Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 22, 2020 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-35479 | |
Entity Registrant Name | MRC GLOBAL INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | Fulbright Tower | |
Entity Address, Address Line Two | 1301 McKinney Street, Suite 2300 | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Tax Identification Number | 20-5956993 | |
Entity Address, Postal Zip Code | 77010 | |
City Area Code | 877 | |
Local Phone Number | 294-7574 | |
Title of 12(b) Security | Common Stock, par value $0.01 | |
Trading Symbol | MRC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2020 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001439095 | |
Current Fiscal Year End Date | --12-31 | |
Common Stock [Member] | ||
Entity Common Stock, Shares Outstanding | 81,995 | |
Restricted Stock [Member] | ||
Entity Common Stock, Shares Outstanding | 74,055 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 28 | $ 32 |
Accounts receivable, net | 476 | 459 |
Inventories, net | 691 | 701 |
Other current assets | 24 | 26 |
Total current assets | 1,219 | 1,218 |
Long-term assets: | ||
Operating lease assets | 179 | 186 |
Property, plant and equipment, net | 131 | 138 |
Other assets | 19 | 19 |
Intangible assets: | ||
Goodwill, net | 480 | 483 |
Other intangible assets, net | 273 | 281 |
Total assets | 2,301 | 2,325 |
Current liabilities: | ||
Trade accounts payable | 399 | 357 |
Accrued expenses and other current liabilities | 82 | 91 |
Operating lease liabilities | 33 | 34 |
Current portion of long-term debt | 4 | 4 |
Total current liabilities | 518 | 486 |
Long-term liabilities: | ||
Long-term debt, net | 517 | 547 |
Operating lease liabilities | 161 | 167 |
Deferred income taxes | 90 | 91 |
Other liabilities | 43 | 37 |
Commitments and contingencies | ||
6.5% Series A Convertible Perpetual Preferred Stock, $0.01 par value; authorized 363,000 shares; 363,000 shares issued and outstanding | 355 | 355 |
Stockholders' equity: | ||
Common stock, $0.01 par value per share: 500 million shares authorized, 106,209,943 and 105,624,750 issued, respectively | 1 | 1 |
Additional paid-in capital | 1,730 | 1,731 |
Retained deficit | (480) | (483) |
Less: Treasury stock at cost: 24,216,330 shares | (375) | (375) |
Accumulated other comprehensive loss | (259) | (232) |
Total stockholders' equity | 617 | 642 |
Total liabilities and stockholders' equity | $ 2,301 | $ 2,325 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Condensed Consolidated Balance Sheets [Abstract] | ||
Temporary Equity, Dividend Rate, Percentage | 6.50% | 6.50% |
Temporary Equity, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Temporary Equity, Shares Authorized | 363,000 | 363,000 |
Temporary Equity, Shares Issued | 363,000 | 363,000 |
Temporary Equity, Shares Outstanding | 363,000 | 363,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 106,209,943 | 105,624,750 |
Treasury stock, shares | 24,216,330 | 24,216,330 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Condensed Consolidated Statements of Operations [Abstract] | ||
Sales | $ 794 | $ 970 |
Cost of sales | 646 | 796 |
Gross profit | 148 | 174 |
Selling, general and administrative expenses | 126 | 139 |
Operating income | 22 | 35 |
Other (expense) income: | ||
Interest expense | (8) | (11) |
Other, net | ||
Income before income taxes | 14 | 24 |
Income tax expense | 5 | 6 |
Net income | 9 | 18 |
Series A preferred stock dividends | 6 | 6 |
Net income attributable to common stockholders | $ 3 | $ 12 |
Basic income per common share | $ 0.04 | $ 0.14 |
Diluted income per common share | $ 0.04 | $ 0.14 |
Weighted-average common shares, basic | 81.7 | 84.3 |
Weighted-average common shares, diluted | 82.4 | 85.3 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Condensed Consolidated Statements of Comprehensive Income [Abstract] | ||
Net income | $ 9 | $ 18 |
Other comprehensive (loss) income | ||
Foreign currency translation adjustments | (21) | 3 |
Hedge accounting adjustments, net of tax | (6) | (2) |
Total other comprehensive (loss) income, net of tax | (27) | 1 |
Comprehensive (loss) income | $ (18) | $ 19 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained (Deficit) [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive (Loss) [Member] | Total |
Balance at Dec. 31, 2018 | $ 1 | $ 1,721 | $ (498) | $ (300) | $ (232) | $ 692 |
Balance (shares) at Dec. 31, 2018 | 105,000,000 | 19,000,000 | ||||
Net income | 18 | 18 | ||||
Foreign currency translation adjustments | 3 | 3 | ||||
Hedge accounting adjustments | (2) | (2) | ||||
Shares withheld for taxes | (6) | (6) | ||||
Equity-based compensation expense | 4 | 4 | ||||
Dividends declared on preferred stock | (6) | (6) | ||||
Purchase of common stock | $ (25) | $ (25) | ||||
Purchase of common stock, shares | (2,000,000) | (1,758,537) | ||||
Balance at Mar. 31, 2019 | $ 1 | 1,719 | (486) | $ (325) | (231) | $ 678 |
Balance (shares) at Mar. 31, 2019 | 105,000,000 | 21,000,000 | ||||
Balance at Dec. 31, 2019 | $ 1 | 1,731 | (483) | $ (375) | (232) | 642 |
Balance (shares) at Dec. 31, 2019 | 106,000,000 | 24,000,000 | ||||
Net income | 9 | 9 | ||||
Foreign currency translation adjustments | (21) | (21) | ||||
Hedge accounting adjustments | (6) | (6) | ||||
Shares withheld for taxes | (3) | (3) | ||||
Equity-based compensation expense | 2 | 2 | ||||
Dividends declared on preferred stock | (6) | (6) | ||||
Purchase of common stock | ||||||
Purchase of common stock, shares | ||||||
Balance at Mar. 31, 2020 | $ 1 | $ 1,730 | $ (480) | $ (375) | $ (259) | $ 617 |
Balance (shares) at Mar. 31, 2020 | 106,000,000 | 24,000,000 | 81,993,613 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating activities | ||
Net income | $ 9 | $ 18 |
Adjustments to reconcile net income to net cash provided by (used in) operations: | ||
Depreciation and amortization | 5 | 5 |
Amortization of intangibles | 7 | 11 |
Equity-based compensation expense | 2 | 4 |
Deferred income tax benefit | 1 | 1 |
(Decrease) increase in LIFO reserve | (3) | |
Provision for uncollectible accounts | 6 | 2 |
Other | 1 | 2 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (33) | (47) |
Inventories | (4) | (42) |
Other current assets | 2 | 8 |
Accounts payable | 49 | 27 |
Accrued expenses and other current liabilities | (5) | (29) |
Net cash provided by (used in) operations | 37 | (40) |
Investing activities | ||
Purchases of property, plant and equipment | (2) | (2) |
Net cash used in investing activities | (2) | (2) |
Financing activities | ||
Payments on revolving credit facilities | (228) | (256) |
Proceeds from revolving credit facilities | 205 | 319 |
Payments on long-term obligations | (4) | (1) |
Purchase of common stock | (25) | |
Dividends paid on preferred stock | (6) | (6) |
Repurchases of shares to satisfy tax withholdings | (3) | (6) |
Other | 1 | |
Net cash (used in) provided by financing activities | (36) | 26 |
Decrease in cash | (1) | (16) |
Effect of foreign exchange rate on cash | (3) | |
Cash -- beginning of period | 32 | 43 |
Cash -- end of period | 28 | 27 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 8 | 10 |
Cash paid for income taxes | $ 1 | $ 5 |
Background and Basis of Present
Background and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Background and Basis of Presentation [Abstract] | |
