q3 2018 supplemental...
TRANSCRIPT
October 30, 2018
Q3 2018 SUPPLEMENTAL INFORMATION
2
In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott cautions that statements in this presentation which are forward-looking, and
provide other than historical information, involve risks, contingencies and uncertainties that may impact actual results of operations of McDermott. These forward-looking statements include,
among other things, statements about 2018 focus areas, second half 2018 guidance, project milestones and percentage of completion and expected timetables, increased opportunities in
the market, 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,
anticipated future intangibles amortization, targeted savings from cost synergies and the other expected impacts of CPI, including anticipated implementation costs, our expectations
regarding working capital balances, expected covenant compliance, our expectations about the timelines and anticipated use of proceeds from the sales of the tank storage and pipe
fabrication businesses, our anticipated amounts of project-related and other intangibles amortization, our assessments and beliefs with respect to the three legacy Focus Projects of CB&I,
our beliefs with respect to the combination with CB&I, integration progress and long-term prospects, expectations on future contract structure, our planned reduction in total debt and our
plans and expectations with respect to the Ras Al Khair fabrication yard. 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 possibility that the expected CPI savings from the recently completed combination will not be realized, or will not be realized within the
expected time period; difficulties related to the integration of the two companies; disruption from the combination making it more difficult to maintain relationships with customers, employees,
regulators or suppliers; the diversion of management time and attention to integration matters; adverse changes in the markets in which McDermott operates or credit markets; the inability of
McDermott 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; 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 annual and quarterly
filings with the U.S. Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2017 and subsequent quarterly reports on Form 10-Q.
This presentation 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.
FORWARD-LOOKING STATEMENTS
NON-GAAP DISCLOSURESThis presentation includes several “non-GAAP” financial measures as defined under Regulation G of the U.S. Securities Exchange Act of 1934, as amended. McDermott reports its financial
results in accordance with U.S. generally accepted accounting principles, but the company believes that certain non-GAAP financial measures provide useful supplemental information to
investors regarding the underlying business trends and performance of its ongoing operations and are useful for period-over-period comparisons of those operations. The non-GAAP
measures in this presentation include Backlog, Adjusted Operating Income and Margin, Adjusted Net Income, Adjusted Diluted Earnings Per Share (“EPS”), EBITDA, Adjusted EBITDA,
Free Cash Flow, and Adjusted Free Cash Flow. These non-GAAP financial measures should be considered as supplemental to, and not as a substitute for or superior to, the financial
measures prepared in accordance with GAAP.
Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are provided in the Financial Appendix of this presentation.
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Deliver excellence in execution
through implementation of the
One McDermott Way
Drive savings throughout the
organization and embody a best
in class cost culture
EXECUTEDRIVE
2018
FOCUS AREAS
Complete integration
successfully to establish top tier,
vertically integrated EPC
company, competitively
differentiated in technology,
customer relationships, culture
and geographic footprint
Develop strategy to position
the company for future growth
by capitalizing on a robust
revenue opportunity pipeline
and growing end markets
Exercise disciplined bidding
through thorough evaluation and
assessment of project risk
profiles
INTEGRATE
POSITION
DISCIPLINE
QUARTERLY RESULTS
5
Q3 2018 FINANCIAL HIGHLIGHTS
Q3 2018 results reflect first full reporting period as a Combined company
Adjustments for Q3 2018 include transaction-related costs of $5 million, costs to achieve Combination Profitability Initiative (CPI) of $31 million and amortization of acquired
intangible assets of $68 million
Revenue for Q3 2018 was primarily driven by Cameron LNG, Freeport LNG, LACC and Saudi Aramco Safaniya Phase 5 projects
Operating results primarily driven by our NCSA and MENA segments
1) The reconciliations of EBITDA, each adjusted measure and free cash flow, all of which are non-GAAP measures, to the most comparable GAAP measures are provided in the
pages entitled “Additional Disclosures – Quarterly Reconciliations” and “Additional Disclosures – EBITDA Reconciliations.”
2) Adjusted diluted EPS has not been adjusted to exclude the amortization of acquired intangible assets.
3) Includes cash, cash equivalents, and restricted cash.
Orders $3,052 $842 $89
Backlog 11,512 10,186 2,428
Revenues 2,289 1,735 959
Financial Metrics (Adjusted as Indicated)1
Gross Profit and Margin % $273 11.9% $237 13.7% $185 19.3%
Operating Income and Margin % $129 5.6% $49 2.8% $125 13.0%
Net Income Attributable to McDermott $2 $47 $95
Diluted EPS $0.01 $0.33 $1.00
EBITDA $239 $92 $155
Adjusted Operating Income and Margin % $232 10.2% $172 9.9% $125 13.0%
Adjusted Net Income Attributable to McDermott $89 $59 $95
Adjusted Diluted EPS2 $0.20 $0.29 $1.00
Adjusted EBITDA $275 $208 $155
Capex $19 $24 $16
Cash from Operations ($221) $398 $45
Free Cash Flow ($240) $374 $29
Ending Cash Balance3 $905 $1,138 $435
Working Capital ($1,915) ($1,444) $260
Intangible Amortization $68 $22 $0
$ in millions except for per share data Q3'18 Q2'18 Q3'17
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Q3 2018 SEGMENT REPORTING AND PRODUCT OFFERING
Orders were driven by the NCSA, EARC and TECH segments
Revenues were driven by NCSA and MENA and Operating Income was driven by NCSA, MENA and TECH
Revenues were largely driven by Downstream, LNG and Offshore & Subsea projects
TECH continues to produce strong and steady results
$ in millions
1) The reconciliations of Adjusted Operating Income and Adjusted Operating Margin, which are Non-GAAP measures, to the most
comparable GAAP measures are provided in the page entitled “Additional Disclosures – Segment Reconciliations.”
