Strong Start to 2018 Driven by One McDermott
Way
McDermott International, Inc. (NYSE:MDR) (“McDermott” or “we”) is
providing an operational update for the quarter ended March 31,
2018, and reaffirming its 2018 guidance originally issued on
January 24, 2018, as reaffirmed on February 21, 2018.
First Quarter 2018 Operational
Update
|
|
Estimates forThree Months
EndedMar 31,
2018(Unaudited) |
($ in millions, except as indicated and per share
amounts) |
Order Intake |
~$320 |
Backlog |
~$3.4B |
Revenues |
$600 -
610 |
|
|
Operating Income |
$60 -
65 |
Operating Margin |
10.0% -
10.7% |
Net Income |
$30 -
35 |
Diluted Net Income Per
Share |
$0.10 -
0.12 |
Adjusted Operating
Income1 |
$75 -
80 |
Adjusted Operating
Margin1 |
12.5% -
13.1% |
Adjusted Net
Income1,2 |
$45 -
50 |
Adjusted Diluted Net
Income Per Share1,2 |
$0.15 -
0.17 |
Adjusted EBITDA1 |
$100 -
105 |
|
|
Ending Cash, Restricted
Cash and Cash Equivalents |
$410 -
415 |
Cash Provided by
Operating Activities |
$25 -
35 |
~ = approximately1 Adjusted Operating Income,
Adjusted Operating Margin, Adjusted Net Income, Adjusted Diluted
Net Income Per Share (“Adjusted EPS”) and Adjusted EBITDA reflect
an adjustment to Operating Income computed in accordance with U.S.
generally accepted accounting principles (“GAAP”) to add back
approximately $15 million of transaction, integration and
restructuring related costs associated with the proposed
combination with Chicago Bridge & Iron Company N.V.
(“CB&I”) incurred during the quarter ended March 31, 2018.The
reconciliations of Adjusted Operating Income, Adjusted Operating
Margin, Adjusted Net Income, Adjusted EPS and Adjusted EBITDA to
the respective most comparable GAAP measures are provided in the
appendix entitled “Reconciliation of Non-GAAP Financial Measures to
GAAP Financial Measures.”2 The calculations of Adjusted Net Income
and Adjusted EPS reflect the tax effects of Non-GAAP adjustments
during the period. In jurisdictions in which we currently do not
pay taxes, no tax impact is applied to Non-GAAP adjusting
items.
“I am very pleased with the performance our team
delivered to start 2018,” said David Dickson, President and Chief
Executive Officer of McDermott. “Our preliminary results reflect
our focus on the fundamentals of McDermott’s business, including
maintaining our operational performance and customer relationships.
During the quarter, our strong relationship with Saudi Aramco led
to the award of the 13 Jackets EPCI contract. Additionally, we were
awarded a detailed engineering and long lead procurement contract
for the BP Cassia C Compression platform and the front-end
engineering and design (“FEED”) contract for the West African
Tortue/Ahmeyim development. These contracts will be executed under
our new strategic business model that develops FEED, in conjunction
with our customers using our industry execution expertise and
vertical integration, that are ultimately converted into full-scale
engineering, procurement, construction and installation (“EPCI”)
contracts. Given these first quarter preliminary results, our
ongoing confidence in the McDermott business and the confidence we
have in our end markets and their continued recovery, we are
reaffirming our guidance for 2018.”
McDermott’s preliminary first quarter 2018
results were driven by solid backlog conversion across all Areas,
settlement of significant change orders and continued execution on
cost-saving efforts such as the Fit2Grow initiative, which
generated approximately $15 million in expected savings during the
quarter.
In the Americas, Europe and Africa (“AEA”)
Area:
- The Pemex Abkatun project started the first of two offshore
campaigns, successfully installing the eight leg jacket, before
moving onto the tripods and bridges installation, which is
ongoing.
- On the BP Angelin project, final mechanical completion of the
deck, along with onshore commissioning, is on schedule to be
completed early in Q2 2018 at the Altamira yard.
- The QGEP Atlanta project offshore work was completed
successfully in March 2018 and the NO 102 vessel has already
departed from Brazil.
- The Maersk Tyra project continues on schedule, with early ramp
up in line with expectations, including the construction readiness
plan at the Batam yard.
- The recently awarded front-end engineering and design contract
for the BP Tortue/Ahmeyim Field Development is expected to commence
the initial engineering phase in early Q2 2018. The agreement
includes a mechanism to transition the contract to a lump-sum EPCI
contract at a later date.
