Stephens Non-Deal Road Show March 2013 1 MRC Global Inc. // Stephens Non-Deal Road Show Andrew Lane Chairman, President & CEO Jim Braun EVP & CFO Exhibit 99.1 March 2013 |
2 Stephens Non-Deal Road Show March 2013 2 This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act, as amended, including, for example, statements about the Company’s business strategy, its industry, its future profitability, growth in the Company’s various markets, 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 annual report on Form 10-K for the year ended December 31, 2012 and the registration statement (including a prospectus and prospectus supplement) for the offering to which this communication relates, which are available on the SEC’s website at www.sec.gov and on the Company’s website, 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 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. Statement Regarding Use of Non-GAAP Measures: The Non-GAAP financial measures contained in this presentation (EBITDA, Adjusted EBITDA, Adjusted EPS 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. Forward Looking Statements and Non-GAAP Disclaimer |
3 Stephens Non-Deal Road Show March 2013 By the Numbers Industry Sectors Product Categories Business Model 2012 Sales $5.57 B Upstream Line Pipe / OCTG Locations 400+ Countries 44+ Midstream Valves Customers 18,000+ Suppliers 18,000+ Downstream/ Industrial Fittings / Flanges SKU’s 175,000+ Employees 4,750+ Company Snapshot MRO 70% Projects 30% U.S. 76% Canada 14% Europe / Asia Pacific 10% MRC is the largest global distributor of pipe, valves and fittings (PVF) to the energy industry |
Founded 1921 1989 Acquires Appalachian Pipe & Supply 2007 Goldman Sachs Capital Partners Strategic Investment 1977 Founded 2005 Acquires Midfield Supply 2007 Merger of McJunkin and Red Man to form MRC 2009 MRC opens Houston HQ 2011 MRC acquires SPF 2011 MRC acquires VSC 2012 MRC acquires OneSteel Piping Systems 2009 MRC acquires Transmark 2010 MRC acquires South Texas Supply 2010 MRC acquires Dresser Oil Tools MRC’s 92 Year History // The Road to the Fortune 500 2012 MRC Global IPO; begins trading on NYSE 2012 MRC listed on Fortune 500 2012 MRC signs the industry’s first global valve contract with Shell 2008 MRC acquires LaBarge 2012 MRC acquires Chaparral Supply 2012 MRC acquires Production Specialty Services 4 Stephens Non-Deal Road Show March 2013 |
5 Stephens Non-Deal Road Show March 2013 Clear Market Leader Globally and in the Shales Leading industrial distributor of PVF globally to the energy and industrials sectors Note: As of 31-Dec-2012 1 Including contracts and pricing arrangements. 2 International locations include sales offices and pipe yards at MRC locations. North America International Branches 190+ 50+ Distribution Centers 8 = U.S. 1 = Canada 1 = U.K. 1 = Singapore 1 = Netherlands 1 = Australia Valve Automation Centers 12 12 Pipe Yards 120 10 Ecuador Equatorial Guinea Finland France Germany India Indonesia Iraq Italy Kazakhstan Kuwait Malaysia Mexico Netherlands New Zealand Nigeria Norway Pakistan Peru Poland Russia Saudi Arabia 44+ Countries & 400+ Locations Angola Aruba Australia Austria Belgium Brunei Cameroon Canada China Colombia Denmark Branch operations and significant direct export sales Singapore South Africa South Korea Spain Sweden Thailand Trinidad Turkey United Arab Emirates United Kingdom United States 2 • ~2/3 of sales are under contracts with a 95% renewal rate since 2000 • Continue to grow “share” and “size of wallet” with major existing customers while adding new ones • North American Shales as much as 5x PVF intensive as conventional activity |
