McDermott Reports Third Quarter 2012 Financial Results

McDermott Reports Third Quarter 2012 Financial Results

Earnings per share of 21 cents; Strong $5.3 Billion Backlog

HOUSTON--(BUSINESS WIRE)-- McDermott International, Inc. (NYS: MDR) ("McDermott" or the "Company") today reported income of $50.6 million, or $0.21 per diluted share, for the 2012 third quarter. The results of the 2012 third quarter compare to income from continuing operations of $9.8 million, or $0.04 per diluted share, in the corresponding period of 2011. Weighted average common shares outstanding on a fully diluted basis were approximately 237.9 million and 236.9 million in the quarters ended September 30, 2012 and September 30, 2011, respectively.

McDermott's revenues were $1,028.7 million for the 2012 third quarter compared to $879.9 million in the corresponding period of 2011. The year-over-year increase was attributable to the Middle East and Atlantic segments, primarily due to increased fabrication and marine activity. The increase from these segments was partially offset by lower revenues in the Asia Pacific segment due to lower marine activity.

The Company's operating income in the 2012 third quarter was $82.5 million compared to $35.2 million in the 2011 third quarter. The increase in operating income was primarily due to approximately $50 million in project losses recognized in the 2011 third quarter, in addition to higher fabrication and marine activity in the Middle East and Atlantic segments and additional change order activity in the Asia Pacific segment in the 2012 third quarter.

"The positive results of our 2012 third quarter keep us on track for a solid 2012 financial performance," said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott. "We see continued strength in our end markets and are encouraged by the significant level of bids and targeted market opportunities."

The Company's other income for the third quarter of 2012 was $1.7 million, which represents an improvement of $1.3 million as compared to other income of $0.4 million in the third quarter of 2011 primarily attributable to increased interest income.

At September 30, 2012, the Company's backlog was approximately $5.3 billion, compared to $5.7 billion and $4.3 billion at June 30, 2012 and September 30, 2011, respectively.

Balance Sheet Summary

As of September 30, 2012, McDermott reported total assets of approximately $3.4 billion. Included in this amount was $720.7 million of cash and cash equivalents, restricted cash and investments. Net working capital, calculated as current assets less current liabilities, was $679.4 million. Additionally, total equity was over $1.9 billion, or approximately 57% of total assets, with total debt of $108.3 million.

OTHER INFORMATION

About the Company

McDermott is a leading engineering, procurement, construction and installation ("EPCI") company focused on executing complex offshore oil and gas projects worldwide. Providing fully integrated EPCI services for upstream field developments, the Company delivers fixed and floating production facilities, pipelines and subsea systems from concept to commissioning. McDermott's customers include national and major energy companies. Operating in approximately 20 countries across the Atlantic, Middle East and Asia Pacific, the Company's integrated resources include approximately 13,500 employees and a diversified fleet of marine vessels, fabrication facilities and engineering offices. McDermott has served the energy industry since 1923. To learn more, please visit McDermott's website on the Internet at www.mcdermott.com.

Forward-Looking Statements

In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott cautions that statements in this press release, which are forward-looking and provide other than historical information, involve risks and uncertainties that may impact McDermott's actual results of operations. These forward-looking statements include statements about backlog, to the extent backlog may be viewed as an indicator of future revenues, McDermott remaining on track for a solid 2012 financial performance and the continued strength in McDermott's end markets. Although we believe that the expectations reflected in those forward-looking statements are reasonable, we can give no assurance that those expectations will prove to have been correct. Those statements are made by using various underlying assumptions and are subject to numerous uncertainties and risks, including adverse changes in the markets in which we operate or credit markets, our inability to successfully execute on contracts in backlog, changes in project design or schedules, changes in the scope or timing of contracts, and contract cancellations, change orders and other modifications. If one or more of these risks materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected. For a more complete discussion of these and other risk factors, please see McDermott's annual and quarterly filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2011 and subsequent quarterly reports on Form 10-Q. This news release reflects management's views as of the date hereof. Except to the extent required by applicable law, McDermott undertakes no obligation to update or revise any forward-looking statement.