McDermott Posts Surprise Loss

(RTTNews) - Engineering and construction firm McDermott International, Inc. (MDR) said Monday after the markets closed that it swung to a huge fourth quarter loss, hurt by lower revenue as well as asset impairments and restructuring charges.

The company's quarterly results also came in well below analysts' expectations.

At the same time, the company said it was withdrawing prior financial guidance and suspending guidance for the foreseeable future, while it is implementing its organizational changes and closing out legacy projects.

"During the fourth quarter, we worked through a number of legacy issues, reviewed our backlog in light of new developments and recorded a number of charges, most of which related to prior period cash outlays," said David Dickson, McDermott's President and Chief Executive Officer.

McDermott shares are currently losing 9.37% in after hours trading after closing the day's regular trading session at $8.11, down 22 cents or 2.64%. The shares trade in a 52-week range of $6.68 to $11.38.

Dickson, who joined McDermott on October 31, 2013 as Executive Vice President and Chief Operating Officer, assumed the role of President and Chief Executive Officer on December 16, 2013.

For the fourth quarter ended December 31, 2014, the Houston, Texas-based company reported a net loss of $324.0 million or $1.37 per share, compared to net income of $40.5 million or $0.17 per share for the year-ago quarter.

On average, 16 analysts polled by Thomson Reuters expected the company to earn $0.15 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Fourth quarter revenues fell 48% to $517.34 million from $995.95 million in the same quarter last year. Twelve analysts had a consensus revenue estimate of $825.61 million for the fourth quarter.

Fourth quarter bookings totaled $737 million, and the company ended the quarter with backlog of about $4.8 billion, up from $4.6 billion at the end of the prior quarter.

At the end of the fourth quarter, the company had $3.6 billion in bids and change orders outstanding. The company is targeting to bid over $16 billion in new projects over the next five quarters. In total, the company's revenue pipeline was $24 billion as of December 31, 2013.

The company said it is implementing a new organizational design, which will orient the company around its offshore and subsea operations. Scott Cummins will lead the offshore business, while Tony Duncan will lead the company's subsea business.

The company also said it is reevaluating and deferring capital expenditures to improve strategic alignment, to reduce its cost structure, while it also plans to divest non-core assets.