6 Stephens Non-Deal Road Show March 2013 By Geography Note: Business mix based on fiscal year 2012. By Product Line By Industry Sector MRC Diversification 1 - Approximately 17% (or $200 M) of total for valves is valve automation Industry leading product, end market and geographic diversification Canada 14% Europe/ Asia Pacific 10% Western US 26% Gulf Coast 25% Eastern US 25% OCTG 13% Line Pipe 21% Valves 26% Fittings & Flanges 21% Other 19% Chemical 6% Refining 7% Other/ Industrial 14% Gas Utility 10% Production Infrastructure, Materials & Supplies 33% Transmission 17% Drilling & Completion Tubulars 13% |
7 Stephens Non-Deal Road Show March 2013 Core Distribution Processes • Cost Savings and Efficiencies • Order Management and Product Bundling • Quality Assurance • Supplier Registration • Logistics Management • Customer Reporting Integrated Services • Technical Assistance / Product Recommendation • Inventory Consignment / Just-in- Time Delivery • Customized IT Solutions • Warehouse Management Service Offerings Products Delivery of Mission Critical Products and Value Added Services Generating savings and efficiencies for our customers while enabling them to focus on their core competencies • 175,000+ unique, mission-critical products used in high pressure, high stress or abrasive operating environments • Low cost relative to overall cost of maintenance or project spend so service is paramount |
Supplier Benefits • • • Customer Benefits • • • • MRC plays a critical role in the complex, technical, global energy supply chain Strong Long-Term Relationships with “Blue Chip” Customers and Suppliers Mutual Benefits • • • 8 Access to over 18,000+ customers Manufacturing and scale efficiencies Leverage MRC’s technical sales force MRC Approved Supplier List / Quality Program Financial stability Trusted long-term partnerships Access to over 18,000+ suppliers worldwide Efficiencies and inventory management Access to a broad product offering (~$1B inventory) Access to global sourcing from 35 countries Stephens Non-Deal Road Show March 2013 |
Upstream: Increasing E&P Spending Source: Spears and Associates (Drilling and Production Outlook – December, 2012) Positive Energy and Industrial Spending Trends Downstream: Continued MRO & Project Activity • Global: Energy demand continues to grow with sizable MRO/project opportunities given the age of global energy infrastructure and slowly improving global economy • Upstream: Shales extremely active, shift to Oil/NGL E&P, Natural Gas MRO production, Oil Sands activity seeing strong growth • Coal-to-gas substitution at historically high levels • Midstream: Shale activity in new unsupported areas; increased pipeline integrity regulation plus aging pipeline infrastructure accelerating MRO rates; gas utilities continue to outsource PVF procurement $ billions Source: Industrial Information Resources Midstream: NA Pipeline Spending to Increase Source: Stifel Nicolaus Diversified industrial Infrastructure Report August 28, 2012 $ billions $ 236 $ 240 $ 294 $ 329 $ 338 $ 368 $ 393 $ 419 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 9 2011A 2012E 1H12A 1H13E Maintenance Projects $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 Nat Gas NGL Oil 2011A Estimate 2012E Forecast 2013E Forecast Stephens Non-Deal Road Show March 2013 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 • Downstream: MRO and infrastructure projects accelerating; strong growth in chemical/industrial with low natural gas prices and steady PMI; rebound in refinery utilization / margins |