Background and Basis of Presentation | NOTE 1 – BACKGROUND AND BASIS OF PRESENTATION Business Operations : MRC Global Inc. is a holding company headquartered in Houston, Texas. Our wholly owned subsidiaries are global distributors of pipe, valves, fittings (“PVF”) and related infrastructure products and services across each of the upstream production (exploration, production and extraction of underground oil and gas), midstream pipeline (gathering and transmission of oil and gas ) , gas utilities ( gas utilities and the storage and distribution of oil and gas) and downstream and industrial (crude oil refining and petrochemical and chemical processing and general industrials ) sectors. We have branches in principal industrial, hydrocarbon producing and refining areas throughout the United States, Canada, Europe, Asia , Australasia , the Middle East and Caspian . We obtain products from a broad range of suppliers. Basis of Presentation : We have prepared our unaudited condensed consolidated financial statements in accordance with Rule 10-01 of Regulation S-X for interim financial statements. These statements do not include all information and footnotes that generally accepted accounting principles require for complete annual financial statements. However, the information in these statements reflects all normal recurring adjustments which are, in our opinion, necessary for a fair presentation of the results for the interim periods. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2020 . We have derived our condensed consolidated balance sheet as of December 31, 2019 from the audited consolidated financial statements for the year ended December 31, 2019. You should read these condensed consolidated financial statements in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2019. The consolidated financial statements include the accounts of MRC Global Inc. and its wholly owned and majority owned subsidiaries (collectively referred to as the “Company” or by such terms as “we,” “our” or “us”). All material intercompany balances and transactions have been eliminated in consolidation. Recent Issued Accounting Pronouncements : In March 2020, the Financial Accounting Standards Board (“ FASB ”) issued Accounting Standards Update (“ ASU ”) 2020-04, Reference Rate Reform (Topic 848) (" AS U 2020-04"), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate ("LIBOR") or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impacts of the the provisions of ASU 2020- 04 on our consolidated financial statements . In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , an update intended to simplify various aspects related to accounting for income taxes. This guidance removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. This accounting standards update will be effective for annual and interim financial statement periods beginning after December 15, 2020 , with early adoption permitted. We are currently evaluating the impact of this accounting standards update, but do not expect the adoption to materially impact our consolidated financial statements. Adoption of New Accounting Standards : In June 2016, the FAS B issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments , which requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. We adopted ASU 2016-13 on January 1, 2020. The adoption of this new standard resulted in the recognition of $ 1 million of incremental bad debt expense in the three months ended March 31, 2020. Valuation of Goodwill and Indefinite-Lived Intangibles : We apply a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis (as of October 1) and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. Our October 2019 quantitative impairment tests for goodwill and indefinite-lived intangible assets indicated there was no impairment as the fair value of each of our reporting units and indefinite-lived intangible assets exceeded carrying value by a significant margin, with the exception of our International reporting unit for which the excess was approximately 20 %. As a result of our reduced forecasts and the significant decline in our market capitalization as a result of the coronavirus disease 2019 (“COVID-19”) pandemic, we qualitatively assessed whether it was more likely than not our goodwill or indefinite-lived intangible assets were impaired as of March 31, 2020. We reviewed our previous forecasts and assumptions based on our current projections that are subject to various risks and uncertainties, including: (1) forecasted revenues, expenses and cash flows, including the duration and extent of impact to our business from the COVID-19 pandemic, (2) current discount rates, (3) the reduction in our market capitalization, and (4) control premiums on observable market conditions. Based on our qualitative assessment, we concluded that our goodwill and indefinite-lived intangible assets were not impaired as of March 31, 2020. However, we are unable to predict how long current market conditions will persist, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on our business. To the extent we are unable to conclude in a future period that it is more likely than not our goodwill and indefinite-lived intangible assets are not impaired, we would be required to perform a full quantitative impairment test, the results of which could require recognition of an impairment charge in future periods. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2020 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | NOTE 2 – REVENUE RECOGNITION R evenue is recognized when control of promised goods or services is transferred to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Substantially all of our revenue is recognized when products are shipped or delivered to our customers, and payment is due from our customers at the time of billing with a majority of our customers having 30 - day terms. Returns are estimated and recorded as a reduction of revenue. A mounts received in advance of shipment are deferred and recognized when the performance obligations are satisfied . Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and , therefore , are excluded from sales in the accompanying consolidated statements of operations. Cost of sales includes the cost of inventory sold and related items, such as vendor rebates, inventory allowances and reserves and shipping and handling costs associated with inbound and outbound freight, as well as depreciation and amortization and amortization of intangible assets. In some cases, particularly with third-party pipe shipments, shipping and handling costs are considered separate performance obligations, and as such, the revenue and cost of sales are recorded when the performance obligation is fulfilled. Our contracts with customers ordinarily involve performance obligations that are one year or less. Therefore, we have applied the optional exemption that permits the omission of information about our unfulfilled performance obligation s as of the balance sheet dates . Contract Balances : Variations in the timing of revenue recognition, invoicing and receipt of payment result in categories of assets and liabilities that include invoiced accounts receivable , uninvoiced accounts receivable , contract assets and deferred revenue (contract liabilities) on the consolidated balance sheet s . Generally, revenue recognition and invoicing occur simultaneous ly as we transfer control of promised goods or services to our customers. We consider contract assets to be accounts receivable when we have an unconditional right to consideration and only the passage of time is required before payment is due. In certain cases, particularly those involving customer-specific documentation requirements, invoicing is delayed until we are able to meet the documentation requirements . In these cases, we recognize a contract asset separate from accounts receivable until those requirements are met, and we are able to invoice the customer. Our contract asset balance associated with these requirements, as of March 31, 2020 and Decembe r 31, 201 9, was $ 21 million and $ 26 million, respectively. These contract asset balances are included within accounts receivable in the accompanying consolidated balance sheets. We record contract liabilities, or deferred revenue , when cash payments are received from customers in advance of our performance, including amounts which are refundable. The deferred revenue balance at March 31, 2020 and December 3 1, 201 9 was $ 5 million and $ 4 million, respectively. During the three months ended March 31, 2020 and 2019, we recognized $ 2 million and $ 5 million of revenue that was deferred as of December 31, 2019 and 2018, respectively. Deferred revenue balances are included within accrued expenses and other current liabilities in the accompanying consolidated balance sheets. Disaggregated Revenue : Our disaggregated revenue represent s our business of selling PVF to the energy sector across each