McDermott International (MDR)

F4Phanatic (97.13) Submitted: 10/05/06 10:56 PM : Start Price: $24.88 MDR Score: -3.21

McDermott's three operating segments contributed to an increase in revenues so far this year. The three segments of McDermott include,

Offshore Oil and Gas Construction - includes J Ray McDermott which provides construction services for the oil industry.

Power Generation Systems - includes The Babcock & Wilcox Company which manufactures and operates electrical and steam generating plants.

Government Operations - includes BWX Technologies, Inc. and subsidiaries, which provides fuel and equipment to the U.S. Navy's nuclear fleet and manages U.S. Government - owned facilities.

McDermott announced on September 8,2006 it was conducting a strategic realignment of it's businesses operating within the power industry. Effective January 1, 2007 McDermott will consolidate BWX Technologies and Babcock & Wilcox into a single operating entity as The Babcock & Wilcox Companies.

Earnings have been strong at McDermott, backlogs are at record levels, bids outstanding remain robust and cash flow has enabled MDR to retire substantially all of its funded debt. Offshore Oil & Gas Construction Construction revenues in this segment were $398.8 million in Q2 of 2006, compared to $349.7 million for Q2 of 2005. The year to year increase in revenues resulted from increased activity in the Middle East region and worldwide marine projects. Segment income for 2006 2nd quarter was $63.9 million, compared to $30.2 million in Q2 of 2005. Major items in Q2 of 2006 were projects in the Middle East and Caspian regions. On June 30, 2006 the backlog for J.Ray McDermott was $3.2 billion, compared with a backlog of $0.9 billion on June 30, 2005.

Power Generation Systems for the 2nd quarter of 2006 were $488.7 million. During 2005, Babcock & Wilcox was deconsolidated and therefore there were no revenues reported for the 2nd quarter of 2005. Segment income for Q2 of 2006 was $25.2 million, compared to $0.3 million in 2005 2nd quarter. The increase was due to reconsolidation of Babcock & Wilcox beginning in the 1st quarter of 06. On June 30, 2006 B&W's backlog was $3.1 billion.

Government Operations revenues were $163.5 million for Q2 of 2006, compared to $159.9 million for Q2 of 2005. The increase was due to higher volumes in the manufacture of nuclear components for U.S. Government programs. Segment income for 2006 2nd quarter was $30.8 billion, compared to $29.7 million in the 2nd quarter of 2005. The increase was due to an increase in the manufacture of fuel for research test reactors and fuel for commercial reactors. On June 30, 2006 the backlog was $1.5 billion, compared to $1.6 billion on June 30, 2005.

Some financials for MDR include,

Trailing P/E 23.68
Forward P/E 14.17
Revenue $2.60 billion
Revenue per Share $24.53
Quarterly Revenue Growth 105.80%
EBITDA 369.98 million
Quarterly Earnings Growth -43.89%
Total Cash $674.9 million
Total Debt $27.75 million

2006 Q2 Net Income $45.4 million
2005 Q2 Net Income $80.9 million

2006 Q2 Revenue $1,048.9 million
2005 Q2 Revenue $509.7 million

McDermott is a long-term buy and hold for me!

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