OPERATING SEGMENTS
PRODUCT OFFERING
$ in millions NCSA EARC MENA APAC TECH CORP Total
Orders $2,297 $329 $7 $134 $285 $ - $3,052
Backlog 6,519 1,502 2,164 713 614 - 11,512
Revenues 1,516 77 473 75 148 - 2,289
Operating Income and Margin % $97 6.4% $(13) (16.9%) $89 18.8% $9 12.0% $20 13.5% $(73) 0.0% $129 5.6%
Adjusted Operating Income and Margin %1 $109 7.2% $(8) (10.1%) $96 20.3% $9 12.4% $63 42.8% $(37) 0.0% $232 10.2%
Capex 2 - 2 4 - 11 19
$ in millionsOffshore &
SubseaLNG Downstream Power Total
Orders $336 $8 $2,093 $614 $3,052
Backlog 2,886 1,578 5,417 1,631 11,512
Revenues 548 553 860 328 2,289
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PURCHASE ACCOUNTING AND INTANGIBLE AMORTIZATION
The net tangible assets acquired are recorded at our preliminary assessment of fair value as of the date of the Combination1
Investments in unconsolidated affiliates, which are part of the net tangible assets acquired, include a fair value adjustment of $221 million as a result of the Combination; approximately $118 million of the
fair value adjustment will be amortized over a range of 2 to 30 years based on the life of the assets to which the basis difference is attributable to
Project related intangibles represent the fair value of acquired contracts and backlog as of May 10, 2018; the fair value of acquired backlog has been adjusted to represent a normal market rate and will be
amortized over the remaining life of the project
Project related intangible amortization is anticipated to be $31 million, $33 million, $22 million, $5 million and $7 million for the remainder of 2018 and for the years 2019, 2020, 2021 and 2022, respectively
All other intangibles amortization (including for process technologies, trade names, trade marks and customer relationships) is anticipated to be $24 million, $84 million, $83 million, $78 million and $72
million for the remainder of 2018 and for the years 2019, 2020, 2021 and 2022, respectively
PURCHASE PRICE ALLOCATION1
INTANGIBLE ASSETS
$ in millions
Purchase Price Allocation
Total equity consideration 1,693
Cash consideration transferred 2,872
Total Combination Consideration Transferred 4,565
Net tangible assets acquired (including cash) (1,326)
Intangible assets acquired 1,183
Goodwill 4,708
Total purchase price 4,565
Intangible Asset
Acquired Fair
Value
Useful Life
Range, in Years
Project related intangible assets 239
Project related intangible liabilities (97)
Project related intangibles, net 142 2 - 6
Process technologies 498 10 - 30
Trade names 401 10 - 20
Customer relationships 115 4 - 11
Trade marks 27 10
Total 1,183
1) All purchase accounting amounts are as of the date of the Combination, 5/10/18. The purchase price allocation is based on preliminary information and
is subject to change when additional information is obtained. We have not finalized our assessment of the fair values of the net tangible and intangible
assets acquired. The final purchase price allocation will result in adjustments to various assets and liabilities, including the residual amount allocated to
goodwill during the acquisition measurement period.
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GLOBALLY INTEGRATED
We are ahead of our plan to become a premier, fully integrated, global EPCI provider, with product solutions spanning on-shore and off-shore from concept to commissioning
One McDermott Way – Global operating model designed and implemented, project review processes aligned and employee total rewards and performance management aligned
Culture – Six global culture summits with 1,000+ participants conducted, new vision and values unveiled to global organization and 100+ town halls and workshops conducted
globally to align cultures
Revenue Synergies –$1.6 billion in revenue synergies achieved and global execution of combined product portfolio enabled
Systems and Processes – Progress on streamlined IT systems is progressing well as the Company has now completed the global Enterprise Systems Blueprint and initiated the
Global ERP System Design Phase
CPI - $475 million in annual run rate targeted savings identified as part of CPI
Significant progress made under all five pillars of our integration plan
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LUMMUS TECHNOLOGY
120+ Licensed Technologies; 3,000+ Patents, Patent Applications and Trademarks
40% of the world’s ethylene produced under licenses from Lummus
Refining technologies focused on cleaner fuels (i.e. IMO 2020 bunker fuel standards)
Generates steady and attractive returns selling licenses/catalysts and heat transfer equipment
Longer term, this business segment will house all of the technology that underpins McDermott’s business
Leading technology licensor of proprietary gas processing, refining, petrochemical and coal gasification technologies as
well as a supplier of proprietary catalysts, equipment and related engineering services
• ~$8 billion of petrochemical &
refining pull-through success in
past five years resulting from
licensing sales
• Significant onshore pull-through
potential identified in 2018/2019
pipeline
1) The HDPE award did not directly result from the sale of a Technology license. Rather, it resulted in part from customer relationships on other projects whose history included technology license sales.
