Attached files
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| 8-K - MCDERMOTT INTERNATIONAL, INC. 8-K - MCDERMOTT INTERNATIONAL INC | a50466497.htm |
Exhibit 99.1
McDermott Reports Third Quarter 2012 Financial Results
Earnings per share of 21 cents; Strong $5.3 Billion Backlog
HOUSTON--(BUSINESS WIRE)--November 5, 2012--McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today reported income of $50.6 million, or $0.21 per diluted share, for the 2012 third quarter. The results of the 2012 third quarter compare to income from continuing operations of $9.8 million, or $0.04 per diluted share, in the corresponding period of 2011. Weighted average common shares outstanding on a fully diluted basis were approximately 237.9 million and 236.9 million in the quarters ended September 30, 2012 and September 30, 2011, respectively.
McDermott’s revenues were $1,028.7 million for the 2012 third quarter compared to $879.9 million in the corresponding period of 2011. The year-over-year increase was attributable to the Middle East and Atlantic segments, primarily due to increased fabrication and marine activity. The increase from these segments was partially offset by lower revenues in the Asia Pacific segment due to lower marine activity.
The Company’s operating income in the 2012 third quarter was $82.5 million compared to $35.2 million in the 2011 third quarter. The increase in operating income was primarily due to approximately $50 million in project losses recognized in the 2011 third quarter, in addition to higher fabrication and marine activity in the Middle East and Atlantic segments and additional change order activity in the Asia Pacific segment in the 2012 third quarter.
“The positive results of our 2012 third quarter keep us on track for a solid 2012 financial performance,” said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott. “We see continued strength in our end markets and are encouraged by the significant level of bids and targeted market opportunities.”
The Company’s other income for the third quarter of 2012 was $1.7 million, which represents an improvement of $1.3 million as compared to other income of $0.4 million in the third quarter of 2011 primarily attributable to increased interest income.
At September 30, 2012, the Company’s backlog was approximately $5.3 billion, compared to $5.7 billion and $4.3 billion at June 30, 2012 and September 30, 2011, respectively.
Balance Sheet Summary
As of September 30, 2012, McDermott reported total assets of approximately $3.4 billion. Included in this amount was $720.7 million of cash and cash equivalents, restricted cash and investments. Net working capital, calculated as current assets less current liabilities, was $679.4 million. Additionally, total equity was over $1.9 billion, or approximately 57% of total assets, with total debt of $108.3 million.
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 remaining on track for a solid 2012 financial performance and the continued strength in McDermott’s end markets. 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.
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McDERMOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME |
|||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| (In thousands, except share and per share amounts) | |||||||||||||||||
| Revenues | $ | 1,028,745 | $ | 879,894 | $ | 2,645,671 | $ | 2,628,935 | |||||||||
| Costs and Expenses: | |||||||||||||||||
| Cost of operations | 889,823 | 802,951 | 2,246,961 | 2,253,981 | |||||||||||||
| Selling, general and administrative expenses | 51,834 | 48,046 | 145,927 | 163,827 | |||||||||||||
|
Gain on asset disposals |
(85 | ) |
(7,811 |
) |
(282 |
) |
(8,107 | ) | |||||||||
| Total costs and expenses | 941,572 | 843,186 | 2,392,606 | 2,409,701 | |||||||||||||
| Equity in Income (Loss) of Unconsolidated Affiliates | (4,692 | ) |
(1,492 |
) |
(11,026 | ) | 59 | ||||||||||
| Operating Income | 82,481 | 35,216 | 242,039 | 219,293 | |||||||||||||
| Other Income (Expense): | |||||||||||||||||
| Interest income | 996 | 319 | 4,215 | 1,060 | |||||||||||||
| Interest expense |
- |
(152 |
) |
- |
(415 | ) | |||||||||||
|
Gain (loss) on foreign currency--net |
488 | 504 | 11,185 | (2,356 | ) | ||||||||||||
|
Other income (expense)--net |
242 | (298 | ) | (288 | ) |
(1,586 |
) |
||||||||||
| Total other income (expense) | 1,726 | 373 | 15,112 |
(3,297 |
) |
||||||||||||
| Income from continuing operations before provision for income taxes and noncontrolling interests | 84,207 | 35,589 | 257,151 | 215,996 | |||||||||||||
| Provision for Income Taxes | 29,916 | 20,535 | 87,004 | 60,351 | |||||||||||||
| Income from continuing operations before noncontrolling interests | 54,291 | 15,054 | 170,147 | 155,645 | |||||||||||||
