McDermott Reports Second Quarter 2016 Financial and Operational Results
(\\$ in millions, except per share amounts) | |||||||||||||||||||||||||
Three Months Ended | Delta | Six Months Ended | Delta | ||||||||||||||||||||||
June 30, 2016 | June 30, 2015 | Yr-over-Yr | June 30, 2016 | June 30, 2015 | Yr-over-Yr | ||||||||||||||||||||
Revenues | \\$ | 706.6 | \\$ | 1,046.5 | \\$ | (339.9 | ) | \\$ | 1,435.7 | \\$ | 1,597.0 | \\$ | (161.3 | ) | |||||||||||
Operating Income | 57.0 | 49.1 | 7.9 | 93.0 | 62.4 | 30.6 | |||||||||||||||||||
Operating Margin | 8.1 | % | 4.7 | % | 3.4 | % | 6.5 | % | 3.9 | % | 2.6 | % | |||||||||||||
Net Income / (Loss) | 20.7 | 11.5 | 9.2 | 18.5 | (3.0 | ) | 21.5 | ||||||||||||||||||
Diluted EPS | 0.07 | 0.04 | 0.03 | 0.07 | (0.01 | ) | 0.08 | ||||||||||||||||||
Adjusted Operating Income1 | 59.5 | 64.5 | (5.0 | ) | 134.1 | 88.2 | 45.9 | ||||||||||||||||||
Adjusted Operating Margin1 | 8.4 | % | 6.2 | % | 2.2 | % | 9.3 | % | 5.5 | % | 3.8 | % | |||||||||||||
Adjusted Net Income1 | 22.8 | 26.8 | (4.0 | ) | 59.1 | 22.4 | 36.7 | ||||||||||||||||||
Adjusted Diluted EPS1 | 0.08 | 0.09 | (0.01 | ) | 0.21 | 0.08 | 0.13 | ||||||||||||||||||
Cash Provided (Used) by Operating Activities | 16.5 | (7.5 | ) | 24.0 | 75.8 | (26.1 | ) | 101.9 | |||||||||||||||||
1) Adjustments to the GAAP financial measures include
“We are pleased to report operational profitability across all of our Areas driven by our continued focus on cost management and successful project execution. Key awards in both
David Dickson, President and Chief Executive Officer of McDermott. “The award of Abkatun-A2, our largest project with Pemex to-date, supports our strategic goal of leading in
Second Quarter 2016 Operating Results
Second quarter 2016 earnings attributable to McDermott stockholders on a consolidated basis prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) were
The Company reported second quarter 2016 revenues of
The Company’s operating income for the second quarter of 2016 was
Cash provided by operating activities in the second quarter 2016 was
First Half 2016 Operating Results
Net income attributable to McDermott stockholders on a consolidated basis prepared in accordance with GAAP for the first six months of 2016 was
The Company reported revenues of
The Company’s operating income for the first six months of 2016 was
Cash provided by operating activities in the first half of 2016 was
Operational Review
As of June 30, 2016 | ||||||||||||||||||||||||||
AEA | MEA | ASA | Total | |||||||||||||||||||||||
(\\$ in billions) | ||||||||||||||||||||||||||
Backlog | \\$ | 0.6 | \\$ | 2.9 | \\$ | 0.9 | \\$ | 4.4 | ||||||||||||||||||
Bids & Change Orders Outstanding | 0.9 | 2.4 | 0.9 | 4.2 | ||||||||||||||||||||||
Targets | 5.3 | 1.9 | 5.3 | 12.5 | ||||||||||||||||||||||
Total | 6.8 | 7.2 | 7.1 | 21.1 | ||||||||||||||||||||||
Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | |||||||||||||||||||||||||
AEA | MEA | ASA | AEA | MEA | ASA | |||||||||||||||||||||
(\\$ in millions) | ||||||||||||||||||||||||||
New Orders | \\$ | 475.9 | \\$ | 653.6 | \\$ | 105.6 | \\$ | 468.6 | \\$ | 770.3 | \\$ | 335.2 | ||||||||||||||
Revenue | 86.8 | 317.8 | 302.0 | 149.5 | 588.1 | 698.1 | ||||||||||||||||||||
