HOUSTON, April 29, 2019 /PRNewswire/ -- McDermott
International, Inc. (NYSE: MDR) today reported revenues of
$2.2 billion and a net loss of
$(70) million, or $(0.39) per diluted share, for the first quarter
of 2019. Excluding restructuring, integration and transaction
costs, as outlined in an accompanying table, the adjusted net
income for the first quarter of 2019 was $3
million, or $0.02 per diluted
share.
"With our steady progress on both Cameron and Freeport during the first quarter of 2019,
McDermott has taken important steps to demonstrate disciplined
execution on these projects," said David
Dickson, President and Chief Executive Officer of
McDermott. "The recent introduction of feed gas at
Cameron was a major milestone in
the commissioning of Train 1 and is the precursor for the
production of liquefied natural gas. With the imminent completion
of Train 1, as well as the initial work to commission Freeport
Train 1, we are increasingly confident that the two facilities will
come fully on line in 2020 as world-class LNG producers. Further,
we were pleased to report that we had no material increase in cost
estimates on either project in the first quarter, and we continue
to progress our commercial discussions relating to Cameron."
"As for the company's performance in the first quarter of 2019,
the net loss of $(70) million was
largely the result of $73 million of
restructuring, integration and transaction costs, which also
impacted operating income, offsetting otherwise sound performance
across our operating segments and a sequential-quarter reduction in
selling, general and administrative expenses," said Dickson.
"More broadly, the company continues to exhibit commercial
success in a steadily improving market. In particular,
McDermott reported a book-to-bill ratio of 3.0x, a new award total
of $6.7 billion and a 41%
sequential-quarter improvement in backlog. Included in our orders
this quarter were the Golden Pass LNG project in North America, several offshore projects in
the Middle East, the BP Tortue
project and Cassia-C project – both of which converted from FEED
work to EPCI – and the Woodside Scarborough FEED award, which is a
revenue synergy and includes a mechanism for conversion to an EPCI
contract pending FID by the customer. The level of awards in the
first quarter demonstrates customer confidence in the combined
company, which is further supported by our $91 billion revenue opportunity pipeline.
Additionally, our backlog as of the end of the first quarter gives
us visibility for about 80% of our expected total revenues for 2019
– and more than $9 billion for 2020
and thereafter."
First Quarter 2019 Operating Results
First quarter 2019 loss attributable to McDermott common
stockholders was $(70) million, or $(0.39) per fully
diluted share, impacted by $69 million of restructuring and
integration costs – which included costs to implement our
Combination Profitability Initiative ("CPI") program, change in
control, severance, professional fees and settlement of litigation
– as well as $4 million of transaction costs associated with
the ongoing process to sell the company's non-core storage tank and
pipe fabrication businesses. The unfavorable impact of these items
was partially offset by tax benefits of $34
million related to the settlement of a customer claim and a
favorable court ruling. The adjusted net income for the first
quarter of 2019 was $3 million, or $0.02 per fully diluted share, excluding the
restructuring, integration and transaction costs.
McDermott reported first quarter 2019 revenues of $2.2 billion driven by the LNG and Downstream
product lines in NCSA and the Offshore and Subsea product line in
MENA.
McDermott's operating income for the first quarter of 2019 was
$13 million and adjusted operating
income was $86 million, excluding the
previously described restructuring, integration and transaction
costs. Operating income for the first quarter of 2019 was favorably
impacted by the execution of various projects in MENA and NCSA, as
well as strong performance in the Technology segment.
Financial
Highlights
|
|
Three months
Ended
|
|
|
Delta
|
|
|
Mar 31,
2019
|
|
|
Mar 31,
2018
|
|
|
Qtr-on-Qtr
|
|
|
($ in millions,
except per share amounts)
|
|
Revenues
|
$
|
2,211
|
|
|
$
|
608
|
|
|
$
|
1,603
|
|
Operating
Income
|
|
13
|
|
|
|
65
|
|
|
|
(52)
|
|
Operating
Margin
|
|
0.6
|
%
|
|
|
10.7
|
%
|
|
|
-10.1
|
%
|
Net Income
(Loss)
|
|
(70)
|
|
|
|
35
|
|
|
|
(105)
|
|
Diluted
EPS1
|
|
(0.39)
|
|
|
|
0.37
|
|
|
|
(0.76)
|
|
Total Intangibles
Amortization2
|
|
35
|
|
|
|
-
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income3
|
|
86
|
|
|
|
79
|
|
|
|
7
|
|
Adjusted Operating
Margin3
|
|
3.9
|
%
|
|
|
13.0
|
%
|
|
|
-9.1
|
%
|
Adjusted Net
Income3,4
|
|
3
|
|
|
|
49
|
|
|
|
(46)
|
|
Adjusted Diluted
EPS1,3,4
|
|
0.02
|
|
|
|
0.52
|
|
|
|
(0.50)
|
|
Adjusted
EBITDA3
|
|
164
|
|
|
|
104
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Provided by
Operating Activities
|
|
(244)
|
|
|
|
38
|
|
|
|
(282)
|
|
Capital
Expenditures
|
|
18
|
|
|
|
18
|
|
|
|
-
|
|
Free Cash
Flow3
|
|
(262)
|
|
|
|
20
|
|
|
|
(282)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
Capital5
|
|
(1,972)
|
|
|
|
384
|
|
|
|
(2,356)
|
|
|
Note: Results for the
three months ended March 31, 2018 are as originally reported by
McDermott and do not reflect a presentation of combined
results.
|
|
1
|
Diluted EPS and
adjusted diluted EPS were calculated using weighted average diluted
shares of 181 million and 95 million for the three months ended
March 31, 2019 and 2018, respectively.
|
2
|
Total intangibles
amortization includes the sum of project-related intangibles
amortization, other intangibles amortization and amortization of
intangible assets resulting from investments in unconsolidated
affiliates, all of which are associated with the intangible assets
and liabilities acquired in the Combination.
|
3
|
Adjusted operating
income, adjusted operating margin, adjusted net income, adjusted
diluted net income per share ("adjusted diluted EPS") and adjusted
EBITDA reflect adjustments to Operating Income and Net Income
computed in accordance with U.S. generally accepted accounting
principles ("GAAP"). The reconciliations of these non-GAAP
measures, as well as free cash flow, to the respective most
comparable GAAP measures are provided in the appendix entitled
"Reconciliation of Non-GAAP to GAAP Financial Measures."
|
4
|
The calculations of
adjusted net income and adjusted diluted EPS reflect the tax
effects of non-GAAP adjustments during each applicable period. In
jurisdictions in which we currently do not pay taxes, no tax impact
is applied to non-GAAP adjusting items.
|
5
|
Working capital =
(current assets, less cash and cash equivalents, restricted cash
and project-related intangibles) – (current liabilities, less
current maturities of long-term debt and project-related intangible
liabilities).
|
Cash and Liquidity
Cash used by operating activities in the first quarter of 2019
was $(244) million. This primarily
reflected the company's net loss and the usage of cash on the
Cameron and Freeport LNG projects.
