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Engineering and construction firm McDermott International (MDR - Analyst Report) reported mixed fourth-quarter 2012 earnings results, owing to strong performances in certain regions, partially offset by steeper operating costs. Earnings per share from continuing operations came in at 17 cents, behind the Zacks Consensus Estimate of 23 cents.

However, the Texas-based engineering-to-project management service provider’s per share profit was significantly higher than 4 cents earned in the fourth quarter of 2011. The quarter’s result was positively influenced by favorable order activity in the Asia-Pacific belt.

McDermott generated revenues of $996.0 million in the quarter, up 22.0% from the fourth quarter of 2011 and also ahead of our expectation of $988.0 million. Better marine operations on a subsea project in the Middle East and Atlantic regions boosted the company’s results.

On a reported basis, the company registered operating income of $77.3 million (jumped 145.9% year over year) during the quarter. Total costs and expenses also increased 17.10% from the corresponding period last year to $913.0 million.

Backlog

At the end of the fourth quarter of 2012, McDermott had a backlog of $5,067.2 million, compared with $3,881.1 million a year ago. As of Sep 30, 2012, the backlog was $5,339.8 million.

Balance Sheet

As of Dec 31, 2012, McDermott had cash/cash equivalents of $640.1 million and long-term debt (including current maturities) of approximately $102.7 million (representing a debt-to-capitalization ratio of approximately 5.0%).

Zacks Rating

The company currently retains a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next 1 to 3 months.

McDermott primarily serves the worldwide offshore oil and gas field developments, including front-end design and detailed engineering, fabrication and installation of offshore drilling and production facilities, as well as installation of marine pipelines and subsea production systems.

Additionally, the company provides project management and procurement services. It operates in most of the major offshore oil and gas producing regions, including the U.S., Mexico, Canada, the Middle East, India, the Caspian Sea and Asia Pacific.

Apart from McDermott, there are some other energy firms that offer value and are worth buying now. These include Range Resources Corp. (RRC - Analyst Report), Linn Co LLC (LNCO - Snapshot Report) and Future Fuel Corp. (FF - Snapshot Report). All of these stocks sport a Zacks Rank #1 (Strong Buy).
 

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