![]() 1 May 2015 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 By the Numbers 1 Industry Sectors Product Categories TTM Sales TTM Adjusted EBITDA $5.920B $427M Upstream Line Pipe & OCTG Employees ~4,700 Locations 400+ Midstream Valves Countries • Operations • Direct Sales (>$100,000) • All countries 20 45+ 90+ Customers 21,000+ Downstream/ Industrial Fittings & Flanges Suppliers 21,000+ SKU’s 230,000+ Company Snapshot MRC Global is the largest global distributor of pipe, valves and fittings (PVF) to the energy industry, by sales 1. As of March 31, 2015. |
![]() Revenue by Industry Sector Note: Percentage of sales for the twelve months ended March 31, 2015. Upstream 46% Downstream 25% Midstream 29% Diversified Across All Three Major Energy Sectors Other/ Industrial 12% Chemicals & Refining 13% Gas Utility 10% Transmission 19% Drilling & Completion Tubulars (OCTG) 9% Production Infrastructure, Materials & Supplies 37% 4 |
![]() By Product Line Revenue by Geography and Product Line Note: Percentage of sales for the twelve ended March 31, 2015. By Geography Houston, TX Edmonton, AB Bradford, UK Singapore Perth, AU Stavanger, NO Diversified Across Multiple Geographies - Domestically (all shale plays) and Internationally 10% 15% 23% 25% 27% Canada Asia / Europe Eastern Western Gulf Coast 32% 21% 20% 18% 9% Valves Fittings & Flanges Line Pipe General Oilfield Products OCTG 5 21% 20% 18% 9% 32% |
![]() 6 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 AGL Resources Atmos NiSource PG&E MarkWest DCP Midstream Chesapeake Energy CNRL ConocoPhillips Apache Anadarko California Resources Corporation 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 Williams |
![]() Integrated Supply Statistics • Supplying Integrated Supply services since 1988 • Accounts for sales in excess of $830 million and growing rapidly • Employ over 190 personnel at customer sites • Providing Integration Services on over 100 customer sites • Managing over 1.4 million customer part numbers • Consignment inventories in excess of $35 million at 700 locations • Manage customer-owned point of use materials at over 800 locations MRC Global is a leading provider of Integrated Supply Services to the Energy Industry 7 |
![]() 8 Strategic Objectives Rebalance Product Mix to Higher Margin Items • Focus on valve and valve automation • Strengthen offerings in stainless & alloy PFF Growth from Mergers & Acquisitions • • 1. Percentage of sales for the twelve months ended March 31, 2015. • All Other - 21,000+ customers Customer Mix - Sales 1 • Focus on multi-year “Top 25” MRO agreements and adding scope to current agreements • Recently added or renewed: • Mark West – midstream MRO, 5 years • Statoil – Johan Sverdrup project, instrumentation • Marathon Oil – U.S. MRO, 5 years • California Resources Corporation – U.S. Integrated Supply - 3 years • TECO Energy’s People’s Gas & New Mexico Gas – U.S. Integrated Supply - 5 years Execute Global Preferred Supplier Contracts 30% 22% 48% Continue to identify geographic and product line opportunities, no acquisitions expected in 2015 Current expectation is to use free cash flow to repay debt $300-$400 million in 2015 Organic Growth Targeted Growth Accounts: develop the “next 75” customers Targeted Growth Accounts Top 1 - 25 |
