Edgen Group Reports Second Quarter 2013 Results
Edgen Group Reports Second 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 and six months ended June 30, 2013.
Second Quarter 2013 Financial Highlights
Net sales were $431.6 million, down 13.1% from $496.5 million in the second quarter of 2012, but up 6.3% from $406.1 million in the first quarter of 2013
Sales backlog of $274 million at June 30, 2013 was down 32.3% from June 30, 2012, but up 5.8% from March 31, 2013
Gross margin remained relatively flat at 11.9% during the second quarter of 2013 as compared to 11.8% during the second quarter of 2012 and 12.2% during the first quarter of 2013
Gross margin for our Energy & Infrastructure ("E&I") segment was 14.7%, up 1.0% from the second quarter of 2012 and up 0.3% from the first quarter of 2013
Gross margin for our Oil Country Tubular Goods ("OCTG") segment was 9.1%, down 0.7% from the second quarter of 2012 and 0.9% from the first quarter of 2013
Income from operations was $17.3 million, down 22.8% from $22.4 million in the second quarter of 2012, but up 10.2% from $15.7 million in the first quarter of 2013
Net loss was ($0.3) million for the second quarter of 2013 as compared to ($13.8) million in the second quarter of 2012 and ($5.4) million in the first quarter of 2013
Adjusted EBITDA was $24.7 million compared to $34.1 million in the second quarter of 2012 and $23.9 million in the first quarter of 2013
Second Quarter 2013 Leading Market Indicators
Three months ended | % Change | ||||||||||||||
June 30, 2013 | March 31, 2013 | June 30, 2012 | March 31, 2013 to | June 30, 2012 to | |||||||||||
Average rig count: | |||||||||||||||
Worldwide total rig count(1) | 3,222 | 3,569 | 3,372 | -10% | -4% | ||||||||||
Worldwide offshore rig count(1) | 386 | 368 | 357 | 5% | 8% | ||||||||||
US onshore drilling rig count(1) | 1,710 | 1,706 | 1,924 | 0% | -11% | ||||||||||
Average commodity prices: | |||||||||||||||
WTI crude oil per barrel(2) | $ 94.05 | $ 94.33 | $ 93.29 | 0% | 1% | ||||||||||
Brent crude oil per barrel(2) | 102.56 | 112.44 | 108.04 | -9% | -5% | ||||||||||
Natural gas ($/Mcf)(2) | 4.02 | 3.49 | 2.29 | 15% | 76% | ||||||||||
Domestic hot rolled coils per ton(3) | 604.00 | 621.00 | 640.00 | -3% | -6% | ||||||||||
Average footage drilled: | |||||||||||||||
Worldwide total (Mil)(4) | 134.6 | 150.8 | 130.9 | -11% | 3% | ||||||||||
U.S. onshore (Mil)(4) | 99.0 | 98.4 | 96.7 | 1% | 2% | ||||||||||
(1) Source: Baker Hughes Incorporated (www.bakerhughes.com) | |||||||||||||||
(2) Source:Department of Energy, EIA (www.eia.gov) | |||||||||||||||
(3) Source: Preston Pipe and Tube Report, July 2013 | |||||||||||||||
(4) Source: Spears & Associates, Inc. Drilling and Production Outlook, June 2013 | |||||||||||||||
Second Quarter 2013 Management Discussion
"We are pleased to announce increased sales and backlog over the first quarter of 2013," said Dan O'Leary, Chairman and Chief Executive officer. "Elevated quotation activity and recent project bookings at the close of the second quarter reinforce our optimism about future opportunities for Edgen Group, particularly into 2014. Pricing pressure and project delays still had an impact in the second quarter, however we remained focused on improving the mix of products that we sold, providing exceptional service to our customers with active drilling programs, and adding new customers, especially in areas that we expect will gain traction when market conditions improve."
