mrc20240331c

mrc20240331c_10q.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	FOR THE QUARTERLY PERIOD ENDED March 31, 2024

	OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______

Commission file number: 001-35479

MRC GLOBAL INC.

(Exact name of registrant as specified in its charter)

Delaware	20-5956993
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

1301 McKinney Street, Suite 2300 Houston, Texas	77010
(Address of Principal Executive Offices)	(Zip Code)

(877) 294-7574
(Registrant’s Telephone Number, including Area Code)

________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	MRC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 85,076,144 shares of the registrant’s common stock (excluding 147,433 unvested restricted shares), par value $0.01 per share, issued and outstanding as of May 2, 2024.

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INDEX TO QUARTERLY REPORT ON FORM 10-Q

Page
PART I – FINANCIAL INFORMATION

ITEM 1.	financial statements (UNAUDITED)	3

	Condensed Consolidated Balance Sheets – March 31, 2024 AND DECEMBER 31, 2023	3

	cONdENSED cONSOLIDATED STATEMENTS OF OPERATIONS – THREE MONTHS ENDED March 31, 2024 AND March 31, 2023	4

	Condensed Consolidated Statements of cOMPREHENSIVE INCOME – three months ended March 31, 2024 AND March 31, 2023	5

	Condensed CONSOLIDATED STATEMENTS OF STOCKHOLDERs’ EQUITY – three MONTHS ENDED March 31, 2024 AND March 31, 2023	6

	Condensed CONSOLIDATED STATEMENTS OF cash flows – Three MONTHS ENDEd March 31, 2024 AND March 31, 2023	7

	Notes to the Condensed Consolidated Financial Statements – March 31, 2024	8

ITEM 2.	management’s discussion and analysis of financial condition and results of operations	17

ITEM 3.	quantitative and qualitative disclosures about market risk	26

ITEM 4.	controls and procedures	27

PART II – OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	28

ITEM 1a.	RISK FACTORS	28

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	28

ITEM 3.	Defaults Upon Senior Securities	28

ITEM 4.	MINING SAFETY DISCLOSURES	29

ITEM 5.	other information	29

ITEM 6.	Exhibits	30

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

MRC GLOBAL INC.

(in millions, except per share amounts)

	*March 31,*			*December 31,*
	*2024*			*2023*

Assets
Current assets:
Cash	$	146		$	131
Accounts receivable, net		478			430
Inventories, net		546			560
Other current assets		34			34
Total current assets		1,204			1,155

Long-term assets:
Operating lease assets		196			205
Property, plant and equipment, net		78			78
Other assets		20			21

Intangible assets:
Goodwill, net		264			264
Other intangible assets, net		158			163
	$	1,920		$	1,886

Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable	$	402		$	355
Accrued expenses and other current liabilities		95			102
Operating lease liabilities		25			34
Current portion of debt obligations		292			292
Total current liabilities		814			783

Long-term liabilities:
Long-term debt		3			9
Operating lease liabilities		186			186
Deferred income taxes		47			45
Other liabilities		20			20

Commitments and contingencies

6.5% Series A Convertible Perpetual Preferred Stock, $0.01 par value; authorized 363,000 shares; 363,000 shares issued and outstanding		355			355

Stockholders' equity:
Common stock, $0.01 par value per share: 500 million shares authorized, 109,287,979 and 108,531,564 issued, respectively		1			1
Additional paid-in capital		1,767			1,768
Retained deficit		(665	)		(678	)
Less: Treasury stock at cost: 24,216,330 shares		(375	)		(375	)
Accumulated other comprehensive loss		(233	)		(228	)
		495			488
	$	1,920		$	1,886

See notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

MRC GLOBAL INC.

(in millions, except per share amounts)

	*Three Months Ended*
	*March 31,*			*March 31,*
	*2024*			*2023*

Sales	$	806		$	885
Cost of sales		643			706
Gross profit		163			179
Selling, general and administrative expenses		125			122
Operating income		38			57
Other expense:
Interest expense		(8	)		(7	)
Other, net		(3	)		(3	)

Income before income taxes		27			47
Income tax expense		8			13
Net income		19			34
Series A preferred stock dividends		6			6
Net income attributable to common stockholders	$	13		$	28


Basic earnings per common share	$	0.15		$	0.33
Diluted earnings per common share	$	0.15		$	0.33
Weighted-average common shares, basic		84.7			84.0
Weighted-average common shares, diluted		86.1			85.4

See notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

MRC GLOBAL INC.

