MRC Global Announces Fourth Quarter And Full Year 2012 Results

        MRC Global Announces Fourth Quarter And Full Year 2012 Results

Quarterly sales of $1.307 billion; record annual sales of $5.571 billion

Quarterly net loss of $6.4 million, or ($0.06) per share, including charges

Excluding charges, Q4 2012 adjusted net income of $56.4 million and diluted
EPS of $0.55

Quarterly Adjusted EBITDA of $99 million; annual Adjusted EBITDA of $463
million

PR Newswire

HOUSTON, Feb. 21, 2013

HOUSTON, Feb. 21, 2013 /PRNewswire/ --MRC Global Inc. (NYSE: MRC), the
largest global distributor, based on sales, of pipe, valves and fittings (PVF)
and related products and services to the energy and industrial sectors, today
announced fourth quarter and full year 2012 results. MRC's sales of
$1.307billion in the fourth quarter of 2012 were in line with the prior
year's quarter, driven by 9.4% growth in sales of the Company's core product
offerings offset by the planned reduction in the OCTG business. Sales in 2012
were a record of $5.571 billion, compared to $4.832 billion in 2011, an
increase of 15%.

MRC reported a net loss of $6.4 million, or ($0.06) per share, for the fourth
quarter of 2012 compared to net income of $3.6 million, or $0.04 per diluted
share, in the fourth quarter of 2011. Fourth quarter 2012 net loss included
pre-tax charges totaling $96.6 million ($62.8 million after tax, or $0.61 per
diluted share) related to the redemption of MRC's outstanding 9.50% senior
secured notes and the termination of a pension plan in the Netherlands.
Excluding these charges, adjusted net income for the fourth quarter of 2012
was $56.4 million, or $0.55 per diluted share. Fourth quarter 2012 results
reflected a $27.2 million benefit relating to the use of the last-in,
first-out (LIFO) method of inventory cost accounting. Adjusted EBITDA was
$99.2 million for the fourth quarter of 2012 compared to $100.3 million for
the same period in 2011. See the tables below for a reconciliation of both
adjusted net income and adjusted EBITDA to net income.

For the full year, MRC's reported net income for 2012 was $118.0 million or
$1.22 per diluted share, compared to net income of $29.0 million or $0.34 per
diluted share, in 2011. Excluding the impact of special items, adjusted net
income for 2012 was $196.0 million, or $2.02 per diluted share. Adjusted
EBITDA for 2012 was $463.2 million compared to $360.5 million in 2011, a 29%
increase.

Andrew R. Lane, MRC's chairman, president and chief executive officer, stated,
"2012 was a landmark year for MRC. We completed our IPO and a secondary
offering, significantly reduced debt and interest expense, improved our
product mix and grew our business both organically and through strategic
acquisitions. In spite of an industry-wide slowdown in the fourth quarter, we
still produced solid top-line growth of 21% for the year in our core product
offerings, which excludes the OCTG business which we strategically began
deemphasizing in 2012. We exceeded our expectations in executing on our
strategic rebalancing away from the OCTG business in the fourth quarter,
reducing its contribution to below 9% of our total revenue."

The Company's North American sales were $1.166 billion in the fourth quarter
of 2012 and reflect a decrease in OCTG revenues of $102.0 million from the
fourth quarter of 2011. Excluding the OCTG business, North American revenues
were 5.3% higher than last year's fourth quarter. International sales of
$140.6million in the fourth quarter of 2012 increased 55% over the same
period in 2011, primarily due to the acquisition of OneSteel Piping Systems
(MRC PSA) in March 2012.

Fourth quarter 2012 sales to the upstream sector declined 10% from the fourth
quarter of 2011 to $574.4million, or 44% of sales, as a result of the planned
reduction in OCTG revenues. Fourth quarter 2012 midstream sales increased 6%
over the same period in 2011 to $365.9 million, or 28%of sales. Fourth
quarter 2012 sales to the downstream sector grew 13% over the same period in
2011 to $366.4 million, or 28% of sales, driven by the company's Australian
acquisition, which is more heavily weighted toward the downstream sector than
the company as a whole.

