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| 8-K - FORM 8-K - MRC GLOBAL INC. | d364404d8k.htm |
 Andrew
Lane Chairman, President & CEO
MRC Global Inc. // William
Blair Growth Stock Conference June 12, 2012
Exhibit 99.1 |
 William
Blair 2012 2
Forward Looking Statements and GAAP Disclaimer
This
presentation
contains
forward-looking
statements,
including,
for
example,
statements
about
the
Company’s
business
strategy,
its
industry,
its
future
profitability,
growth
in
the
Company’s
various
markets,
the
strength
of
future
activity
levels,
and
the
Company’s
expectations,
beliefs,
plans,
strategies,
objectives,
prospects
and
assumptions.
These
forward-looking
statements
are
not
guarantees
of
future
performance.
These
statements
involve
known
and
unknown
risks,
uncertainties
and
other
factors
that
may
cause
the
Company’s
actual
results
and
performance
to
be
materially
different
from
any
future
results
or
performance
expressed
or
implied
by
these
forward-looking
statements.
For
a
discussion
of
key
risk
factors,
please
see
the
risk
factors
disclosed
in
the
Company’s
registration
statement
on
Form
S-1
effective
April
11,
2012,
related
to
our
common
stock,
and
our
Quarterly
Statement
on
Form
10-Q
for
the
quarter
ended
March
31,
2012,
both
of
which
are
available
on
the
SEC’s
website
at
www.sec.gov.
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
our
actual
results,
performance
or
achievements
to
differ
materially
from
anticipated
future
results,
performance
or
achievements
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.
Statement
Regarding
use
of
Non-GAAP
Measures:
The
Non-GAAP
financial
measures
contained
in
this
presentation
(including,
without
limitation,
EBITDA,
Adjusted
EBITDA,
Adjusted
EBITDA
Margin,
Adjusted
Gross
Profit,
Return
on
Net
Assets
(RONA)
and
variations
thereof)
are
not
measures
of
financial
performance
calculated
in
accordance
with
GAAP
and
should
not
be
considered
as
alternatives
to
net
income
(loss)
or
any
other
performance
measure
derived
in
accordance
with
GAAP
or
as
alternatives
to
cash
flows
from
operating
activities
as
a
measure
of
our
liquidity.
They
should
be
viewed
in
addition
to,
and
not
as
a
substitute
for,
analysis
of
our
results
reported
in
accordance
with
GAAP,
or
as
alternative
measures
of
liquidity.
Management
believes
that
certain
non-GAAP
financial
measures
provide
a
view
to
measures
similar
to
those
used
in
evaluating
our
compliance
with
certain
financial
covenants
under
our
credit
facilities
and
provide
financial
statement
users
meaningful
comparisons
between
current
and
prior
year
period
results.
They
are
also
used
as
a
metric
to
determine
certain
components
of
performance-based
compensation.
The
adjustments
and
Adjusted
EBITDA
are
based
on
currently
available
information
and
certain
adjustments
that
we
believe
are
reasonable
and
are
presented
as
an
aid
in
understanding
our
operating
results.
They
are
not
necessarily
indicative
of
future
results
of
operations
that
may
be
obtained
by
the
Company. |
 By the
Numbers Industry Sectors
Product Categories
Business Model
2011 Sales
$4.83 B
Upstream
Line Pipe / OCTG
Locations
410+
Countries
18
Midstream
Valves
Customers
12,000+
Suppliers
12,000+
Downstream/
Industrial
Fittings / Flanges
SKU’s
150,000+
Employees
4,400+
MRC is the largest global distributor of pipe, valves and fittings (PVF) to the
energy industry. Company Snapshot
International
7%
Canada
13%
MRO
66%
Projects
34%
U.S.
80%
William Blair 2012
3 |
 Founded
1921
1989
Acquires
Appalachian
Pipe & Supply
2007
Goldman Sachs
Capital Partners
Strategic
Investment
1977
Founded
2005
Acquires
Midfield
Supply
2008
MRC
acquires
LaBarge
2007
Merger of
McJunkin
and Red Man
to form
MRC
2009
MRC opens
Houston HQ
2009
MRC
acquires
Transmark
2010
MRC
acquires
South
Texas
Supply
2010
MRC
acquires
Dresser
Oil Tools
2011
MRC
acquires
SPF
2011
MRC
acquires
VSC
2012
MRC
acquires
OneSteel
Piping
Systems
2012
MRC
Global
IPO;
begins
trading
on NYSE
MRC’s 91 Year History // The Road to the Fortune 500
2012
MRC
signs the
industry’s
first global
valve
contract with
Shell
2012
MRC
listed on
Fortune 500
William Blair 2012
4 |
 MRC
plays a critical role in the complex, technical, global energy supply chain.
