Attached files
| file | filename |
|---|---|
| 8-K - MCDERMOTT INTERNATIONAL, INC. 8-K - MCDERMOTT INTERNATIONAL INC | a50187099.htm |
Exhibit 99.1
McDermott Reports Fourth Quarter 2011 Financial Results
Approximately $66 million of Net Charges and Increased Contingency Offset Otherwise Solid Quarter
- First Quarter 2012 Bookings Off to Strong Start with $2 Billion Inpex Award
- Agile vessel now working on charter in Brazil; Mexican pipelay project near completion
HOUSTON--(BUSINESS WIRE)--February 29, 2012--McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today reported income from continuing operations of $9.3 million, or $0.04 per diluted share, for the 2011 fourth quarter. The results of the 2011 fourth quarter compare to income from continuing operations of $45.5 million, or $0.19 per diluted share, in the corresponding period of 2010. Classified as discontinued operations, the results of McDermott’s charter fleet business are excluded from all periods presented, and The Babcock & Wilcox Company, which was spun-off to McDermott shareholders on July 30, 2010, is excluded from the 2010 and 2009 full-year results. Weighted average common shares outstanding on a fully diluted basis were approximately 236.9 million and 237.0 million in the quarters ended December 31, 2011 and December 31, 2010, respectively.
McDermott’s revenues were $816.2 million for the 2011 fourth quarter, an increase of over 51 percent compared to $539.6 million in the corresponding period of 2010. The year-over-year increase was primarily due to a 134 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, coupled with increased revenues in the Middle East and Atlantic segments.
The Company’s operating income in the 2011 fourth quarter was $31.4 million, compared to $59.3 million in the 2010 fourth quarter. Operating income in the 2011 fourth quarter was negatively affected by an aggregate of approximately $66 million (pretax and after-tax) from additional project losses and increased contingency on certain projects, primarily the nearly-complete Mexican pipelay project and the 5-year charter contract in Brazil, partially offset by one-time benefits associated with the Company’s captive insurance program, a partial recovery of exit costs on a discontinued fabrication facility and the reversal of previously accrued compensation expenses. In the Asia Pacific segment, operating income increased $70 million as compared to the 2010 fourth quarter.
“Clearly, we were disappointed to incur additional charges on the two Atlantic projects, including the need to add contingency to the Brazilian project,” said Steve M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott. “However, we are pleased that our work with the Agile vessel in Brazil has now begun after much delay, and we expect to be complete with the Mexican pipelay project in just a matter of weeks – so the outlook has improved. Absent these issues, our execution on other projects in the fourth quarter was solid and our expectations for 2012 are higher than 2011.”
The Company’s other income for the fourth quarter of 2011 was $3.9 million, an improvement of $9.3 million compared to the other expense of $5.4 million in the fourth quarter of 2010, primarily due to higher foreign currency gains.
At December 31, 2011, the Company’s backlog was $3.9 billion, compared to $5.0 billion and $4.3 billion at December 31, 2010 and September 30, 2011, respectively. Of the December 31, 2011 backlog, approximately $347 million is from projects currently in a loss position, primarily the Brazilian charter, whereby future revenues are expected to equal costs when recognized. As previously announced, McDermott has received in excess of $2 billion in new awards thus far in the first quarter of 2012.
Balance Sheet Summary
As of December 31, 2011, McDermott reported total assets of approximately $3.0 billion. Included in this amount was $731.8 million of cash and cash equivalents, restricted cash and investments. Net working capital, calculated as current assets less current liabilities, was $515.4 million. Additionally, total equity was $1.7 billion, or approximately 58% of total assets, with total debt of $93.7 million.
Discontinued Operations
For the fourth quarter of 2011, McDermott recorded a net loss from discontinued operations of $19.3 million, or $0.08 per diluted share, primarily due to a write-down on the assets held for sale based upon recent discussions with interested parties and external advisors. Including the results of discontinued operations, total net loss attributable to McDermott was approximately $10 million, or $0.04 per diluted share, for the 2011 fourth quarter.
Full-year 2011 Overview
For the year ended December 31, 2011, McDermott reported revenues of $3.4 billion, a record annual level for the Company, with operating income of $250.7 million and net income from continuing operations of $151.5 million, or $0.64 per fully diluted share. Included in the full year results are approximately $127 million of net charges from project losses and increased contingency, partially offset by captive insurance income, partial recovery of facility exit costs and a gain on asset sale.