of the upstream production (exploration, production and extraction of underground oil and gas), midstream pipeline (gathering and transmission of oil and gas ) , gas utilities and downstream and industrial (crude oil refining and petrochemical and chemical processing and general industrials ) sectors in each of our reportable segments . Each of our end markets and geographical reportable segments are impacted and influenced by varying factors, including macroeconomic environment, commodity prices, maintenance and capital spending, and exploration and production activity. As such, we believe that this information is important in depicting the nature, amount, timing and uncertainty of our contracts with customers. The following table presents our revenue disaggregated by revenue source (in millions): Three Months Ended March 31, U.S. Canada International Total 2020: Upstream production $ 139 $ 37 $ 46 $ 222 Midstream pipeline 110 4 5 119 Gas utilities 199 3 - 202 Downstream & industrial 190 6 55 251 $ 638 $ 50 $ 106 $ 794 2019: Upstream production $ 206 $ 46 $ 60 $ 312 Midstream pipeline 133 6 8 147 Gas utilities 204 10 - 214 Downstream & industrial 236 6 55 297 $ 779 $ 68 $ 123 $ 970 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventories [Abstract] | |
Inventories | NOTE 3 – INVENTORIES The com position of our inventory is as follows (in millions ) : March 31, December 31, 2020 2019 Finished goods inventory at average cost: Valves, automation, measurement and instrumentation $ 355 $ 355 Carbon steel pipe, fittings and flanges 246 268 All other products 277 268 878 891 Less: Excess of average cost over LIFO cost (LIFO reserve) ( 152 ) ( 155 ) Less: Other inventory reserves ( 35 ) ( 35 ) $ 691 $ 701 The Company uses the last-in, first-out ( “ LIFO ” ) method of valuing U.S. inventories. The use of the LIFO method has the effect of reducing net income during periods of rising inventory costs (inflationary periods) and increasing net income during periods of falling inventory costs (deflationary periods). Valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination . Our inventory quantities are expected to be reduced for the current year, resulting in a liquidation of a LIFO inventory layer that was carried at a lower cost prevailing from a prior year, as compared with current costs in the current year (a “LIFO decrement”). A LIFO decrement results in the erosion of layers created in earlier years, and, therefore, a LIFO layer is not created for years that have decrements. For the three months ended March 31, 2020, the effect of this LIFO decrement decreased cost of sales by approximately $ 3 million. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | NOTE 4 – LEASES We lease certain distribution centers, warehouses, office space, land and equipment. Substantially all of these leases are classified as operating leases. We recognize lease expense on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Many of our facility leases include one or more options to renew, with renewal terms that can extend the lease term from one year to 15 years with a maximum lease term of 30 years, including renewals. The exercise of lease renewal options is at our sole discretion; therefore, renewals to extend the terms of most leases are not included in our right of use (“ROU”) assets and lease liabilities as they are not reasonably certain of exercise. In the case of our regional distribution centers and certain corporate offices, where the renewal is reasonably certain of exercise, we include the renewal period in our lease term. Leases with escalation adjustments based on an index, such as the consumer price index, are expensed based on current rates. Leases with specified escalation steps are expensed based on the total lease obligation ratably over the life of the lease. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Non-lease components, such as payment of real estate taxes, maintenance, insurance and other operating expenses, have been excluded from the determination of our lease liability. As most of our leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments using a portfolio approach. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Expense associated with our operating leases was $ 10 million for the three months ended March 31, 2020 and 2019, which is classified in selling, general and administrative expenses. Cash paid for leases recognized as liabilities was $ 11 million for the three months ended March 31, 2020 and 2019. The maturity of lease liabilities is as follows (in millions): Maturity of Operating Lease Liabilities Remainder of 2020 $ 30 2021 35 2022 27 2023 21 2024 17 After 2024 192 Total lease payments 322 Less: Interest ( 128 ) Present value of lease liabilities $ 194 Amounts maturing after 2024 include expected renewals for leases of regional distribution centers and certain corporate offices through dates up to 2049. The term and discount rate associated with leases are as follows: March 31, Operating Lease Term and Discount Rate 2020 Weighted-average remaining lease term (years) 14 Weighted-average discount rate 7.0 % |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2020 | |
Long-Term Debt [Abstract] | |
Long-Term Debt | NOTE 5 – LONG-TERM DEBT The components of our long-term debt are as follows (in millions ): March 31, December 31, 2020 2019 Senior Secured Term Loan B, net of discount and issuance costs of $ 2 $ 386 $ 390 Global ABL Facility 135 161 521 551 Less: Current portion ( 4 ) ( 4 ) $ 517 $ 547 Senior Secured Term Loan B : We have a Senior Secured Term Loan B (the “Term Loan”) with an original principal amount of $ 400 million, which amortizes in equal quarterly installments of 1 % per year with the balance payable in September 2024, when the facility matures. The Term Loan has an applicable interest rate margin of 300 basis points in the case of loans incurring interest based on LIBOR, and 200 basis points in the case of loans incurring interest based on the base rate. The Term Loan allows for incremental increases in facility size by up to an aggregate of $ 200 million, plus an additional amount such that the Company’s first lien leverage ratio (as defined under the Term Loan) would not exceed 4.00 to 1.00. MRC Global (US) Inc. is the borrower under this facility, which is guaranteed by MRC Global Inc. as well as all of its wholly owned U.S. subsidiaries. In addition, it is secured by a second lien on the assets securing our Global ABL Facility , defined below, (which includes accounts receivable and inventory) and a first lien on substantially all of the other assets of MRC Global Inc. and those of its U.S. subsidiaries, as well as a pledge of all of the capital stock of our domestic subsidiaries and 65 % of the capital stock of first tier, non-U.S. subsidiaries. We are required to repay the Term Loan with certain asset sales and insurance proceeds. In addition, on an annual basis, we are required to repay an amount equal to 50 % of excess cash flow, as defined in the Term Loan, reducing to 25 % if our first lien leverage ratio is no more than 2.75 to 1.00. No payment of excess cash flow is required if the first lien leverage ratio is less than or equal 2.50 to 1.00. In addition, the Term Loan contains a number of customary restrictive covenants. In March 2019, we purchased and retired $ 3 million of the outstanding interests in the Term Loan at a cost of $ 2 million. We recognized a gain of $ 1 million on the extinguishment of the debt in the three months ended March 31, 2020. Global ABL Facility : We have an $ 800 million multi-currency asset-based revolving credit (the “Global ABL Facility”) that matures in September 2022. This facility is comprised of revolver commitments of $ 675 million in the United States, $ 65 million in Canada, $ 18 million in Norway, $ 15 million in Australia, $ 13 million in the Netherlands, $ 7 million in the United Kingdom and $ 7 million in Belgium. It contains an accordion feature that allows us to increase the principal amount of the facility by up to $ 200 million, subject to securing additional lender commitments. MRC Global Inc. and each of its current and future wholly owned material U.S. subsidiaries guarantee the obligations of our borrower subsidiaries under the Global ABL Facility. Additionally, each of our non-U.S. borrower subsidiaries guarantees the obligations of our other non-U.S. borrower subsidiaries under the Global ABL Facility. Outstanding obligations are generally secured by a first priority security interest in accounts receivable and inventory. Availability is dependent on a borrowing base comprised of a percentage of eligible accounts receivable and inventory which is subject to redetermination from time to time. Excess Availability, as defined under our Global ABL Facility and adjusted for the pro forma effect of an inventory appraisal completed in April 2020 , was $ 437 million as of March 31, 2020. Interest on Borrowings : The interest rates on our borrowings outstanding at March 31, 2020 and December 31, 2019, including a floating to fixed interest rate swap and amortization of debt issuance costs, are as set forth below: March 31, December 31, 2020 2019 Senior Secured Term Loan B 5.22 % 5.50 % Global ABL Facility 2.55 % 3.47 % Weighted average interest rate 4.52 % 4.91 % |