- The pre-engineering and long lead procurement for the BP Cassia
C project was awarded and commenced in the first quarter of 2018,
with implementation of our innovative Digital Twin technology
platform expected to occur later in the project.
In the Middle East (“MEA”) Area:
- Offshore work in the Safaniya field relating to the Long Term
Agreement II project is now substantially complete. Engineering and
procurement activities on the Safaniya Phase 5 project are nearing
completion, with the first two platforms 100% complete. The
Safaniya Phase 6 project is proceeding as per the project schedule,
and the first steel plate was cut on March 12, 2018, with Saudi
Aramco senior management in attendance.
- The Bul Hanine EPCI project for Qatar Petroleum is now fully
underway in our Kuala Lumpur office, with fabrication work in our
Batam facility scheduled to commence in late Q2 2018.
- The recently awarded Saudi Aramco project for 13 Jackets is
proceeding at a fast pace, with the first structural steel expected
to arrive in our Jebel Ali fabrication yard in Q2 2018.
In
the Asia (“ASA”) Area:
- The ONGC Vashishta project achieved first gas in late March,
and the Ichthys project is substantially complete.
- The double joint welding of heavy and light wall pipe for the
Greater Western Flank2 (GWF2) project was completed at McDermott’s
purpose-built facility within our Batam fabrication yard in early
January 2018. The offshore scope is expected to be completed
during late Q2 2018.
- The Reliance KGD6 Subsea Engineering, Procurement, Installation
and Pre-commissioning project set up is complete.
- The Gorgon Phase 2 Subsea manifolds fabrication project,
awarded in December 2017 by Baker Hughes, a GE Company (BHGE), is
progressing in line with the project plan.
- The Exxon West Barracouta subsea tie back design was completed
in March 2018.
During the first quarter of 2018, McDermott
reached agreement on a significant change order in the ASA Area,
which contributed to an increase in our operating margin. A
significant amount of the cost and a portion of the revenues
associated with the change order were recognized in prior
quarters.
As of March 31, 2018, McDermott’s preliminary
total revenue opportunity pipeline is estimated to be approximately
$25.0 billion, which includes our estimated backlog of
approximately $3.4 billion, bids and change orders outstanding of
approximately $7.5 billion and targets of approximately $14.1
billion. Our revenue opportunity pipeline increased approximately
$0.5 billion from December 31, 2017. Our bids outstanding and
change orders increased approximately $3.1 billion from December
31, 2017, signaling increased opportunities in the market.
Full Year 2018 Guidance
McDermott’s full year 2018 guidance was
initially issued on January 24, 2018, and reaffirmed on Feburary
21, 2018. McDermott is reaffirming it again at this time, with an
adjustment to our anticipated costs forecast under Corporate and
Other. McDermott’s 2018 guidance does not include any transaction,
integration, financing or restructuring related costs associated
with the proposed combination with CB&I.
|
Full Year 2018 Guidance |
($ in millions, except as indicated) |
Revenues |
$3.1B -
3.3B |
Operating Income |
$250 -
275 |
Operating Margin |
7.9% -
8.3% |
Net Income1 |
$120 -
145 |
Diluted Net Income Per
Share |
$0.42 -
0.52 |
|
|
Debt
Measures |
|
Net Interest
Expense2 |
~$50 |
Cash Interest / DIC
Amortization Interest |
~$43 /
~$7 |
Ending Cash, Restricted
Cash and Cash Equivalents |
$580 -
605 |
Ending Gross Debt3 |
~$515 |
|
|
Other Financial
Measures |
|
Income Tax Expense |
~$70 |
EBITDA4 |
$340 -
365 |
Cash from Operating
Activities |
$310 -
335 |
Capex |
$100 -
115 |
Free Cash Flow |
$195 -
235 |
Corporate and
Other5 |
$(195)
- (210) |
|
|
~ = approximately1 McDermott’s forecasted net
income attributable to McDermott does not include the 2018 year-end
pension actuarial gain or loss, because McDermott has no basis to
estimate pension actuarial gain or loss amounts for the forecast
period and cannot estimate such amount without unreasonable effort.