Book-to-Bill | 5.5 | x | 2.1 | x | 0.3 | x | 3.1 | x | 1.3 | x | 0.5 | x | ||||||||||||||
Operating Income | 3.2 | 42.0 | 12.3 | (21.8 | ) | 80.4 | 37.4 | |||||||||||||||||||
Operating Margin | 3.6 | % | 13.2 | % | 4.1 | % | (14.6 | %) | 13.7 | % | 5.4 | % | ||||||||||||||
Adjusted Operating Income | 2.7 | 42.0 | 14.8 | 12.4 | 80.4 | 41.3 | ||||||||||||||||||||
Adjusted Operating Margin | 3.1 | % | 13.2 | % | 4.9 | % | 8.3 | % | 13.7 | % | 5.9 | % | ||||||||||||||
Capex | 0.9 | 2.5 | 134.6 | 3.5 | 4.7 | 161.6 | ||||||||||||||||||||
As of
In the
The
Derrick Barge 30 successfully completed the Hess Bergading project, which included the installation of a large processing facility jacket and a wellhead platform jacket and topside. The INPEX Ichthys project continues to remain on schedule off the north coast of
Cost Structure Progress
Substantially all remaining activities for the McDermott Profitability Initiative (“MPI”) have been completed. During the quarter the majority of the resources at our ASA headquarters moved from
Our Additional Overhead Reduction (“AOR”) program, which was initiated in the fourth quarter of 2015, is nearing completion, with the expected conclusion of all remaining activities by the end of the third quarter of 2016. We still anticipate in-year cash savings of
The Company’s restructuring costs for second quarter of 2016 were
2016 Outlook
(\\$ in millions, except per share amounts, or as indicated) | |||||
Q1’16 Guidance | Q2’16 Guidance | ||||
Revenues | ~2.7B | ~2.7B | |||
Operating Income | ~108 | ~126 | |||
Net Loss | ~(29) | ~(8) | |||
Diluted Loss Per Share | ~(0.12) | ~(0.03) | |||
Net Interest Expense1 | ~60 | ~60 | |||
Income Tax Expense | ~60 | ~60 | |||
Adjusted Operating Income2,4 | ~155 | ~170 | |||
Adjusted Net Income2,4 | ~18 | ~35 | |||
Adjusted Diluted EPS2,4 | ~0.06 | ~0.12 | |||
Adjusted EBITDA2,4 | ~245 | ~256 | |||
Restructuring Expense | ~15 | ~12 | |||
Cash Interest / DIC Amortization Interest | ~60 / ~13 | ~60 / ~14 | |||
Capex | ~265 | ~250 | |||
Ending Cash and Restricted Cash | ~590 | ~505 | |||
Ending Gross Debt3 | ~840 | ~765 | |||
Cash from Operating Activities | ~115 | ~105 | |||
Free Cash Flow4 | ~(150) | ~(145) | |||
1) Net Interest Expense is gross interest expense less capitalized interest and interest income.
2) Adjustments to the outlook GAAP financial measures include restructuring costs of
3) Ending Gross Debt does not include any reduction related to debt issuance costs
4) The calculations of forecasted total and per share adjusted net income, adjusted operating income, adjusted EBITDA and free cash flow are shown in the appendices entitled “Reconciliation of Forecast GAAP Financials to Non-GAAP Financial Measures.”
~ = approximately
Updates to our full-year 2016 guidance are driven by revisions in our expected project sequencing and improvements in projects that have recently been completed. Although uncertainty remains in the macro commodity environment, for now, we will continue to concentrate on our highest value proposition opportunities, executing our existing backlog, increasing customer alignment, our asset utilization and cost/liquidity management.