10 Stephens Non-Deal Road Show March 2013 (US$ in millions) 1 Reflects reported revenues for the year of acquisition M&A Driven Growth: Track Record of Success MRC has completed and successfully acquired $3 billion of revenues since 2007 |
11 Today 10 – 15 Years Ago Next 1 to 5 Years Changing PVF Energy Distribution Landscape Consolidating energy industry benefits global players • Upstream • Midstream • Downstream • Pipe • Valves • Fittings • Flanges • Supplies • PVF purchasing handled locally • Facility-by-facility basis • Separate contracts by product class: • Purchasing more consolidated • Contracts by end segment: • Contracts cover PVF • Customers align with suppliers with size/scale • Global upstream / midstream / downstream PVF contracts Decentralized Procurement Centralized Procurement Global Procurement Stephens Non-Deal Road Show March 2013 |
12 MRC & Shell // Global Valve Contract for MRO and Projects Industry’s first valve and combined North American PFF contract Deepwater GOM NA Tight Gas & Liquids Brazil Offshore BC-10 West Africa Future Middle East RDC FLNG / LNG Oceania Sakhalin Shell Offshore Shell has one of the top 5 global CAPEX budgets Coal Bed Methane China Tight Gas Tar Sands Kashagan Ph1 Alaska Offshore North America Includes PFF LNG Salym Development LNG / GTL Cracker Unit Pittsburgh, PA Stephens Non-Deal Road Show March 2013 |
13 Global E&P Spending Growth – Positive Secular Trends (Target 6 – 7% Annually) • Global Energy Demand Favorable: Continued general economic recovery, commodity price environment, global supply constraints and increased energy consumption • Shale Activity Unprecedented: Shale gas, as a percentage of total natural gas production, has rapidly increased from less than 2% of total U.S. natural gas production in 2001 to 30% in 2011 and is projected to increase to 49% by 2035 • Accelerating MRO: Increased utilization of processing facilities and decreasing quality of energy feedstocks accelerating PVF replacement rates • Recovering Project Outlook: Infrastructure and E&P projects rebounding with economic growth and need for capacity expansions Large, Fragmented Market with Significant Growth Opportunities Organic Growth – Leverage Scale (Target: 8 – 9% Annually) • One-Stop Solution: Leverage extensive product offering and be “one-stop” PVF solution • Cross-Selling: Introduce existing customers to complete PVF product portfolio • Projects: Further penetrate existing customer’s project activity • Investments: Add incremental branches, DCs and sales people • International: Expand further globally with existing customers • Adjacencies: Add new products to existing PVF “bundle” or target new complimentary end markets Acquisitions – Accretive Expansion (Target: 2 – 3% Annually) • Core Competency: Proven ability to identify, execute and integrate strategic and tuck-in acquisitions • Highly Fragmented: Opportunities to extend product offering, end markets and/or geographic coverage MRC is in an excellent position to continue to exceed industry growth Long-term Targets: Revenue Growth: 10-12% | Adjusted EBITDA Margin: 10+% | Leverage: 2.0 – 3.0x Note: All targets are long term. Stephens Non-Deal Road Show March 2013 |
14 Stephens Non-Deal Road Show March 2013 Financial Overview |