(in millions)

	*Three Months Ended*
	*March 31,*			*March 31,*
	*2024*			*2023*

Net income	$	19		$	34

Other comprehensive loss
Foreign currency translation adjustments		(5	)		(1	)
Total other comprehensive loss, net of tax		(5	)		(1	)
Comprehensive income	$	14		$	33

See notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

MRC GLOBAL INC.

(in millions)

																	*Accumulated*
					*Additional*												*Other*			*Total*
	*Common Stock*				*Paid-in*			*Retained*			*Treasury Stock*						*Comprehensive*			*Stockholders'*
	*Shares*		*Amount*		*Capital*			*Deficit*			*Shares*			*Amount*			*Loss*			*Equity*
Balance at December 31, 2023		109	$	1	$	1,768		$	(678	)		(24	)	$	(375	)	$	(228	)	$	488
Net income		-		-		-			19			-			-						19
Foreign currency translation		-		-		-			-			-			-			(5	)		(5	)
Shares withheld for taxes		-		-		(5	)					-			-			-			(5	)
Equity-based compensation expense		-		-		4			-			-			-			-			4
Dividends declared on preferred stock		-		-		-			(6	)		-			-			-			(6	)
Balance at March 31, 2024		109	$	1	$	1,767		$	(665	)		(24	)	$	(375	)	$	(233	)	$	495

																	*Accumulated*
					*Additional*												*Other*			*Total*
	*Common Stock*				*Paid-in*			*Retained*			*Treasury Stock*						*Comprehensive*			*Stockholders'*
	*Shares*		*Amount*		*Capital*			*(Deficit)*			*Shares*			*Amount*			*Loss*			*Equity*
Balance at December 31, 2022		108	$	1	$	1,758		$	(768	)		(24	)	$	(375	)	$	(230	)	$	386
Net income		-		-		-			34			-			-			-			34
Foreign currency translation		-		-		-			-			-			-			(1	)		(1	)
Shares withheld for taxes		-		-		(4	)		-			-			-			-			(4	)
Equity-based compensation expense		-		-		3			-			-			-			-			3
Dividends declared on preferred stock		-		-		-			(6	)		-			-			-			(6	)
Balance at March 31, 2023		108	$	1	$	1,757		$	(740	)		(24	)	$	(375	)	$	(231	)	$	412

See notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

MRC GLOBAL INC.

(in millions)

	*Three Months Ended*
	*March 31,*			*March 31,*
	*2024*			*2023*

Operating activities
Net income	$	19		$	34
Adjustments to reconcile net income to net cash provided by (used in) operations:
Depreciation and amortization		5			5
Amortization of intangibles		5			5
Equity-based compensation expense		4			3
Deferred income tax expense		2			5
Other non-cash items		3			4
Changes in operating assets and liabilities:
Accounts receivable		(51	)		(28	)
Inventories		8			(96	)
Other current assets		1			(1	)
Accounts payable		49			54
Accrued expenses and other current liabilities		(7	)		(15	)
Net cash provided by (used in) operations		38			(30	)

Investing activities
Purchases of property, plant and equipment		(6	)		(3	)
Other investing activities		1			-
Net cash used in investing activities		(5	)		(3	)

Financing activities
Payments on revolving credit facilities		(14	)		(211	)
Proceeds from revolving credit facilities		9			262
Payments on debt obligations		(1	)		(1	)
Dividends paid on preferred stock		(6	)		(6	)
Repurchases of shares to satisfy tax withholdings		(5	)		(4	)
Net cash (used in) provided by financing activities		(17	)		40

Increase in cash		16			7
Effect of foreign exchange rate on cash		(1	)		-
Cash -- beginning of period		131			32
Cash -- end of period	$	146		$	39

Supplemental disclosures of cash flow information:
Cash paid for interest	$	7		$	7
Cash paid for income taxes	$	13		$	13

See notes to condensed consolidated financial statements.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MRC GLOBAL INC.

NOTE 1 – BACKGROUND AND BASIS OF PRESENTATION

Business Operations: MRC Global Inc. is a holding company headquartered in Houston, Texas. Our wholly owned subsidiaries are global distributors of pipe, valves, fittings (“PVF”) and infrastructure products and services across each of the following sectors:

●		Gas Utilities: gas utilities (storage and distribution of natural gas)
●		DIET: downstream, industrial and energy transition (crude oil refining, petrochemical and chemical processing, general industrials and energy transition projects)
●		PTI: production and transmission infrastructure (exploration, production and extraction, gathering, processing and transmission of oil and gas)

We have service centers in industrial, chemical, gas distribution and hydrocarbon producing and refining areas throughout the United States, Canada, Europe, Asia, Australasia and the Middle East. We obtain products from a broad range of suppliers.