Credit Facility Amendment and Extension
In
Other Financial Information
Weighted average common shares outstanding on a fully diluted basis were approximately 284.9 million and 289.7 million for the quarters ended
Conference Call
McDermott has scheduled a conference call and webcast related to its second quarter results today at
About the Company
McDermott is a leading provider of integrated engineering, procurement, construction and installation (EPCI) and module fabrication services for upstream field developments worldwide. The Company delivers fixed and floating production facilities, pipelines, installations and subsea systems from concept to commissioning for complex Offshore and Subsea oil and gas projects to help oil companies safely produce and transport hydrocarbons. Our customers include national and major energy companies. Operating in approximately 20 countries across the world, our locally focused and globally integrated resources include approximately 11,400 employees, a diversified fleet of specialty marine construction vessels, fabrication facilities and engineering offices. We are renowned for our extensive knowledge and experience, technological advancements, performance records, superior safety and commitment to deliver. McDermott has served the energy industry since 1923, and shares of its common stock are listed on the
To learn more, please visit our website at www.mcdermott.com
NON-GAAP Measures
This press release includes several “non-GAAP” financial measures as defined under Regulation G of the U.S. Securities Exchange Act of 1934, as amended. We report our financial results in accordance with U.S. generally accepted accounting principles, but believe that certain non-GAAP financial measures provide useful supplemental information to investors regarding the underlying business trends and performance of our ongoing operations and are useful for period-over-period comparisons of those operations. The non-GAAP measures we have presented in this press release include non-GAAP Adjusted Operating Income (Loss), non-GAAP Adjusted Operating Margin, the total and diluted per share amounts of non-GAAP Adjusted Net Income (Loss) attributable to the Company, EBITDA and adjusted EBITDA, and Free Cash Flow. These non-GAAP financial measures should be considered as supplemental to, and not as a substitute for, or superior to, the financial measures prepared in accordance with GAAP.
Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are provided in the supplemental information set forth at the end of this press release.
Forward-Looking Statements
In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott cautions that statements in this press release which are forward-looking, and provide other than historical information, involve risks, contingencies and uncertainties that may impact McDermott's actual results of operations. These forward-looking statements include, but are not limited to, statements about backlog, bids outstanding, target projects and revenue pipeline, to the extent these may be viewed as indicators of future revenues or profitability, the expected value, scope, execution and timing of projects discussed, credit and debt structure, future savings and costs related to the McDermott Profitability Initiative and the Additional Overhead Reduction program, and McDermott’s earnings and other guidance for the full year of 2016 and 2016 outlook. Although we believe that the expectations reflected in those forward-looking statements are reasonable, we can give no assurance that those expectations will prove to have been correct. Those statements are made by using various underlying assumptions and are subject to numerous risks, contingencies and uncertainties, including, among others: adverse changes in the markets in which we operate or credit markets, our inability to successfully execute on contracts in backlog, changes in project design or schedules, the availability of qualified personnel, changes in the terms, scope or timing of contracts, contract cancellations, change orders and other modifications and actions by our customers and other business counterparties, changes in industry norms and adverse outcomes in legal or other dispute resolution proceedings. If one or more of these risks materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected. You should not place undue reliance on forward-looking statements. For a more complete discussion of these and other risk factors, please see McDermott's annual and quarterly filings with the
