Attached files
| file | filename |
|---|---|
| 8-K - MCDERMOTT INTERNATIONAL, INC. 8-K - MCDERMOTT INTERNATIONAL INC | a50062411.htm |
Exhibit 99.1
McDermott Reports Third Quarter 2011 Financial Results
Reported Results In-line with Pre-released Ranges
HOUSTON--(BUSINESS WIRE)--November 8, 2011--McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today reported income from continuing operations of $9.8 million, or $0.04 per diluted share, for the 2011 third quarter. The results of the 2011 third quarter compare to income from continuing operations of $60.8 million, or $0.26 per diluted share, in the corresponding period of 2010. Classified as discontinued operations, the results of McDermott’s charter fleet business are excluded from both periods and The Babcock & Wilcox Company, which was spun-off to McDermott shareholders last year on July 30, is excluded from the 2010 period. Weighted average common shares outstanding on a fully diluted basis were approximately 236.9 million and 236.3 million in the quarters ended September 30, 2011 and September 30, 2010, respectively.
McDermott’s revenues were $879.9 million for the 2011 third quarter, an increase of over 20 percent, compared to $732.1 million in the corresponding period of 2010. The year-over-year increase was primarily due to a 91 percent increase in revenues in the Asia Pacific segment as a result of expanded scope and marine activity on a large engineering, procurement, construction and installation project, partially offset by a 34 percent decline in Middle East segment revenues.
The Company’s operating income in the 2011 third quarter was $35.2 million, compared to $84.3 million in the 2010 third quarter. Operating income in the 2011 third quarter was negatively affected by previously announced project losses of approximately $50 million, primarily within the Atlantic segment, which more than offset a 95 percent increase in the Asia Pacific segment’s operating income, as compared to the 2010 third quarter. In the 2010 third quarter, McDermott’s operating income was negatively affected by approximately $44 million of non-cash impairment and related charges, which was largely offset by approximately $36 million in project improvements on certain Qatar projects.
The Company’s other income for the third quarter of 2011 was $373 thousand, an improvement of $3.9 million compared to the other expense in the third quarter of 2010, primarily due to higher foreign currency gains.
At September 30, 2011, the Company’s backlog was $4.3 billion, compared to $3.6 billion and $4.7 billion at September 30, 2010 and June 30, 2011, respectively. Of the September 30, 2011 backlog, approximately $335 million is from projects currently in a loss position whereby future revenues are expected to equal costs when recognized.
Balance Sheet Summary
As of September 30, 2011, McDermott reported total assets of approximately $2.8 billion.
Included in this amount was $618.8 million of cash, restricted cash and investments. Net working capital, calculated as current assets less current liabilities, was $493.4 million. Additionally, total equity was $1.7 billion, or approximately 62% of total assets, with total debt of $89.1 million.
Discontinued Operations
For the third quarter of 2011, McDermott recorded net income from discontinued operations of $1.2 million, or $0.01 per diluted share. Including the results of discontinued operations, total net income attributable to McDermott was $11.0 million, or $0.05 per diluted share, for the 2011 third 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 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. 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 without limitation our inability to successfully execute on contracts in backlog, changes in project design or schedules, changes in the scope or timing of contracts, contract cancellations and 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, 2010 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. CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
