Andrew Lane Chairman, President & CEO MRC Global Inc. // William Blair Growth Stock Conference June 12, 2012 Exhibit 99.1 |
William Blair 2012 2 Forward Looking Statements and GAAP Disclaimer This presentation contains forward-looking statements, including, for example, statements about the Company’s business strategy, its industry, its future profitability, growth in the Company’s various markets, the strength of future activity levels, and the Company’s expectations, beliefs, plans, strategies, objectives, prospects and assumptions. These forward-looking statements are not guarantees of future performance. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s 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 registration statement on Form S-1 effective April 11, 2012, related to our common stock, and our Quarterly Statement on Form 10-Q for the quarter ended March 31, 2012, both of which are available on the SEC’s website at www.sec.gov. 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 our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements 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. Statement Regarding use of Non-GAAP Measures: The Non-GAAP financial measures contained in this presentation (including, without limitation, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Return on Net Assets (RONA) and variations thereof) are not measures of financial performance calculated in accordance with GAAP and should not be considered as alternatives to net income (loss) or any other performance measure derived in accordance with GAAP or as alternatives to cash flows from operating activities as a measure of our liquidity. They should be viewed in addition to, and not as a substitute for, analysis of our results reported in accordance with GAAP, or as alternative measures of liquidity. Management believes that certain non-GAAP financial measures provide a view to measures similar to those used in evaluating our compliance with certain financial covenants under our credit facilities and provide financial statement users meaningful comparisons between current and prior year period results. They are also used as a metric to determine certain components of performance-based compensation. The adjustments and Adjusted EBITDA are based on currently available information and certain adjustments that we believe are reasonable and are presented as an aid in understanding our operating results. They are not necessarily indicative of future results of operations that may be obtained by the Company. |
By the Numbers Industry Sectors Product Categories Business Model 2011 Sales $4.83 B Upstream Line Pipe / OCTG Locations 410+ Countries 18 Midstream Valves Customers 12,000+ Suppliers 12,000+ Downstream/ Industrial Fittings / Flanges SKU’s 150,000+ Employees 4,400+ MRC is the largest global distributor of pipe, valves and fittings (PVF) to the energy industry. Company Snapshot International 7% Canada 13% MRO 66% Projects 34% U.S. 80% William Blair 2012 3 |
Founded 1921 1989 Acquires Appalachian Pipe & Supply 2007 Goldman Sachs Capital Partners Strategic Investment 1977 Founded 2005 Acquires Midfield Supply 2008 MRC acquires LaBarge 2007 Merger of McJunkin and Red Man to form MRC 2009 MRC opens Houston HQ 2009 MRC acquires Transmark 2010 MRC acquires South Texas Supply 2010 MRC acquires Dresser Oil Tools 2011 MRC acquires SPF 2011 MRC acquires VSC 2012 MRC acquires OneSteel Piping Systems 2012 MRC Global IPO; begins trading on NYSE MRC’s 91 Year History // The Road to the Fortune 500 2012 MRC signs the industry’s first global valve contract with Shell 2012 MRC listed on Fortune 500 William Blair 2012 4 |
MRC plays a critical role in the complex, technical, global energy supply chain. Business Model CUSTOMERS SUPPLIERS William Blair 2012 5 Access to over 12,000+ customers Manufacturing and scale efficiencies Leverage MRC’s technical sales force Supplier Benefits Mutual Benefits Trusted long-term partnerships Financial stability MRC Approved Supplier List / Quality Program Customer Benefits Access to over 12,000+ suppliers worldwide Efficiencies and inventory management Access to a broad product offering ($1B+ inventory) Access to a global sourcing from 35 countries |
William Blair 2012 6 By Geography Note: Business mix based on 2011 sales By Product Line MRC is diversified by geography, industry sector, and product line. MRC Diversification Drilling & Completion Tubulars 17% Production Infrastructure, Materials & Supplies 30% International 7% Chemical 9% Transmission 17% Gas Utility 9% Refining 9% Other / Industrial 9% By Industry Sector Western US 24% Gulf Coast 28% Eastern US 28% Canada 13% Other 20% OCTG 17% Valves 24% Line Pipe 21% Fittings & Flanges 18% |
William Blair 2012 7 Well positioned to capitalize on shale, heavy oil and oil sands activity. North America E&P spending to grow 6% in 2012*. * Barclays Equity Research North America Core Business Model North American Infrastructure • 175+ Branches • 160+ Pipe Yards • 7 Regional Distribution Centers • 12 Valve Automation Centers Horn River Montney Duvernay Bakken Niobrara Monterey Mississippian Lime Granite Washington Woodford Fayetteville Barnett Haynesville Permian Basin Eagle Ford Utica Marcellus |
