MRC Global Announces First Quarter 2014 Results

               MRC Global Announces First Quarter 2014 Results

Sales of $1,306 million

Net income of $24 million

Diluted EPS of $0.23 per share

Adjusted diluted EPS of $0.28 per share

Adjusted EBITDA of $84 million

PR Newswire

HOUSTON, May 1, 2014

HOUSTON, May 1, 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 first
quarter 2014 results.

The company's sales were $1,306 million for the first quarter of 2014, which
are unchanged from the first quarter of 2013 and 3% lower than the fourth
quarter of 2013. Net income for the first quarter of 2014 was $23.5 million,
or $0.23 per diluted share, compared to a first quarter 2013 net income of
$46.2 million, or $0.45 per diluted share.

Adjusted diluted earnings per share (EPS) for the first quarter of 2014 was
$0.28 per diluted share and excludes the impact of a $5.0 million after-tax
charge ($0.05 per diluted share) related to the sale of the company's
progressive cavity pump (PCP) distribution and servicing business in Canada.
There were no adjustments to the first quarter of 2013 diluted EPS of $0.45
per diluted share. Please refer tothe 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, "As we previously discussed, inclement weather negatively impacted
first quarter 2014 sales in some regions of the U.S. in January and February.
However, we saw an increase in activity late in the quarter, which contributed
to organic growth in the upstream sector across all segments. The outlook for
the remainder of 2014 is encouraging. Our backlog at the end of the first
quarter was $1.03 billion, an all-time record for our company." Mr. Lane also
commented, "We are pleased to have completed the acquisition of Stream in the
first quarter and are looking forward to their contributions to MRC Global."

MRC Global's first quarter 2014 gross profit of $232.1 million declined to
17.8% of sales from first quarter 2013 gross profit of $246.6million, or
18.9% of sales. The 110 basis point decline reflected the impact of deflation
in the company's line pipe product group as well as the company's last-in,
first-out (LIFO) inventory costing methodology. First quarter 2014 gross
profit reflected a charge of $1.3million in cost of sales relating to the use
of the LIFO method of inventory cost accounting, while the first quarter of
2013 reflected a benefit of $3.1 million.

Selling, general and administrative (SG&A) expenses were $171.4 million for
the first quarter of 2014 compared to $160.8 million in the same period of
2013. The increase included $18 million of incremental expense from the
acquisitions of Stream AS (Stream) in January 2014 as well as Flangefitt
Stainless Ltd. (Flangefitt) and Flow Control Products (Flow Control) in the
second half of 2013. Excluding these acquisitions, SG&A was down $7.4 million
in the first quarter of 2014 compared to the first quarter of 2013 primarily
due to the disposition of the PCP distribution and servicing business in
Canada.

Adjusted EBITDA was $84.0 million for the first quarter of 2014 compared to
$103.9 million for the same period in 2013. Please refer to the
reconciliation of adjusted EBITDA (a non-GAAP measure) to net income (a GAAP
measure) in this release.

Interest expense for the first quarter of 2014 was $15.1 million as compared
to $15.3 million in the first quarter of 2013. The benefit of the repricing of
the Senior Secured Term Loan B in November 2013 was partially offset by higher
average debt balances in the first quarter of 2014 related to the acquisition
of Stream.

Sales by Segment

U.S. sales in the first quarter of 2014 were down 1.8% to $948.0 million from
the same quarter in 2013. The decline was attributable to reduced line pipe
sales as a result of lower line pipe pricing and reduced customer capital
spending including the impact of inclement weather in the company's Eastern
region in the first quarter of 2014. This decline was partially offset by an
increase in the company's other product lines as well as $5.6 million of sales
related to the company's July 2013 acquisition of Flow Control. From a sector
perspective, the U.S. experienced organic growth in the upstream and
downstream sectors of 2.8% and 1.0%, respectively.

Canadian sales in the first quarter of 2014 were $166.2 million, down 18.7%
from the same quarter in 2013. The decline was primarily attributable to the
sale of the PCP distribution and servicing business, which reduced sales by
$23 million. The remaining 7.4% reduction in sales was due to a decline in the
Canadian dollar relative to the U.S. dollar.

