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TheStreet Open House

McDermott Reports Second Quarter 2012 Financial Results

The Company’s other income for the second quarter of 2012 was $2.9 million, which represents an improvement of $1.6 million as compared to other income of $1.3 million in the second quarter of 2011 primarily attributable to increased interest income.

At June 30, 2012, the Company’s backlog was approximately $5.7 billion, compared to $5.8 billion and $4.7 billion at March 31, 2012 and June 30, 2011, respectively.

Balance Sheet Summary

As of June 30, 2012, McDermott reported total assets of approximately $3.2 billion. Included in this amount was $748.7 million of cash and cash equivalents, restricted cash and investments. Net working capital, calculated as current assets less current liabilities, was $611.5 million. Additionally, total equity was over $1.8 billion, or approximately 57% of total assets, with total debt of $109.8 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, and our belief that McDermott’s growth strategy is well designed for the markets we serve. 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.

         

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

 
Three Months Ended June 30, Six Months Ended June 30,
2012 2011 2012 2011
(In thousands, except share and per share amounts)
 
Revenues $ 889,248   $ 849,801   $ 1,616,926   $ 1,749,041  
Costs and Expenses:
Cost of operations 759,704 703,805 1,357,138 1,451,030
Selling, general and administrative expenses 47,482 60,412 94,093 115,781
(Gain) loss on asset disposals   29     (71 )   (197 )   (296 )
Total costs and expenses   807,215     764,146     1,451,034     1,566,515  
 
Equity in Income (Loss) of Unconsolidated Affiliates   (2,651 )   (1,876 )   (6,334 )   1,551  
 
Operating Income   79,382     83,779     159,558     184,077  
 
Other Income (Expense):
Interest income 1,585 292 3,219 741
Interest expense

-

(263 )

-

(263 )

Gain (loss) on foreign currency--net

1,256 1,372 10,697 (2,860 )

Other income (expense)--net

  51     (117 )   (530 )   (1,288 )
Total other income (expense)   2,892     1,284     13,386     (3,670 )
 
Income from continuing operations before provision for income taxes and noncontrolling interests   82,274     85,063     172,944     180,407  
Provision for Income Taxes   28,345     17,237     57,088     39,816  
Income from continuing operations before noncontrolling interests   53,929     67,826     115,856     140,591  
Total income from discontinued operations, net of tax  

-

    3,610     3,497     5,272  
Net Income   53,929     71,436     119,353     145,863  

Less: Net Income Attributable to Noncontrolling Interests

  1,190     4,108     3,856     8,115  
Net Income Attributable to McDermott International, Inc. $ 52,739   $ 67,328   $ 115,497   $ 137,748  

         

McDERMOTT INTERNATIONAL, INC.

EARNINGS PER SHARE COMPUTATION

 
Three Months Ended June 30, Six Months Ended

June 30,

2012 2011 2012 2011
(In thousands, except share and per share amounts)
 
 
Income from continuing operations less noncontrolling interests $ 52,739 $ 63,718 $ 112,000 $ 132,476
Income from discontinued operations, net of tax  

-

  3,610   3,497   5,272

Net income attributable to McDermott International, Inc.

$ 52,739 $ 67,328 $ 115,497 $ 137,748
 
Weighted average common shares (basic) 235,681,213 234,573,031 235,444,733 234,207,053
Effect of dilutive securities:
Stock options, restricted stock and restricted stock units   1,779,552   2,971,643   1,951,964   2,938,073
Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards (diluted)   237,460,765   237,544,674   237,396,697   237,145,126
 
Basic earnings per share:
Income from continuing operations less noncontrolling interests 0.22 0.27 0.48 0.57
Income from discontinued operations, net of tax

-

0.02 0.01 0.02
Net income attributable to McDermott International, Inc. 0.22 0.29 0.49 0.59
 
Diluted earnings per share:
Income from continuing operations less noncontrolling interests 0.22 0.27 0.47 0.56
Income from discontinued operations, net of tax

-

0.02 0.01 0.02
Net income attributable to McDermott International, Inc. 0.22 0.28 0.49 0.58
               

SUPPLEMENTARY DATA

 
Three Months Ended June 30, Six Months Ended

June 30,

2012 2011 2012 2011
(In thousands)
Pension expense $ 189 $ 5,435 $ 768 $ 11,588
Depreciation & amortization expense $ 22,598 $ 19,574 $ 45,874 $ 40,099
Capital expenditures $ 86,910 $ 77,696 $ 131,661 $ 141,682
Backlog

$

5,746,701

$

4,715,590

$

5,746,701

$

4,715,590

     

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

 

June 30, 2012

December 31, 2011

(In thousands, except share and per share amounts)

Assets
Current Assets:
Cash and cash equivalents $ 644,060 $ 570,854
Restricted cash and cash equivalents 24,024 21,962
Investments 48,970 109,522

