McDermott International Inc. (MDR), the Houston-based maker of pipelines for offshore oil fields, fell the most in 18 months after quarterly earnings missed analysts’ estimates and the company said it sees “near-term challenges.”
McDermott declined 15 percent to $9.33 at 11:39 a.m. in New York, after earlier having the biggest intraday drop since October 2011.
First-quarter net income decreased 67 percent to $20.6 million, or 9 cents a share, from $62.8 million, or 26 cents, a year earlier, the company said in a statement issued yesterday after the close of regular trading. Excluding one-time items, per-share profit fell below the 14-cent average of 16 estimates compiled by Bloomberg.
The profitability drop represented “another disappointing” quarter, Michael Marino, an analyst at Stephens Inc. in Houston, wrote in a note to investors today. “This quarter the disappointment was in the Middle East where several projects experienced profitability adjustments.”
Operating margins, which were 7 percent in the first quarter, may be at break even levels or a loss for the second and third quarters after its largest project was completed in Australia and with continuing losses forecast for its Atlantic division, Chief Financial Officer Perry Elders said on an investor conference call today.
The company has about $1.8 billion in backlog work that will “roll off” in 2014, Chief Executive Officer Stephen M. Johnson said on the call. “We still have work to do to book additional business for 2014.”
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