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McDermott reports Q2 2014 financial results

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Oilfield Technology,

McDermott International, Inc. today announced financial results for the quarter ended June 30, 2014. The company reported a second quarter 2014 net loss of US$ 11 million or US$ 0.05 per fully diluted share, compared to a net loss of US$ 149 million or US$ 0.63 per diluted share in the prior-year quarter. Weighted average common shares outstanding on a fully diluted basis were approximately 237 million and 236 million in the quarters ended June 30, 2014 and June 30, 2013, respectively.

The company reported second quarter revenues of US$ 476 million, a decrease of 26% compared to revenues of US$ 647 million in the corresponding period of 2013 due to lower marine contribution. Operating income was US$ 28 million in the second quarter 2014 and included US$ 46 million of gains on asset sales and US$ 1 million of restructuring expenses. These results compare to the prior-year operating loss of US$ 150 million, which included US$ 15 million of restructuring expenses.

“The results reflect our efforts to improve execution, and we are pleased to return three legacy projects to profitability and to complete two others,” said David Dickson, President and Chief Executive Officer of McDermott. Dickson added, “I am encouraged by the steps our reorganized management team is taking to promote cultural change as we focus on improving our competitiveness and building quality backlog.”

The company’s other expense for the second quarter 2014 was US$ 32 million compared to other income of US$ 9 million in the year-ago quarter due to increased interest expense. The second quarter 2014 interest expense included US$ 28 million of expenses related to prior financing arrangements.

Contract backlog summary

As of June 30, 2014, the company’s backlog was US$ 4.1 billion, compared to US$ 4.4 billion at March 31, 2014. Of the June 30, 2014 backlog, approximately 39% related to offshore operations and approximately 61% related to subsea operations. Order intake in the second quarter 2014 totaled US$ 176 million.

At the end of the second quarter, the company had US$ 8.4 billion in bids and change orders outstanding. The company is targeting to bid approximately US$ 9.8 billion in projects that are expected to be awarded in the next five quarters. In total, the company’s revenue pipeline was US$ 22 billion as of June 30, 2014.

Balance sheet summary

As of June 30, 2014, McDermott reported total assets of US$ 3.7 billion. Included in this amount is US$ 958 million in cash and cash equivalents, restricted cash and investments. At quarter-end the company had US$ 904 million in debt outstanding and total equity of US$ 1.6 billion, or 45% of total assets.

Adapted from a press release by David Bizley

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