Basis of Presentation: We have prepared our unaudited condensed consolidated financial statements in accordance with Rule 10-01 of Regulation S-X for interim financial statements. These statements do not include all information and footnotes that generally accepted accounting principles ("GAAP") require for complete annual financial statements. However, the information in these statements reflects all normal recurring adjustments that are, in our opinion, necessary for a fair presentation of the results for the interim periods. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results that will be realized for the fiscal year ending December 31, 2024. We have derived our condensed consolidated balance sheet as of December 31, 2023, from the audited consolidated financial statements for the year ended December 31, 2023. You should read these condensed consolidated financial statements in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023.

The condensed consolidated financial statements include the accounts of MRC Global Inc. and its wholly owned and majority owned subsidiaries (collectively referred to as the "Company" or by terms such as "we", "our" or "us"). All intercompany balances and transactions have been eliminated in consolidation.

Recently Issued Accounting Standards: In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740) ("ASU 2023-09"), which aims to enhance the transparency and decision usefulness of income tax disclosures through requiring improvements in those disclosures primarily related to the rate reconciliation and income taxes paid information. This update will be effective for annual periods beginning after December 15, 2024. We are currently evaluating the impacts of the provisions of ASU 2023-09 on our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) ("ASU 2023-07"), which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker ("CODM"). This update will be effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are currently evaluating the impacts of the provisions of ASU 2023-07 on our consolidated financial statements.

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NOTE 2 – REVENUE RECOGNITION

We recognize revenue when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. We generally recognize our revenue when products are shipped or delivered to our customers, and payment is due from our customers at the time of billing with a majority of our customers having 30-day terms. We estimate and record returns as a reduction of revenue. Amounts received in advance of shipment are deferred and recognized when the performance obligations are satisfied. Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, we exclude these taxes from sales in the accompanying condensed consolidated statements of operations. In some cases, particularly with third party pipe shipments, we consider shipping and handling costs to be separate performance obligations, and as such, we record the revenue and cost of sales when the performance obligation is fulfilled. While a small proportion of our sales, we occasionally recognize revenue under a bill and hold arrangement. Recognition of revenue on bill and hold arrangements occurs when control transfers to the customer provided that the reason for the bill and hold arrangement is substantive, the product is separately identified as belonging to the customer, ready for physical transfer and unavailable to be used or directed to another customer. Cost of sales includes the cost of inventory sold and related items, such as vendor rebates, inventory allowances and reserves and shipping and handling costs associated with inbound and outbound freight, as well as depreciation and amortization of intangible assets.

Our contracts with customers ordinarily involve performance obligations that are one year or less. Therefore, we have applied the optional exemption that permits the omission of information about our unfulfilled performance obligations as of the balance sheet dates.

Contract Balances: Variations in the timing of revenue recognition, invoicing and receipt of payment result in categories of assets and liabilities that include invoiced accounts receivable, uninvoiced accounts receivable, contract assets and deferred revenue (contract liabilities) on the condensed consolidated balance sheets.

Generally, revenue recognition and invoicing occur simultaneously as we transfer control of promised goods or services to our customers. We consider contract assets to be accounts receivable when we have an unconditional right to consideration and only the passage of time is required before payment is due. In certain cases, particularly those involving customer-specific documentation requirements, invoicing is delayed until we are able to meet the documentation requirements. In these cases, we recognize a contract asset separate from accounts receivable until those requirements are met, and we are able to invoice the customer. Our contract asset balance associated with these requirements as of March 31, 2024, and December 31, 2023, was $10 million and $9 million, respectively. These contract asset balances are included within accounts receivable in the accompanying condensed consolidated balance sheets.

We record contract liabilities, or deferred revenue, when cash payments are received from customers in advance of our performance, including amounts which are refundable. The deferred revenue balance at March 31, 2024 and December 31, 2023 was $12 million and $7 million, respectively. During the three months ended March 31, 2024, we recognized $3 million of the revenue that was deferred as of December 31, 2023. During the three months ended March 31, 2023, we recognized $2 million of the revenue that was deferred as of December 31, 2022. Deferred revenue balances are included within accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets.