Project Name
Shintech – Ethane Cracker Project
Afipsky Oil Refinery Expansion – Hydrocracker Project
Phillips 66 – Gas Desulfurization Project
Naftna Industrija Srbije – Delayed Coking Unit
JSC Lukoil – Delayed Coking Unit
LACC – Ethane Cracker
LACC – Monoethylene Glycol Facility
Total Petrochemicals & Refining – Ethane Cracker Project
Oman Oil Refineries & Petrochemical Institute – Steam Cracker
Occidental Chemical – Ethane Cracker Project
KNPC – Clean Fuels Project
Bayport Polymers – High-Density Polyethylene (HDPE) Plant1
10
Targeted CPI savings being increased from $350 million to $475 million
Implemented $319 million of annualized savings as of Q3 2018
CPI resulted in $40 million positive impact to Q3 2018 earnings and $57 million in cash savings achieved in the third quarter
One-time benefit of $52 million recognized during the third quarter due to sale of former CB&I administrative headquarters
Planned headcount reduction of approximately 1,100 with approximately 800 separations as of September 30, 2018
Estimated costs to achieve have been reduced from $210 million to $190 million as a result of a recent accounting pronouncement that provides for the capitalization of
certain implementation costs of our ERP system on the balance sheet; these implementation costs will then be amortized over the useful life of the ERP software license
COMBINATION PROFITABILITY INITIATIVE (“CPI”)
CATEGORY SOURCE TOTAL ACTIONED/TARGETED CPI SAVINGS/COSTS
COSTS OF
OPERATIONS
SUPPLY CHAIN• Consolidate buying power to negotiate improved pricing or rebates with suppliers
• Improved category management and strategic sourcing
• Negotiate improved sub-contract pricing with providers based on volume174
OPERATIONS &
PROJECT
• Pooling of operations support resources in high value centers
• Consolidate offices and facilities based on proximity and reduce office footprint
• Increase asset and tool utilization by transferring or reusing on subsequent projects
• Reduce spend on travel expenses by encouraging video conferencing and adjusting policies
166
SG&A
BACK OFFICE
SUPPORT
• Move transactional back-office support to high value centers
• Optimize functional staffing levels to industry or internal best practices
• Eliminating duplicate services95
SYSTEMS &
APPLICATIONS
• Eliminate redundant systems
• Reduce applications and associated support
• Consolidate duplicate technology licenses and reduce number of overall user licenses required40
TOTAL TARGETED CPI SAVINGS 475
ESTIMATED TOTAL COSTS TO ACHIEVE 190
$99
$138
$73
$9
$319
$106
$75
$28
$22
$31
$156
$84
Savings
actioned / costs
incurred to date
Remaining run-rate
savings / costs to
achieve
11
Capital expenditures primarily driven by project and maintenance capex of $10 million and upgrades to the Amazon of $6 million
Cash flows used for other investing primarily represents ($110) million in advances from third party participants of proportionately consolidated consortiums, net,
partially offset by proceeds from asset dispositions of approximately $53 million
Cash flows from financing activities include $109 million in advances from joint ventures and consortiums (including proportionately consolidated joint ventures
and equity-method investments), partially offset by repayments of debt and capital lease obligations of ($16) million
$1,138 millioncash, cash equivalents & restricted cash as of June 30, 20181
$905 millioncash, cash equivalents & restricted cash as of Sept. 30, 20182
Q3 2018 SUMMARY CASH FLOW$ in millions
CASH FLOWS
FOR CAPEX
(19)
CASH FLOWS USED FOR
OTHER INVESTING
ACTIVITIES & FX
(85)
CASH FLOWS FROM
FINANCING ACTIVITIES
92
NET CHANGE
IN CASH
(233)
1) Includes restricted cash of $324 million as of Jun. 30, 2018
2) Includes restricted cash of $325 million as of Sep. 30, 2018
CASH FLOWS USED FOR
OPERATING ACTIVITIES
(221)
12
Cash paid for interest primarily represents interest paid on the Term Loan B
Increase in cash paid for taxes from prior quarter primarily related to state taxes associated with the gain on technology sale accrued prior to the Combination
Changes in current assets and liabilities are primarily driven by significant increases in advance billings on contracts due to the changes in estimate on the three Focus
Projects, partially offset by collections on trade receivables
Q3 2018 EBITDA TO FREE CASH FLOW$ in millions
DecreaseIncrease
1) The reconciliations of EBITDA and Free Cash Flow, all of which are Non-GAAP measures, to the most comparable GAAP measures are provided in
the pages entitled “Additional Disclosures – Quarterly Reconciliations” and “Additional Disclosures – EBITDA Reconciliations.”
Q3'18EBITDA
Cash Paidfor Interest
Cash Paidfor Taxes
Changes inCurrent
Assets &Liabilities
Changes inLong-termAssets &Liabilities
Q3'18 CashFlows fromOperations
Capex Q3'18 FreeCash Flow
TransactionCosts andCosts to
Achieve CPI
Q3'18Adjusted Free
Cash Flow
13
Increase in negative working capital from the prior quarter was primarily a result of $744 million in changes in estimates on the legacy Focus Projects which significantly increased contract liabilities
The Freeport, Cameron, and Calpine projects used ($156) million, ($562) million, and ($43) million of net working capital, respectively
Negative working capital acquired from the Combination as of May 10, 2018 was ($2.4) billion; this was driven by significant cash advances and front-end milestones on onshore LNG and Downstream projects in NCSA and subsequent changes in estimates on the legacy Focus Projects
NET WORKING CAPITAL TREND COMPARISON$ in millions
$ (1,444)$ (1,915)
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
0
1,000
2,000
3,000
Q2 2018 Q3 2018
Accounts receivable Contract assets Other assetsAccounts payable Contract liabilities Other liabilitiesNet Working Capital
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LEGACY FOCUS PROJECTS HIGHLIGHTS
After five months of ownership and significant operational changes, we believe we have reached a
definitive and complete understanding of the schedule and cost position on the three “focus” legacy
CB&I projects and have taken steps to de-risk them: Changes in project and oversight personnel,
reporting structures, execution plans, forecast cost base methodology, and improved
communication with customers and consortium members
Cameron LNG: the changes in estimates followed a detailed reassessment of the schedule and cost base. The analysis included a comprehensive review of the work to go, including work for which we may not be compensated -- such as rework -- and a reduction in productivity estimates. The reassessed schedule and estimates reflect regional limitations on labor availability and quality, the elimination of an incentive opportunity, and the addition of liquidated damages associated with the completion schedule.
Freeport LNG: the changes in estimates followed a detailed reassessment of the schedule and cost base and a reduction in forecasted labor productivity resulting from regional limitations on labor availability and quality. The change was also impacted by the Company’s decision, reached in conjunction with
ongoing customer discussions, to include liquidated damages associated with the pre-Hurricane
Harvey schedule.
Calpine: the changes in estimates resulted from a comprehensive review and reassessment of
productivity, which resulted in the Company reducing the productivity factor on future work by 20%.
The newly-assumed productivity factor also considered lessons learned on the closeout experience on the recently completed IPL project. First fire is anticipated during the fourth quarter of 2018.
$ in millions
15
LEGACY FOCUS PROJECTS DETAIL
1) Represents the cumulative percentage of completion (“POC”), which includes progress achieved prior to the Combination. POC calculated in accordance with GAAP, which requires the project progress to be reset to 0% as of the date of the Combination for accounting purposes, was 36%, 37% and 53% for the Freeport, Cameron and Calpine projects, respectively, as of September 30, 2018.
2) Represents the net change in gross profit as a result of changes in estimates of the revenues and costs at completion as of the date of the Combination which were identified in Q3 2018. These changes in estimates were made by McDermott when reassessing the fair value of acquired contracts. These changes in estimate did not directly impact our Q3 2018 earnings due to the application of purchase accounting.
