McDermott International, Inc. (NYSE: MDR) (“McDermott” or the
“Company”) today reported income of $50.6 million, or $0.21 per
diluted share, for the 2012 third quarter. The results of the 2012
third quarter compare to income from continuing operations of $9.8
million, or $0.04 per diluted share, in the corresponding period of
2011. Weighted average common shares outstanding on a fully diluted
basis were approximately 237.9 million and 236.9 million in the
quarters ended September 30, 2012 and September 30, 2011,
respectively.
McDermott’s revenues were $1,028.7 million for the 2012 third
quarter compared to $879.9 million in the corresponding period of
2011. The year-over-year increase was attributable to the Middle
East and Atlantic segments, primarily due to increased fabrication
and marine activity. The increase from these segments was partially
offset by lower revenues in the Asia Pacific segment due to lower
marine activity.
The Company’s operating income in the 2012 third quarter was
$82.5 million compared to $35.2 million in the 2011 third quarter.
The increase in operating income was primarily due to approximately
$50 million in project losses recognized in the 2011 third quarter,
in addition to higher fabrication and marine activity in the Middle
East and Atlantic segments and additional change order activity in
the Asia Pacific segment in the 2012 third quarter.
“The positive results of our 2012 third quarter keep us on track
for a solid 2012 financial performance,” said Stephen M. Johnson,
Chairman of the Board, President and Chief Executive Officer of
McDermott. “We see continued strength in our end markets and are
encouraged by the significant level of bids and targeted market
opportunities.”
The Company’s other income for the third quarter of 2012 was
$1.7 million, which represents an improvement of $1.3 million as
compared to other income of $0.4 million in the third quarter of
2011 primarily attributable to increased interest income.
At September 30, 2012, the Company’s backlog was approximately
$5.3 billion, compared to $5.7 billion and $4.3 billion at June 30,
2012 and September 30, 2011, respectively.
Balance Sheet Summary
As of September 30, 2012, McDermott reported total assets of
approximately $3.4 billion. Included in this amount was $720.7
million of cash and cash equivalents, restricted cash and
investments. Net working capital, calculated as current assets less
current liabilities, was $679.4 million. Additionally, total equity
was over $1.9 billion, or approximately 57% of total assets, with
total debt of $108.3 million.
OTHER INFORMATION
About the Company
McDermott is a leading engineering, procurement, construction
and installation (“EPCI”) company focused on executing complex
offshore oil and gas projects worldwide. Providing fully integrated
EPCI services for upstream field developments, the Company delivers
fixed and floating production facilities, pipelines and subsea
systems from concept to commissioning. McDermott’s customers
include national and major energy companies. Operating in
approximately 20 countries across the Atlantic, Middle East and
Asia Pacific, the Company’s integrated resources include
approximately 13,500 employees and a diversified fleet of marine
vessels, fabrication facilities and engineering offices. McDermott
has served the energy industry since 1923. To learn more, please
visit McDermott’s website on the Internet at www.mcdermott.com.
Forward-Looking
Statements
In accordance with the Safe Harbor provisions of the Private
Securities Litigation Reform Act of 1995, McDermott cautions that
statements in this press release, which are forward-looking and
provide other than historical information, involve risks and
uncertainties that may impact McDermott's actual results of
operations. These forward-looking statements include statements
about backlog, to the extent backlog may be viewed as an indicator
of future revenues, McDermott remaining on track for a solid 2012
financial performance and the continued strength in McDermott’s end
markets. Although we believe that the expectations reflected in
those forward-looking statements are reasonable, we can give no
assurance that those expectations will prove to have been correct.
Those statements are made by using various underlying assumptions
and are subject to numerous uncertainties and risks, including
adverse changes in the markets in which we operate or credit
markets, our inability to successfully execute on contracts in
backlog, changes in project design or schedules, changes in the
scope or timing of contracts, and contract cancellations, change
orders and other modifications. If one or more of these risks
materialize, or if underlying assumptions prove incorrect, actual
results may vary materially from those expected. For a more
complete discussion of these and other risk factors, please see
McDermott's annual and quarterly filings with the Securities and
Exchange Commission, including its annual report on Form 10-K for
the year ended December 31, 2011 and subsequent quarterly reports
on Form 10-Q. This news release reflects management's views as of
the date hereof. Except to the extent required by applicable law,
McDermott undertakes no obligation to update or revise any
forward-looking statement.