Conference Call
Edgen Group management will host a webcast and conference call to discuss these financial results on Friday, August 9, 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 10031843. 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 June 30, | Six months ended June 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
NET SALES | $ | 431,550 | $ | 496,499 | $ | 837,654 | $ | 1,002,329 | ||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 380,076 | 437,835 | 736,591 | 885,253 | ||||||||||||||||
Selling, general and administrative expense | 27,588 | 28,406 | 54,400 | 51,434 | ||||||||||||||||
Depreciation and amortization expense | 6,520 | 7,887 | 13,639 | 16,125 | ||||||||||||||||
Total operating expenses | 414,184 | 474,128 | 804,630 | 952,812 | ||||||||||||||||
INCOME (LOSS) FROM OPERATIONS | 17,366 | 22,371 | 33,024 | 49,517 | ||||||||||||||||
OTHER INCOME (EXPENSE): | ||||||||||||||||||||
Other income (expense) - net | 13 | 167 | (2,083 | ) | 472 | |||||||||||||||
Loss on prepayment of debt | - | (17,005 | ) | (1,675 | ) | (17,005 | ) | |||||||||||||
Interest expense - net | (14,803 | ) | (19,521 | ) | (29,746 | ) | (41,567 | ) | ||||||||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) | 2,576 | (13,988 | ) | (480 | ) | (8,583 | ) | |||||||||||||
INCOME TAX EXPENSE (BENEFIT) | 2,844 | (165 | ) | 5,173 | 1,139 | |||||||||||||||
NET INCOME (LOSS) | $ | (268 | ) | $ | (13,823 | ) | $ | (5,653 | ) | $ | (9,722 | ) | ||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO: | ||||||||||||||||||||
Predecessor | $ | - | $ | 768 | $ | - | $ | 4,858 | ||||||||||||
Non-controlling interest | 823 | (8,517 | ) | 346 | (8,506 | ) | ||||||||||||||
Edgen Group Inc.* | (1,091 | ) | (6,074 | ) | (5,999 | ) | (6,074 | ) | ||||||||||||
EARNINGS (LOSS) PER SHARE OF CLASS A COMMON STOCK ATTRIBUTABLE TO EDGEN GROUP INC.*: | ||||||||||||||||||||
Basic | $ | (0.06 | ) | $ | (0.35 | ) | $ | (0.33 | ) | $ | (0.35 | ) | ||||||||
Diluted | (0.06 | ) | (0.35 | ) | (0.33 | ) | (0.35 | ) | ||||||||||||
WEIGHTED AVERAGE SHARES OF CLASS A COMMON STOCK OUTSTANDING*: | ||||||||||||||||||||
Basic | 17,994,965 | 17,213,423 | 17,975,282 | 17,213,423 | ||||||||||||||||
Diluted | 17,994,965 | 17,213,423 | 17,975,282 | 17,213,423 | ||||||||||||||||
*Edgen Group Inc. did not have any assets or operations, nor did it have any common stock outstanding prior to the initial public offering (the "IPO") and the reorganization of our business (the "Reorganization") on May 2, 2012. Net income (loss) attributable to Edgen Group Inc., earnings (loss) per share of Class A common stock attributable to Edgen Group Inc. and weighted average shares of Class A common stock outstanding shown above for the prior year are for the period from May 2, 2012 to June 30, 2012.
EDGEN GROUP INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) | ||||||
June 30, 2013 (Unaudited) | December 31, | |||||
ASSETS | ||||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents | $ 13,262 | $ 29,729 | ||||
Accounts receivable, net of allowance for doubtful accounts of $2.9 million and $2.5 million | 233,237 | 266,365 | ||||
Inventory, net of provision of $7.9 million and $7.5 million | 387,379 | 388,204 | ||||
Income tax receivable | 1,526 | 1,067 | ||||
Deferred tax asset | 10 | 8 | ||||
Prepaid expenses and other current assets | 15,176 | 7,574 | ||||
Total current assets | 650,590 | 692,947 | ||||
PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF $43.6 MILLION AND $42.1 MILLION | 45,507 | 46,834 | ||||
GOODWILL | 35,072 | 36,590 | ||||
DEFERRED TAX ASSET | 5,025 | 4,812 | ||||
OTHER INTANGIBLE ASSETS, NET OF ACCUMULATED AMORTIZATION OF $155.8 MILLION AND $148.3 MILLION | 146,700 | 158,880 | ||||
OTHER ASSETS | 19,331 | 21,069 | ||||
TOTAL ASSETS | $ 902,225 | $ 961,132 | ||||
LIABILITIES AND EQUITY | ||||||
CURRENT LIABILITIES: | ||||||
Managed cash overdrafts | $ 6,304 | $ 4,593 | ||||
Accounts payable | 164,367 | 202,607 | ||||
Income taxes payable | 5,929 | 7,707 | ||||
Deferred revenue | 11,020 | 8,016 | ||||
Accrued interest payable | 8,231 | 9,866 | ||||
Current portion of long term debt and capital lease obligations | 2,874 | 2,822 | ||||
Deferred tax liability | 1,962 | 1,953 | ||||
Accrued expenses and other current liabilities | 20,981 | 29,298 | ||||
Total current liabilities | 221,668 | 266,862 | ||||
DEFERRED TAX LIABILITY | 4,438 | 5,314 | ||||
OTHER LONG TERM LIABILITIES | 4,922 | 3,109 | ||||
REVOLVING CREDIT FACILITIES | 86,386 | 56,894 | ||||
LONG TERM DEBT AND CAPITAL LEASE | 583,508 | 602,551 | ||||
Total liabilities | 900,922 | 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, 18,948,200 and 18,196,062 shares issued and outstanding | 2 | 2 | ||||
Class B common stock, $0.0001 par value, 24,343,138 shares authorized, issued and outstanding | 2 | 2 | ||||
Additional paid in capital | 149,397 | 162,901 | ||||
Retained earnings (deficit) | (55,684) | (49,685) | ||||
Accumulated other comprehensive income (loss) | (11,888) | (9,294) | ||||
Total stockholders' equity | 81,829 | 103,926 | ||||
NON-CONTROLLING INTEREST | (80,526) | (77,524) | ||||
Total equity | 1,303 | 26,402 | ||||
TOTAL LIABILITIES AND EQUITY | $ 902,225 | $ 961,132 | ||||
EDGEN GROUP INC. CONDENSED CONSOLIDATED/COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||||