3) Includes the Freeport Trains 1 & 2 and Freeport Train 3 projects, which are performed by two separate consortiums. As of September 30, 2018, the Freeport Train 3 project was profitable and was not in a loss position.
$ in millions
FREEPORT3 CAMERON CALPINE
Cumulative POC1 82% 83% 91%
Gross Profit Loss Loss Loss
Accrued Loss Position ($28) ($127) ($43)
Operational Update
• Train 1 88% complete with construction.
• Train 2 progressing as expected with improved productivity due to lessons learned from Train 1 and nearing 81% complete with construction.
• Train 3 impacted more significantly by effects of Harvey but still making progress and is 70% complete with construction.
• Phase 1 utility systems and existing facilities substantially complete; fuel gas introduction and main compressor runs planned for Q4
• Commenced Train 2 main compressor motors lube oil flushing
• Construction completion: Phase 1 – 95%; Train 2 – 62%; Train 3 – 49%
• Overall Progress is 92% complete with Construction at 88%
• Commissioning 29% complete; 54 of 105 subsystems required for First Fire complete
• Now executing project as an integrated MDR / Calpine team.
• First Fire planned for Q4 2018 and substantial completion in Q1 2019
Other JV Members Chiyoda and Zachry Construction Chiyoda N/A
Revenues in Q3 2018 $220 $191 $29
Backlog Roll-off in Q4 2018 $210 $173 $19
Backlog Roll-off 2019 Onwards $412 $385 $8
Cash Flow Use in Q3 2018 ($115) ($34) ($14)
Projected Cash Flow Use in Q4 2018 ($174) ($81) ($29)
Projected Cash Flow Use in 2019 ($64) ($320) ($41)
Change in Estimate at Completion
Identified in Q3 20182 ($194) ($482) ($68)
Targeted Completion
Train 1: Q3 2019
Train 2: Q1 2020
Train 3: Q2 2020
Phase 1: Q2 2019
Train 2: Q4 2019
Train 3: Q1 2020
Q1 2019
16
In accordance with U.S. GAAP, McDermott was required to reset the POC for all acquired contracts to zero as of the date of the Combination; in the table above, the
cumulative POC, including progress achieved prior to the Combination, is provided for all projects being performed by CB&I as of the date of the Combination, in addition
to the reset POC calculated in accordance with U.S. GAAP
Significant progress has been achieved on the remaining project portfolio; no additional projects have been identified with substantial remaining project execution risk
The Aramco Marjan Power System project in the MENA segment was successfully completed during the quarter
REMAINING PORTFOLIO CONTINUES TO PERFORM WELL1
Status update on projects >$500 Million (excluding Focus Projects)
1) Projects as of September 30, 2018. The list excludes projects that were substantially complete (>95%) in prior periods.
2) Represents the project size at time of award. Project sizes are as follows: Substantial ($500 million – $750 million), Major ($750
million - $1 billion), and Mega (>$1 billion).
PROJECT NAME1 SEGMENT
PRODUCT
OFFERING PROJECT SIZE2 BACKLOG
GAAP
POC
CUMULATIVE
POC STATUS
Saudi Aramco LTA II MENAOffshore/
SubseaMega $147 91% 91%
Preparation for BRRI offshore campaign is underway. Hook up and commissioning ongoing.
Saudi Aramco Safaniya Phase 5 MENAOffshore/
SubseaSubstantial $221 86% 86%
Pipeline pre-commissioning in progress and vessel arrived for hook-up of last deck. SFNY-228, SFNY-19 and SFNY-28 energized on 25th Sep 2018.
This project builds on legacy of successfully executed projects under LTA II Contract.
Shintech NCSA Downstream Mega $62 80% 97% Systems completion and completion of refractory building. Fuel gas was introduced to the site as well as firing boiler A & B. Remaining activities
are gradually incorporating close-out tasks
Entergy #1 - St. Charles NCSA Power Substantial $98 55% 91% The STG area continues to be a main focus of work. With Inner and Outer casing installations complete, the final coupling installations are the
focus.
LACC Ethylene Production Facility NCSA Downstream Mega $284 51% 87% Project is in commissioning phase. The mechanical completion (key milestone) is forecasted for October 31st.
Entergy - Lake Charles NCSA Power Substantial $340 29% 53% The primary focus is completion of the electrical engineering scope and finalization of designed quantities. Working closely with the
subcontractors to ensure that the progress targets are achieved.
Total Ethane Cracker NCSA Downstream Mega $1,014 19% 32% Project recently completed a comprehensive model review aimed at gaining further confidence on remaining installation quantities. Project
moving from engineering and procurement into construction.
Saudit Aramco Safaniya Phase 6 MENAOffshore/
SubseaMajor $716 16% 16%
PO's have been issued for critical long lead procurement items. This project builds on legacy of successfully executed projects under LTA II
Contract.
Entergy Montgomery County NCSA Power Substantial $550 9% 9% Project recently awarded. This is the third project in the Entergy power portfolio.
ADNOC Takreer MENA Downstream Substantial $489 8% 9% Teams fully mobilised with all critical equipment ordered and design review ongoing.
Total Tyra EARCOffshore/
SubseaSubstantial $692 8% 8%
Package 1 - Comprehensive model review planned for Dec-18. Procurement cycle to benefit from scale; volume discounts are being solicited.
Package 2 - Overall engineering deliverables continue to stay ahead of plan.
Bayport Polymers Borstar Bay 3 NCSA Downstream Mega $1,215 0% 0% Project recently awarded. This is a second recent project with Total.
