Mcdermott International (MDRIQ) 8-K McDermott Reports First Quarter 2013 Financial Results

Exhibit 99.1

McDermott Reports First Quarter 2013 Financial Results

EPS of $0.09; $1.0 Billion of New Bookings Added to Backlog

HOUSTON--(BUSINESS WIRE)--May 8, 2013--McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today reported net income of $20.6 million, or $0.09 per fully diluted share, for the quarter ended March 31, 2013. The results for the first quarter 2013 compared to income from continuing operations of $61.9 million, or $0.25 per fully diluted share, in the corresponding period of 2012. Weighted average common shares outstanding on a fully diluted basis were approximately 239.2 million and 237.3 million in the quarters ended March 31, 2013 and 2012, respectively.

McDermott’s revenues were $807.5 million for the first quarter 2013, an increase of 11 percent compared to $727.7 million in the corresponding period of 2012. The year-over-year increase was primarily due to an approximately $48.6 million increase in revenues in the Atlantic segment as a result of increased fabrication activity, coupled with increased revenues in the Asia Pacific and Middle East segments.

The Company’s operating income in the first quarter 2013 was $53.0 million, a decrease of $27.2 million compared to $80.2 million in the first quarter 2012. The first quarter 2013 results were affected by operating losses in the Middle East and Atlantic segments, partially offset by stronger operating income in our Asia Pacific segment. In the first quarter 2013, operating losses in the Middle East segment totaled approximately $18.5 million compared to operating income of $34.7 million for the corresponding prior year period, a decline primarily attributable to execution plan changes on a project at an advanced stage of completion, which resulted in cost increases associated with hook-up activities and the use of third-party vessels. In addition, the decline in operating income was due to lower asset utilization and project activity compared to the prior year. The operating loss for the Atlantic segment changed by approximately $4.4 million to a loss of approximately $16.4 million due to increased support costs associated with lower marine asset utilization.

Operating income in the Asia Pacific segment increased approximately $30.5 million to $88.0 million in the first quarter 2013, primarily due to the successful execution and change orders on a key project as well as cost savings on other projects offset by approximately $4.1 million in increased costs estimates for one of our marine subsea projects. In addition, an approximately $12.3 million or $0.05 per diluted share gain on the sale of the DB 26 was recognized during the quarter for the segment.

The Company’s other expense for the first quarter 2013 was $1.4 million, a reduction of $11.9 million compared to other income of $10.5 million in the first quarter 2012, primarily due to net losses on foreign currency related items.

During the quarter, the Company booked approximately $1.0 billion in new orders including two projects in the Arabian Gulf. In addition, at March 31, 2013 the Company had approximately $5.6 billion in bids and change orders outstanding. The Company has also identified $10.1 billion in target project opportunities that the Company expects to bid in the next five quarters.

At March 31, 2013, the Company’s backlog was $5.3 billion, compared to $5.8 billion and $5.1 billion at March 31, 2012 and December 31, 2012, respectively. Of the March 31, 2013 backlog, approximately $428.9 million was derived from five projects currently in a loss position, of which 93 percent relate to a project in the Asia Pacific segment and the five-year charter in Brazil. In addition, the backlog includes approximately $165.6 million for one project under deferred profit recognition.

“Although the final phases of an otherwise well-executed project in the Middle East challenged us this quarter, I am pleased with our successful completion of a key project in the Asia Pacific segment,” said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott. “With the sale of the DB 26 and our expansion of our subsea engineering talent through the acquisition of DeepSea group, McDermott is making steady progress on its strategic transformation. We remain focused on winning work for which we can provide a cost-effective solution and execute successfully for our customers and for our shareholders.”

Balance Sheet Summary

As of March 31, 2013, McDermott reported total assets of approximately $3.2 billion. Included in this amount was $502.4 million of cash and cash equivalents, restricted cash and investments. Net working capital, calculated as current assets less current liabilities, was $616.2 million. Additionally, total equity was $2.0 billion, or approximately 62% of total assets, with total debt of $101.2 million.