Total cash availability was $1.1
billion at March 31, 2019,
consisting of $413 million of
unrestricted cash and $714 million of
availability under McDermott's revolving credit facility. As of
March 31, 2019, McDermott had
$1.7 billion of combined availability
under its principal letter of credit facilities, uncommitted
bilateral credit facilities and surety arrangements. McDermott was
in compliance with all financial covenants under its financing
arrangements as of March 31, 2019.
Pipe and Tank Sale
The sale processes for each of the pipe fabrication and tank
businesses is going well and as planned. The sale process has
generated a high level of interest for both. The sale of the pipe
fabrication business is expected to close in Q2 2019 and the sale
of the tank business is expected to close in Q3 2019.
Combination Profitability Initiative
McDermott's $475 million CPI
program was fully actioned as of the end of the first quarter of
2019. However, integration of certain program elements,
such as information technology systems, is ongoing. McDermott's
operating results for the three months ended March 31, 2019 include approximately $66 million of such savings. The full benefit of
the annualized run-rate synergies, partially offset by inflation,
competitive pricing and the impact of percentage of completion
accounting, is expected in 2020. The company expects that it will
continue to invest in opportunities to capture additional
efficiencies and cost savings over time.
Reporting Segment Update
McDermott's segment reporting is presented as: North, Central
and South America, or NCSA;
Europe, Africa, Russia and Caspian, or EARC; Middle East and North Africa, or MENA; Asia Pacific, or APAC; and Technology, or
TECH. The company also reports results for Corporate. Segment and
Corporate results are summarized below.
Segment Financial
Highlights
|
Three Months Ended
Mar 31, 2019
|
|
|
Segment Operating
Results
|
|
|
|
|
|
|
|
|
|
NCSA
|
|
|
EARC
|
|
|
MENA
|
|
|
APAC
|
|
|
TECH
|
|
|
Corporate
|
|
Total
|
|
|
($ in
millions)
|
|
New Orders
|
$
|
4,307
|
|
|
$
|
684
|
|
|
$
|
1,425
|
|
|
$
|
137
|
|
|
$
|
117
|
|
|
$
|
-
|
|
$
|
6,670
|
|
Backlog1
|
|
8,581
|
|
|
|
1,915
|
|
|
|
2,879
|
|
|
|
1,401
|
|
|
|
601
|
|
|
-
|
|
|
15,377
|
|
Revenue
|
|
1,380
|
|
|
|
148
|
|
|
|
380
|
|
|
|
155
|
|
|
|
148
|
|
|
-
|
|
|
2,211
|
|
Book-to-Bill
|
|
3.1
|
x
|
|
|
4.6
|
x
|
|
|
3.8
|
x
|
|
|
0.9
|
x
|
|
|
0.8
|
x
|
|
|
-
|
|
|
3.0
|
x
|
Operating Income
(Loss)
|
|
73
|
|
|
|
7
|
|
|
|
66
|
|
|
|
13
|
|
|
|
35
|
|
|
|
(181)
|
|
|
13
|
|
Operating
Margin
|
|
5.3
|
%
|
|
|
4.7
|
%
|
|
|
17.4
|
%
|
|
|
8.4
|
%
|
|
|
23.6
|
%
|
|
|
-
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income (Loss)2
|
|
73
|
|
|
|
7
|
|
|
|
66
|
|
|
|
13
|
|
|
|
35
|
|
|
|
(108)
|
|
|
86
|
|
Adjusted Operating
Margin2
|
|
5.3
|
%
|
|
|
4.7
|
%
|
|
|
17.4
|
%
|
|
|
8.4
|
%
|
|
|
23.6
|
%
|
|
|
-
|
|
|
3.9
|
%
|
Capex
|
|
2
|
|
|
|
-
|
|
|
|
4
|
|
|
|
5
|
|
|
|
-
|
|
|
|
7
|
|
|
18
|
|
|
Note: All amounts
have been rounded to the nearest million. Individual line
items may not sum to totals as a result of rounding.
|
Product Offering
Financial Highlights
|
Three Months Ended
Mar 31, 2019
|
|
Offshore
& Subsea
|
|
LNG
|
|
Downstream
|
|
Power
|
|
Total
|
|
(In
millions)
|
New Orders
|
$
|
2,365
|
|
$
|
3,851
|
|
$
|
428
|
|
$
|
26
|
|
$
|
6,670
|
Backlog
|
|
5,113
|
|
|
4,620
|
|
|
4,779
|
|
|
865
|
|
|
15,377
|
Revenue
|
|
611
|
|
|
414
|
|
|
860
|
|
|
326
|
|
|
2,211
|
|
|
1
|
Our backlog is equal
to our Remaining Performance Obligations (RPOs) as determined in
accordance with U.S. GAAP.
|
2
|
Adjusted Operating
Income (Loss) and Margin, by segment, are non-GAAP measures.
Reconciliations to the most comparable GAAP measures are provided
in the appendix entitled "Reconciliation of Segment Non-GAAP to
GAAP Financial Measures."
|
North, Central and South
America (NCSA)
Major drivers of NCSA revenues of $1.4
billion were the Cameron LNG, Freeport LNG, Entergy Power
and Total Ethane Cracker projects. Operating income and margin for
NCSA were $73 million and 5.3%,
respectively, during the quarter. Key contributors to operating
income were the Total Ethane Cracker, LACC ethylene cracker, LA-MEG
petrochemical, Shintech ethylene cracker, Entergy Lake Charles
power and Entergy Montgomery County power projects.
