MRC Global Announces Fourth Quarter And Full Year 2013 Results And Introduces 2014 Guidance

MRC Global Announces Fourth Quarter And Full Year 2013 Results And Introduces
                                2014 Guidance

- Fourth quarter sales of $1.34 billion; Annual sales of $5.23 billion

- Fourth quarter diluted EPS of $0.23; Annual diluted EPS of $1.48, up 21%
from 2012

- Fourth quarter adjusted EBITDA of $87 million; Annual adjusted EBITDA of
$386 million

- Fourth quarter net income of $23 million; Annual net income of $152 million

- Generated $324 million in cash from operations in 2013

- 2014 sales guidance $5.5 billion to $5.8 billion

PR Newswire

HOUSTON, Feb. 20, 2014

HOUSTON, Feb. 20, 2014 /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 industry, today announced
fourth quarter and full year 2013 results and introduced 2014 guidance.

The company's sales increased 3% from $1.31 billion in the fourth quarter of
2012 to $1.34billion in the same quarter of 2013. The increase of $37 million
came from the acquisitions of Production Specialty Services Inc. (PSS), Flow
Control Products (Flow Control) and Flangefitt Stainless Ltd. (Flangefitt),
all of which are primarily in the upstream sector.

Net income for the fourth quarter of 2013 was $23.3 million, or $0.23 per
diluted share, compared to a fourth quarter 2012 net loss of ($6.4) million,
or ($0.06) per diluted share.

Adjusted diluted EPS for the fourth quarter of 2013 was $0.32 per diluted
share and excludes the impact of a total of $9.7 million in after-tax charges
($0.09 per diluted share) related to re-pricing of debt, the accelerated
recognition of equity-based compensation and an increase in valuation
allowances for certain deferred tax assets. Adjusted diluted EPS for the
fourth quarter of 2012 was $0.55 per diluted share and excluded $62.8 million
in after-tax charges ($0.61 per diluted share) related to the purchase and
early retirement of a portion of MRC Global's previously outstanding senior
secured notes and the termination of a pension plan in the Netherlands. See
the reconciliation of adjusted net income (a non-GAAP measure) to net income
(a GAAP measure) included in this release.

Andrew R. Lane, MRC Global's chairman, president and chief executive officer,
stated, "While 2013 didn't result in the growth we had initially expected, we
completed our strategic rebalance of OCTG which resulted in a $251 million
drop in annual revenue compared to 2012 but accomplished our goal of reducing
our exposure to our most volatile, lowest margin product line."

Mr. Lane also noted, "The year finished on a positive note, with the highest
sales quarter of the year, up 2% from the previous quarter despite poor
weather and fewer billing days. We were successful in expanding several of our
major customer framework agreements, adding international scope for future
growth. We are also very pleased with our strategic acquisitions of Flangefitt
in December 2013 and Stream in January 2014. These two acquisitions
significantly increase our international scale as well as add new offshore and
project capabilities in the upstream sector to our business model. We
successfully managed our working capital in the slower than expected year,
generating $324 million in cash flow from operations in 2013 and reduced our
long-term debt."

In conclusion, Mr. Lane stated, "We are looking forward to returning to a year
of growth in 2014, with annual sales expected to grow in the high single
digits."

MRC Global's fourth quarter 2013 gross profit of $226.0 million declined to
16.8% of sales from fourth quarter 2012 gross profit of $258.3million, or
19.8% of sales. Fourth quarter 2013 reflected a charge of $1.1 million in cost
of sales relating to the use of the last-in, first-out (LIFO) method of
inventory cost accounting while fourth quarter 2012 reflected a benefit of
$27.2 million. Gross profit was also negatively impacted by pricing pressure
and product mix changes in the line pipe product line.

Selling, general and administrative expenses were $167.4million for the
fourth quarter of 2013 compared to $154.2 million in the same period of 2012.
This increase included a $5.2 million charge associated with the accelerated
recognition of equity-based compensation expense as a result of the November
2013 secondary common stock offering in which our private equity sponsor sold
its remaining interest in MRC Global. The increase also included $5.0 million
of incremental expense from the PSS, Flow Control and Flangefitt acquisitions
as well as costs associated with our ongoing acquisition-related activities.

Adjusted EBITDA was $87.2 million for the fourth quarter of 2013 compared to
$99.2 million for the same period in 2012. See reconciliation of adjusted
EBITDA (a non-GAAP measure) to net income (a GAAP measure) in this release.

