Exhibit 99.1
McDERMOTT INTERNATIONAL, INC.
The Oil Service Conference III
February 18, 2005
Cautionary Statements / Safe Harbor
Statements in this presentation which express a forecast, expectation or estimate, as well as those which are not historical fact, are forward looking. They involve a number of risks and uncertainties, including audit risks, which may cause actual results to differ materially from such forward-looking statements. These risks and uncertainties include factors detailed in McDermott International’s filings with the U.S. Securities & Exchange Commission, including its Form 10-K for the year ended December 31, 2003 and its Form 10-Q’s which are filed quarterly.
Enercom 2005 Oil Service Conference III February 18, 2005 2
McDermott Operating Segments[1]
Consolidated Operating Subsidiaries
Marine Construction Government Operations
J. Ray McDermott BWX Technologies (J. Ray) (BWXT)
Providing solutions for offshore field development to the worldwide oil and gas industry
Lifecycle management of special nuclear materials, facilities & technologies primarily for the U.S. government
Not Consolidated Chapter 11
Power Generation
Babcock & Wilcox (B&W)
Power generation equipment design, supply and construction and after market services
[1] Major subsidiaries only
Enercom 2005 Oil Service Conference III February 18, 2005 3
Financial Snapshot
Common Share Information
Stock symbol (NYSE): MDR
Recent price/share[1]: $18.01
Shares outstanding: 66.9 million
Market capitalization[1]: $1.2 billion
52-week trading range: $6.72-$19.60
Daily volume average[1] 550,320
[1] As of February 10, 2005
2004 Forecasted Financial Statistics[2]
Revenues: $1.85 billion
Op. Income: $110 - $118 million
Net Income: $54 - $60 million
EPS: $0.78 - $0.87
Unrestricted
Cash: $260 million
[2] Forecasted YE 2004 GAAP; includes asset sales and project improvements (see SEC filings for detail)
Enercom 2005 Oil Service Conference III February 18, 2005 4
Investment Highlights
Industry-leading, franchise-name businesses Valued supplier to our customers Improved bidding discipline at J. Ray Solid, predictable backlog at BWXT
B&W Chapter 11 bankruptcy resolution in sight Financial restructuring complete, liquidity improved Experienced, shareholder-focused management team
Enercom 2005 Oil Service Conference III February 18, 2005 5
McDERMOTT INTERNATIONAL, INC.
J. Ray’s Core Capabilities
Providing solutions for offshore field developments worldwide
Engineering and Procurement
Fabrication:
Jackets, Hulls, FPSOs, TLP’s and Topsides
Installation:
Platforms, Hulls, FPSOs, TLP’s, Topsides and Pipelines
Subsea/Deepwater Technology
Enercom 2005 Oil Service Conference III February 18, 2005 7
J. Ray McDermott Snapshot
Long, established track record as a pioneer in the marine construction industry
Worldwide operations
Location Facility Vessels
Asia Pacific (Batam) Fab 3
Caspian (Baku) Fab 1 (Operate only)
Gulf of Mexico (Morgan City) Fab 3
Middle East (Dubai) Fab 1
Mexico (Veracruz) Ship Repair 5 (Joint Venture)
9,100 employees
Enercom 2005 Oil Service Conference III February 18, 2005 8
Spectrum of Offshore Infrastructure
J. Ray’s experience covers shallow to the deepest water
Graphics compliments of Offshore Magazine (2002 Offshore Oil & Gas Industry Deepwater Solutions for Concept Selections Poster May 2002)
Fixed Platform Compliant Tower (CT) Mini-TLP Conventional Tension Leg Platform (TLP)
Semi-FPS (Floating Production Facility) Truss Spar Classic Spar Classic Spar Control Buoy (CB) Subsea Tieback
Tieback Flowline FPSO (Floating Production Storage Offloading)
Enercom 2005 Oil Service Conference III February 18, 2005 9
Strong Relationships with Major Offshore Operators
Enercom 2005 Oil Service Conference III February 18, 2005 10
Field Development Lifecycle
Field infrastructure fabrication and installation accounts for a small portion of operators’ overall costs to first production
Seismic / Reservoir Identification
Well Completion
Drilling
Infrastructure
Production
1 – 2 Years 1 Year 1 Year 1 – 2 Years 5 – 20 Years
Years of development and considerable resources have been committed prior to the infrastructure stage of the cycle
Source: Morgan Stanley
Enercom 2005 Oil Service Conference III February 18, 2005 11
Industry Fundamentals Are Promising [1]
Commodity prices at historic highs
Highest growth rates expected for deepwater and pipelay projects
Deep water necessitates floating production solutions for field development
International markets expected to grow faster than GOM
Worldwide Identified Offshore Construction Projects (# of projects by water depth)
Over 1500’
451-1500’
301-450’
151-300’
0-150’
141 217
113 139
87 121
198 228
196 186
0 100 200 300 400
Under construction/planned Under study/review
Enercom 2005 Oil Service Conference III [1] Source: ODS Petrodata & Jefferies & Company, Inc. February 18, 2005 12
Strong Improvement at J. Ray
Range
2003 2004 est. [1]
J. Ray Op. Income 4Q04 Est.
$100 $50 $0 -$50 Operating Income ($ millions)
[1] Forecasted J. Ray 2004 operating income. 9/30/04 YTD actual plus 4Q04 forecast.