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF
INCOME
Three Months EndedSeptember 30, Nine Months
EndedSeptember 30, 2012 2011 2012
2011 (In thousands, except share and per share
amounts) Revenues $ 1,028,745 $ 879,894 $
2,645,671 $ 2,628,935 Costs and Expenses: Cost
of operations 889,823 802,951 2,246,961 2,253,981 Selling, general
and administrative expenses 51,834 48,046 145,927 163,827
Gain on asset disposals
(85 )
(7,811
)
(282
)
(8,107 ) Total costs and expenses 941,572
843,186 2,392,606
2,409,701 Equity in Income (Loss) of
Unconsolidated Affiliates (4,692 )
(1,492
)
(11,026 ) 59 Operating Income
82,481 35,216 242,039
219,293 Other Income (Expense): Interest income 996
319 4,215 1,060 Interest expense
-
(152
)
-
(415 )
Gain (loss) on foreign currency--net
488 504 11,185 (2,356 )
Other income (expense)--net
242 (298 ) (288 )
(1,586
)
Total other income (expense) 1,726 373
15,112
(3,297
)
Income from continuing operations before provision for
income taxes and noncontrolling interests 84,207
35,589 257,151 215,996
Provision for Income Taxes 29,916
20,535 87,004 60,351
Income from continuing operations before noncontrolling interests
54,291 15,054 170,147
155,645 Total income from discontinued
operations, net of tax
-
1,187 3,497 6,459
Net Income 54,291 16,241
173,644 162,104 Less: Net Income
Attributable to NoncontrollingInterests 3,679
5,290 7,535 13,405 Net
Income Attributable to McDermott International, Inc. $ 50,612
$ 10,951 $ 166,109 $ 148,699
McDERMOTT INTERNATIONAL, INC.
EARNINGS PER SHARE COMPUTATION
Three Months EndedSeptember 30, Nine Months
Ended
September 30,
2012 2011 2012 2011 (In thousands,
except share and per share amounts) Income from
continuing operations less noncontrolling interests $ 50,612 $
9,764 $ 162,612 $ 142,240 Income from discontinued operations, net
of tax
-
1,187 3,497 6,459 Net income
attributable to McDermott International, Inc. $ 50,612 $ 10,951 $
166,109 $ 148,699 Weighted average common shares
(basic) 235,817,203 234,940,184 235,568,889 234,451,430 Effect of
dilutive securities: Stock options, restricted stock and restricted
stock units 2,049,797 2,007,479 1,984,574
2,627,875 Adjusted weighted average common shares and
assumed exercises of stock options and vesting of stock awards
(diluted) 237,867,000 236,947,663 237,553,463
237,079,305
Basic earnings per share:
Income from continuing operations less noncontrolling interests
0.21 0.04 0.69 0.61 Income from discontinued operations, net of tax
-
0.01 0.01 0.03 Net income attributable to McDermott International,
Inc. 0.21 0.05 0.70 0.63
Diluted earnings per share:
Income from continuing operations less noncontrolling interests
0.21 0.04 0.68 0.60 Income from discontinued operations, net of tax
-
0.01 0.01 0.03 Net income attributable to McDermott International,
Inc. 0.21 0.05 0.69 0.63
SUPPLEMENTARY DATA
Three Months EndedSeptember 30, Nine Months
Ended
September 30,
2012 2011 2012
2011 (In thousands) Depreciation and amortization $
20,082 $ 19,801 $ 65,956 $ 59,900 Drydock amortization $ 7,999 $
6,037 $ 21,606 $ 18,336 Capital expenditures $ 47,623 $ 90,190 $
179,284 $ 231,872 Backlog $ 5,339,755 $ 4,255,432 $ 5,339,755 $
4,255,432
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
September 30,2012
December 31, 2011
(In thousands, except share and per share amounts)
Assets Current Assets: Cash and cash equivalents $ 638,794 $
570,854 Restricted cash and cash equivalents 23,074 21,962
Investments 28,737 109,522
Accounts receivable--trade, net
548,068 445,808
Accounts receivable--other
63,774 53,386 Contracts in progress 499,339 287,390 Deferred income
taxes 11,580 11,931 Other current assets 41,155
36,332 Total Current Assets 1,854,521
1,537,185 Property, Plant and Equipment
2,018,481 1,958,877 Less accumulated depreciation (819,645 )
(857,012
)
Net Property, Plant and Equipment 1,198,836 1,101,865 Assets
Held for Sale 28,724 55,571 Investments 30,097 29,484 Goodwill