17
Onshore construction activity driven by high levels of utilization in NCSA and MENA
Lower vessel utilization driven by decreased activity this quarter in subsea fleet
Unallocated DOE is primarily driven by the underutilization of certain marine assets and bid and proposal costs recorded in each segment
ONSHORE CONSTRUCTION1
(Wkhr 000s)
UNALLOCATED DIRECT OPERATING
EXPENSES(in millions)
$49
$37
OFFSHORE
FABRICATION(Wkhr 000s)
ASSET UTILIZATION SUMMARY
Actual: 1,047
Standard: 1,631
64%
Actual: 3,740
Standard: 4,500
83%
Actual: 8,083
Standard: 6,130
132%
Actual: 382
Standard: 750Q2’18
ONSHORE
FABRICATION(Wkhr 000s)
OFFSHORE/SUBSEA VESSELS
(Days)
51%
18
No cash draws on revolver; $142 million is being utilized for the issuance of letters of credit
No significant debt maturities in the near term
Higher debt issuance costs related to Combination related financing
CAPITALIZATIONSept 30, 2018($ in millions)
Cash, Cash Equivalents and Restricted Cash $905
Senior Secured Term Loan 2,249
10.625% Six-Year Senior Unsecured Notes 1,300
North Ocean 105 Loan 20
Vendor Equipment Financing (“VEF”) 5
Gross Debt $3,574
Debt Issuance Costs (142)
Total Debt $3,432
Net Debt1 $2,669
Q3 2018 CAPITAL STRUCTURE, REVOLVER AND LC AVAILABILITY
1) Net Debt is defined as Gross Debt net of Cash, Cash Equivalents and Restricted Cash.
142M
858M
Revolver
Availability
1,376M
928M
419M278M
14M 681M
409M
32M
LC Facility UncommittedBilaterals
Surety CashSecured
Availability Usage
REVOLVER
AVAILABILITY
$1Bn $1.6Bn
$1.4Bn
LC AVAILABILITY
$0.8Bn
$0.3Bn
19
CREDIT AGREEMENT FINANCIAL COVENANT COMPLIANCECompliance calculations as of September 30, 2018
In compliance with covenants under Credit Agreement, with ample headroom
Additional details and full calculations are included in this presentation on the pages titled “Additional Disclosures – Covenant EBITDA Calculation” and
“Additional Disclosures – Covenant Calculations”
Covenant Liquidity includes available cash of $580 million, unused revolver availability of $858M and cash collateral for LC’s less LC obligations of $33 million
LeverageRatio
Covenant FCC Ratio Covenant Liquidity Covenant
2.46x
4.25x2.40x
1.50x
$1,472M
$200M
LEVERAGE RATIO COVERAGE RATIO MINIMUM LIQUIDITY
20
Focus remains on technology pull through with differentiated vertical integration capabilities
Identified U.S. Pipe Fabrication and Tank Storage businesses as divestiture candidates
Process underway with expected completion of U.S. Pipe Fabrication sale and Tank Business sale in 2019
2017 Revenues of ~$1.5 Billion
COMPLETED STRATEGIC PORTFOLIO REVIEW
Provides fabricated piping systems and piping fabrication, with
capabilities in induction bending. Develops and uses proprietary
welding techniques, computer applications for material control,
production scheduling and fabrication management
APP – Maintains and distributes extensive inventory of
commodity fittings and specialty piping components in stainless,
alloy and carbon steel for sale to third parties and for internal
fabrication use
Provides services and solutions for storage tanks and pressure
vessels for the oil & gas, power, water, wastewater, and metals and
mining industry
Solutions include LNG storage, storage terminals for bulk liquids and
refrigerated products, water storage tanks and pressure spheres
Has built over 46,000 storage structures in more than 100 countries
Plate fabrication facilities located in Houston, TX; Clive, IA; Everett,
WA; Al Aujam, Saudi Arabia and Kwinana, Australia
U.S. PIPE FABRICATION BUSINESS TANK BUSINESS
21
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
OGP IMCA Construction Industry Institute McDermott
TAKING THE LEAD WITH SAFETY
QHSES: DRIVING TOWARD INDUSTRY LEADING PERFORMANCE
International Association
of Oil & Gas Producers
International Marine
Contractors Association
McDermott
International, Inc.0.351
0.191
0.291
Total Recordable Incident Rate
0.221 Construction
Industry Institute
1) Figures as of December 31, 2017
ORDER INTAKE, BACKLOG & BID PIPELINE
ORDER INTAKE, BACKLOG & BID PIPELINE
23
Details of $11.5B Backlog as September 30, 2018
$2.3
$6.2
$3.1
2018 2019 Thereafter
Off/Sub$3.2 28%
LNG$1.6 14%
Downstream$5.0 43%
Power$1.7 15%
NCSA$6.5 57%
EARC$1.5 13%
MENA$2.2 19%
APAC$0.7, 6% TECH
$0.6, 5%
Q3 2018 BACKLOG & EXPECTED ROLL-OFF$ in millions
BACKLOG
By Product OfferingBACKLOG
By SegmentBACKLOG
Roll-Off by Year
Strong Q3 2018 order intake led to increased backlog quarter over quarter
Backlog balanced across US and international markets with majority of backlog related to onshore projects
Good visibility into 2019 and thereafter
24
Off/Sub$0.3 4%
LNG$1.6 24%
Downstream$3.1 47%
Power$1.6 25%
Q3 2018 BACKLOG BY SEGMENT AND PRODUCT OFFERING$ in millions
NCSA - $6.5B
NCSA segment diversified across all of our product offerings
Backlog outside of NCSA attributable to offshore/subsea and downstream product offerings
Technology segment backlog driven by downstream product offering
EARC - $1.5B MENA - $2.2B APAC - $0.7B TECH - $0.6B
Off/Sub$0.7 45%Downstream
$0.8 55%Off/Sub
$1.3 61%
Downstream$0.8 39%
Off/Sub$0.6 88%
Downstream$0.1 12%
Downstream$0.6 100%
25
REVENUE PIPELINE 5 QUARTER LOOK AHEAD$ in billions, except $/Bbl
1) Includes change orders. There is no assurance that bids outstanding or target projects will be awarded to McDermott, or that outstanding change orders ultimately will be
approved and paid by the applicable customers in the full amounts requested or at all. Target projects are those that we believe fit McDermott’s capabilities and are
anticipated to be awarded in the market in next five quarters.