2 Net Interest Expense is gross interest expense less capitalized
interest and interest income.3 Ending Gross Debt excludes debt
issuance costs and capital lease obligations.4 The calculations of
EBITDA and Free Cash Flow, which are Non-GAAP measures, are shown
in the appendix entitled “Reconciliation of Forecast Non-GAAP
Financial Measures to Forecast GAAP Financial Measures.”5 Corporate
and Other represents the operating income (loss) from corporate and
non-operating activities, including corporate expenses, certain
centrally managed initiatives (such as restructuring charges),
impairments, year-end mark-to-market (“MTM”) pension actuarial
gains and losses, costs not attributable to a particular reporting
segment, and unallocated direct operating expenses associated with
the underutilization of vessels, fabrication facilities and
engineering resources.
Integration Update
The integration planning process for McDermott’s
pending combination with CB&I is progressing well. The
companies have received all necessary regulatory approvals and the
combination is on track to close in the second quarter of 2018.
“We made significant progress during the quarter
towards completing our proposed combination with CB&I,
including announcing the executive leadership team and
organizational structure, concluding the competition authority
reviews and syndicating the requisite financing,” continued
Dickson. “Our integration planning has given us added confidence in
our ability to achieve our stated cost synergy target. Through our
work, we have identified expected cost savings in excess of $250
million, which further increases the value of the combination for
our stockholders.”
Update on Synergies
The companies have validated the identified $250
million in annualized cost synergies with concrete plans to achieve
them by the second quarter of 2019. The cost synergies are
expected to be driven through efficiencies in Supply
Chain/Procurement, G&A, Operations and “Other” (i.e., perks,
travel, etc.) savings areas. The $84 million in Supply
Chain/Procurement savings are expected to be executed through a
combination of improved commodity/category buying power and
supplier consolidation, as well as improved purchase agreements
held by both companies. The $84 million in G&A savings are
expected to be achieved through a combination of centralization
and/or outsourcing of specific transactional functions and
right-sizing the overall corporate support core. The $55 million in
operational savings are expected to be executed through pooling of
operations support resources in high value centers, facility
footprint rationalization and harmonizing project management
layers/structures. The $27 million in "Other" savings are expected
to be achieved by adopting a more conservative travel and expense
policy, eliminating certain benefits/perks and reducing board of
directors and insurance costs.
In addition to the $250 million, the companies
have identified potential incremental savings of $100 million in
savings that our integration teams are working to verify and
determine the expected timing to achieve through leveraging
McDermott’s cost conscious culture on the combined business. These
savings are expected to be achieved across G&A, Operations, and
Supply Chain/Procurement. With the implementation of the recently
announced plans regarding organizational structure and leadership
driving our integration efforts, we have identified potential
additional $9 million in G&A, $22 million in operations and $69
million in Supply Chain/Procurement savings. These savings are
expected to be executed through similar channels as the original
savings and will be included in the overall integration plans. As
our executive leadership continues the integration planning, we
will remain vigilant in identifying additional opportunities for
cost synergies.
Update on Financing
McDermott has syndicated senior credit
facilities to provide requisite financing to complete the pending
combination with CB&I. The capital structure as a whole is
expected to carry an estimated annualized interest cost on funded
indebtedness of approximately $304 million, which compares to the
estimated annualized interest cost of approximately $298 million on
funded indebtedness originally anticipated based on the financing
estimates described in McDermott’s previously published pro forma
financial statements.
About the Company
McDermott is a leading provider of integrated
engineering, procurement, construction and installation (“EPCI”),
front-end engineering and design (“FEED”) and module fabrication
services for upstream field developments worldwide. McDermott
delivers fixed and floating production facilities, pipelines,
installations and subsea systems from concept to commissioning for
complex Offshore and Subsea oil and gas projects to help oil
companies safely produce and transport hydrocarbons. Our
customers include national and major energy companies.
Operating in approximately 20 countries across the world, our
locally focused and globally integrated resources include
approximately 11,800 employees, a diversified fleet of specialty
marine construction vessels, fabrication facilities and engineering
offices. We are renowned for our extensive knowledge and
experience, technological advancements, performance records,
superior safety and commitment to deliver. McDermott has
served the energy industry since 1923, and shares of its common
stock are listed on the New York Stock Exchange.
To learn more, please visit our website at
www.mcdermott.com.
Non-GAAP Measures
This communication includes several “non-GAAP”
financial measures as defined under Regulation G of the U.S.
Securities Exchange Act of 1934, as amended. We report our
financial results in accordance with GAAP, but believe that certain
non-GAAP financial measures provide useful supplemental information
to investors regarding the underlying business trends and
performance of our ongoing operations and are useful for
period-over-period comparisons of those operations.
