Attached files
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| 8-K - MCDERMOTT INTERNATIONAL, INC. 8-K - MCDERMOTT INTERNATIONAL INC | a50580623.htm |
Exhibit 99.1
McDermott Reports Fourth Quarter 2012 Financial Results
EPS of $0.17; Strong Performance in Asia Pacific
Fourth quarter 2012 bookings and recent awards provide improved revenue visibility for 2013
HOUSTON--(BUSINESS WIRE)--February 28, 2013--McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today reported net income of $40.5 million, or $0.17 per diluted share, for the 2012 fourth quarter. The results of the 2012 fourth quarter compare to income from continuing operations of $9.3 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 237.8 million and 236.9 million in the quarters ended December 31, 2012 and 2011, respectively.
McDermott’s revenues were $996.0 million for the 2012 fourth quarter, an increase of 22 percent compared to $816.2 million in the corresponding period of 2011. The year-over-year increase was primarily due to a 36 percent increase in revenues in the Asia Pacific segment as a result of increased marine activity on a subsea project, coupled with increased revenues in the Middle East and Atlantic segments.
The Company’s operating income in the 2012 fourth quarter was $77.3 million, an increase of 146 percent compared to $31.4 million in the 2011 fourth quarter. Results in the fourth quarter 2011 included approximately $66 million in pretax and after-tax charges primarily related to loss projects in Mexico and Brazil. The fourth quarter 2012 results were negatively affected by an aggregate of approximately $32 million of project losses and increased costs on certain projects, including approximately $23 million in the Asia Pacific segment as a result of incremental costs associated with anticipated productivity and project delays on one subsea project, which is expected to complete in late 2013. The Atlantic segment also was impacted by increased cost estimates relating to two fabrication projects totaling approximately $9 million, due to lower than expected productivity, which are expected to complete in mid-2013.
The Company’s other income for the fourth quarter of 2012 was $8.7 million, an improvement of $4.8 million compared to other income of $3.9 million in the fourth quarter of 2011, primarily due to higher foreign currency gains.
At December 31, 2012, the Company’s backlog was $5.1 billion, compared to $3.9 billion and $5.3 billion at December 31, 2011 and September 30, 2012, respectively. Of the December 31, 2012 backlog, approximately $545 million is from six projects currently in a loss position, primarily relating to the recently commenced project in the Asia Pacific segment and a five-year charter in Brazil, where future revenues are expected to equal costs when recognized. In addition, the backlog includes approximately $162 million for one project under deferred profit recognition.
“There were a number of positives during the quarter as fourth quarter bookings, combined with awards received in the first quarter 2013, maintained a strong backlog and improved revenue visibility for the coming year,” said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott. “We expect to recognize $2.6 billion in revenue in 2013 from our existing backlog and recent awards. With this revenue, combined with additional short-term work that we typically accrue throughout the year, we expect to see total revenues in the range of $3 billion in 2013. With increased bidding activity and the company’s continued balance sheet strength, we believe McDermott is well positioned to meet the growing customer demand in each of our market segments.”
Balance Sheet Summary
As of December 31, 2012, McDermott reported total assets of approximately $3.3 billion. Included in this amount was $704.3 million of cash and cash equivalents, restricted cash and investments. Net working capital, calculated as current assets less current liabilities, was $676.8 million. Additionally, total equity was $2.0 billion, or approximately 61% of total assets, with total debt of $102.7 million.
Full-year 2012 Overview
For the year ended December 31, 2012, McDermott reported revenues of $3.6 billion, with operating income of $319.3 million and net income of $206.7 million, or $0.87 per fully diluted share. Operating income for 2012 in the Asia Pacific segment benefited significantly from lower expected costs to complete the marine campaign on an engineering, procurement, construction and installation project, which is expected to complete in early 2013. These gains were partially offset by project losses across each segment totaling approximately $52.0 million.
