Edgen Group Reports First Quarter 2013 Results

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Edgen Group Reports First Quarter 2013 Results

BATON ROUGE, La.--(BUSINESS WIRE)-- Edgen Group Inc. (the "Company" or "Edgen Group") (NYS: EDG) a leading global distributor of specialized products including steel pipe, valves, plate, and related components to the energy sector and industrial infrastructure markets, today reported its financial results for the three months ended March 31, 2013.

"Our OCTG business performance was excellent during the quarter considering the decline in rig count and weakness in selling prices," stated Dan O'Leary, the Company's Chairman and Chief Executive Officer. "The near term prospects of our E&I business are being affected by the steel pricing environment and delays in contract awards and customer purchasing decisions. We expect to get a clearer picture soon regarding the timing of these anticipated customer expenditures. As a result, we are withdrawing our previous guidance and plan to address 2013 guidance at a later time."


Three Months Ended March 31, 2013 and 2012

  • Net sales were $406.1 million for the first quarter of 2013, down from $505.8 million for the same period in 2012.
    • Net sales from our Energy & Infrastructure ("E&I") segment decreased 28% to $201.2 million in 2013 compared to $277.7 million in 2012. Gross margins in 2013 and 2012 were 14.4% and 13.5%, respectively.
    • Net sales from our Oil Country Tubular Goods ("OCTG") segment decreased 10% to $205.2 million in 2013 compared to $228.1 million in 2012. Gross margins in 2013 and 2012 were 10.0% and 9.2%, respectively.
  • Selling, general and administrative ("SG&A") expenses for the first quarter of 2013 and 2012 were 6.6% and 4.6%, respectively, of net sales.
  • Interest expense decreased 32% for the first quarter of 2013 as compared to the first quarter of 2012 due to lower outstanding debt as well as the debt refinancing we completed in the fourth quarter of 2012.
  • Net loss of $(5.4) million in 2013, as compared to net income of $4.1 million in 2012, includes a loss on prepayment of debt of $1.7 million pre-tax ($1.4 million after tax) and a $2.3 million pre-tax ($1.5 million after tax) charge related to our obligation under our tax receivable agreement. Excluding charges, adjusted net loss was $(2.5) million for the first quarter of 2013.
  • Adjusted EBITDA was $23.9 million in 2013 compared to $36.4 million in 2012.

Mr. O'Leary continued, "We continue to remain optimistic about the long term growth of our end markets and the power of our business model."

Conference Call

Edgen Group management will host a webcast and conference call to discuss these financial results on Monday, May 13, 2013 at 11:00 a.m. Eastern Daylight Time (10:00 a.m. Central Daylight 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 1-888-317-6016 and international parties may dial 1-412-317-6016. To access the conference call, please call at least ten minutes prior to the start time.

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 10027057. 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 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 ability to achieve growth and profitability. 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 Annual Report on Form 10-K filed with the SEC on March 15, 2013, and in other reports filed by us with the SEC. 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.

  

EDGEN GROUP INC.

CONDENSED CONSOLIDATED/COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


(In thousands, except shares outstanding and per share data)

 
Three months ended March 31
20132012
NET SALES$406,103$505,831
OPERATING EXPENSES:
Cost of sales (exclusive of depreciation and amortization shown below)356,515447,418
Selling, general and administrative expense26,81223,028
Depreciation and amortization expense  7,118   8,239 
Total operating expenses  390,445   478,685 
INCOME (LOSS) FROM OPERATIONS15,65827,146
OTHER INCOME (EXPENSE):
Other income (expense) - net(2,096)305
Loss on prepayment of debt(1,675)-
Interest expense - net  (14,942)  (22,046)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)(3,055)5,405
INCOME TAX EXPENSE (BENEFIT)  2,330   1,304 
NET INCOME (LOSS) $(5,385) $4,101 
 
NET INCOME (LOSS) ATTRIBUTABLE TO:
Predecessor$-$4,090
Non-controlling interest(477)11
Edgen Group Inc.*(4,908)-
 
EARNINGS (LOSS) PER SHARE OF CLASS A COMMON STOCK ATTRIBUTABLE TO EDGEN GROUP INC.*:
Basic$(0.27)N/A
Diluted(0.27)N/A
 
WEIGHTED AVERAGE SHARES OF CLASS A COMMON STOCK OUTSTANDING*:
Basic17,955,380N/A
Diluted17,955,380N/A
 

*Edgen Group Inc. did not have any assets or operations, nor did it have any common stock outstanding prior to the IPO and the Reorganization on May 2, 2012.

