1 November 4, 2013 Baird’s 2013 Industrial Conference Andrew Lane Chairman, President & CEO Exhibit 99.1 |
2 Baird’s 2013 Industrial Conference November 4, 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. 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 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 Gross Profit 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 |
Company Snapshot MRO 72% Projects 28% U.S. 76% Canada 13% Europe / Asia Pacific 11% MRC is the largest global distributor of pipe, valves and fittings (PVF) to the energy industry 1. Percentage of sales for the nine months ended September 30, 2013 2. MRO revenue generated from broad based contracts covering both ongoing capital and operating needs of customers. By the Numbers Industry Sectors Product Categories Business Model 1 2013 Revenue Guidance $5.16B+ Upstream Line Pipe / OCTG Locations 400+ Countries 44+ Midstream Valves Customers 18,000+ Suppliers 18,000+ Downstream/ Industrial Fittings / Flanges SKU’s 175,000+ 3 Baird’s 2013 Industrial Conference November 4, 2013 2 |
MRC Revenue Diversification by Industry Sector Chemical 5% Gas Utility 11% Refining 7% Other / Industrial 16% Transmission 17% Drilling & Completion Tubulars 9% Production Infrastructure, Materials & Supplies 35% Note: Percentage of sales for the nine months ended September 30, 2013. Upstream 44% Downstream 28% 28% Midstream 4 Baird’s 2013 Industrial Conference November 4, 2013 |
By Product Line MRC Revenue Diversification Note: Percentage of sales for the nine months ended September 30, 2013. By Geography 5 Baird’s 2013 Industrial Conference November 4, 2013 11% 13% 24% 25% 27% Asia / Europe Canada Eastern US Western US Gulf Coast 28% 22% 21% 20% 9% Valves Fittings & Flanges Other Line Pipe OCTG 28% 22% 20% 21% 9% |
Why customers Choose Distribution & MRC Generating savings and efficiencies for our customers while enabling them to focus on their core competencies 6 Baird’s 2013 Industrial Conference November 4, 2013 Benefits of MRC Integrated Supply Chain Services Supplier Registration / Preferred Supplier List Global delivery footprint $1B+ in global inventory Global sourcing from 35+ countries Cost Savings and Efficiencies Technical Assistance / Product Recommendation Warehouse and Logistics Management Inventory Consignment / Just-in-Time Delivery Customized IT Solutions |
MRC plays a critical role in the complex, technical, global energy supply chain Long-Term Customer & Supplier Relationships CUSTOMERS SUPPLIERS 7 Baird’s 2013 Industrial Conference November 4, 2013 |
Where Our Customers Need Us To Be Leading industrial distributor of PVF globally to the energy and industrials sectors Houston, TX Edmonton, AB Bradford, UK Singapore Perth, AU 8 Baird’s 2013 Industrial Conference November 4, 2013 North America International Branches U.S. = 144+ Canada = 45+ 49+ Distribution Centers U.S.= 8 Canada = 1 U.K. = 1 Singapore = 1 Australia = 2 Netherlands = 1 Valve Automation Centers U.S. =13 Canada = 1 12 Pipe Yards U.S. = 95+ Canada = 25+ 9 |
29% 22% 49% 1. Percentage of sales for the nine months ended September 30, 2013. 9 Baird’s 2013 Industrial Conference November 4, 2013 Strategic Objectives Execute Global Preferred Supplier Contracts • 2012: North American PVF & Global Valve Contract for Shell • 2013 : • Global Celanese PVF • NiSource US MRO PVF • Williams, US PVF, Midstream • Chevron Phillips Chemical, PVF, Downstream Rebalance Product Mix to Higher Margin Items • Focus on valve and valve automation • Strengthen offerings in stainless and alloy PFF • Lowered OCTG as a percentage of inventory / sales Growth from Mergers & Acquisitions • Add product lines to complete global PVF offerings • 2012: Production Specialty Services – Permian Basin • 2013: Flow Control Products, Permian Basin – Valve & valve automation • Service customers where they spend – currently an international focus • NAWAH – Iraqi alliance Organic Growth • Target Accounts : develop the “next 75” customers • Top 25 customers represent 49% of revenue¹ All Other - 18,000+ customers Targeted Growth Accounts Top 1 - 25 Customer Mix - Revenue |
10 Baird’s 2013 Industrial Conference November 4, 2013 End Market Opportunities Global E&P Spending² 1. Percentage of sales for the nine months ended September 30, 2013. 2. Source: Barclays 2013 E&P Spending Outlook Mid Year Update. 3. Source: Pipeline Safety and Hazardous Materials Administration, Wall Street Journal, for Top 10 states by pipeline mileage. 4. Source: Industrial Info Resources: October 2013. Petroleum Refining & Chemical Processing Spend in North America 4 millions millions MRC Revenue Mix by End Market 63% Built Before 1970 37% Built After 1970 $- $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 2011A 2012A 2013E 2014E 2015E United States Canada Outside North America Upstream 44% Midstream 28% Downstream 28% $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 2012A 2013E 2014E 2015E 2016E 2017E 1 > New North American Shale Infrastructure > Aging U.S. Infrastructure and New Legislation To Drive Pipeline Replacement and Additional Automated Valve Sales³ |