Non-GAAP measures include adjusted diluted net
income per share, adjusted net income, adjusted operating income,
adjusted operating income margin and adjusted EBITDA for McDermott,
in each case excluding the impacts of certain identified items. The
excluded items represent items that our management does not
consider to be representative of our normal operations. We believe
that adjusted diluted net income per share, adjusted net income,
adjusted operating income, adjusted operating income margin and
adjusted EBITDA are useful measures for investors to review,
because they provide a consistent measure of the underlying
financial results of our ongoing business and, in our management’s
view, allow for a supplemental comparison against historical
results and expectations for future performance. Furthermore, our
management uses adjusted net income and adjusted operating income
as measures of the performance of our operations for budgeting and
forecasting, as well as employee incentive compensation. However,
Non-GAAP measures should not be considered as substitutes for
operating income, net income or other data prepared and reported in
accordance with GAAP and should be viewed in addition to our
reported results prepared in accordance with GAAP.
The forecast non-GAAP measures we have presented
in this communication include forecast free cash flow and EBITDA,
in each case excluding the impacts of certain identified items. We
believe these forward-looking financial measures are within
reasonable measure. We define “free cash flow” as cash flows from
operations less capital expenditures. We believe investors consider
free cash flow as an important measure, because it generally
represents funds available to pursue opportunities that may enhance
stockholder value, such as making acquisitions or other
investments. Our management uses free cash flow for that reason. We
define EBITDA as net income plus depreciation and amortization,
interest expense, net, and provision for income taxes. We have
included EBITDA disclosures in this communication because EBITDA is
widely used by investors for valuation and comparing our financial
performance with the performance of other companies in our
industry. Our management also uses EBITDA to monitor and compare
the financial performance of our operations. EBITDA does not give
effect to the cash that we must use to service our debt or pay our
income taxes, and thus does reflect the funds actually available
for capital expenditures, dividends or various other purposes. Our
presentations of free cash flow and EBITDA may not be comparable to
similarly titled measures in other companies’ reports. You should
not consider free cash flow and EBITDA in isolation from, or as a
substitute for, net income or cash flow measures prepared in
accordance with U.S. GAAP.
Reconciliations of these non-GAAP financial
measures and forecast non-GAAP financial measures to the most
comparable GAAP measures are provided in the tables set forth at
the end of this communication.
Forward-Looking Statements
McDermott cautions that statements in this communication which
are forward-looking, and provide other than historical information,
involve risks, contingencies and uncertainties that may impact
actual results of operations of McDermott, including after the
proposed business combination with CB&I. These forward-looking
statements include, among other things, statements about the
preliminary first quarter 2018 results, full-year 2018 guidance,
project milestones, backlog, bids and change orders outstanding,
target projects and revenue opportunity pipeline, to the extent
these may be viewed as indicators of future revenues or
profitability, cost synergies and progress towards completing the
proposed combination (including the related financing). Although we
believe that the expectations reflected in those forward-looking
statements are reasonable, we can give no assurance that those
expectations will prove to have been correct. Those statements are
made by using various underlying assumptions and are subject to
numerous risks, contingencies and uncertainties, including, among
others: the ability of McDermott and CB&I to obtain the
shareholder approvals necessary to complete the proposed
combination on the anticipated timeline or at all; the risk that a
condition to the closing of the proposed combination may not be
satisfied, or that the proposed combination may fail to close,
including as the result of any inability to obtain the financing
for the combination; the outcome of any legal proceedings,
regulatory proceedings or enforcement matters that may be
instituted relating to the proposed combination; the costs incurred
to consummate the proposed combination; the possibility that the
expected synergies from the proposed combination will not be
realized, or will not be realized within the expected time period;
difficulties related to the integration of the two companies; the
credit ratings of the combined businesses following the proposed
combination; disruption from the proposed combination making it
more difficult to maintain relationships with customers, employees,
regulators or suppliers; the diversion of management time and
attention on the proposed combination; adverse changes in the
markets in which McDermott and CB&I operate or credit markets;
the inability of McDermott or CB&I to execute on contracts in
backlog successfully; changes in project design or schedules; the
availability of qualified personnel; changes in the terms, scope or
timing of contracts; contract cancellations; change orders and
other modifications and actions by customers and other business
counterparties of McDermott and CB&I; changes in industry
norms; and adverse outcomes in legal or other dispute resolution
proceedings. If one or more of these risks materialize, or if
underlying assumptions prove incorrect, actual results may vary
materially from those expected. You should not place undue reliance
on forward-looking statements. For a more complete discussion of
these and other risk factors, please see each of McDermott's and
CB&I's annual and quarterly filings with the U.S. Securities
and Exchange Commission (the "SEC"), including their respective
annual reports on Form 10-K for the year ended December 31, 2017.
