McDermott International, Inc. (NYSE: MDR) (“McDermott” or the
“Company”) today reported income from continuing operations of
$68.8 million, or $0.29 per diluted share, for the 2011 first
quarter. The results of the 2011 first quarter compare to income
from continuing operations of $51.6 million, or $0.22 per diluted
share, in the corresponding period of 2010. The results of
McDermott’s charter fleet business and The Babcock & Wilcox
Company (“B&W”), which was spun-off to McDermott shareholders
on July 30, 2010, are excluded from both periods and are classified
as discontinued operations. Weighted average common shares
outstanding on a fully diluted basis were approximately 236.7
million and 234.8 million in the quarters ended March 31, 2011 and
March 31, 2010, respectively.
McDermott’s revenues for the 2011 first quarter were $899.2
million, an increase of 78 percent, compared to $504.9 million in
the corresponding period of 2010. The year-over-year increase was
primarily due to significant increases in the Asia Pacific and
Middle East segments as a result of higher marine activity on large
engineering, procurement, construction and installation (“EPCI”)
projects, partially offset by lower revenues in the Atlantic
segment.
The Company’s operating income was $100.3 million in the 2011
first quarter, compared to $73.2 million in the 2010 first quarter.
The year-over-year increase was due to a 148 percent increase in
the Middle East segment, partially offset by reduced levels of
operating income in the Asia Pacific and Atlantic segments.
Although higher revenues provided an overall increase in operating
income, the improvement was moderated as McDermott recognized
significantly less income from change orders, settlements and
close-outs in the first quarter of 2011 as compared to the 2010
period.
“McDermott delivered solid results in the 2011 first quarter
which represents a positive start to the year,” said Stephen M.
Johnson, Chairman of the Board, President and Chief Executive
Officer of McDermott. “The offshore EPCI markets we serve continue
to be robust, our backlog remains strong, we’ve executed well and
our healthy balance sheet provides a firm foundation to pursue
growth.”
The Company’s other expense for the first quarter of 2011
increased to $5.0 million, from $1.1 million in the first quarter
of 2010, primarily due to non-cash foreign currency expense.
At March 31, 2011, the Company’s backlog was $4.8 billion,
compared to $4.1 billion and $5.0 billion at March 31, 2010 and
December 31, 2010, respectively.
Balance Sheet Summary
As of March 31, 2011, McDermott reported total assets of almost
$2.6 billion. Included in this amount was approximately $741.4
million of cash, restricted cash and investments. Net working
capital, calculated as current assets less current liabilities, was
$483.8 million. Additionally, total equity was over $1.6 billion,
or 62% of total assets, with total debt of $65.1 million.
Discontinued Operations
For the first quarter of 2011, McDermott recorded net income
from discontinued operations of $1.7 million, or $0.01 per diluted
share, derived from its charter fleet business which is held for
sale. Including the results of discontinued operations, total net
income attributable to McDermott was $70.4 million, or $0.30 per
diluted share, for the 2011 first quarter.
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 more than
15,000 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, to the extent backlog may be viewed as an indicator
of future revenues, the conditions of the EPCI markets and future
growth. 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 and changes in the scope or timing of contracts. 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, 2010 and 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.
Conference Call to Discuss First
Quarter 2011 Earnings Release
Date: Wednesday, May 11, 2011, at 10:00 a.m. ET (9:00
a.m. CT)
Live Webcast: Investor Relations section of Web site at
www.mcdermott.com
Replay: Available for 2 weeks in the investor relations
section of www.mcdermott.com
McDERMOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
Three Months EndedMarch 31, 2011
2010 (Unaudited)
(In thousands, except share and per
shareamounts)
Revenues $ 899,240 $ 504,882
Costs and Expenses: Cost of operations 747,225 379,206 Gain on
asset disposals and impairments – net (225 ) (2,080 ) Selling,
general and administrative expenses 55,369
51,138 Total costs and expenses 802,369
428,264 Equity in Income (Loss) of
Unconsolidated Affiliates 3,427 (3,431 )
Operating Income 100,298 73,187
Other Income (Expense): Interest income 449
490 Interest expense — (162 ) Other expense – net (5,403 )
(1,450 ) Total other expense – net (4,954 )
(1,122 )
Income from continuing operations before
provision for income taxes and noncontrolling
interest
95,344 72,065 Provision
for Income Taxes 22,579 12,239
Income from continuing operations before noncontrolling
interest 72,765 59,826 Loss on
disposal of discontinued operations — (24,202 ) Income from
discontinued operations, net of tax 1,662
32,581 Total income from discontinued operations, net
of tax 1,662 8,379 Net
Income 74,427 68,205 Less
net income attributable to noncontrolling interest (4,007 )
(8,264 ) Net Income Attributable to McDermott
International, Inc. $ 70,420 $ 59,941
McDERMOTT INTERNATIONAL, INC.