Generating the largest share of revenues and having
responsibility for executing the largest projects to date in the
entire portfolio, NCSA accomplished a number of key operational
achievements in the quarter, including substantial completion on
the Calpine power project, resulting in the combined-cycle gas
turbine power station being turned over to the customer to begin
commercial operations. The Cameron LNG project was 90% complete as
of the end of the first quarter, with Phase 1 achieving mechanical
completion during the period. Cameron is scheduled for initial production of
LNG this quarter. Initial production of LNG from Trains 2 and 3 at
Cameron is scheduled for Q1 of
2020 and Q2 of 2020, respectively. The Freeport LNG project
progressed, reaching 93% completion as of the end of the first
quarter and received FERC approval on April
18 to bring in fuel gas for pre-commissioning of the
pretreatment facility. Initial production of LNG from Freeport trains 1, 2 and 3 is expected in Q3
2019, Q4 2019 and Q1 2020, respectively. The LACC project, which
will include a 1 million ton per year ethylene cracker and a mono
ethylene glycol plant, achieved mechanical completion during the
quarter. The Borstar Bay 3 polymers project continues with early
site preparation and the Entergy Montgomery County project
continued with the commencement of construction. Additionally, with
its joint venture members, the segment booked its share of a
strategically important win, with the award of the Golden Pass LNG
project, a three-train LNG facility in Sabine Pass, Texas. Engineering and early
procurement activities are underway.
Europe, Africa, Russia and Caspian (EARC)
Revenues of $148 million in EARC
were primarily driven by engineering and procurement progress on
the Total Tyra offshore project, procurement on the Afipsky
refinery project and construction on the Lukoil refinery project.
Operating income and margin for EARC were $7
million and 4.7% during the quarter. Key contributors were
the Total Tyra and Afipsky projects.
The BP Tortue EPCI project was awarded during the quarter as a
pull-through from the recently completed FEED work. This contract
marks a number of firsts: our first significant subsea EPCI project
in West Africa; the first project
using our state-of-the-art pipelay vessel Amazon; and our support
of BP's first entry into Senegal
and Mauritania. The project is
working through set-up activities and is in preparation for
procurement of long-lead items. Other key operational achievements
in the quarter included significant progress on the construction
phase of the Lukoil project, which is now approximately 21%
complete overall. Engineering and fabrication progress continues on
both packages of the Total Tyra project, which marked McDermott's
return to the North Sea. The project recently achieved a safety
milestone of 460 days without a lost-time incident. Additionally,
the Afipsky project continued to progress on its procurement
scope.
Middle East and North Africa (MENA)
Revenues of $380 million in MENA
were primarily driven by procurement, fabrication, marine and
hook-up activity on several offshore projects, including Saudi
Aramco Safaniya Phases 5 and 6, QP Bul Hanine, and Saudi Aramco LTA
II, as well as engineering, procurement and construction on several
onshore projects, including the ADNOC Crude Flexibility refinery,
SASREF refinery and Liwa petrochemical EPC lump-sum projects.
Operating income and margin for MENA were $66 million and 17.4%, respectively, during the
quarter, with the same drivers as noted above for revenues.
MENA's strong market position in the region's offshore market
contributed to a number of operational achievements in the quarter,
including substantially completing the Saudi Aramco LTA II project,
with the Berri hook-up campaign remaining. The Saudi Aramco
Safaniya projects progressed well, with commercial close-out
activities taking place on Phase 5 and engineering and long-lead
procurement substantially complete and marine and hook-up
activities commencing on Phase 6. This project builds on the legacy
of successfully executed projects under the LTA II contract. Saudi
Aramco Marjan TP-10 was awarded during the quarter. This contract
includes design, procurement, fabrication and installation, testing
and pre-commissioning of the TP-10 tie-in platform, six gas lift
topside modules and associated pipeline and subsea cables. The
project is in the initial engineering phase and purchase orders are
being placed for long-lead procurement items. The ADNOC Crude
Flexibility project continued to progress well with manufacturing
of critical equipment well underway and mobilization of the storage
group for the tank scope.
Asia Pacific (APAC)
Revenues of $155 million in APAC
were driven by substantial completion of the offshore campaign for
the Reliance KG-D6 subsea project in India and various other projects across the
region. Operating income and margin for APAC were $13 million and 8.4%, respectively, during the
quarter, primarily driven by various projects and closeouts across
the region.
The segment continued to make progress during the quarter in
delivering a best-in-class solution on the ONGC KG-DWN 98/2 subsea
project with cost-efficiency and industry leading safety, with the
set-up of the project management and commencement of engineering.
The project is being executed in a consortium with Baker Hughes GE
and Larsen and Toubro. The DLV 2000 successfully completed its
scope, including a pipeline installation, on the KG-D6 project. The
Woodside Scarborough FEED commenced during the quarter. The FEED is
for a floating production unit for the Scarborough field gas
development in Western Australia
and, upon completion, the contract includes a mechanism for
conversion to an EPCI contract pending FID by the customer. The
Batam Fabrication Yard achieved an impressive 50 million manhours
lost-time incident-free as it continues to ramp-up to support
projects globally. The JG Summit Storage Tank project is
progressing with tanks and sphere erection ramping up.
Technology (TECH)
Revenues of $148 million were
primarily driven by licensing and proprietary supply, including
catalyst sales, in the petrochemicals and refining markets.
Operating income and margin for TECH were $35 million and 23.6%, respectively, during the
quarter, primarily driven by catalyst shipments, execution
progress, earned fees and process performance.
With its position as a leading global supplier of technology
licenses to the growing ethylene and propylene markets, the
Technology segment continued to demonstrate its strong market
position, with the creation of a new ethylene and petrochemicals
task force that has identified more than $39
billion of potential pull-through EPC opportunities related
to the complete Lummus Technology portfolio, including the
segment's CLG joint venture. In the refining market, the segment
has introduced the next generation of our HYDROCAT® CDModules®
system catalyst to provide a more efficient desulfurization process
for our customer's production of ultra-low sulfur gasoline; and
several new awards in China,
Kuwait and Saudi Arabia.
Corporate
Corporate expenses include various corporate and other
non-operating activities. Corporate expense in the first quarter of
2019 was $181 million, mainly
attributable to selling, general, administrative and other expenses
of $48 million; $54 million of unallocated operating costs;
$69 million of costs for
restructuring and integration and $4
million of transaction-related costs associated with the
ongoing process to sell the company's non-core storage tank and
pipe fabrication businesses.
Revenue Opportunity Pipeline
McDermott's revenue opportunity pipeline consists of Backlog,
Bids & Change Orders Outstanding and Target Projects, which are
those projects McDermott expects to be awarded in the market in the
next five quarters. McDermott defines Backlog as Remaining
Performance Obligations (RPOs) as determined in accordance with
GAAP.
At the end of the first quarter of 2019, McDermott's revenue
opportunity pipeline was approximately $91
billion, primarily driven by NCSA and MENA with continuing
momentum in the pace of new awards in the offshore/subsea,
downstream and LNG markets.