![]() 9 Strategic Shift in Product Mix to Higher Margin Products ($ millions) Total Revenue less Carbon Energy Tubulars (OCTG & Line Pipe) 15% CAGR for Higher Margin Products 2010 - 2014 $2,384 $2,989 $3,697 $3,705 $4,238 2010 2011 2012 2013 2014 |
![]() 10 Product Mix Shift from 2008 to 2014 • Stable, higher margin valves are a larger percentage of revenue • More volatile carbon pipe is a smaller percentage of revenue • The prices of higher margin products are more stable 2008 2014 Note: Percentage of sales for the year ended December 31, 2008 and December 31, 2014. 55% Higher Margin Products OCTG 24% Line Pipe 21% Valves 15% 18% General Products 22% 45% Carbon Pipe 71% Higher Margin Products OCTG 10% Line Pipe 19% Valves 32% Fittings & Flanges General Oilfield Products 18% 29% Carbon Pipe Flanges Fittings & Oilfield 21% |
![]() 11 • Inflation impacted both OCTG and LP in 2008…resulting in a significant reduction in prices in 2009 • Today, prices are lower and have less to fall in a downturn Line Pipe Prices OCTG Prices 48% 47% Carbon Steel Prices in 2008/2009 as Compared to Today Note: Prices are per ton as reported in published market data. Amounts reflect peak prices in September 2008, trough prices in November 2009. 2014 peak prices for OCTG are from November and Line Pipe from August. 15% 8% $3,242 $1,675 $1,786 $1,517 Peak 2008 Trough 2009 Peak 2014 Mar-15 $3,036 $1,614 $1,643 $1,511 Peak 2008 Trough 2009 Peak 2014 Mar-15 |
![]() 12 Strategic Expansion into Offshore Production Platform MRO • Top 4 largest offshore markets ~$140 billion E&P spend • Norway is the largest – we are positioned in 4 of the 5 largest offshore markets • MRC Global revenue mix • Pre Stream acquisition (2013) – approx. 98% onshore, 2% offshore • Post Stream acquisition (2014) – approx. 93% onshore, 7% offshore 1. Source: Rystad Energy, September 2014 ($ billions) $38 $36 $35 $32 $24 $20 $17 $16 $16 $15 Norway United Kingdom USA Brazil Australia Angola Nigeria Kingdom of Saudi Arabia Malaysia Mexico Top 10 Global Offshore E&P Markets 1 Pipe, Fittings & Flanges 25% Valve Management 37% Instrumentation 38% Stream 2014 Sales by Division |
![]() 13 Building an International Platform for Growth North America Estimated PVF Spend ~$25B Estimated Share of PVF Spend 1 International Estimated PVF Spend ~$20B 1. Market sizes are management estimates based on 2014 results. $0 $52 $256 $330 $567 $554 $873 2008 2009 2010 2011 2012 2013 2014 International Segment Revenue ($ millions) All others 80% MRC Global 20% ~$5.0 B MRC % ~$900M All others 95% Global 5 |
![]() 14 Financial Overview |
![]() Financial Metrics Sales Adjusted Gross Profit and % Margin Adjusted EBITDA and % Margin 7.0% 8.5% ($ millions, except per share data) Y-o-Y Growth 28% 24% (5%) 11% Y-o-Y Growth 61% 29% (17%) 10% 5.8% 7.5% 8.3% 7.4% 7.1% 6.4% 6.7% Y-o-Y Growth 26% 15% (6%) 13% Diluted EPS Y-o-Y Growth 156% 259% 21% (5%) 17.2% 17.6% 19.0% 19.3% 18.9% 19.5% 18.6% Three months ended March 31 Three months ended March 31 Three months ended March 31 Three months ended March 31 $663 $850 $1,058 $1,009 $1,120 $254 $241 2010 2011 2012 2013 2014 2014 2015 $3,846 $4,832 $5,571 $5,231 $5,933 $1,306 $1,292 2010 2011 2012 2013 2014 2014 2015 $224 $360 $463 $386 $424 $84 $87 2010 2011 2012 2013 2014 2014 2015 $(0.61) $0.34 $1.22 $1.48 $1.40 $0.23 $0.28 2010 2011 2012 2013 2014 2014 2015 15 |