| Total income from discontinued operations, net of tax |
- |
1,187 | 3,497 | 6,459 | |||||||||||||
| Net Income | 54,291 | 16,241 | 173,644 | 162,104 | |||||||||||||
|
Less: Net Income Attributable to Noncontrolling Interests |
3,679 | 5,290 | 7,535 | 13,405 | |||||||||||||
| Net Income Attributable to McDermott International, Inc. | $ | 50,612 | $ | 10,951 | $ | 166,109 | $ | 148,699 | |||||||||
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McDERMOTT INTERNATIONAL, INC. EARNINGS PER SHARE COMPUTATION |
|||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended
September 30, |
||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||
| (In thousands, except share and per share amounts) | |||||||||||||
| Income from continuing operations less noncontrolling interests | $ | 50,612 | $ | 9,764 | $ | 162,612 | $ | 142,240 | |||||
| Income from discontinued operations, net of tax |
- |
1,187 | 3,497 | 6,459 | |||||||||
| Net income attributable to McDermott International, Inc. | $ | 50,612 | $ | 10,951 | $ | 166,109 | $ | 148,699 | |||||
| Weighted average common shares (basic) | 235,817,203 | 234,940,184 | 235,568,889 | 234,451,430 | |||||||||
| Effect of dilutive securities: | |||||||||||||
| Stock options, restricted stock and restricted stock units | 2,049,797 | 2,007,479 | 1,984,574 | 2,627,875 | |||||||||
| Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards (diluted) | 237,867,000 | 236,947,663 | 237,553,463 | 237,079,305 | |||||||||
| Basic earnings per share: | |||||||||||||
| Income from continuing operations less noncontrolling interests | 0.21 | 0.04 | 0.69 | 0.61 | |||||||||
| Income from discontinued operations, net of tax |
- |
0.01 | 0.01 | 0.03 | |||||||||
| Net income attributable to McDermott International, Inc. | 0.21 | 0.05 | 0.70 | 0.63 | |||||||||
| Diluted earnings per share: | |||||||||||||
| Income from continuing operations less noncontrolling interests | 0.21 | 0.04 | 0.68 | 0.60 | |||||||||
| Income from discontinued operations, net of tax |
- |
0.01 | 0.01 | 0.03 | |||||||||
| Net income attributable to McDermott International, Inc. | 0.21 | 0.05 | 0.69 | 0.63 | |||||||||
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SUPPLEMENTARY DATA |
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|
Three Months Ended September 30, |
Nine Months Ended
September 30, |
|||||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||
| Depreciation and amortization | $ | 20,082 | $ | 19,801 | $ | 65,956 | $ | 59,900 | ||||||||||||||
| Drydock amortization | $ | 7,999 | $ | 6,037 | $ | 21,606 | $ | 18,336 | ||||||||||||||
| Capital expenditures | $ | 47,623 | $ | 90,190 | $ | 179,284 | $ | 231,872 | ||||||||||||||
| Backlog | $ | 5,339,755 | $ | 4,255,432 | $ | 5,339,755 | $ | 4,255,432 | ||||||||||||||
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McDERMOTT INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS |
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|
September 30, 2012 |
December 31, |
||||||||||
| (In thousands, except share and per share amounts) | |||||||||||
| Assets | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 638,794 | $ | 570,854 | |||||||
| Restricted cash and cash equivalents | 23,074 | 21,962 | |||||||||
| Investments | 28,737 | 109,522 | |||||||||
|
Accounts receivable--trade, net |
548,068 | 445,808 | |||||||||
|
Accounts receivable--other |
63,774 | 53,386 | |||||||||
| Contracts in progress | 499,339 | 287,390 | |||||||||
| Deferred income taxes | 11,580 | 11,931 | |||||||||
| Other current assets | 41,155 | 36,332 | |||||||||
| Total Current Assets | 1,854,521 | 1,537,185 | |||||||||
| Property, Plant and Equipment | 2,018,481 | 1,958,877 | |||||||||
| Less accumulated depreciation | (819,645 | ) |
(857,012 |
) |
|||||||
| Net Property, Plant and Equipment | 1,198,836 | 1,101,865 | |||||||||
| Assets Held for Sale | 28,724 | 55,571 | |||||||||
| Investments | 30,097 | 29,484 | |||||||||
| Goodwill | 41,202 | 41,202 | |||||||||
| Investments in Unconsolidated Affiliates | 35,430 | 42,659 | |||||||||
| Other Assets | 175,233 | 184,848 | |||||||||
| Total Assets | $ | 3,364,043 | $ | 2,992,814 | |||||||
| Liabilities and Equity | |||||||||||
| Current Liabilities: | |||||||||||
| Notes payable and current maturities of long-term debt | $ | 14,146 | $ | 8,941 | |||||||
| Accounts payable | 375,954 | 315,514 | |||||||||
| Accrued liabilities | 395,234 | 309,515 | |||||||||
| Advance billings on contracts | 307,144 | 320,438 | |||||||||
| Deferred income taxes | 13,213 | 13,187 | |||||||||
| Income taxes payable | 69,383 | 54,181 | |||||||||
| Total Current Liabilities | 1,175,074 | 1,021,776 | |||||||||
| Long-Term Debt | 94,140 | 84,794 | |||||||||
