McDermott International, Inc. (MDR)
Q2 2010 Earnings Call Transcript
August 10, 2010 10:00 am ET
Jay Roueche – VP, IR and Corporate Communications
Steve Johnson – President and CEO
Perry Elders – SVP and CFO
Andy Kaplowitz – Barclays Capital
Steven Fisher – UBS
John Rogers – Davidson
Tahira Afzal – KeyBanc
Marty Malloy – Johnson Rice
Stephen Gengaro – Jefferies
Roger Read – Natexis
Graham Mattison – Lazard Capital Markets
Joe Gibney – Capital One Southcoast
Jeff Spittel – Madison Williams
Will Gabrielski – Gleacher & Company
Previous Statements by MDR
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Ladies and gentlemen, thank you for standing by, and welcome to McDermott International’s second quarter 2010 earnings conference call. At this time, all participants are in listen-only mode. Following the company’s prepared remarks, we will conduct a question-and-answer session and instructions will be given at that time.
I would now like to turn the call over to our host, Mr. Jay Roueche, McDermott’s Treasurer and Vice President of Investor Relations. Please go ahead, sir.
Thank you, Marisa and good morning, everyone. We appreciate you joining us to discuss McDermott’s second quarter 2010 financial results, which we reported yesterday after the markets closed. Joining me on the call this morning are Steve Johnson, McDermott’s President and Chief Executive Officer; and Perry Elders, Senior Vice President and Chief Financial Officer.
Before I turn the call over, let me remind you that this event is being recorded and a replay will be available for a limited time on our website. In addition, some of our comments this morning will include forward-looking statements and estimates. These comments are subject to various risks and uncertainties and they reflect management’s view as of August 10, 2010.
Please refer to our filings with the Securities and Exchange Commission, which are available on our website, included in our Form 10-K for the year ended December 31, 2009 and our recently filed Form 10-Q for a discussion of the factors that may cause actual results to differ from management’s projections, forecast, estimates and expectations. And please note that except to the extent required by applicable law, McDermott undertakes no obligation to update any forward-looking statement.
I also want to inform you McDermott filed its Form 10-Q for the second quarter yesterday with the SEC which includes the consolidated financial statements of McDermott with the results of Babcock & Wilcox Company included. We encourage you to review this filing. However, since the spin-off was completed on July 30, our comments this morning will speak only to the pro forma financial information of McDermott’s continuing operations, which exclude B&W’s results in the cost of the spin-off. These financial statements were filed with the SEC on Form 8-K and Form 8-K/A over last week and relevant tables were included in our press release yesterday.
I will now turn the call over to Steve Johnson, McDermott’s CEO, for his remarks on the operational and business environment.
Thanks, Jay and good morning, everyone. We appreciate you joining us today as well as for your ownership of or interest in our company. I want all of you to know that I am really enthusiastic about my new role at McDermott and look forward to spending much more time with each of you, McDermott shareholders and the general financial community over the next several weeks and months.
I believe McDermott is well positioned as a standalone E&C company, specializing in offshore oil and gas construction. I am also thankful for all the work of my predecessors who worked to position McDermott as a market leader and who led us to appropriate investments that will assure we maintain a market leader position in the future.
In addition to the outstanding construction and marine capital assets that we currently employ, we believe our growth initiatives in Mexico, China and Kazakhstan, plus investments in new vessels have been well timed and have the company on the right path.
I am equally pleased with how our strong and experienced management team is coming together, many of whom are long-tenured employees with significant company experience and I appreciate their support greatly.
Perhaps, most importantly, I have been very impressed with the talent and technical acumen of our employees. My goal is to build upon the legacy business that I am so fortunate to lead today.
As Jay just mentioned, we’ll keep our comments focused on our continuing operations this morning. If you have questions on the consolidated results, we’ll be happy to address those in the Q&A session to the extent we can. But now that the spin is complete, we really want to highlight our ongoing business.
All-in-all, I am very pleased with McDermott’s pro forma results during the 2010 second quarter, and frankly for the entire first half of this year. I doubt that I can adequately convey how remarkably busy it has been around here coupling the spin-off activities with our ongoing focus on the operations of the company.
I truly appreciate all of the hard work of my many colleagues to get us to this point while maintaining focus on our customers’ projects. The marketplace we serve and working to deliver value to our shareholders. Harry is going to cover the financials in detail, but just to give you the high level overview.
Revenues were $640 million, down from a year ago, but up 24% sequentially. Operating income was up 84% compared to last year, which drove an increase in earnings per share of 133% to $0.35 per share in the 2010 second quarter compared to $0.15 per share a year ago.