![]() 16 Balance Sheet Metrics Total Debt Capital Structure Cash Flow from Operations Net Leverage ($ millions) March 31, 2015 Cash and Cash Equivalents $ 49 Total Debt (including current portion): $ 1,373 Term Loan B due 2019, net of discount $ 778 Global ABL Facility due 2019 $ 595 Total Debt $ 1,373 Total Equity $ 1,375 Total Capitalization $ 2,748 Liquidity $ 436 Three months ended March 31 5.8x 4.1x 2.5x 2.6x 3.4x 3.1x 2010 2011 2012 2013 2014 31-Mar-15 $113 $(103) $240 $ 324 $(106) $(74) $116 2010 2011 2012 2013 2014 2014 2015 $1,360 $1,527 $1,257 $987 $1,454 $1,373 2010 2011 2012 2013 2014 31-Mar-15 |
![]() 17 Summary of Certain Debt Terms • Repayment • No near-term maturities - 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 • maximum of 50% of annual “Excess Cash Flow” • Financial Maintenance Covenants • No financial maintenance covenants currently in effect • Under the Global ABL, if “Excess Availability” is less than the greater of : • 10% of the “ABL Commitment” - The threshold is approximately $105 million (10% of the $1.050 billion commitment) or $79.8 million, • then a “Fixed Charge Coverage Ratio” of 1.0 : 1.0 is required • As of March 31, 2015: • “Excess Availability” is approximately $386 million • “Fixed Charge Coverage Ratio” is 2.12 |
![]() 18 Current 2015 Outlook – Updated May 2015 • Market indicators – North American E&P capital expenditure budgets down 35%, with Canada impacted the most – International spending is expected to be 10-20% lower – US rig count down approximately 1,000 from peak in 2014 • Commodities – WTI Oil price $50-$60/bbl (Brent $55-$65) – US Natural Gas prices $2.25-$3.25/mcf • Expect to generate $350-$450 million of cash from operations • Free cash flow to be used to reduce debt • Cost savings measure undertaken – Headcount reduction – Lower incentive compensation – Salary and hiring freezes • Revenue headwinds $100 million or more related to currency • Potential deflation in tubular products 10%-15% |
![]() Macro drivers • Growth in global energy consumption driving investment • Increased global production • Need for additional energy infrastructure • Expansion of downstream energy conversion businesses Investment Thesis Highlights Leading global PVF distributor to the energy sector MRC Global attributes • Market leader • Exposed to all sectors of global energy • Long term global customer & supplier relationships • Generates strong cash flow from operations over the cycle 19 |
![]() 20 Appendix |
![]() 21 MRC Global // North America Corporate Headquarters Branch Locations Regional Distribution Centers Valve Automation Centers Western Gulf Coast Canada Eastern |
![]() 22 Global Footprint to Serve Customers - North America Munster, IN Nitro, WV Tulsa, OK Houston, TX Nisku, AB Cheyenne, WY Odessa, TX Bakersfield, CA San Antonio, TX Regional Distribution Centers Corporate Headquarters Valve Automation Centers Branch Locations By the Numbers As of 3/31/2015 Branches 160+ RDCs 10 VACs 14 Employees ~3,300 Pittsburg, PA |
![]() 23 Global Footprint to Serve Customers - Europe Regional Distribution Centers Valve Automation Centers Branch Locations Stavanger, NO By the Numbers As of 3/31/2015 Branches 35 RDCs 3 VACs 14 Countries 12 Employees ~900 Rotterdam, NL Bradford, UK |
![]() Global Footprint to Serve Customers - Asia Pacific & Middle East Regional Distribution Centers Valve Automation Centers Branch Locations Singapore Perth, WA Brisbane, QLD Dubai, UAE By the Numbers As of 3/31/2015 Branches 28 RDCs 4 VACs 7 Countries 8 Employees ~500 24 |