| (In thousands) | |||||||||||||||||
| Revenues | $ | 879,894 | $ | 732,095 | $ | 2,628,935 | $ | 1,864,121 | |||||||||
| Costs and Expenses: | |||||||||||||||||
| Cost of operations | 802,951 | 565,996 | 2,253,981 | 1,421,041 | |||||||||||||
| Selling, general and administrative expenses | 48,046 | 56,099 | 163,827 | 159,911 | |||||||||||||
| Loss on asset impairments |
- |
24,444 |
- |
24,444 | |||||||||||||
| Gain on asset disposals |
(7,811 |
) |
(108 |
) |
(8,107 |
) |
(2,414 |
) |
|||||||||
| Total costs and expenses | 843,186 | 646,431 | 2,409,701 | 1,602,982 | |||||||||||||
| Equity in Income (Loss) of Unconsolidated Affiliates |
(1,492 |
) |
(1,361 |
) |
59 |
(5,507 |
) |
||||||||||
| Operating Income | 35,216 | 84,303 | 219,293 | 255,632 | |||||||||||||
| Other Income (Expense): | |||||||||||||||||
| Interest income | 319 | 314 | 1,060 | 1,139 | |||||||||||||
| Interest expense |
(152 |
) |
(392 |
) |
(415 |
) |
(2,671 |
) |
|||||||||
| Other income (expense) – net | 206 |
(3,460 |
) |
(3,942 |
) |
(4,188 |
) |
||||||||||
| Total other income (expense) | 373 |
(3,538 |
) |
(3,297 |
) |
(5,720 |
) |
||||||||||
| Income from continuing operations before provision for income taxes and noncontrolling interests | 35,589 | 80,765 | 215,996 | 249,912 | |||||||||||||
| Provision for Income Taxes | 20,535 | 10,085 | 60,351 | 35,229 | |||||||||||||
| Income from continuing operations before noncontrolling interests | 15,054 | 70,680 | 155,645 | 214,683 | |||||||||||||
| Loss on disposal of discontinued operations |
- |
(32,936 |
) |
- |
(123,356 |
) |
|||||||||||
| Income (loss) from discontinued operations, net of tax | 1,187 |
(7,094 |
) |
6,459 | 89,048 | ||||||||||||
| Total income (loss) from discontinued operations, net of tax | 1,187 |
(40,030 |
) |
6,459 |
(34,308 |
) |
|||||||||||
| Net Income | 16,241 | 30,650 | 162,104 | 180,375 | |||||||||||||
|
Less: Net Income Attributable to Noncontrolling |
|||||||||||||||||
| Interests | 5,290 | 9,847 | 13,405 | 23,597 | |||||||||||||
| Net Income Attributable to McDermott International, Inc. | $ | 10,951 | $ | 20,803 | $ | 148,699 | $ | 156,778 | |||||||||
|
McDERMOTT INTERNATIONAL, INC. EARNINGS PER SHARE COMPUTATION |
|||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended
September 30, |
||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||
| (In thousands, except share and per share amounts) | |||||||||||||||
| Basic: | |||||||||||||||
| Income from continuing operations less noncontrolling interests | $ | 9,764 | $ | 60,833 | $ | 142,240 | $ | 191,086 | |||||||
| Income (loss) from discontinued operations, net of tax | 1,187 |
(40,030 |
) |
6,459 |
(34,308 |
) |
|||||||||
| Net income attributable to McDermott International, Inc. | $ | 10,951 | $ | 20,803 | $ | 148,699 | $ | 156,778 | |||||||
| Weighted average common shares | 234,940,184 | 232,670,579 | 234,451,430 | 231,780,675 | |||||||||||
| Income from continuing operations less noncontrolling interests | 0.04 | 0.26 | 0.61 | 0.82 | |||||||||||
| Income (loss) from discontinued operations, net of tax | 0.01 |
(0.17 |
) |
0.03 |
(0.15 |
) |
|||||||||
| Net income attributable to McDermott International, Inc. | 0.05 | 0.09 | 0.63 | 0.67 | |||||||||||
| Diluted: | |||||||||||||||
| Income from continuing operations less noncontrolling interests | $ | 9,764 | $ | 60,833 | $ | 142,240 | $ | 191,086 | |||||||
| Income (loss) from discontinued operations, net of tax | 1,187 |
(40,030 |
) |
6,459 |
(34,308 |
) |
|||||||||