MRC's gross profit of $258.3 million in the fourth quarter of 2012 improved by
550 basis points to 19.8% of sales compared to $187.4 million, or 14.3% of
sales, in the fourth quarter of 2011. The increase in gross profit percentage
reflected improved product sales mix, pricing and cost of product initiatives,
including a $27.2 million fourth quarter 2012 benefit resulting from the use
of LIFO. For 2012, gross profit was $1.014 billion, or 18.2% of sales,
compared to $708.2 million, or 14.7% of sales, in 2011.

For the fourth quarter of 2012, selling, general and administrative expenses
(SG&A) were $154.2million compared to $137.5 million inthe same period in
2011. This increase was primarily attributable to the inclusion of expenses
from MRC PSA in Australia and an increase in personnel expenses.

Mr. Lane continued, "Strong cash flow performance in the fourth quarter
contributed toward full year cash flow from operations of $240.1 million,
resulting in year-end net debt of $1.219 billion, down $261 million from
2011. With the refinancing steps we took in the quarter to significantly
lower the interest rate on our debt, we expect to see significant interest
expense savings in 2013 as compared to 2012."

Calendar Year 2013 Guidance

MRC's expected full year 2013 results, excluding the impact of any future
acquisitions, are as follows:

                           Low             High
Revenue                    $5.750 billion  $6.050 billion
Adjusted EBITDA            $480 million    $520 million
Diluted Earnings Per Share $2.10           $2.35



Conference Call

The Company will hold a conference call to discuss its fourth quarter and full
year 2012 results at 10:00 a.m. Eastern (9:00 a.m. Central) on Friday,
February 22, 2013. To participate in the call, dial(480) 629-9835 and ask
for the MRC Global conference call at least 10 minutes prior to the start
time. To access it live over the Internet, please log onto the web at
http://www.mrcglobal.com, and go to the "Investor Relations" page of the
Company's website at least fifteen minutes early to register, download and
install any necessary audio software. For those who cannot listen to the live
call, a replay will be available through March 8, 2013 and may be accessed by
dialing (303) 590-3030 and using passcode 4587192#. Also, an archive of the
webcast will be available shortly after the call at http://www.mrcglobal.com
for 90 days.

About MRC Global Inc.

Headquartered in Houston, Texas, MRC, a Fortune 500 company, is the largest
global distributor, based on sales, of pipe, valves and fittings (PVF) and
related products and services to the energy and industrial sectors and
supplies these products and services across each of the upstream, midstream
and downstream sectors.

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 "will," "expect," "expected" and similar expressions are intended to
identify forward-looking statements.

Statements about the company's business, including its strategy, its industry,
the company's future profitability, the company's guidance on its expected
interest savings, revenue, adjusted EBITDA and diluted earnings per share in
2013, growth in the company's various markets and the company's expectations,
beliefs, plans, strategies, objectives, prospects and assumptions 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. These
risks and uncertainties include (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, Executive Vice President
and Chief Financial Officer
MRC Global Inc.
Jim.Braun@mrcglobal.com
832-308-2845

Ken Dennard, Managing Partner
Dennard ▪ Lascar Associates
ken@dennardlascar.com
713-529-6600



MRC Global Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
                                            December 31,
                                            2012              2011
Assets
Current assets:
 Cash                                     $     37,090  $     46,127
 Accounts receivable, net                 823,236           791,280
 Inventories                              970,228           899,064
 Deferred income taxes                    6,603             2,215
 Income taxes receivable                  248               -
 Other current assets                     13,169            11,437
Total current assets                        1,850,574         1,750,123
Other assets                                37,031            39,212
Property, plant and equipment, net          122,458           107,430
Intangible assets:
 Goodwill, net                            610,392           561,270
 Other intangible assets, net             749,272           771,867
                                            1,359,664         1,333,137
                                            $  3,369,727    $  3,229,902
Liabilities and stockholders' equity
Current liabilities:
 Trade accounts payable                   $    438,344   $    479,584
 Accrued expenses and other current       124,026           108,973
liabilities
 Income taxes payable                     -                 11,950
 Deferred revenue                         1,573             4,450
 Deferred income taxes                    79,661            70,425
 Current portion of long-term debt        6,500             -
Total current liabilities                   650,104           675,382
Long-term obligations:
 Long-term debt, net                      1,250,089         1,526,740
 Deferred income taxes                    261,448           288,985
 Other liabilities                        22,164            17,933
                                            1,533,701         1,833,658
Commitments and contingencies
Stockholders' equity:
 Common stock, $0.01 par value per
share; 500,000 shares authorized,
 101,563 and 84,427 issued and          1,016             844
outstanding, respectively
 Preferred stock, $0.01 par value per
share; 100,000 shares authorized,
 no shares issued and outstanding      -                 -
 Additional paid-in-capital               1,625,900         1,282,949
 Retained (deficit)                       (418,830)         (536,791)
 Accumulated other comprehensive loss     (22,164)          (26,140)
                                            1,185,922         720,862
                                            $  3,369,727    $  3,229,902