Interest expense for the fourth quarter of 2013 was $14.7 million as compared
to $19.9 million in the fourth quarter of 2012. The decrease in interest
expense was the result of lower interest rates from refinancing the company's
senior secured notes in November 2012 and the re-pricing of the senior secured
Term Loan B in November 2013, as well as lower average debt balances in 2013.

Sales by Segment

U.S. sales in the fourth quarter of 2013 were up 6% to $1.01 billion from the
same quarter in 2012. A majority of the increase was due to the acquisitions
of PSS and Flow Control. In addition, the company experienced organic growth
in the sales of its gas utility and line pipe product lines.

Canadian sales in the fourth quarter of 2013 were $189.3 million, down 10.6%
from the same quarter in 2012. Adjusting for a 5% decline in the Canadian
dollar, the company experienced an underlying reduction in sales of
approximately 6% due to a lower level of project-related sales.

International sales in the fourth quarter of 2013 were $143.1million, an
increase of 1.8% from the same period in 2012. The company experienced growth
in sales from Europe and Asia, but were partially offset by a decline in sales
from Australasia.

Sales by Sector

Upstream sales in the fourth quarter of 2013 increased 5.5% from the fourth
quarter of 2012 to $606.0million, or 45% of total sales. The improvement in
upstream sales is substantially attributable to the acquisitions of PSS and
Flow Control, partially offset by weak sales in Canada.

Midstream sales in the fourth quarter of 2013 increased 7.2% from the fourth
quarter of 2012 to $392.2million, or 29% of total sales. Spending from
transmission and gas utility customers was up by 4% and 14%, respectively.

Downstream sales in the fourth quarter of 2013 decreased 5.6% from the fourth
quarter of 2012 to $346.0 million, or 26% of total sales. The company
continued to experience weak market conditions in the international and
Canadian segments although the company experienced growth in the U.S.

Balance sheet

Debt outstanding was $986.8 million at December 31, 2013, a reduction of $57
million during the fourth quarter of 2013. Cash provided by operations was
$82.2 million during the fourth quarter of 2013 and $323.6 million for the
year ended December 31, 2013.

Calendar Year 2014 Guidance

MRC Global's expected full year 2014 results, excluding the impact of any
future acquisitions, are as follows:

                          Low            High
Sales                     $5.5 billion   $5.8 billion
Adjusted EBITDA           $ 400 million  $ 450 million
Tax rate                  35%            36%
Capital expenditures      $25 million    $30 million
Cash flow from operations $175 million   $ 200 million

Conference Call

The company will hold a conference call to discuss its fourth quarter and full
year 2013 results at 10:00 a.m. Eastern (9:00 a.m. Central) on February 21,
2014. 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
the conference call 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, 2014 and may be accessed by
dialing (303) 590-3030 and using pass code 4660955#. Also, an archive of the
webcast will be available shortly after the call at
http://www.mrcglobal.comfor 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 industry and supplies these
products and services across each of the upstream, midstream and downstream
sectors. More information about MRC Global can be found on our website
mrcglobal.com.

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", "looking forward", "guidance" 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 sales,
adjusted EBITDA, tax rate, capital expenditures and cash flow, 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 are based on management's expectations that
involve a number of business risks and uncertainties, any of which could cause
actual results to differ materially from those expressed in or implied by the
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors, most of which are difficult to predict and
many of which are beyond our control, including the factors described in the
company's SEC filings that may cause our 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; 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.govand 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.

Contact:

Monica Schafer
Vice President Investor Relations
MRC Global Inc.
Monica.Schafer@mrcglobal.com
832-308-2847