Revenue
Opportunity Pipeline
|
As
of
|
|
|
|
|
Mar 31,
2019
|
|
Dec 31,
2018
|
|
Sep 30,
2018
|
|
Jun 30,
2018
|
|
Mar 31,
2018
|
|
|
|
|
($ in
billions)
|
|
|
|
Backlog
|
$
|
15.4
|
|
$
|
10.9
|
|
$
|
11.5
|
|
$
|
10.2
|
|
$
|
3.4
|
|
|
|
Bids & Change
Orders Outstanding1
|
|
17.7
|
|
|
20.3
|
|
|
20.7
|
|
|
19.0
|
|
|
7.5
|
|
|
|
Targets2
|
|
58.0
|
|
|
61.9
|
|
|
48.1
|
|
|
49.3
|
|
|
14.1
|
|
|
|
Total
|
|
91.1
|
|
|
93.1
|
|
|
80.3
|
|
|
78.5
|
|
|
25.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
Opportunity Pipeline by Segment
|
As of Mar 31,
2019
|
|
NCSA
|
|
EARC
|
|
MENA
|
|
APAC
|
|
TECH
|
|
Total
|
|
($ in
billions)
|
Backlog
|
$
|
8.6
|
|
$
|
1.9
|
|
$
|
2.9
|
|
$
|
1.4
|
|
$
|
0.6
|
|
$
|
15.4
|
Bids & Change
Orders Outstanding1
|
|
1.4
|
|
|
7.7
|
|
|
5.9
|
|
|
2.7
|
|
|
-
|
|
|
17.7
|
Targets2
|
|
24.9
|
|
|
7.6
|
|
|
17.4
|
|
|
6.5
|
|
|
1.6
|
|
|
58.0
|
Total
|
|
34.9
|
|
|
17.2
|
|
|
26.2
|
|
|
10.6
|
|
|
2.2
|
|
|
91.1
|
|
Note: All amounts
have been rounded to the nearest tenth of a billion. Individual
line items may not sum to totals as a result of
rounding.
|
|
1
|
There is no assurance
that bids outstanding will be awarded to McDermott or that
outstanding change orders ultimately will be approved and paid by
the applicable customers in the full amounts requested or at
all.
|
2
|
Target projects are
those that McDermott has identified as anticipated to be awarded by
customers or prospective customers in the next five quarters
through competitive bidding processes and capable of being
performed by McDermott. There is no assurance that target projects
will be awarded to McDermott or at all.
|
2019 Guidance
McDermott is updating its previous 2019 guidance. Guidance is
based on the company's existing portfolio of businesses. McDermott
expects operating performance in the second half of 2019 to be
stronger than the first half, reflecting higher revenues, execution
of recently booked backlog, higher utilization and cost synergies
under the CPI.
|
|
Full Year 2019
Guidance
|
|
|
($ in millions,
except per share
amounts or as indicated)
|
Revenues
|
|
~$10.0B
|
Operating
Income
|
|
~$660
|
Operating
Margin
|
|
~6.6%
|
Net Interest
Expense1
|
|
~$380
|
Income Tax
Expense
|
|
~$65
|
Accretion of
Redeemable Preferred Stock
|
|
~$15
|
Dividends on
Redeemable Preferred Stock
|
|
~$36
|
Net Income
|
|
~$170
|
Diluted Net Income,
Per Share
|
|
~$0.90
|
Diluted Share
Count
|
|
~188
|
EBITDA2
|
|
~$945
|
Corporate and Other
Operating Income (Expense)3
|
|
~$(520)
|
|
|
|
Adjustment
|
|
|
Restructuring and
Integration Costs4
|
|
~$120
|
Transactions
Costs5
|
|
~$20
|
|
|
|
Adjusted Earnings
Metrics
|
|
|
Adjusted Operating
Income2
|
|
~$800
|
Adjusted Operating
Margin2
|
|
~8%
|
Adjusted Net
Income2
|
|
~$310
|
Adjusted Diluted
EPS2
|
|
~$1.65
|
Adjusted
EBITDA2
|
|
~$1.1B
|
|
|
|
Cash Flow &
Other Metrics
|
|
|
Cash from Operating
Activities
|
|
~$(310)
|
Capex
|
|
~$(160)
|
Free Cash
Flow2
|
|
~$(470)
|
Cash Interest / DIC
Amortization Interest
|
|
~$345 /
~$40
|
Cash Taxes
|
|
~$65
|
|
|
|
Cash, Restricted Cash
and Cash Equivalents
|
|
~$545
|
Gross
Debt6
|
|
~$3,700
|
Net Working
Capital
|
|
~$(1.3)B
|
|
|
1
|
Net interest expense
is gross interest expense less capitalized interest and interest
income.
|
2
|
The calculations of
EBITDA, adjusted operating income, adjusted operating margin,
adjusted net income, adjusted diluted EPS, adjusted EBITDA and free
cash flow, which are non-GAAP measures, are shown in the appendix
entitled "Reconciliation of Forecast Non-GAAP Financial Measures to
Forecast GAAP Financial Measures."
|
3
|
Corporate and other
operating Income (expense) represents the operating income
(expense) from corporate and non-operating activities, including
certain centrally managed initiatives, such as restructuring and
integration costs and costs to achieve the CPI, impairments, annual
mark-to-market pension adjustments, costs not attributable to a
particular reporting segment, and unallocated direct operating
expenses associated with the underutilization of vessels,
fabrication facilities and engineering resources.
|
4
|
Restructuring and
integration costs, including costs to achieve the
CPI.
|
5
|
Transaction costs
associated with the ongoing process to sell the company's non-core
storage tank and U.S. pipe fabrication businesses.
|
6
|
Ending gross debt
excludes debt issuance costs and operating and finance lease
obligations.
|
Conference
Call
McDermott has scheduled a conference call and webcast related to
its first quarter 2019 results at 7:30
a.m., U.S. Central time, today. Shareholders and other
interested parties are invited to listen to the call by
visiting www.mcdermott-investors.com or by calling
1-706-634-2259 (Conference ID: 8784976). A presentation of
supplemental financial information will be available on McDermott's
Investor Relations site at that time. A replay of the webcast
will be available on McDermott's website for seven days after the
call.
About McDermott
McDermott is a premier, fully integrated provider of technology,
engineering and construction solutions to the energy industry. For
more than a century, customers have trusted McDermott to design and
build end-to-end infrastructure and technology solutions to
transport and transform oil and gas into the products the world
needs today. Our proprietary technologies, integrated expertise and
comprehensive solutions deliver certainty, innovation and added
value to energy projects around the world. Customers rely on
McDermott to deliver certainty to the most complex projects, from
concept to commissioning. It is called the "One McDermott Way."
