McDermott International undershot analysts’ expectations with its second quarter results yesterday, with profit down 11% on Q2 2010, despite higher revenue.
The year-over-year decline was primarily due to lower revenues in the Middle East segment, primarily due to lower marine activity and the prior completion of certain projects that were active in the 2010 second quarter, partially offset by substantial improvement in the operating results of the Asia Pacific segment and reduced losses in the Atlantic segment.
The offshore EPC firm reported income from continuing operations of $63.7 million, or $0.27 per diluted share, for the 2011 second quarter, and revenue of $849.8 million, a 35% increase over Q2 2010.
The results of the 2011 second quarter compare to income from continuing operations of $78.7 million, or $0.34 per diluted share, in the corresponding period of 2010.
Classified as discontinued operations, the results of McDermott’s charter fleet business are excluded from both periods and The Babcock & Wilcox Company, which was spun-off to McDermott shareholders last year on July 30, is excluded from the 2010 period.Â
The year-over-year increase in revenue was primarily due to a 144% increase in revenues in the Asia Pacific segment as a result of expanded scope on a large engineering, procurement, construction and installation project as well as higher marine activity, partially offset by a 30% decline in revenues within the Middle East segment.
The Company’s operating income was $83.8 million in the 2011 second quarter, compared to $98.1 million in the 2010 second quarter.
“During the second quarter, McDermott delivered solid bookings in excess of $800 million which kept backlog at a strong level. Importantly, the amount of bids outstanding increased over 50 percent sequentially from the first quarter of 2011, providing confidence that the markets we serve continue to be active,” said Stephen M. Johnson, Chairman of the Board, President and Chief Executive Officer of McDermott. “Considering our pipeline of potential work is robust, our approach will remain disciplined, which we believe serves our stakeholders well. In addition, the Company’s balance sheet has remained strong, our backlog is solid and earnings have been healthy, together providing the foundation for growth.”
At June 30, 2011, the Company’s backlog was $4.7 billion, compared to $4.2 billion and $4.8 billion at June 30, 2010 and March 31, 2011, respectively.
