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McDermott International Inc. recently reported earnings of 17 cents per share in first-quarter 2018, surpassing the Zacks Consensus Estimate of 16 cents. Further, the bottom line also improved from the year-ago quarter’s earnings of 8 cents. The outperformance can primarily be attributed to solid operational execution.
Key projects that strengthened earnings in the quarter include Inpex Ichthys, Pemex Abkatun-A2, Saudi Aramco LTA II Lump Sum and Saudi Aramco Safaniya Phase 5.
McDermott generated revenues of about $607.8 million in the quarter, 17% higher than the prior-year quarter’s figure of $519.4 million and also ahead of the Zacks Consensus Estimate of $591 million. Increased activity in the Middle East drove revenues.
McDermott International, Inc. Price, Consensus and EPS Surprise
Cost of operations increased from $428.6 million in the year-ago quarter to about $475.7 million in the quarter under review. While expenses in research and development decreased 4.8% year over year to $458 thousand in the first quarter of 2018, selling, general and administrative expenses rose 33.9% from the prior-year quarter to $48.9 million.
Backlog
As of Mar 31, McDermott had a backlog of $3.4 billion compared with $3.9 billion a year ago. In the first quarter, the company took $321.2 million worth of orders, following which its book-to-bill ratio is 0.5x.
Balance Sheet
Capital expenditure for McDermott was about $18.4 million during the quarter, compared with almost $63 million in the year-ago quarter. As of Mar 31, 2017, the company had cash and cash equivalents of $412.7 million and long-term debt of approximately $513 million. Its debt-to-capitalization ratio was about 21.8%.
2018 Guidance
The company reiterated its preliminary guidance issued on Jan 24. McDermott expects full-year revenues to lie within the $3.1-$3.3 billion range. The company expects EBITDA to be within the range of $340-$365 million. Capital expenditure is anticipated to be between $100 million and $115 million. Net income is now anticipated to be approximately within $120-$145 million. Also, McDermott expects free cash flow to range within $195-$235 million. EPS is estimated to lie between 42 cents and 52 cents.
Moreover, the company’s plan to combine its operations with that of Chicago Bridge & Iron Company N.V. CBI, which is expected to be executed in the coming month, is likely to bring an integrated technology and engineering expertise, along with a cost-effective delivery structure. The deal is expected to create significant value for the investors.
Price Performance
McDermott has lost 7.5% in the first quarter compared with 9.6% fall of its industry.
Zacks Rank and Stocks to Consider
McDermott has a Zacks Rank #3 (Hold).
If you are interested in the energy sector, you can opt for some better-ranked stocks like EOG Resources, Inc. (EOG - Free Report) , Oasis Midstream Partners LP and CNOOC Ltd. (CEO - Free Report) . While EOG Resources and Oasis Midstream sport a Zacks Rank #1 (Strong Buy), CNOOC has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based EOG Resources is an upstream energy company. For 2018, the bottom line of the company is likely to be up 34.1%. In the last four reported quarters, the company witnessed a positive average surprise of 25.7%.
Houston, TX-based Oasis Midstream is an integrated energy partnership. Its revenues for 2018 are anticipated to improve 29.3% from the prior-year quarter, while its bottom line is expected to increase 337.2%.
Hong Kong-based CNOOC is an integrated energy company. Its revenues for 2018 are anticipated to improve 49% year over year, while its bottom line is expected to increase 82.8%.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Image: Bigstock
McDermott (MDR) Q1 Earnings Beat Estimates, Affirms Guidance
McDermott International Inc. recently reported earnings of 17 cents per share in first-quarter 2018, surpassing the Zacks Consensus Estimate of 16 cents. Further, the bottom line also improved from the year-ago quarter’s earnings of 8 cents. The outperformance can primarily be attributed to solid operational execution.
Key projects that strengthened earnings in the quarter include Inpex Ichthys, Pemex Abkatun-A2, Saudi Aramco LTA II Lump Sum and Saudi Aramco Safaniya Phase 5.
McDermott generated revenues of about $607.8 million in the quarter, 17% higher than the prior-year quarter’s figure of $519.4 million and also ahead of the Zacks Consensus Estimate of $591 million. Increased activity in the Middle East drove revenues.
McDermott International, Inc. Price, Consensus and EPS Surprise
McDermott International, Inc. Price, Consensus and EPS Surprise | McDermott International, Inc. Quote
Cost of operations increased from $428.6 million in the year-ago quarter to about $475.7 million in the quarter under review. While expenses in research and development decreased 4.8% year over year to $458 thousand in the first quarter of 2018, selling, general and administrative expenses rose 33.9% from the prior-year quarter to $48.9 million.
Backlog
As of Mar 31, McDermott had a backlog of $3.4 billion compared with $3.9 billion a year ago. In the first quarter, the company took $321.2 million worth of orders, following which its book-to-bill ratio is 0.5x.
Balance Sheet
Capital expenditure for McDermott was about $18.4 million during the quarter, compared with almost $63 million in the year-ago quarter. As of Mar 31, 2017, the company had cash and cash equivalents of $412.7 million and long-term debt of approximately $513 million. Its debt-to-capitalization ratio was about 21.8%.
2018 Guidance
The company reiterated its preliminary guidance issued on Jan 24. McDermott expects full-year revenues to lie within the $3.1-$3.3 billion range. The company expects EBITDA to be within the range of $340-$365 million. Capital expenditure is anticipated to be between $100 million and $115 million. Net income is now anticipated to be approximately within $120-$145 million. Also, McDermott expects free cash flow to range within $195-$235 million. EPS is estimated to lie between 42 cents and 52 cents.
Moreover, the company’s plan to combine its operations with that of Chicago Bridge & Iron Company N.V. CBI, which is expected to be executed in the coming month, is likely to bring an integrated technology and engineering expertise, along with a cost-effective delivery structure. The deal is expected to create significant value for the investors.
Price Performance
McDermott has lost 7.5% in the first quarter compared with 9.6% fall of its industry.
Zacks Rank and Stocks to Consider
McDermott has a Zacks Rank #3 (Hold).
If you are interested in the energy sector, you can opt for some better-ranked stocks like EOG Resources, Inc. (EOG - Free Report) , Oasis Midstream Partners LP and CNOOC Ltd. (CEO - Free Report) . While EOG Resources and Oasis Midstream sport a Zacks Rank #1 (Strong Buy), CNOOC has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based EOG Resources is an upstream energy company. For 2018, the bottom line of the company is likely to be up 34.1%. In the last four reported quarters, the company witnessed a positive average surprise of 25.7%.
Houston, TX-based Oasis Midstream is an integrated energy partnership. Its revenues for 2018 are anticipated to improve 29.3% from the prior-year quarter, while its bottom line is expected to increase 337.2%.
Hong Kong-based CNOOC is an integrated energy company. Its revenues for 2018 are anticipated to improve 49% year over year, while its bottom line is expected to increase 82.8%.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Click here to see them >>