McDermott Int'l Results Surpass Estimates, Outlook Strong; Stock Up 21%

(RTTNews) - McDermott International Inc (MDR), a provider of engineering, construction and installation services to the energy industry, on Monday reported fourth-quarter net earnings of $8.2 million or $0.03 per share. This compares with a loss of $326.2 million or $1.38 per share last year.

The company's revenues for the quarter were higher at $806.4 million compared with $517.3 million in the prior year.

Analysts polled by Thomson Reuters estimated a loss of $0.06 per share on revenues of $715.8 million for the quarter. Analysts' estimates typically exclude special items.

Results were also driven by expenses that decreased to $778.3 million from $832 million a year ago.

"We delivered better project execution throughout the year and successfully closed out a number of challenging legacy contracts," the company said.

As of December 2014, the company's backlog was $3.6 billion.

For the full year 2015, the company projects revenues of $3.3 billion to $3.6 billion, while analysts expect $2.79 billion.

McDermott also announced the results of a review of its cost structure, which is expected to drive an improvement in profitability.

The three key components of the plan include increased organizational efficiency, commencing in the first quarter of this year, with expected savings starting in the second quarter of 2015; centralization of various front- and back-office functions; and operational cost initiatives leveraging McDermott's global scale and the outsourcing of some non-core business activities.

The company anticipates annual cash savings in 2015, before restructuring costs, of about $50 million, with an annualized expected cash savings of $100 million, starting in 2016. McDermott expects to incur $25 million to $35 million in restructuring costs in 2015, as a result of the review.

Separately, McDermott said it has been awarded initial work for a significant power supply system replacement contract by Saudi Aramco for the Marjan field, offshore Saudi Arabia. Work is expected to be executed through the fourth quarter of 2016.

The company also has been awarded a large project for a new jacket, temporary deck and replacement umbilical by Qatar Petroleum for the North Field Alpha gas development, offshore Qatar. Work is expected to be executed through the second quarter of 2016.

The company said both contracts would be included in its first quarter 2015 backlog.