McDERMOTT INTERNATIONAL, INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(In thousands, except share and per share amounts) | ||||||||||||||||
Revenues | \\$ | 706,627 | \\$ | 1,046,537 | \\$ | 1,435,659 | \\$ | 1,597,000 | ||||||||
Costs and Expenses: | ||||||||||||||||
Cost of operations | 595,442 | 925,522 | 1,211,475 | 1,400,981 | ||||||||||||
Selling, general and administrative expenses | 52,075 | 47,793 | 90,403 | 99,469 | ||||||||||||
Impairment loss | - | 6,808 | 32,311 | 6,808 | ||||||||||||
Loss (gain) on asset disposals | (362 | ) | 1,910 | (362 | ) | 1,543 | ||||||||||
Restructuring expenses | 2,484 | 15,391 | 8,851 | 25,780 | ||||||||||||
Total costs and expenses | 649,639 | 997,424 | 1,342,678 | 1,534,581 | ||||||||||||
Operating income | 56,988 | 49,113 | 92,981 | 62,419 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense, net | (12,655 | ) | (12,985 | ) | (23,893 | ) | (25,164 | ) | ||||||||
Gain (loss) on foreign currency, net | (1,974 | ) | 1,943 | (5,157 | ) | 475 | ||||||||||
Other expense, net | (877 | ) | (359 | ) | (1,085 | ) | (456 | ) | ||||||||
Total other expense | (15,506 | ) | (11,401 | ) | (30,135 | ) | (25,145 | ) | ||||||||
Income before provision for income taxes | 41,482 | 37,712 | 62,846 | 37,274 | ||||||||||||
Provision for income taxes | 19,804 | 16,541 | 39,134 | 21,410 | ||||||||||||
Income before income (loss) from investments in unconsolidated affiliates | 21,678 | 21,171 | 23,712 | 15,864 | ||||||||||||
Income (loss) from investments in unconsolidated affiliates | 127 | (7,481 | ) | (4,351 | ) | (14,222 | ) | |||||||||
Net income | 21,805 | 13,690 | 19,361 | 1,642 | ||||||||||||
Less: Net income attributable to noncontrolling interest | 1,148 | 2,164 | 876 | 4,623 | ||||||||||||
Net income (loss) attributable to McDermott International, Inc. | \\$ | 20,657 | \\$ | 11,526 | \\$ | 18,485 | \\$ | (2,981 | ) | |||||||
Income (loss) per share | ||||||||||||||||
Net income (loss) attributable to McDermott International, Inc. | ||||||||||||||||
Basic: | 0.09 | 0.05 | 0.08 | (0.01 | ) | |||||||||||
Diluted: | 0.07 | 0.04 | 0.07 | (0.01 | ) | |||||||||||
Shares used in the computation of income (loss) per share: | ||||||||||||||||
Basic: | 240,338,540 | 238,332,012 | 239,739,204 | 237,918,366 | ||||||||||||
Diluted: | 284,909,414 | 289,689,981 | 283,132,238 | 237,918,366 |
McDERMOTT INTERNATIONAL, INC. | |||||||||||||||
EARNINGS PER SHARE COMPUTATION | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(In thousands, except share and per share amounts) | |||||||||||||||
Net income (loss) attributable to McDermott International, Inc. | \\$ | 20,657 | \\$ | 11,526 | \\$ | 18,485 | \\$ | (2,981 | ) | ||||||
Weighted average common shares (basic) | 240,338,540 | 238,332,012 | 239,739,204 | 237,918,366 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Tangible equity units | 40,896,300 | 40,896,300 | 40,896,300 | - | |||||||||||
Stock options, restricted stock, and restricted stock units | 3,674,574 | 10,461,669 | 2,496,734 | - | |||||||||||
Adjusted weighted average common shares and assumed exercises of stock options and vesting of stock awards (diluted) |
284,909,414 | 289,689,981 | 283,132,238 | 237,918,366 | |||||||||||
Net income (Loss) per share | |||||||||||||||
Net income (loss) attributable to McDermott International, Inc. | |||||||||||||||
Basic: | \\$ | 0.09 | \\$ | 0.05 | \\$ | 0.08 | \\$ | (0.01 | ) | ||||||
Diluted: | \\$ | 0.07 | \\$ | 0.04 | \\$ | 0.07 | \\$ | (0.01 | ) |
SUPPLEMENTARY DATA | ||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||
