MRC Global Announces Third Quarter 2013 Results And Reaffirms Annual Adjusted EBITDA Guidance

MRC Global Announces Third Quarter 2013 Results And Reaffirms Annual Adjusted
                               EBITDA Guidance

Sales of $1.31 billion

Diluted EPS of $0.38 per share

Adjusted diluted EPS of $0.40 per share

Adjusted EBITDA of $96.4 million

PR Newswire

HOUSTON, Oct. 31, 2013

HOUSTON, Oct. 31, 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 third quarter 2013 results.

MRC Global's sales of $1.31billion in the third quarter of 2013 decreased
9.5% from $1.45 billion in the third quarter of 2012 due, in part, to a
planned reduction in the company's lower margin oil country tubular goods
(OCTG) business. OCTG represented 8.0% of sales in the third quarter of 2013
compared to 12.8% of sales in the third quarter of 2012. Excluding OCTG, sales
were lower across all sectors and segments. The decline in sales was partially
offset by the acquisitions of Production Specialty Services Inc. (PSS) and
Flow Control Products (Flow Control), which together contributed $33 million
of revenue in the third quarter of 2013.

Net income for the third quarter of 2013 was $38.8 million, or $0.38 per
diluted share, compared to third quarter 2012 net income of $55.5 million, or
$0.54 per diluted share.

Adjusted diluted EPS for the third quarter of 2013 was $0.40 per diluted share
and excludes the impact of a $1.3 million after-tax charge ($0.01 per diluted
share) related to the bankruptcy of a workers' compensation insurance carrier,
which required the company to assume the obligation for existing workers'
compensation claims, as well as a $1.3 million after-tax charge ($0.01 per
diluted share) associated with the retirement of an executive officer of the
company. Adjusted diluted EPS for the third quarter of 2012 was $0.61 per
diluted share and excludes a $6.5 million after-tax charge ($0.07 per diluted
share) related to the purchase and early retirement of a portion of MRC
Global's previously outstanding senior secured notes. See reconciliation of
adjusted net income (a non-GAAP measure) to net income (a GAAP measure)
presented as Supplemental Information in the financial statements included in
this release.

Andrew R. Lane, MRC Global's chairman, president and chief executive officer,
stated, "Our third quarter results were in line with our expectations and
reflect improved activity levels and customer spending on a sequential basis,
although the year-over-year comparisons were challenged by a robust third
quarter of 2012. We had strong free cash flow this quarter as reflected in the
reduction of our outstanding debt to $1.04 billion."

MRC Global's third quarter 2013 gross profit of $238.3 million declined to
18.1% of sales from third quarter 2012 gross profit of $277.2million, or
19.1% of sales. Third quarter 2013 and 2012 results each benefited from a
reduction in cost of sales relating to the use of the last-in, first-out
(LIFO) method of inventory cost accounting of $5.7 million and $15.4 million,
respectively.

Selling, general and administrative expenses were $160.9million for the third
quarter of 2013 compared to $155.0 million in the same period of 2012. This
increase was primarily attributable to the inclusion of $5.0 million of
incremental expense from the acquisitions of PSS and Flow Control in December
2012 and July 2013, respectively, as well as $2.0 million of expenses
associated with the retirement of an executive officer of the company.

Adjusted EBITDA was $96.4 million for the third quarter of 2013 compared to
$125.3 million for the same period in 2012. See reconciliation of adjusted
EBITDA (a non-GAAP measure) to net income (a GAAP measure) presented as
Supplemental Information in the financial statements included in this release.

Interest expense for the third quarter of 2013 was $15.5 million as compared
to $28.2 in the third quarter of 2012; the decrease was largely due to
refinancing the company's senior secured notes in November 2012.

Other expense and income items included a $2.0 million pre-tax charge related
to the bankruptcy of a workers' compensation insurance carrier, which required
the company to assume the obligation forexisting workers' compensation claims
and a $1.4 million pre-tax foreign currency exchange gain in the third quarter
of 2013 as compared to a $2.0 million pre-tax foreign currency exchange gain
in the third quarter of 2012.