Business Model
CUSTOMERS
SUPPLIERS
William Blair 2012
5
Access to over 12,000+
customers
Manufacturing and scale
efficiencies
Leverage MRC’s technical
sales force
Supplier Benefits
Mutual Benefits
Trusted long-term partnerships
Financial stability
MRC Approved Supplier List /
Quality Program
Customer Benefits
Access to over 12,000+ suppliers
worldwide
Efficiencies and inventory
management
Access to a broad product offering
($1B+ inventory)
Access to a global sourcing from 35
countries |
 William
Blair 2012 6
By Geography
Note: Business mix based on 2011 sales
By Product Line
MRC is diversified by geography, industry sector, and product line.
MRC Diversification
Drilling &
Completion
Tubulars
17%
Production
Infrastructure,
Materials &
Supplies
30%
International
7%
Chemical
9%
Transmission
17%
Gas
Utility
9%
Refining
9%
Other /
Industrial
9%
By Industry Sector
Western
US
24%
Gulf
Coast
28%
Eastern
US
28%
Canada
13%
Other
20%
OCTG
17%
Valves
24%
Line
Pipe
21%
Fittings
&
Flanges
18% |
 William
Blair 2012 7
Well positioned to capitalize on shale, heavy oil and oil sands activity.
North America E&P spending to grow 6% in 2012*.
* Barclays Equity Research
North America Core Business Model
North American Infrastructure
•
175+ Branches
•
160+ Pipe Yards
•
7 Regional Distribution Centers
•
12 Valve Automation Centers
Horn River
Montney
Duvernay
Bakken
Niobrara
Monterey
Mississippian
Lime
Granite Washington
Woodford
Fayetteville
Barnett
Haynesville
Permian Basin
Eagle Ford
Utica
Marcellus |
 William
Blair 2012 8
International E&P spending forecast to grow 12% in 2012*.
International Growth Model
* Barclays Equity Research
MRC Branches / Locations
Regional Distribution Centers
Valve Automation Centers
40+ Branches
Regional Distribution Centers in
UK, Singapore and Australia
10 Valve Automation Centers
Expanding International Presence
2 Pipe Yards |
 William
Blair 2012 9
Strong Growth in Global E&P Spending
Source: Barclays 2012 E&P Spending Outlook Mid Year Update.
Positive Trends
U.S. Additions to Natural Gas Pipelines
U.S. Aging Infrastructure / New Legislation to
Drive Pipeline Replacement
Source: Pipeline Safety and Hazardous Materials Administration, Wall Street Journal,
for Top 10 states by pipeline mileage Source:
ICF
International,
North
American
Midstream
Infrastructure
Through
2035
–
A
Secure
Energy
Future,
Prepared for the INGAA Foundation, June 28, 2011
0
100
200
300
400
500
600
700
800
900
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Actual Estimates
Outside
North
America
Canada
Built After
1970
37%
Built
Before
1970
63%
444
548
688
1,193
1,126
2009A
2010A
2011E
2012E
2013E
2005A
2007A
2009A
2011E
2013E
2015E
2016E
2006A
2008A
2010A
2012E
2014E
U.S.
U.S. Refining Turnaround Activity
Source: Industrial Info Resource, Inc. Based on quarterly average planned
unit outages. |
 William
Blair 2012 10
Global
Procurement
Today
10 –
15 Years Ago
Next 1 to 5 Years
Consolidating energy industry benefits global players.
Changing PVF Energy Distribution Landscape
•
Pipe
•
Valves
•
Fittings
•
Flanges
•
Supplies
•
Upstream
•
Midstream
•
Downstream
•
Purchasing more
consolidated
•
Contracts by end
segment:
•
Contracts cover PVF
•
Customers align with
•
PVF purchasing
handled locally
•
Facility-by-facility
basis
•
Separate contracts
by product class:
suppliers with size/scale
Global upstream /
midstream /
downstream PVF
contracts
Decentralized
Procurement
Centralized
Procurement |
 William
Blair 2012 11
MRC & Shell // Global Valve Contract for MRO & Projects
Industry’s first global valve and combined North American PFF contract.