MRC Global Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(Dollars in thousands, except per share amounts)
                                          December 31,       December 31,
                                          2013               2012
Assets
Current assets:
Cash                                      $          $        
                                          25,188             37,090
Accounts receivable, net                  812,147            823,236
Inventories, net                          971,567            970,228
Other current assets                      37,091             20,020
Total current assets                      1,845,993          1,850,574
Other assets                              30,473             37,031
Property, plant and equipment, net        118,923            122,458
Intangible assets:
Goodwill, net                             632,284            610,392
Other intangible assets, net              708,009            749,272
                                          $             $     
                                          3,335,682         3,369,727
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable                    $           $       
                                          550,393            438,344
Accrued expenses and other current        124,925            125,599
liabilities
Deferred income taxes                     78,844             79,661
Current portion of long-term debt         7,935              6,500
Total current liabilities                 762,097            650,104
Long-term obligations:
Long-term debt, net                       978,899            1,250,089
Deferred income taxes                     241,116            261,448
Other liabilities                         15,302             22,164
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value per share:
500,000 shares authorized, 101,913 and    1,019              1,016
101,563 issued and outstanding,
respectively
Preferred stock, $0.01 par value per
share; 100,000 shares authorized, no     -                  -
shares issued and outstanding
Additional paid-in capital                1,644,406          1,625,900
Retained deficit                          (266,735)          (418,830)
Accumulated other comprehensive loss      (40,422)           (22,164)
                                          1,338,268          1,185,922
                                          $             $     
                                          3,335,682         3,369,727



MRC Global Inc.

Condensed Consolidated Statements of Income (Unaudited)

(Dollars in thousands, except per share amounts)
                      Three Months Ended            Year Ended
                      December 31,   December 31,   December 31,  December 31,
                      2013           2012           2013          2012
Sales                 $          $          $         $    
                      1,344,203     1,306,733     5,230,792    5,570,858
Cost of sales         1,118,241      1,048,429      4,276,033     4,557,115
Gross profit          225,962        258,304        954,759       1,013,743
Selling, general and
administrative        167,352        154,225        642,994       606,753
expenses
Operating income      58,610         104,079        311,765       406,990
Other income
(expense):
Interest expense      (14,697)       (19,898)       (60,685)      (112,519)
Loss on early
extinguishment of     -              (92,215)       -             (113,961)
debt
Expenses associated   (5,136)        -              (5,136)       (1,685)
with refinancing
Change in fair value
of derivative         4,142          416            4,731         2,186
instruments
Other, net            (293)          (2,869)        (13,764)      685
Income before income  42,626         (10,487)       236,911       181,696
taxes
Income tax expense    19,323         (4,045)        84,816        63,738
Net income            $        $        $        $     
                       23,303        (6,442)       152,095      117,958
Basic earnings per    $        $        $        $     
common share             0.23       (0.06)         1.50      1.22
Diluted earnings per  $        $        $        $     
common share             0.23       (0.06)         1.48      1.22
Weighted-average      101,829        101,518        101,712       96,465
common shares, basic
Weighted-average
common shares,        102,720        101,518        102,522       96,925
diluted



MRC Global Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)
                                              Year Ended
                                              December 31,     December 31,
                                              2013             2012
Operating activities
Net income                                    $          $      
                                              152,095         117,958
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization                 22,338           18,585
Amortization of intangibles                   52,072           49,466
Equity-based compensation expense             15,488           8,475
Deferred income tax benefit                   (19,823)         (20,432)
Amortization of debt issuance costs           5,777            8,782
Write off of debt issuance costs              2,865            1,685
Loss on early extinguishment of debt          -                113,961
(Decrease) increase in LIFO reserve           (20,180)         (24,140)
Change in fair value of derivative            (4,731)          (2,186)
instruments
Provision for uncollectible accounts          (298)            2,428
Foreign currency losses (gains)               12,913           (766)
Other non-cash items                          1,137            7,727
Changes in operating assets and liabilities:
Accounts receivable                           2,069            22,399
Inventories                                   4,479            26,674
Income taxes payable                          (7,057)          (12,593)
Other current assets                          (8,738)          (681)
Accounts payable                              117,320          (84,380)
Accrued expenses and other current            (4,138)          7,110
liabilities
Net cash provided by operations               323,588          240,072
Investing activities
Purchases of property, plant and equipment    (22,068)         (26,189)
Proceeds from the disposition of property,    4,583            2,272
plant and equipment
Acquisitions, net of cash acquired of $2,433, (46,794)         (152,367)
$0 and $2,036
Other investment and notes receivable         (5,130)          (6,755)
transactions
Net cash used in investing activities         (69,409)         (183,039)
Financing activities
Proceeds from the sale of common stock        -                333,342
Payments on revolving credit facilities       (2,150,188)      (2,422,136)
Proceeds from revolving credit facilities     1,738,213        2,571,835
Purchases and redemption of senior secured    -                (1,135,223)
notes
Proceeds from issuance of term loan           150,000          643,500
Payments on long-term obligations             (6,859)          (33,081)
Debt issuance costs paid                      (697)            (20,038)
Proceeds from exercise of stock options       3,285            677
Tax benefit on stock options                  1,261            629
Other financing activities                    (6)              3
Net cash used in financing activities         (264,991)        (60,492)
Decrease in cash                              (10,812)         (3,459)
Effect of foreign exchange rate on cash       (1,090)          (5,578)
Cash -- beginning of year                     37,090           46,127
Cash -- end of year                           $         $       
                                              25,188          37,090



MRC Global Inc.