OTHER INFORMATION
Conference Call
McDermott has scheduled a conference call and webcast related to its fourth quarter and full year 2012 results on Friday, March 1, 2013, at 9:00 a.m. U.S. Central Standard 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, to the extent backlog may be viewed as an indicator of future revenues, McDermott’s improved revenue visibility for 2013, including our expectation for total revenue in the range of $3 billion in 2013, our expectation that McDermott will recognize $2.6 billion in revenue in 2013 from existing backlog and recent awards, the expected timing for completion of certain projects, McDermott’s increased bidding activity and continued balance sheet strength, and our belief that McDermott is well positioned to meet growing customer demand in each of our market segments. 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. 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 |
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Three Months Ended December 31, |
Year Ended December 31, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Revenues | $ | 995,953 | $ | 816,175 | $ | 3,641,624 | $ | 3,445,110 | ||||||||||||
| Costs and Expenses: | ||||||||||||||||||||
| Cost of operations | 853,048 | 726,409 | 3,100,009 | 2,980,390 | ||||||||||||||||
| Selling, general and administrative expenses | 60,047 | 48,175 | 205,974 | 212,002 | ||||||||||||||||
| Loss on asset impairments |
- |
5,488 |
- |
5,488 | ||||||||||||||||
| (Gain) loss on asset disposals | (123 | ) | (371 | ) | (405 | ) | (8,478 | ) | ||||||||||||
| Total Costs and Expenses | 912,972 | 779,701 | 3,305,578 | 3,189,402 | ||||||||||||||||
| Equity in Loss of Unconsolidated Affiliates | (5,693 | ) | (5,044 | ) | (16,719 | ) | (4,985 | ) | ||||||||||||
| Operating Income | 77,288 | 31,430 | 319,327 | 250,723 | ||||||||||||||||
| Other Income (Expense): | ||||||||||||||||||||
| Interest income | 441 | 788 | 4,656 | 1,848 | ||||||||||||||||
| Interest expense |
- |
(114 | ) |
- |
(529 | ) | ||||||||||||||
| Gain (loss) on foreign currency–net | 8,957 | 3,591 | 20,142 | 1,234 | ||||||||||||||||
| Other expense–net | (707 | ) | (400 | ) | (995 | ) | (1,985 | ) | ||||||||||||
| Total other income (expense) | 8,691 | 3,865 | 23,803 | 568 | ||||||||||||||||
| Income from continuing operations before provision for income taxes, discontinued operations and noncontrolling interest | 85,979 | 35,295 | 343,130 | 251,291 | ||||||||||||||||
| Provision for Income Taxes | 42,200 | 26,773 | 129,204 | 87,124 | ||||||||||||||||
| Income from continuing operations before discontinued operations and noncontrolling interest | 43,779 | 8,522 | 213,926 | 164,167 | ||||||||||||||||
| Total income (loss) from discontinued operations, net of tax |
- |
(19,271 | ) | 3,497 | (12,812 | ) | ||||||||||||||
| Net Income | 43,779 | (10,749 | ) | 217,423 | 151,355 | |||||||||||||||
|
Less: net income attributable to noncontrolling interests |
3,235 | 780 | 10,770 | 12,625 |
|
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| Net Income Attributable to McDermott International, Inc. | $ | 40,544 | $ | (9,969 | ) | $ | 206,653 | $ | 138,730 | |||||||||||
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McDERMOTT INTERNATIONAL, INC. EARNINGS PER SHARE COMPUTATION |
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Three Months Ended December 31, |
Year Ended
December 31, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| (In thousands, except share and per share amounts) | ||||||||||||||||||
