McDermott Sees Losses Narrow, But Revenues Fall
McDermott has reported first quarter 2015 net loss of $14.5 million, or $0.06 per fully diluted share including restructuring charges, compared to a net loss of $46.5 million, or $0.20 per diluted share, in the prior-year quarter.
Net of restructuring charges, the first quarter 2015 loss would have been reduced by $10.4 million or $0.04 per fully diluted share.
The Company reported first quarter 2015 revenues of $550.5 million, a decrease of $53.3 million compared to revenues of $603.8 million for the prior-year first quarter. Revenues for the first quarter 2015 were affected by weather and third-party performance delays on the company’s INPEX project, as well as customer initiated changes on Middle East brownfield projects that impacted the timing of vessel mobilization.
The Company’s operating income was $6.6 million for the first quarter 2015 and included $10.4 million of restructuring expenses. These results compare to the prior-year period first quarter operating loss of $38.2 million, which included $6.1 million of restructuring expenses.
As of March 31, 2015, the Company’s backlog was $3.75 billion, compared to $3.6 billion at December 31, 2014. Of the March 31, 2015 backlog, approximately 50% related to offshore operations and approximately 50% related to subsea operations. Order intake in the first quarter 2015 totaled $697.8 million and included new awards for Saudi ARAMCO, QP and KJO in the MEA area, as well as Chevron and QGEP in the AEA area.
At March 31, 2015, the Company had $8.8 billion in bids and change orders outstanding compared to $8.6 billion at December 31, 2014. At March 31, 2015, the Company was targeting to bid approximately $16.8 billion in projects that it expects to be awarded to the market through June 30, 2016. In total, the company’s potential revenue pipeline was $25.6 billion as of March 31, 2015.
Through the end of March, McDermott has decreased its employee count by 475 positions from increased organizational efficiencies resulting in expected 2015 cash savings of $27.6 million. Initiatives on centralization and operational costs have also started.
Restructuring charges for the quarter were $10.4 million, as part of the company’s previous guidance of $25 million to $35 million for the full year 2015. According to McDermott, the company remains on track to achieve the expected annual cash savings of $50 million in 2015, before restructuring charges.
“In addition to the profitability initiatives and as a result of the Company’s regular work activity and the sequencing of projects, over 1,200 additional positions have been released from the company. These positions are primarily related to craft labor in McDermott’s fabrication yards,” said the company in a statement.
