Exhibit 99.1
McDermott Reports Second Quarter 2012 Financial Results
Earnings per share of 22 cents; Sizable $5.7 Billion Backlog and Solid Balance Sheet
HOUSTON--(BUSINESS WIRE)--August 6, 2012--McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today reported income from continuing operations of $52.7 million, or $0.22 per diluted share, for the 2012 second quarter. The results of the 2012 second quarter compare to income from continuing operations of $63.7 million, or $0.27 per diluted share, in the corresponding period of 2011. Classified as discontinued operations, the results of McDermott’s former charter fleet business, which was sold in March 2012, are excluded from the periods presented. Weighted average common shares outstanding on a fully diluted basis were approximately 237.5 million in the quarters ended June 30, 2012 and June 30, 2011.
McDermott’s revenues were $889.2 million for the 2012 second quarter compared to $849.8 million in the corresponding period of 2011. The year-over-year increase was attributable to the Middle East and Atlantic segments, primarily due to increased fabrication and marine activity. The increase from these segments was partially offset by lower revenues in the Asia Pacific segment due to lower marine activity.
The Company’s operating income in the 2012 second quarter was $79.4 million compared to $83.8 million in the 2011 second quarter. Increased operating income in the Middle East segment and improved results in the Atlantic segment were more than offset by the decline in the Asia Pacific segment, attributable to lower marine activity.
“We are pleased with the results of our 2012 second quarter which keeps us on pace for the year,” said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott. “Both the Middle East and Asia Pacific segments reported solid operating results in the 2012 second quarter, with each providing over $46 million in operating income. As anticipated, the Atlantic segment reported an operating loss; however, its 2012 second quarter level was an improvement as compared to the 2011 second quarter. McDermott is in a solid financial position, with a strong balance sheet and a solid backlog of work, and we believe our growth strategy is well designed for the markets we serve.”
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, | December 31, | ||||||||
(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 |
CONTACT:
McDermott International, Inc.
Investors, Analysts and Financial Media:
Jay Roueche, 281-870-5462
Vice President
jroueche@mcdermott.com
or
Trade and General Media:
Louise Denly, 281-870-5025
Director, Corporate Communications
ldenly@mcdermott.com