Edgen Group Reports Third Quarter 2012 Results

Outlook

Based on current market conditions and expected customer spending patterns and delivery schedules, the Company maintains its revised annual revenue and Adjusted EBITDA guidance, as disclosed in its Form 8-K filed on October 1, 2012. The Company will continue to monitor global economic conditions and market drivers that may impact its operations and financial results including, but not limited to, global energy demand, oil and natural gas prices, international and U.S. land-based rig count and commodity steel prices. Changes in these factors could have an adverse impact on our operating results.

Conference Call

Edgen Group management will host a webcast and conference call to discuss these financial results on Friday, November 9, 2012 at 11:00 a.m. Eastern time (10:00 a.m. Central 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 1-877-317-6789 and international parties may dial 1-412-317-6789. 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 10020004. 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, and during the conference call referenced in this press release we may make, 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 business strategy and all statements under the "Outlook" heading above. 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 prospectus filed with the SEC on April 27, 2012 and in our subsequent filings with the SEC made prior to or after the date hereof. 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. UNAUDITED CONDENSED CONSOLIDATED/COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data)
		Three months ended September 30,								Nine months ended September 30,
		2012				2011				2012				2011
SALES		$	534,624			$	457,166			$	1,536,953			$	1,199,282
OPERATING EXPENSES:
Cost of sales (exclusive of depreciation and amortization shown below)		469,932				398,867				1,355,186				1,043,516
Selling, general and administrative expense		25,171				25,105				76,606				66,961
Depreciation and amortization expense		7,905				8,933				24,031				26,781
Total operating expenses		503,008				432,905				1,455,823				1,137,258
INCOME FROM OPERATIONS		31,616				24,261				81,130				62,024
OTHER INCOME (EXPENSE):
Other income (expense)- net		(366		)		71				109				1,857
Loss on prepayment of debt		—				—				(17,005		)		—
Interest expense - net		(18,331		)		(20,733		)		(59,899		)		(64,517		)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE		12,919				3,599				4,335				(636		)
INCOME TAX EXPENSE		2,535				1,193				3,674				3,315
NET INCOME (LOSS)		$	10,384			$	2,406			$	661			$	(3,951	)
NET INCOME (LOSS) ATTRIBUTABLE TO:
Predecessor		$	—			$	2,240			$	4,858			$	(4,177	)
Non-controlling interest		6,498				166				(2,008		)		226
Edgen Group Inc.		3,886				—				(2,189		)	*	—
EDGEN GROUP INC. EARNINGS (LOSS) PER SHARE:
Basic		$	0.22							$	(0.12	)	*
Diluted		0.21								(0.12		)	*
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		17,771,939								17,547,082			*
Diluted		18,182,524								17,547,082			*
* 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. Accordingly, the loss attributable to Edgen Group Inc., loss per share and weighted average common shares outstanding shown are for the period from May 2, 2012 to September 30, 2012 (the period since the IPO and the Reorganization).

EDGEN GROUP INC. UNAUDITED CONDENSED CONSOLIDATED/COMBINED CONSOLIDATED BALANCE SHEETS (In thousands)
		September 30, 2012				December 31, 2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	19,157			$	26,269
Accounts receivable - net of allowance for doubtful accounts of $2,548 and $2,056, respectively		301,565				261,155
Inventory		383,792				339,371
Prepaid expenses and other current assets		11,603				10,443
Total current assets		716,117				637,238
PROPERTY, PLANT AND EQUIPMENT - NET		46,357				46,647
GOODWILL		23,894				22,965
OTHER INTANGIBLE ASSETS - NET		152,351				172,036
OTHER ASSETS		14,333				21,854
TOTAL ASSETS		$	953,052			$	900,740
LIABILITIES AND EQUITY (DEFICIT)
CURRENT LIABILITIES:
Managed cash overdrafts		$	7,798			$	6,488
Accounts payable		198,571				223,428
Accrued interest payable		12,860				26,982
Current portion of long term debt and capital lease		401				19,244
Accrued expenses and other current liabilities		47,209				31,787
Total current liabilities		266,839				307,929
DEFERRED TAX LIABILITY - NET		2,957				4,544
OTHER LONG TERM LIABILITIES		1,328				783
REVOLVING CREDIT FACILITIES		88,200				37,523
LONG TERM DEBT AND CAPITAL LEASE		523,564				627,078
Total liabilities		882,888				977,857
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A common stock; 18,048,062 shares issued and outstanding at September 30, 2012		2				—
Class B common stock; 24,343,138 shares issued and outstanding at September 30, 2012		2				—
Additional paid in capital		162,862				—
Retained deficit		(30,511		)		—
Accumulated other comprehensive loss		(9,423		)		—
Total stockholders' equity		122,932				—
PREDECESSOR NET DEFICIT:
Net deficit		—				(51,799		)
Accumulated other comprehensive loss		—				(25,648		)
Total predecessor net deficit		—				(77,447		)
NON-CONTROLLING INTEREST		(52,768		)		330
Total equity (deficit)		70,164				(77,117		)
TOTAL LIABILITIES AND EQUITY (DEFICIT)		$	953,052			$	900,740

