McDermott International, Inc. (NYSE: MDR) (“McDermott” or the
“Company”) today reported net income of $20.6 million, or $0.09 per
fully diluted share, for the quarter ended March 31, 2013. The
results for the first quarter 2013 compared to income from
continuing operations of $61.9 million, or $0.25 per fully diluted
share, in the corresponding period of 2012. Weighted average common
shares outstanding on a fully diluted basis were approximately
239.2 million and 237.3 million in the quarters ended March 31,
2013 and 2012, respectively.
McDermott’s revenues were $807.5 million for the first quarter
2013, an increase of 11 percent compared to $727.7 million in the
corresponding period of 2012. The year-over-year increase was
primarily due to an approximately $48.6 million increase in
revenues in the Atlantic segment as a result of increased
fabrication activity, coupled with increased revenues in the Asia
Pacific and Middle East segments.
The Company’s operating income in the first quarter 2013 was
$53.0 million, a decrease of $27.2 million compared to $80.2
million in the first quarter 2012. The first quarter 2013 results
were affected by operating losses in the Middle East and Atlantic
segments, partially offset by stronger operating income in our Asia
Pacific segment. In the first quarter 2013, operating losses in the
Middle East segment totaled approximately $18.5 million compared to
operating income of $34.7 million for the corresponding prior year
period, a decline primarily attributable to execution plan changes
on a project at an advanced stage of completion, which resulted in
cost increases associated with hook-up activities and the use of
third-party vessels. In addition, the decline in operating income
was due to lower asset utilization and project activity compared to
the prior year. The operating loss for the Atlantic segment changed
by approximately $4.4 million to a loss of approximately $16.4
million due to increased support costs associated with lower marine
asset utilization.
Operating income in the Asia Pacific segment increased
approximately $30.5 million to $88.0 million in the first quarter
2013, primarily due to the successful execution and change orders
on a key project as well as cost savings on other projects offset
by approximately $4.1 million in increased costs estimates for one
of our marine subsea projects. In addition, an approximately $12.3
million or $0.05 per diluted share gain on the sale of the DB 26
was recognized during the quarter for the segment.
The Company’s other expense for the first quarter 2013 was $1.4
million, a reduction of $11.9 million compared to other income of
$10.5 million in the first quarter 2012, primarily due to net
losses on foreign currency related items.
During the quarter, the Company booked approximately $1.0
billion in new orders including two projects in the Arabian Gulf.
In addition, at March 31, 2013 the Company had approximately $5.6
billion in bids and change orders outstanding. The Company has also
identified $10.1 billion in target project opportunities that the
Company expects to bid in the next five quarters.
At March 31, 2013, the Company’s backlog was $5.3 billion,
compared to $5.8 billion and $5.1 billion at March 31, 2012 and
December 31, 2012, respectively. Of the March 31, 2013 backlog,
approximately $428.9 million was derived from five projects
currently in a loss position, of which 93 percent relate to a
project in the Asia Pacific segment and the five-year charter in
Brazil. In addition, the backlog includes approximately $165.6
million for one project under deferred profit recognition.
“Although the final phases of an otherwise well-executed project
in the Middle East challenged us this quarter, I am pleased with
our successful completion of a key project in the Asia Pacific
segment,” said Stephen M. Johnson, Chairman of the Board, President
and Chief Executive Officer of McDermott. “With the sale of the DB
26 and our expansion of our subsea engineering talent through the
acquisition of DeepSea group, McDermott is making steady progress
on its strategic transformation. We remain focused on winning work
for which we can provide a cost-effective solution and execute
successfully for our customers and for our shareholders.”
Balance Sheet Summary
As of March 31, 2013, McDermott reported total assets of
approximately $3.2 billion. Included in this amount was $502.4
million of cash and cash equivalents, restricted cash and
investments. Net working capital, calculated as current assets less
current liabilities, was $616.2 million. Additionally, total equity
was $2.0 billion, or approximately 62% of total assets, with total
debt of $101.2 million.
OTHER INFORMATION
Conference Call
McDermott has scheduled a conference call and webcast related to
its first quarter 2013 results on Thursday, May 9, 2013, at 9:00
a.m. U.S. Central Daylight Time. Interested parties may listen over
the Internet through a link posted in the Investor Relations
section of the Company's website. The replay will also be available
on the Company's website following the end of the live call.
