McDermott Spotlights 2Q10 Financial Results
McDermott reported net income of $76.0 million, or $0.32 per diluted share, for the 2010 second quarter on consolidated revenues of $1.3 billion. The results of the 2010 second quarter compare to net income of $92.6 million, or $0.40 per diluted share, on revenues of $1.6 billion in the corresponding period of 2009. Both periods include the results of The Babcock & Wilcox Company ("B&W"), which was spun-off to McDermott shareholders on July 30, 2010. Additionally, the 2010 second quarter net income included approximately $66.2 million in after-tax expenses related to the spin-off ($0.28 per diluted share). Weighted average common shares outstanding on a fully diluted basis were approximately 234.4 million and 233.1 million in the quarters ended June 30, 2010 and June 30, 2009, respectively.
With McDermott's spin-off of B&W now complete, the past results of B&W, as well as the costs of the spin-off, will be accounted for as discontinued operations in McDermott's future reporting periods. As a result, the remainder of this release will reference McDermott's continuing operations as reflected in the unaudited pro forma financial statements, included in the tables below and filed with the U.S. Securities and Exchange Commission on Forms 8-K and 8-K/A, which adjust McDermott's consolidated results for the spin-off of B&W and the related costs.
On this pro forma basis, McDermott's net income was $81.3 million, or $0.35 per diluted share, for the second quarter of 2010 on consolidated revenues of $645.1 million. The results of the 2010 second quarter compare to pro forma net income of $34.4 million, or $0.15 per diluted share, on revenues of $832.9 million in the corresponding period of 2009. The year-over-year decrease in revenues was due to reduced level of activities primarily in the Middle East and Asia Pacific regions.
The Company's pro forma operating income was $102.7 million in the 2010 second quarter, compared to $55.7 million in the 2009 second quarter. The year-over-year increase in the 2010 second quarter, as compared to the corresponding period of 2009, was due to improved project performance, primarily in our Middle East operations.
"McDermott's performance in the second quarter of 2010 was an excellent beginning as the Company moves forward post-spin," said Stephen M. Johnson, President and Chief Executive Officer of McDermott. "During the quarter, we recognized about $720 million of new bookings, which grew backlog sequentially to $4.3 billion. The Company's operating margins for the quarter were exceptional at nearly 16% and the pro forma balance sheet provides a strong foundation to pursue growth. Our new leadership team is excited about our long-term prospects as an engineering and construction company exclusively focused on the offshore oil and gas industry."
The Company's other expense for the second quarter of 2010 was $2.3 million, compared to other income of $2.2 million in the second quarter of 2009. The $4.5 million negative variance was primarily due to the write-off of unamortized debt issuance costs, lower interest income combined with higher interest expense, and the amortization of fees associated with new credit facilities.
At June 30, 2010, the Company's pro forma backlog was $4.3 billion, compared to $4.2 billion and $4.7 billion at March 31, 2010 and June 30, 2009, respectively.
Balance Sheet Summary
McDermott has included a pro forma balance sheet which reflects the accounts of the Company excluding B&W. As of June 30, 2010, as adjusted, McDermott had total assets of $2.3 billion. Included in this amount was approximately $764.3 million of cash, cash equivalents and investments. Net working capital, calculated as current assets less current liabilities, was $383.2 million. Additionally, shareholders' equity was approximately $1.4 billion, or 62% of total assets, with total debt of $55.8 million.
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