December 17, 2014 TM Investor Presentation Exhibit 99.1 |
2 2 This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Words such as “will,” “expect,” “expected”, “looking forward”, “guidance” and similar expressions are intended to identify forward-looking statements. Statements about the company’s business, including its strategy, the impact of changes in oil prices and customer spending, its industry, the company’s future profitability, the company’s guidance on its sales, adjusted EBITDA, adjusted gross profit, tax rate, capital expenditures and cash flow, growth in the company’s various markets and the company’s expectations, beliefs, plans, strategies, objectives, prospects and assumptions are not guarantees of future performance. These statements are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, most of which are difficult to predict and many of which are beyond our control, including the factors described in the company’s SEC filings that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. For a discussion of key risk factors, please see the risk factors disclosed in the company’s SEC filings, which are available on the SEC’s website at www.sec.gov and on the company’s website, www.mrcglobal.com. Our filings and other important information are also available on the Investor Relations page of our website at www.mrcglobal.com. Undue reliance should not be placed on the company’s forward-looking statements. Although forward-looking statements reflect the company’s good faith beliefs, reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the company’s actual results, performance or achievements or future events to differ materially from anticipated future results, performance or achievements or future events expressed or implied by such forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except to the extent required by law. Forward Looking Statements and Non-GAAP Disclaimer |
3 Diversification by Industry Sector - Revenue Note: Percentage of sales for the twelve months ended September 30, 2014. Upstream 47% Downstream 25% 28% Midstream Diversified Across All Three Major Energy Sectors Transmission 18% Drilling & Completion Tubulars (OCTG) 9% Production Infrastructure, Materials & Supplies 38% Other/ Industrial 13% Chemicals & Refining 12% Gas Utility 10% |
4 By Product Line Revenue by Geography and Product Line Note: Percentage of sales for the twelve months ended September 30, 2014. By Geography Houston, TX Edmonton, AB Bradford, UK Singapore Perth, AU Stavanger, NO Diversified Across Multiple Geographies - Domestically (all shale plays) and Internationally 12% 14% 16% 17% 18% 23% Canada Asia / Europe Western US Southwest Gulf Coast Eastern US 32% 21% 19% 19% 9% Valves Fittings & Flanges General Oilfield Products Line Pipe OCTG 32% 21% 19% 19% 9% |
5 Downstream Midstream Upstream MRC Global plays a vital role in the complex, technical, global energy supply chain Long-Term Supplier & Customer Relationships CUSTOMERS SUPPLIERS IOCs Phillips 66 Valero DOW DuPont Marathon Petroleum Access Midstream AGL Resources Atmos NiSource PG&E Williams DCP Midstream Chesapeake Energy ConocoPhillips Devon Apache Anadarko CNRL Hess Husky Energy Marathon Oil Statoil Energy Carbon Steel Tubular Products Valves Fittings, Flanges and General Use Products Tenaris TMK- IPSCO U.S. Steel CSI Tubular JMC Wheatland Balon Cameron Flowserve Kitz Neway Velan Boltex Bonney Forge Chevron Phillips Chemical Tube Forgings of America WL Plastics Emerson |
6 Strategic Shift in Product Mix to Higher Margin Products ($ millions) Total Revenue less Carbon Energy Tubulars (OCTG & Line Pipe) 15% CAGR Over Past 4 Years $2,384 $2,989 $3,697 $3,705 ~$4,200 2010 2011 2012 2013 2014E |
7 2014 and 2008 – What Is Different in Product Mix? • Product mix has changed significantly • More volatile carbon pipe is a smaller part of our business today • Impact of downturn in customer spending is expected to impact higher margin products less than carbon pipe 2008 2014 55% Higher Margin Products OCTG 24% Line Pipe 21% Valves 15% 22% 45% Carbon Pipe 72% Higher Margin Products 19% OCTG 9% Valves 32% 19% 28% Carbon Pipe Fittings & Flanges 18% General Products Oilfield General Oilfield Products Line Pipe Fittings & Flanges 21% Note: Percentage of sales for the year ended December 31, 2008 and for the twelve months ended September 30, 2014. |
8 • Historically high inflation impacted both OCTG and LP in 2008 • This resulted is a significant reduction in prices in 2009 • Today, prices are at more normalized levels and have less to fall in a downturn Line Pipe OCTG 48% 47% 2014 and 2008 – What Is Different in Carbon Steel Pricing Prices are per ton as reported in published market data. Amounts reflect peak prices in September 2008, trough prices in November 2009 and current prices in November 2014 are per ton as reported in published market data. The amounts reflect peak (September) prices in 2008, trough (November) prices in 2009, and current (November) prices in 2014 $3,242 $1,675 $1,789 2008 2009 2014 $3,036 $1,614 $1,624 2008 2009 2014 |
9 1. Reflects reported revenues for 2013. Building an International Platform 2014 International Acquisitions Date Acquisition Rationale Region Revenue¹ ($ millions) Jan-14 Stream International Offshore PVF Norway $ 271 May-14 MSD Engineering Valve Automation Singapore & SE Asia 26 Jun-14 HypTeck International Offshore Norway 38 $0 $52 $256 $330 $567 $554 >$900 2008 2009 2010 2011 2012 2013 2014E International Segment Revenue ($ millions) |
10 Capital Structure |
Balance Sheet Metrics Total Debt Capital Structure Net Leverage ($ millions) September 30, 2014 Cash and Cash Equivalents $ 31 Total Debt (including current portion): Term Loan B due 2019, net of discount 782 Global ABL Facility due 2019 632 Other 3 Total Debt $ 1,417 Total Equity $ 1,425 Total Capitalization $ 2,842 Liquidity $ 307 1. The net leverage ratio is 3.25x pro forma for the acquisition of Stream, Flangefitt, MSD and HypTeck. 11 4.1x 2.6x 2.5x 3.4x 1 2011 2012 2013 September 30, 2014 3x 2x Target range 2x-3x $1,527 $1,257 $987 $1,417 2011 2012 2013 September 30, 2014 |
12 Summary of Certain Debt Terms • Repayment • Global ABL and Term Loan B mature in 2019 • Term Loan B has 1% per year amortization, paid quarterly • Term Loan B requires repayment in form of annual excess cash flow sweep (currently at the maximum of 50% of annual “Excess Cash Flow”) • Financial Maintenance Covenants • No maintenance covenants are currently in effect in either the Global ABL or Term Loan B • Under the Global ABL, if “Excess Availability” is less than the greater of 10% of the “ABL Commitment” or $79.8 million, then a “Fixed Charge Coverage Ratio” of 1.0:1.0 is required. • The threshold is approximately $105 million (10% of the $1.050 billion commitment) • “Excess Availability” is approximately $268 million as of November 30, 2014 • “Fixed Charge Coverage Ratio” was 2.36 at September 30, 2014 (the most recent compliance certificate) |
13 Summary of Certain Debt Terms • The Global ABL and Term Loan B also contain customary restrictive covenants that limit our ability to make investments, prepay certain indebtedness, grant liens, incur additional indebtedness, sell assets, make fundamental changes, enter into transactions with affiliates and pay dividends. |