Operating in over 54 countries, McDermott's locally focused and
globally integrated resources include approximately 32,000
employees and engineers, a diversified fleet of specialty marine
construction vessels and fabrication facilities around the world.
To learn more, visit www.mcdermott.com.
Non-GAAP Measures
This communication includes several "non-GAAP" financial
measures as defined under Regulation G of the U.S. Securities
Exchange Act of 1934, as amended. We report our financial results
in accordance with GAAP but believe that certain non-GAAP financial
measures provide useful supplemental information to investors
regarding the underlying business trends and performance of our
ongoing operations and are useful for period-over-period
comparisons of those operations. The forecast non-GAAP measures we
have presented in this communication include forecast EBITDA,
adjusted operating income (loss), adjusted operating income margin,
adjusted net income, adjusted diluted EPS, free cash flow, EBITDA
and adjusted EBITDA. We believe these forward-looking financial
measures are within reasonable measure.
Non-GAAP measures include adjusted operating income (loss),
adjusted operating income margin, adjusted net income, adjusted
diluted EPS, free cash flow, EBITDA and adjusted EBITDA, in each
case excluding the impacts of certain identified items. The
excluded items represent items that our management does not
consider to be representative of our normal operations. We believe
that these metrics are useful for investors to review, because they
provide more consistent measures of the underlying financial
results of our ongoing business and, in our management's view,
allow for a supplemental comparison against historical results and
expectations for future performance. Furthermore, our management
uses each of these metrics as measures of the performance of our
operations for budgeting and forecasting, as well as employee
incentive compensation. However, Non-GAAP measures should not be
considered as substitutes for operating income, net income or other
data prepared and reported in accordance with GAAP and should be
viewed in addition to our reported results prepared in accordance
with GAAP.
We define free cash flow as cash flows from operations less
capital expenditures. We believe investors consider free cash flow
as an important measure, because it generally represents funds
available to pursue opportunities that may enhance stockholder
value, such as making acquisitions or other investments. Our
management uses free cash flow for that reason. We define EBITDA as
net income plus depreciation and amortization, interest expense,
net, provision for income taxes and accretion and dividends from
redeemable preferred stock. We define adjusted EBITDA as EBITDA
adjusted to exclude significant, non-recurring transactions to our
operating income, both gains and charges. We have included
EBITDA and adjusted EBITDA disclosures in this communication
because EBITDA is widely used by investors for valuation and
comparing our financial performance with the performance of other
companies in our industry. Our management also uses EBITDA and
adjusted EBITDA to monitor and compare the financial performance of
our operations. EBITDA and adjusted EBITDA do not give effect to
the cash that we must use to service our debt or pay our income
taxes, and thus do not reflect the funds actually available for
capital expenditures, dividends or various other purposes. Our
presentations of free cash flow, EBITDA and adjusted EBITDA may not
be comparable to similarly titled measures in other companies'
reports. You should not consider free cash flow, EBITDA and
adjusted EBITDA in isolation from, or as substitutes for, net
income or cash flow measures prepared in accordance with U.S.
GAAP.
Reconciliations of these non-GAAP financial measures and
forecast non-GAAP financial measures to the most comparable GAAP
measures are provided in the tables included in this
communication.
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 communication which are forward-looking, and
provide other than historical information, involve risks,
contingencies and uncertainties that may impact actual results of
operations of McDermott. These forward-looking statements include,
among other things, statements about 2019 guidance, project
milestones and percentage of completion and expected timetables,
cost estimates on identified projects, cost recoveries and
schedule-based incentives on projects, assessments and beliefs with
respect to legacy CB&I projects (including the three Focus
projects), the market outlook, backlog, bids and change orders
outstanding, target projects and revenue opportunity pipeline, to
the extent these may be viewed as indicators of future revenues or
profitability, the potential for FEEDs to convert to full EPCI
awards, the contemplated sale of the U.S. pipe fabrication and tank
storage businesses and the anticipated timing from those
transactions, targeted savings from cost synergies and the other
expected impacts of the CPI, including anticipated CPI
implementation costs, the expected timing for completion of the
CPI, other opportunities to capture efficiencies and cost savings,
our potential and our beliefs with respect to the combination with
CB&I. 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 risks, contingencies and uncertainties,
including, among others: the possibility that the expected CPI
savings will not be realized, or will not be realized within the
expected time period; adverse changes in the markets in which
McDermott operates or credit markets; the inability of McDermott to
execute on contracts in backlog successfully; changes in project
design or schedules; the availability of qualified personnel;
changes in the terms, scope or timing of contracts; contract
cancellations; change orders and other modifications and actions by
customers and other business counterparties of McDermott; changes
in industry norms; and adverse outcomes in legal or other dispute
resolution proceedings. If one or more of these risks materialize,
or if underlying assumptions prove incorrect, actual results may
vary materially from those expected. You should not place undue
reliance on forward-looking statements. For a more complete
discussion of these and other risk factors, please see each of
McDermott's annual and quarterly filings with the U.S. Securities
and Exchange Commission, including McDermott's annual report on
Form 10-K for the year ended December 31,
2018 and subsequent quarterly report on Form 10-Q. This
communication reflects the views of McDermott's management 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.