Enercom 2005 Oil Service Conference III February 18, 2005 13
J. Ray Turnaround in Progress
Recruited and built new leadership organization
Substantial improvements in business development, bidding, execution, and planning processes
Maintain strong historical relationships with key customers
Expect to successfully execute current backlog; approximately $1.2 billion at 12/31/04
Our challenge is to turn $1.2 billion of bids into profitable orders
Enercom 2005 Oil Service Conference III February 18, 2005 14
J. Ray Backlog Characteristics[1]
Backlog by Type of Contract
Unit Rate 9%
Fixed Price 37%
Combination 54%
Backlog by Geographic Region
Middle East 33%
Caspian 48%
Americas 7%
Asia Pacific 12%
Enercom 2005 Oil Service Conference III [1] Based on 9/30/04 backlog of $1.4 billion February 18, 2005 15
J. Ray Summary
Well positioned to capture industry growth
Strong franchise in strategic geographical locations
New management team leading change in all areas
$1.2 billion backlog and good growth prospects
Turnaround is underway but not yet complete
Enercom 2005 Oil Service Conference III February 18, 2005 16
BWXT is the premier manager of complex, high-consequence nuclear and national security operations. We are disciplined operators and managers of nuclear production facilities, who deliver value and customer confidence.
McDERMOTT INTERNATIONAL, INC.
BWXT Serves Two Key Roles
Manufactures, and is the premier supplier of, nuclear components for the U.S. Navy
2 divisions: Nuclear products & nuclear equipment
Provide the critical skills and resources that produce propulsion systems for the U.S. Navy
Financial results are in consolidated statements
Manage and operate sites for Dept. of Energy
12 sites managed primarily by LLCs with JV partners
Primarily equity method accounting, income from investees
Enercom 2005 Oil Service Conference III February 18, 2005 18
Primary Locations & Statistics
Employees (incl. site):
10,940
Est. 2004 Revenues:
$550 Million
DOE Site Budgets Managed:
$1.1 Billion
Size of Nuclear Facilities:
More than 12 mm sq. ft
INL – ICP
Bettis Rocky Flats Mound
Y-12 ORNL
LANL Pantex
SRS
SPR Sites
DOE Sites NNSA Sites BWXT Facilities Actively bidding site
Enercom 2005 Oil Service Conference III February 18, 2005 19
BWXT Growth Drivers
Ship & submarine building rates
Refuel
New M&O opportunities
Space reactor programs
Down-blending services
Funding of strategic & environmental programs
Regulatory and policy changes
Enercom 2005 Oil Service Conference III February 18, 2005 20
BWXT is Growing
BWXT Revenue $600
$500
(millions) $400 $300 $200 $100 $0 $554 $550 $531 $494 $444
2000 2001 2002 2003 Est.
2004 $120
$100
(millions) $80
$60 $40 $20 $0 $108-$111
$86
$60 $52 $44
2000 2001 2002 2003 Est.
2004
Revenue Former M&O Contract Operating Income Equity Income
Expected 4th qtr. results
[1] BWXT segment income does not include pension expense
Enercom 2005 Oil Service Conference III February 18, 2005 21
BWXT Backlog Amortization[1]
Manufacturing Backlog by Estimated Revenue Year
Beyond 2006 32%
4Q04 11%
2005 34%
2006 23%
[1] Based on 9/30/04 backlog of $1.5 billion
Enercom 2005 Oil Service Conference III February 18, 2005 22
BWXT’s Strategy
Maintain leadership position
Maintain customer confidence
Generate cost reductions
Explore opportunities selectively outside the U.S.
Continue strong operational and financial performance
Enercom 2005 Oil Service Conference III February 18, 2005 23
McDERMOTT INTERNATIONAL, INC.
B&W Snapshot
The Babcock & Wilcox Company was incorporated in 1881
Premier coal-fired boiler manufacturer for electricity generation
Today’s key products and services
OEM boilers and related equipment to generate steam and power
Environmental and emission reduction equipment
Upgrades, service and replacement parts
EPIC coal-fired power plants & projects
Field engineering and construction services
Replacement nuclear steam generators (US and Canada)
Nuclear service and parts (Canada)
World-wide locations
Approximately 10,700 employees
Enercom 2005 Oil Service Conference III February 18, 2005 25
Majority of Business is Services & Upgrades A repeatable, baseload business
Services, Parts O&M
Project Upgrades
OEM – New Plants
B&W 2003 Revenues
$1.4 billion
Enercom 2005 Oil Service Conference III February 18, 2005 26
B&W Chapter 11 Update
Two possibilities to emerge from C11
1) Negotiated settlement with claimants
Approved by MDR shareholders & claimants in 2003
B&W equity, 4.75mm MDR shares plus price guarantee, MI note & insurance policies
Waiting court / BOD approval; appeals remain possible
Currently reflected in McDermott’s financial statements
2) Asbestos resolution legislation
Retain all consideration proposed by settlement
B&W would pay into national trust on annual basis (25-30 years)
Keep B&W’s approximate $315 mm in cash at 9/30/04
Enercom 2005 Oil Service Conference III February 18, 2005 27
Financial Review
McDERMOTT INTERNATIONAL, INC.
