MRC Global Inc. Announces Preliminary Third Quarter Results and Raises Full Year Guidance

 MRC Global Inc. Announces Preliminary Third Quarter Results and Raises Full
                                Year Guidance

PR Newswire

HOUSTON, Oct. 9, 2012

HOUSTON, Oct. 9, 2012 /PRNewswire/ --MRC Global Inc. (NYSE:MRC) announced
today that it expects to report the following results for the third quarter:

  oSales. The company expects to report sales of between approximately $1.43
    billion and $1.47 billion for the three months ended September 30, 2012,
    as compared to sales of $1.37 billion for the three months ended September
    30, 2011.
  oNet income. The company expects to report net income of between
    approximately $46 million and $53million for the three months ended
    September 30, 2012, as compared to net income of $21.9 million for the
    three months ended September 30, 2011.
  oDiluted earnings per share. The company expects to report diluted earnings
    per share of between approximately $0.45 and $0.52 for the three months
    ended September 30, 2012, as compared to diluted earnings per share of
    $0.26 for the three months ended September 30, 2011.
  oAdjusted EBITDA. The company expects to report Adjusted EBITDA of between
    approximately $121million and $129 million for the three months ended
    September 30, 2012, as compared to Adjusted EBITDA of $109.6 million for
    the three months ended September 30, 2011. Adjusted EBITDA is a non-GAAP
    measure. See "Reconciliation of Adjusted EBITDA to Net Income" below.
  oTotal indebtedness, net of cash. The company's total indebtedness, net of
    cash, outstanding at September 30, 2012 was approximately $1.238 billion,
    as compared to $1.315 billion of total indebtedness, net of cash,
    outstanding at June 30, 2012.

Andrew Lane, MRC Global's Chairman, President and CEO, commented, "I'm very
pleased with the continued strong financial results in 2012, which have been
primarily driven by North American shale infrastructure spending of our major
customers."

During the third quarter of 2012, the company purchased in the open market
$86.7 million in face amount of its 9.50% senior secured notes due 2016 for
$94.6million.The company is expected to record a pre-tax charge of
$10.3million ($6.5 million after tax) in the third quarter of 2012, or a
diluted earnings per share impact of approximately $0.06 per share. The
impact of this expected charge is included in the expected net income and
diluted earnings per share amounts above.

In addition, the company expects to record an adjustment to its last-in,
first-out (LIFO) inventory reserve, resulting in a positive (additive)
adjustment to income before taxes. This adjustment is expected to be
approximately $14.5 million, pre-tax ($9.4 million after tax, or $0.09 per
share). The impact of this expected item is included in the expected net
income and diluted earnings per share amounts above.

Management has prepared the estimates presented above in good faith based upon
the company's internal reporting and expectations as of and for the three
months ended September 30, 2012. These estimated ranges are preliminary,
unaudited, subject to completion, reflect the company's current good faith
estimates and may be revised as a result of management's further review of the
company's results. The company and its auditors have not completed the normal
quarterly review procedures as of and for the three months ended September 30,
2012, and there can be no assurance that the company's final results for this
quarterly period will not differ from these estimates. Any such differences
could be material. During the course of the preparation of the company's
consolidated financial statements and related notes as of and for the three
months ended September 30, 2012, the company may identify items that would
require it to make material adjustments to the preliminary financial
information. These estimates should not be viewed as a substitute for full
interim financial statements prepared in accordance with GAAP. In addition,
these preliminary estimates as of and for the three months ended September
30, 2012 are not necessarily indicative of the results to be achieved for the
remainder of 2012 or any future period.

Calendar Year 2012 Updated Guidance

The company has raised its expected full year 2012 guidance for revenue,
adjusted gross profit percentage and Adjusted EBITDA percentage and provides
guidance for its expected full year 2012 effective tax rate, capital
expenditures and cash from operations as follows:

                                     Low            High
Revenue                              $ 5.55 billion $ 5.68 billion
Adjusted Gross Profit Percentage (1) 18.6%          19.2%
Adjusted EBITDA Percentage           8.4%           8.7%
Effective Tax Rate                   35.5%          36.5%
Capital Expenditures                 $ 26 million   $ 27 million
Cash from Operations                 $125 million   $150 million

(1) See the company's Annual Report on Form 10-K and Quarterly Reports on Form
    10-Q for the company's full definition of Adjusted Gross Profit.