Depreciation & amortization expense | \\$ | 21,395 | \\$ | 26,044 | \\$ | 41,997 | \\$ | 51,371 | ||||||||||
Drydock amortization | \\$ | 2,992 | \\$ | 4,386 | \\$ | 6,932 | \\$ | 9,658 | ||||||||||
Capital expenditures | \\$ | 138,774 | \\$ | 24,013 | \\$ | 170,674 | \\$ | 47,985 | ||||||||||
Backlog | \\$ | 4,369,844 | \\$ | 3,130,340 | \\$ | 4,369,844 | \\$ | 3,130,340 |
McDERMOTT INTERNATIONAL, INC. | ||||||||
CONSOLIDATED BALANCE SHEETS (Unaudited) |
||||||||
June 30, 2016 |
December 31, 2015 |
|||||||
(In thousands, except share and per share amounts) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | \\$ | 470,023 | \\$ | 664,844 | ||||
Restricted cash and cash equivalents | 112,792 | 116,801 | ||||||
Accounts receivable—trade, net | 273,625 | 208,474 | ||||||
Accounts receivable—other | 54,998 | 66,689 | ||||||
Contracts in progress | 304,790 | 435,829 | ||||||
Other current assets | 44,549 | 34,641 | ||||||
Total current assets | 1,260,777 | 1,527,278 | ||||||
Property, plant and equipment | 2,559,108 | 2,467,352 | ||||||
Less accumulated depreciation | (853,463 | ) | (856,493 | ) | ||||
Net property, plant and equipment | 1,705,645 | 1,610,859 | ||||||
Accounts receivable—long-term retainages | 128,190 | 155,061 | ||||||
Investments in unconsolidated affiliates | 27,866 | 26,551 | ||||||
Deferred income taxes | 13,154 | 18,822 | ||||||
Other assets | 38,296 | 48,505 | ||||||
Total assets | \\$ | 3,173,928 | \\$ | 3,387,076 | ||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Notes payable and current maturities of long-term debt | \\$ | 52,802 | \\$ | 24,882 | ||||
Accounts payable | 215,987 | 279,821 | ||||||
Accrued liabilities | 269,277 | 330,943 | ||||||
Advance billings on contracts | 101,421 | 164,773 | ||||||
Income taxes payable | 21,833 | 23,787 | ||||||
Total current liabilities | 661,320 | 824,206 | ||||||
Long-term debt | 704,108 | 819,001 | ||||||
Self-insurance | 19,975 | 18,653 | ||||||
Pension liability | 23,940 | 24,066 | ||||||
Non-current income taxes | 58,379 | 52,559 | ||||||
Other liabilities | 109,746 | 101,870 | ||||||
Commitments and contingencies | ||||||||
Stockholders' Equity: | ||||||||
Common stock, par value \\$1.00 per share, authorized 400,000,000 shares; | ||||||||
issued 248,646,454 and 246,841,128 shares, respectively | 248,646 | 246,841 | ||||||
Capital in excess of par value (including prepaid common stock purchase contracts) | 1,689,103 | 1,687,059 | ||||||
Accumulated deficit | (242,399 | ) | (260,884 | ) | ||||
Accumulated other comprehensive loss | (65,875 | ) | (93,955 | ) | ||||
Treasury stock, at cost: 8,074,794 and 7,824,204 shares, respectively | (93,792 | ) | (92,262 | ) | ||||
Stockholders' Equity—McDermott International, Inc. | 1,535,683 | 1,486,799 | ||||||
Noncontrolling interest | 60,777 | 59,922 | ||||||
Total Equity | 1,596,460 | 1,546,721 | ||||||
Total Liabilities and Equity | \\$ | 3,173,928 | \\$ | 3,387,076 |
McDERMOTT INTERNATIONAL, INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
Six Months Ended June 30, | ||||||||
2016 | 2015 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | \\$ | 19,361 | \\$ | 1,642 | ||||
Non-cash items included in net income: | ||||||||
Depreciation and amortization | 41,997 | 51,371 | ||||||
Drydock amortization | 6,932 | 9,658 | ||||||
Impairment loss | 32,311 | 6,808 | ||||||
Stock-based compensation charges | 9,242 | 9,891 | ||||||
Loss from investments in unconsolidated affiliates | 4,351 | 14,222 | ||||||
Loss (gain) on asset disposals | (362 | ) | 1,543 | |||||
Restructuring (gain) expense | (1,500 | ) | 9,153 | |||||
Deferred income taxes | 5,667 | (1,215 | ) | |||||
Other non-cash items | 1,143 | (495 | ) | |||||
Changes in assets and liabilities that provided (used) cash: | ||||||||
Accounts receivable | (30,835 | ) | (147,293 | ) | ||||
Contracts in progress, net of advance billings on contracts | 67,698 | (129,932 | ) | |||||
Accounts payable | (65,212 | ) | 120,586 | |||||
Accrued and other current liabilities | (45,523 | ) | 48,380 | |||||
Pension liability | (751 | ) | (942 | ) | ||||
Other assets and liabilities | 31,271 | (19,443 | ) | |||||
