Houston-based EPCI contractor McDermott recorded an increase in both profit and revenues in its last full quarter as a separate company before it merges with CB&I.
McDermott, which recently rejected a takeover offer by Subsea 7, on Tuesday posted its first quarter 2018 earnings attributable to McDermott stockholders of $35.2 million compared to $21.9 million for the prior-year first quarter.
McDermott’s first quarter 2018 revenues totaled $607.8 million, an increase of $88.4 million, compared to revenues of $519.4 million for the prior-year first quarter.
The key projects driving revenues for the first quarter of 2018 were the Saudi Aramco LTA II Lump Sum, Saudi Aramco Safaniya Phase 5, Inpex Ichthys and Pemex Abkatun-A2 projects. The increase from the prior-year first quarter was primarily due to the settlement of a significant change order in Asia and an increase in activity in the Middle East.
David Dickson, President and Chief Executive Officer of McDermott, said: “As market conditions improve for our customers, opportunities for the combined organization continue to increase as our customers remain enthusiastic about the vertically integrated solution a combined McDermott and CB&I will offer.”
Dickson, who will continue to lead the combined company, also reminded that the integration teams from the two companies had identified potential incremental savings of $100 million in addition to the expected $250 million in annualized cost synergies.
Dickson added: “We are excited to complete our transformational combination with CB&I so that we can begin integrating our two companies and deliver on the significant value-creating benefits of the transaction.”
At the end of the quarter, McDermott’s backlog was $3.4 billion, compared to $3.9 billion at the end of last December. Order intake in the first quarter of 2018 totaled $321.2 million.
McDermott and CB&I did not allow Subsea 7’s attempted takeover and objection by a shareholder holding about 2% of the company to rock their merger boat but boasted with support from two proxy advisory firms, Institutional Shareholder Services and Glass Lewis, who endorsed the merger plan ahead of the special meetings of shareholders of both companies scheduled to be held on May 2.
Once and if the merger is completed as planned next month, the new company will keep the name McDermott as it “provides a strong foundation for the combined company.”
Offshore Energy Today Staff