MRC Global (formerly McJunkin Red Man) is one the world's largest suppliers of parts and supplies used by energy and industrial customers. Operating from 400-plus locations, predominantly in North America, the company distributes about 150,000 pipe, valves, and fittings (PVF), as well as general and specialty products. Some 50% of MRC Global's sales are attributable to maintenance, repair, and operations (MRO) contracts, including procurement, warehousing, and inventory management. Core customers are oil and gas exploration and production giants, as well as transmission and storage, oil refining and petrochemical processing companies, such as BP, Exxon Mobil, and Valero. MRC Global went public in 2012.
Change in Company Type
The 2012 IPO raised $477.3 million, which the company plans to use to pay down debt.
MRC Global has set its sights on becoming the world's largest distributor of PVF and related products. To this end, MRC Global promotes itself as a one-stop shop for PVF purchases. Its operations couple sole-source supply agreements with MRO contracts throughout all phases of work in oil and gas and other process industries.
The company serves more than 12,000 customers through more than 400 service locations throughout North America, Europe, Asia, and Australia.
The company's revenues increased by 26% in 2011 thanks to a 25% rise in North American sales due to an increase in sales volumes related to the improved business environment. This is especially true in the upstream and midstream sectors which have seen higher activity levels in the oil and natural gas shale regions in the US as well as in the heavy oil and tar sands regions of Canada. International sales increased by 29% in 2011 due to the acquisition of Stainless Pipe and Fittings Australia in June 2011, while the remainder of the increase was due to an improvement in volumes in the downstream sector in Europe during 2011.
MRC Global's net income increased by 156% in 2011 due to revenue increases in 2011 and a decrease in Other Income (Expense) as a change in the fair market value of derivatives resulted in earnings of $7 million.
MRC Global's one-stop shop strategy is underpinned both by efforts to augment its customer base, including penetration of new geographies, neighboring markets (such as crude oil refining and petrochemical processing), and acquisitions that complement the company's core activities.
As part of its strategy to expand globally in key markets and be the world's leading PVF distributor, the company acquired Sydney-based OneSteel Piping Systems (OPS), a division of OneSteel Limited's distribution business, in 2012 for about $67.7 million. OPS now operates as MRC Piping Systems Australia. The unit is a top PVF supplier and distributor to oil and gas, mining, and mineral processing markets throughout Australia.
To boost its position in the Permian Basin, that year the company also agreed to buy Production Specialty Services, which has 17 locations.
In 2011 MRC Global acquired the majority of the operating assets of Cherokee, Oklahoma based Chaparral Supply, LLC, a wholly owned subsidiary of SandRidge Energy, Inc. Chaparral Supply provides pipe, valve, and fitting products and oilfield supplies to its parent.
In 2011 the company acquired Stainless Pipe and Fittings Australia (SPF), the largest distributor of stainless steel piping products in the southern hemisphere. The buy extends MRC Global's holdings in premier pipe, fittings and flange operations and complements its 2009 purchase of Transmark, the leading valve distributor in the eastern hemisphere.
Following the 2012 IPO, Goldman Sachs held 77% of the company.
MRC Global evolved from a merger financed by Goldman Sachs through PVF Holdings in 2007; the deal brought together industrial and oilfield pipe suppliers McJunkin Corporation of Charleston, West Virginia, and Red Man Pipe & Supply of Tulsa, Oklahoma. – less