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McDermott Reports Third Quarter 2012 Financial Results

Stocks in this article: MDR

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.

         

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 NoncontrollingInterests   3,679     5,290     7,535     13,405  
 
Net Income Attributable to McDermott International, Inc. $ 50,612   $ 10,951   $ 166,109   $ 148,699  

         

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
                   

SUPPLEMENTARY DATA

 
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

         

McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

 
September 30, 2012

December 31, 2011

(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  




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