EARNINGS PER SHARE COMPUTATION
Three Months EndedMarch
31,
2011 2010
(Unaudited)
(In thousands, except shares
andper share amounts)
Basic: Income from continuing operations less noncontrolling
interest
$
68,758
$ 51,562 Income from discontinued operations, net of tax
1,662 8,379 Net income attributable to McDermott
International, Inc. $ 70,420 $ 59,941 Weighted average
common shares 233,841,075 230,824,301 Basic
earnings per common share: Income from continuing operations less
noncontrolling interest $ 0.29 $ 0.22 Income from discontinued
operations, net of tax $ 0.01 $ 0.04 Net income attributable to
McDermott International, Inc. $ 0.30 $ 0.26 Diluted:
Weighted average common shares (basic) 233,841,075
230,824,301 Effect of dilutive securities: Stock options,
restricted stock and performance shares 2,904,503
3,928,734 Adjusted weighted average common shares
236,745,578 234,753,035 Diluted earnings per common
share: Income from continuing operations less noncontrolling
interest $ 0.29 $ 0.22 Income from discontinued operations, net of
tax $ 0.01 $ 0.04 Net income attributable to McDermott
International, Inc. $ 0.30 $ 0.26
SUPPLEMENTARY DATA
Three Months EndedMarch 31,
2011 2010 (Unaudited)
(In thousands)
Pension expense $ 6,153 $ 6,473
Depreciation & amortization
expense
20,525 18,787 Capital expenditures 63,986 48,412 Backlog $
4,764,005 $ 4,092,566
McDERMOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, December 31, 2011
2010 (Unaudited) (In
thousands) Assets Current Assets: Cash and cash
equivalents $ 209,207 $ 403,463 Restricted cash and cash
equivalents 206,354 197,861 Investments 257,584 209,463 Accounts
receivable—trade, net 297,269
323,497
Accounts receivable—other
37,607
28,447 Contracts in progress 122,198 65,853 Deferred income taxes
12,426 10,323 Assets held for sale 14,220 10,161 Other current
assets 47,972 36,570 Total
Current Assets 1,204,837 1,285,638
Property, Plant and Equipment 1,789,093 1,720,040 Less
accumulated depreciation 824,107 804,471
Net Property, Plant and Equipment 964,986
915,569 Assets Held for Sale
78,148 77,150 Investments 68,211
75,742 Goodwill 41,202
41,202 Investments in Unconsolidated
Affiliates 48,459 45,016 Other
Assets 164,508 158,371 Total
Assets $ 2,570,351 $ 2,598,688
Liabilities and Equity Current Liabilities: Notes payable
and current maturities of long-term debt $ 8,001 $ 8,547 Accounts
payable 281,331 252,974 Accrued liabilities 280,956 286,831 Advance
billings on contracts 62,336 250,053 Deferred income taxes 14,971
12,849 Income taxes payable 50,370 32,851 Liabilities associated
with assets held for sale 23,028 20,902
Total Current Liabilities 720,993
865,007 Long-Term Debt 57,091
46,748 Self-Insurance 36,179
35,655 Pension Liability 54,598
52,831 Other Liabilities 97,862
86,180 Commitments and Contingencies
Stockholders’ Equity:
Common stock, par value $1.00 per share,
authorized 400,000,000 shares; issued 241,912,337 and240,791,473
shares at March 31, 2011 and December 31, 2010, respectively
241,912 240,791 Capital in excess of par value 1,363,335 1,357,316
Retained earnings 170,793 100,373
Treasury stock, at cost, 7,159,192 and
6,906,262 shares at March 31, 2011 and December 31,
2010,respectively
(92,218 ) (85,735 ) Accumulated other comprehensive loss
(148,559 ) (163,717 ) Stockholders’ Equity—McDermott
International, Inc. 1,535,263 1,449,028 Noncontrolling interest
68,365 63,239 Total Equity
1,603,628 1,512,267 Total
Liabilities and Equity $ 2,570,351 $ 2,598,688
McDERMOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
Three Months Ended March
31,
2011 2010 (Unaudited) (In thousands)
Cash Flows From Operating Activities: Net income $ 74,427 $
68,205 Income from discontinued operations, net of tax
(1,662 )
(8,379
)
Income from continuing operations 72,765 59,826 Non-cash
items included in net income: Depreciation and amortization 20,525
18,787 Equity in (income) loss of unconsolidated affiliates (3,427
) 3,431 Gains on asset disposals and impairments—net (225 )
(2,080
)
Benefit from deferred taxes (6,929 ) (2,497 ) Pension costs 6,153
6,473 Other non-cash items 4,368 13,084 Changes in assets and
liabilities, net of effects from acquisitions: Accounts receivable
17,045 62,206 Net contracts in progress and advance billings on
contracts (244,062 )
(25,758
)
Accounts payable 23,947
(104,169
)
Accrued and other current liabilities 39,311 3,863 Pension
liability and accrued postretirement and employee benefits
(41,546
)
(55,295 ) Other 20,038 (16,590 ) Net
Cash Used In Operating Activities—Continuing Operations
(92,037 ) (38,719 )
Cash Flows From Investing
Activities: Increase in restricted cash and cash equivalents
(8,493
)
(23,498
)
Purchases of property, plant and equipment
(63,986
)
(48,412
)
Net (increase) decrease in available-for-sale securities
(39,808
)
48,408 Other investing activities, net 218
2,459 Net Cash Used In Investing
Activities—Continuing Operations (112,069 )
(21,043
)
Cash Flows From Financing Activities: Payment of debt
(2,158
)
(2,176 ) Increase in debt 11,837
-
Other financing activities, net 57 1,246
Net Cash Provided By (Used In) Financing
Activities—Continuing Operations 9,736 (930 )
Effects of exchange rate changes on cash and cash
equivalents 114 435 Net decrease
in cash and cash equivalents
(194,256
)
(60,257 ) Cash and cash equivalents at beginning of
period 403,463 428,298 Cash and
cash equivalents at end of period—Continuing Operations
$
209,207
$ 368,041
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