This communication reflects the views of McDermott's management as
of the date hereof. Except to the extent required by applicable
law, McDermott undertakes no obligation to update or revise any
forward-looking statement.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any proxy, vote or approval with respect to the proposed
transaction or otherwise, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. In connection with the
proposed transactions, McDermott International, Inc. ("McDermott")
has filed a Registration Statement on Form S-4 (the “Registration
Statement”) with the SEC that includes (1) a joint proxy statement
of McDermott and Chicago Bridge & Iron Company N.V.
("CB&I"), which also constitutes a prospectus of McDermott and
(2) an offering prospectus of McDermott Technology, B.V. in
connection with McDermott Technology, B.V.'s offer to acquire
CB&I shares. The Registration Statement was declared effective
by the SEC on March 29, 2018. McDermott and CB&I have mailed
the definitive joint proxy statement/prospectus to stockholders of
McDermott and shareholders of CB&I. In addition, McDermott and
McDermott Technology, B.V. have filed a Tender Offer Statement on
Schedule TO-T (the "Schedule TO") with the SEC and CB&I has
filed a Solicitation/Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") with respect to the exchange offer. The
solicitation and offer to purchase shares of CB&I's common
stock is only being made pursuant to the Schedule TO and related
offer to purchase. This material is not a substitute for the joint
proxy statement/prospectus, the Schedule TO, the Schedule 14D-9 or
the Registration Statement or for any other document that McDermott
or CB&I may file with the SEC and send to McDermott's and/or
CB&I's shareholders in connection with the proposed
transactions. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION OR
DECISION WITH RESPECT TO THE EXCHANGE OFFER, WE URGE INVESTORS OF
CB&I AND MCDERMOTT TO READ THE REGISTRATION STATEMENT, JOINT
PROXY STATEMENT/PROSPECTUS, SCHEDULE TO (INCLUDING THE OFFER TO
PURCHASE, RELATED LETTER OF TRANSMITTAL AND OTHER OFFER DOCUMENTS)
AND SCHEDULE 14D-9, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM
TIME TO TIME, AND OTHER RELEVANT DOCUMENTS FILED BY MCDERMOTT AND
CB&I WITH THE SEC CAREFULLY BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT MCDERMOTT, CB&I AND THE PROPOSED
TRANSACTIONS.
Investors are able to obtain free copies of the Registration
Statement, joint proxy statement/prospectus, Schedule TO and
Schedule 14D-9, as each may be amended from time to time, and other
relevant documents filed by McDermott and CB&I with the SEC at
http://www.sec.gov, the SEC's website, or free of charge from
McDermott's website (http://www.mcdermott.com) under the tab,
"Investors" and under the heading "Financial Information" or by
contacting McDermott's Investor Relations Department at (281)
870-5147. These documents are also available free of charge from
CB&I's website (http://www.cbi.com) under the tab "Investors"
and under the heading "SEC Filings" or by contacting CB&I's
Investor Relations Department at (832) 513-1068.
Participants in Proxy Solicitation
McDermott, CB&I and their respective directors and certain
of their executive officers and employees may be deemed, under SEC
rules, to be participants in the solicitation of proxies from
McDermott's and CB&I's shareholders in connection with the
proposed transactions. Information regarding the officers and
directors of McDermott is included in its annual report on Form
10-K for the year ended December 31, 2017, filed with the SEC on
February 21, 2018, as amended by its annual report on Form 10-K/A
filed with the SEC on March 8, 2018. Information regarding the
officers and directors of CB&I is included in its annual report
on Form 10-K for the year ended December 31, 2017, filed with the
SEC on February 21, 2018, as amended by its annual report on Form
10-K/A filed with the SEC on March 22, 2018. Additional information
regarding the persons who may be deemed participants and their
interests is set forth in the Registration Statement and joint
proxy statement/prospectus and other materials filed with the SEC
in connection with the proposed transactions. Free copies of these
documents may be obtained as described in the paragraphs above.