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Disaggregated Revenue: Our disaggregated revenue represents our business of selling PVF to energy and industrial end users across each of the Gas Utilities, DIET, and PTI sectors in each of our reportable segments. Each of our end markets and geographical reportable segments are impacted and influenced by varying factors, including macroeconomic environment, commodity prices, maintenance and capital spending and exploration and production activity. As such, we believe that this information is important in depicting the nature, amount, timing and uncertainty of our revenue from contracts with customers.

The following table presents our revenue disaggregated by revenue source (in millions):

*Three Months Ended*
*March 31,*

	*U.S.*		*Canada*		*International*		*Total*
2024:
Gas Utilities	$	265	$	1	$	—	$	266
DIET		202		9		65		276
PTI		200		19		45		264
	$	667	$	29	$	110	$	806
2023:
Gas Utilities	$	306	$	1	$	—	$	307
DIET		210		5		63		278
PTI		224		36		40		300
	$	740	$	42	$	103	$	885

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NOTE 3 – INVENTORIES

The composition of our inventory is as follows (in millions):

	*March 31,*			*December 31,*
	*2024*			*2023*
Finished goods inventory at average cost:
Valves, automation, measurement and instrumentation	$	258		$	274
Carbon steel pipe, fittings and flanges		182			193
Gas products		273			266
All other products		131			126
		844			859
Less: Excess of average cost over LIFO cost (LIFO reserve)		(283	)		(282	)
Less: Other inventory reserves		(15	)		(17	)
	$	546		$	560

The Company uses the last-in, first-out (“LIFO”) method of valuing U.S. inventories. The use of the LIFO method has the effect of reducing net income during periods of rising inventory costs (inflationary periods) and increasing net income during periods of falling inventory costs (deflationary periods). Valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, we base interim LIFO calculations on management’s estimates of expected year-end inventory levels and costs and these estimates are subject to the final year-end LIFO inventory determination.

NOTE 4 – LEASES

We lease certain distribution centers, warehouses, office space, land and equipment. Substantially all of these leases are classified as operating leases. We recognize lease expense on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Many of our facility leases include one or more options to renew, with renewal terms that can extend the lease term from one year to 15 years with a maximum lease term of 30 years, including renewals. The exercise of lease renewal options is at our sole discretion; therefore, renewals to extend the terms of most leases are not included in our right of use (“ROU”) assets and lease liabilities as they are not reasonably certain of exercise. In the case of our regional distribution centers and certain corporate offices, where the renewal is reasonably certain of exercise, we include the renewal period in our lease term. Leases with escalation adjustments based on an index, such as the consumer price index, are expensed based on current rates. Leases with specified escalation steps are expensed based on the total lease obligation ratably over the life of the lease. Leasehold improvements are depreciated over the expected lease term. Non-lease components, such as payment of real estate taxes, maintenance, insurance and other operating expenses, have been excluded from the determination of our lease liability.

As most of our leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments using a portfolio approach. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Expense associated with our operating leases was $11 million for the three months ended March 31, 2024, and $10 million for the three months ended March 31, 2023, which we have classified in selling, general and administrative expenses. Cash paid for leases recognized as liabilities was $11 million for the three months ended March 31, 2024, and $10 million for the three months ended March 31, 2023.

The maturity of lease liabilities is as follows (in millions):

Maturity of Operating Lease Liabilities
Remainder of 2024	$	35
2025		41
2026		35
2027		30
2028		26
After 2028		136
Total lease payments		303
Less: Interest		(92	)
Present value of lease liabilities	$	211

The term and discount rate associated with leases are as follows:

	*March 31,*
Operating Lease Term and Discount Rate	*2024*
Weighted-average remaining lease term (years)		11
Weighted-average discount rate		6.6	%

Amounts maturing after 2028 include expected renewals for leases of regional distribution centers and certain corporate offices through dates up to 2048. Excluding these optional renewals, our weighted-average remaining lease term is 6 years.