Total cash provided by (used in) operating activities | 75,790 | (26,066 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (170,674 | ) | (47,985 | ) | ||||
(Increase) decrease in restricted cash and cash equivalents | 4,009 | (6,842 | ) | |||||
Investments in unconsolidated affiliates | (4,105 | ) | (4,783 | ) | ||||
Proceeds from asset dispositions | 388 | 10,510 | ||||||
Sales and maturities of available-for-sale securities | - | 2,875 | ||||||
Other investing activities | - | (232 | ) | |||||
Total cash used in investing activities | (170,382 | ) | (46,457 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayment of debt | (88,845 | ) | (13,402 | ) | ||||
Repurchase of common stock | (2,572 | ) | (1,448 | ) | ||||
Payment of debt issuance costs | (8,211 | ) | - | |||||
Other | - | (13 | ) | |||||
Total cash used in financing activities | (99,628 | ) | (14,863 | ) | ||||
Effects of exchange rate changes on cash and cash equivalents | (601 | ) | (1,348 | ) | ||||
Net decrease in cash and cash equivalents | (194,821 | ) | (88,734 | ) | ||||
Cash and cash equivalents at beginning of period | 664,844 | 665,309 | ||||||
Cash and cash equivalents at end of period | \\$ | 470,023 | \\$ | 576,575 |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
McDermott reports our financial results in accordance with the U.S. generally accepted accounting principles (“GAAP”). This press release also includes several Non-GAAP1 financial measures as defined under the SEC’s Regulation G. The following tables reconcile Non-GAAP financial measures to comparable GAAP financial measures:
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | ||||||||||||
(In thousands, except share and per share amounts) | |||||||||||||||
GAAP Net Income (Loss) Attributable to MDR | \\$ | 20,657 | \\$ | 11,526 | \\$ | 18,485 | \\$ | (2,981 | ) | ||||||
Less: Adjustments | |||||||||||||||
Restructuring charges2 | 2,484 | 15,391 | 8,851 | 25,780 | |||||||||||
Impairment loss3 | - | - | 32,311 | - | |||||||||||
Total Non-GAAP Adjustments | 2,484 | 15,391 | 41,162 | 25,780 | |||||||||||
Tax Effect of Non-GAAP Changes | (327 | ) | (132 | ) | (500 | ) | (353 | ) | |||||||
Total Non-GAAP Adjustments (After Tax) | 2,157 | 15,259 | 40,662 | 25,427 | |||||||||||
Non-GAAP Adjusted Net Income Attributable to MDR | \\$ | 22,814 | \\$ | 26,785 | \\$ | 59,147 | \\$ | 22,446 | |||||||
GAAP Operating Income | \\$ | 56,988 | \\$ | 49,113 | \\$ | 92,981 | \\$ | 62,419 | |||||||
Non-GAAP Adjustments | 2,484 | 15,391 | 41,162 | 25,780 | |||||||||||
Non-GAAP Adjusted Operating Income | \\$ | 59,472 | \\$ | 64,504 | \\$ | 134,143 | \\$ | 88,199 | |||||||
Non-GAAP Adjusted Operating Margin | 8.4 | % | 6.2 | % | 9.3 | % | 5.5 | % | |||||||
GAAP Diluted EPS | \\$ | 0.07 | \\$ | 0.04 | \\$ | 0.07 | \\$ | (0.01 | ) | ||||||
Non-GAAP Adjustments | 0.01 | 0.05 | 0.14 | 0.09 | |||||||||||
Non-GAAP Diluted EPS4 | \\$ | 0.08 | \\$ | 0.09 | \\$ | 0.21 | \\$ | 0.08 | |||||||
Shares used in computation of income (loss) per share: | |||||||||||||||
Basic | 240,338,540 | 238,332,012 | 239,739,204 | 237,918,366 | |||||||||||
Diluted | 284,909,414 | 289,689,981 | 283,132,238 | 289,418,166 | |||||||||||
1Non-GAAP measures include the total and diluted per share amounts of adjusted net income (loss) attributable to the Company and adjusted operating income and operating margin, in each case excluding the impact of certain identified items. We believe that total and per share adjusted net income (loss) and adjusted operating income and operating margin are useful measures for investors to review because they provide consistent measures of the underlying results of our ongoing business. Furthermore, our management uses adjusted net income (loss) and adjusted operating income as measures of the performance of our operations. However, Non-GAAP measures should not be considered as substitutes for operating income, net income or other data prepared and reported in accordance with GAAP and should be viewed in addition to the Company’s reported results prepared in accordance with GAAP.