EDGEN GROUP INC. UNAUDITED CONDENSED CONSOLIDATED/COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
		Nine months ended September 30,
		2012				2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	661			$	(3,951	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		24,031				26,781
Amortization of deferred financing costs		3,775				3,665
Amortization of discount on long term debt		954				891
Non-cash accrual of interest on Seller Note		2,207				2,759
Loss on prepayment of debt		17,005				—
Equity-based compensation expense		4,907				1,948
Unrealized (gain) loss on derivative instruments		(487		)		639
Allowance for doubtful accounts		469				27
Provision for inventory allowances and writedowns		1,125				876
Deferred income tax benefit		(1,889		)		(1,086		)
Loss on foreign currency transactions		785				657
Gain on sale of property, plant and equipment		(48		)		(983		)
Changes in operating assets and liabilities:
Accounts receivable		(40,869		)		(50,453		)
Inventory		(43,859		)		(79,169		)
Prepaid expenses and other current assets		(2,415		)		(1,017		)
Accounts payable		(24,452		)		50,347
Accrued expenses and other current liabilities		(2,254		)		(12,997		)
Income tax payable		2,154				2,713
Income tax receivable		(298		)		18,235
Other		(816		)		(130		)
Net cash used in operating activities		(59,314		)		(40,248		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(3,130		)		(2,549		)
Proceeds from the sale of property, plant and equipment		113				6,276
Net cash provided by (used in) investing activities		(3,017		)		3,727
CASH FLOWS FROM FINANCING ACTIVITIES:
Gross proceeds from issuance of Class A common stock in initial public offering		153,862				—
Initial public offering costs		(4,574		)		—
Repayment of BL term loan, including prepayment penalty of $8,876		(125,322		)		—
Repayment of portion of Seller Note		(10,745		)		—
Other principal payments on long term debt and capital lease		(273		)		(4,985		)
Deferred financing costs		(1,157		)		(1,309		)
Distributions to owners of Predecessor		(8,605		)		(5,008		)
Distributions to owners		(2,170		)		—
Loan payable to EM II LP		950				—
Proceeds from revolving credit facilities		602,000				175,434
Payments to revolving credit facilities		(551,378		)		(186,184		)
Managed cash overdraft		1,329				8,288
Net cash provided by (used in) financing activities		53,917				(13,764		)
Effect of exchange rate changes on cash and cash equivalents		1,302				(622		)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(7,112		)		(50,907		)
CASH AND CASH EQUIVALENTS - beginning of period		26,269				62,864
CASH AND CASH EQUIVALENTS - end of period		$	19,157			$	11,957

EDGEN GROUP INC. UNAUDITED CONDENSED CONSOLIDATED/COMBINED CONSOLIDATED SEGMENT INFORMATION (In thousands)
		Three months ended September 30,								Nine months ended September 30,
		2012				2011				2012				2011
Sales:
E&I		$	295,651			$	244,838			$	828,691			$	652,949
OCTG		239,188				212,328				708,479				546,395
Intersegment sales		(215		)		—				(217		)		(62		)
Total sales		$	534,624			$	457,166			$	1,536,953			$	1,199,282
Intersegment sales:
E&I		$	71			$	—			$	71			$	—
OCTG		144				—				146				62
Total intersegment sales		$	215			$	—			$	217			$	62
Selling, general and administrative expense:
E&I		$	17,870			$	18,464			$	51,094			$	49,609
OCTG		3,534				3,825				14,442				10,039
Corporate		3,767				2,816				11,070				7,313
Total selling, general and administrative expense		$	25,171			$	25,105			$	76,606			$	66,961
Depreciation and amortization:
E&I		$	4,270			$	5,296			$	13,130			$	15,891
OCTG		3,635				3,637				10,901				10,890
Corporate		—				—				—				—
Total depreciation and amortization		$	7,905			$	8,933			$	24,031			$	26,781
Income from operations:
E&I		$	19,366			$	13,174			$	49,817			$	33,897
OCTG		16,017				13,903				42,383				35,440
Corporate		(3,767		)		(2,816		)		(11,070		)		(7,313		)
Total income from operations		$	31,616			$	24,261			$	81,130			$	62,024
		September 30, 2012				December 31, 2011
Assets:
E&I		$	586,906			$	537,872
OCTG		364,799				362,868
Corporate		1,347				—
Total assets		$	953,052			$	900,740

Basis of Presentation

On May 2, 2012, we completed an initial public offering (“IPO”) of common stock and were party to a series of transactions (the “Reorganization”). As a result of the IPO and the Reorganization, we are the parent holding company of Edgen Murray Corporation (“EMC”) and Bourland & Leverich Supply Co. (“B&L”) and have consolidated the results of these businesses with our own. EMC and B&L comprise the historical businesses of Edgen Murray II, L.P. (“EM II LP”) and Bourland & Leverich Holdings LLC (“B&L Holdings”), respectively, which comprise 100% of our E&I and OCTG segments, respectively. The Reorganization has been accounted for as a transaction between entities under common control, as we, EM II LP, EMC, B&L and B&L Holdings have been since July 2010, and continue to be, under the collective common control of affiliates of Jefferies Capital Partners (“JCP”).

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