$2.4 $3.9 $3.4$10.2 $11.5$5.4 $4.4 $7.5
$19.0 $20.7
$12.6$16.2 $14.1
$49.3$48.1
3Q'17 4Q'17 1Q'18 2Q'18 3Q'18
Backlog Bids & COs Targets
$20.4$24.5 $25.0
$78.5 $80.357
67 69
7783
Oil Price $/bbl
Continuing to see recovery in the offshore & subsea, LNG and downstream markets with highest McDermott revenue opportunity pipeline in company history
Pipeline replenished as projects are awarded and move into backlog
Decrease in targets as projects move to bids outstanding and backlog
1 1
26
PRODUCT OFFERING RESOURCE
REPORTING SEGMENT$35.7
$7.9
$16.4
$6.6$1.8
$31.8
$9.7
$17.8
$7.3$2.2
NCSA EARC MENA APAC TECH
Q2’18
Q3’18
CONTRACT TYPE2CUSTOMER
BIDS & CHANGE ORDERS OUTSTANDING AND TARGET PROJECTS1
$68.8 billion as of September 30, 2018 compared to $68.3 billion as of June 30, 2018
Bids and change orders outstanding and target projects driven by NCSA and balanced across remainder of portfolio
Improving macro conditions drive increased opportunity pipeline
Bids and change orders outstanding and targets balanced across customer type
1) Includes change orders. There is no assurance that bids outstanding or target projects will be awarded to McDermott, or that outstanding change orders ultimately will be
approved and paid by the applicable customers in the full amounts requested or at all. Target projects are those that we believe fit McDermott’s capabilities and are
anticipated to be awarded in the market in next five quarters.
2) Other includes hybrid, cost-plus, time and materials, and other contract types.
$23.5
$42.3
$2.5
$23.7
$40.4
$4.6
Oil Gas Power/Other
$18.4$9.4
$40.5
$20.8
$8.1
$39.9
NOCs Super Majors Others
$67.7
$0.6
$65.4
$3.4
Fixed Priced Other
GREENFIELD / BROWNFIELD
$47.6
$20.6
$46.8
$22.0
Greenfield Brownfield
$27.1
$17.2
$2.5
$21.5$25.1
$20.0
$1.1
$22.6
Off/Sub LNG Power Down
$ in Billions
2018 GUIDANCE
SECOND HALF 2018 GUIDANCE
28
SECOND HALF 2018 GUIDANCE$ in millions, except per share amounts, or as indicated
This guidance is based on the Company’s existing portfolio and capital structure as of September 30, 2018
McDermott is updating its guidance for the second half of 2018, primarily to reflect increased intangibles amortizations, ourupdated tax forecast, and the
changes in estimates on the legacy focus projects
Continue to see solid revenues and adjusted EBITDA reflecting the continued strong, growing revenue opportunity pipeline
Cash flow and net working capital guidance has been adjusted to reflect the anticipated incremental cash usage due to the changes in estimates on the
legacy focus projects
Earnings Metrics
Second Half
2018 Guidance
Revenues $4.8B - 5.1B
Operating Income $200 - 230
Operating Margin 4.2 - 4.5%
Net Interest Expense1 ~$170
Income Tax Expense ~$65
Net Income $(10) - (20)
Diluted Net Income, Per Share $(0.06) - (0.11)
Diluted Share Count ~180
EBITDA2 $375 - 415
Adjustments
Transaction Costs3 ~$5
Costs to Achieve CPI4 ~$75
Intangibles Amortization5 ~$130
Adjusted Earnings Metrics
Adjusted Operating Income2 $405 - 435
Adjusted Operating Margin2 8.0% - 8.5%
Adjusted Net Income2 $150 - 160
Adjusted EPS2 $0.31 - 0.36
Adjusted EBITDA2 $450 - 490
Cash Flow & Other Metrics
Cash from Operating Activities $(520) - (540)
Capex ~$60
Free Cash Flow 2 $(580) - (600)
Cash Interest / DIC Amortization Interest ~$150 / ~$20
Cash Taxes ~$95
Corporate and Other Operating Income6 $(200) - (225)
Cash, Restricted Cash and Cash Equivalents $450 - 500
Gross Debt7 ~$3.6B
Net Working Capital ~$(1.5B)
~ = approximately
1) Net Interest Expense is gross interest expense less capitalized interest and interest income.
2) The calculations of EBITDA, Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income,
Adjusted Diluted Net Income Per Share, Adjusted 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.”
3) Transaction costs primarily represent success fees incurred after the Combination. No tax impact is forecasted
for these costs.
4) Costs to achieve CPI include restructuring and integration costs. The forecasted tax impact of these costs is
approximately $5 million.
5) Intangibles amortization represents the amortization of project-related and other intangibles. The forecasted tax
impact of the amortization is approximately $30 million.
6) Corporate and Other represents the operating income (loss) from corporate and non-operating activities,
including corporate expenses, certain centrally managed initiatives, 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.
7) Ending Gross Debt excludes debt issuance costs and capital lease obligations.
FREQUENTLY ASKED QUESTIONS
30
Question Response
1) What are the long-term prospects
for the McDermott and CB&I
combination?
McDermott is on track to be a market leader in key upstream and downstream markets. We have made enormous
progress in integrating the two organizations and our focus is now on optimizing our combined strengths to create
long-term value for our investors, customers and employees.
2) How confident is the management
team in achieving the $350 million of
cost synergies announced at the
close of the Combination?
We are increasing our CPI target from $350 million to $475 million. We have already made significant progress
toward this objective, actioning $319 million of run rate synergies as of Q3 2018.
3) How is the integration process
proceeding?
The company has made significant progress in integrating the two organizations. For example, prior to closing of the
transaction, we had determined the new organizational structure of the combined company and identified the new
senior leadership team. Additionally, within four days of closing the transaction, we had consolidated nearly all
corporate functions for the combined organization into our headquarters location in Houston.
4) Do you expect to remain a largely
fixed-price contractor?
Yes. Most of the customers in the markets we serve have expressed a strong preference for fixed-price contracts,
and we expect that the majority of our new awards will continue to be fixed-price. Such contracts can offer attractive
margins when they are screened for appropriate risk, negotiated carefully and executed efficiently.
FREQUENTLY ASKED QUESTIONS
31
Question Response
5) Do you have plans to reduce
your debt level over time?