OTHER INFORMATION

Conference Call

McDermott has scheduled a conference call and webcast related to its first quarter 2013 results on Thursday, May 9, 2013, at 9:00 a.m. U.S. Central Daylight Time. Interested parties may listen over the Internet through a link posted in the Investor Relations section of the Company's website. The replay will also be available on the Company's website following the end of the live call.

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, major integrated and other energy companies. Operating in approximately 20 countries across the Atlantic, Middle East and Asia Pacific, the Company’s integrated resources include approximately 14,000 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, bookings, bidding, change orders outstanding and target project opportunities, to the extent each of these items may be viewed as an indicator of future revenues, McDermott’s expectations on the timing for bidding target project opportunities and McDermott’s progress on its strategic transformation. 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, 2012 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 March 31,
	2013			2012
	(In thousands)
Revenues	$	807,488		$	727,678
Costs and Expenses:
Cost of operations		712,814			597,434
Selling, general and administrative expenses		52,226			46,611
Gain on asset disposals		(14,716	)		(226	)
Total costs and expenses		750,324			643,819
Equity in Loss of Unconsolidated Affiliates		(4,131	)		(3,683	)
Operating Income		53,033			80,176
Other Income (Expense):
Interest income		342			1,634
Gain (loss) on foreign currency – net		(2,526	)		9,441
Other income (expense) – net		782			(581	)
Total other income (expense)		(1,402	)		10,494
Income from continuing operations before provision for income taxes and noncontrolling interests		51,631			90,670
Provision for Income Taxes		27,313			28,743
Income from continuing operations before noncontrolling interests		24,318			61,927
Gain on disposal of discontinued operations		-			257
Income from discontinued operations, net of tax		-			3,240
Total income from discontinued operations, net of tax		-			3,497
Net Income		24,318			65,424
Less: Net Income Attributable to Noncontrolling
Interests		3,765			2,666
Net Income Attributable to McDermott International, Inc.	$	20,553		$	62,758

McDERMOTT INTERNATIONAL, INC. EARNINGS PER SHARE COMPUTATION
	Three Months Ended March 31,
	2013		2012
	(In thousands, except share and per share amounts)
Income from continuing operations less noncontrolling interests	$	20,553	$	59,261
Income from discontinued operations, net of tax		-		3,497
Net income attributable to McDermott International, Inc.	$	20,553	$	62,758
Weighted average common shares (basic)		235,941,185		235,208,252
Effect of dilutive securities:
Stock options, restricted stock and restricted stock units		3,258,696		2,124,375
Adjusted weighted average common shares and assumed exercises of
stock options and vesting of stock awards (diluted)		239,199,881		237,332,627
Basic earnings per share:
Income from continuing operations less noncontrolling interests		0.09		0.25
Income from discontinued operations, net of tax		-		0.01
Net income attributable to McDermott International, Inc.		0.09		0.27
Diluted earnings per share:
Income from continuing operations less noncontrolling interests		0.09		0.25
Income from discontinued operations, net of tax		-		0.01
Net income attributable to McDermott International, Inc.		0.09		0.26

SUPPLEMENTARY DATA
	Three Months Ended March 31,
	2013		2012
	(In thousands)
Depreciation & amortization expense	$	20,222	$	23,276
Drydock amortization expense	$	5,550	$	7,112
Capital expenditures	$	37,649	$	44,751
Backlog	$	5,297,981	$	5,806,633

