- Second quarter 2012 sales of $496.5 million and Adjusted EBITDA of $34.1 million
Baton Rougue, LA -- Edgen Group Inc. a leading global distributor of specialized products including steel pipe, valves, plate, and related components to the energy sector and industrial markets, today reported its financial results for the three and six months ended June 30, 2012.
Edgen Group sales for the second quarter 2012 increased 20% to $496.5 million from $415.1 million in the second quarter 2011. Edgen Group sales for the first six months of 2012 increased 35% to $1.0 billion from $742.1 million for the first six months of 2011.
Sales from the Company's Energy & Infrastructure ("E&I") segment, operating under the brand name Edgen Murray, increased $32.8 million, or 15%, to $255.4 million for the second quarter 2012 and increased $124.9 million, or 31%, to $533.0 million for the first six months of 2012 compared to the same periods in 2011. E&I segment backlog increased to $405 million at June 30, 2012 compared to $356 million at March 31, 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 $48.5 million, or 25%, to $241.1 million for the second quarter 2012 and increased by $135.2 million, or 40%, to $469.3 million for the first six months of 2012 compared to the same periods in 2011.
Gross profit for the second quarter 2012 increased $3.5 million, a 6% increase, compared to the second quarter 2011. Gross profit for the first six months of 2012 increased $19.6 million, a 20% increase, compared to the first six months of 2011. Gross margins were 11.8% and 11.7% in the second quarter 2012 and the first six months of 2012, respectively, which is an improvement from 11.5% in the first quarter 2012. Gross margins were 13.3% and 13.1% in the second quarter 2011 and the first six months of 2011, respectively.
Gross margins for the E&I segment were 13.7% and 13.6% for the second quarter 2012 and first six months of 2012, respectively, compared to 13.5% in the first quarter 2012. Gross margins also improved for the OCTG segment at 9.8% and 9.5% for the second quarter 2012 and first six months of 2012, respectively, compared to 9.2% in the first quarter 2012.
Selling, general and administrative ("SG&A") expenses were 5.7% and 5.1% of total sales for the second quarter 2012 and for the first six months of 2012, respectively, compared to 5.3% and 5.6% of total sales for the same periods in 2011, respectively. SG&A expense for the second quarter 2012 was increased by a non-cash charge of $3.0 million related to equity-based compensation expense associated with the acceleration of certain equity-based awards. Exclusive of the $3.0 million charge, SG&A expenses were 5.1% and 4.8% of total sales for the second quarter 2012 and first six months of 2012, respectively, and reflect improved operating leverage on higher sales.
Net loss for the second quarter 2012 was $(13.8 million) compared to net income of $1.0 million in the second quarter 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 (net of tax of $0 million) non-cash equity based compensation charge discussed above, net income for the second quarter of 2012 would have been $4.3 million. Loss per diluted share was $(0.35) in the second quarter 2012 and reflects Edgen Group's allocable net loss which includes the impact of the charges discussed above, and the weighted average number of outstanding dilutive shares since the initial public offering on May 2, 2012.
Net loss for the first six months of 2012 was $(9.7 million) compared to a net loss of $(6.4 million) for the first six months of 2011. Excluding the impact of the debt prepayment and equity-based compensation charges previously discussed, net income for the six months ended June 30, 2012 would have been $8.4 million
Adjusted EBITDA (as defined and calculated in the attached table), a non-GAAP financial measure used by Edgen Group and its lenders to evaluate the performance of the business, was $34.1 million for the second quarter 2012 compared to $34.3 million for the second quarter 2011. Adjusted EBITDA increased $11.9 million, or 20%, to $70.5 million for the first six months of 2012 compared to $58.6 million for the first six months of 2011. As of June 30, 2012, the Company's trailing twelve month Adjusted EBITDA was $136.5 million.
Dan O'Leary, the Company's Chairman and Chief Executive Officer stated, "We are extremely pleased with the sales growth in 2012 in both our E&I and OCTG segments. Within our E&I segment, we captured higher sales volumes in the U.S. Midstream energy market and saw increased sales in the Asia/Pacific region. Project activity slowed in Europe, but our MRO sales in that region remain steady." Mr. O'Leary continued, "Our OCTG segment sales were positively impacted by market share gains, improved sales product mix, and a higher average rig count from rigs operating primarily in U.S. liquid-rich shale formations which require specialized alloy products."
Outlook
The Company is focused on executing its organic sales growth strategy for the remainder of 2012 and maintains its annual guidance based on current market conditions and customer business levels. The monitoring of market drivers including oil and natural gas prices, global rig count, and expected customer energy and infrastructure spending will continue. The Company is exploring alternatives for refinancing its Senior Secured Notes, focusing on strengthening its balance sheet, and investing in its future.
Conference Call
Edgen Group management will host a webcast and conference call to discuss these financial results on Friday, August 3, 2012 at 11:00 a.m. Eastern time (10:00 a.m. Central time). To access the conference call live over the internet, please log onto Edgen Group's website, 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. To participate in the conference call, interested parties in the United States may dial 1-877-317-6789 and international parties may dial 1-412-317-6789. To access the conference call, please call at least ten minutes prior to the start time and request conference number 10015719.
For those who are unable to listen to the live call, a replay will be available by dialing 1-877-344-7529 (United States) and 1-412-317-0088 (International) and using the conference number 10015719. A replay of the conference call will also be available at Edgen Group's website for 90 days following the date the webcast is posted.
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 .
Forward-Looking Statements Disclaimer
This press release contains, and during the conference call referenced in this press release we may make, forward-looking statements within the meaning of federal securities laws. All statements other than statements of historical fact are considered forward-looking statements including, without limitation, statements about our business strategy. These forward-looking statements involve a number of risks, uncertainties, assumptions and other factors that could affect future results and cause actual results and events to differ materially from historical and expected results and those expressed or implied in the forward-looking statements. Our historical financial information, and the risks and other important factors that could affect the outcome of the events set forth in these statements and that could affect our operating results and financial condition, are contained in our filings with the Securities and Exchange Commission ("SEC"), including our prospectus filed with the SEC on April 27, 2012 and in our subsequent filings with the SEC made prior to or after the date hereof. We undertake no obligation to review or update any forward-looking statements to reflect events or circumstances occurring after the date of this press release. Investors, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.
