McDermott Reports Q1 Results, Buoyed by Near-Record Backlog of $10B
McDermott International has reported net income of $77.7 million, or $0.33 per diluted share, for the 2009 first quarter, compared to net income of $123.2 million, or $0.54 per diluted share, for the corresponding period in 2008. Weighted average common shares outstanding on a fully diluted basis were approximately 232.6 million and 230.1 million in the quarters ended March 31, 2009 and March 31, 2008, respectively.
McDermott’s revenues in the first quarter of 2009 were $1,493.3 million, an increase of 3.0 percent compared to $1,450.4 million in the corresponding period in 2008. The increase in consolidated revenues was due to a higher level of activity in the Offshore Oil & Gas Construction and Government Operations segments, partially offset by lower revenues in the Power Generation Systems segment.
The Company's operating income in the 2009 first quarter was $131.2 million, compared to $157.1 million in the 2008 first quarter. A year-over-year increase of $21.8 million in consolidated pension plan expense, which was predominantly a non-cash expense, combined with a $12.7 million reduction in gains on asset sales, were the primary factors in the variance between the two periods.
"Considering the ongoing state of uncertainty in the global economy and that we continue to work through the Middle East pipeline projects in the Offshore Oil & Gas Construction segment, I am quite pleased with the results McDermott produced in the quarter," said John A. Fees, Chief Executive Officer of McDermott. "The Company's backlog is near record levels at $10 billion; we see the end to the problematic pipeline projects later this year, and our financial position remains solid. Clearly, the Company has work to do, and near-term challenges still exist, but I am confident McDermott is well-positioned and progressing in this environment."
At March 31, 2009, McDermott's consolidated backlog was $10.0 billion, compared to $10.2 billion and $9.8 billion at March 31, 2008 and December 31, 2008, respectively.
RESULTS OF OPERATIONS
2009 First Quarter Compared to 2008 First Quarter
Offshore Oil & Gas Construction Segment
Revenues in the Offshore Oil & Gas Construction segment were $708.5 million in the 2009 first quarter, compared to $645.9 million for the same period a year ago. The year-over-year improvement in revenues resulted from increased activities in the Middle East and Americas regions, partially offset by a decline in the Caspian region.
Segment income for the 2009 first quarter was $45.0 million, compared to $52.9 million in the 2008 first quarter. Major areas contributing to first quarter 2009 segment income include the Middle East, Asia Pacific, Caspian and Americas regions. During the first quarter of 2009, the Company substantially completed the marine pipeline installation portion on one of its three Qatar projects. The remaining two Qatar projects recently commenced pipeline installation activities during the second quarter of 2009.
At March 31, 2009, segment backlog was $5.0 billion, compared to backlog of $5.3 billion and $4.5 billion at March 31, 2008 and December 31, 2008, respectively.
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