International sales in the first quarter of 2014 were $191.5million, an
increase of 41.9% from the same period in 2013. The increase was due primarily
to sales from Stream and Flangefitt of $64.3million for the first quarter of
2014. Organically, excluding the decline in the Australian dollar compared to
the U.S. dollar, International sales remained relatively flat when comparing
first quarter of 2014 to first quarter of 2013.

Sales by Sector

Upstream sales in the first quarter of 2014 increased 9.7% from the first
quarter of 2013 to $634.8million, or 49% of total sales. The improvement in
upstream sales was substantially attributable to the acquisitions completed in
2013 and 2014, as well as organic growth of 2.0%, partially offset by the sale
of the PCP distribution and servicing business in Canada.

Midstream sales in the first quarter of 2014 decreased 11.1% from the first
quarter of 2013 to $307.4million, or 23% of total sales. Sales to both
transmission and gas utility customers were down by 16.9% and 1.6%,
respectively. Reduced midstream sales were influenced by lower line pipe
activity in the U.S.

Downstream sales in the first quarter of 2014 decreased 4.6% from the first
quarter of 2013 to $363.5 million, or 28% of total sales. The company
experienced weak market conditions in the Canadian and International segments,
partially offset by modest growth in the U.S.

Balance Sheet

Debt outstanding was $1,314 million at March 31, 2014, an increase of $327.4
million during the first quarter of 2014, primarily due to the acquisition of
Stream. Cash used in operations was $74.3 million during the first quarter of
2014 primarily due to timing of receivables collections and an increase in
inventory purchases in anticipation of increased sales levels.

Calendar Year 2014 Guidance

MRC Global's expected full year 2014 results, excluding the impact of any
future acquisitions, is unchanged from last quarter, as presented below.

                          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 first quarter 2014
results at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on May 2, 2014.
To participate in the call, please 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.comand 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 May 16, 2014 and may be accessed by
dialing (303) 590-3030 and using pass code 4673664#. 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)
                                          March 31,          December 31,
                                          2014               2013
Assets
Current assets:
Cash                                      $          $        
                                          30,140             25,188
Accounts receivable, net                  904,838            812,147
Inventories, net                          1,053,594          971,567
Other current assets                      36,895             37,091
Total current assets                      2,025,467          1,845,993
Other assets                              27,568             30,473
Property, plant and equipment, net        120,650            118,923
Intangible assets:
Goodwill, net                             779,513            632,284
Other intangible assets, net              767,122            708,009
                                          $             $     
                                          3,720,320         3,335,682
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable                    $           $       
                                          535,842            550,393
Accrued expenses and other current        150,118            124,925
liabilities
Deferred income taxes                     77,686             78,844
Current portion of long-term debt         7,935              7,935
Total current liabilities                 771,581            762,097
Long-term obligations:
Long-term debt, net                       1,306,292          978,899
Deferred income taxes                     256,566            241,116
Other liabilities                         19,750             15,302
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value per share:
500,000 shares authorized, 101,944 and
101,913 issued and outstanding,           1,019              1,019
respectively
Preferred stock, $0.01 par value per
share; 100,000 shares authorized,
no shares issued and outstanding          -                  -
Additional paid-in capital                1,646,421          1,644,406
Retained deficit                          (243,215)          (266,735)
Accumulated other comprehensive loss      (38,094)           (40,422)
                                          1,366,131          1,338,268
                                          $             $     
                                          3,720,320         3,335,682





MRC Global Inc.

Condensed Consolidated Statements of Income (Unaudited)

(Dollars in thousands, except per share amounts)
                                    Three Months Ended
                                    March 31,             March 31,
                                    2014                  2013
Sales                               $     1,305,679  $     1,305,100
Cost of sales                       1,073,547             1,058,529
Gross profit                        232,132               246,571
Selling, general and administrative 171,389               160,757
expenses
Operating income                    60,743                85,814
Other income (expense):
Interest expense                    (15,148)              (15,302)
Change in fair value of derivative  (3,563)               567
instruments
Other, net                          (5,310)               116
Income before income taxes          36,722                71,195
Income tax expense                  13,202                25,012
Net income                          $              $       
                                    23,520                46,183
Basic earnings per common share     $            $         
                                    0.23                  0.45
Diluted earnings per common share   $            $         
                                    0.23                  0.45
Weighted-average common shares,     101,924               101,609
basic
Weighted-average common shares,     102,738               102,426
diluted





