McDermott Shares Soar 22 % As Q4 Results Top Estimates, Rosy Outlook

(RTTNews) - Shares of McDermott International, Inc. (MDR) soared more than 22 percent in extended trade on Monday after the engineering and construction company reported a loss for the fourth quarter that came in significantly narrower than analysts' expectations. Quarterly revenues increased and topped Street estimates. The company also provided revenue forecast for the full-year 2015, well above analysts' expectations.

"McDermott is in a much stronger position today, compared to a year ago, as a result of our turnaround efforts. With the recapitalization of the Company in early 2014, we raised the liquidity needed to work through our legacy contracts, capital expenditure commitments and initiatives for 2014 and for the foreseeable future," President and CEO David Dickson said in a statement.

The Houston, Texas-based company reported a net loss of $8.18 million or $0.03 per share for the fourth quarter, sharply narrower than $326.24 million or $1.38 per share in the prior-year quarter.

On average, 16 analysts polled by Thomson Reuters expected the company to report a loss of $0.06 per share for the quarter. Analysts' estimates typically exclude one-time items.

Revenue for the quarter increased to $806.40 million from $517.34 million in the same quarter last year, and topped ten Wall Street analysts' consensus estimate of $715.83 million.

Results were also driven by total costs and expenses that decreased to $778.25 million from $832.09 million a year ago.

The company reported a backlog of $3.6 billion as at the end of the fourth quarter, lower than $4.80 billion at the end of the year-ago quarter.

At the end of the fourth quarter, the company had $8.6 billion in bids and change orders outstanding and is targeting about $17.6 billion in projects that it expects to be awarded to the market through March 31, 2016. The company's potential revenue pipeline was $29.8 billion as of December 31, 2014.

Looking ahead to fiscal 2015, the company projects revenues of $3.3 billion to $3.6 billion, while analysts expect $2.79 billion.

Additionally, McDermott announced the results of a review of its cost structure, which is expected to drive an improvement in profitability and flexibility through the reduction of fixed and variable costs.

The company will focus on increased organizational efficiency, commencing in the first quarter of this year, with expected savings starting in the second quarter of 2015. It will also centralize various front- and back-office functions, and implement operational cost initiatives leveraging McDermott's global scale and the outsourcing of some non-core business activities.

The company said it 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.

MDR closed Monday's regular trading session at $2.61, up $0.111 or 4.40% on a volume of 5.20 million shares. The stock soared $0.59 or 22.22% in after-hours trading.