About MRC Global Inc. – Global Supplier of Choice^®
Headquartered in Houston, Texas, MRC, a Fortune 500 company, is the largest
global distributor of pipe, valve, and fittings (PVF) and related products and
services to the energy industry, based on sales, and supplies these products
and services across each of the upstream, midstream and downstream sectors.
More information on MRC can be found on our website at www.mrcglobal.com.

Reconciliation of Adjusted EBITDA and Net Income
The company defines Adjusted EBITDA as net income plus interest, income taxes,
depreciation and amortization, amortization of intangibles, other
non-recurring and non-cash charges (such as gains/losses on the early
extinguishment of debt, changes in the fair value of derivative instruments
and goodwill impairment) and plus or minus the impact of the company's LIFO
inventory costing methodology. The company presents Adjusted EBITDA because it
is an important measure used to determine the interest rate and commitment fee
it pays under its global ABL facility. In addition, the company believes it is
a useful indicator of its operating performance. The company believes this for
the following reasons:

  oThe company's management uses Adjusted EBITDA for planning purposes,
    including the preparation of the company's annual operating budget and
    financial projections, as well as for determining a significant portion of
    the compensation of the company's executive officers.
  oAdjusted EBITDA is widely used by investors to measure a company's
    operating performance without regard to items, such as interest expense,
    income tax expense and depreciation and amortization, that can vary
    substantially from company to company depending upon their financing and
    accounting methods, the book value of their assets, their capital
    structures and the method by which their assets were acquired.
  oSecurities analysts use Adjusted EBITDA as a supplemental measure to
    evaluate the overall operating performance of companies.

In particular, the company believes that Adjusted EBITDA is a useful indicator
of its operating performance because Adjusted EBITDA measures the company's
operating performance without regard to certain non-recurring, non-cash or
transaction-related expenses.

Adjusted EBITDA, however, does not represent and should not be considered as
an alternative to net income, cash flow from operations or any other measure
of financial performance calculated and presented in accordance with GAAP. The
company's Adjusted EBITDA may not be comparable to similar measures that other
companies report because other companies may not calculate Adjusted EBITDA in
the same manner as the company does. Although the company uses Adjusted EBITDA
as a measure to assess the operating performance of its business, Adjusted
EBITDA has significant limitations as an analytical tool because it excludes
certain material costs. For example, it does not include interest expense,
which has been a significant element of the company's costs. Because the
company uses capital assets, depreciation expense is a significant element of
its costs and impacts its ability to generate revenue. In addition, the
omission of the amortization expense associated with intangible assets further
limits the usefulness of this measure. Adjusted EBITDA also does not include
the payment of certain taxes, which is also a significant element of the
company's operations. Furthermore, Adjusted EBITDA does not account for the
company's last-in, first-out (LIFO) inventory costing methodology, and
therefore, to the extent that recently purchased inventory accounts for a
relatively large portion of the company's sales, Adjusted EBITDA may overstate
the company's operating performance. Because Adjusted EBITDA does not account
for certain expenses, its utility as a measure of the company's operating
performance has material limitations. Because of these limitations, management
does not view Adjusted EBITDA in isolation or as a primary performance measure
and also uses other measures, such as net income and sales, to measure
operating performance.

The calculation of Adjusted EBITDA is consistent with the computation of
Consolidated Cash Flow, as defined in the indenture governing the company's
outstanding notes, except for the change in the LIFO reserve, which would not
be an adjustment in determining Consolidated Cash Flow.

The following table reconciles Adjusted EBITDA to net income for the ranges
presented above for the three months ended September 30, 2012 (estimated) and
for the three months ended September 30, 2011 (actual).