Contact:
Investors & Financial Media
Scott Lamb
Vice President, Investor Relations
+1 832.513.1068
scott.lamb@mcdermott.com
Global Media Relations
Gentry Brann
Global Vice President, Communications and Marketing
+1 281.870.5269
Gentry.Brann@McDermott.com
START OF APPENDIX
McDERMOTT
INTERNATIONAL, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
Three months ended
March 31,
|
|
|
2019
|
|
2018
|
|
|
(In millions,
except per share amounts)
|
Revenues
|
|
$
|
2,211
|
|
$
|
608
|
|
|
|
|
|
|
|
Costs and
Expenses:
|
|
|
|
|
|
|
Cost of
operations
|
|
|
2,018
|
|
|
476
|
Project intangibles
and inventory-related amortization
|
|
|
10
|
|
|
-
|
Total cost of
operations
|
|
|
2,028
|
|
|
476
|
Research and
development expenses
|
|
|
8
|
|
|
-
|
Selling, general and
administrative expenses
|
|
|
72
|
|
|
48
|
Other intangibles
amortization
|
|
|
22
|
|
|
-
|
Transaction
costs
|
|
|
4
|
|
|
3
|
Restructuring and
integration costs
|
|
|
69
|
|
|
12
|
Other operating
expense, net
|
|
|
1
|
|
|
-
|
Total
expenses
|
|
|
2,204
|
|
|
539
|
|
|
|
|
|
|
|
Income (loss) from
investments in unconsolidated affiliates
|
|
|
9
|
|
|
(4)
|
Investment in
unconsolidated affiliates-related amortization
|
|
|
(3)
|
|
|
-
|
Operating
income
|
|
|
13
|
|
|
65
|
|
|
|
|
|
|
|
Other
expense:
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(92)
|
|
|
(12)
|
Other non-operating
income, net
|
|
|
1
|
|
|
2
|
Total other expense,
net
|
|
|
(91)
|
|
|
(10)
|
|
|
|
|
|
|
|
(Loss) income before
provision for income taxes
|
|
|
(78)
|
|
|
55
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
|
|
(21)
|
|
|
21
|
|
|
|
|
|
|
|
Net (loss)
income
|
|
|
(57)
|
|
|
34
|
|
|
|
|
|
|
|
Less: Net loss
attributable to noncontrolling interests
|
|
|
(1)
|
|
|
(1)
|
|
|
|
|
|
|
|
Net (loss) income
attributable to McDermott
|
|
$
|
(56)
|
|
$
|
35
|
|
|
|
|
|
|
|
Dividends on
redeemable preferred stock
|
|
|
(10)
|
|
|
-
|
Accretion of
redeemable preferred stock
|
|
|
(4)
|
|
|
-
|
|
|
|
|
|
|
|
Net (loss) income
attributable to common stockholders
|
|
|
(70)
|
|
|
35
|
|
|
|
|
|
|
|
Net (loss) income per
share attributable to common stockholders
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.39)
|
|
$
|
0.37
|
Diluted
|
|
$
|
(0.39)
|
|
$
|
0.37
|
|
|
|
|
|
|
|
Shares used in the
computation of net (loss) income per share
|
|
|
|
|
|
|
Basic
|
|
|
181
|
|
|
95
|
Diluted
|
|
|
181
|
|
|
95
|
McDERMOTT
INTERNATIONAL, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
(In millions,
except per share
amounts)
|
Assets
|
(Unaudited)
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents ($142 and $146 related to variable interest entities
("VIEs"))
|
$
|
413
|
|
$
|
520
|
Restricted cash
and cash equivalents
|
|
326
|
|
|
325
|
Accounts
receivable—trade, net ($15 and $29 related to VIEs)
|
|
977
|
|
|
932
|
Accounts
receivable—other ($49 and $57 related to VIEs)
|
|
149
|
|
|
175
|
Contracts in
progress ($245 and $144 related to VIEs)
|
|
1,006
|
|
|
704
|
Project-related
intangible assets, net
|
|
114
|
|
|
137
|
Inventory
|
|
106
|
|
|
101
|
Other current
assets ($29 and $24 related to VIEs)
|
|
148
|
|
|
139
|
Total current
assets
|
|
3,239
|
|
|
3,033
|
Property, plant
and equipment, net
|
|
2,051
|
|
|
2,067
|
Operating lease
right-of-use assets
|
|
401
|
|
|
-
|
Accounts
receivable—long-term retainages
|
|
69
|
|
|
62
|
Investments in
unconsolidated affiliates
|
|
453
|
|
|
452
|
Goodwill
|
|
2,681
|
|
|
2,654
|
Other
intangibles, net
|
|
979
|
|
|
1,009
|
Other
non-current assets
|
|
156
|
|
|
163
|
Total
assets
|
$
|
10,029
|
|
$
|
9,440
|
|
|
|
|
|
|
Liabilities,
Mezzanine Equity and Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Revolving credit
facility
|
$
|
178
|
|
$
|
-
|
Current
maturities of long-term debt
|
|
30
|
|
|
30
|
Current portion
of long-term lease obligations
|
|
97
|
|
|
8
|
Accounts payable
($326 and $277 related to VIEs)
|
|
949
|
|
|
595
|
Advance billings
on contracts ($541 and $717 related to VIEs)
|
|
1,618
|
|
|
1,954
|
Project-related
intangible liabilities, net
|
|
52
|
|
|
66
|
Accrued
liabilities ($94 and $136 related to VIEs)
|
|
1,694
|
|
|
1,564
|
Total current
liabilities
|
|
4,618
|
|
|
4,217
|
Long-term
debt
|
|
3,393
|
|
|
3,393
|
Long-term lease
obligations
|
|
394
|
|
|
66
|
Deferred income
taxes
|
|
47
|
|
|
47
|
Other
non-current liabilities
|
|
659
|
|
|
664
|
Total
liabilities
|
|
9,111
|
|
|
8,387
|
Commitments and
contingencies
|
|
|
|
|
|
Mezzanine
equity:
|
|
|
|
|
|
Redeemable preferred
stock
|
|
243
|
|
|
230
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock, par
value $1.00 per share, authorized 255 shares;
issued 184 and
183 shares, respectively
|
|
184
|
|
|
183
|
Capital in excess of
par value
|
|
3,545
|
|
|
3,539
|
Accumulated
deficit
|
|
(2,789)
|
|
|
(2,719)
|
Accumulated other
comprehensive loss
|
|
(165)
|
|
|
(107)
|
Treasury stock, at
cost: 3 and 3 shares, respectively
|
|
(96)
|
|
|
(96)
|
Total McDermott
Stockholders' Equity
|
|
679
|
|
|
800
|
Noncontrolling
interest
|
|
(4)
|
|
|
23
|
Total stockholders'
equity
|
|
675
|
|
|
823
|
Total liabilities and
stockholders' equity
|
$
|
10,029
|
|
$
|
9,440
|
McDERMOTT
INTERNATIONAL, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
Three months ended
March 31,
|
|
2019
|
|
2018
|
|
(In
millions)
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net (loss)
income
|
$
|
(57)
|
|
$
|
34
|
Non-cash items
included in net (loss) income:
|
|
|
|
|
|
Depreciation and
amortization
|
|
76
|
|
|
23
|
Debt issuance cost
amortization
|
|
11
|
|
|
2
|
Stock-based
compensation charges
|
|
6
|
|
|
3
|
Deferred
taxes
|
|
-
|
|
|
1
|
Changes in operating
assets and liabilities, net of effects of businesses
acquired:
|
|
|
|
|
|
Accounts
receivable
|
|
(87)
|
|
|
(68)
|
Contracts in progress,
net of advance billings on contracts
|
|
(638)
|
|
|
143
|
Accounts
payable
|
|
357
|
|
|
(90)
|
Other current and
non-current assets
|
|
12
|
|
|
(20)
|
Investments in
unconsolidated affiliates
|
|
(4)
|
|
|
4
|
Other current and
non-current liabilities
|
|
80
|
|
|
6
|
Total cash (used
in) provided by operating activities
|
|
(244)
|
|
|
38
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
|
(18)
|
|
|
(18)
|
Advances related to
proportionately consolidated consortiums
|
|
(114)
|
|
|
-
|
Investments in
unconsolidated affiliates
|
|
(1)
|
|
|
(2)
|
Total cash used in
investing activities
|
|
(133)
|
|
|
(20)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Revolving credit
facility borrowings
|
|
483
|
|
|
-
|
Revolving credit
facility repayments
|
|
(305)
|
|
|
-
|
Repayment of debt and
finance lease obligations
|
|
(8)
|
|
|
-
|
Advances related to
equity method joint ventures and proportionately consolidated
consortiums
|
|
116
|
|
|
-
|
Repurchase of common
stock
|
|
(4)
|
|
|
(7)
|
Distribution to joint
venture member
|
|
(5)
|
|
|
-
|
Total cash provided
by (used in) financing activities
|
|
277
|
|
|
(7)
|
|
|
|
|
|
|
Effects of
exchange rate changes on cash, cash equivalents and restricted
cash
|
|
(6)
|
|
|
-
|
Net (decrease)
increase in cash, cash equivalents and restricted
cash
|
|
(106)
|
|
|
11
|
Cash, cash
equivalents and restricted cash at beginning of
period
|
|
845
|
|
|
408
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
739
|
|
$
|
419
|
McDERMOTT
INTERNATIONAL, INC.
