McDermott International, Inc. (NYSE: MDR) (“McDermott” or the
“Company”) today reported income from continuing operations of
$59.3 million, or $0.25 per diluted share, for the 2012 first
quarter. The results of the 2012 first quarter compare to income
from continuing operations of $68.8 million, or $0.29 per diluted
share, in the corresponding period of 2011. Classified as
discontinued operations, the results of McDermott’s charter fleet
business are excluded from all periods presented. This charter
fleet business was sold on March 19, 2012, with the Company
receiving proceeds of approximately $61 million. Weighted average
common shares outstanding on a fully diluted basis were
approximately 237.3 million and 236.7 million in the quarters ended
March 31, 2012 and March 31, 2011, respectively.
McDermott’s revenues were $727.7 million for the 2012 first
quarter compared to $899.2 million in the corresponding period of
2011. The year-over-year decrease was primarily due to fewer
fabrication manhours and lower marine activity in the Asia Pacific
segment, partially offset by an approximate 150 percent increase in
the Atlantic segment’s revenues, primarily as a result of increased
fabrication work in the United States.
The Company’s operating income in the 2012 first quarter was
$80.2 million compared to $100.3 million in the 2011 first quarter.
Increased operating income in the Asia Pacific segment and improved
results in the Atlantic segment, both as compared to the 2011 first
quarter, were more than offset by reduced operating income in the
Middle East segment, as a result of lower marine activity.
“The 2012 first quarter proved to be a positive start to the
year, exceeding our prior expectations,” said Stephen M. Johnson,
Chairman of the Board, President and Chief Executive Officer of
McDermott. “With record bookings, an all-time high backlog and a
continued strong balance sheet, McDermott is building a solid
foundation for the future. We are pleased to have completed the
sale of the charter fleet business during the quarter, and we
expect both the new North Ocean 105 and the upgraded DB50 to be
available for work this summer. We continue to believe the market
opportunities ahead remain strong.”
The Company’s other income for the first quarter of 2012 was
$10.5 million, primarily due to foreign currency gains, which
represents an improvement of $15.4 million as compared to the other
expense of $5.0 million in the first quarter of 2011.
At March 31, 2012, the Company’s backlog was $5.8 billion,
compared to $3.9 billion and $4.8 billion at December 31, 2011 and
March 31, 2011, respectively. Of the March 31, 2012 backlog,
approximately $360 million is from projects currently in a loss
position, primarily a 5-year Brazilian vessel charter contract,
whereby future revenues are expected to equal costs when
recognized.
Balance Sheet Summary
As of March 31, 2012, McDermott reported total assets of
approximately $3.1 billion. Included in this amount was $899.5
million of cash and cash equivalents, restricted cash and
investments. Net working capital, calculated as current assets less
current liabilities, was $605.1 million. Additionally, total equity
was almost $1.8 billion, or approximately 58% of total assets, with
total debt of $92.2 million.
Discontinued Operations
For the first quarter of 2012, McDermott recorded net income
from discontinued operations of $3.5 million, or $0.01 per diluted
share, primarily due to the first quarter 2012 operations, and a
gain on sale, of the charter fleet business. Including the results
of discontinued operations, total net income attributable to
McDermott was $62.8 million, or $0.26 per diluted share, for the
2012 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
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 building a solid foundation for the
future, the expected availability of the North Ocean 105 and DB50
for work this summer, and our continued belief that the market
opportunities ahead remain strong. 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 Ended March 31, 2012
2011 (In thousands) Revenues $
727,678 $ 899,240 Costs and Expenses: Cost of
operations 597,434 747,225 Selling, general and administrative
expenses 46,611 55,369 Gain on asset disposals (226 )
(225 ) Total costs and expenses 643,819
802,369 Equity in Income (Loss) of Unconsolidated
Affiliates (3,683 ) 3,427 Operating
Income 80,176 100,298 Other Income
(Expense): Interest income 1,634 449 Gain (loss) on foreign
currency – net 9,441 (4,232 ) Other expense – net (581 )
(1,171 ) Total other income (expense) 10,494
(4,954 ) Income from continuing operations before
provision for income taxes and noncontrolling interests 90,670
95,344 Provision for Income Taxes 28,743
22,579 Income from continuing operations before
noncontrolling interests 61,927 72,765
Gain on disposal of discontinued operations 257
-
Income from discontinued operations, net of tax 3,240
1,662 Total income from discontinued operations, net
of tax 3,497 1,662 Net Income 65,424
74,427 Less: Net Income Attributable to Noncontrolling Interests
2,666 4,007 Net Income Attributable to
McDermott International, Inc. $ 62,758 $ 70,420
McDERMOTT INTERNATIONAL, INC. EARNINGS PER
SHARE COMPUTATION Three
Months Ended March 31, 2012
2011 (In thousands, except share and per share
amounts) Basic: Income from continuing operations
less noncontrolling interests $ 59,261 $ 68,758 Income from
discontinued operations, net of tax 3,497 1,662 Net
income attributable to McDermott International, Inc. $ 62,758 $
70,420
Diluted: Weighted average common shares