| Net income attributable to McDermott International, Inc. | $ | 10,951 | $ | 20,803 | $ | 148,699 | $ | 156,778 | |||||||
| Weighted average common shares (basic) | 234,940,184 | 232,670,579 | 234,451,430 | 231,780,675 | |||||||||||
| Effect of dilutive securities: | |||||||||||||||
| Stock options, restricted stock and restricted stock units | 2,007,479 | 3,600,832 | 2,627,875 | 3,368,656 | |||||||||||
| Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards | 236,947,663 | 236,271,411 | 237,079,305 | 235,149,331 | |||||||||||
| Income from continuing operations less noncontrolling interests | 0.04 | 0.26 | 0.60 | 0.81 | |||||||||||
| Income (loss) from discontinued operations, net of tax | 0.01 |
(0.17 |
) |
0.03 |
(0.14 |
) |
|||||||||
| Net income attributable to McDermott International, Inc. | 0.05 | 0.09 | 0.63 | 0.67 | |||||||||||
|
SUPPLEMENTARY DATA |
||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended
September 30, |
|||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||
| (In thousands) | ||||||||||||||||||
| Pension expense | $ | 3,779 | $ | 2,981 | $ | 15,367 | $ | 16,282 | ||||||||||
| Depreciation & amortization expense | $ | 19,801 | $ | 19,601 | $ | 59,900 | $ | 57,424 | ||||||||||
| Capital expenditures | $ | 90,190 | $ | 38,939 | $ | 231,872 | $ | 136,555 | ||||||||||
| Backlog | $ | 4,255,432 | $ | 3,591,416 | ||||||||||||||
|
McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||||||
|
September 30, 2011 |
December 31, 2010 |
|||||||||||
|
(In thousands, except share |
||||||||||||
| Assets | ||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | $ | 403,589 | $ | 403,463 | ||||||||
| Restricted cash and cash equivalents | 14,297 | 197,861 | ||||||||||
| Investments | 159,086 | 209,463 | ||||||||||
|
Accounts receivable--trade, net |
296,303 | 323,497 | ||||||||||
|
Accounts receivable--other |
36,354 | 28,447 | ||||||||||
|
Contracts in progress |
300,331 | 65,853 | ||||||||||
| Deferred income taxes | 13,102 | 10,323 | ||||||||||
| Assets held for sale | 20,630 | 10,161 | ||||||||||
| Other current assets | 44,071 | 36,570 | ||||||||||
| Total Current Assets | 1,287,763 | 1,285,638 | ||||||||||
| Property, Plant and Equipment | 1,923,733 | 1,720,040 | ||||||||||
| Less accumulated depreciation |
(840,365 |
) |
(804,471 |
) |
||||||||
| Net Property, Plant and Equipment | 1,083,368 | 915,569 | ||||||||||
| Assets Held for Sale | 76,315 | 77,150 | ||||||||||
| Investments | 41,860 | 75,742 | ||||||||||
| Goodwill | 41,202 | 41,202 | ||||||||||
| Investments in Unconsolidated Affiliates | 45,505 | 45,016 | ||||||||||
| Other Assets | 183,788 | 158,371 | ||||||||||
| Total Assets | $ | 2,759,801 | $ | 2,598,688 | ||||||||
| Liabilities and Equity | ||||||||||||
| Current Liabilities: | ||||||||||||
| Notes payable and current maturities of long-term debt | $ | 6,615 | $ | 8,547 | ||||||||
| Accounts payable | 299,535 | 252,974 | ||||||||||
| Accrued liabilities | 311,021 | 286,831 | ||||||||||
| Advance billings on contracts | 103,896 | 250,053 | ||||||||||
| Deferred income taxes | 3,969 | 12,849 | ||||||||||
| Income taxes payable | 46,034 | 32,851 | ||||||||||
| Liabilities associated with assets held for sale | 23,288 | 20,902 | ||||||||||
| Total Current Liabilities | 794,358 | 865,007 | ||||||||||
| Long-Term Debt | 82,478 | 46,748 | ||||||||||
| Self-Insurance | 39,040 | 35,655 | ||||||||||
| Pension Liability | 43,488 | 52,831 | ||||||||||
| Other Liabilities | 99,342 | 86,180 | ||||||||||
| Commitments and Contingencies | ||||||||||||
| Stockholders’ Equity: | ||||||||||||
|
Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 242,251,921 and |
||||||||||||
|
240,791,473 shares at September 30, 2011 and December 31, 2010, respectively |
242,252 | 240,791 | ||||||||||