McDermott’s Consolidated Revenues
J. Ray’s revenue decline due to completion of large projects
BWXT’s revenues increased year-over-year
Most of BWXT’s M&O business not reflected in revenues
Increasing J. Ray’s backlog remains major priority $2,500
$2,000
$1,500 Revenues ($ millions)
$1,000 $500 $0
2003 2004 est.
BWXT BWXT 4Q04 Est. J. Ray J. Ray 4Q04 Est.
Enercom 2005 Oil Service Conference III February 18, 2005 29
Operating Income Improving $120
$90
$60
Operating Income ($ millions)
$30
$0
-$30
-$60
Range 2003 2004 est.
Operating Income 4Q04 Est.
2004 between $110-118 million[1]
J. Ray improvement key driver
BWXT income up +/- 25 percent
Corporate expenses down
Asset sales and project improvement contribute to 2004 results
D&A appx. $40 million in 2004
B&W C11 revaluation expense
$12.0 mm in 2004, $17.9 mm in 2003
[1] Forecasted 2004 operating income. 9/30/04 YTD actual plus 4Q04 forecast.
Enercom 2005 Oil Service Conference III February 18, 2005 30
B&W Settlement affects Liabilities & Net Income on a quarterly basis, driven by stock price changes
B&W C11 settlement liability, after-tax in millions $160 $140 $120 $100 $80 $60 $40 $20 $0 $110.0
$4.38
12/31/02 FV
$86.4
$2.90
03/31/03 FV
$126.4
$6.33
06/30/03 FV
$118.2
$5.71
09/30/03 FV
$127.9
$11.95
12/31/03 FV
$125.3
$8.39
03/31/04 FV
$129.3
$10 .16
06/30/04 FV
$130.3
$11.80
9/30/04 FV
$18.36
$139.9
12/31/04 FV EST.
$20
$18
$16
$14
$ MDR stock price
$12
$10
$8
$6
$4
$2
$0
FV = Fair Value
B&W settlement liability MDR stock price
Enercom 2005 Oil Service Conference III February 18, 2005 31
Financial Restructuring Complete
J. Ray completed $200 mm note offering (12/03)
BWXT signed a $135 mm credit facility (12/03)
J. Ray’s asset sales lowered capital employed
DB 60 vessel - $44 mm (7/04)
Shearleg Crane barge - $18.7 mm (7/04)
DB 17 vessel - $8.6 mm (7/04)
Scottish fabrication facility - $14.5 mm (12/04)
Harbor Island fabrication facility lease (4/04)
J. Ray signed $25 mm LC facility (8/04)
Received $38 mm from UK pension plan (1/05)
All business segments now financed on stand-alone basis with no cross defaults, guarantees, etc.
Enercom 2005 Oil Service Conference III February 18, 2005 32
Liquidity at 2/7/05
($ in millions) J. Ray MI (BWXT) MII Total
Cash, equivalents & investments $341 $42 $167 $550
Less restricted amounts:
Letters of credit (71) - (5) (76)
Captive insurer (16) - (25) (41)
Pledged securities - - (41) (41)
Cap-x, vessel reserve (51) - - (51)
Foreign accts, other (5) - (1) (6)
Total free cash available 198 42 95 335
BWXT credit capacity 83 83
Total available liquidity $198 $125 $95 $418
Enercom 2005 Oil Service Conference III February 18, 2005 33
Key Areas of Focus
Return J. Ray to long-term earnings growth and industry leadership
Successfully execute existing backlog
Build profitable backlog while managing risk/reward profile and pricing guidelines
Manage operating and G&A costs for expected revenue level
Maintain strong performance at BWXT
Succeed in bidding for additional M&O contracts
Resolve B&W Chapter 11 bankruptcy through shareholder-approved settlement or by legislation
Enercom 2005 Oil Service Conference III February 18, 2005 34
Investment Highlights
Industry-leading, franchise-name businesses
Valued supplier to our customers
Improved bidding discipline at J. Ray
Solid, predictable backlog at BWXT
B&W Chapter 11 bankruptcy resolution in sight
Financial restructuring complete, liquidity improved
Experienced, shareholder-focused management team
Enercom 2005 Oil Service Conference III February 18, 2005 35
McDERMOTT INTERNATIONAL, INC.
(NYSE: MDR)
For more information contact:
Jay Roueche
Director of Investor Relations 281-870-5462