The Company’s Chairman, President and Chief Executive Officer, Dan O’Leary stated, “Our two operating segments, Edgen Murray and Bourland & Leverich, achieved significant year over year gains in revenue and earnings. Favorable business conditions in oil prices, rig count, and capital expenditure by our customers drove increased demand for the specialized products we distribute throughout global energy markets. Our ability to capture share for drilling programs, project development, and MRO activity as it came on line resulted in 55% gain in pro forma revenue and 50% growth in pro forma EBITDA from the first quarter of 2011 to the first quarter of 2012. First quarter 2012 sales included high demand for products related to shale drilling and completions, transmission infrastructure and robust offshore upstream activity.”
Compared to first quarter 2011, pro forma sales from the Company’s Energy & Infrastructure (“E&I”) segment, operating under the brand name Edgen Murray, increased by $92.1 million, or 50%, to $277.7 million. Strong organic growth was driven by increased activity levels, particularly in the Upstream and Midstream energy markets, as a result of worldwide oil and natural gas development.
Compared to first quarter 2011, pro forma sales from the Company’s Oil Country Tubular Goods (“OCTG”) segment, operating under the brand name Bourland & Leverich, increased by $86.7 million, or 61%, to $228.2 million. There was strong demand from onshore drilling customers with active drilling programs in oil and liquids-rich shale plays. These significant increases were driven by higher rig count, additional product volume needed for horizontal drilling, and more complex material requirements for difficult environments during the first quarter 2012 compared to the same period in 2011.
Pro forma gross profit increased $16.1 million, a 38% increase, compared to the first quarter of 2011. As a result of a lower margin product mix centered around shale extraction and processing infrastructure, pro forma gross margin was 11.5% in the first quarter 2012 compared to 12.9% in the same period in 2011.
Pro forma selling, general and administrative (“SG&A”) expenses were 4.5% of total sales for the first quarter of 2012 compared to 6.0% of pro forma total sales for the same period in 2011 due to improved operating leverage on higher sales. Pro forma SG&A expenses increased $3.2 million, to $23.0 million compared to $19.8 million in the same period in 2011, driven by staff additions and other expenses to support sales growth.
Mr. O’Leary commented, “These strong first quarter results, combined with the completion of our initial public offering and repayment of over $139 million of debt, are positive events that create significant improvement in our balance sheet and will contribute to the successful execution of our long term growth strategies.”
Selected financial information for the first quarter 2012 is included below. See “Basis of Presentation” below for a discussion of the impact of the Company’s initial public offering and reorganization on May 2, 2012 and for an explanation of the Company’s use of pro forma financial information.
Conference Call
Edgen Group management will host a conference call to discuss the financial results on Thursday, May 10, 2012 at 9:00 a.m. Eastern time (8:00 a.m. Central time). This call may include material information not included in this press release. Interested parties in the United States may dial 1-877-883-0383 to listen to the live conference call. Additionally, international parties may dial 1-412-902-6506. To access the conference call, please call in at least ten minutes prior to the start time and request conference number 1164777.
To access the conference call via internet, please log onto http://www.edgengroup.com and go to the “Investor Relations” webpage at least fifteen minutes prior to the start time to register, download and install any necessary software.
A replay of the conference call (conference number 10013935) will be available in the United States by dialing 1-877-344-7529 and 1-412-317-0088 for international parties. A replay of the conference call will also be available at Edgen Group’s website, www.edgengroup.com, and will remain available for seven days following the date the replay is posted. The Company will also have the webcast available on the Company’s website at www.edgengroup.com shortly after the live event and for 90 days.
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