McDermott reported net income of $59.9 million, or $0.26 per diluted share, for the 2010 first quarter which includes approximately $33 million, pretax ($29.5 million, after-tax1) of combined costs related to the anticipated spin-off of The Babcock & Wilcox Company ("B&W") and expenses related to safety initiatives at, and the associated temporary stand down of, B&W's NFS operations. The results of the 2010 first quarter compare to $77.7 million, or $0.33 per diluted share, in the corresponding period of 2009. Weighted average common shares outstanding on a fully diluted basis were approximately 234.8 million and 232.6 million in the quarters ended March 31, 2010 and March 31, 2009, respectively.
McDermott's revenues in the first quarter of 2010 were $1,181.9 million, compared to $1,493.3 million in the corresponding period in 2009. The year-over-year decrease was primarily due to a 26.7 percent decline, or $189.0 million, in the Offshore Oil & Gas Construction segment and a 22.5 percent decline, or $118.8 million, in the Power Generation Systems segment.
The Company's operating income was $91.8 million in the 2010 first quarter, compared to $131.2 million in the 2009 first quarter. In Offshore Oil & Gas Construction, segment income increased approximately 84 percent, or $37.7 million, compared to the 2009 first quarter. Offsetting this improvement was a year-over-year decline of $48.9 million in the Power Generation Systems' segment income and the $33 million of identified expenses, which was predominantly in the Government Operations and Corporate segments.
"McDermott's results for the 2010 first quarter were adversely affected by the previously announced B&W spin-off and NFS-related expenses, but it was generally in-line with our expectations for a light quarter. We anticipate that operating income will improve from here during remaining quarters of 2010. The Power Generation Systems segment hit what we believe to be trough levels during the quarter, as it typically lags GDP, but we believe we are beginning to see a turn in the power marketplace. The Offshore Oil & Gas Construction segment had another outstanding quarter, despite lower revenues," said John A. Fees, Chief Executive Officer of McDermott. "The Company is making excellent progress on the previously announced spin-off of The Babcock & Wilcox Company. We now believe McDermott is on course for the B&W separation to be complete as early as June 30, 2010."
At March 31, 2010, the Company's consolidated backlog was $8.9 billion, compared to $10 billion and $8.1 billion at March 31, 2009 and December, 2009, respectively.
RESULTS OF OPERATIONS - 2010 First Quarter Compared to 2009 First Quarter
Revenues in the Offshore Oil & Gas Construction segment were $519.5 million in the 2010 first quarter, compared to $708.5 million for the same period a year ago. Increased revenues in the Asia Pacific region were more than offset by reduced levels in other regions.
Segment income for the 2010 first quarter was $82.8 million, compared to $45.0 million in the 2009 first quarter. Major areas contributing to first quarter 2010 segment income include the Middle East and Asia Pacific regions.
At March 31, 2010, segment backlog was $4.2 billion, compared to backlog of $5.0 billion and $3.4 billion at March 31, 2009 and December 31, 2009, respectively.
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