McDERMOTT INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS
	March 31, 2013			December 31, 2012
	(In thousands, except share and per share amounts)
Assets
Current Assets:
Cash and cash equivalents	$	461,535		$	640,147
Restricted cash and cash equivalents		21,942			18,116
Accounts receivable--trade, net		443,182			428,800
Accounts receivable--other		65,561			75,461
Contracts in progress		544,404			560,154
Deferred income taxes		6,888			9,765
Assets held for sale		1,396			2,679
Other current assets		42,436			54,667
Total Current Assets		1,587,344			1,789,789
Property, Plant and Equipment		2,155,243			2,115,176
Less accumulated depreciation		(828,223	)		(833,385	)
Net Property, Plant and Equipment		1,327,020			1,281,791
Investments		18,936			26,750
Goodwill		41,202			41,202
Investments in Unconsolidated Affiliates		35,233			37,435
Assets Held for Sale		12,243			26,758
Other Assets		159,040			129,902
Total Assets	$	3,181,018		$	3,333,627
Liabilities and Equity
Current Liabilities:
Notes payable and current maturities of long-term debt	$	44,025		$	14,146
Accounts payable		302,250			400,007
Accrued liabilities		332,358			369,418
Advance billings on contracts		206,010			241,696
Deferred income taxes		16,027			10,758
Income taxes payable		70,425			76,986
Total Current Liabilities		971,095			1,113,011
Long-Term Debt		57,188			88,562
Self-Insurance		24,141			22,641
Pension Liability		24,757			25,069
Other Liabilities		136,949			132,239
Commitments and Contingencies
Stockholders’ Equity:
Common stock, par value $1.00 per share, authorized 400,000,000 shares; issued 243,778,369 and
243,442,156 shares at March 31, 2013 and December 31, 2012, respectively		243,778			243,442
Capital in excess of par value		1,394,859			1,391,271
Retained earnings		466,309			445,756
Treasury stock, at cost, 7,359,501 and 7,574,903 shares at March 31, 2013 and December 31, 2012,
respectively		(99,688	)		(98,725	)
Accumulated other comprehensive loss		(100,697	)		(94,413	)
Stockholders’ Equity--McDermott International, Inc.		1,904,561			1,887,331
Noncontrolling Interests		62,327			64,774
Total Equity		1,966,888			1,952,105
Total Liabilities and Equity	$	3,181,018		$	3,333,627

McDERMOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
	Three Months Ended March 31,
	2013			2012
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	24,318		$	65,424
Less: Income from discontinued operations, net of tax		-			3,497
Income from continuing operations		24,318			61,927
Non-cash items included in net income:
Depreciation and amortization		20,222			23,276
Drydock amortization		5,550			7,112
Equity in loss of unconsolidated affiliates		4,131			3,683
Gain on asset disposals		(14,716	)		(226	)
Benefit for deferred taxes		5,332			(4,131	)
Other non-cash items		2,391			3,803
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable		(6,573	)		50,017
Net contracts in progress and advance billings on contracts		(19,935	)		65,363
Accounts payable		(125,234	)		(55,292	)
Accrued and other current liabilities		(20,774	)		(10,040	)
Pension liability and accrued postretirement and employee benefits		(19,657	)		7,489
Other assets and liabilities		(42,170	)		19,880
TOTAL CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES--CONTINUING OPERATIONS		(187,115	)		172,861
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(37,649	)		(44,751	)
Increase in restricted cash and cash equivalents		(3,826	)		(2,870	)
Purchases of available-for-sale securities		(3,744	)		(40,319	)
Sales and maturities of available-for-sale securities		31,193			94,380
Proceeds from sale and disposal of assets		35,621			226
Other investing activities		(4,596	)		(2,376	)
NET CASH PROVIDED BY INVESTING ACTIVITIES--CONTINUING OPERATIONS		16,999			4,290
NET CASH PROVIDED BY INVESTING ACTIVITIES--DISCONTINUED OPERATIONS		-			60,671
TOTAL CASH PROVIDED BY INVESTING ACTIVITIES		16,999			64,961
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of debt		(1,494	)		(1,494	)
Distributions to noncontrolling interests		(6,200	)		(15,733	)
Other financing activities		(1,015	)		(1,784	)
TOTAL CASH USED IN FINANCING ACTIVITIES--CONTINUING OPERATIONS		(8,709	)		(19,011	)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH		213			(700	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(178,612	)		218,111
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		640,147			570,854
CASH AND CASH EQUIVALENTS AT END OF PERIOD--CONTINUING OPERATIONS	$	461,535		$	788,965
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes (net of refunds)	$	25,916		$	16,036

CONTACT:
McDermott International, Inc.
Investors, Analysts and Financial Media:
Steven D. Oldham, (281) 870-5147
Vice President, Treasury and Investor Relations
soldham@mcdermott.com
or
Trade and General Media:
Louise Denly, (281) 870-5025
Director, Corporate Communications
ldenly@mcdermott.com