Contacts:
MediaEd MemiManager, Communications+1 (281)
870-5943 ememi@mcdermott.com
InvestorsTy Lawrence Vice President, Investor
Relations +1 (281) 870-5147tplawrence@mcdermott.com
FinsburyWinnie Lerner / Nicholas Leasure+1
(646) 805-2855
McDERMOTT INTERNATIONAL,
INC.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES
McDermott reports its financial results in
accordance with U.S. generally accepted accounting principles
(“GAAP”). This communication also includes several Non-GAAP
financial measures as defined under the SEC’s Regulation G. The
following tables reconcile Non-GAAP financial measures to
comparable GAAP financial measures:
|
|
|
Estimates forThree Months
EndedMar 31,
2018(Unaudited) |
|
($ in millions, except per share amounts) |
|
Net Income
Attributable to MDR |
$30 - 35 |
|
|
|
|
|
Less:
Adjustments |
|
|
|
Transaction, Integration and Restructuring Costs1 |
~15 |
|
Tax
Effect of Non-GAAP Adjustments2 |
|
- |
|
Total
Non-GAAP Adjustments (After Tax) |
~15 |
|
|
|
|
|
Adjusted Net
Income Attributable to McDermott |
$45 - 50 |
|
|
|
|
|
Operating
Income |
$60 - 65 |
|
Non-GAAP
Adjustments3 |
~15 |
|
Adjusted
Operating Income |
$75 - 80 |
|
Adjusted
Operating Margin |
12.5% - 13.1% |
|
|
|
|
|
Diluted Net
Income Per Share |
$0.10 - 0.12 |
|
Non-GAAP
Adjustments |
~0.05 |
|
Adjusted
Diluted Net Income Per Share |
$0.15 - 0.17 |
|
|
|
|
|
Net Income
Attributable to MDR |
$30 - 35 |
|
Depreciation & Amortization |
~25 |
|
Interest
Expense, Net |
~10 |
|
Provision
for Income Taxes |
~20 |
|
EBITDA4 |
$85 - 90 |
|
Non-GAAP
Adjustments3 |
~15 |
|
Adjusted
EBITDA4 |
$100 - 105 |
|
|
|
|
|
Shares used in
computation of income per share: |
|
|
|
Basic |
|
284,658,938 |
|
Diluted |
|
285,050,535 |
|
|
|
|
|
|
GAAP
Revenue |
$600 - 610 |
|
|
|
|
1 We recognized approximately $15 million in
transaction, integration and restructuring costs associated with
the proposed combination with CB&I.2 Represents tax effects of
Non-GAAP adjustments. The Non-GAAP adjusting items are attributable
to tax jurisdictions in which we currently do not pay taxes and,
therefore, no tax impact is applied to those items. 3 Includes the
Non-GAAP adjustments described in footnote 1 to the table below
“First Quarter 2018 Operational Update”. 4 We define EBITDA as net
income plus depreciation and amortization, interest expense, net,
and provision for income taxes. We define Adjusted EBITDA as
EBITDA less the adjustments detailed in the immediately preceding
pages. We have included EBITDA and Adjusted EBITDA
disclosures in this supplemental deck because EBITDA is widely used
by investors for valuation and comparing our financial performance
with the performance of other companies in our industry and because
Adjusted EBITDA provides a consistent measure of EBITDA relating to
our underlying business. Our management also uses EBITDA and
Adjusted EBITDA to monitor and compare the financial performance of
our operations. EBITDA and Adjusted EBITDA do not give effect
to the cash that we must use to service our debt or pay our income
taxes, and thus do not reflect the funds actually available for
capital expenditures, dividends or various other purposes. In
addition, our presentation of EBITDA and Adjusted EBITDA may not be
comparable to similarly titled measures in other companies’
reports. You should not consider EBITDA or Adjusted EBITDA in
isolation from, or as a substitute for, net income or cash flow
measures prepared in accordance with U.S. GAAP.
McDERMOTT INTERNATIONAL,
INC.RECONCILIATION OF FORECAST NON-GAAP FINANCIAL
MEASURES TO GAAP FINANCIAL MEASURES
|
|
Full Year2018 Guidance |
($ in millions) |
Cash Flows from
Operating Activities |
$310 -
335 |
Capital
Expenditures |
100 - 115 |
Free Cash
Flow |
$195 - 235 |
|
|
Net Income
Attributable to McDermott |
$120 -
145 |
Add: |
|
Depreciation and Amortization |
~100 |
Interest
Expense, Net |
~50 |
Income
Tax Expense |
~70 |
EBITDA |
$340 - 365 |
|
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