Redeemable Preferred Stock
Redeemable Preferred Stock | 3 Months Ended |
Mar. 31, 2020 | |
Redeemable Preferred Stock [Abstract] | |
Redeemable Preferred Stock | NOTE 6 – REDEEMABLE PREFERRED STOCK Preferred Stock Issuance In June 2015, we issued 363,000 shares of Series A Convertible Perpetual Preferred Stock (the “Preferred Stock”) and received gross proceeds of $ 363 million. The Preferred Stock ranks senior to our common stock with respect to dividend rights and rights on liquidation, winding-up and dissolution. The Preferred Stock has a stated value of $ 1,000 per share, and holders of Preferred Stock are entitled to cumulative dividends payable quarterly in cash at a rate of 6.50 % per annum. In June 2018, the holders of Preferred Stock designated one member to our Board of Directors. If we fail to declare and pay the quarterly dividend for an amount equal to six or more dividend periods, the holders of the Preferred Stock would be entitled to designate an additional member to our Board of Directors. Holders of Preferred Stock are entitled to vote together with the holders of the common stock as a single class, in each case, on an as-converted basis, except where a separate class vote of the common stockholders is required by law. Holders of Preferred Stock have certain limited special approval rights, including with respect to the issuance of pari passu or senior equity securities of the Company. The Preferred Stock is convertible at the option of the holders into shares of common stock at an initial conversion rate of 55.9284 shares of common stock for each share of Preferred Stock, which represents an initial conversion price of $ 17.88 per share of common stock, subject to adjustment. On or after June 10, 2020 , the Company will have the option to redeem, in whole but not in part, all the outstanding shares of Preferred Stock at 105 % of par value , subject to certain redemption price adjustments. We may elect to convert the Preferred Stock, in whole but not in part, into the relevant number of shares of common stock if the last reported sale price of the common stock has been at least 150 % of the conversion price then in effect for a specified period. The conversion rate is subject to customary anti-dilution and other adjustments. Holders of the Preferred Stock may, at their option, require the Company to repurchase their shares in the event of a fundamental change, as defined in the agreement. The repurchase price is based on the original $ 1,000 per share purchase price except in the case of a liquidation in which case they would receive the greater of $ 1,000 per share and the amount that would be received if they held common stock converted at the conversion rate in effect at the time of the fundamental change. Because this feature could require redemption as a result of the occurrence of an event not solely within the control of the Company, the Preferred Stock is classified as temporary equity on our balance sheet. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | NOTE 7 – STOCKHOLDERS’ EQUITY Share Repurchase Program From time to time, the Company’s board of directors has authorized repurchase programs for shares of the Company’s common stock. As of March 31, 20 20 , there were no remaining authorizations outstanding under these programs. There were 81,993,613 shares of common stock outstanding as of March 31, 20 20 . The following table summarizes the share repurchase activity: Three Months Ended March 31, March 31, 2020 2019 Number of shares acquired on the open market - 1,758,537 Average price per share $ - $ 14.24 Total cost of acquired shares (in millions) $ - $ 25 Equity Compensation Plans Our 2011 Omnibus Incentive Plan originally had 3,250,000 shares reserved for issuance under the plan. In both April 2015 and 2019, our shareholders approved an additional 4,250,000 and 2,500,000 shares, respectively, for reservation for issuance under the plan. The plan permits the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based and cash-based awards. Since the adoption of the 2011 Omnibus Incentive Plan, the Company’s Board of Directors has periodically granted stock options , restricted stock awards, restricted stock units and performance share units to directors and employees , but no other types of awards have been granted under the plan. Options and stock appreciation rights may not be granted at prices less than the fair market value of our common stock on the date of the grant, nor for a term exceeding ten year s. For employees, vesting generally occurs over a three year to five year period on the anniversaries of the date specified in the employees’ respective agreement s , subject to accelerated vesting under certain circumstances set forth in the agreements. Vesting for directors generally occurs on the on e y ear anniversary of the grant date . In 2020 , 336,325 performance share unit awards and 696,777 shares of restricted stock units have been granted to employees . To date , 8,744,461 shares have been granted under this plan. A Black-Scholes option-pricing model is used to estimate the fair value of the stock options. A Monte Carlo simulation is completed to estimate the fair value of performance share unit awards with a stock price performance component. We expense the fair value of all equity grants , including performance share unit awards, on a straight-line basis over the vesting period. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss in the accompanying consolidated balance sheets consists of the following (in millions): March 31, December 31, 2020 2019 Foreign currency translation adjustments $ ( 245 ) $ ( 224 ) Hedge accounting adjustments ( 13 ) ( 7 ) Pension related adjustments ( 1 ) ( 1 ) Accumulated other comprehensive loss $ ( 259 ) $ ( 232 ) Earnings per Share Earnings per share are calculated in the table below (in millions , except per share amounts) : Three Months Ended March 31, March 31, 2020 2019 Net income $ 9 $ 18 Less: Dividends on Series A Preferred Stock 6 6 Net income attributable to common stockholders $ 3 $ 12 Weighted average basic shares outstanding 81.7 84.3 Effect of dilutive securities 0.7 1.0 Weighted average diluted shares outstanding 82.4 85.3 Net income per share: Basic $ 0.04 $ 0.14 Diluted $ 0.04 $ 0.14 Equity awards and shares of Preferred Stock are disregarded in the calculation of diluted earnings per share if they are determined to be anti-dilutive. For the three months ended March 31, 2020 and 2019, all of the shares of the Preferred Stock were anti-dilutive. We had approximately 3.4 million and 2.6 million anti-dilutive stock options , restricted units and performance units for the three months ended March 31, 2020 and 2019, respectively . |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Information [Abstract] | |