MRC Global Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)
                                              Three Months Ended
                                              March 31,        March 31,
                                              2014             2013
Operating activities
Net income                                    $         $       
                                              23,520          46,183
Adjustments to reconcile net income to net
cash (used in) provided by operations:
Depreciation and amortization                 5,177            5,392
Amortization of intangibles                   15,730           13,243
Equity-based compensation expense             1,808            1,920
Deferred income tax benefit                   (6,809)          (4,017)
Amortization of debt issuance costs           1,352            1,446
Increase (decrease) in LIFO reserve           1,315            (3,072)
Change in fair value of derivative            3,563            (567)
instruments
Provision for uncollectible accounts          244              (907)
Foreign currency gains                        (1,636)          (184)
Other non-cash items                          783              572
Changes in operating assets and liabilities:
Accounts receivable                           (39,335)         11,937
Inventories                                   (46,141)         12,581
Income taxes payable                          22,013           25,198
Other current assets                          4,934            (6,987)
Accounts payable                              (45,696)         83,484
Accrued expenses and other current            (15,140)         (11,815)
liabilities
Net cash (used in) provided by operations     (74,318)         174,407
Investing activities
Purchases of property, plant and equipment    (1,957)          (4,890)
Proceeds from the disposition of property,    551              52
plant and equipment
Acquisitions, net of cash acquired            (247,201)        -
Other investment and notes receivable         (734)            295
transactions
Net cash used in investing activities         (249,341)        (4,543)
Financing activities
Payments on revolving credit facilities       (451,808)        (544,460)
Proceeds from revolving credit facilities     781,114          365,167
Payments on long-term obligations             (1,984)          (1,625)
Debt issuance costs paid                      (90)             (173)
Proceeds from exercise of stock options       329              1,459
Tax (expense) benefit on stock options        (9)              451
Net cash provided by (used in) financing      327,552          (179,181)
activities
Increase (decrease) in cash                   3,893            (9,317)
Effect of foreign exchange rate on cash       1,059            (352)
Cash -- beginning of period                   25,188           37,090
Cash -- end of period                         $         $       
                                              30,140          27,421





MRC Global Inc.

Supplemental Information (Unaudited)

Reconciliation of Adjusted Net Income to Net Income

(Dollars in thousands, except per share amounts)
                                          Three Months Ended
                                          March 31, 2014
                                          Net Income    Per Share
Net income                                $   23,520  $     0.23
Loss on sale of Canadian PCP business (1) 5,012         0.05
Adjusted Net Income                       $   28,532  $     0.28



Note to above:
(1)                Charge related to the sale of our progressive cavity pump
                   distribution and servicing business in Canada.
There were no adjustments to net income for the three months ending March 31,
2013.
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, do not represent and should not be
considered as an alternative to net income and net income per share calculated
and presented in accordance with U.S. generally accepted accounting principles
(GAAP). Because adjusted net income and adjusted net income per share do 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 per share, to measure performance.





MRC Global Inc.

Supplemental Information (Unaudited)

Reconciliation of Adjusted EBITDA to Net Income

(Dollars in millions)
                                          Three Months Ended
                                          March 31,          March 31,
                                          2014               2013
Net income                                $          $        
                                          23.5               46.2
Income tax expense                        13.2               25.0
Interest expense                          15.1               15.3
Depreciation and amortization             5.2                5.4
Amortization of intangibles               15.7               13.2
Increase (decrease) in LIFO reserve       1.3                (3.1)
Change in fair value of derivative        3.6                (0.6)
instruments
Equity-based compensation expense         1.8                1.9
Loss on sale of Canadian PCP business     6.2                -
Foreign currency gains                    (1.6)              (0.2)
Other expense                             -                  0.8
Adjusted EBITDA                           $          $       
                                          84.0               103.9



Note to above:
The company 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 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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