41,202 41,202 Investments in Unconsolidated Affiliates 35,430
42,659 Other Assets 175,233 184,848
Total Assets $ 3,364,043 $ 2,992,814
Liabilities and Equity Current Liabilities: Notes payable
and current maturities of long-term debt $ 14,146 $ 8,941 Accounts
payable 375,954 315,514 Accrued liabilities 395,234 309,515 Advance
billings on contracts 307,144 320,438 Deferred income taxes 13,213
13,187 Income taxes payable 69,383 54,181
Total Current Liabilities 1,175,074
1,021,776 Long-Term Debt 94,140 84,794
Self-Insurance 27,867 23,585 Pension Liability 19,292 21,295 Other
Liabilities 124,979 107,652 Commitments and Contingencies
Stockholders’ Equity: Common stock, par value $1.00 per share,
authorized 400,000,000 shares; issued 243,419,194 and 242,416,424
shares at September 30, 2012 and December 31, 2011, respectively
243,419 242,416 Capital in excess of par value 1,387,311 1,375,976
Retained earnings 405,212 239,103 Treasury stock, at cost,
7,574,903 and 7,359,983 shares at September 30, 2012 and December
31, 2011, respectively (98,725 )
(95,827
)
Accumulated other comprehensive loss
(80,508
)
(102,030
)
Stockholders’ Equity--McDermott
International, Inc.
1,856,709 1,659,638 Noncontrolling Interests 65,982
74,074 Total Equity 1,922,691
1,733,712 Total Liabilities and Equity $
3,364,043 $ 2,992,814
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Nine Months EndedSeptember 30, 2012
2011 (In thousands) Cash Flows From Operating
Activities: Net income $ 173,644 $ 162,104 Less: Income from
discontinued operations, net of tax 3,497 6,459
Income from continuing operations $ 170,147 $ 155,645
Non-cash items included in net income: Depreciation and
amortization 65,956 59,900 Drydock amortization 21,606 18,336
Equity in (income) loss of unconsolidated affiliates 11,026
(59
)
Gain on asset disposals and
impairments--net
(282
)
(8,107
)
Provision (benefit) from deferred taxes 3,929
(2,910
)
Stock-based compensation charges 11,449 8,340 Pension costs 1,152
15,367 Other non-cash items 5,178 5,909 Changes in assets and
liabilities, net of effects from dispositions: Accounts receivable
(113,460
)
26,238 Net contracts in progress and advance billings on contracts
(225,340
)
(380,635
)
Accounts payable 58,675 44,667 Accrued and other current
liabilities 66,125 71,148 Pension liability and accrued
postretirement and employee benefits 17,322
(51,041
)
Other assets and liabilities 16,166
(33,663
)
Net Cash Provided By (Used In) Operating
Activities--Continuing Operations
109,649
(70,865
)
Net Cash Used In Operating
Activities--Discontinued Operations
-
(211 ) Total Cash Provided By (Used In) Operating
Activities 109,649
(71,076
)
Cash Flows From Investing Activities: Purchases of
property, plant and equipment
(179,284
)
(231,872
)
(Increase) decrease in restricted cash and cash equivalents
(1,112
)
183,564 Purchases of available-for-sale securities
(82,735
)
(516,628
)
Sales and maturities of available-for-sale securities 164,807
601,128 Proceeds from asset disposals 405 8,483 Other investing
activities, net (2,305 ) (16 )
Net Cash Provided By (Used In) Investing
Activities--Continuing Operations
(100,224
)
44,659
Net Cash Provided By Investing
Activities--Discontinued Operations
60,671
-
Total Cash Provided By (Used In) Investing
Activities
(39,553
)
44,659
Cash Flows From Financing Activities:
Increase in debt 19,033 40,212 Payment of debt
(4,482
)
(6,473
)
Debt issuance costs 64
(4,824
)
Distributions to noncontrolling interests
(15,728
)
-
Other financing activities, net
(2,706
)
(2,059
)
Net Cash Provided By (Used In) Financing
Activities--Continuing Operations
(3,819
)
26,856 Effects of exchange rate changes on cash and
cash equivalents 1,663 (313 )
Net increase in cash and cash
equivalents
67,940 126 Cash and cash equivalents at
beginning of period 570,854 403,463
Cash and cash equivalents at end of
period--Continuing Operations
$ 638,794 $ 403,589
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