Segment, Geographic and Product Line Information | NOTE 8 – SEGMENT INFORMATION Our business is comprised of three operating and reportable segments : U.S. , Canada and International. Our International segment consists of our operations outside of the U.S. and Canada. These segments represent our business of selling PVF to the energy sector across each of the upstream production (exploration, production and extraction of underground oil and gas), midstream pipeline (gathering and transmission of oil and gas ) , gas utilities and downstream and industrial (crude oil refining and petrochemical and chemical processing and general industrials ) sectors. The following table presents financial information for each reportable segment (in millions): Three Months Ended March 31, March 31, 2020 2019 Sales U.S. $ 638 $ 779 Canada 50 68 International 106 123 Consolidated sales $ 794 $ 970 Operating income U.S. $ 18 $ 32 Canada - - International 4 3 Total operating income 22 35 Interest expense ( 8 ) ( 11 ) Other, net - - Income before income taxes $ 14 $ 24 March 31, December 31, 2020 2019 Total assets U.S. $ 1,913 $ 1,915 Canada 95 91 International 293 319 Total assets $ 2,301 $ 2,325 Our sales by product line are as follows (in millions ): Three Months Ended March 31, March 31, Type 2020 2019 Line pipe $ 100 $ 154 Carbon fittings and flanges 115 153 Total carbon pipe, fittings and flanges 215 307 Valves, automation, measurement and instrumentation 323 383 Gas products 134 133 Stainless steel and alloy pipe and fittings 37 50 General products 85 97 $ 794 $ 970 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | NOTE 9 – FAIR VALUE MEASUREMENTS From time to time, we use derivative financial instruments to help manage our exposure to interest rate risk and fluctuations in foreign currencies. Interest Rate Swap : In March 2018, we entered into a five year interest rate swap that became effective on March 31, 2018, with a notional amount of $ 250 million from which the Company will receive payments at 1-month LIBOR and make monthly payments at a fixed rate of 2.7145 % with settlement and reset dates on or near the last business day of each month until maturity. The fair value of the swap at inception was zero . We have designated the interest rate swap as an effective cash flow hedge utilizing the guidance under ASU 2017-12. As such, the valuation of the interest rate swap is recorded as an asset or liability, and the gain or loss on the derivative is recorded as a component of other comprehensive income. I nterest rate swap agreements are reported on the accompanying balance sheets at fair value utilizing observable Level 2 inputs such as yield curves and other market-based factors. We obtain dealer quotations to value our interest rate swap agreements. The fair value of our interest rate swap is estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows at current market interest rates. The fair value of the interest rate swap was a liability of $ 17 million and $ 9 million as of March 31, 2020 and December 31, 2019, respectively. Foreign Exchange Forward Contracts : Foreign exchange forward contracts are reported at fair value utilizing Level 2 inputs, as the fair value is based on broker quotes for the same or similar derivative instruments. O ur foreign exchange derivative instruments are freestanding , have not been designated as hedges and, accordingly, changes in their fair market value are recorded in earnings. The total notional amount of our forward foreign exchange contracts and options was approximately $ 19 million and $ 21 million at March 31, 2020 and December 31, 2019, respectively. The fair value of our foreign exchange contracts was not material as of March 31, 2020 and December 31, 201 9. With the exception of long-term debt, the fair values of our financial instruments, including cash and cash equivalents, accounts receivable, trade accounts payable and accrued liabilities approximate carrying value. The carrying value of our debt was $ 521 million and $ 551 m illion at March 31, 2020 and December 31, 2019, respectively. We estimate the fair value of the Term Loan using Level 2 inputs, or quoted market prices. The fair value of our debt was $ 447 million and $ 554 million at March 31, 2020 and December 31, 2019 respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | NOTE 10 – COMMITMENTS AND CONTINGENCIES Litigation As bestos Claims. We are one of many defendants in lawsuits that plaintiffs have brought seeking damages for personal injuries that exposure to asbestos allegedly caused. Plaintiffs and their family members have brought these lawsuits against a large volume of defendant entities as a result of the defendants’ manufacture, distribution, supply or other involvement with asbestos, asbestos containing-products or equipment or activities that allegedly caused plaintiffs to be exposed to asbestos. These plaintiffs typically assert exposure to asbestos as a consequence of third-party manufactured products that our MRC Global (US) Inc. subsidiary purportedly distributed. As of March 31, 2020 , we are named a defendant in approximately 591 l awsuits involving approximately 1,167 claims. No asbestos lawsuit has resulted in a judgment against us to date, with a majority being settled, dismissed or otherwise resolved. Applicable third-party insurance has substantially covered these claims, and insurance should continue to cover a substantial majority of existing and anticipated future claims. Accordingly, we have recorded a liability for our estimate of the most likely settlement of asserted claims and a related receivable from insurers for our estimated recovery, to the extent we believe that the amounts of recovery are probable. It is not possible to predict the outcome of these claims and proceedings. However, in our opinion, th e likelihood that the ultimate disposition of any of these claims and legal proceeding s will have a material adverse effect on our consolidated financial statements is remote . Other Legal Claims and Proceedings. From time to time, we have been subject to various claims and involved in legal proceedings incidental to the nature of our businesses. We maintain insurance coverage to reduce financial risk associated with certain of these claims and proceedings. It is not possible to predict the outcome of these claims and proceedings. However, in our opinion, th e likelihood that the ultimate disposition of any of these claims and legal proceeding s will have a material adverse effect on our consolidated financial statements is remote. Product Claims. From time to time, in the ordinary course of our business, our customers may claim that the products that we distribute are either defective or require repair or replacement under warranties that either we or the manufacturer may provide to the customer. These proceedings are, in the opinion of management, ordinary and routine matters incidental to our normal business. Our purchase orders with our suppliers generally require the manufacturer to indemnify us against any product liability claims, leaving the manufacturer ultimately responsible for these claims. In many cases, state, provincial or foreign law provides protection to distributors for these sorts of claims, shifting the responsibility to the manufacturer. In some cases, we could be required to repair or replace the products for the benefit of our customer and seek our recovery from the manufacturer for our expense. In our opinion, th e likelihood that the ultimate disposition of any of these claims and legal proceeding s will have a material adverse effect on our consolidated financial statements is remote . Customer Contracts We have contracts and agreements with many of our customers that dictate certain terms of our sales arrangements (pricing, deliverables, etc.). While we make every effort to abide by the terms of these contracts, certain provisions are complex and often subject to varying interpretations. Under the terms of these contracts, our customers have the right to audit our adherence to the contract terms. Historically, any settlements that have resulted from these customer audits have not been material to our consolidated financial statements. Purchase Commitments We ha v e purchase obligations consisting primarily of inventory purchases made in the normal course of business to meet operating needs. While our vendors often allow us to cancel these purchase orders without penalty, in certain cases, cancellations may subject us to cancellation fees or penalties depending on the terms of the contract . |
