McDermott Delivers 'Solid' Results for 2Q, Backlog at $9.5B
McDermott International has reported net income of $92.6 million, or $0.40 per diluted share, for the 2009 second quarter, compared to its record quarter of $177.5 million, or $0.77 per diluted share, in the corresponding period of 2008. Weighted average common shares outstanding on a fully diluted basis were approximately 233.1 million and 230.4 million in the quarters ended June 30, 2009 and June 30, 2008, respectively.
McDermott's revenues in the second quarter of 2009 were $1,565.0 million, compared to $1,792.6 million in the corresponding period in 2008. The decrease in consolidated revenues was primarily due to a lower level of activity in the Power Generation Systems segment, partially offset by increased revenues in the Government Operations segment.
The Company's operating income in the 2009 second quarter was $147.7 million, compared to $231.1 million in the 2008 second quarter. Notwithstanding a 35.2 percent year-over-year increase in Government Operations' segment income, McDermott’s 2009 second quarter operating income declined compared to a year ago due to a predominantly non-cash increase of $21.9 million in consolidated pension plan expense and reduced levels of segment income from both Power Generation Systems and Offshore Oil & Gas Construction.
"McDermott delivered solid results in the 2009 second quarter and produced the highest level of quarterly income since the second quarter of 2008," said John A. Fees, Chief Executive Officer of McDermott. "While the markets we serve lack conviction due to worldwide economic conditions, the Company's bidding activity remains good, particularly in oil and gas, our liquidity improved sequentially to over $1 billion, and McDermott's backlog remains strong."
At June 30, 2009, McDermott’s consolidated backlog was $9.5 billion, compared to $9.8 billion and $10.0 billion at June 30, 2008 and March 31, 2009, respectively.
2009 Second Quarter Compared to 2008 Second Quarter
Offshore Oil & Gas Construction Segment
Revenues in the Offshore Oil & Gas Construction segment were $832.7 million in the 2009 second quarter, compared to $872.3 million for the same period a year ago. Increased revenues in the Middle East region were more than offset by reduced levels in other regions. Approximately 40 percent of the total 2009 second quarter revenues were derived from the Middle East projects in Qatar.
Segment income for the 2009 second quarter was $67.8 million, compared to $98.0 million in the 2008 second quarter. Major areas contributing to second quarter 2009 segment income include the Middle East, Asia Pacific and Americas regions.
At June 30, 2009, segment backlog was $4.7 billion, compared to backlog of $5.3 billion and $5.0 billion at June 30, 2008 and March 31, 2009, respectively.
Corporate & Other Income and Expense
Unallocated corporate expenses were $21.4 million in the 2009 second quarter, compared to $15.4 million in the 2008 second quarter. The year-over-year increase is predominantly due to increased pension expense.
The Company's other expense for the second quarter of 2009 was $5.2 million, compared to other income of $10.0 million in the second quarter of 2008. The $15.2 million decline was predominantly due to increased non-cash, foreign currency translation charges, as well as reduced net interest income.