2Restructuring charges are primarily associated with workforce reductions, facility closures, consultant fees, lease terminations and asset impairments.
3Impairment loss is related to an impairment of our Agile vessel during first quarter of 2016, upon termination of its charter in
4Diluted EPS is calculated using a share count determined by whether the period has a net income or a net loss. In the event of net income, Diluted EPS uses the fully diluted share count; however, in the event of a net loss, the potentially dilutive shares are excluded from the share count.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
McDermott reports our financial results in accordance with the U.S. generally accepted accounting principles (“GAAP”). This press release also includes several Non-GAAP1 financial measures as defined under the SEC’s Regulation G. The following tables reconcile Non-GAAP financial measures to comparable GAAP financial measures:
Three Months Ended June 30, 2016 | Six Months Ended June 30, 2016 | ||||||||||||||||||||||||||
AEA | MEA | ASA | AEA | MEA | ASA | ||||||||||||||||||||||
Revenues | \\$ | 86,810 | \\$ | 317,834 | \\$ | 301,983 | \\$ | 149,435 | \\$ | 588,089 | \\$ | 698,135 | |||||||||||||||
GAAP Operating Income (Loss) | 3,168 | 41,959 | 12,274 | (21,753 | ) | 80,426 | 37,407 | ||||||||||||||||||||
GAAP Operating Margin | 3.6 | % | 13.2 | % | 4.1 | % | -14.6 | % | 13.7 | % | 5.4 | % | |||||||||||||||
Adjustments | |||||||||||||||||||||||||||
Restructuring2 | (462 | ) | - | 2,533 | 1,874 | 17 | 3,861 | ||||||||||||||||||||
Impairment3 | - | - | - | 32,311 | - | - | |||||||||||||||||||||
Total Non-GAAP Adjustments | (462 | ) | - | 2,533 | 34,185 | 17 | 3,861 | ||||||||||||||||||||
Non-GAAP Operating Income (Loss) | \\$ | 2,706 | \\$ | 41,959 | \\$ | 14,807 | \\$ | 12,432 | \\$ | 80,443 | \\$ | 41,268 | |||||||||||||||
Non-GAAP Adjusted Operating Margin | 3.1 | % | 13.2 | % | 4.9 | % | 8.3 | % | 13.7 | % | 5.9 | % | |||||||||||||||
1Non-GAAP measures include the total and diluted per share amounts of adjusted net income (loss) attributable to the Company and adjusted operating income and operating margin, in each case excluding the impact of certain identified items. We believe that total and per share adjusted net income (loss) and adjusted operating income and operating margin are useful measures for investors to review because they provide consistent measures of the underlying results of our ongoing business. Furthermore, our management uses adjusted net income (loss) and adjusted operating income as measures of the performance of our operations. However, Non-GAAP measures should not be considered as substitutes for operating income, net income or other data prepared and reported in accordance with GAAP and should be viewed in addition to the Company’s reported results prepared in accordance with GAAP.
2Restructuring charges are primarily associated with workforce reductions, facility closures, consultant fees, lease terminations and asset impairments.