Supplemental Information (Unaudited)

Reconciliation of Net Income to Adjusted Net Income

(Dollars in thousands, except per share amounts)
                             December 31, 2013
                             Three Months Ended       Year Ended
                             Net Income    Per Share  Net Income    Per Share*
Net income                   $   23,303  $      $  152,095  $    
                                           0.23                    1.48
Executive separation expense -             -          1,295         0.01
(1)
Insurance charge (2)         -             -          1,291         0.01
Expenses associated with     3,338         0.03       3,338         0.03
refinancing (3)
Equity-based compensation    3,403         0.03       3,403         0.03
acceleration (4)
Deferred tax asset           3,000         0.03       3,000         0.03
adjustment (5)
Adjusted Net Income          $   33,044  $      $  164,422  $    
                                           0.32                    1.60
                             December 31, 2012
                             Three Months Ended       Year Ended
                             Net Income    Per Share  Net Income    Per Share
Net income                   $           $      $  117,958  $    
                             (6,442)      (0.06)                   1.22
Loss on early extinguishment 59,940        0.58       74,075        0.76
of debt (6)
Write off of debt issuance   -             -          1,095         0.01
costs (7)
Pension settlement (8)       2,873         0.03       2,873         0.03
Adjusted Net Income          $   56,371  $      $  196,001  $    
                                           0.55                    2.02



Note to above:
(1)              Cash and equity-based compensation charges associated with
                 the separation of an executive officer recorded in SG&A.
                 Charge resulting from the bankruptcy of a workers'
(2)              compensation insurance carrier, which required the company to
                 assume the obligation for existing workers' compensation
                 claims, recorded in other expenses.
                 Expenses related to the re-pricing of the company's senior
(3)              secured Term Loan B in November 2013. Write off of debt
                 issuance costs associated with the refinancing of our credit
                 facilities in 2012.
                 Accelerated recognition of equity-based compensation expense
(4)              as a result of the November 2013 secondary common stock
                 offering in which our private equity sponsor sold its
                 remaining interest in MRC Global, which was recorded in SG&A.
(5)              Net adjustment to increase the valuation allowance on
                 deferred tax assets for certain foreign jurisdictions.
                 Loss on the extinguishment of debt associated with the
(6)              purchase and redemption of previously outstanding senior
                 secured notes.
(7)              Charges related to termination of a defined benefit pension
                 plan in the Netherlands recorded in other expenses.
* Column does not foot due to rounding.
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.



MRC Global Inc.

Supplemental Information (Unaudited)

Calculation of Adjusted EBITDA

(Dollars in millions)
                       Three Months Ended           Year Ended
                       December 31,   December 31,  December 31,  December 31,
                       2013           2012          2013          2012
Net income             $        $        $        $     
                         23.3          (6.4)    152.1       118.0
Income tax expense     19.3           (4.0)         84.8          63.7
Interest expense       14.7           19.9          60.7          112.5
Loss on early          -              92.2          -             114.0
extinguishment of debt
Expenses associated    5.1            -             5.1           1.7
with refinancing
Depreciation and       5.6            5.4           22.3          18.6
amortization
Amortization of        12.9           12.3          52.1          49.5
intangibles
Increase (decrease) in 1.1            (27.2)        (20.2)        (24.1)
LIFO reserve
Change in fair value
of derivative          (4.1)          (0.4)         (4.7)         (2.2)
instruments
Equity-based           6.9            2.6           15.5          8.5
compensation expense
Executive separation   -              -             0.8           -
expense (cash portion)
Insurance charge       -              -             2.0           -
Pension settlement     -              4.4           -             4.4
Foreign currency       0.9            (0.3)         12.9          (0.8)
losses (gains)
Other expense          1.5            0.7           3.0           (0.6)
Adjusted EBITDA        $        $        $        $     
                         87.2          99.2      386.4       463.2

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.

SOURCE MRC Global Inc.

Website: http://www.mrcglobal.com
 
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