Here's Why McDermott (MDR) Is Down 44% Since Q3 Earnings
Zacks Investment Research | Nov 10, 2019 10:57PM ET
Shares of McDermott International, Inc. (NYSE:MDR) have plunged nearly 44% since earnings announcement on Nov 4. In fact, the stock price hit a new 52-week low of 93 cents in last Friday’s trading session. This extends the company’s downward trend on the bourse over the past year, during which the stock has shed 88.2% of value compared with the industry’s 31% decline.
Reasons for this downside were weaker-than-expected third-quarter results and other headwinds. Let’s delve deeper.
McDermott recently released third-quarter 2019 results, missing on both earnings and revenues. The oilfield equipment provider incurred adjusted loss per share of $1.80, significantly wider than the Zacks Consensus Estimate of 21 cents. However, in the year-ago quarter, the company reported earnings of 20 cents.
The lower-than-expected earnings reflect the impact of higher costs plus goodwill and asset impairments. Particularly, quarterly expenses surged to $2,173 million from the year-ago figure of $1,986 million.
Revenues of $2,121 million also lagged the Zacks Consensus Estimate of $2,367 million. Moreover, the top line fell 7.3% from the year-ago quarter.
Shares of McDermott plunged to new lows as work at its headquarters gets stalled following the company's alleged delay in payments to its general contractor.
Revenue Pipeline
McDermott boasts a ‘Revenue Opportunity Pipeline’ of $89.1 billion including Backlog, Bids & Change Orders Outstanding and Target (NYSE:TGT) Projects. As of Sep 30, its backlog was $20.1 billion, surging 74.78% year over year.
The company’s Bids & Change Orders Outstanding came in at $11.8 billion while Target Projects summed $57.2 billion. Its revenue pipeline is primarily boosted by North, Central & South America (‘NCSA’), and Middle East & North Africa (‘MENA’) segments, given a continued momentum in offshore/subsea, downstream and LNG markets.
Capital Expenditure & Balance Sheet
During the quarter, McDermott spent approximately $32 million on capital programs, higher than the year-ago figure of $19 million. As of Sep 30, the company had $677 million in cash and cash equivalents and total debt of $3,450 million.
McDermott International, Inc. Price, Consensus and EPS Surprise
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