Comments and outlook for 2012
“While McDermott’s results for 2011 were negatively impacted in total by certain project losses as discussed previously and herein, our outlook for 2012 reflects expected improvement in many areas,” Johnson continued. “The Company has begun the year with its largest single booking at the time of award with the Inpex Ichthys project, and we continue to see a number of new award opportunities on the horizon. We believe that McDermott has fully reflected the expected costs to complete the two challenging Atlantic projects with sufficient contingency for the future. Although we expect at this time that the first quarter of 2012 will be the trough period of the year, we do view the current range of analyst estimates for the full year ($0.70-$1.01) as reasonable bookends at this time, based on our current 2012 forecast and expected business conditions.”
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, the expected timing of the completion of the Mexico pipelay project and McDermott's expectations for its operating and financial results for the year ending December 31, 2012. 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, additional project losses and the potential submission of and recovery on change orders and claims. 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. 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 December 31, |
Year Ended December 31, |
|||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| Revenues | $ | 816,175 | $ | 539,622 | $ | 3,445,110 | $ | 2,403,743 | ||||||||||||||||
| Costs and Expenses: | ||||||||||||||||||||||||
| Cost of operations | 726,409 | 421,220 | 2,980,390 | 1,842,261 | ||||||||||||||||||||
| Selling, general and administrative expenses | 48,175 | 56,852 | 212,002 | 216,763 | ||||||||||||||||||||
| (Gain) loss on asset disposals and impairments | 5,117 | 190 | (2,990 | ) | 22,220 | |||||||||||||||||||
| Total costs and expenses | 779,701 | 478,262 | 3,189,402 | 2,081,244 | ||||||||||||||||||||
| Equity in Loss of Unconsolidated Affiliates | (5,044 | ) | (2,087 | ) | (4,985 | ) | (7,594 | ) | ||||||||||||||||
| Operating Income | 31,430 | 59,273 | 250,723 | 314,905 | ||||||||||||||||||||
| Other Income (Expense): | ||||||||||||||||||||||||
| Interest income (expense) – net | 674 | 443 | 1,319 | (1,089 | ) | |||||||||||||||||||
| Other income (expense) – net | 3,191 | (5,834 | ) | (751 | ) | (10,022 | ) | |||||||||||||||||
| Total other income (expense) | 3,865 | (5,391 | ) | 568 | (11,111 | ) | ||||||||||||||||||
| Income from continuing operations before provision for income | ||||||||||||||||||||||||
| taxes, discontinued operations and noncontrolling interest | 35,295 | 53,882 | 251,291 | 303,794 | ||||||||||||||||||||
| Provision for Income Taxes | 26,773 | 5,953 | 87,124 | 41,182 | ||||||||||||||||||||
| Income from continuing operations before discontinued | ||||||||||||||||||||||||
| operations and noncontrolling interest | 8,522 | 47,929 | 164,167 | 262,612 | ||||||||||||||||||||
| loss from discontinued operations, net of tax | (19,271 | ) | (592 | ) | (12,812 | ) | (34,900 | ) | ||||||||||||||||
| Net Income (Loss) | (10,749 | ) | 47,337 | 151,355 | 227,712 | |||||||||||||||||||
| Less: Net Income (Loss) Attributable to Noncontrolling | ||||||||||||||||||||||||
| Interests | (780 | ) | (2,449 | ) | 12,625 | 26,046 | ||||||||||||||||||
| Net Income Attributable to McDermott International, Inc. | $ | (9,969 | ) | $ | 44,888 | $ | 138,730 | $ | 201,666 | |||||||||||||||
|
McDERMOTT INTERNATIONAL, INC. EARNINGS PER SHARE COMPUTATION |
|||||||||||||||||||||||
|
Three Months Ended December 31, |
Year Ended
December 31, |
||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||
| (In thousands, except share and per share amounts) | |||||||||||||||||||||||
| Income from continuing operations less noncontrolling interests | $ | 9,302 | $ | 45,480 | $ | 151,542 | $ | 236,566 | |||||||||||||||
| Loss from discontinued operations, net of tax | (19,271 | ) | (592 | ) | (12,812 | ) | (34,900 | ) | |||||||||||||||
| Net income (loss) attributable to McDermott International, Inc. | $ | (9,969 | ) | $ | 44,888 | $ | 138,730 | $ | 201,666 | ||||||||||||||