| Income from continuing operations less noncontrolling interests | $ | 40,544 | $ | 9,302 | $ | 203,156 | $ | 151,542 | ||||||||||
| Income (loss) from discontinued operations, net of tax |
- |
(19,271 | ) | 3,497 | (12,812 | ) | ||||||||||||
| Net income (loss) attributable to McDermott International, Inc. | $ | 40,544 | $ | (9,969 | ) | $ | 206,653 | $ | 138,730 | |||||||||
| Weighted average common shares | 235,847,019 | 235,041,313 | 235,638,422 | 234,598,901 | ||||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||
| Stock options, restricted stock and restricted stock units | 1,971,339 | 1,882,795 | 1,981,266 | 2,441,606 | ||||||||||||||
| Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards | 237,818,358 | 236,924,108 | 237,619,688 | 237,040,507 | ||||||||||||||
| Basic earnings per share: | ||||||||||||||||||
| Income from continuing operations less noncontrolling interests | 0.17 | 0.04 | 0.86 | 0.65 | ||||||||||||||
| Income (loss) from discontinued operations, net of tax |
- |
(0.08 | ) | 0.01 | (0.05 | ) | ||||||||||||
| Net income (loss) attributable to McDermott International, Inc. | 0.17 | (0.04 | ) | 0.88 | 0.59 | |||||||||||||
| Diluted earnings per share: | ||||||||||||||||||
| Income from continuing operations less noncontrolling interests | 0.17 | 0.04 | 0.86 | 0.64 | ||||||||||||||
| Income (loss) from discontinued operations, net of tax |
- |
(0.08 | ) | 0.01 | (0.05 | ) | ||||||||||||
| Net income (loss) attributable to McDermott International, Inc. | 0.17 | (0.04 | ) | 0.87 | 0.59 | |||||||||||||
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SUPPLEMENTARY DATA |
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Three Months Ended December 31, |
Year Ended
December 31, |
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| 2012 | 2011 | 2012 | 2011 | ||||||||||||||||
| (In thousands) | |||||||||||||||||||
| Pension expense | $ | 378 | $ | 4,125 | $ | 1,530 | $ | 19,492 | |||||||||||
| Depreciation & amortization expense | $ | 20,484 | $ | 22,491 | $ | 86,440 | $ | 82,391 | |||||||||||
| Drydock amortization expense | $ | 3,939 | $ | 6,231 | $ | 25,545 | $ | 24,567 | |||||||||||
| Capital expenditures | $ | 107,026 | $ | 50,749 | $ | 286,310 | $ | 282,621 | |||||||||||
| Backlog | $ | 5,067,164 | $ | 3,881,063 | $ | 5,067,164 | $ | 3,881,063 | |||||||||||
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McDERMOTT INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS |
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| December 31, | ||||||||||||
| 2012 | 2011 | |||||||||||
|
(In thousands, except |
||||||||||||
| Assets | ||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | $ | 640,147 | $ | 570,854 | ||||||||
| Restricted cash and cash equivalents | 18,116 | 21,962 | ||||||||||
| Investments | 19,242 | 109,522 | ||||||||||
|
Accounts receivable--trade, net |
428,800 | 445,808 | ||||||||||
|
Accounts receivable--other |
75,461 | 53,386 | ||||||||||
| Contracts in progress | 560,154 | 287,390 | ||||||||||
| Deferred income taxes | 9,765 | 11,931 | ||||||||||
| Assets held for sale | 2,679 | 3,197 | ||||||||||
| Other current assets | 35,425 | 33,135 | ||||||||||
| Total Current Assets | 1,789,789 | 1,537,185 | ||||||||||
| Property, Plant and Equipment | 2,115,176 | 1,958,877 | ||||||||||
| Less accumulated depreciation |
(833,385 |
) |
(857,012 |
) |
||||||||
| Net Property, Plant and Equipment | 1,281,791 | 1,101,865 | ||||||||||
| Assets Held for Sale | 26,758 | 55,571 | ||||||||||