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NOTE 5 – DEBT

The components of our debt are as follows (in millions):

	*March 31,*		*December 31,*
	*2024*		*2023*
Senior Secured Term Loan B, net of discount and issuance costs of $1	$	292	$	292
Global ABL Facility		3		9
		295		301
Less: current portion		292		292
	$	3	$	9

Senior Secured Term Loan B: The Company has a Senior Secured Term Loan B (the “Term Loan”) with an original principal amount of $400 million, which amortizes in equal quarterly installments of 1% per year with the balance payable in September 2024, when the facility matures. In accordance with ASC 470, the Term Loan is classified as a current liability as of March 31, 2024, as the Company anticipates repaying its Term Loan on or before its maturity in September 2024 using a combination of excess cash and the Global ABL Facility. The Term Loan has an applicable interest rate margin of 300 basis points in the case of loans incurring interest based on LIBOR, and 200 basis points in the case of loans incurring interest based on the base rate. Beginning July 1, 2023, the LIBOR interest rate is now calculated as the aggregate Chicago Mercantile Exchange ("CME") Term SOFR plus the International Swaps and Derivatives Association (ISDA) credit adjustment spread. "Term SOFR" is the forward-looking, per annum secured overnight financing rate administered by CME Group Benchmark Administration Limited and published on the applicable Thompson Reuters Corporation website page for each of 1-month, 3-month, and 6-month maturities. The Term Loan allows for incremental increases in facility size by up to an aggregate of $200 million, plus an additional amount such that the Company’s first lien leverage ratio (as defined under the Term Loan) would not exceed 4.00 to 1.00. MRC Global (US) Inc. is the borrower under this facility, which MRC Global Inc. as well as all of its wholly owned U.S. subsidiaries guarantees. In addition, the Term Loan is secured by a second lien on the assets securing our Global ABL Facility, defined below (which includes accounts receivable and inventory) and a first lien on substantially all of the other assets of MRC Global Inc. and those of its U.S. subsidiaries as well as a pledge of all of the capital stock of our domestic subsidiaries and 65% of the capital stock of first tier, non-U.S. subsidiaries. In addition, the Term Loan contains a number of customary restrictive covenants. The Company is required to repay the Term Loan with the proceeds from certain asset sales and certain insurance proceeds. In addition, on an annual basis, the Company is required to repay an amount equal to 50% of excess cash flow, as defined in the Term Loan, reducing to 25% if the first lien leverage ratio is no more than 2.75 to 1.00. No payment of excess cash flow is required if the first lien leverage ratio is less than or equal 2.50 to 1.00. The amount of cash used in the determination of the senior secured leverage ratio is limited to $75 million.

Global ABL Facility: The Company is a party to a multi-currency, global asset-based lending facility (the “Global ABL Facility”), including certain of its subsidiaries, its lenders and Bank of America, N.A. as administrative agent, security trustee and collateral agent. The Global ABL Facility is a revolving credit facility of $750 million, which matures in September 2026. The Global ABL Facility is comprised of $705 million in revolver commitments in the United States, which includes a $30 million sub-limit for Canada, $12 million in Norway, $10 million in Australia, $10.5 million in the Netherlands, $7.5 million in the United Kingdom and $5 million in Belgium. The Global ABL Facility contains an accordion feature that allows us to increase the principal amount of the facility by up to $250 million, subject to securing additional lender commitments. MRC Global Inc. and each of its current and future wholly owned material U.S. subsidiaries guarantee the obligations of our borrower subsidiaries under the Global ABL Facility. Additionally, each of our non-U.S. borrower subsidiaries guarantees the obligations of our other non-U.S. borrower subsidiaries under the Global ABL Facility. Outstanding obligations are generally secured by a first priority security interest in accounts receivable, inventory and related assets. U.S. borrowings under the amended facility bear interest at Term SOFR (as defined in the Global ABL Facility, which varies from the Term SOFR rate used to calculate LIBOR under the Term Loan) plus a margin varying between 1.25% and 1.75% based on our fixed charge coverage ratio. Canadian borrowings under the facility bear interest at the Canadian Dollar Bankers' Acceptances Rate ("BA Rate") plus a margin varying between 1.25% and 1.75% based on our fixed charge coverage ratio. Borrowings under our foreign borrower subsidiaries bear interest at a benchmark rate, which varies based on the currency in which such borrowings are made, plus a margin varying between 1.25% and 1.75% based on our fixed charge coverage ratio. Availability is dependent on a borrowing base comprised of a percentage of eligible accounts receivable and inventory, which is subject to redetermination from time to time. Excess Availability, as defined under our Global ABL Facility, was $645 million as of March 31, 2024.