MRC Global Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
                       Three Months Ended          Year Ended
                       December 31,   December 31,  December 31,  December
                                                                  31,
                       2012           2011          2012          2011
Sales                  $           $          $           $   
                       1,306,733     1,306,369     5,570,858     4,832,423
Cost of sales          1,048,429      1,119,007     4,557,115     4,124,271
Gross profit           258,304        187,362       1,013,743     708,152
Selling, general and
administrative         154,225        137,469       606,753       513,563
expenses
Operating income       104,079        49,893        406,990       194,589
Other income
(expense):
 Interest expense    (19,898)       (34,472)      (112,519)     (136,844)
 Loss on early
extinguishment of      (92,215)       -             (113,961)     -
debt
 Write off of debt   -              -             (1,685)       (9,450)
issuance costs
 Change in fair
value of derivative    416            1,784         2,186         7,044
instruments
 Other, net          (2,869)        188           685           429
Income (loss) before   (10,487)       17,393        181,696       55,768
income taxes
Income tax expense     (4,045)        13,832        63,738        26,784
(benefit)
Net income (loss)      $        $        $          $     
                       (6,442)        3,561      117,958      28,984
Effective tax rate     38.6 %         79.5 %        35.1 %        48.0 %
Basic income (loss)    $        $        $        $     
per common share        (0.06)         0.04      1.22        0.34
Diluted income (loss)  $        $        $        $     
per common share        (0.06)         0.04       1.22        0.34
Weighted-average       101,518        84,419        96,465        84,417
common shares, basic
Weighted-average
common shares,         101,518        84,741        96,925        84,655
diluted







MRC Global Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
                                       Year Ended December 31,
                                       2012                 2011
Operating activities
Net income                             $     117,958    $      28,984
Adjustments to reconcile net income
to net cash provided by
 (used in) operations:
 Depreciation and amortization    18,585               17,046
 Amortization of intangibles      49,466               50,652
 Equity-based compensation        8,475                8,385
expense
 Deferred income tax (benefit)    (20,432)             (16,362)
expense
 Amortization of debt issuance    8,782                10,456
costs
 Loss on early extinguishment of  113,961              -
debt
 Write off of debt issuance       1,685                9,450
costs
 (Decrease) increase in LIFO      (24,140)             73,703
reserve
 Change in fair value of          (2,186)              (7,044)
derivative instruments
 Hedge termination                -                    -
 Provision for uncollectible      2,428                433
accounts
 Other non-cash items             6,961                4,025
 Changes in operating assets and
liabilities:
 Accounts receivable           22,399               (177,744)
 Inventories                   26,674               (182,173)
 Income taxes                  (12,593)             45,333
 Other current assets          (681)                (35)
 Accounts payable              (84,380)             36,550
 Deferred revenue              (2,921)              (13,642)
 Accrued expenses and other    10,031               9,086
current liabilities
Net cash provided by (used in)         240,072              (102,897)
operations
Investing activities
Purchases of property, plant and       (26,189)             (18,056)
equipment
Proceeds from the disposition of       2,272                3,087
property, plant & equipment
Acquisitions, net of cash acquired of  (152,367)            (39,865)
$0 and $2,036
Proceeds from the sale of assets held  -                    10,594
for sale
Other investment and notes receivable  (6,755)              (3,795)
transactions
Net cash used in investing activities  (183,039)            (48,035)
Financing activities
Proceeds from the sale of common       333,342              -
stock
Net proceeds from revolving credit     149,699              150,428
facilities
Purchase and redemption of senior      (1,135,223)          -
secured notes
Proceeds from issuance of term loan    643,500              -
Payments on long-term obligations      (33,081)             -
Debt issuance costs paid               (20,038)             (9,836)
Proceeds from exercise of stock        677                  3
options
Tax benefit on stock options           629                  -
Forfeited dividends on forfeited       3                    -
unvested restricted stock
Net cash (used in) provided by         (60,492)             140,595
financing activities
Decrease in cash                       (3,459)              (10,337)
Effect of foreign exchange rate on     (5,578)              262
cash
Cash – beginning of year               46,127               56,202
Cash – end of year                     $      37,090  $      46,127







