McDermott Shares Tumble On Weak Q2 Results; COO John McCormack To Retire

(RTTNews) - Shares of McDermott International Inc. (MDR) fell more than 16 percent in extended trades Monday after the engineering and construction company reported a loss for the second quarter on restructuring costs and lower revenues. The company added that it has commenced the restructuring of its Atlantic operations in the quarter. McDermott also said that its chief operating officer John McCormack has informed of his intention to retire.

Houston, Texas-based McDermott's net loss for the second quarter was $149.42 million or $0.63 per share, compared to net income of $52.74 million or $0.22 per share in the comparable quarter last year. On average, eighteen analysts polled by Thomson Reuters expected the company to report earnings of $0.03 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the latest quarter declined 27 percent to $647.25 million from $889.25 million in the year ago quarter. Analysts had a consensus revenue estimate for the quarter of $757.87 million.

McDermott attributed the lower revenue to its Middle East and Asia Pacific segments, primarily due to the completion of several significant projects that were active in the year-ago quarter. The decrease from these segments was partially offset by higher revenues in the Atlantic segment due to higher fabrication activity in Mexico.

Total costs and expenses for the quarter declined 2 percent to $791.33 million from $807.22 million in the same period last year.

As at quarter-end, the company's backlog was approximately $5.1 billion, compared to $5.3 billion at the end of the previous quarter.

McDermott said it has commenced the restructuring of its Atlantic operations in the quarter. The restructuring includes personnel reductions in Houston and New Orleans as well as a relocation of Morgan City's fabrication and marine activities to Altamira, Mexico, following the completion of Morgan City's existing projects in backlog.

McDermott expects restructuring costs to range between $45 million to $60 million and include severance, asset impairment and relocation expenses, in addition to future Morgan City lease costs. The company incurred about $15.46 million of these restructuring costs in the latest quarter, and expects the majority to be recognized over the next four quarters.

In a separate statement, McDermott said that Executive Vice President and Chief Operating Officer John McCormack has informed the company of his intention to retire, effective in the fourth quarter of 2013. McCormack, aged 66 years, has served with the company for ten years and has held his current role since 2011.

The company said it is conducting an internal and external search for a successor, whom it expects to name in the near-term to enable a smooth transition.

MDR closed Monday's regular trading session at $8.73 on a volume of 4.80 million shares. In after-hours, the stock declined $1.41 or 16.15 percent to $7.32.