Today 10 – 15 Years Ago Next 1 to 5 Years Changing PVF Energy Distribution Landscape Consolidating energy industry benefits global players Decentralized Procurement • Separate contracts by product class • PVF purchasing handled locally Centralized Procurement • Purchasing more consolidated • Contracts by end segment • Contracts cover PVF • Customers align with suppliers with size/scale • Global upstream / midstream / downstream PVF contracts Global Procurement 11 Baird’s 2013 Industrial Conference November 4, 2013 |
12 Baird’s 2013 Industrial Conference November 4, 2013 Note: Reflects reported revenues for the year of acquisition M&A - Track Record of Strategic Acquisitions • • • • Branch platforms/infrastructure for North American shale plays Global valve and valve automation Global stainless/alloys International branch platform for “super majors” E&P spend Acquisition Priorities |
13 Baird’s 2013 Industrial Conference November 4, 2013 Financial Overview |
14 Baird’s 2013 Industrial Conference November 4, 2013 Financial Metrics Sales Adjusted Gross Profit and % Margin Adjusted EBITDA and % Margin ($ in millions, except per share data) Y-o-Y Growth 61% 29% (14%) 5.8% 7.5% 8.3% 7.8% 7.5% 8.5% 7.7% Longer term revenue growth and improving profitability Y-o-Y Growth 26% 15% (6%) Diluted EPS Y-o-Y Growth NM 259% 43% Nine months ended Sept 30 $1,046 $3,846 $4,832 $5,571 $5,160 $4,264 $3,887 2010 2011 2012 2013 Guidance 2012 2013 $5,300 Nine months ended Sept 30 $663 $850 $1,058 $994 $809 $763 2010 2011 2012 2013 Guidance 2012 2013 Nine months ended Sept 30 Y-o-Y Growth 28% 24% (4%) 17.2% 17.6% 19.0% 20% 19% 19.0% 19.6% $(0.61) $0.34 $1.22 $1.65 $1.31 $1.26 2010 2011 2012 2013 Guidance 2012 2013 $ 1.85 Nine months ended Sept 30 $224 $360 $463 $385 $364 $299 2010 2011 2012 2013 Guidance 2012 2013 $415 |
15 Baird’s 2013 Industrial Conference November 4, 2013 Balance Sheet Metrics Total Debt Capital Structure Cash Flow from Operations Net Leverage ($ in millions) Strong balance sheet and cash flow Sept 30, 2013 Cash and Cash Equivalents $ 33 Total Debt (including current portion): Term Loan B due 2019, net of discount 638 Global ABL Facility due 2017 406 Total Debt $ 1,044 Total Equity 1,317 Total Capitalization $ 2,361 Nine months ended Sept 30 $1,360 $1,527 $1,257 $1,044 2010 2011 2012 Sep-13 $113 $(103) $240 $250 $66 $241 2010 2011 2012 2013 Guidance 2012 2013 $280 5.8 x 4.1 x 2.6x 2.5x 2010 2011 2012 Sep-13 |
16 Baird’s 2013 Industrial Conference November 4, 2013 Macro drivers • Growth in global energy consumption driving investment • Increased global production • Need for additional energy infrastructure • Expansion of downstream energy conversion businesses Investment Thesis Summary Leading global PVF distributor to the energy sector MRC attributes • Ability to capitalize on global energy investment across all sectors • Long term global customer & supplier relationships • Strong balance sheet |
17 Baird’s 2013 Industrial Conference November 4, 2013 Appendix |
18 Baird’s 2013 Industrial Conference November 4, 2013 Nine months ended Sept 30 December 31 ($ in millions) 2013 2012 2012 2011 2010 Net income (loss) $ 128.8 $ 124.4 $ 118.0 $ 29.0 $ (51.8) Income tax expense (benefit) 65.5 67.8 63.7 26.8 (23.4) Interest expense 46.0 92.6 112.5 136.8 139.6 (Decrease) increase in LIFO reserve (21.2) 3.1 (24.1) 73.7 74.6 Write off of debt issuance costs - 1.7 1.7 9.5 - Loss on early extinguishment of debt - 21.7 114.0 - - Depreciation and amortization 16.8 13.2 18.6 17.0 16.6 Amortization of intangibles 39.1 37.2 49.5 50.7 53.9 Change in fair value of derivative instruments (0.6) (1.8) (2.2) (7.0) 4.9 Equity based compensation expense 8.6 5.9 8.5 8.4 3.7 Executive separation expense (cash portion) 0.8 - - - - Insurance charge 2.0 - - - - Foreign currency losses (gains) 12.0 (0.5) (0.8) (0.6) 0.3 Inventory write-down - - - - 0.4 M&A transaction & integration expenses - - - 0.5 1.4 Pension settlement - - 4.4 - - Legal and consulting expenses - - - 9.9 4.2 Joint venture termination - - - 1.7 - Provision for uncollectible accounts - - - 0.4 (2.0) Severance and related costs - - - 1.1 3.2 Franchise taxes - - - 0.4 0.7 Closed locations - - - - (0.7) Other expenses 1.4 (1.2) (0.6) 2.2 (1.4) Adjusted EBITDA $ 299.2 $ 364.1 $ 463.2 $ 360.5 $ 224.2 Adjusted EBITDA Reconciliation |
19 Baird’s 2013 Industrial Conference November 4, 2013 Nine months ended Sept 30 December 31 ($ in millions) 2013 2012 2012 2011 2010 Gross Profit $ 728.8 $ 755.4 $ 1,013.7 $ 708.2 $ 518.1 Depreciation and amortization 16.8 13.2 18.6 17.0 16.6 Amortization of intangibles 39.1 37.2 49.5 50.7 53.9 (Decrease) increase in LIFO reserve (21.2) 3.1 (24.1) 73.7 74.6 Adjusted Gross Profit $ 763.5 $ 808.9 $ 1,057.7 $ 849.6 $ 663.2 Adjusted Gross Profit GAAP Reconciliation |