| Capital in excess of par value | 1,372,968 | 1,357,316 | ||||||||||
| Retained earnings | 249,072 | 100,373 | ||||||||||
| Treasury stock, at cost, 7,308,140 and 6,906,262 shares at September 30, 2011 and December 31, | ||||||||||||
| 2010, respectively | (95,261 | ) | (85,735 | ) | ||||||||
| Accumulated other comprehensive loss |
(142,980 |
) |
(163,717 |
) |
||||||||
| Stockholders’ Equity—McDermott International, Inc. | 1,626,051 | 1,449,028 | ||||||||||
| Noncontrolling Interests | 75,044 | 63,239 | ||||||||||
| Total Equity | 1,701,095 | 1,512,267 | ||||||||||
| Total Liabilities and Equity | $ | 2,759,801 | $ | 2,598,688 | ||||||||
|
McDERMOTT INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||||
|
Nine Months Ended September 30, |
|||||||||||||
| 2011 | 2010 | ||||||||||||
| (In thousands) | |||||||||||||
| Cash Flows From Operating Activities: | |||||||||||||
| Net income | $ | 162,104 | $ | 180,375 | |||||||||
| Less: Income (loss) from discontinued operations, net of tax | 6,459 |
(34,308 |
) |
||||||||||
| Income from continuing operations | $ | 155,645 | $ | 214,683 | |||||||||
| Non-cash items included in net income: | |||||||||||||
| Depreciation and amortization | 59,900 | 57,424 | |||||||||||
| Equity in (income) loss of unconsolidated affiliates |
(59 |
) |
5,507 | ||||||||||
| Loss on asset impairments |
- |
24,444 | |||||||||||
| Gain on asset disposals |
(8,107 |
) |
(2,414 |
) |
|||||||||
| Benefit from deferred taxes |
(2,910 |
) |
(4,272 |
) |
|||||||||
| Pension costs | 15,367 | 16,282 | |||||||||||
| Other non-cash items | 14,249 | 21,921 | |||||||||||
| Changes in assets and liabilities: | |||||||||||||
| Accounts receivable | 26,238 | 64,415 | |||||||||||
| Net contracts in progress and advance billings on contracts |
(380,635 |
) |
29,306 | ||||||||||
| Accounts payable | 44,667 |
(88,778 |
) |
||||||||||
| Accrued and other current liabilities | 71,148 | 10,055 | |||||||||||
| Pension liability and accrued postretirement and employee benefits |
(51,041 |
) |
(138,783 |
) |
|||||||||
| Other |
(15,327 |
) |
(71,992 |
) |
|||||||||
|
Net Cash Provided By (Used In) Operating Activities--Continuing Operations |
(70,865 |
) |
137,798 | ||||||||||
| Cash Flows From Investing Activities: | |||||||||||||
| Purchases of property, plant and equipment |
(231,872 |
) |
(136,555 |
) |
|||||||||
| (Increase) decrease in restricted cash and cash equivalents | 183,564 |
(83,498 |
) |
||||||||||
| Purchases of available-for-sale securities |
(516,628 |
) |
(844,103 |
) |
|||||||||
| Sales and maturities of available-for-sale securities | 601,128 | 706,234 | |||||||||||
| Proceeds from asset disposals | 8,483 | 4,563 | |||||||||||
| Other investing activities, net |
(16 |
) |
(15,647 |
) |
|||||||||
|
Net Cash Provided By (Used In) Investing Activities--Continuing Operations |
44,659 | (369,006 | ) | ||||||||||
| Cash Flows From Financing Activities: | |||||||||||||
| Payment of debt |
(6,473 |
) |
(6,398 | ) | |||||||||
| Debt issuance costs |
(4,824 |
) |
(13,247 |
) |
|||||||||
| Increase in debt | 40,212 |
- |
|||||||||||
| Dividend received from B&W |
- |
100,000 | |||||||||||
| Other financing activities, net |
(2,059 |
) |
2,177 | ||||||||||
|
Net Cash Provided By Financing Activities--Continuing Operations |
26,856 | 82,532 | |||||||||||
| Effects of exchange rate changes on cash and cash equivalents |
(524 |
) |
(183 |
) |
|||||||||
| Net increase (decrease) in cash and cash equivalents | 126 |
(148,859 |
) |
||||||||||
| Cash and cash equivalents at beginning of period | 403,463 | 428,298 | |||||||||||
|
Cash and cash equivalents at end of period--Continuing Operations |
$ | 403,589 | $ | 279,439 | |||||||||
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
Director, 281-870-5025
Corporate
Communications
ldenly@mcdermott.com