MRC Global Inc.
Supplemental Information (Unaudited)
Calculation of Adjusted EBITDA
(Dollars in thousands)
                       Three Months Ended          Year Ended
                       December 31,  December 31,  December 31,   December 31,
                       2012          2011          2012           2011
Net income (loss)      $         $        $        $     
                       (6,442)       3,561         117,958       28,984
Income tax expense     (4,045)       13,832        63,738         26,784
(benefit)
Interest expense       19,898        34,472        112,519        136,844
Loss on early
extinguishment of      92,215        -             113,961        -
debt
Write off of debt      -             -             1,685          9,450
issuance costs
Depreciation and       5,405         4,227         18,585         17,046
amortization
Amortization of        12,282        12,853        49,466         50,652
intangibles
Increase in LIFO       (27,220)      27,703        (24,140)       73,703
reserve
Change in fair value
of derivative          (416)         (1,784)       (2,186)        (7,044)
instruments
Share based            2,618         2,121         8,475          8,385
compensation expense
Legal and consulting   -             3,821         (1,196)        9,906
expenses
Pension settlement     4,420         -             4,420          -
Joint venture          -             -             -              1,713
termination
Other (income) ^       448           (482)         (72)           4,042
expense
                       $         $          $        $     
Adjusted EBITDA        99,163        100,324                   
                                                   463,213       360,465

Note to above:

MRC defines Adjusted EBITDA as net income plus interest, income taxes,
depreciation and amortization, amortization of intangibles, and other
non-recurring and non-cash charges (such as gain/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 its LIFO inventory
costing methodology. The company presents Adjusted EBITDA because the company
believes Adjusted EBITDA is a useful factor indicator of the company's
operating performance. Among other things, the company believes that Adjusted
EBITDA is a useful indicator of the company's 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 U.S.
generally accepted accounting principles (GAAP). 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,
the company 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. See the company's Annual Report
filed on Form 10-K for a more thorough discussion of the use of Adjusted
EBITDA.







MRC Global Inc.
Supplemental Information (Unaudited)
Reconciliation of Net Income to Adjusted Net Income
(Dollars in thousands)
                            Three Months Ended         Year Ended

                            December 31, 2012          December 31, 2012
                            Net Income    Per Share    Net Income    Per Share
Net Income                  $       $        $       $    
                              (6,442)   (0.06)       117,958      1.22
Loss on extinguishment of   59,940        0.58         74,075        0.76
debt
Write off of debt issuance  -             -            1,095         0.01
costs
Pension settlement          2,873         0.03         2,873         0.03
Adjusted Net Income         $       $       $       $    
                             56,371     0.55          196,001     2.02

Note to above:

MRC incurred certain charges to repurchase and redeem its 9.5% senior secured
notes and terminate its Netherlands pension plan in 2012. The company
presents adjusted net income and adjusted net income per share because the
company believes these measures are useful indicators of what the company's
net income and net income per share would have been without the impact of
these one-time events being included and believes that many analysts and
investors will want to know this information when comparing the company's
results against the results of other companies. Adjusted net income and
adjusted net income per share, however, does not represent and should not be
considered as an alternative to net income and net income per share calculated
and presented in accordance with GAAP. Because net income and net income per
share does not account for certain expenses, its utility as a measure of our
performance has material limitations. Because of these limitations, management
does not view adjusted net income and net income per share in isolation or as
a primary performance measure and also uses other measures, such as net income
and net income, to measure performance.

SOURCE MRC Global Inc.

Website: http://www.mrcglobal.com