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, major integrated and other energy companies.
Operating in approximately 20 countries across the Atlantic, Middle
East and Asia Pacific, the Company’s integrated resources include
approximately 14,000 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, bookings, bidding, change orders outstanding and
target project opportunities, to the extent each of these items may
be viewed as an indicator of future revenues, McDermott’s
expectations on the timing for bidding target project opportunities
and McDermott’s progress on its strategic transformation. 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, 2012 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 EndedMarch
31, 2013 2012 (In thousands)
Revenues $ 807,488 $ 727,678 Costs and
Expenses: Cost of operations 712,814 597,434 Selling, general and
administrative expenses 52,226 46,611 Gain on asset disposals
(14,716 ) (226 ) Total costs and expenses
750,324 643,819 Equity in
Loss of Unconsolidated Affiliates (4,131 ) (3,683 )
Operating Income 53,033 80,176
Other Income (Expense): Interest income 342 1,634 Gain
(loss) on foreign currency – net (2,526 ) 9,441 Other income
(expense) – net 782 (581 ) Total other
income (expense) (1,402 ) 10,494
Income from continuing operations before provision for income taxes
and noncontrolling interests 51,631 90,670 Provision for
Income Taxes 27,313 28,743
Income from continuing operations before noncontrolling interests
24,318 61,927 Gain on disposal
of discontinued operations
-
257 Income from discontinued operations, net of tax
-
3,240 Total income from discontinued
operations, net of tax
-
3,497 Net Income 24,318 65,424
Less: Net Income Attributable to Noncontrolling Interests
3,765 2,666 Net Income Attributable to
McDermott International, Inc. $ 20,553 $ 62,758
McDERMOTT INTERNATIONAL, INC.
EARNINGS PER SHARE COMPUTATION
Three Months EndedMarch 31, 2013
2012
(In thousands, except share and per
share amounts)
Income from continuing operations less noncontrolling
interests $ 20,553 $ 59,261 Income from discontinued operations,
net of tax
-
3,497 Net income attributable to McDermott International,
Inc. $ 20,553 $ 62,758 Weighted average common shares
(basic) 235,941,185 235,208,252 Effect of dilutive
securities: Stock options, restricted stock and restricted stock
units 3,258,696 2,124,375 Adjusted weighted average
common shares and assumed exercises of stock options and vesting of
stock awards (diluted) 239,199,881 237,332,627
Basic earnings per share: Income from continuing operations
less noncontrolling interests 0.09 0.25 Income from discontinued
operations, net of tax
-
0.01 Net income attributable to McDermott International, Inc. 0.09
0.27
Diluted earnings per share: Income from
continuing operations less noncontrolling interests 0.09 0.25
Income from discontinued operations, net of tax
-
0.01 Net income attributable to McDermott International, Inc. 0.09
0.26
SUPPLEMENTARY DATA
Three Months EndedMarch 31, 2013
2012 (In thousands) Depreciation & amortization
expense $ 20,222 $ 23,276 Drydock amortization expense $ 5,550 $
7,112 Capital expenditures $ 37,649 $ 44,751 Backlog $ 5,297,981 $
5,806,633
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2013
December 31, 2012
(In thousands, except share and per
share amounts)
Assets Current Assets: Cash and cash equivalents $ 461,535 $
640,147 Restricted cash and cash equivalents 21,942 18,116
Accounts receivable--trade, net
443,182 428,800
Accounts receivable--other
65,561 75,461 Contracts in progress 544,404 560,154 Deferred income
taxes 6,888 9,765 Assets held for sale 1,396 2,679 Other current
assets 42,436 54,667 Total
Current Assets 1,587,344 1,789,789
Property, Plant and Equipment 2,155,243 2,115,176 Less
accumulated depreciation (828,223 ) (833,385 )