                                Three Months Ended September 30,
                                2012            2012             2011 (Actual)

                                (Estimated Low) (Estimated High) 
                                                ($ in millions)
Net income                      $ 46.0          $ 53.0           $ 21.9
Income tax expense              29.5            31.5             11.1
Interest expense                28.0            28.4             34.3
Depreciation and amortization   4.5             4.7              4.7
Amortization of intangibles     12.3            12.5             12.7
Change in fair value of         (0.2)           (0.5)            (1.8)
derivative instruments
Share based compensation        1.9             2.4              3.8
expense
Legal and consulting expenses   —               —                1.5
Increase (decrease) in LIFO     (14.0)          (15.2)           18.3
reserve
Joint venture termination       —               —                1.7
Other noncash expenses (1)      2.2             2.1              1.4
Loss on early extinguishment of 10.3            10.4             —
debt
Adjusted EBITDA                 $120.5          $129.3           $109.6

    For the three months ended September 30, 2012, estimated to include
    foreign exchange gains and losses. For the three months ended September
(1) 30, 2011, included transaction-related expenses, pre-acquisition EBITDA of
    Stainless Pipe & Fittings Australia Pty Ltd. and other items added back to
    net income pursuant to the company's then existing ABL credit facility.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of
Section27A of the Securities Act and Section21E of the Exchange Act. Words
such as "expects," "expected," and similar expressions are intended to
identify forward-looking statements. The company's expectations regarding the
third quarter results and full year 2012 expected results above are only the
company's expectations regarding these matters. The company's expected
financial condition, results and future prospects are dependent on the
following factors, including (among others) decreases in oil and natural gas
industry expenditure levels, which may result from decreased oil and natural
gas prices or other factors; increased usage of alternative fuels, which may
negatively affect oil and natural gas industry expenditure levels; U.S.and
international general economic conditions; the company's ability to compete
successfully with other companies in the company's industry; the risk that
manufacturers of the products the company distributes will sell a substantial
amount of goods directly to end users in the industries it serves; unexpected
supply shortages; cost increases by the company's suppliers; the company's
lack of long-term contracts with most of its suppliers; increases in customer,
manufacturer and distributor inventory levels; suppliers' price reductions of
products that the company sells, which could cause the value of its inventory
to decline; decreases in steel prices, which could significantly lower the
company's profit; increases in steel prices, which it may be unable to pass
along to its customers, which could significantly lower its profit; the
company's lack of long-term contracts with many of its customers and its lack
of contracts with customers that require minimum purchase volumes; changes in
the company's customer and product mix; risks related to the company's
customers' credit; the potential adverse effects associated with integrating
acquisitions into the company's business and whether these acquisitions will
yield their intended benefits; the success of the company's acquisition
strategies; the company's significant indebtedness; the dependence on the
company's subsidiaries for cash to meet its debt obligations; changes in the
company's credit profile; a decline in demand for certain of the products that
the company distributes if import restrictions on these products are lifted;
environmental, health and safety laws and regulations; the sufficiency of the
company's insurance policies to cover losses, including liabilities arising
from litigation; product liability claims against the company; pending or
future asbestos-related claims against the company; the potential loss of key
personnel; interruption in the proper functioning of the company's information
systems; loss of third-party transportation providers; potential inability to
obtain necessary capital; risks related to adverse weather events or natural
disasters; impairment of the company's goodwill or other intangible assets;
changes in tax laws or adverse positions taken by taxing authorities in the
countries in which the company operates; and adverse changes in political or
economic conditions in the countries in which the company operates. For a
discussion of key risk factors, please see the risk factors disclosed in the
company's SEC filings, which are available on the SEC's website at www.sec.gov
and on the company's website, www.mrcglobal.com.

Undue reliance should not be placed on the company's forward-looking
statements. Although forward-looking statements reflect the company's good
faith beliefs, reliance should not be placed on forward-looking statements
because they involve known and unknown risks, uncertainties and other factors,
which may cause the company's actual results, performance or achievements or
future events to differ materially from anticipated future results,
performance or achievements or future events expressed or implied by such
forward-looking statements. The company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result of new
information, future events, changed circumstances or otherwise, except to the
extent required by law.

Contacts:
James E. Braun, EVP & Chief Financial Officer
MRC Global Inc.
Jim.Braun@mrcpvf.com
832-308-2845

Ken Dennard, Managing Partner
DRG&L
ksdennard@drg-l.com
713-529-6600

SOURCE MRC Global Inc.

Website: http://www.mrcglobal.com
 
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