Interest on Borrowings: The interest rates on our outstanding borrowings at March 31, 2024 and December 31, 2023, include a floating to fixed interest rate swap and amortization of debt issuance costs, were as follows:

	*March 31,*			*December 31,*
	*2024*			*2023*
Senior Secured Term Loan B		8.60	%		9.08	%
Global ABL Facility		6.11	%		5.82	%
Weighted average interest rate		8.57	%		8.98	%

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NOTE 6 – REDEEMABLE PREFERRED STOCK

Preferred Stock Issuance

In June 2015, we issued 363,000 shares of Series A Convertible Perpetual Preferred Stock (the “Preferred Stock”) and received gross proceeds of $363 million. The Preferred Stock ranks senior to our common stock with respect to dividend rights and rights on liquidation, winding-up and dissolution. The Preferred Stock has a stated value of $1,000 per share, and holders of Preferred Stock are entitled to cumulative dividends payable quarterly in cash at a rate of 6.50% per annum. In June 2018, the holders of Preferred Stock designated one member to our board of directors. If we fail to declare and pay the quarterly dividend for an amount equal to six or more dividend periods, the holders of the Preferred Stock would be entitled to designate an additional member to our board of directors. Holders of Preferred Stock are entitled to vote together with the holders of the common stock as a single class, in each case, on an as-converted basis, except where law requires a separate class vote of the common stockholders. Holders of Preferred Stock have certain limited special approval rights, including with respect to the issuance of pari passu or senior equity securities of the Company.

The Preferred Stock is convertible at the option of the holders into shares of common stock at an initial conversion rate of 55.9284 shares of common stock for each share of Preferred Stock, which represents an initial conversion price of $17.88 per share of common stock, subject to adjustment. The Company currently has the option to redeem, in whole but not in part, all the outstanding shares of Preferred Stock at par value, subject to certain redemption price adjustments. We may elect to convert the Preferred Stock, in whole but not in part, into the relevant number of shares of common stock if the last reported sale price of the common stock has been at least 150% of the conversion price then in effect for a specified period. The conversion rate is subject to customary anti-dilution and other adjustments.

Holders of the Preferred Stock may, at their option, require the Company to repurchase their shares in the event of a fundamental change, as defined in the agreement. The repurchase price is based on the original $1,000 per share purchase price except in the case of a liquidation, in which case the holders would receive the greater of $1,000 per share and the amount that would be received if they held common stock converted at the conversion rate in effect at the time of the fundamental change. Because this feature could require redemption as a result of the occurrence of an event not solely within the control of the Company, the Preferred Stock is classified as temporary equity on our balance sheet.

MRC Global Inc. may not enter into any new, or amend, or modify any existing agreement or arrangement that by its terms restricts, limits, prohibits or prevents the Company from paying dividends on the Preferred Stock, redeeming or repurchasing the Preferred Stock or effecting the conversion of the Preferred Stock. Any such agreement, amendment or modification would require the consent of the holder of the Preferred Stock.

NOTE 7 – STOCKHOLDERS’ EQUITY

Equity Compensation Plans

The Company's Omnibus Incentive Plan permits the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based and cash-based awards. Since the adoption of the Plan, the Company’s board of directors has periodically granted stock options, restricted stock awards, restricted stock units and performance share units to directors and employees, but no other types of awards have been granted under the plan. Options and stock appreciation rights may not be granted at prices less than the fair market value of our common stock on the date of the grant, nor for a term exceeding ten years. For employees, vesting generally occurs over a three-year period on the anniversaries of the date specified in the employees’ respective agreements, subject to accelerated vesting under certain circumstances set forth in the agreements, and in any event, no less than one year. Vesting for directors generally occurs on the one-year anniversary of the grant date. A Black-Scholes option-pricing model is used to estimate the fair value of the stock options. A Monte Carlo simulation is completed to estimate the fair value of performance share unit awards with a stock price performance component. We expense the fair value of all equity grants, including performance share unit awards, on a straight-line basis over the vesting period. In 2024, 457,138 performance share unit awards, 12,414 restricted stock awards, 959,287 shares of restricted stock units have been granted to executive management, members of our Board of Directors and employees.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets consists of the following (in millions):

	*March 31,*			*December 31,*
	*2024*			*2023*
Currency translation adjustments	$	(232	)	$	(227	)
Other adjustments		(1	)		(1	)
Accumulated other comprehensive loss	$	(233	)	$	(228	)

Table of Contents

Earnings per Share

Earnings per share are calculated in the table below (in millions, except per share amounts):

	Three Months Ended
	March 31,		March 31,
	2024		2023
Net income	$	19	$	34
Less: Dividends on Series A Preferred Stock		6		6
Net income attributable to common stockholders	$	13	$	28

Weighted average basic shares outstanding

SEC Form 10-Q filed by MRC Global Inc.