- Big 50
- Sales of $534.6 million; an increase of 17% from prior year's third quarter
- Net income of $10.4 million and diluted earnings per share of $0.21
- Adjusted EBITDA of $39.8 million; up 17% from prior year's third quarter
Baton Rouge, LA - Edgen Group Inc., a leading global distributor of specialized products including steel pipe, valves, plate, and related components to the energy and industrial markets, today reported its financial results for the three and nine months ended September 30, 2012.
Edgen Group sales for the third quarter 2012 increased 17% to a record $534.6 million from $457.2 million in the third quarter 2011. Edgen Group sales for the first nine months of 2012 increased 28% to $1.5 billion from $1.2 billion for the first nine months of 2011.
Sales from the Company's Energy & Infrastructure (“E&I”) segment, operating under the brand name Edgen Murray, increased $50.7 million, or 21%, to $295.6 million for the third quarter 2012 and increased $175.7 million, or 27%, to $828.7 million for the first nine months of 2012 compared to the same periods in 2011. E&I segment backlog was $350 million at September 30, 2012 compared to $405 million at June 30, 2012 and $353 million at December 31, 2011.
Sales at the Company's Oil Country Tubular Goods (“OCTG”) segment, operating under the brand name Bourland & Leverich, increased $26.9 million, or 13%, to $239.2 million for the third quarter 2012 and increased by $162.1 million, or 30%, to $708.5 million for the first nine months of 2012 compared to the same periods in 2011.
Gross margins were 12.1% and 11.8% in the third quarter 2012 and the first nine months of 2012, respectively, which is an improvement from 11.8% in the second quarter 2012. Gross margins were 12.8% and 13.0% in the third quarter 2011 and the first nine months of 2011, respectively.
Gross margins for the E&I segment were 14.0% and 13.8% for the third quarter 2012 and first nine months of 2012, respectively, compared to 13.7% in the second quarter 2012. Gross margins for the OCTG segment were 9.5% for both the third quarter and the first nine months of 2012 compared to 9.8% in the second quarter 2012.
Selling, general and administrative (“SG&A”) expenses were 4.7% and 5.0% of total sales for the third quarter 2012 and for the first nine months of 2012, respectively, compared to 5.5% and 5.6% of total sales for the same periods in 2011, respectively. Exclusive of a $3.0 million non-cash charge related to equity-based compensation expense associated with the acceleration of certain equity-based awards in the second quarter 2012, SG&A expenses were 4.8% of total sales and reflect effective cost control for the first nine months of 2012 and resulted in improved operating income.
Net income for the third quarter 2012 was $10.4 million compared to net income of $2.4 million in the third quarter 2011. Earnings per basic and diluted share for the third quarter 2012 were $0.22 and $0.21, respectively.
Net income for the first nine months of 2012 was $0.7 million compared to a net loss of $(4.0) million for the first nine months of 2011. Excluding the $15.1 million (net of tax of $1.9 million) loss on prepayment of debt related to the Company's initial public offering and the $3.0 million equity-based compensation charges (net of tax of $0) previously discussed, net income for the nine months ended September 30, 2012 would have been $18.8 million.
Adjusted EBITDA (as defined and calculated in the attached table), a non-GAAP financial measure used by Edgen Group to evaluate the performance of the business, was $39.8 million, or a 17% increase, for the third quarter 2012 compared to $33.9 million for the third quarter 2011. Adjusted EBITDA increased $17.9 million, or 19%, to $110.4 million for the first nine months of 2012 compared to $92.5 million for the first nine months of 2011. At September 30, 2012, the Company's trailing twelve month adjusted EBITDA was $142.6 million.
Dan O'Leary, the Company's Chairman and Chief Executive Officer stated, “We believe our sales growth and operating results in the third quarter 2012 represent our ability to adapt and capture customer spending. In our E&I segment, we saw higher sales volumes in the U.S. midstream energy market and increased offshore upstream sales in the Asia/Pacific region.” Mr. O'Leary continued, “At the same time, our OCTG segment sales increased through market share gains and improved sales product mix from rigs operating primarily in U.S. liquid-rich shale formations which require specialized alloy products.”
Based on current market conditions and expected customer spending patterns and delivery schedules, the Company maintains its revised annual revenue and Adjusted EBITDA guidance, as disclosed in its Form 8-K filed on October 1, 2012. The Company will continue to monitor global economic conditions and market drivers that may impact its operations and financial results including, but not limited to, global energy demand, oil and natural gas prices, international and U.S. land-based rig count and commodity steel prices. Changes in these factors could have an adverse impact on our operating results.
About Edgen Group
Edgen Group is a leading global distributor of specialized products and services to the energy sector and industrial infrastructure markets, including steel pipe, valves, quenched and tempered and high yield heavy plate and related components. Edgen Group is headquartered in Baton Rouge, Louisiana. Additional information is available at www.edgengroup.com.
EDGEN GROUP INC.
UNAUDITED CONDENSED CONSOLIDATED/COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Three months ended
Nine months ended
|Cost of sales (exclusive of depreciation and amortization shown below)||469,932||398,867||1,355,186||1,043,516|
|Selling, general and administrative expense||25,171||25,105||76,606||66,961|
|Depreciation and amortization expense||7,905||8,933||24,031||26,781|
|Total operating expenses||503,008||432,905||1,455,823||1,137,258|
|INCOME FROM OPERATIONS||31,616||24,261||81,130||62,024|
|OTHER INCOME (EXPENSE):|
|Other income (expense)- net||(366||)||71||109||1,857|
|Loss on prepayment of debt||—||—||(17,005||)||—|
|Interest expense - net||(18,331||)||(20,733||)||(59,899||)||(64,517||)|
|INCOME (LOSS) BEFORE INCOME TAX EXPENSE||12,919||3,599||4,335||(636||)|
|INCOME TAX EXPENSE||2,535||1,193||3,674||3,315|
|NET INCOME (LOSS)||$||10,384||$||2,406||$||661||$||(3,951||)|
|NET INCOME (LOSS) ATTRIBUTABLE TO:|
|Edgen Group Inc.||3,886||—||(2,189||)|
|EDGEN GROUP INC. EARNINGS (LOSS) PER SHARE:|
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:|
* Edgen Group Inc. did not have any assets or operations, nor did it have any common stock outstanding prior to the IPO and the Reorganization. Accordingly, the loss attributable to Edgen Group Inc., loss per share and weighted average common shares outstanding shown are for the period from May 2, 2012 to September 30, 2012 (the period since the IPO and the Reorganization).
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