McDermott Q1 Results Affected by Weather, Record Backlog of $1.8B
McDermott International, Inc. reported net income of $123.2 million, or $0.54 per diluted share, for the 2008 first quarter, compared to net income of $158.1 million, or $0.69 per diluted share, for the corresponding period in 2007. Weighted average common shares outstanding on a fully diluted basis were approximately 230.1 million and 228.4 million in the quarters ended March 31, 2008 and March 31, 2007, respectively. For 2007, the Company's common shares outstanding and earnings per share are adjusted to reflect the 2-for-1 stock split effected in September 2007.
McDermott's revenues in the first quarter of 2008 were $1,450.4 million, an increase of 6.4 percent compared to $1,363.4 million in the corresponding period in 2007. The consolidated improvement in Company revenues, compared to a year ago, was a result of increases in the Offshore Oil & Gas Construction and Government Operations segments, partially offset by a decline in the Power Generation Systems segment.
Operating income was $157.1 million in the 2008 first quarter compared to $192.5 million in the 2007 first quarter. Year-over-year increases in the Power Generation Systems and Government Operations segments, totaling a combined $36 million, were more than offset by a $68.3 million decline segment income from the Offshore Oil & Gas Construction segment, primarily due to weather-related downtime in the 2008 first quarter and a lower amount of project close-outs, change orders and settlements compared to the first quarter of 2007.
"Despite a disruptive first quarter for Offshore Oil & Gas Construction, the outlook for all of our business segments remains strong for 2008 as we execute our record backlog and continue robust bidding activity," said Bruce W. Wilkinson, Chairman of the Board and Chief Executive Officer of McDermott. "Each of the energy markets we serve has significant needs, and with our record of safe and timely execution, McDermott is well-positioned in the marketplace."
At March 31, 2008, McDermott's consolidated backlog was $10.2 billion, compared to $7.9 billion and $9.8 billion at March 31, 2007 and December 31, 2007, respectively.
Offshore Oil & Gas Construction Segment
Revenues in the Offshore Oil & Gas Construction segment were $645.9 million in the 2008 first quarter, compared to $550.3 million for the same period a year ago. The year-over-year increase in revenues resulted from increased fabrication activities in the Middle East and Asia Pacific regions, partially offset by reduced activities in the Caspian region.
Segment income for the 2008 first quarter was $52.9 million, compared to $121.2 million in the 2007 first quarter. The decrease in segment income was primarily attributable to a high-level of unproductive offshore working days for major construction vessels during the 2008 first quarter, due to poor weather conditions in major areas of operation, and reduced activities in the Caspian region. In addition, the 2007 first quarter benefited from a significant amount of project close-outs, change orders and settlements, totaling approximately $40 million, compared to approximately $11 million in the first quarter of 2008.
At March 31, 2008, segment backlog was $5.3 billion, compared to backlog of $4.2 billion and $4.8 billion at March 31, 2007 and December 31, 2007, respectively.
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