3Impairment loss is related to an impairment of our Agile vessel during first quarter of 2016, upon termination of its charter in
RECONCILIATION OF FORECAST GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
This press release includes several forward-looking Non-GAAP1 financial measures as defined under the SEC’s Regulation G. We believe forward looking financial measures are within reasonable measure. The following table reconciles Non-GAAP financial measures to comparable GAAP financial measures:
Q1' 16 Guidance |
Q2' 16 Guidance |
|||||||||
(In thousands, except per share amounts) | ||||||||||
GAAP Net Loss Attributable to MDR | \\$ | (29,000 | ) | \\$ | (8,300 | ) | ||||
Less: Adjustments | ||||||||||
Restructuring charges2 | 15,000 | 12,000 | ||||||||
Impairment Loss3 | 32,000 | 32,000 | ||||||||
Total Non-GAAP Adjustments | 47,000 | 44,000 | ||||||||
Tax Effect of Non-GAAP changes4 | - | (700 | ) | |||||||
Total Non-GAAP Adjustments (Net of Tax) | 47,000 | 43,300 | ||||||||
Non-GAAP Adjusted Net Income Attributable to MDR | \\$ | 18,000 | \\$ | 35,000 | ||||||
GAAP Operating Income | \\$ | 108,000 | \\$ | 126,000 | ||||||
Non-GAAP Adjustments | 47,000 | 44,000 | ||||||||
Non-GAAP Adjusted Operating Income | \\$ | 155,000 | \\$ | 170,000 | ||||||
GAAP Diluted EPS | \\$ | (0.12 | ) | \\$ | (0.03 | ) | ||||
Non-GAAP Adjustments | 0.18 | 0.15 | ||||||||
Non-GAAP Diluted EPS5 | \\$ | 0.06 | \\$ | 0.12 | ||||||
Cash flows from operating activities | \\$ | 115,000 | \\$ | 105,000 | ||||||
Capital expenditures | (265,000 | ) | (250,000 | ) | ||||||
Free cash flow | \\$ | (150,000 | ) | \\$ | (145,000 | ) | ||||
GAAP Net Loss Attributable to the Company | \\$ | (29,000 | ) | \\$ | (8,300 | ) | ||||
Add: | ||||||||||
Depreciation and amortization | 107,000 | 100,300 | ||||||||
Interest Expense, Net | 60,000 | 60,000 | ||||||||
Provision for Taxes | 60,000 | 60,000 | ||||||||
EBITDA | \\$ | 198,000 | \\$ | 212,000 | ||||||
EBITDA | \\$ | 198,000 | \\$ | 212,000 | ||||||
Adjustments | 47,000 | 44,000 | ||||||||
Adjusted EBITDA | \\$ | 245,000 | \\$ | 256,000 | ||||||
1Forecast Non-GAAP measures include the total and diluted per share amounts of adjusted net income (loss) attributable to the Company and adjusted operating income, free cash flow, EBITDA and Adjusted EBITDA, in each case excluding the impact of certain identified items. See footnote 1 to the preceding tables for a discussion of adjusted net income (loss) attributable to the Company. We define “free cash flow” as cash flows from operations less capital expenditures. We believe investors consider free cash flow as an important measure because it generally represents funds available to pursue opportunities that may enhance shareholder value, such as making acquisitions or other investments. Our management uses free cash flow for that reason. We define EBITDA as net income plus depreciation and amortization, interest expense, net and provision for income taxes. We define Adjusted EBITDA as EBITDA less the adjustments relating to restructuring charges and impairment loss detailed on the second immediately preceding page. We have included EBITDA and Adjusted EBITDA disclosures in this press release because EBITDA is widely used by investors for valuation and comparing our financial performance with the performance of other companies in our industry and because Adjusted EBITDA provides a consistent measure of EBITDA relating to our underlying business. Our management also uses EBITDA and Adjusted EBITDA to monitor and compare the financial performance of our operations. EBITDA and Adjusted EBITDA do not give effect to the cash that we must use to service our debt or pay our income taxes, and thus do not reflect the funds actually available for capital expenditures, dividends or various other purposes. In addition, our presentation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures in other companies’ reports. You should not consider EBITDA or Adjusted EBITDA in isolation from, or as a substitute for, net income or cash flow measures prepared in accordance with U.S. GAAP.
2Restructuring charges are primarily associated with workforce reductions, facility closures, consultant fee, lease terminations and asset impairments.
3Impairment loss is related to an impairment of our Agile vessel during first quarter of 2016 upon termination of its charter in
4We did not adjust Q1’16 Guidance for taxes and therefore tax impacts are not included.
5Diluted EPS is calculated using a share count determined by whether the period has a net income or a net loss.
Комментарии