| Investments | 26,750 | 29,484 | ||||||||||
| Goodwill | 41,202 | 41,202 | ||||||||||
| Investments in Unconsolidated Affiliates | 37,435 | 42,659 | ||||||||||
| Other Assets | 129,902 | 184,848 | ||||||||||
| Total Assets | $ | 3,333,627 | $ | 2,992,814 | ||||||||
| Liabilities and Equity | ||||||||||||
| Current Liabilities: | ||||||||||||
| Notes payable and current maturities of long-term debt | $ | 14,146 | $ | 8,941 | ||||||||
| Accounts payable | 400,007 | 315,514 | ||||||||||
| Accrued liabilities | 108,963 | 116,051 | ||||||||||
| Accrued employee-related benefits | 57,391 | 29,072 | ||||||||||
| Accrued contract costs | 203,064 | 164,392 | ||||||||||
| Advance billings on contracts | 241,696 | 320,438 | ||||||||||
| Deferred income taxes | 10,758 | 13,187 | ||||||||||
| Income taxes payable | 76,986 | 54,181 | ||||||||||
| Total Current Liabilities | 1,113,011 | 1,021,776 | ||||||||||
| Long-Term Debt | 88,562 | 84,794 | ||||||||||
| Self-Insurance | 22,641 | 23,585 | ||||||||||
| Pension Liability | 25,069 | 21,295 | ||||||||||
| Other Liabilities | 132,239 | 107,652 | ||||||||||
| Commitments and Contingencies | ||||||||||||
| Stockholders’ Equity: | ||||||||||||
|
Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued and outstanding 243,442,156 and 242,416,424 shares at December 31, 2012 and December 31, 2011, respectively |
243,442 | 242,416 | ||||||||||
| Capital in excess of par value | 1,391,271 | 1,375,976 | ||||||||||
| Retained earnings | 445,756 | 239,103 | ||||||||||
|
Treasury stock, at cost, 7,574,903 and 7,359,983 shares at December 31, 2012 and December 31, 2011, respectively |
(98,725 |
) |
(95,827 |
) |
||||||||
| Accumulated other comprehensive loss |
(94,413 |
) |
(102,030 |
) |
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Stockholders’ Equity--McDermott International, Inc. |
1,887,331 | 1,659,638 | ||||||||||
| Noncontrolling Interests | 64,774 | 74,074 | ||||||||||
| Total Equity | 1,952,105 | 1,733,712 | ||||||||||
| Total Liabilities and Equity | $ | 3,333,627 | $ | 2,992,814 | ||||||||
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McDERMOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS |
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| Year Ended December 31, | ||||||||||||||||
| 2012 | 2011 |
2010 |
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| (In thousands) | ||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
| Net income | $ | 217,423 | $ | 151,355 | $ | 227,712 | ||||||||||
| (Income) loss from discontinued operations, net of tax | (3,497 | ) | 12,812 | 34,900 | ||||||||||||
| Income from continuing operations | 213,926 | 164,167 | 262,612 | |||||||||||||
| Non-cash items included in net income: | ||||||||||||||||
| Depreciation and amortization | 86,440 | 82,391 | 76,452 | |||||||||||||
| Drydock amortization | 25,545 | 24,567 | 26,205 | |||||||||||||
| Equity in loss of unconsolidated affiliates | 16,719 | 4,985 | 7,594 | |||||||||||||
| Gains on asset disposals | (405 | ) | (8,478 | ) | (2,440 | ) | ||||||||||
| Loss on asset impairments |
- |
5,488 | 24,660 | |||||||||||||
| Provision for deferred taxes | 3,847 | 1,650 | 1,830 | |||||||||||||
| Stock-based compensation charges | 15,369 | 17,825 | 16,458 | |||||||||||||
| Other non-cash items | 8,367 | 18,096 | 13,307 | |||||||||||||
| Changes in assets and liabilities, net of effects from acquisitions: | ||||||||||||||||
| Accounts receivable |
(5,920 |
) |
(152,840 |
) |
(6,457 | ) | ||||||||||
| Net contracts in progress and advance billings on contracts | (351,604 | ) |