Net Property, Plant and Equipment 1,327,020 1,281,791 Investments
18,936 26,750 Goodwill 41,202 41,202 Investments in Unconsolidated
Affiliates 35,233 37,435 Assets Held for Sale 12,243 26,758 Other
Assets 159,040 129,902 Total
Assets $ 3,181,018 $ 3,333,627
Liabilities
and Equity Current Liabilities: Notes payable and current
maturities of long-term debt $ 44,025 $ 14,146 Accounts payable
302,250 400,007 Accrued liabilities 332,358 369,418 Advance
billings on contracts 206,010 241,696 Deferred income taxes 16,027
10,758 Income taxes payable 70,425 76,986
Total Current Liabilities 971,095
1,113,011 Long-Term Debt 57,188 88,562
Self-Insurance 24,141 22,641 Pension Liability 24,757 25,069 Other
Liabilities 136,949 132,239 Commitments and Contingencies
Stockholders’ Equity: Common stock, par value $1.00 per share,
authorized 400,000,000 shares; issued 243,778,369 and 243,442,156
shares at March 31, 2013 and December 31, 2012, respectively
243,778
243,442
Capital in excess of par value 1,394,859 1,391,271 Retained
earnings 466,309 445,756 Treasury stock, at cost, 7,359,501 and
7,574,903 shares at March 31, 2013 and December 31, 2012,
respectively (99,688 ) (98,725
)
Accumulated other comprehensive loss
(100,697
)
(94,413
)
Stockholders’ Equity--McDermott
International, Inc.
1,904,561 1,887,331 Noncontrolling Interests 62,327
64,774 Total Equity 1,966,888
1,952,105 Total Liabilities and Equity $ 3,181,018
$ 3,333,627
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Three Months Ended
March 31,
2013 2012 (In thousands) CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $ 24,318 $ 65,424 Less: Income
from discontinued operations, net of tax
-
3,497 Income from continuing operations
24,318 61,927 Non-cash items included in net income: Depreciation
and amortization 20,222 23,276 Drydock amortization 5,550 7,112
Equity in loss of unconsolidated affiliates 4,131 3,683 Gain on
asset disposals (14,716 ) (226 ) Benefit for deferred taxes 5,332
(4,131 ) Other non-cash items 2,391 3,803 Changes in assets and
liabilities, net of effects from acquisitions and dispositions:
Accounts receivable (6,573 ) 50,017 Net contracts in progress and
advance billings on contracts (19,935 ) 65,363 Accounts payable
(125,234 ) (55,292 ) Accrued and other current liabilities (20,774
) (10,040 ) Pension liability and accrued postretirement and
employee benefits (19,657 ) 7,489 Other assets and liabilities
(42,170 ) 19,880
TOTAL CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES--CONTINUING OPERATIONS
(187,115 ) 172,861
CASH FLOWS FROM
INVESTING ACTIVITIES: Purchases of property, plant and
equipment (37,649 ) (44,751 ) Increase in restricted cash and cash
equivalents (3,826 ) (2,870 ) Purchases of available-for-sale
securities (3,744 ) (40,319 ) Sales and maturities of
available-for-sale securities 31,193 94,380 Proceeds from sale and
disposal of assets 35,621 226 Other investing activities
(4,596 ) (2,376 )
NET CASH PROVIDED BY INVESTING
ACTIVITIES--CONTINUING OPERATIONS
16,999 4,290
NET CASH PROVIDED BY INVESTING
ACTIVITIES--DISCONTINUED OPERATIONS
-
60,671 TOTAL CASH PROVIDED BY INVESTING
ACTIVITIES 16,999 64,961
CASH
FLOWS FROM FINANCING ACTIVITIES: Payment of debt (1,494 )
(1,494 ) Distributions to noncontrolling interests (6,200 ) (15,733
) Other financing activities (1,015 ) (1,784 )
TOTAL CASH USED IN FINANCING
ACTIVITIES--CONTINUING OPERATIONS
(8,709 ) (19,011 ) EFFECTS OF EXCHANGE RATE
CHANGES ON CASH 213 (700 ) NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS (178,612 )
218,111 CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 640,147 570,854
CASH AND CASH EQUIVALENTS AT END OF
PERIOD--CONTINUING OPERATIONS
$ 461,535 $ 788,965
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the
period for: Income taxes (net of refunds) $ 25,916 $ 16,036
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