Sales by Segment

U.S. sales in the third quarter of 2013 were $1.02 billion and reflected a
planned decrease in OCTG revenues of $83.4 million from the third quarter of
2012 as well as lower sales across other product lines due to lower activity
levels and lower spending of some of our key customers. These declines were
partially offset by the acquisitions of PSS and Flow Control.

Canadian sales in the third quarter of 2013 were $162.1 million, down 12.7%
from the same quarter in 2012 primarily due to a decline in project sales in
the oil sands region of northern Alberta as well as a weaker Canadian dollar
relative to the U.S. dollar.

International sales in the third quarter of 2013 were $136.6million and
decreased 11.1% from the same period in 2012 due to weaker demand,
particularly in parts of Australia that have experienced reduced customer
spending in the mining and oil and gas sectors. In addition, nearly half of
the decline can be attributed to a weaker Australian dollar relative to the
U.S. dollar.

Sales by Sector

Upstream sales in the third quarter of 2013 declined 10% from the third
quarter of 2012 to $588.1million, or 45% of sales. The change in upstream
sales is primarily attributable to the planned reduction in OCTG revenue and
weak sales in Canada, partially offset by the acquisitions of PSS and Flow
Control.

Midstream sales in the third quarter of 2013 decreased 6.6% from the third
quarter of 2012 to $377.3million, or 29% of sales. Spending from the
company's transmission customers declined but was partially offset by an
increase in spending from the company's gas utility customers.

Downstream sales in the third quarter of 2013 decreased 11.5% from the third
quarter of 2012 to $348.3 million, or 26% of sales due to weaker market
conditions, primarily in the international segment.

Balance sheet

Outstanding debt was $1.04 billion at September 30, 2013, a reduction of $40.1
million during the quarter. Cash provided by operations was $59.5 million
during the third quarter of 2013 and $241.4 million for the nine months ended
September 30, 2013.

Calendar Year 2013 Guidance

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

                           Low             High
Revenue                    $5,160 million  $5,300 million
Adjusted EBITDA            $385 million    $415 million
Diluted Earnings Per Share $1.65           $1.85



Conference Call

The company will hold a conference call to discuss its third quarter 2013
results at 10:00 a.m. Eastern (9:00 a.m. Central) on November 1, 2013. To
participate in the call, dial(480) 629-9692 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 November 15, 2013 and may be accessed by dialing (303) 590-3030 and
using pass code 4639997#. 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 Global, 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 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 MRC Global'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 industry sectors the company 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 the company's
inventory to decline; decreases in steel prices, which could significantly
lower MRC's profit; increases in steel prices, which the company 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 the company's 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' creditworthiness; 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 the company distributes if import
restrictions on these products are lifted; environmental, health and safety
laws and regulations and the interpretation or implementation thereof; 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 our goodwill or
other intangible assets;  changes in tax laws or adverse positions taken by
taxing authorities in the countries in which the company operates; adverse
changes in political or economic conditions in the countries in which the
company operates; exposure to U.S. and international laws and regulations,
including the Foreign Corrupt Practices Act and the U.K. Bribery Act and other
economic sanction programs; risks relating to ongoing evaluations of internal
controls required by Section 404 of the Sarbanes-Oxley Act; the impact on us
of the SEC's move toward convergence with IFRS; and the occurrence of cyber
security incidents. 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.
Our filings and other important information are also available on the Investor
Relations page of our website at www.mrcglobal.com.

Undue reliance should not be placed on the company's forward-looking
statements. Although forward-looking statements reflect the company's good
faith beliefs, reliance should not be placed on forward-looking statements
because they involve known and unknown risks, uncertainties and other factors,
which may cause 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                               Monica Schafer

Executive Vice President and Chief           Vice President Investor Relations
Financial Officer
MRC Global Inc.                              MRC Global Inc.
Jim.Braun@mrcglobal.com                      Monica.Schafer@mrcglobal.com
832-308-2845                                 832-308-2847