Background and Basis of Prese_2
Background and Basis of Presentation (Policy) | 3 Months Ended |
Mar. 31, 2020 | |
Background and Basis of Presentation [Abstract] | |
Business Operations | Business Operations : MRC Global Inc. is a holding company headquartered in Houston, Texas. Our wholly owned subsidiaries are global distributors of pipe, valves, fittings (“PVF”) and related infrastructure products and services across each of the upstream production (exploration, production and extraction of underground oil and gas), midstream pipeline (gathering and transmission of oil and gas ) , gas utilities ( gas utilities and the storage and distribution of oil and gas) and downstream and industrial (crude oil refining and petrochemical and chemical processing and general industrials ) sectors. We have branches in principal industrial, hydrocarbon producing and refining areas throughout the United States, Canada, Europe, Asia , Australasia , the Middle East and Caspian . We obtain products from a broad range of suppliers. |
Basis of Presentation | Basis of Presentation : We have prepared our unaudited condensed consolidated financial statements in accordance with Rule 10-01 of Regulation S-X for interim financial statements. These statements do not include all information and footnotes that generally accepted accounting principles require for complete annual financial statements. However, the information in these statements reflects all normal recurring adjustments which are, in our opinion, necessary for a fair presentation of the results for the interim periods. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2020 . We have derived our condensed consolidated balance sheet as of December 31, 2019 from the audited consolidated financial statements for the year ended December 31, 2019. You should read these condensed consolidated financial statements in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2019. The consolidated financial statements include the accounts of MRC Global Inc. and its wholly owned and majority owned subsidiaries (collectively referred to as the “Company” or by such terms as “we,” “our” or “us”). All material intercompany balances and transactions have been eliminated in consolidation. |
Adoption of New Accounting Standards and Recently Issued Accounting Standards | Recent Issued Accounting Pronouncements : In March 2020, the Financial Accounting Standards Board (“ FASB ”) issued Accounting Standards Update (“ ASU ”) 2020-04, Reference Rate Reform (Topic 848) (" AS U 2020-04"), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate ("LIBOR") or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impacts of the the provisions of ASU 2020- 04 on our consolidated financial statements . In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , an update intended to simplify various aspects related to accounting for income taxes. This guidance removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. This accounting standards update will be effective for annual and interim financial statement periods beginning after December 15, 2020 , with early adoption permitted. We are currently evaluating the impact of this accounting standards update, but do not expect the adoption to materially impact our consolidated financial statements. Adoption of New Accounting Standards : In June 2016, the FAS B issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments , which requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. We adopted ASU 2016-13 on January 1, 2020. The adoption of this new standard resulted in the recognition of $ 1 million of incremental bad debt expense in the three months ended March 31, 2020. |
Valuation of Goodwill and Indefinite-Lived Intangibles | Valuation of Goodwill and Indefinite-Lived Intangibles : We apply a fair value-based impairment test to the carrying value of goodwill and indefinite-lived intangible assets on an annual basis (as of October 1) and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. Our October 2019 quantitative impairment tests for goodwill and indefinite-lived intangible assets indicated there was no impairment as the fair value of each of our reporting units and indefinite-lived intangible assets exceeded carrying value by a significant margin, with the exception of our International reporting unit for which the excess was approximately 20 %. As a result of our reduced forecasts and the significant decline in our market capitalization as a result of the coronavirus disease 2019 (“COVID-19”) pandemic, we qualitatively assessed whether it was more likely than not our goodwill or indefinite-lived intangible assets were impaired as of March 31, 2020. We reviewed our previous forecasts and assumptions based on our current projections that are subject to various risks and uncertainties, including: (1) forecasted revenues, expenses and cash flows, including the duration and extent of impact to our business from the COVID-19 pandemic, (2) current discount rates, (3) the reduction in our market capitalization, and (4) control premiums on observable market conditions. Based on our qualitative assessment, we concluded that our goodwill and indefinite-lived intangible assets were not impaired as of March 31, 2020. However, we are unable to predict how long current market conditions will persist, what additional measures may be introduced by governments or private parties or what effect any such additional measures may have on our business. To the extent we are unable to conclude in a future period that it is more likely than not our goodwill and indefinite-lived intangible assets are not impaired, we would be required to perform a full quantitative impairment test, the results of which could require recognition of an impairment charge in future periods. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue Recognition [Abstract] | |
Summary of Revenue Disaggregation | Three Months Ended March 31, U.S. Canada International Total 2020: Upstream production $ 139 $ 37 $ 46 $ 222 Midstream pipeline 110 4 5 119 Gas utilities 199 3 - 202 Downstream & industrial 190 6 55 251 $ 638 $ 50 $ 106 $ 794 2019: Upstream production $ 206 $ 46 $ 60 $ 312 Midstream pipeline 133 6 8 147 Gas utilities 204 10 - 214 Downstream & industrial 236 6 55 297 $ 779 $ 68 $ 123 $ 970 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventories [Abstract] | |
Composition of Inventory | March 31, December 31, 2020 2019 Finished goods inventory at average cost: Valves, automation, measurement and instrumentation $ 355 $ 355 Carbon steel pipe, fittings and flanges 246 268 All other products 277 268 878 891 Less: Excess of average cost over LIFO cost (LIFO reserve) ( 152 ) ( 155 ) Less: Other inventory reserves ( 35 ) ( 35 ) $ 691 $ 701 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Maturity of Operating Lease Liabilities | Maturity of Operating Lease Liabilities Remainder of 2020 $ 30 2021 35 2022 27 2023 21 2024 17 After 2024 192 Total lease payments 322 Less: Interest ( 128 ) Present value of lease liabilities $ 194 |
Operating Lease Term and Discount Rate | March 31, Operating Lease Term and Discount Rate 2020 Weighted-average remaining lease term (years) 14 Weighted-average discount rate 7.0 % |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Long-Term Debt [Abstract] | |
Components of Long-Term Debt | March 31, December 31, 2020 2019 Senior Secured Term Loan B, net of discount and issuance costs of $ 2 $ 386 $ 390 Global ABL Facility 135 161 521 551 Less: Current portion ( 4 ) ( 4 ) $ 517 $ 547 |
Interest on Borrowings | March 31, December 31, 2020 2019 Senior Secured Term Loan B 5.22 % 5.50 % Global ABL Facility 2.55 % 3.47 % Weighted average interest rate 4.52 % 4.91 % |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity [Abstract] | |