|
EARNINGS PER SHARE
COMPUTATION
|
|
|
|
|
|
|
|
Three months Ended
Mar 31
|
|
2019
|
|
2018
|
|
($ in millions,
except share and
per share amounts)
|
|
|
|
|
|
|
Net (loss) income
attributable to McDermott
|
$
|
(56)
|
|
$
|
35
|
Dividends on
redeemable preferred stock
|
|
(10)
|
|
|
-
|
Accretion of
redeemable preferred stock
|
|
(4)
|
|
|
-
|
Net (loss) income
attributable to common stockholders
|
$
|
(70)
|
|
$
|
35
|
|
|
|
|
|
|
Weighted average
common stock (basic)
|
181
|
|
95
|
Effect of dilutive
securities:
|
|
|
|
|
|
Stock-based
awards
|
|
-
|
|
|
-
|
Warrants and preferred
stock
|
|
-
|
|
|
-
|
Weighted average
common stock (diluted)
|
181
|
|
|
95
|
|
|
|
|
|
|
Net (loss) income per
share attributable to common stockholders
|
|
|
|
|
|
Basic:
|
$
|
(0.39)
|
|
$
|
0.37
|
Diluted:
|
$
|
(0.39)
|
|
$
|
0.37
|
|
|
|
|
|
|
SUPPLEMENTARY
DATA
|
|
|
|
|
|
|
|
Three months Ended
Mar 31
|
|
2019
|
|
2018
|
|
($ in
millions)
|
Depreciation &
amortization
|
$
|
76
|
|
$
|
23
|
Capital
expenditures
|
|
18
|
|
|
18
|
Backlog
|
|
15,377
|
|
|
3,387
|
McDermott reports its financial results in accordance with U.S.
generally accepted accounting principles ("GAAP"). This press
release also includes several Non-GAAP financial measures as
defined under the SEC's Regulation G. The following tables
reconcile certain Non-GAAP financial measures used in this press
release to comparable GAAP financial measures. Additional
reconciliations are provided in the accompanying tables.
McDERMOTT
INTERNATIONAL, INC.
|
|
RECONCILIATION OF
SEGMENT NON-GAAP TO GAAP FINANCIAL MEASURES
|
|
|
|
|
Three Months Ended
Mar 31, 2019
|
|
|
Segment Operating
Results
|
|
|
|
|
|
|
|
|
|
NCSA
|
|
|
EARC
|
|
|
MENA
|
|
|
APAC
|
|
|
TECH
|
|
|
Corporate
|
|
Total
|
|
|
($ in
millions)
|
|
Revenues
|
$
|
1,380
|
|
|
$
|
148
|
|
|
$
|
380
|
|
|
$
|
155
|
|
|
$
|
148
|
|
|
-
|
|
$
|
2,211
|
|
GAAP Operating
Income (Loss)
|
|
73
|
|
|
|
7
|
|
|
|
66
|
|
|
|
13
|
|
|
|
35
|
|
|
|
(181)
|
|
|
13
|
|
GAAP Operating
Margin
|
|
5.3
|
%
|
|
|
4.7
|
%
|
|
|
17.4
|
%
|
|
|
8.4
|
%
|
|
|
23.6
|
%
|
|
|
-
|
|
|
0.6
|
%
|
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring,
Integration & Transaction Costs1
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
73
|
|
|
73
|
|
Total Non-GAAP Adjustments
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
73
|
|
|
73
|
|
Non-GAAP Operating
Income (Loss)
|
$
|
73
|
|
|
$
|
7
|
|
|
$
|
66
|
|
|
$
|
13
|
|
|
$
|
35
|
|
|
$
|
(108)
|
|
$
|
86
|
|
Non-GAAP Adjusted
Operating Margin
|
|
5.3
|
%
|
|
|
4.7
|
%
|
|
|
17.4
|
%
|
|
|
8.4
|
%
|
|
|
23.6
|
%
|
|
|
-
|
|
|
3.9
|
%
|
|
Note:
Individual line items may not sum to totals as a result of
rounding.
|
|
1
|
Restructuring and
integration costs of $69 million, which included costs to implement
our CPI program, change in control, severance, professional fees
and settlement of litigation – as well as $4 million of transaction
costs associated with the ongoing process to sell the company's
non-core storage tank and pipe fabrication businesses during the
three months ended March 31, 2019.
|
McDERMOTT
INTERNATIONAL, INC.