Shell has one of the top 5 global CAPEX budgets
Deepwater
GOM
NA Tight Gas
& Liquids
Brazil
Offshore
BC-10
West
Africa
Future
Middle
East
RDC
FLNG
/ LNG
Oceania
Sakhalin
Shell
Offshore
Coal Bed
Methane
Cracker Unit
Pittsburgh, PA
China
Tight Gas
Tar Sands
Kashagan
Ph1
LNG /
GTL
North America
Includes PFF
LNG
Salym
Development
Alaska
Offshore |
 William
Blair 2012 12
Increasing MRC Shareholder Value
Growth
Efficiency / Profitability
Organic Growth
Increase Returns on
Working Capital Investment
Optimize Cost of Capital
•
North American shale activity
•
Midstream infrastructure
•
Downstream –
refining turnaround
activity and resurgence in
petrochemical activity
•
Australia –
new PVF leadership
position
•
Optimize inventory mix
•
Global sourcing
•
Focus on higher margin
products
•
Maximize profitability in
Australia as integration of
recent acquisitions is
completed
•
Target leverage at
2.0x –
3.0x
•
Reduce overall cost
of debt
Acquisitions
•
International geographic extensions
•
Valve & actuation
•
North American region / shale bolt-ons
Revenue Growth:
Target 10% to 12% per year
Organic:
8% to 9%
Acquisitions:
2% to 3%
Adjusted EBITDA Margin Improvement
8.0 to 8.5%
in near term
9.0 to 9.5%
in mid term
10+%
in 5 years |
 Reflects reported revenues for the year of acquisition
Estimate based on supply agreement with SandRidge Energy (close in June
2012) (US$ in millions)
Track Record of Successful M&A
William Blair 2012
13
1
2
MRC has completed and successfully acquired $920 million of revenues since mid
2008. |
 Strategic investments in shale plays driving North America Growth.
Eagle Ford Rig: Stephens
Eagle Ford Sales: MRC data
Eagle Ford Production: www.rrc.state.tx.us; 2012
Annualized
Bakken Production
MRC Investment in the Bakken
MRC Sales in the Bakken
August 2010
Acquisition
–
Dresser
Oil
Tools &
Supply
January 2012
Opened Regional Distribution
Center in Cheyenne, WY
Strategic Investments to Capitalize on Shale Growth
Bakken Rig: Stephens
Bakken Sales: MRC data
Bakken Production: MidstreamBusiness.com, "Bakken's
Rapid Ascent”2012 Annualized
Eagle Ford Production
MRC Investment in the Eagle Ford
MRC Sales in the Eagle Ford
May 2010
Acquisition –
South Texas Supply
March 2011
Opened Regional Distribution
Center in San Antonio, TX
William Blair 2012
14 |
 William
Blair 2012 15
Sales
Adjusted Gross Profit and % Margin
Source: Company management
RONA calculation = Adjusted EBITDA divided by the sum of accounts receivable,
inventory (plus the LIFO reserve), and PP&E less accounts payable. Adjusted
EBITDA and % Margin Return on Net Assets (RONA)
Strong growth and improving profitability.
Y-o-Y Growth
26%
39%
Y-o-Y Growth
28%
49%
Y-o-Y Growth
61%
92%
(US$ in millions)
Financial Trends
5.8%
7.5%
6.0%
8.3%
$
3,846
$4,832
$992
$1,383
2010
2011
1Q2011
1Q2012
$663
$850
$174
$260
2010
2011
1Q2011
1Q2012
$224
$361
$60
$115
2010
2011
1Q2011
1Q2012
19.6%
24.1%
20.4%
28.2%
2010
2011
1Q2011
1Q2012
17.2%
17.6%
17.5%
18.8% |
 William
Blair 2012 16
16
¹
As of May 31, 2012
2
Proforma for IPO
First Quarter Update
Year Over Year Results
In Millions, except per share data
1Q
2012
1Q
2011
Sales
$ 1,383
$ 992
39%
Cost of sales
1,146
845
Gross profit
237
147
SG&A
146
117
Operating income
90
30
Net income
$ 38
$ (1)
EPS
$ 0.44
$ (0.01)
Adjusted EBITDA
$ 115
$ 60
92%
Adjusted EBITDA%
8.3%
6.0%
Full Year 2012 Outlook
¹
Sales
$5.4 to $5.6 billion
Adjusted EBITDA
8.0% to 8.5% of sales
Capital Structure
²
April 2012 IPO with net proceeds of $334 million
Total Debt $1.278 billion
Net Debt / Adjusted EBITDA 2.9X |