| Self-Insurance | 27,867 | 23,585 | |||||||||
| Pension Liability | 19,292 | 21,295 | |||||||||
| Other Liabilities | 124,979 | 107,652 | |||||||||
| Commitments and Contingencies | |||||||||||
| Stockholders’ Equity: | |||||||||||
| Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 243,419,194 and 242,416,424 shares at September 30, 2012 and December 31, 2011, respectively | 243,419 | 242,416 | |||||||||
| Capital in excess of par value | 1,387,311 | 1,375,976 | |||||||||
| Retained earnings | 405,212 | 239,103 | |||||||||
| Treasury stock, at cost, 7,574,903 and 7,359,983 shares at September 30, 2012 and December 31, 2011, respectively | (98,725 | ) |
(95,827 |
) |
|||||||
| Accumulated other comprehensive loss |
(80,508 |
) |
(102,030 |
) |
|||||||
|
Stockholders’ Equity--McDermott International, Inc. |
1,856,709 | 1,659,638 | |||||||||
| Noncontrolling Interests | 65,982 | 74,074 | |||||||||
| Total Equity | 1,922,691 | 1,733,712 | |||||||||
| Total Liabilities and Equity | $ | 3,364,043 | $ | 2,992,814 | |||||||
|
McDERMOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||
|
Nine Months Ended September 30, |
||||||||||
| 2012 | 2011 | |||||||||
| (In thousands) | ||||||||||
| Cash Flows From Operating Activities: | ||||||||||
| Net income | $ | 173,644 | $ 162,104 | |||||||
| Less: Income from discontinued operations, net of tax | 3,497 | 6,459 | ||||||||
| Income from continuing operations | $ | 170,147 | $ 155,645 | |||||||
| Non-cash items included in net income: | ||||||||||
| Depreciation and amortization | 65,956 | 59,900 | ||||||||
| Drydock amortization | 21,606 | 18,336 | ||||||||
| Equity in (income) loss of unconsolidated affiliates | 11,026 |
(59 |
) |
|||||||
|
Gain on asset disposals and impairments--net |
(282 |
) |
(8,107 |
) |
||||||
| Provision (benefit) from deferred taxes | 3,929 |
(2,910 |
) |
|||||||
| Stock-based compensation charges | 11,449 | 8,340 | ||||||||
| Pension costs | 1,152 | 15,367 | ||||||||
| Other non-cash items | 5,178 | 5,909 | ||||||||
| Changes in assets and liabilities, net of effects from dispositions: | ||||||||||
| Accounts receivable |
(113,460 |
) |
26,238 | |||||||
| Net contracts in progress and advance billings on contracts |
(225,340 |
) |
(380,635 |
) |
||||||
| Accounts payable | 58,675 | 44,667 | ||||||||
| Accrued and other current liabilities | 66,125 | 71,148 | ||||||||
| Pension liability and accrued postretirement and employee benefits | 17,322 |
(51,041 |
) |
|||||||
| Other assets and liabilities | 16,166 |
(33,663 |
) |
|||||||
|
Net Cash Provided By (Used In) Operating Activities--Continuing Operations |
109,649 |
(70,865 |
) |
|||||||
|
Net Cash Used In Operating Activities--Discontinued Operations |
- |
(211 | ) | |||||||
| Total Cash Provided By (Used In) Operating Activities | 109,649 |
(71,076 |
) |
|||||||
| Cash Flows From Investing Activities: | ||||||||||
| Purchases of property, plant and equipment |
(179,284 |
) |
(231,872 |
) |
||||||
| (Increase) decrease in restricted cash and cash equivalents |
(1,112 |
) |
183,564 | |||||||
| Purchases of available-for-sale securities |
(82,735 |
) |
(516,628 |
) |
||||||
| Sales and maturities of available-for-sale securities | 164,807 | 601,128 | ||||||||
| Proceeds from asset disposals | 405 | 8,483 | ||||||||
| Other investing activities, net | (2,305 | ) | (16 | ) | ||||||
|
Net Cash Provided By (Used In) Investing Activities--Continuing Operations |
(100,224 |
) |
44,659 | |||||||
|
Net Cash Provided By Investing Activities--Discontinued Operations |
60,671 |
- |
||||||||
|
Total Cash Provided By (Used In) Investing Activities |
|
(39,553 |
) |
44,659 | ||||||
| Cash Flows From Financing Activities: | ||||||||||
| Increase in debt | 19,033 | 40,212 | ||||||||
| Payment of debt |
(4,482 |
) |
(6,473 |
) |
||||||
| Debt issuance costs | 64 |
(4,824 |
) |
|||||||
| Distributions to noncontrolling interests |
(15,728 |
) |
- |
|||||||
| Other financing activities, net |
(2,706 |
) |
(2,059 |
) |
||||||
|
Net Cash Provided By (Used In) Financing Activities--Continuing Operations |
(3,819 |
) |
26,856 | |||||||
| Effects of exchange rate changes on cash and cash equivalents | 1,663 | (313 | ) | |||||||
|
Net increase in cash and cash equivalents |
67,940 | 126 | ||||||||
| Cash and cash equivalents at beginning of period | 570,854 | 403,463 | ||||||||
|
Cash and cash equivalents at end of period--Continuing Operations |
$ | 638,794 | $ 403,589 | |||||||
CONTACT:
McDermott International, Inc.
Investors,
Analysts and Financial Media:
Robby Bellamy, (281) 870-5165
Director,
Investor Relations
rbellamy@mcdermott.com
or
Trade
and General Media:
Louise Denly, (281) 870-5025
Director,
Corporate Communications
ldenly@mcdermott.com