![]() 25 1. Reflects reported revenues for the year of acquisition or 2013 for Stream, MSD and HypTeck. M&A - Track Record of Strategic Acquisitions • • • • International branch platform for “super majors” E&P spend Branch platforms/infrastructure for North American shale plays Global valve and valve automation Global stainless/alloys Acquisition Priorities |
![]() Upstream 26 |
![]() Midstream 27 |
![]() Downstream 28 |
![]() Performance Measures Sales per Employee 1 ($ thousands) Adjusted Gross Profit per Employee 1 ($ thousands) SG&A / Sales Average Working Capital / Sales Return on Average Net Capital Employed (RANCE) 2 1. Calculated based on average number of employees 2. RANCE is defined as Pretax income for the year plus interest expense and related financing charges, multiplied by 1, minus our effective tax rate, and the denominator is average net capital employed for the year. Net capital employed is defined as Total assets minus Current liabilities plus Other long- term liabilities. $1,043 $1,234 $1,255 $1,054 $1,181 2010 2011 2012 2013 2014 $180 $217 $238 $203 $223 2010 2011 2012 2013 2014 23.0% 19.8% 20.4% 21.8% 21.3% 2010 2011 2012 2013 2014 11.7% 10.6% 10.9% 12.3% 12.1% 2010 2011 2012 2013 2014 1.9% 6.1% 10.9% 8.4% 7.0% 2010 2011 2012 2013 2014 29 |
![]() 30 Three months ended March Year Ended December 31 ($ millions) 2015 2014 2014 2013 2012 2011 2010 Net income $29.1 $ 23.5 $ 144.1 $ 152.1 $ 118.0 $ 29.0 $ (51.8) Income tax expense 13.1 13.2 81.8 84.8 63.7 26.8 (23.4) Interest expense 14.6 15.1 61.8 60.7 112.5 136.8 139.6 Depreciation and amortization 5.1 5.2 22.5 22.3 18.6 17.0 16.6 Amortization of intangibles 15.9 15.7 67.8 52.1 49.5 50.7 53.9 Increase (decrease) in LIFO reserve (0.2) 1.3 11.9 (20.2) (24.1) 73.7 74.6 Expenses associated with refinancing - - - 5.1 1.7 9.5 - Loss on early extinguishment of debt - - - - 114.0 - - Change in fair value of derivative instruments 0.7 3.6 1.1 (4.7) (2.2) (7.0) 4.9 Equity-based compensation expense 2.5 1.8 8.9 15.5 8.5 8.4 3.7 Inventory write-down - - - - - - 0.4 M&A transaction & integration expenses - - - - - 0.5 1.4 Severance & related costs 1.8 - 7.5 0.8 - 1.1 3.2 Loss on sale of Canadian progressive cavity pump business - 6.2 6.2 - - - - Loss on disposition of rolled and welded business - - 4.1 - - - - Cancellation of executive employment agreement (cash portion) - - 3.2 - - - - Insurance charge - - - 2.0 - - - Foreign currency losses (gains) 4.1 (1.6) 2.5 12.9 (0.8) (0.6) 0.3 Pension settlement - - - - 4.4 - - Legal and consulting expenses - - - - - 9.9 4.2 Provision for uncollectible accounts - - - - - 0.4 (2.0) Joint venture termination - - - - - 1.7 - Other expense (income) - - 0.6 3.0 (0.6) 2.6 (1.4) Adjusted EBITDA 86.7 $ 84.0 $ 424.0 $ 386.4 $ 463.2 $ 360.5 $ 224.2 Adjusted EBITDA Reconciliation |
![]() 31 Three months ended March 31 Year ended December 31 ($ millions) 2015 2014 2014 2013 2012 2011 2010 Gross profit $219.9 $ 232.1 $ 1,018.1 $ 954.8 $ 1,013.7 $ 708.2 $ 518.1 Depreciation and amortization 5.1 5.2 22.5 22.3 18.6 17.0 16.6 Amortization of intangibles 15.9 15.7 67.8 52.1 49.5 50.7 53.9 Increase (decrease) in LIFO reserve (0.2) 1.3 11.9 (20.2) (24.1) 73.7 74.6 Adjusted Gross Profit $240.7 $254.3 $ 1,120.3 $ 1,009.0 $ 1,057.7 $ 849.6 $ 663.2 Adjusted Gross Profit Reconciliation |