Yes. Our objective is to reduce the ratio of total debt to EBITDA to 2.0x by the end of 2020.
6) What kind of feedback have you
had from customers regarding the
Combination?
The feedback from customers has been extremely positive since we announced the transaction in December 2017.
Specifically, many customers have been excited by the enhanced modularization capabilities of the combined
company.
7) What is the status of the MOU
with Saudi Aramco and the new
yard in Saudi Arabia?
This long-range plan continues to move forward. As previously announced, we plan to build a new fabrication and
marine complex at Ras Al Khair in Saudi Arabia to increase McDermott’s abilities to serve its growing Middle East
and Caspian markets. As originally announced, the new facility is expected to be at full capacity by the mid-2020s.
8) What is the status of the Net
Power project?
Net Power achieved first fire of its supercritical carbon dioxide (CO₂) demonstration power plant and test facility in
May 2018. This milestone included the firing of the 50MWth Toshiba commercial-scale combustor. The firing of the
combustor involved the integrated operation of the full NET Power process. Following a period of rigorous testing,
the combustor will be integrated with the turbine and power will be generated.
FREQUENTLY ASKED QUESTIONS
FINANCIAL APPENDIX
33
Note: Amounts have been rounded to the nearest million, except per share amounts. Totals may not foot as a result of rounding.
1) We recognized $5 million and $37 million of transaction costs associated with the Combination during the third and second quarters of 2018, respectively.
2) Costs to achieve our Combination Profitability Initiative (CPI) include restructuring and integration costs. We incurred $31 million and $63 million of costs from CPI in the third and second quarters of 2018, respectively.
3) Intangibles amortization includes the amortization of all acquired intangibles from the Combination, including project-related intangibles, other intangible assets (process technologies, trade names, trade marks, and customer relationships), and amortization of investments in unconsolidated affiliates.
4) As part of the financing of the Combination and establishment of our new capital structure during Q2 2018, we incurred costs associated with the prepayment of our prior credit facility and senior notes of $14 million, which includes a make-whole premium and the accelerated write-off of debt issuance costs.
5) During Q2 2018, we benefited from the tax benefit of $117 million resulting from the internal transfer of certain intellectual property rights.
6) The adjustments to GAAP Net Income have been income tax effected when included in net income based on the respective tax jurisdiction in which the adjustments were incurred.
7) Includes the Non-GAAP adjustments described in footnotes 1, 2, and 3 above. Adjustments to operating income exclude the debt extinguishment costs and tax benefit on the intercompany transfer of IP, as these items are not included in the computation of operating income.
8) Adjusted diluted EPS includes the intangibles amortization described in footnote 3 above.
ADDITIONAL DISCLOSURES – QUARTERLY RECONCILIATIONSReconciliation of Non-GAAP to GAAP financial measures
Sep 30, 2018 Jun 30, 2018 Sep 30, 2017
(Dollars in millions, except share and per share amounts)
Net Income (Loss) Attributable to MDR $2 $47 $95
Less: Adjustments
Transaction costs1 5 37 -
Costs to achieve CPI2 31 63 -
Intangibles amortization3 68 22 -
Debt extinguishment costs4 - 14 -
Tax benefit on intercompany transfer of IP 5 - (117) -
Total Non-GAAP Adjustments 103 21 -
Tax Effect of Non-GAAP Changes6 (17) (8) -
Total Non-GAAP Adjustments (After Tax) 87 12 -
Non-GAAP Adjusted Net Income Attributable to McDermott $89 $59 $95
Operating Income $129 $49 $125
Non-GAAP Adjustments7 103 123 -
Non-GAAP Adjusted Operating Income $232 $172 $125
Non-GAAP Adjusted Operating Margin 10.2% 9.9% 13.0%
Diluted EPS $0.01 $0.33 $1.00
Non-GAAP Adjustments8 0.19 (0.04) -
Non-GAAP EPS $0.20 $0.29 $1.00
Shares used in computation of earnings (loss) per share:
Basic 180 144 95
Diluted 181 144 95
Cash flows from operating activities $(221) $398 $45
Capital expenditures 19 24 16
Free cash flow $(240) $374 $29
Revenues $2,289 $1,735 $959
Three Months Ended
34
Note: Amounts have been rounded to the nearest million. Totals may not foot as a result of rounding.
1) We recognized $5 million of transaction costs associated with the Combination during the third quarter of 2018.
2) Costs to achieve CPI include restructuring and integration costs. We recognized $31 million of costs to achieve CPI in the third quarter of 2018.
3) Intangibles amortization includes the amortization of all acquired intangibles from the Combination, including project-related intangibles, other intangible assets (process technologies, trade names, trade marks, and customer relationships) and amortization of investments in unconsolidated affiliates.
ADDITIONAL DISCLOSURES – SEGMENT RECONCILIATIONSReconciliation of Non-GAAP to GAAP financial measures
35
1) 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 transaction costs, costs to achieve CPI and debt extinguishment costs 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.
ADDITIONAL DISCLOSURES – EBITDA RECONCILIATIONSReconciliation of Non-GAAP to GAAP financial measures
Sep 30, 2018 Jun 30, 2018 Sep 30, 2017
(Dollars in millions)
Net income (loss) attributable to McDermott $2 $47 $95
Add:
Depreciation & amortization 107 57 28
Interest expense, net 86 72 12
Provision for income taxes 44 (84) 19
EBITDA1 $239 $92 $155
EBITDA $239 $92 $155
Adjustments:
Transaction costs 5 37 -
Costs to achieve CPI 31 63 -
Debt extinguishment costs - 14 -
Adjusted EBITDA1 $275 $208 $155
Three Months Ended
36
1) The definition of Covenant EBITDA is provided in our credit agreement entered into on May 10, 2018. Covenant EBITDA is presented for the purpose of disclosing our compliance with the covenants in our credit agreement. Covenant EBITDA may differ in the method of calculation from similarly titled measures used by us in other presentations or used by other companies. Please see our quarterly report on Form 10-Q for the quarter ended September 30, 2018, as filed with the SEC, for additional information.
