McDermott Reports First Quarter 2013 Financial Results

  McDermott Reports First Quarter 2013 Financial Results

         EPS of $0.09; $1.0 Billion of New Bookings Added to Backlog

Business Wire

HOUSTON -- May 08, 2013

McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) today
reported net income of $20.6 million, or $0.09 per fully diluted share, for
the quarter ended March 31, 2013. The results for the first quarter 2013
compared to income from continuing operations of $61.9 million, or $0.25 per
fully diluted share, in the corresponding period of 2012. Weighted average
common shares outstanding on a fully diluted basis were approximately 239.2
million and 237.3 million in the quarters ended March 31, 2013 and 2012,
respectively.

McDermott’s revenues were $807.5 million for the first quarter 2013, an
increase of 11 percent compared to $727.7 million in the corresponding period
of 2012. The year-over-year increase was primarily due to an approximately
$48.6 million increase in revenues in the Atlantic segment as a result of
increased fabrication activity, coupled with increased revenues in the Asia
Pacific and Middle East segments.

The Company’s operating income in the first quarter 2013 was $53.0 million, a
decrease of $27.2 million compared to $80.2 million in the first quarter 2012.
The first quarter 2013 results were affected by operating losses in the Middle
East and Atlantic segments, partially offset by stronger operating income in
our Asia Pacific segment. In the first quarter 2013, operating losses in the
Middle East segment totaled approximately $18.5 million compared to operating
income of $34.7 million for the corresponding prior year period, a decline
primarily attributable to execution plan changes on a project at an advanced
stage of completion, which resulted in cost increases associated with hook-up
activities and the use of third-party vessels. In addition, the decline in
operating income was due to lower asset utilization and project activity
compared to the prior year. The operating loss for the Atlantic segment
changed by approximately $4.4 million to a loss of approximately $16.4 million
due to increased support costs associated with lower marine asset utilization.

Operating income in the Asia Pacific segment increased approximately $30.5
million to $88.0 million in the first quarter 2013, primarily due to the
successful execution and change orders on a key project as well as cost
savings on other projects offset by approximately $4.1 million in increased
costs estimates for one of our marine subsea projects. In addition, an
approximately $12.3 million or $0.05 per diluted share gain on the sale of the
DB 26 was recognized during the quarter for the segment.

The Company’s other expense for the first quarter 2013 was $1.4 million, a
reduction of $11.9 million compared to other income of $10.5 million in the
first quarter 2012, primarily due to net losses on foreign currency related
items.

During the quarter, the Company booked approximately $1.0 billion in new
orders including two projects in the Arabian Gulf. In addition, at March 31,
2013 the Company had approximately $5.6 billion in bids and change orders
outstanding. The Company has also identified $10.1 billion in target project
opportunities that the Company expects to bid in the next five quarters.

At March 31, 2013, the Company’s backlog was $5.3 billion, compared to $5.8
billion and $5.1 billion at March 31, 2012 and December 31, 2012,
respectively. Of the March 31, 2013 backlog, approximately $428.9 million was
derived from five projects currently in a loss position, of which 93 percent
relate to a project in the Asia Pacific segment and the five-year charter in
Brazil. In addition, the backlog includes approximately $165.6 million for one
project under deferred profit recognition.

“Although the final phases of an otherwise well-executed project in the Middle
East challenged us this quarter, I am pleased with our successful completion
of a key project in the Asia Pacific segment,” said Stephen M. Johnson,
Chairman of the Board, President and Chief Executive Officer of McDermott.
“With the sale of the DB 26 and our expansion of our subsea engineering talent
through the acquisition of DeepSea group, McDermott is making steady progress
on its strategic transformation. We remain focused on winning work for which
we can provide a cost-effective solution and execute successfully for our
customers and for our shareholders.”

Balance Sheet Summary

As of March 31, 2013, McDermott reported total assets of approximately $3.2
billion. Included in this amount was $502.4 million of cash and cash
equivalents, restricted cash and investments. Net working capital, calculated
as current assets less current liabilities, was $616.2 million. Additionally,
total equity was $2.0 billion, or approximately 62% of total assets, with
total debt of $101.2 million.

OTHER INFORMATION

Conference Call

McDermott has scheduled a conference call and webcast related to its first
quarter 2013 results on Thursday, May 9, 2013, at 9:00 a.m. U.S. Central
Daylight Time. Interested parties may listen over the Internet through a link
posted in the Investor Relations section of the Company's website. The replay
will also be available on the Company's website following the end of the live
call.

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, major integrated and other energy companies.
Operating in approximately 20 countries across the Atlantic, Middle East and
Asia Pacific, the Company’s integrated resources include approximately 14,000
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, bookings, bidding, change orders outstanding and
target project opportunities, to the extent each of these items may be viewed
as an indicator of future revenues, McDermott’s expectations on the timing for
bidding target project opportunities and McDermott’s progress on its strategic
transformation. 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, 2012
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.


McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME
                                                              
                                                   Three Months Ended
                                                   March 31,
                                                   2013            2012
                                                   (In thousands)
                                                                   
Revenues                                           $ 807,488      $ 727,678 
                                                                   
Costs and Expenses:
Cost of operations                                   712,814         597,434
Selling, general and administrative expenses         52,226          46,611
Gain on asset disposals                             (14,716 )      (226    )
                                                                   
Total costs and expenses                            750,324       643,819 
                                                                   
                                                                   
Equity in Loss of Unconsolidated Affiliates         (4,131  )      (3,683  )
                                                                   
Operating Income                                    53,033        80,176  
                                                                   
Other Income (Expense):
Interest income                                      342             1,634
Gain (loss) on foreign currency – net                (2,526  )       9,441
Other income (expense) – net                        782           (581    )
                                                                   
Total other income (expense)                        (1,402  )      10,494  
                                                                   
                                                                   
Income from continuing operations before
provision for income taxes and noncontrolling        51,631          90,670
interests
                                                                   
Provision for Income Taxes                          27,313        28,743  
                                                                   
Income from continuing operations before            24,318        61,927  
noncontrolling interests
                                                                   
Gain on disposal of discontinued operations          -               257
Income from discontinued operations, net of         -             3,240   
tax
                                                                   
Total income from discontinued operations, net      -             3,497   
of tax
                                                                   
Net Income                                           24,318          65,424
                                                                   
Less: Net Income Attributable to
Noncontrolling
Interests                                           3,765         2,666   
                                                                   
Net Income Attributable to McDermott               $ 20,553       $ 62,758  
International, Inc.

                                                       
McDERMOTT INTERNATIONAL, INC.

EARNINGS PER SHARE COMPUTATION
                                                               
                                     Three Months Ended
                                     March 31,
                                     2013                      2012
                                     (In thousands, except share and per share
                                     amounts)
                                                               
                                                               
Income from continuing
operations less noncontrolling       $   20,553                $  59,261
interests
Income from discontinued                -                       3,497
operations, net of tax
Net income attributable to           $   20,553                $  62,758
McDermott International, Inc.
                                                               
                                                               
Weighted average common shares          235,941,185             235,208,252
(basic)
Effect of dilutive securities:
Stock options, restricted
stock and restricted stock              3,258,696               2,124,375
units
Adjusted weighted average
common shares and assumed
exercises of
stock options and vesting of            239,199,881             237,332,627
stock awards (diluted)
                                                               
Basic earnings per share:
Income from continuing
operations less noncontrolling           0.09                     0.25
interests
Income from discontinued                 -                        0.01
operations, net of tax
Net income attributable to               0.09                     0.27
McDermott International, Inc.
                                                               
Diluted earnings per share:
Income from continuing
operations less noncontrolling           0.09                     0.25
interests
Income from discontinued                 -                        0.01
operations, net of tax
Net income attributable to               0.09                     0.26
McDermott International, Inc.

                                                        
SUPPLEMENTARY DATA

                                               Three Months Ended
                                               March 31,
                                               2013                2012
                                               (In thousands)
Depreciation & amortization                    $ 20,222            $ 23,276
expense
Drydock amortization expense                   $ 5,550             $ 7,112
Capital expenditures                           $ 37,649            $ 44,751
Backlog                                        $ 5,297,981         $ 5,806,633

                                                             
McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS
                                                                 
                                           March 31,             December 31,
                                           2013                  2012
                                           (In thousands, except share and per
                                           share amounts)
Assets
Current Assets:
Cash and cash equivalents                  $  461,535            $ 640,147
Restricted cash and cash equivalents          21,942               18,116
Accounts receivable--trade, net               443,182              428,800
Accounts receivable--other                    65,561               75,461
Contracts in progress                         544,404              560,154
Deferred income taxes                         6,888                9,765
Assets held for sale                          1,396                2,679
Other current assets                         42,436             54,667    
                                                                 
Total Current Assets                         1,587,344          1,789,789 
                                                                 
Property, Plant and Equipment                 2,155,243            2,115,176
Less accumulated depreciation                (828,223   )        (833,385  )
                                                                 
Net Property, Plant and Equipment             1,327,020            1,281,791
Investments                                   18,936               26,750
Goodwill                                      41,202               41,202
Investments in Unconsolidated Affiliates      35,233               37,435
Assets Held for Sale                          12,243               26,758
Other Assets                                 159,040            129,902   
                                                                 