William Blair 2012 8 International E&P spending forecast to grow 12% in 2012*. International Growth Model * Barclays Equity Research MRC Branches / Locations Regional Distribution Centers Valve Automation Centers 40+ Branches Regional Distribution Centers in UK, Singapore and Australia 10 Valve Automation Centers Expanding International Presence 2 Pipe Yards |
William Blair 2012 9 Strong Growth in Global E&P Spending Source: Barclays 2012 E&P Spending Outlook Mid Year Update. Positive Trends U.S. Additions to Natural Gas Pipelines U.S. Aging Infrastructure / New Legislation to Drive Pipeline Replacement Source: Pipeline Safety and Hazardous Materials Administration, Wall Street Journal, for Top 10 states by pipeline mileage Source: ICF International, North American Midstream Infrastructure Through 2035 – A Secure Energy Future, Prepared for the INGAA Foundation, June 28, 2011 0 100 200 300 400 500 600 700 800 900 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Actual Estimates Outside North America Canada Built After 1970 37% Built Before 1970 63% 444 548 688 1,193 1,126 2009A 2010A 2011E 2012E 2013E 2005A 2007A 2009A 2011E 2013E 2015E 2016E 2006A 2008A 2010A 2012E 2014E U.S. U.S. Refining Turnaround Activity Source: Industrial Info Resource, Inc. Based on quarterly average planned unit outages. |
William Blair 2012 10 Global Procurement Today 10 – 15 Years Ago Next 1 to 5 Years Consolidating energy industry benefits global players. Changing PVF Energy Distribution Landscape • Pipe • Valves • Fittings • Flanges • Supplies • Upstream • Midstream • Downstream • Purchasing more consolidated • Contracts by end segment: • Contracts cover PVF • Customers align with • PVF purchasing handled locally • Facility-by-facility basis • Separate contracts by product class: suppliers with size/scale Global upstream / midstream / downstream PVF contracts Decentralized Procurement Centralized Procurement |
William Blair 2012 11 MRC & Shell // Global Valve Contract for MRO & Projects Industry’s first global valve and combined North American PFF contract. Shell has one of the top 5 global CAPEX budgets Deepwater GOM NA Tight Gas & Liquids Brazil Offshore BC-10 West Africa Future Middle East RDC FLNG / LNG Oceania Sakhalin Shell Offshore Coal Bed Methane Cracker Unit Pittsburgh, PA China Tight Gas Tar Sands Kashagan Ph1 LNG / GTL North America Includes PFF LNG Salym Development Alaska Offshore |
William Blair 2012 12 Increasing MRC Shareholder Value Growth Efficiency / Profitability Organic Growth Increase Returns on Working Capital Investment Optimize Cost of Capital • North American shale activity • Midstream infrastructure • Downstream – refining turnaround activity and resurgence in petrochemical activity • Australia – new PVF leadership position • Optimize inventory mix • Global sourcing • Focus on higher margin products • Maximize profitability in Australia as integration of recent acquisitions is completed • Target leverage at 2.0x – 3.0x • Reduce overall cost of debt Acquisitions • International geographic extensions • Valve & actuation • North American region / shale bolt-ons Revenue Growth: Target 10% to 12% per year Organic: 8% to 9% Acquisitions: 2% to 3% Adjusted EBITDA Margin Improvement 8.0 to 8.5% in near term 9.0 to 9.5% in mid term 10+% in 5 years |
Reflects reported revenues for the year of acquisition Estimate based on supply agreement with SandRidge Energy (close in June 2012) (US$ in millions) Track Record of Successful M&A William Blair 2012 13 1 2 MRC has completed and successfully acquired $920 million of revenues since mid 2008. |
Strategic investments in shale plays driving North America Growth. Eagle Ford Rig: Stephens Eagle Ford Sales: MRC data Eagle Ford Production: www.rrc.state.tx.us; 2012 Annualized Bakken Production MRC Investment in the Bakken MRC Sales in the Bakken August 2010 Acquisition – Dresser Oil Tools & Supply January 2012 Opened Regional Distribution Center in Cheyenne, WY Strategic Investments to Capitalize on Shale Growth Bakken Rig: Stephens Bakken Sales: MRC data Bakken Production: MidstreamBusiness.com, "Bakken's Rapid Ascent”2012 Annualized Eagle Ford Production MRC Investment in the Eagle Ford MRC Sales in the Eagle Ford May 2010 Acquisition – South Texas Supply March 2011 Opened Regional Distribution Center in San Antonio, TX William Blair 2012 14 |
William Blair 2012 15 Sales Adjusted Gross Profit and % Margin Source: Company management RONA calculation = Adjusted EBITDA divided by the sum of accounts receivable, inventory (plus the LIFO reserve), and PP&E less accounts payable. Adjusted EBITDA and % Margin Return on Net Assets (RONA) Strong growth and improving profitability. Y-o-Y Growth 26% 39% Y-o-Y Growth 28% 49% Y-o-Y Growth 61% 92% (US$ in millions) Financial Trends 5.8% 7.5% 6.0% 8.3% $ 3,846 $4,832 $992 $1,383 2010 2011 1Q2011 1Q2012 $663 $850 $174 $260 2010 2011 1Q2011 1Q2012 $224 $361 $60 $115 2010 2011 1Q2011 1Q2012 19.6% 24.1% 20.4% 28.2% 2010 2011 1Q2011 1Q2012 17.2% 17.6% 17.5% 18.8% |
William Blair 2012 16 16 ¹ As of May 31, 2012 2 Proforma for IPO First Quarter Update Year Over Year Results In Millions, except per share data 1Q 2012 1Q 2011 Sales $ 1,383 $ 992 39% Cost of sales 1,146 845 Gross profit 237 147 SG&A 146 117 Operating income 90 30 Net income $ 38 $ (1) EPS $ 0.44 $ (0.01) Adjusted EBITDA $ 115 $ 60 92% Adjusted EBITDA% 8.3% 6.0% Full Year 2012 Outlook ¹ Sales $5.4 to $5.6 billion Adjusted EBITDA 8.0% to 8.5% of sales Capital Structure ² April 2012 IPO with net proceeds of $334 million Total Debt $1.278 billion Net Debt / Adjusted EBITDA 2.9X |