Disappointing 4Q for McDermott, CEO says

McDermott International announced financial results for the fourth quarter and full year ended December 31, 2013.

The Company reported a fourth quarter net loss of $324 million or $1.37 per fully diluted share, and an operating loss of $316 million, of which approximately 80% relates to cash outlays that were made prior to the fourth quarter. The Company reported fourth quarter revenues of $517 million, a decrease of 48% percent compared to $996 million in the corresponding period of 2012. The Company reported fourth quarter 2012 net income of $41 million, or $0.17 per fully diluted share, and operating income of $77 million.

For the year ended December 31, 2013, the Company reported revenues of $2.7 billion, compared to $3.6 billion for the year ended December 31, 2012. The Company reported an operating loss of $465 million in the year ended December 31, 2013 compared to operating income of $319 million in the year ended December 31, 2012.

Of the $316 million fourth quarter operating loss, approximately $134 million was related to commercial issues, approximately $80 million was related to operational matters, approximately $86 million was related to asset impairments and approximately $16 million was related to restructuring charges in the Atlantic Segment and a corporate reorganization.

On December 16, 2013, David Dickson assumed the role of President and Chief Executive Officer and was concurrently appointed to McDermott’s Board of Directors. Dickson, age 46, joined the Company on October 31, 2013 as Executive Vice President and Chief Operating Officer. He has approximately 24 years of offshore oilfield engineering and construction business experience, including 11 years of experience with Technip S.A. and its subsidiaries. From September 2008 until October 2013, he served as President of Technip USA Inc., with oversight responsibilities for all of Technip’s North American operations.

Disappointing 4th quarter

Dickson said: “During the fourth quarter, we worked through a number of legacy issues, reviewed our backlog in light of new developments and recorded a number of charges, most of which related to prior period cash outlays.”

 “Although the Company’s fourth quarter results are disappointing, we are taking the right steps to stabilize the business and drive long-term growth, profitability and shareholder value creation as a leading global offshore and subsea contractor. McDermott is at a strategic inflection point, and we are making good progress toward improving our internal processes and risk management. We secured a new financing commitment to enhance our financial flexibility and are increasing operational efficiency through a new organizational design, while taking the necessary steps to deliver improved and predictable execution. Driving profitability and cash flow remains our top priority, and we are reevaluating our capital expenditures, reducing our cost structure and exploring the divestiture of non-core assets to achieve that goal.”

Dickson added, “McDermott is a strong company with a dynamic and talented team in place to ensure that our organization is positioned to succeed going forward. We are encouraged by a number of important customer wins during the quarter, along with an attractive pipeline of potential projects. McDermott delivers tremendous value to its customers, and we look forward to capitalizing on the Company’s strategic advantages in the marketplace to create value for our shareholders.”