McDermott International, Inc. reported net income of $19.3 million on revenues of $591.2 million for the quarter ended September 30, 2001. Earnings were up 245 percent as compared to the same quarter last year, when net income was $5.6 million. Revenues increased by more than 50 percent over the third quarter last year, when revenues were $391.0 million. Operating income was $33.6 million in the third quarter of 2001, compared to $12.7 million a year ago, a 165 percent increase quarter over quarter.
For the first nine months of 2001, McDermott reported revenues of $1.52 billion and net income of $22.9 million, or $0.37 a diluted share. These results compare with revenues of $1.47 billion and net income of $3.4 million, or $0.06 a diluted share, in the same period a year ago. The 2000 results include Babcock & Wilcox (4BW.F)
through February 21, 2000, when it filed for Chapter 11 reorganization. Excluding Babcock & Wilcox's results for that period in 2000, McDermott's revenues for the first nine months of 2000 were $1.31 billion and the net loss was $2.1 million.
"Activity in our marine construction operations has increased considerably since the beginning of the year, and the increase in operating profit during the quarter was substantially beyond our forecast," said Bruce Wilkinson, Chairman of the Board and Chief Executive Officer. "Although we expect seasonal weakness in the fourth quarter, marine construction volume should continue its upward trend into the foreseeable future as we work through our current backlog and anticipate additional bookings in coming quarters."
Wilkinson also noted that the company's cash flow from operations was again excellent in the third quarter, despite the significant increase in activity. Operating cash flow for the quarter was about $35 million, compared to a cash deficit of about $2 million in the third quarter last year.
Worldwide marine construction activity continued to increase in the third quarter, especially in the deepwater markets of the Gulf of Mexico. J. Ray McDermott reported segment income of $22.3 million, a $27.2 million improvement over the third quarter of 2000. Segment income increased year-over-year primarily due to higher volume and better gross margins in both North America and Eastern Hemisphere fabrication activities, and as a result of higher equity income this quarter. Sequentially, segment income more than doubled over the second quarter of 2001, when it was $9.9 million.
Marine construction backlog at the end of the third quarter was $1.53 billion, compared to $554.4 million a year ago and $1.23 billion at the end of June. Eastern Hemisphere backlogs increased somewhat this quarter, but the largest increase was in the Western Hemisphere, where about $250 million of work associated with the fabrication of topsides for BP (BP)
's deepwater Gulf of Mexico projects was booked. This work is expected to be under way by the first quarter of 2002 at J. Ray McDermott's fabrication facility near Morgan City, Louisiana.