MRC Global Inc. Completes Acquisition Of OneSteel Piping Systemst, Announces Fourth Quarter and Full Year 2011 Financial Results
Houston, TX - March 1, 2012 - MRC Global Inc., the largest global distributor of pipe, valves and fittings and related products and services to the energy and industrial sectors based on sales, today announced its fourth quarter and full year 2011 financial results.
For the fourth quarter of 2011, the company generated sales of $1.306 billion, up 26.2% from sales of $1.035 billion in the fourth quarter of 2010. For the year ended December 31, 2011, sales increased 25.7% to $4.832 billion from $3.846 billion during the year ended December 31, 2010. These increases were primarily due to the continued strengthening in MRC’s upstream and midstream sectors, which improved activity levels have driven, primarily in the oil and natural gas shale regions.
Gross margin was $187.4 million (14.3% of sales) in the fourth quarter of 2011, compared with $134.4 million (13.0% of sales) in the fourth quarter of 2010. Gross margin for the year ended December 31, 2011 was $708.2 million (14.7% of sales), compared to $518.1 million (13.5% of sales) for 2010.
Commenting on the company’s results, Andrew R. Lane, chairman, president and chief executive officer, stated, “Demand for our products and services remained strong in the fourth quarter, as evidenced by our $1.306 billion in sales and our 26% year-over-year growth. Our year-over-year fourth quarter profitability improved as we focused on our higher margin products and as a result of our inventory rebalancing efforts.”
For the fourth quarter of 2011, selling, general and administrative expenses (SG&A) increased $21.1 million compared to the same quarter in 2010. For the year ended December 31, 2011, SG&A expenses increased $61.9 million over 2010. These increases are attributable primarily to an increase in variable personnel expenses and the inclusion of expenses from the June 2011 acquisition of MRC SPF in Australia.
The company generated operating income of $49.9 million in the fourth quarter of 2011 compared to $18.1 million for the fourth quarter of 2010. For the year ended December 31, 2011, the company generated operating income of $194.6 million, compared to operating income of $66.4 million for 2010, an increase of $128.2 million.
The company’s net income for the fourth quarter of 2011 was $3.6 million, compared to a net loss of $13.5 million for the fourth quarter of 2010. For the year ended December 31, 2011 the company’s net income was $29.0 million, compared to a net loss of $51.8 million for 2010. The net income in the fourth quarter was negatively impacted by a $28 million LIFO charge and an abnormally high income tax rate resulting from certain discrete fourth quarter items.
Adjusted EBITDA was $100.3 million for fourth quarter of 2011, compared to $56.7 million for the same period in 2010. Adjusted EBITDA was $360.5 million for the year ended December 31, 2011, compared to $224.2 million during 2010. The increase in Adjusted EBITDA was due primarily to an increase in sales volume and gross margin, offset partially by our increased operating expenses. See the table attached hereto for a reconciliation of Adjusted EBITDA to net income and net loss.
The company’s net working capital at December 31, 2011 was $1.075 billion, compared to $843 million at December 31, 2010. The current year increase is the result of higher revenue levels requiring greater working capital. These working capital additions are reflected in the cash used by operations for the year ended December 31, 2011 which was $103 million.
On Wednesday, February 29, 2012, the board of directors and our shareholders approved a two-for-one stock split which reduced the number of shares by one half. All numbers in this document reflect have been updated to reflect this stock split.
Mr. Lane continued, “We are very pleased with the overall financial results of 2011 and significant improvement over 2010. The 26% revenue growth to $4.832 billion, the 60% improvement in adjusted EBITDA to $360.5 million, and the $29 million in net income were major accomplishments in this turnaround year for MRC. On December 21, 2011, we announced that we had entered into an agreement to acquire the operations and assets of OneSteel Piping Systems. We expect to close on this acquisition in early March 2012, subject to the fulfillment of usual and ordinary closing conditions. After closing, MRC will have Australia’s largest full line product offering including carbon steel, stainless steel and alloy pipe, valves, fittings and flanges to serve both maintenance, repair and operations (MRO) and project needs of our key customers throughout Australia in oil and gas, mining and mineral processing.”
Today MRC Global Inc. (“MRC”) announced it has completed the previously announced acquisition of the operations and assets of OneSteel Piping Systems (OPS). Effective today, OPS now operates as MRC Piping Systems Australia.
Andrew Lane, Chairman, President and Chief Executive Officer commented, “We are pleased and excited to have completed the acquisition of OneSteel Piping Systems. With the acquisition of OPS, MRC is now the largest distributor of pipes, valves and fittings in Australia in the markets we serve, with the largest full-line product offering including carbon steel, stainless steel and alloy pipe, valves, fittings and flanges to serve customers throughout Australia in the oil and gas, mining and mineral processing industries.”