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McDermott (MDR) Q2 Earnings Beat, Revenues Miss; Down Y/Y

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Offshore oil and gas-focused engineering and construction firm McDermott International Inc. reported better than expected second-quarter 2016 results. Improved execution of projects and operational profitability led to the outperformance.

The company reported adjusted earnings of 8 cents per share that handily beat the Zacks Consensus Estimate of 2 cent.  However, the bottom line deteriorated substantially from 12 cents per share reported in the year-ago quarter.

McDermott generated revenues of about $707 million in the quarter as against $1,047 million in the prior-year quarter. The top line also came in below the Zacks Consensus Estimate of $736 million.

Total Expenses

Total costs and expenses decreased 34.9% from $997.4 million in the year-ago quarter to about $649.6 million.

Backlog

At the end of the second quarter, McDermott had a backlog of $4,369.8 million as against $3,130.3 million a year ago. While 80% of the total backlog is related to offshore operations, the remaining 20% pertains to subsea operations.

Balance Sheet

Capital expenditure for McDermott was about $138.8 million during the quarter.

As of Jun 30, 2016, McDermott had cash and cash equivalents of $470 million and long-term debt of approximately $704.1 million. This represents a debt-to-capitalization ratio of about 30.6%.

MCDERMOTT INTL Price, Consensus and EPS Surprise

MCDERMOTT INTL Price, Consensus and EPS Surprise | MCDERMOTT INTL Quote

Recent News 

On Jul 26 2016, McDermott entered into a five-year cooperation agreement with Nakilat-Keppel Offshore Marine to pursue offshore engineering, procurement, construction and installation projects in Qatar.

 Zacks Rank and Key Stock Picks

Houston, TX-based McDermott currently carries a Zacks Rank #3 (Hold).

Some better-ranked players from the broader energy sector are Murphy USA Inc. (MUSA - Free Report) , Legacy Reserves LP and Sasol Ltd. (SSL - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).

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