Energy-focused engineering and construction firm
McDermott International, Inc.
) reported mixed third-quarter 2012 earnings results, owing to
strong performances in certain regions, partially offset by
steeper operating costs.
MCDERMOTT INTL (MDR): Free Stock Analysis
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Earnings per share from continuing operations came in at 21
cents, behind the Zacks Consensus Estimate of 24 cents.
However, the Texas-based engineering-to-project management
service provider's per share profit were significantly higher
than 5 cents earned in the third quarter of 2011. The quarter's
result was positively influenced by favorable order activity in
the Asia-Pacific belt.
McDermott generated revenues of $1,028.7 million in the quarter,
up 16.9% from the third quarter of 2011 and also exceeded our
expectation of $990.0 million. Better fabrication and marine
operations in the Middle East and Atlantic regions boosted the
On a reported basis, the company registered operating income of
$82.5 million (jumped 134.4% year over year) during the quarter.
Total costs and expenses also increased 11.7% from the
corresponding period, last year to $941.6 million.
At the end of the third quarter of 2012, McDermott had a backlog
of $5,339.8 million, compared with $4,255.4 million a year ago.
As of June 30, 2012, backlog was $5,746.7 million.
As of September 30, 2012, McDermott had cash/cash equivalents of
$638.8 million and long-term debt (including current maturities)
of approximately $108.3 million (representing a
debt-to-capitalization ratio of approximately 5.3%).
On the same day, one of the affiliates of McDermott won cable
procurement and installation contract for Saudi Aramco in the
Safaniya, Abu Safah and Marjan fields. Another affiliate of the
company also received contracts for North Dome and PDM projects
from Saudi Aramco.
We are maintaining our Neutral recommendation on McDermott
International - which shares business ties with
Williams Partners L.P.
). The company has a diversified product portfolio, specialty
manufacturing and service capabilities, and proprietary
Additionally, McDermott's improving award activity, geographic
footprint in high-growth regions, and continued strong project
execution provide solid visibility into its earnings for 2013.