| Weighted average common shares | 235,041,313 | 233,351,424 | 234,598,901 | 232,173,362 | |||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Stock options, restricted stock and restricted stock units | 1,882,795 | 3,688,702 | 2,441,606 | 3,448,667 | |||||||||||||||||||
| Adjusted weighted average common shares and assumed exercises of | |||||||||||||||||||||||
| stock options and vesting of stock awards | 236,924,108 | 237,040,126 | 237,040,507 | 235,622,029 | |||||||||||||||||||
| Basic earnings per share : | |||||||||||||||||||||||
| Income from continuing operations less noncontrolling interests | 0.04 | 0.20 | 0.65 | 1.02 | |||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | (0.08 | ) | — | (0.05 | ) | (0.15 | ) | ||||||||||||||||
| Net income attributable to McDermott International, Inc. | (0.04 | ) | 0.19 | 0.59 | 0.87 | ||||||||||||||||||
| Diluted earnings per share: | |||||||||||||||||||||||
| Income from continuing operations less noncontrolling interests | 0.04 | 0.19 | 0.64 | 1.00 | |||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | (0.08 | ) | — | (0.05 | ) | (0.15 | ) | ||||||||||||||||
|
Net income attributable to McDermott International, Inc. |
(0.04 | ) | 0.19 | 0.59 | 0.85 | ||||||||||||||||||
|
SUPPLEMENTARY DATA |
|||||||||||||||||||||||||||
|
Three Months Ended December 31, |
Year Ended
December 31, |
||||||||||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||
| Pension expense | $ | 4,125 | $ | 5,532 | $ | 19,492 | $ | 21,814 | |||||||||||||||||||
| Depreciation & amortization expense | $ | 22,491 | $ | 19,035 | $ | 82,391 | $ | 76,452 | |||||||||||||||||||
| Capital expenditures | $ | 50,749 | $ | 59,321 | $ | 282,621 | $ | 186,862 | |||||||||||||||||||
| Backlog | $ | 3,881,063 | $ | 5,038,988 | $ | 3,881,063 | $ | 5,038,988 | |||||||||||||||||||
|
McDERMOTT INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS |
|||||||||||||
| December 31, | December 31, | ||||||||||||
| 2011 | 2010 | ||||||||||||
| (In thousands, except share and per share amounts) | |||||||||||||
| Assets | |||||||||||||
| Current Assets: | |||||||||||||
| Cash and cash equivalents | $ | 570,854 | $ | 403,463 | |||||||||
| Restricted cash and cash equivalents | 21,962 | 197,861 | |||||||||||
| Investments | 109,522 | 209,463 | |||||||||||
| Accounts receivable—trade, net | 445,808 | 323,497 | |||||||||||
| Accounts receivable—other | 53,386 | 28,447 | |||||||||||
| Contracts in progress | 287,390 | 65,853 | |||||||||||
| Deferred income taxes | 11,931 | 10,323 | |||||||||||
| Assets held for sale | 3,197 | 10,161 | |||||||||||
| Other current assets | 33,135 | 36,570 | |||||||||||
| Total Current Assets | 1,537,185 | 1,285,638 | |||||||||||
| Property, Plant and Equipment | 1,958,877 | 1,720,040 | |||||||||||
| Less accumulated depreciation | (857,012 | ) | (804,471 | ) | |||||||||
| Net Property, Plant and Equipment | 1,101,865 | 915,569 | |||||||||||
| Assets Held for Sale | 55,571 | 77,150 | |||||||||||
| Investments | 29,484 | 75,742 | |||||||||||
| Goodwill | 41,202 | 41,202 | |||||||||||
| Investments in Unconsolidated Affiliates | 42,659 | 45,016 | |||||||||||
| Other Assets | 184,848 | 158,371 | |||||||||||
| Total Assets | $ | 2,992,814 | $ | 2,598,688 | |||||||||
| Liabilities and Equity | |||||||||||||
| Current Liabilities: | |||||||||||||
| Notes payable and current maturities of long-term debt | $ | 8,941 | $ | 8,547 | |||||||||
| Accounts payable | 315,514 | 252,974 | |||||||||||
| Accrued liabilities | 309,515 | 286,831 | |||||||||||
| Advance billings on contracts | 320,438 | 250,053 | |||||||||||
| Deferred income taxes | 13,187 | 12,849 | |||||||||||
| Income taxes payable | 54,181 | 32,851 | |||||||||||
| Liabilities associated with assets held for sale |
- |
20,902 | |||||||||||
| Total Current Liabilities | 1,021,776 | 865,007 | |||||||||||
| Long-Term Debt | 84,794 | 46,748 | |||||||||||
| Self-Insurance | 23,585 | 35,655 | |||||||||||
| Pension Liability | 21,295 | 52,831 | |||||||||||
| Other Liabilities | 107,652 | 86,180 | |||||||||||
| Commitments and Contingencies | |||||||||||||
| Stockholders’ Equity: | |||||||||||||
| Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 242,416,424 and | |||||||||||||
| 240,791,473 shares at December 31, 2011 and December 31, 2010, respectively | 242,416 | 240,791 | |||||||||||
| Capital in excess of par value | 1,375,976 | 1,357,316 | |||||||||||
