McDermott’s 2Q net loss narrows
McDermott International, Inc.,a provider of integrated engineering, procurement, construction and installation (EPCI) services for upstream field developments, reported a second quarter 2014 net loss of $11 million or $0.05 per fully diluted share, compared to a net loss of $149 million or $0.63 per diluted share in the prior-year quarter.
McDermott reported second quarter revenues of $476 million, a decrease of 26% compared to revenues of $647 million in the corresponding period of 2013 due to lower marine contribution. Operating income was $28 million in the second quarter 2014 and included $46 million of gains on asset sales and $1 million of restructuring expenses. These results compare to the prior-year operating loss of $150 million, which included $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 $32 million compared to other income of $9 million in the year-ago quarter due to increased interest expense. The second quarter 2014 interest expense included $28 million of expenses related to prior financing arrangements.
Contract Backlog Summary
As of June 30, 2014, the Company’s backlog was $4.1 billion, compared to $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 $176 million.
At the end of the second quarter, the Company had $8.4 billion in bids and change orders outstanding. The Company is targeting to bid approximately $9.8 billion in projects that are expected to be awarded in the next five quarters. In total, the Company’s revenue pipeline was $22 billion as of June 30, 2014.
Balance Sheet Summary
As of June 30, 2014, McDermott reported total assets of $3.7 billion. Included in this amount is $958 million in cash and cash equivalents, restricted cash and investments. At quarter-end the Company had $904 million in debt outstanding and total equity of $1.6 billion, or 45% of total assets.