(151,157 |
) |
182,472 | |||||||||||
| Accounts payable | 84,430 | 71,291 | (38,536 | ) | ||||||||||||
| Accrued and other current liabilities | 36,922 | 56,049 | 40,110 | |||||||||||||
| Income taxes | 22,832 | 17,138 | 84,269 | |||||||||||||
| Pension liability and accrued postretirement and employee benefits | 36,897 | (83,263 | ) | (106,338 | ) | |||||||||||
| Other | 16,419 | 29,537 | (197,871 | ) | ||||||||||||
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NET CASH PROVIDED BY OPERATING ACTIVITIES--CONTINUING OPERATIONS |
209,784 | 97,446 | 384,327 | |||||||||||||
|
NET CASH USED IN OPERATING ACTIVITIES--DISCONTINUED OPERATIONS |
- |
(1,426 | ) | (44,153 | ) | |||||||||||
| TOTAL CASH PROVIDED BY OPERATING ACTIVITIES | 209,784 | 96,020 | 340,174 | |||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
| Purchases of property, plant and equipment | (286,310 | ) | (282,621 | ) | (186,862 | ) | ||||||||||
| (Increase) decrease in restricted cash and cash equivalents | 3,846 | 175,899 | (142,853 | ) | ||||||||||||
| Purchases of available-for-sale securities |
(95,964 |
) |
(546,822 | ) | (1,491,329 | ) | ||||||||||
| Sales and maturities of available-for-sale securities | 191,298 | 693,424 | 1,363,803 | |||||||||||||
| Investments in unconsolidated affiliates |
(5,084 |
) |
(1,058 | ) | (32,550 | ) | ||||||||||
| Proceeds from asset dispositions and other investing activities | 3,291 | 9,943 | 2,870 | |||||||||||||
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NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES--CONTINUING OPERATIONS |
(188,923 |
) |
48,765 | (486,921 | ) | |||||||||||
|
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES--DISCONTINUED OPERATIONS |
60,671 |
- |
(65,084 | ) | ||||||||||||
| TOTAL CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (128,252 | ) | 48,765 | (552,005 | ) | |||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
| Proceeds from debt | 19,034 | 46,987 | 3,423 | |||||||||||||
| Payment of debt | (10,061 | ) | (8,606 | ) | (8,540 | ) | ||||||||||
| Purchase of treasury shares | (2,898 | ) | (10,092 | ) | (15,715 | ) | ||||||||||
| Cash contribution from The Babcock & Wilcox Company |
- |
- |
100,000 | |||||||||||||
| Distributions to NCI | (20,135 | ) | (2,524 | ) |
- |
|||||||||||
| Debt issuance costs and other financing activities | 267 | (4,476 | ) | (3,076 | ) | |||||||||||
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES--CONTINUING OPERATIONS |
(13,793 | ) | 21,289 | 76,092 | ||||||||||||
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES--DISCONTINUED OPERATIONS |
- |
1,426 | (109,600 | ) | ||||||||||||
| TOTAL CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (13,793 | ) | 22,715 | (33,508 | ) | |||||||||||
| EFFECTS OF EXCHANGE RATE CHANGES ON CASH | 1,554 | (109 | ) | (80 | ) | |||||||||||
| TRANSFER OF CASH TO THE BABCOCK & WILCOX COMPANY |
- |
- |
(250,388 | ) | ||||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 69,293 | 167,391 | (495,807 | ) | ||||||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 570,854 | 403,463 | 899,270 | |||||||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 640,147 | $ | 570,854 | $ | 403,463 | ||||||||||
CONTACT:
McDermott International, Inc.
Investors, Analysts and
Financial Media:
Steven D. Oldham, 281-870-5147
Vice
President, Treasury and Investor Relations
soldham@mcdermott.com
or
Trade
and General Media:
Louise Denly, 281-870-5025
Director,
Corporate Communications
ldenly@mcdermott.com