MRC Global Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(Dollars in thousands, except per share amounts)
                                          September 30,      December 31,
                                          2013               2012
Assets
Current assets:
Cash                                      $          $        
                                          33,439             37,090
Accounts receivable, net                  841,545            823,236
Inventories, net                          929,529            970,228
Other current assets                      31,954             20,020
Total current assets                      1,836,467          1,850,574
Other assets                              33,357             37,031
Property, plant and equipment, net        118,445            122,458
Intangible assets:
Goodwill, net                             623,714            610,392
Other intangible assets, net              711,574            749,272
                                          $             $     
                                          3,323,557         3,369,727
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable                    $           $       
                                          498,797            438,344
Accrued expenses and other current        121,874            125,599
liabilities
Deferred income taxes                     82,813             79,661
Current portion of long-term debt         6,500              6,500
Total current liabilities                 709,984            650,104
Long-term obligations:
Long-term debt, net                       1,037,264          1,250,089
Deferred income taxes                     241,090            261,448
Other liabilities                         18,659             22,164
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value per share:
500,000 shares authorized, 101,745
and 101,563 issued and outstanding,      1,017              1,016
respectively
Preferred stock, $0.01 par value per
share; 100,000 shares authorized,
no shares issued and outstanding         -                  -
Additional paid-in capital                1,637,003          1,625,900
Retained deficit                          (290,038)          (418,830)
Accumulated other comprehensive loss      (31,422)           (22,164)
                                          1,316,560          1,185,922
                                          $             $     
                                          3,323,557         3,369,727





MRC Global Inc.
Condensed Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share amounts)
                      Three Months Ended            Nine Months Ended
                      September 30,  September 30,  September     September
                                                    30,           30,
                      2013           2012           2013          2012
Sales                 $          $          $         $    
                      1,313,711     1,451,114     3,886,589    4,264,125
Cost of sales         1,075,418      1,173,916      3,157,792     3,508,686
Gross profit          238,293        277,198        728,797       755,439
Selling, general and
administrative        160,910        154,955        475,642       452,528
expenses
Operating income      77,383         122,243        253,155       302,911
Other income
(expense):
Interest expense      (15,463)       (28,177)       (45,988)      (92,621)
Loss on early
extinguishment of     -              (10,322)       -             (21,746)
debt
Write off of debt     -              -              -             (1,685)
issuance costs
Change in fair value
of derivative         (1,828)        845            589           1,770
instruments
Other, net            (87)           1,232          (13,471)      3,554
Income before income  60,005         85,821         194,285       192,183
taxes
Income tax expense    21,248         30,280         65,493        67,783
Net income            $        $        $        $     
                       38,757        55,541        128,792      124,400
Basic earnings per    $        $        $        $     
common share             0.38        0.55         1.27      1.31
Diluted earnings per  $        $        $        $     
common share             0.38        0.54         1.26      1.31
Weighted-average      101,715        101,490        101,673       94,768
common shares, basic
Weighted-average
common shares,        102,393        102,029        102,455       95,185
diluted





