McDermott Delivers Mixed 3Q Results - Analyst Blog
06 November 2012 - 1:15PM
Zacks
Energy-focused engineering and
construction firm McDermott International, Inc.
(MDR) reported mixed third-quarter 2012 earnings results, owing to
strong performances in certain regions, partially offset by steeper
operating costs.
Earnings per share from continuing operations came in at 21 cents,
behind the Zacks Consensus Estimate of 24 cents.
However, the Texas-based engineering-to-project management service
provider’s per share profit were significantly higher than 5 cents
earned in the third quarter of 2011. The quarter’s result was
positively influenced by favorable order activity in the
Asia-Pacific belt.
McDermott generated revenues of $1,028.7 million in the quarter, up
16.9% from the third quarter of 2011 and also exceeded our
expectation of $990.0 million. Better fabrication and marine
operations in the Middle East and Atlantic regions boosted the
company’s results.
On a reported basis, the company registered operating income of
$82.5 million (jumped 134.4% year over year) during the quarter.
Total costs and expenses also increased 11.7% from the
corresponding period, last year to $941.6 million.
Backlog
At the end of the third quarter of 2012, McDermott had a backlog of
$5,339.8 million, compared with $4,255.4 million a year ago. As of
June 30, 2012, backlog was $5,746.7 million.
Balance Sheet
As of September 30, 2012, McDermott had cash/cash equivalents of
$638.8 million and long-term debt (including current maturities) of
approximately $108.3 million (representing a debt-to-capitalization
ratio of approximately 5.3%).
Contract
On the same day, one of the affiliates of McDermott won cable
procurement and installation contract for Saudi Aramco in the
Safaniya, Abu Safah and Marjan fields. Another affiliate of the
company also received contracts for North Dome and PDM projects
from Saudi Aramco.
Recommendation
We are maintaining our Neutral recommendation on McDermott
International – which shares business ties with Williams
Partners L.P. (WPZ). The company has a diversified product
portfolio, specialty manufacturing and service capabilities, and
proprietary technological expertise.
Additionally, McDermott’s improving award activity, geographic
footprint in high-growth regions, and continued strong project
execution provide solid visibility into its earnings for 2013.
MCDERMOTT INTL (MDR): Free Stock Analysis Report
WILLIAMS PTNRS (WPZ): Free Stock Analysis Report
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