Summary of Share Repurchase Activity | The following table summarizes the share repurchase activity: Three Months Ended March 31, March 31, 2020 2019 Number of shares acquired on the open market - 1,758,537 Average price per share $ - $ 14.24 Total cost of acquired shares (in millions) $ - $ 25 |
Accumulated Other Comprehensive Loss in Accompanying Consolidated Balance Sheets | March 31, December 31, 2020 2019 Foreign currency translation adjustments $ ( 245 ) $ ( 224 ) Hedge accounting adjustments ( 13 ) ( 7 ) Pension related adjustments ( 1 ) ( 1 ) Accumulated other comprehensive loss $ ( 259 ) $ ( 232 ) |
Earnings Per Share | Three Months Ended March 31, March 31, 2020 2019 Net income $ 9 $ 18 Less: Dividends on Series A Preferred Stock 6 6 Net income attributable to common stockholders $ 3 $ 12 Weighted average basic shares outstanding 81.7 84.3 Effect of dilutive securities 0.7 1.0 Weighted average diluted shares outstanding 82.4 85.3 Net income per share: Basic $ 0.04 $ 0.14 Diluted $ 0.04 $ 0.14 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Information [Abstract] | |
Schedule of Financial Information for Each Segment | Three Months Ended March 31, March 31, 2020 2019 Sales U.S. $ 638 $ 779 Canada 50 68 International 106 123 Consolidated sales $ 794 $ 970 Operating income U.S. $ 18 $ 32 Canada - - International 4 3 Total operating income 22 35 Interest expense ( 8 ) ( 11 ) Other, net - - Income before income taxes $ 14 $ 24 March 31, December 31, 2020 2019 Total assets U.S. $ 1,913 $ 1,915 Canada 95 91 International 293 319 Total assets $ 2,301 $ 2,325 |
Schedule of Net Sales by Product Line | Three Months Ended March 31, March 31, Type 2020 2019 Line pipe $ 100 $ 154 Carbon fittings and flanges 115 153 Total carbon pipe, fittings and flanges 215 307 Valves, automation, measurement and instrumentation 323 383 Gas products 134 133 Stainless steel and alloy pipe and fittings 37 50 General products 85 97 $ 794 $ 970 |
Background and Basis of Prese_3
Background and Basis of Presentation (Details) - USD ($) $ in Millions | 1 Months Ended | |
Oct. 31, 2019 | Mar. 31, 2020 | |
Concentration Risk [Line Items] | ||
Margin | 20.00% | |
Accounting Standards Update 2016-13 [Member] | ||
Concentration Risk [Line Items] | ||
Credit losses | $ 1 |
Revenue Recognition (Narrative)
Revenue Recognition (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenue Recognition [Abstract] | |||
Contract assets | $ 21 | $ 26 | |
Deferred revenue | 5 | $ 4 | |
Deferred revenue recognized | $ 2 | $ 5 |
Revenue Recognition (Summary of
Revenue Recognition (Summary of Revenue Disaggregation) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 794 | $ 970 |
United States [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 638 | 779 |
Canada [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 50 | 68 |
International [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 106 | 123 |
Upstream [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 222 | 312 |
Upstream [Member] | United States [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 139 | 206 |
Upstream [Member] | Canada [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 37 | 46 |
Upstream [Member] | International [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 46 | 60 |
Midstream [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 119 | 147 |
Midstream [Member] | United States [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 110 | 133 |
Midstream [Member] | Canada [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 4 | 6 |
Midstream [Member] | International [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 5 | 8 |
Gas Utilities [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 202 | 214 |
Gas Utilities [Member] | United States [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 199 | 204 |
Gas Utilities [Member] | Canada [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 3 | 10 |
Downstream [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 251 | 297 |
Downstream [Member] | United States [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 190 | 236 |
Downstream [Member] | Canada [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 6 | 6 |
Downstream [Member] | International [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 55 | $ 55 |
Inventories (Narrative) (Detail
Inventories (Narrative) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Inventories [Abstract] | |
Effect of LIFO decrement on cost of sales | $ 3 |
Inventories (Composition of Inv
Inventories (Composition of Inventory) (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Finished goods inventory at average cost: | ||
Finished goods inventory at average cost | $ 878 | $ 891 |
Less: Excess of average cost over LIFO cost (LIFO reserve) | (152) | (155) |
Less: Other inventory reserves | (35) | (35) |
Inventories, net | 691 | 701 |
Valves, Automation, Measurement And Instrumentation [Member] | ||
Finished goods inventory at average cost: | ||
Finished goods inventory at average cost | 355 | 355 |
Carbon Pipe, Fittings And Flanges [Member] | ||
Finished goods inventory at average cost: | ||
Finished goods inventory at average cost | 246 | 268 |
All Other Products [Member] | ||
Finished goods inventory at average cost: | ||
Finished goods inventory at average cost | $ 277 | $ 268 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating lease cost | $ 10 | $ 10 |
Cash paid | $ 11 | $ 11 |
Minimum [Member] | ||
Renewal term | 1 year | |
Maximum [Member] | ||
Renewal term | 15 years | |
Term | 30 years |
Leases (Maturity of Operating L
Leases (Maturity of Operating Lease Liabilities) (Details) $ in Millions | Mar. 31, 2020USD ($) |
Leases [Abstract] | |
Remainder of 2020 | $ 30 |
2021 | 35 |
2022 | 27 |
2023 | 21 |
2024 | 17 |
After 2024 | 192 |
Total lease payments | 322 |
Less: Interest | (128) |
Present value of lease liabilities | $ 194 |
Leases (Operating Lease Term an
Leases (Operating Lease Term and Discount Rate) (Details) | Mar. 31, 2020 |
Leases [Abstract] | |
Weighted-average remaining lease term (years) | 14 years |
Weighted-average discount rate | 7.00% |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | |
Debt Instrument [Line Items] | |||
Proceeds from revolving credit facilities | $ 205,000,000 | $ 319,000,000 | |
Term Loan [Member] | |||
Debt Instrument [Line Items] | |||
Debt returned | $ 3,000,000 | ||
Cost of extinguishment | 2,000,000 | ||
Gain on extinguishment of debt | 1,000,000 | ||
Global ABL Facility [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 800,000,000 | 800,000,000 | |
Credit facility, remaining borrowing capacity | 437,000,000 | 437,000,000 | |
Proceeds from revolving credit facilities | 200,000,000 | ||
Global ABL Facility [Member] | United States [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 675,000,000 | 675,000,000 | |
Global ABL Facility [Member] | Canada [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 65,000,000 | 65,000,000 | |
Global ABL Facility [Member] | United Kingdom [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 7,000,000 | 7,000,000 | |
Global ABL Facility [Member] | Australia [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 15,000,000 | 15,000,000 | |
Global ABL Facility [Member] | Belgium [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 7,000,000 | 7,000,000 | |
Global ABL Facility [Member] | Norway [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 18,000,000 | 18,000,000 | |
Global ABL Facility [Member] | Netherlands [Member] | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 13,000,000 | 13,000,000 | |
Secured Term Loan [Member] | Senior Secured Term Loan B [Member] | |||
Debt Instrument [Line Items] | |||
Principal amount | 400,000,000 | $ 400,000,000 | |
Term loan annual amortization percentage | 1.00% | ||
Term Loan accordion feature | $ 200,000,000 | $ 200,000,000 | |
Percentage of capital stock in foreign subsidiaries securing Term Loan B | 65.00% | ||
Secured Term Loan [Member] | Senior Secured Term Loan B [Member] | Base Rate [Member] | |||
Debt Instrument [Line Items] | |||
Variable interest rate | 2.00% | ||