MRC Global Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)
                                              Nine Months Ended
                                              September 30,    September 30,
                                              2013             2012
Operating activities
Net income                                    $          $      
                                              128,792         124,400
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization                 16,782           13,180
Amortization of intangibles                   39,128           37,184
Equity-based compensation expense             8,602            5,859
Deferred income tax benefit                   (16,747)         (3,463)
Amortization of debt issuance costs           4,376            7,088
Write off of debt issuance costs              -                1,685
Loss on early extinguishment of debt          -                21,746
(Decrease) increase in LIFO reserve           (21,247)         3,080
Change in fair value of derivative            (589)            (1,770)
instruments
Provision for uncollectible accounts          (355)            3,936
Foreign currency losses                       11,993           (520)
Other non-cash items                          (133)            5,738
Changes in operating assets and liabilities:
Accounts receivable                           (25,448)         (105,234)
Inventories                                   48,026           (78,889)
Income taxes payable                          (815)            5,867
Other current assets                          (11,961)         (5,836)
Accounts payable                              64,849           9,562
Accrued expenses and other current            (3,878)          22,154
liabilities
Net cash provided by operations               241,375          65,767
Investing activities
Purchases of property, plant and equipment    (14,902)         (21,002)
Proceeds from the disposition of property,    4,025            2,451
plant and equipment
Acquisitions, net of cash acquired            (21,909)         (89,893)
Other investment and notes receivable         (2,116)          (3,979)
transactions
Net cash used in investing activities         (34,902)         (112,423)
Financing activities
Proceeds from the sale of common stock        -                333,342
Payments on revolving credit facilities       (1,534,095)      (1,801,675)
Proceeds from revolving credit facilities     1,328,296        1,755,456
Purchase of senior secured notes              -                (205,003)
Payments on long-term obligations             (4,875)          (31,456)
Debt issuance costs paid                      (189)            (7,930)
Proceeds from exercise of stock options       2,230            51
Tax benefit on stock options                  302              422
Other financing activities                    (6)              -
Net cash (used in) provided by financing      (208,337)        43,207
activities
Decrease in cash                              (1,864)          (3,449)
Effect of foreign exchange rate on cash       (1,787)          (5,839)
Cash -- beginning of period                   37,090           46,127
Cash -- end of period                         $         $       
                                              33,439          36,839

MRC Global Inc.
Supplemental Information (Unaudited)
Calculation of Adjusted EBITDA
(Dollars in millions)
                        Three Months Ended            Nine Months Ended
                        September 30,  September 30,  September    September
                                                      30,          30,
                        2013           2012           2013         2012
Net income              $        $        $       $     
                          38.8         55.5         128.8      124.4
Income tax expense      21.2           30.3           65.5         67.8
Interest expense        15.5           28.2           46.0         92.6
Loss on early           -              10.3           -            21.7
extinguishment of debt
Write off of debt       -              -              -            1.7
issuance costs
Depreciation and        5.6            4.6            16.8         13.2
amortization
Amortization of         13.1           12.4           39.1         37.2
intangibles
(Decrease) increase in  (5.7)          (15.4)         (21.2)       3.1
LIFO reserve
Change in fair value of 1.8            (0.8)          (0.6)        (1.8)
derivative instruments
Equity-based            4.0            2.2            8.6          5.9
compensation expense
Executive separation    0.8            -              0.8          -
expense (cash portion)
Insurance charge        2.0            -              2.0          -
Foreign currency        (1.4)          (2.0)          12.0         (0.5)
(gains) losses
Other expense (income)  0.7            -              1.4          (1.2)
Adjusted EBITDA         $        $        $       $     
                          96.4        125.3          299.2      364.1

Note to above:
MRC Global defines Adjusted EBITDA as net income plus interest, income taxes,
depreciation and amortization, amortization of intangibles, and certain other
expenses (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 indicator of the company's operating performance. Among other things,
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, except per share amounts)
                              September 30, 2013
                              Three Months Ended       Nine Months Ended
                              Net Income    Per Share  Net Income    Per Share
Net income                    $   38,757  $      $  128,792  $    
                                            0.38                    1.26
Executive separation expense  1,295         0.01       1,295         0.01
Insurance charge              1,291         0.01       1,291         0.01
Adjusted Net Income           $   41,343  $      $  131,378  $    
                                            0.40                    1.28
                              September 30, 2012
                              Three Months Ended       Nine Months Ended
                              Net Income    Per Share  Net Income    Per Share
Net income                    $   55,541  $      $  124,400  $    
                                            0.54                    1.31
Loss on early extinguishment  6,529         0.07       13,841        0.14
of debt
Write off of debt issuance    -             -          1,095         0.01
costs
Adjusted Net Income           $   62,070  $      $  139,336  $    
                                            0.61                    1.46

Note to above:
In the first nine months of 2013, MRC Global incurred cash and equity-based
compensation charges related to the retirement of an executive officer as well
as a charge resulting from the bankruptcy of a workers' compensation insurance
carrier, which required the company to assume the obligation for existing
workers' compensation claims. In the first nine months of 2012, MRC Global
incurred certain charges to repurchase senior secured notes in the open
market.



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 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
 
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