(basic) 235,208,252 233,841,075 Effect of dilutive
securities: Stock options, restricted stock and restricted stock
units 2,124,375 2,904,503 Adjusted weighted average
common shares and assumed exercises of stock options and vesting of
stock awards (diluted) 237,332,627 236,745,578
Basic earnings per share: Income from continuing operations
less noncontrolling interests 0.25 0.29 Income from discontinued
operations, net of tax 0.01 0.01 Net income attributable to
McDermott International, Inc. 0.27 0.30
Diluted earnings
per share: Income from continuing operations less
noncontrolling interests 0.25 0.29 Income from discontinued
operations, net of tax 0.01 0.01 Net income attributable to
McDermott International, Inc. 0.26 0.30
SUPPLEMENTARY DATA
Three Months Ended
March 31, 2012
2011 (In thousands) Pension expense $ 579 $ 6,153
Depreciation & amortization expense $ 23,276 $ 20,525 Capital
expenditures $ 44,751 $ 63,986 Backlog $ 5,806,633 $ 4,764,005
McDERMOTT INTERNATIONAL, INC. CONSOLIDATED
BALANCE SHEETS
March 31, 2012
December 31, 2011 (In
thousands, except share and per share amounts)
Assets Current Assets: Cash and cash equivalents $ 788,965 $
570,854 Restricted cash and cash equivalents 24,832 21,962
Investments 54,708 109,522
Accounts receivable-trade, net
388,373 445,808
Accounts receivable-other
61,140 53,386 Contracts in progress 259,664 287,390 Deferred income
taxes 15,097 11,931 Assets held for sale
-
3,197 Other current assets 40,680 33,135
Total Current Assets 1,633,459
1,537,185 Property, Plant and Equipment 2,019,289 1,958,877
Less accumulated depreciation (878,048 ) (857,012 )
Net Property, Plant and Equipment 1,141,241 1,101,865 Assets Held
for Sale
-
55,571 Investments 30,991 29,484 Goodwill 41,202 41,202 Investments
in Unconsolidated Affiliates 39,912 42,659 Other Assets
178,589 184,848 Total Assets $ 3,065,394
$ 2,992,814
Liabilities and Equity
Current Liabilities: Notes payable and current maturities of
long-term debt $ 10,061 $ 8,941 Accounts payable 272,746 315,514
Accrued liabilities 307,797 309,515 Advance billings on contracts
358,052 320,438 Deferred income taxes 12,396 13,187 Income taxes
payable 67,316 54,181 Total Current
Liabilities 1,028,368 1,021,776
Long-Term Debt 82,180 84,794 Self-Insurance 24,969 23,585 Pension
Liability 20,134 21,295 Other Liabilities 122,416 107,652
Commitments and Contingencies Stockholders’ Equity:
Common stock, par value $1.00 per share,
authorized 400,000,000 shares; issued 243,085,098 and 242,416,424
shares at March 31, 2012 and December 31, 2011, respectively
243,085 242,416 Capital in excess of par value 1,379,153 1,375,976
Retained earnings 301,861 239,103
Treasury stock, at cost, 7,811,017 and
7,359,983 shares at March 31, 2012 and December 31, 2011,
respectively
(98,011 ) (95,827 ) Accumulated other comprehensive loss
(99,921 ) (102,030 )
Stockholders’ Equity-McDermott
International, Inc.
1,726,167 1,659,638 Noncontrolling Interests 61,160
74,074 Total Equity 1,787,327
1,733,712 Total Liabilities and Equity $ 3,065,394 $
2,992,814
McDERMOTT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
2012 2011 (In
thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net
income $ 65,424 $ 74,427 Less: Income from discontinued operations,
net of tax 3,497 1,662 Income from
continuing operations 61,927 72,765 Non-cash items included in net
income: Depreciation and amortization 23,276 20,525 Equity in
(income) loss of unconsolidated affiliates 3,683 (3,427 ) Gain on
asset disposals (226 ) (225 ) Benefit for deferred taxes (4,131 )
(6,929 ) Pension costs 579 6,153 Other non-cash items 3,224 4,368
Changes in assets and liabilities, net of effects from
dispositions: Accounts receivable 50,017 17,045 Net contracts in
progress and advance billings on contracts 65,363 (244,062 )
Accounts payable (55,292 ) 23,947 Accrued and other current
liabilities (10,040 ) 39,311 Pension liability and accrued
postretirement and employee benefits 7,489 (41,546 ) Other assets
and liabilities 26,992 20,038
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES-CONTINUING OPERATIONS
172,861 (92,037 )
NET CASH PROVIDED BY OPERATING
ACTIVITIES-DISCONTINUED OPERATIONS
-
114 TOTAL CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 172,861 (91,923 )
CASH FLOWS
FROM INVESTING ACTIVITIES: Purchases of property, plant and
equipment (44,751 ) (63,986 ) Increase in restricted cash and cash
equivalents (2,870 ) (8,493 ) Purchases of available-for-sale
securities (40,319 ) (298,169 ) Sales and maturities of
available-for-sale securities 94,380 258,361 Other investing
activities (2,150 ) 218
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES-CONTINUING OPERATIONS
4,290 (112,069 )
NET CASH PROVIDED BY INVESTING
ACTIVITIES-DISCONTINUED OPERATIONS
60,671
-
TOTAL CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
64,961 (112,069 )
CASH FLOWS FROM FINANCING
ACTIVITIES: Increase in debt
-
11,837 Payment of debt (1,494 ) (2,158 ) Distributions to
noncontrolling interests (15,733 )
-
Other financing activities (1,784 ) 57
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES-CONTINUING OPERATIONS
(19,011 ) 9,736 EFFECTS OF EXCHANGE RATE
CHANGES ON CASH (700 )
-
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
218,111 (194,256 ) CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 570,854 403,463
CASH AND CASH EQUIVALENTS AT END OF
PERIOD-CONTINUING OPERATIONS
$ 788,965 $ 209,207
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION: Cash paid during the period for: Income
taxes (net of refunds) $ 16,036 $ 3,574
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