|
RECONCILIATION OF
NON-GAAP TO GAAP FINANCIAL MEASURES
|
|
|
Three months
Ended
|
|
|
Mar 31,
2019
|
|
|
Mar 31,
2018
|
|
|
($ in millions,
except share and per
share amounts)
|
|
|
|
|
|
|
|
|
|
GAAP Net Income
Attributable to Common Stockholders
|
$
|
(70)
|
|
|
$
|
35
|
|
|
|
|
|
|
|
|
|
Less:
Adjustments
|
|
|
|
|
|
|
|
Transaction
costs1
|
|
4
|
|
|
|
3
|
|
Restructuring and
integration costs2
|
|
69
|
|
|
|
11
|
|
Total Non-GAAP
Adjustments
|
|
73
|
|
|
|
14
|
|
Tax Effect of Non-GAAP
Gains and/or Charges3
|
|
-
|
|
|
|
-
|
|
Total Non-GAAP
Adjustments (After Tax)
|
|
73
|
|
|
|
14
|
|
Non-GAAP Adjusted
Net Income Attributable to Common Stockholders
|
$
|
3
|
|
|
$
|
49
|
|
|
|
|
|
|
|
|
|
GAAP Operating
Income
|
$
|
13
|
|
|
$
|
65
|
|
Non-GAAP
Adjustments
|
|
73
|
|
|
|
14
|
|
Non-GAAP Adjusted
Operating Income
|
$
|
86
|
|
|
$
|
79
|
|
Non-GAAP Adjusted
Operating Margin
|
|
3.9
|
%
|
|
|
13.0
|
%
|
|
|
|
|
|
|
|
|
GAAP Diluted
EPS
|
$
|
(0.39)
|
|
|
$
|
0.37
|
|
Non-GAAP
Adjustments
|
|
0.41
|
|
|
|
0.15
|
|
Non-GAAP Adjusted
Diluted EPS
|
$
|
0.02
|
|
|
$
|
0.52
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of income per share:
|
|
|
|
|
|
|
|
Basic
|
|
181
|
|
|
|
95
|
|
Diluted
|
|
181
|
|
|
|
95
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Common Stockholders
|
$
|
(70)
|
|
|
$
|
35
|
|
Depreciation and
Amortization
|
|
76
|
|
|
|
23
|
|
Interest Expense,
Net
|
|
92
|
|
|
|
11
|
|
Provision for Income
Taxes
|
|
(21)
|
|
|
|
21
|
|
Accretion and
Dividends on redeemable preferred stock
|
|
14
|
|
|
|
-
|
|
EBITDA4
|
|
91
|
|
|
|
90
|
|
Non-GAAP
Adjustments
|
|
73
|
|
|
|
14
|
|
Adjusted
EBITDA4
|
$
|
164
|
|
|
$
|
104
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities
|
$
|
(244)
|
|
|
$
|
38
|
|
Capital
expenditures
|
|
(18)
|
|
|
|
(18)
|
|
Free cash
flow
|
$
|
(262)
|
|
|
$
|
20
|
|
|
|
|
|
|
|
|
|
GAAP
Revenues
|
$
|
2,211
|
|
|
$
|
608
|
|
|
Note: Individual line
items may not sum to totals as a result of rounding.
|
|
1
|
Transaction costs in
Q1 2019 were associated with the ongoing process to sell our
non-core storage tank and U.S. pipe fabrication businesses.
Transaction costs in Q1 2018 were associated with the
Combination.
|
2
|
Restructuring and
integration costs, including costs to achieve the CPI.
|
3
|
The adjustments to
GAAP Net (Loss) Income have been income tax effected when included
in net income based upon the respective tax jurisdictions the
adjustments were incurred in. No income tax effect has been
taken on Non-GAAP charges as charges incurred in the United States,
where we do not expect to receive income tax benefits.
|
4
|
We define EBITDA as
net income plus depreciation and amortization, interest expense,
net, provision for income taxes and accretion and dividends on
redeemable preferred stock. We define adjusted EBITDA as
EBITDA adjusted to exclude significant, non-recurring transactions,
both gains and charges, to our operating income as described in
footnotes 1 and 2 above. We have included EBITDA and adjusted
EBITDA disclosures in this press release because EBITDA is widely
used by investors for valuation and comparing our financial
performance with the performance of other companies in our industry
and because adjusted EBITDA provides a consistent measure of EBITDA
relating to our underlying business. Our management also uses
EBITDA and adjusted EBITDA to monitor and compare the financial
performance of our operations. EBITDA and adjusted EBITDA do
not give effect to the cash that we must use to service our debt or
pay our income taxes, and thus do not reflect the funds actually
available for capital expenditures, dividends or various other
purposes. In addition, our presentation of EBITDA and
adjusted EBITDA may not be comparable to similarly titled measures
in other companies' reports. You should not consider EBITDA or
adjusted EBITDA in isolation from, or as a substitute for, net
income or cash flow measures prepared in accordance with U.S.
GAAP.
|
McDERMOTT
INTERNATIONAL, INC.
|
RECONCILIATION OF
FORECAST NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL
MEASURES
|
|
|
|
Full Year 2019
Guidance
|
|
|
($ in millions,
except per share
amounts or as indicated)
|
Revenues
|
|
~$10.0B
|
|
|
|
Operating
Income
|
|
~$660
|
Operating
Margin
|
|
~6.6%
|
Restructuring,
integration & transaction costs
|
|
~$140
|
Total Non-GAAP
Adjustments
|
|
~$140
|
Adjusted Operating
Income
|
|
~$800
|
Adjusted
Operating Margin
|
|
~8%
|
|
|
|
Net
Income
|
|
~$170
|
Total Non-GAAP
Adjustments
|
|
~$140
|
Tax Impact of
Adjustments
|
|
~$ -
|
Adjusted Net
Income
|
|
~$310
|
Diluted Share
Count
|
|
~188
|
Adjusted Diluted
EPS
|
|
~$1.65
|
|
|
|
Cash Flows from
Operating Activities
|
|
~$(310)
|
Capital
Expenditures
|
|
~$(160)
|
Free Cash
Flow
|
|
~$(470)
|
|
|
|
GAAP Net Income
(Loss) Attributable to Common Stockholders
|
|
~$170
|
Add:
|
|
|
Depreciation and
amortization
|
|
~$280
|
Interest expense,
net
|
|
~$380
|
Provision for
taxes
|
|
~$65
|
Accretion of
Redeemable Preferred Stock
|
|
~$15
|
Dividends on
Redeemable Preferred Stock
|
|
~$36
|
EBITDA
|
|
~$945
|
Restructuring,
integration & transaction costs
|
|
~$140
|
Adjusted
EBITDA
|
|
~$1.1B
|
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SOURCE McDermott International, Inc.