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Edgen Group Inc. (the “Company” or “Edgen Group”) (NYSE: EDG) a leading global distributor of specialized products including steel pipe, valves, plate, and related components to the energy and industrial infrastructure markets, today reported its financial results for the three and twelve months ended December 31, 2012.
“With record net sales in 2012, we are very pleased with our year over year growth given the uncertain global economic conditions throughout 2012,” stated Dan O'Leary, the Company's Chairman and Chief Executive Officer. “Despite the challenging environment, the Company was able to achieve record revenue levels while we focused on completing an IPO, refinancing our debt at more favorable terms and completing two acquisitions to expand our product offering, all of which continue to position the Company for future success.”
Years Ended December 31, 2012 and 2011
Net sales increased 23% to a record $2.1 billion from $1.7 billion in 2011.
Net sales from our Energy & Infrastructure (“E&I”) segment increased 24% to $1.1 billion compared to $911.6 million in 2011. Gross margins in 2012 and 2011 were 13.4% and 14.8%, respectively.
Net sales from our Oil Country Tubular Goods (“OCTG”) segment increased 22% to $929.6 million compared to $763.7 million in 2011. Gross margins in 2012 and 2011 were 9.6% and 10.0%, respectively.
SG&A expenses in 2012 and 2011 were 5.0% and 5.4%, respectively, of net sales.
Exclusive of a $3.0 million non-cash charge related to equity based compensation expense associated with the acceleration of certain equity based awards in the second quarter of 2012, SG&A expenses were 4.9% of net sales and reflect effective cost control for 2012.
Net loss of $(43.4) million in 2012, as compared to a net loss of $(4.2) million in 2011, includes a loss on prepayment of debt of $71.7 million pre-tax ($69.2 million after tax) as well as other charges as reconciled in the tables below. Excluding charges, adjusted net income (loss) was $29.3 million in 2012, compared to $(3.4) million in 2011.
Adjusted EBITDA increased 15%, to $144.9 million in 2012 compared to $125.5 million in 2011.
Sales backlog from our E&I segment decreased to $248.0 million at December 31, 2012 from $353.0 million at December 31, 2011. The decline in sales backlog reflects a slowdown in new bookings late in the year as many of our customers chose to delay capital spending initiatives due to uncertainty in commodity prices, global consumer demand for energy, particularly in Europe and emerging markets and fiscal cliff negotiations in the U.S.
Three Months Ended December 31, 2012 and 2011
Net sales increased 10% to $522.1 million from $475.9 million in 2011.
Net sales from our E&I segment increased 16% to $301.0 million compared to $258.7 million in 2011. Gross margins in 2012 and 2011 were 12.5% and 13.4%, respectively.
Net sales from our OCTG segment increased 2% to $221.1 million compared to $217.2 million in 2011. Gross margins in 2012 and 2011 were 9.9% and 9.5%, respectively.
Selling, general and administrative (“SG&A”) expenses in 2012 and 2011 were 5.1% and 5.0%, respectively, of net sales.
Net loss of $(44.1) million in 2012, as compared to a net loss of $(0.2) million in 2011, includes a loss on prepayment of debt of $54.7 million pre-tax ($54.4 million after tax) as well as other charges as reconciled in the tables below. Excluding charges, adjusted net income was $11.0 million in 2012 compared to $0.6 million in 2011.
Adjusted EBITDA increased 5% to $34.6 million compared to $33.0 million in 2011.
Dan O'Leary stated, “We believe the softness in E&I sales bookings experienced late in the fourth quarter of 2012 and early 2013 will result in a slower first half of 2013 compared to a year ago, but the second half of the year should support another year of sales growth. We expect a competitive environment across all end-markets along with continued pricing pressure for the products we distribute, particularly within the OCTG segment.”