Attached files
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| 8-K - MCDERMOTT INTERNATIONAL, INC. 8-K - MCDERMOTT INTERNATIONAL INC | a6718015.htm |
Exhibit 99.1
McDermott Reports Net Income from Continuing Operations of $68.8 Million, $0.29 Per Fully Diluted Share for the 2011 First Quarter
Significant Increase in Revenues and Operating Income Highlight the Quarter
Backlog Remains Strong at $4.8 Billion
HOUSTON--(BUSINESS WIRE)--May 10, 2011--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
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McDERMOTT INTERNATIONAL, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
||||||||
|
Three Months Ended March 31, |
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| 2011 | 2010 | |||||||
| (Unaudited) | ||||||||
|
(In thousands, except share and per share |
||||||||
| 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 |
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 | ||||
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McDERMOTT INTERNATIONAL, INC. |
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EARNINGS PER SHARE COMPUTATION |
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Three Months Ended |
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| 2011 | 2010 | |||||
|
(Unaudited)
(In thousands, except shares and |
||||||
| 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 | ||
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SUPPLEMENTARY DATA |
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Three Months Ended March 31, |
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| 2011 | 2010 | |||||
|
(Unaudited)
(In thousands) |
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| Pension expense | $ | 6,153 | $ | 6,473 | ||
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Depreciation & amortization expense |
20,525 | 18,787 | ||||
| Capital expenditures | 63,986 | 48,412 | ||||
| Backlog | $ | 4,764,005 | $ | 4,092,566 | ||
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McDERMOTT INTERNATIONAL, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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| 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 and |
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, |
(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 | ||||
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McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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Three Months Ended |
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| 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 |
) |
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| 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 |
) |
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| Accounts payable | 23,947 |
(104,169 |
) |
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| 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 |
) |
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| 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 |
) |
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| Cash Flows From Financing Activities: | ||||||||||
| Payment of debt |
(2,158 |
) |
(2,176 | ) | ||||||
| Increase in debt | 11,837 |
- |
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| 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 | ||||||
CONTACT:
McDermott International, Inc.
Investors, Analysts and
Financial Media:
Jay Roueche, 281-870-5462
Vice President
jroueche@mcdermott.com
or
Robby
Bellamy, 281-870-5165
Director
rbellamy@mcdermott.com
or
Trade
and General Media:
Louise Denly, 281-870-5025
Director,
Corporate Communications
ldenly@mcdermott.com