 
  

EDGEN GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

March 31,
2013
(Unaudited)

 

December 31,
2012

ASSETS
CURRENT ASSETS:
Cash and cash equivalents$22,305$29,729
Accounts receivable, net of allowance for doubtful accounts of $2.6 million and $2.5 million218,992266,365
Inventory, net of provision of $7.3 million and $7.5 million395,946388,204
Income tax receivable1,5321,067
Deferred tax asset158
Prepaid expenses and other current assets  8,004   7,574 

Total current assets

646,794692,947

PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF $42.5 MILLION AND $42.1 MILLION

45,64546,834
GOODWILL35,02336,590
DEFERRED TAX ASSET5,0584,812
OTHER INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION OF $150.5 MILLION AND $148.3 MILLION151,852158,880
OTHER ASSETS  19,996   21,069 
TOTAL ASSETS $904,368  $961,132 
 
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Managed cash overdrafts$8,832$4,593
Accounts payable173,731202,607
Income taxes payable7,7097,707
Deferred revenue5,5488,016
Accrued interest payable22,0799,866
Current portion of long term debt and capital lease obligations2,8812,822
Deferred tax liability1,9471,953
Accrued expenses and other current liabilities  21,351   29,298 
Total current liabilities244,078266,862
DEFERRED TAX LIABILITY5,0635,314
OTHER LONG TERM LIABILITIES4,8513,109
REVOLVING CREDIT FACILITIES58,12256,894
LONG TERM DEBT AND CAPITAL LEASE  583,799   602,551 
Total liabilities  895,913   934,730 
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value, 40,000,000 shares authorized, none issued or outstanding--

Class A common stock, $0.0001 par value, 435,656,862 shares authorized, 18,972,224 and 18,196,062 shares issued and outstanding

22
Class B common stock, $0.0001 par value, 24,343,138 shares authorized, issued and outstanding22
Additional paid in capital156,417162,901
Retained earnings (deficit)(54,593)(49,685)
Accumulated other comprehensive income (loss)  (11,947)  (9,294)
Total stockholders' equity89,881103,926
NON-CONTROLLING INTEREST  (81,426)  (77,524)
Total equity  8,455   26,402 
TOTAL LIABILITIES AND EQUITY $904,368  $961,132 
 
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EDGEN GROUP INC.

CONDENSED CONSOLIDATED/COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(In thousands)

 
Three months ended March 31,
2013 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$(5,385)$4,101
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization7,1188,239
Amortization of deferred financing costs5991,500
Amortization of discount on long term debt161323
Non-cash accrual of interest on Seller Note6711,072
Loss on prepayment of debt1,675-
Equity-based compensation expense846702
Unrealized (gain) loss on derivative instruments44022
Allowance for doubtful accounts120138
Provision for inventory allowances and write downs817375
Deferred income tax benefit(298)(605)
(Gain) loss on foreign currency transactions35929
(Gain) loss on sale of property, plant and equipment9(35)
Changes in operating assets and liabilities:
Accounts receivable45,078(10,974)
Inventory(11,103)(25,139)
Income tax receivable(516)244
Prepaid expenses and other current assets(2,131)(1,776)
Accounts payable(25,656)10,238
Accrued expenses, other current liabilities and deferred revenue(2,541)(22,217)
Income tax payable2,418365
Other  144   - 
Net cash provided by (used in) operating activities $12,825  $(33,398)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment(758)(810)
Proceeds from the sale of property, plant and equipment  28   37 
Net cash provided by (used in) investing activities $(730) $(773)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of portion of Seller Note(16,541)-
Repayment of BL term loan-(11,907)
Other principal payments on long term debt and capital lease(729)(89)
Distributions to owners of Predecessor-(4,702)
Distributions to noncontrolling interests(7,333)-
Proceeds from revolving credit facilities167,170196,365
Payments to revolving credit facilities(165,971)(168,819)
Managed cash overdraft  4,255   9,529 
Net cash provided by (used in) financing activities $(19,149) $20,377 
Effect of exchange rate changes on cash and cash equivalents  (370)  771 
NET CHANGE IN CASH AND CASH EQUIVALENTS $(7,424) $(13,023)
CASH AND CASH EQUIVALENTS - beginning of period $29,729  $26,269 
CASH AND CASH EQUIVALENTS - end of period