2) Covenant EBITDA amounts for Q4 2017 and Q1 2018 are explicitly defined in our credit agreement and do not reconcile to McDermott’s historically reported net income. The Covenant EBITDA amounts for these periods were agreed upon with our lenders based on pro-forma historical financials for McDermott and CB&I combined.
3) Our Covenant EBITDA calculation includes the pro-forma combined results of McDermott and CB&I prior to the Combination. Per the terms of the credit agreement, we must include the net income (loss), tax, interest, and depreciation and amortization recorded by CB&I during the period from April 1, 2018 to May 10, 2018 in our calculation of Covenant EBITDA.
4) Under the definition of Covenant EBITDA, McDermott is permitted to add back the impact of charges on selected projects (referred to as the “Focus Projects”) up to $75 million per quarter, not to exceed $200 million in total. The aggregate amount of project charges used for the Q2 2018 calculation of Covenant EBITDA was $43 million. This amount represents a charge of $43 million on the now completed IPL combined cycle gas power project that was recorded by CB&I in April 2018 prior to the closing of the Combination. The $43 million IPL charge is excluded from McDermott’s GAAP financial statements for the second quarter of 2018.
ADDITIONAL DISCLOSURES – COVENANT EBITDA RECONCILIATION1
Reconciliation of Net Income to Covenant EBITDA in accordance with our credit agreement
Sep 30, 2018 Jun 30, 2018 Mar 31, 20182 Dec 31, 20172
Net Income (loss) attributable to MDR $2 $46
Less: Excludable net income from unrestricted subsidiaries (6) (4)
Net Income (loss) attributable to MDR and restricted subsidiaries (4) 42
Adjustments and addbacks:
Interest expense (including interest capitalized) 96 89
Tax expense (benefit) 44 (84)
Depreciation, drydock and amortization 37 36
Others items:
Equity (income) loss 7 5
Gain (loss) on asset disposal 1 0
Impairment loss - -
Amortization of acquired intangibles or acquisition costs 68 22
Pension (benefit) expense (1) 1
Stock compensation expense 9 3
Charges for the Focus Projects4 - -
Annualized CPI savings 319 -
Costs to achieve CPI 31 63
Transaction costs 5 38
Others 6 21
Covenant EBITDA Attributable to McDermott International, Inc. $618 $235 $267 $258
Net Income (loss) attributable to CB&I prior to the Combination $2,191
Adjustments and addbacks:
Interest expense (including interest capitalized) 23
Tax expense (benefit) 7
Depreciation, drydock and amortization 5
Others items:
Equity (income) loss -
Gain (loss) on asset disposal (2,248)
Impairment loss -
Amortization of acquired intangibles or acquisition costs 3
Pension (benefit) expense 1
Stock compensation expense 1
Charges for the Focus Projects4 43
Costs to achieve CPI 7
Others -
Covenant EBITDA Attributable to CB&I prior to the Combination3 - $31 - -
Total Covenant EBITDA $618 $266 $267 $258
Calculated Covenant EBITDA attributable to McDermott International, Inc. -
Cumulative/TTM $1,409 $1,140
(In millions)
Quarter Ended
37
ADDITIONAL DISCLOSURES – COVENANT CALCULATIONSCovenant calculations in accordance with our credit agreement
Sep 30, 2018 Jun 30, 2018 Mar 31, 2018 Dec 31, 2017
Leverage Ratio
2024 Unsecured Senior Notes $1,300 $1,300
Term Loan 2,249 2,254
NO 105 20 20
Vendor Equipment Financing 5 11
Financial LCs (FLOCs) 121 124
Capital Lease Obligations 75 22
Leverage Ratio Debt 3,771 3,732
Add: FX Exposure - -
Less: Lesser of Cash Collateral, Term Loan Outstanding, or
Specific Term Loan Amount (310) (310)
Total Debt $3,461 $3,422
Bank EBITDA - TTM 1,409 1,140
Leverage Ratio - TTM 2.46x 3.00x
Fixed Charge Coverage Ratio
Interest Expense - In Period $88 $116 $85 $99
Interest Expense - TTM 387
Legacy CB&I Notes - - 19 19
Term Loan 6 6 - -
NO 105 - 4 - 4
Vendor Equipment Financing 5 5 - -
Total Debt Principal Repayments - In Period 11 15 19 23
Total Debt Principal Repayments - TTM 68
Cash Taxes - In Period 67 19 17 30
Cash Taxes - TTM 133
Total Fixed Charges - TTM $587
Bank EBITDA - TTM 1,409
Fixed Charge Coverage Ratio - TTM 2.40x
Liquidity
Cash and Cash equivalents 580 814
Unused Revolving Commitments Available for Borrowing 858 879
Cash Collateral for LC's Less LC Obligations 33 -
Liquidity $1,472 $1,693
Quarter Ended
(In millions)
38
ADDITIONAL DISCLOSURES – 2018 GUIDANCE RECONCILIATIONSReconciliation of Forecast Non-GAAP to US GAAP financial measures
Second Half
2018 Guidance
(Dollars in millions)
Revenues $4.8B - 5.1B
Operating Income $200 - 230
Operating Margin 4.2 - 4.5%
Transaction Costs ~5
Costs to Achieve CPI ~75
Intangibles Amortization ~125
Total Adjustments ~205
Adjusted Operating Income $405 - 435
Adjusted Operating Margin 8.0% - 8.5%
Net Income $(10) - (20)
Total Adjustments ~205
Tax Impact of Adjustments ~(35)
Adjusted Net Income $150 - 160
Less: Intangibles Amortization ~(125)
Plus: Tax Impact of Intangibles Amortization ~30
Subtotal $55 - 65
Diluted Share Count ~180
Adjusted EPS $0.31 - 0.36
Cash Flows from Operating Activities $(520) - (540)
Capital Expenditures ~60
Free Cash Flow $(580) - (600)
Net Income Attributable to McDermott $(10) - (20)
Add:
Depreciation and amortization 160 - 190
Interest expense, net ~170
Provision for taxes ~65
EBITDA $375 - 415
Costs to Achieve CPI ~75
Adjusted EBITDA $450 - 490