Secured Term Loan [Member] | Senior Secured Term Loan B [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Debt Instrument [Line Items] | |||
Variable interest rate | 3.00% | ||
Secured Term Loan [Member] | Senior Secured Leverage Ratio Is No More Than 2.75 to 1.00 [Member] | Senior Secured Term Loan B [Member] | |||
Debt Instrument [Line Items] | |||
Senior secured leverage ratio | 2.75 | ||
Repayment of Term Loan, percentage | 25.00% | ||
Secured Term Loan [Member] | Senior Secured Leverage Ratio Is No More Than 2.50 to 1.00 [Member] | Senior Secured Term Loan B [Member] | |||
Debt Instrument [Line Items] | |||
Senior secured leverage ratio | 2.50 | ||
Secured Term Loan [Member] | Maximum [Member] | Senior Secured Term Loan B [Member] | |||
Debt Instrument [Line Items] | |||
Senior secured leverage ratio | 4 | ||
Repayment of Term Loan, percentage | 50.00% |
Long-Term Debt (Components of L
Long-Term Debt (Components of Long-Term Debt) (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 521 | $ 551 |
Less: Current portion | (4) | (4) |
Long-term debt, net | 517 | 547 |
Secured Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 386 | 390 |
Original issue discount and issuance costs on senior secured Term Loan B | 2 | 2 |
Global ABL Facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 135 | $ 161 |
Long-Term Debt (Interest on Bor
Long-Term Debt (Interest on Borrowings) (Details) | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Weighted average interest rate | 4.52% | 4.91% |
Global ABL Facility [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate | 2.55% | 3.47% |
Senior Secured Term Loan B [Member] | Secured Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate | 5.22% | 5.50% |
Redeemable Preferred Stock (Det
Redeemable Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | ||
Jun. 30, 2015 | Mar. 31, 2020 | Dec. 31, 2019 | |
Stockholders' Equity [Abstract] | |||
Preferred stock, issued | 363,000 | 363,000 | 363,000 |
Gross proceeds from issuance of Series A Preferred Stock | $ 363 | ||
Preferred stock, stated value | $ 1,000 | ||
Preferred stock, dividend rate | 6.50% | 6.50% | 6.50% |
Percent of par value | 105.00% | ||
Preferred stock, initial conversion rate | 55.9284 | ||
Preferred stock, initial conversion price | $ 17.88 | ||
Preferred stock, common stock as percentage of conversion price | 150.00% |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 105 Months Ended | ||
Apr. 30, 2019 | Apr. 30, 2015 | Mar. 31, 2020 | Mar. 31, 2019 | Sep. 30, 2019 | |
Stockholders Equity [Line Items] | |||||
Remaining authorized amount | $ 0 | ||||
Common stock, shares outstanding | 81,993,613 | ||||
2011 Omnibus Incentive Plan [Member] | |||||
Stockholders Equity [Line Items] | |||||
Shares reserved for Incentive Plan | 3,250,000 | ||||
Additional shares reserved for Incentive Plan | 2,500,000 | 4,250,000 | |||
Stock granted | 8,744,461 | ||||
Director [Member] | 2011 Omnibus Incentive Plan [Member] | |||||
Stockholders Equity [Line Items] | |||||
Vesting period | 1 year | ||||
Minimum [Member] | 2011 Omnibus Incentive Plan [Member] | |||||
Stockholders Equity [Line Items] | |||||
Vesting period | 3 years | ||||
Maximum [Member] | 2011 Omnibus Incentive Plan [Member] | |||||
Stockholders Equity [Line Items] | |||||
Vesting period | 5 years | ||||
Stock Options [Member] | |||||
Stockholders Equity [Line Items] | |||||
Anti-dilutive securities | 3,400,000 | 2,600,000 | |||
Stock Options [Member] | 2011 Omnibus Incentive Plan [Member] | |||||
Stockholders Equity [Line Items] | |||||
Maximum term for stock option plan grant | 10 years | ||||
Performance Shares [Member] | 2011 Omnibus Incentive Plan [Member] | |||||
Stockholders Equity [Line Items] | |||||
Stock granted | 336,325 | ||||
Restricted Units [Member] | 2011 Omnibus Incentive Plan [Member] | |||||
Stockholders Equity [Line Items] | |||||
Stock granted | 696,777 |
Stockholders' Equity (Summary o
Stockholders' Equity (Summary of Share Repurchase Activity) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stockholders' Equity [Abstract] | ||
Number of shares acquired on the open market | 1,758,537 | |
Average price per share | $ 14.24 | |
Total cost of acquired shares | $ 25 |
Stockholders' Equity (Accumulat
Stockholders' Equity (Accumulated Other Comprehensive Loss in Accompanying Consolidated Balance Sheets) (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Foreign Currency Translation Adjustments [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ (245) | $ (224) |
Hedge Accounting Adjustments [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | (13) | (7) |
Pension Related Adjustments [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | (1) | (1) |
Accumulated Other Comprehensive Loss [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | $ (259) | $ (232) |
Stockholders' Equity (Earnings
Stockholders' Equity (Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stockholders' Equity [Abstract] | ||
Net income | $ 9 | $ 18 |
Less: Dividends on Series A Preferred Stock | 6 | 6 |
Net income attributable to common stockholders | $ 3 | $ 12 |
Weighted average basic shares outstanding | 81.7 | 84.3 |
Effect of dilutive securities | 0.7 | 1 |
Weighted average diluted shares outstanding | 82.4 | 85.3 |
Net income per share: | ||
Basic | $ 0.04 | $ 0.14 |
Diluted | $ 0.04 | $ 0.14 |
Segment Information (Narrative)
Segment Information (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2020segment | |
Segment Information [Abstract] | |
Number of operating segments | 3 |
Number of Reportable Segments | 3 |
Segment Information (Schedule o
Segment Information (Schedule of Financial Information for Each Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Sales | |||
Sales | $ 794 | $ 970 | |
Operating income | |||
Operating income | 22 | 35 | |
Interest expense | (8) | (11) | |
Income before income taxes | 14 | 24 | |
Total assets | |||
Total assets | 2,301 | $ 2,325 | |
United States [Member] | |||
Sales | |||
Sales | 638 | 779 | |
Operating income | |||
Operating income | 18 | 32 | |
Total assets | |||
Total assets | 1,913 | 1,915 | |
Canada [Member] | |||
Sales | |||
Sales | 50 | 68 | |
Total assets | |||
Total assets | 95 | 91 | |
International [Member] | |||
Sales | |||
Sales | 106 | 123 | |
Operating income | |||
Operating income | 4 | $ 3 | |
Total assets | |||
Total assets | $ 293 | $ 319 |
Segment Information (Schedule_2
Segment Information (Schedule of Net Sales by Product Line) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Sales | $ 794 | $ 970 |
Line pipe [Member] | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Sales | 100 | 154 |
Carbon Fittings And Flanges [Member] | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Sales | 115 | 153 |
Carbon Pipe, Fittings And Flanges [Member] | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Sales | 215 | 307 |
Valves, Automation, Measurement And Instrumentation [Member] | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Sales | 323 | 383 |
Gas Products [Member] | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Sales | 134 | 133 |
Stainless Steel Alloy Pipe and Fittings [Member] | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Sales | 37 | 50 |
General Oilfield Products [Member] | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Sales | $ 85 | $ 97 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2018 | |
Long-term Debt [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Carrying value of debt | $ 521,000,000 | $ 551,000,000 | |
Long-term Debt [Member] | Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value of our debt | 447,000,000 | 554,000,000 | |
Foreign exchange forward contracts [Member] | Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Notional amount | 19,000,000 | 21,000,000 | |
Interest Rate Swap [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value | $ 17,000,000 | $ 9,000,000 | $ 0 |
Notional amount | $ 250,000,000 | ||
Term of swap | 5 years | ||
Fixed interest rate | 2.7145% |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Mar. 31, 2020lawsuitclaim |
Commitments and Contingencies [Abstract] | |
Number of lawsuits | lawsuit | 591 |
Asbestos related pending claims | claim | 1,167 |