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Edgen Group Reports Third Quarter 2012 Results

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three months ended September 30, 2012 and the period from May 2, 2012 to September 30, 2012 (the period since the IPO and the Reorganization). Prior to the IPO and the Reorganization, all income or loss generated from our operations was allocated to the Predecessor. Because we historically operated as a series of related partnerships and limited liability companies, and there was no single capital structure upon which to calculate historical earnings per share information, we have not provided a calculation of basic and diluted earnings per share for periods prior to the IPO and the Reorganization.

   
(dollars in thousands, except share data)

Three months ended September 30, 2012

Period from May 2, 2012 to September 30, 2012

Basic earnings (loss) per share:
Numerator (in thousands):
Net income (loss) attributable to Edgen Group Inc. $ 3,886 $ (2,189 )
Denominator:
Class A shares 17,771,939   17,547,082  
Basic weighted average common shares outstanding 17,771,939 17,547,082
   
Basic earnings (loss) per share $ 0.22   $ (0.12 )
 
Diluted earnings (loss) per share:
Numerator (in thousands):
Net income (loss) attributable to Edgen Group Inc. $ 3,886 $ (2,189 )
Denominator:
Basic weighted average common shares outstanding 17,771,939 17,547,082
Class A unvested restricted shares 277,187
Class A options (vested and unvested) 133,398    
Diluted weighted average common shares outstanding 18,182,524 17,547,082
   
Diluted earnings (loss) per share $ 0.21   $ (0.12 )
 

The table below presents the shares that were excluded from our dilutive earnings (loss) per share calculation because they were anti-dilutive.

   

Three months ended September 30, 2012

Period from May 2, 2012 to September 30, 2012

Class A unvested restricted shares 243,848
Class B shares 24,343,138 24,343,138
Class A options (vested and unvested) 771,585   1,692,192
Total anti-dilutive shares 25,114,723   26,279,178
 

Use of Non-GAAP Financial Measures

We use EBITDA and Adjusted EBITDA in our business operations to, among other things, evaluate the performance of our operating segments, develop budgets and measure our performance against those budgets, determine employee bonuses and evaluate our cash flows in terms of cash needs. We find these measures to be useful tools to assist us in evaluating financial performance because they eliminate items related to capital structure, taxes and certain non-cash charges. These Non-GAAP measures, as calculated by us, are not necessarily comparable to similarly titled measures reported by other companies. Additionally, these Non-GAAP measures have material limitations as analytical tools, are not a measure of financial performance or liquidity under GAAP and should not be considered in isolation or as an alternative to or superior to GAAP measures such as net income, operating income, net cash flow provided by operating activities or any other measure of financial performance or liquidity calculated and presented in accordance with GAAP. We define EBITDA as net income or loss, plus interest expense, provision for income taxes, depreciation, amortization and accretion expense. We define Adjusted EBITDA as EBITDA plus equity based compensation, loss on prepayment of debt and other income and expense. EBITDA and Adjusted EBITDA are commonly used as supplemental financial measures by management and external users of our financial statements, such as investors, commercial banks, research analysts and rating agencies, to assess: (1) our financial performance without regard to financing methods or capital structures; and (2) our ability to generate cash sufficient to pay interest and support our indebtedness. The table set forth below provides reconciliations of EBITDA and Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP.

       

EDGEN GROUP INC.

Supplemental Information (unaudited)

Reconciliation of GAAP Net Income (Loss) to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA

(In millions)

 

Three months ended September 30,

Nine months ended September 30,

Year ended December 31, 2011

Trailing twelve months ended September 30, 2012

2012   2011 2012   2011
NET INCOME (LOSS) $ 10.4 $ 2.4 $ 0.7 $ (4.0 ) $ (4.2 ) $ 0.5
Income tax expense 2.5 1.2 3.7 3.3 4.1 4.5
Interest expense - net 18.3 20.7 59.9 64.5 86.5 81.9
Depreciation and amortization expense 7.9   8.9   24.0   26.8   35.6   32.8
EBITDA 39.1 33.2 88.3 90.6 122.0 $ 119.7
Acquisition costs 0.2 0.2 0.2
Loss on prepayment of debt 17.0 17.0
Equity based compensation 0.5   0.7   4.9   1.9   2.6   5.7
ADJUSTED EBITDA $ 39.8   $ 33.9   $ 110.4   $ 92.5   $ 124.6   $ 142.6




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