15 Stephens Non-Deal Road Show March 2013 • Revenue • Total revenue was impacted by strategic OCTG reduction • Top line remained strong despite slowed customer activity in the last two months of Q4 • Adjusted EBITDA and Margins • Q4 2012 Adjusted EBITDA remained relatively flat vs. Q4 2011 • FY 2012 year-on-year margin expansion of ~80 bps due to continued emphasis on higher margin products • Adjusted EPS • Q4 2012 GAAP EPS includes loss on retirement of debt and pension settlement costs • Strong year-on-year growth in Adjusted EPS for both Q4 and the full-year Q4 2012 Earnings Review (In millions except per share data) Q4 Fiscal Year 2011 2012 2011 2012 OCTG $216 $114 $809 $715 All Other 1,090 1,193 9% 4,023 4,856 21% Total $1,306 $1,307 $4,832 $5,571 Q4 Fiscal Year Q4 Fiscal Year $ 0.04 $ (0.06) GAAP EPS: $ 0.34 $ 1.22 17.8% 19.0% Adjusted Gross Profit: 17.6% 19.0% $ 100 $ 99 Q4 2011 Q4 2012 7.7% 7.6% $ 360 $ 463 FY 2011 FY 2012 7.5% 8.3% $ 0.04 $ 0.55 Q4 2011 Q4 2012 $ 0.34 $ 2.02 FY 2011 FY 2012 |
16 Stephens Non-Deal Road Show March 2013 $218 $224 $360 $463 2009 2010 2011 2012 $493 $663 $850 $1,058 2009 2010 2011 2012 Strong Growth and Margin Drive Attractive Returns Sales Adjusted Gross Profit and % Margin 1 Y-o-Y Growth 5% 26% 15% (US$ in millions) Y-o-Y Growth 34% 28% 24% Y-o-Y Growth 3% 61% 29% 6.0% 5.8% 7.5% 8.3% Strong growth and continued improving profitability 18.6% 19.6% 24.1% 28.9% 2009 2010 2011 2012 $3,662 $3,846 $4,832 $5,571 2009 2010 2011 2012 13.5% 17.2% 17.6% 19.0% Adjusted EBITDA RONA 1 Adjusted EBITDA and % Margin Source: Company management; Company Filings Adjusted EBITDA RONA calculation = Adjusted EBITDA / (EOY Inventory + EOY LIFO reserve + EOY Receivables + EOY PP&E – Payables). |
17 Significant Cash Flow for Deleveraging and Growth Investments Adjusted EBITDA – Capex and % Margin Capital Structure (US$ in millions) Strong cash flows allow for continued deleveraging ($ in millions) December 31, 2012 Cash and Cash Equivalents $ 37.1 Total Debt (including current portion): Term Loan B due 2019, net of discount 642.0 Global ABL Facility due 2017 608.0 Other 6.6 Total Debt $ 1,256.6 Total Equity 1,185.9 Total Capitalization $ 2,442.5 $495 $597 $479 $695 2009 2010 2011 2012 6.4 x 5.8 x 4.1 x 2.6 x 2009 2010 2011 2012 7.8% Cumulative FCF 1 Net Leverage Free Cash Flow defined as cash from operations, less fixed asset purchases (net of disposals). 1 Stephens Non-Deal Road Show March 2013 |
18 Stephens Non-Deal Road Show March 2013 Year Over Year Results In millions, except per share data or where otherwise noted 2011 2012 Sales $ 4,832 $ 5,571 15% Adjusted gross profit 850 1,058 % Margin 17.6% 19.0% Diluted EPS $ 0.34 $ 1.22 Adjusted EBITDA $ 360 $ 463 29% % Margin 7.5% 8.3% Commentary - MRC performing strongly across end markets • Midstream is strongest and fastest growing end market. • Oil/NGL activity more than compensating for more challenging upstream natural gas trends • Chemical / industrial strong with refinery outlook improving for 2013 • Europe flat but strong Southeast Asia and Australia activity • Global Shell contract is industry first and reaffirmation of investment thesis. • MRC believes it will continue to experience above market growth. Financial Update |
19 Stephens Non-Deal Road Show March 2013 Appendix |