Accounts receivable--trade, net

402,503 445,808

Accounts receivable--other

62,478 53,386
Contracts in progress 471,010 287,390
Deferred income taxes 12,316 11,931
Assets held for sale

-

3,197
Other current assets   38,349     33,135  
Total Current Assets   1,703,710     1,537,185  
Property, Plant and Equipment 2,087,422 1,958,877
Less accumulated depreciation  

(898,635

)

 

(857,012

)

Net Property, Plant and Equipment 1,188,787 1,101,865
Assets Held for Sale

-

55,571
Investments 31,661 29,484
Goodwill 41,202 41,202
Investments in Unconsolidated Affiliates 37,873 42,659
Other Assets   187,809     184,848  
Total Assets $ 3,191,042   $ 2,992,814  
 
Liabilities and Equity
Current Liabilities:
Notes payable and current maturities of long-term debt $ 14,573 $ 8,941
Accounts payable 318,743 315,514
Accrued liabilities 337,076 309,515
Advance billings on contracts 353,457 320,438
Deferred income taxes 13,195 13,187
Income taxes payable   55,197     54,181  
Total Current Liabilities   1,092,241     1,021,776  
Long-Term Debt 95,207 84,794
Self-Insurance 26,214 23,585
Pension Liability 19,652 21,295
Other Liabilities 123,168 107,652
Commitments and Contingencies
Stockholders’ Equity:
Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 243,379,604 and 242,416,424 shares at June 30, 2012 and December 31, 2011, respectively 243,380 242,416
Capital in excess of par value 1,383,538 1,375,976
Retained earnings 354,600 239,103
Treasury stock, at cost, 7,874,779 and 7,359,983 shares at June 30, 2012 and December 31, 2011, respectively

(98,723

)

(95,827

)

Accumulated other comprehensive loss  

(110,540

)

 

(102,030

)

Stockholders’ Equity--McDermott International, Inc.

1,772,255 1,659,638
Noncontrolling Interests   62,305     74,074  
Total Equity   1,834,560     1,733,712  
Total Liabilities and Equity $ 3,191,042   $ 2,992,814  

     

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
Six Months Ended June 30,
2012 2011
(In thousands)
Cash Flows From Operating Activities:
Net income $ 119,353 $ 145,863
Less: Income from discontinued operations, net of tax   3,497   5,272  
Income from continuing operations $ 115,856 $ 140,591
Non-cash items included in net income:
Depreciation and amortization 45,874 40,099
Equity in (income) loss of unconsolidated affiliates 6,334 (1,551 )

Gain on asset disposals and impairments--net

(197 ) (296 )
Provision (benefit) from deferred taxes 1,194 (11,648 )
Pension costs 768 11,588
Other non-cash items 10,090 10,369
Changes in assets and liabilities, net of effects from dispositions:
Accounts receivable 36,237 (54,481 )
Net contracts in progress and advance billings on contracts (150,712 ) (257,381 )
Accounts payable 4,074 27,589
Accrued and other current liabilities 10,145 40,505
Pension liability and accrued postretirement and employee benefits 15,426 (42,067 )
Other assets and liabilities   (3,902 ) 24,907  

Net Cash Provided By (Used In) Operating Activities--Continuing Operations

91,187 (71,776 )

Net Cash Provided By Operating Activities--Discontinued Operations

 

-

  62  
Total Cash Provided By (Used In) Operating Activities   91,187     (71,714 )
 
Cash Flows From Investing Activities:
Purchases of property, plant and equipment (131,661 ) (141,682 )
(Increase) decrease in restricted cash and cash equivalents (2,062 ) 39,950
Purchases of available-for-sale securities (66,266 ) (377,018 )
Sales and maturities of available-for-sale securities 125,895 424,452
Other investing activities, net   (2,071 ) 303  

Net Cash Used In Investing Activities--Continuing Operations

(76,165 ) (53,995 )

Net Cash Provided By Investing Activities--Discontinued Operations

  60,671  

-

 
Total Cash Used In Investing Activities   (15,494 ) (53,995 )
 
Cash Flows From Financing Activities:
Increase in debt 19,033 30,745
Payment of debt (2,988 ) (4,288 )
Distributions to noncontrolling interests (15,726 )

-

Other financing activities, net   (2,638 ) (2,361 )

Net Cash Provided By (Used In) Financing Activities--Continuing Operations

  (2,319 ) 24,096  
Effects of exchange rate changes on cash and cash equivalents   (168 ) 45  
Net increase (decrease) in cash and cash equivalents   73,206   (101,568 )
Cash and cash equivalents at beginning of period   570,854   403,463  

Cash and cash equivalents at end of period--Continuing Operations

$ 644,060   $ 301,895  




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