EX-99.2 3 d902712dex992.htm EX-99.2 EX-99.2

Exhibit 99.2

MRC Global Inc.

Income Statement Pro forma for Canada Segment Sale

(in millions)

 

     Year Ended     Year Ended     Three Months Ended  
     December 31,
2022		     December 31,
2023		     March 31,
2024		     June 30,
2024		     September 30,
2024		  

Sales

    $ 3,197     $ 3,266     $ 777     $ 799     $ 771  

Cost of sales

      2,613       2,596       618       630       614  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

      584       670       159       169       157  

Selling, general and administrative expenses

      443       475       119       121       118  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      141       195       40       48       39  

Other (expense) income:

           

Interest expense

      (22 )      (31 )      (8 )      (7 )      (3 ) 

Other, net

      (6 )      (3 )      (3 )      3       (2 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

      113       161       29       44       34  

Income tax expense

      34       39       8       12       3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income

      79       122       21       32       31  

Series A preferred stock dividends

      24       24       6       6       6  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income attributable to common stockholders

    $ 55     $ 98     $ 15     $ 26     $ 25  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

MRC Global Inc.

Reconciliation of Net Income to Adjusted EBITDA (a non-GAAP measure)

(in millions)

 

     Year Ended      Year Ended      Three Months Ended  
     December 31,
2022		      December 31,
2023		      March 31,
2024		      June 30,
2024		     September 30,
2024		  

Net income

    $ 79      $ 122      $ 21      $ 32     $ 31  

Income tax expense

      34        39        8        12       3  

Interest expense

      22        31        8        7       3  

Depreciation and amortization

      18        19        5        5       6  

Amortization of intangibles

      21        21        5        5       5  

Facility closures

      —         —         —         1       —   

Severance and restructuring

      1        —         —         —        —   

Non-recurring IT related professional fees

      —         1        —         —        —   

Increase (decrease) in LIFO reserve

      66        2        1        1       (5 ) 

Equity-based compensation expense

      13        14        4        3       4  

Activism response legal and consulting costs

      —         1        3        1       —   

Write off of debt issuance costs

      —         —         1        —        —   

Customer Settlement

      —         3        —         —        —   

Asset disposal

      —         1        1        —        —   

Foreign currency losses (gains)

      7        3        2        (1 )      2  
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Adjusted EBITDA

    $ 261      $ 257      $ 59      $ 66     $ 49  
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

The company defines adjusted EBITDA as net income plus interest, income taxes, depreciation and amortization, amortization of intangibles, and certain other expenses, including non-cash expenses, (such as equity-based compensation, restructuring, changes in the fair value of derivative instruments, asset impairments, including inventory, long-lived asset impairments (including goodwill and intangible assets), inventory-related charges incremental to normal operations, and plus or minus the impact of its LIFO inventory costing methodology. The company presents adjusted EBITDA because the company believes adjusted EBITDA is a useful indicator of the company’s operating performance. Among other things, adjusted EBITDA measures the company’s operating performance without regard to certain non-recurring, non-cash or transaction-related expenses. Adjusted EBITDA, however, does not represent and should not be considered as an alternative to net income, cash flow from operations or any other measure of financial performance calculated and presented in accordance with GAAP. Because adjusted EBITDA does not account for certain expenses, its utility as a measure of the company’s operating performance has material limitations. Because of these limitations, the company does not view adjusted EBITDA in isolation or as a primary performance measure and uses other measures, such as net income and sales, to measure operating performance. See the company’s Annual Report filed on Form 10-K for a more thorough discussion of the use of adjusted EBITDA.

MRC Global Inc.

Reconciliation of Gross Profit to Adjusted Gross Profit (a non-GAAP measure)

(in millions)

 

     Year Ended     Year Ended  
     December 31,
2022		      Percentage
of Revenue		     December 31,
2023		      Percentage
of Revenue		  

Gross profit, as reported

    $ 584        18.3 %    $ 670        20.5 % 

Depreciation and amortization

      18        0.6 %      19        0.6 % 

Amortization of intangibles

      21        0.7 %      21        0.6 % 

Increase in LIFO reserve

      66        2.1 %      2        0.1 % 
  

 

 

     

 

 

    

 

 

     

 

 

  

Adjusted Gross Profit

    $ 689        21.6 %    $ 712        21.8 % 
  

 

 

     

 

 

    

 

 

     

 

 

  

 

     Three Months Ended  
     March 31,
2024		      Percentage
of Revenue		     June 30,
2024		      Percentage
of Revenue		     September 30,
2024		     Percentage
of Revenue		  

Gross profit, as reported

    $ 159        20.5 %    $ 169        21.2 %    $ 157       20.4 % 

Depreciation and amortization

      5        0.6 %      5        0.6 %      6       0.8 % 

Amortization of intangibles

      5        0.6 %      5        0.6 %      5       0.6 % 

Increase (decrease) in LIFO reserve

      1        0.1 %      1        0.1 %      (5 )      -0.6 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

  

Adjusted Gross Profit

    $ 170        21.9 %    $ 180        22.5 %    $ 163       21.1 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

    

 

 

  

The company defines Adjusted Gross Profit as sales, less cost of sales, plus depreciation and amortization, plus amortization of intangibles, plus inventory-related charges incremental to normal operations and plus or minus the impact of its LIFO inventory costing methodology. The company presents Adjusted Gross Profit because the company believes it is a useful indicator of the company’s operating performance without regard to items, such as amortization of intangibles, that can vary substantially from company to company depending upon the nature and extent of acquisitions of which they have been involved. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon which costing method they may elect. The company uses Adjusted Gross Profit as a key performance indicator in managing its business. The company believes that gross profit is the financial measure calculated and presented in accordance with U.S. generally accepted accounting principles that is most directly comparable to Adjusted Gross Profit.