Total Assets                               $  3,181,018         $ 3,333,627 
                                                                 
Liabilities and Equity
Current Liabilities:
Notes payable and current maturities of    $  44,025             $ 14,146
long-term debt
Accounts payable                              302,250              400,007
Accrued liabilities                           332,358              369,418
Advance billings on contracts                 206,010              241,696
Deferred income taxes                         16,027               10,758
Income taxes payable                         70,425             76,986    
                                                                 
Total Current Liabilities                    971,095            1,113,011 
                                                                 
Long-Term Debt                                57,188               88,562
Self-Insurance                                24,141               22,641
Pension Liability                             24,757               25,069
Other Liabilities                             136,949              132,239
Commitments and Contingencies
Stockholders’ Equity:
Common stock, par value $1.00 per share,
authorized 400,000,000 shares; issued
243,778,369 and
243,442,156 shares at March 31, 2013 and      243,778              243,442
December 31, 2012, respectively
Capital in excess of par value                1,394,859            1,391,271
Retained earnings                             466,309              445,756
Treasury stock, at cost, 7,359,501 and
7,574,903 shares at March 31, 2013 and
December 31, 2012,
respectively                                  (99,688    )         (98,725   )
Accumulated other comprehensive loss         (100,697   )        (94,413   )
                                                                 
Stockholders’ Equity--McDermott               1,904,561            1,887,331
International, Inc.
Noncontrolling Interests                     62,327             64,774    
                                                                 
Total Equity                                 1,966,888          1,952,105 
Total Liabilities and Equity               $  3,181,018         $ 3,333,627 

                                                              
McDERMOTT INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                   
                                                  Three Months Ended

                                                  March 31,
                                                  2013             2012
                                                  (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                        $ 24,318         $ 65,424
Less: Income from discontinued operations,         -              3,497   
net of tax
                                                                   
Income from continuing operations                   24,318           61,927
Non-cash items included in net income:
Depreciation and amortization                       20,222           23,276
Drydock amortization                                5,550            7,112
Equity in loss of unconsolidated affiliates         4,131            3,683
Gain on asset disposals                             (14,716  )       (226    )
Benefit for deferred taxes                          5,332            (4,131  )
Other non-cash items                                2,391            3,803
Changes in assets and liabilities, net of
effects from acquisitions and dispositions:
Accounts receivable                                 (6,573   )       50,017
Net contracts in progress and advance               (19,935  )       65,363
billings on contracts
Accounts payable                                    (125,234 )       (55,292 )
Accrued and other current liabilities               (20,774  )       (10,040 )
Pension liability and accrued postretirement        (19,657  )       7,489
and employee benefits
Other assets and liabilities                       (42,170  )      19,880  
                                                                   
TOTAL CASH PROVIDED BY (USED IN) OPERATING         (187,115 )      172,861 
ACTIVITIES--CONTINUING OPERATIONS
                                                                   
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment          (37,649  )       (44,751 )
Increase in restricted cash and cash                (3,826   )       (2,870  )
equivalents
Purchases of available-for-sale securities          (3,744   )       (40,319 )
Sales and maturities of available-for-sale          31,193           94,380
securities
Proceeds from sale and disposal of assets           35,621           226
Other investing activities                         (4,596   )      (2,376  )
                                                                   
NET CASH PROVIDED BY INVESTING                     16,999         4,290   
ACTIVITIES--CONTINUING OPERATIONS
                                                                   
NET CASH PROVIDED BY INVESTING                     -              60,671  
ACTIVITIES--DISCONTINUED OPERATIONS
                                                                   
TOTAL CASH PROVIDED BY INVESTING ACTIVITIES        16,999         64,961  
                                                                   
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of debt                                     (1,494   )       (1,494  )
Distributions to noncontrolling interests           (6,200   )       (15,733 )
Other financing activities                         (1,015   )      (1,784  )
                                                                   
TOTAL CASH USED IN FINANCING                       (8,709   )      (19,011 )
ACTIVITIES--CONTINUING OPERATIONS
                                                                   
EFFECTS OF EXCHANGE RATE CHANGES ON CASH           213            (700    )
                                                                   
NET INCREASE (DECREASE) IN CASH AND CASH           (178,612 )      218,111 
EQUIVALENTS
                                                                   
CASH AND CASH EQUIVALENTS AT BEGINNING OF          640,147        570,854 
PERIOD
                                                                   
CASH AND CASH EQUIVALENTS AT END OF               $ 461,535       $ 788,965 
PERIOD--CONTINUING OPERATIONS
                                                                   
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income taxes (net of refunds)                     $ 25,916         $ 16,036

Contact:

McDermott International, Inc.
Investors, Analysts and Financial Media:
Steven D. Oldham, (281) 870-5147
Vice President, Treasury and Investor Relations
soldham@mcdermott.com
or
Trade and General Media:
Louise Denly, (281) 870-5025
Director, Corporate Communications
ldenly@mcdermott.com
 
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