20 Stephens Non-Deal Road Show March 2013 December 31 ($ in millions) 2012 2011 2010 2009 Net income (loss) $ 118.0 $ 29.0 $(51.8) $(339.8) Income taxes 63.7 26.8 (23.4) (15.0) Interest expense 112.5 136.8 139.6 116.5 Write off of debt issuance costs 1.7 9.5 — — Depreciation and amortization 18.6 17.0 16.6 14.5 Amortization of intangibles 49.5 50.7 53.9 46.6 Amortization of purchase price accounting — — — 15.7 Change in fair value of derivative instruments (2.2) (7.0) 4.9 (8.9) Closed locations — — (0.7) 1.4 Share based compensation 8.5 8.4 3.7 7.8 Franchise taxes — 0.4 0.7 1.4 Loss (gain) on early extinguishment of debt 114.0 — — (1.3) Goodwill and intangibles impairment — — — 386.1 Inventory write-down — — 0.4 46.5 IT system conversion costs — — — 2.4 M&A transaction & integration expenses — 0.5 1.4 17.5 Pension settlement 4.4 — — — Legal and consulting expenses (1.2) 9.9 4.2 1.9 Joint venture termination — 1.7 — — Provision for uncollectible accounts — 0.4 (2.0) 1.0 Severance and related costs — 1.1 3.2 4.4 MRC Transmark pre-Acquisition contribution — — — 38.5 LIFO (24.1) 73.7 74.6 (115.6) Other expenses (0.2) 1.6 (1.1) (3.1) Adjusted EBITDA $ 463.2 $ 360.5 $ 224.2 $ 218.5 EBITDA Adjustments |
21 Stephens Non-Deal Road Show March 2013 December 31 ($ in millions) EBITDA $ 463.2 $ 360.5 $ 224.2 $ 218.5 AR $ 823.2 $ 791.3 $ 596.4 $ 506.2 Inventory at AC 1,121.2 1,074.2 866.8 898.5 Fixed Assets 122.5 107.4 104.7 111.5 (-) AP (438.4) (479.6) (426.6) (338.5) PSS Adjustment (28.0) — — — Total Adjusted Net Assets $ 1,600.5 $ 1,493.3 $ 1,141.3 $ 1,177.7 Inventory at LIFO 970.2 899.1 765.4 871.6 (+) LIFO reserve 151.0 175.1 101.4 26.9 Total Inventory $ 1,121.2 $ 1,074.2 $ 866.8 $ 898.5 RONA 28.9 % 24.1 % 19.6 % 18.6 % 2011 2010 2009 2012 December 31 ($ in millions) Stockholders' Equity $ 1,185.9 $ 720.8 $ 689.8 $ 743.9 Long term debt 1,256.6 1,526.7 1,360.2 1,452.6 Deferred taxes 334.5 357.2 373.7 377.9 Other liabilities 147.7 143.3 140.8 170.2 Intangible assets (1,359.7) (1,333.1) (1,366.5) (1,425.7) LIFO reserve 151.0 175.1 101.4 26.9 Other assets (50.4) (50.6) (101.9) (111.9) Cash (37.1) (46.1) (56.2) (56.2) PSS Adjustment (28.0) — — — Total Adjusted Net Assets $ 1,600.5 $ 1,493.3 $ 1,141.3 $ 1,177.7 Net income (loss) $ 118.0 $ 29.0 $(51.8) $(339.8) Stockholders' equity 1,185.9 720.8 689.8 743.9 Net income / stockholders'equity 10.0 % 4.0 % (7.5)% (45.7)% 2012 2011 2010 2009 Adjusted EBITDA RONA Calculation Total Adjusted Net Assets GAAP Reconciliation |
22 Stephens Non-Deal Road Show March 2013 December 31 ($ in millions) 2012 2011 2010 2009 Cash from operations $ 240.1 $(102.9) $ 112.7 $ 505.5 Fixed asset purchases (26.2) (18.1) (14.3) (16.7) Disposal of fixed assets 2.3 3.1 3.1 6.5 Free cash flow $ 216.2 $(117.9) $ 101.5 $ 495.3 Cummulative free cash flow $ 695.1 $ 478.9 $ 596.8 $ 495.3 December 31 ($ in millions) 2012 2011 2010 2009 Gross Profit $ 1,013.7 $ 708.2 $ 518.1 $ 548.0 Depreciation and amortization 18.6 17.0 16.6 14.5 Amortization of intangibles 49.5 50.7 53.9 46.6 (Decrease) increase in LIFO reserve (24.1) 73.7 74.6 (115.6) Adjusted Gross Profit $ 1,057.7 $ 849.6 $ 663.2 $ 493.5 Adjusted Gross Profit GAAP Reconciliation Free Cash Flow Calculation |
23 Stephens Non-Deal Road Show March 2013 FY 2012 Q4 2012 ($ in thousands, except per share data) Profit Before Taxes Tax Net Income Per Share Profit Before Taxes Tax Net Income Per Share GAAP Reported Amounts $ 181,696 $ 63,738 $ 117,958 $ 1.22 $(10,487) $(4,045) $(6,442) $(0.06) Loss on extinguishment of debt 113,961 39,886 74,075 0.76 $ 92,215 $ 32,275 $ 59,940 0.58 Write off of debt issuance costs 1,685 590 1,095 0.01 Pension settlement 4,420 1,547 2,873 0.03 4,420 1,547 2,873 0.03 Adjusted GAAP Amounts $ 301,762 $ 105,761 $ 196,001 $ 2.02 $ 86,148 $ 29,777 $ 56,371 $ 0.55 Adjusted EPS Calculation |