| Retained earnings | 239,103 | 100,373 | |||||||||||
| Treasury stock, at cost, 7,359,983 and 6,906,262 shares at December 31, 2011 and December 31, 2010, | |||||||||||||
| respectively | (95,827 | ) | (85,735 | ) | |||||||||
| Accumulated other comprehensive loss | (102,030 | ) | (163,717 | ) | |||||||||
| Stockholders’ Equity—McDermott International, Inc. | 1,659,638 | 1,449,028 | |||||||||||
| Noncontrolling Interests | 74,074 | 63,239 | |||||||||||
| Total Equity | 1,733,712 | 1,512,267 | |||||||||||
| Total Liabilities and Equity | $ | 2,992,814 | $ | 2,598,688 | |||||||||
|
McDERMOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||||||||
| Year Ended December 31, | |||||||||||||||||
| 2011 | 2010 | 2009 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||
| Net income | $ | 151,355 | $ | 227,712 | $ | 390,450 | |||||||||||
| (Income) loss from discontinued operations, net of tax | 12,812 | 34,900 | (180,898 | ) | |||||||||||||
| Income from continuing operations | 164,617 | 262,612 | 209,552 | ||||||||||||||
| Non-cash items included in net income: | |||||||||||||||||
| Depreciation and amortization | 82,391 | 76,452 | 79,867 | ||||||||||||||
| Equity in loss of unconsolidated affiliates | 4,985 | 7,594 | 3,557 | ||||||||||||||
| Gains on asset disposals | (8,478 | ) | (2,440 | ) | (1,699 | ) | |||||||||||
| Loss on asset disposals and impairments | 5,488 | 24,660 | 785 | ||||||||||||||
| Provision for deferred taxes | 1,650 | 1,830 | 5,252 | ||||||||||||||
| Amortization of pension and postretirement costs | 19,492 | 21,814 | 27,352 | ||||||||||||||
| Stock-based compensation charges | 17,825 | 16,458 | 12,987 | ||||||||||||||
| Other non-cash items | (1,396 | ) | (8,507 | ) | 32,151 | ||||||||||||
| Changes in assets and liabilities, net of effects from acquisitions: | |||||||||||||||||
| Accounts receivable | (152,840 | ) | (6,457 | ) | 25,871 | ||||||||||||
| Net contracts in progress and advance billings on contracts | (151,157 | ) | 182,472 | (295,110 | ) | ||||||||||||
| Accounts payable | 71,291 | (38,536 | ) | (8,054 | ) | ||||||||||||
| Accrued and other current liabilities | 56,049 | 40,110 | (57,311 | ) | |||||||||||||
| Income taxes | 17,138 | 84,269 | 5,882 | ||||||||||||||
| Pension liability and accrued postretirement and employee benefits | (83,263 | ) | (106,338 | ) | 41,101 | ||||||||||||
| Other | 54,104 | (171,666 | ) | 103,450 | |||||||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 97,446 | 384,327 | 185,633 | ||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||
| Purchases of property, plant and equipment | (282,621 | ) | (186,862 | ) | (186,518 | ) | |||||||||||
| (Increase) decrease in restricted cash and cash equivalents | 175,899 | (142,853 | ) | (10,718 | ) | ||||||||||||
| Purchases of available-for-sale securities | (546,822 | ) | (1,491,329 | ) | (154,337 | ) | |||||||||||
| Sales and maturities of available-for-sale securities | 693,424 | 1,363,803 | 331,474 | ||||||||||||||
| Proceeds from asset dispositions | 9,943 | 4,824 | 2,761 | ||||||||||||||
| Investments in unconsolidated affiliates | (1,058 | ) | (32,550 | ) | (13,484 | ) | |||||||||||
| Other investing activities | — | (1,954 | ) | (28,427 | ) | ||||||||||||
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 48,765 | (486,921 | ) | (59,249 | ) | ||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||
| Increase in debt | 46,987 | 3,423 | — | ||||||||||||||
| Payment of debt | (8,606 | ) | (8,540 | ) | (4,106 | ) | |||||||||||
| Debt issuance costs | (4,944 | ) | (17,881 | ) | (105 | ) | |||||||||||
| Purchase of treasury shares | (10,092 | ) | (15,715 | ) | (6,531 | ) | |||||||||||
| Cash contribution from The Babcock & Wilcox Company | — | 100,000 | — | ||||||||||||||
| Other financing activities | (2,056 | ) | 14,805 | 6,534 | |||||||||||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 21,289 | 76,092 | (4,208 | ) | |||||||||||||
| EFFECTS OF EXCHANGE RATE CHANGES ON CASH | (109 | ) | 498 | 1,096 | |||||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 167,391 | (26,004 | ) | 123,272 | |||||||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 403,463 | 429,467 | 306,195 | ||||||||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 570,854 | $ | 403,463 | $ | 429,467 | |||||||||||
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