US engineering giant McDermott is seeing increased profitability and cash flow generation driven by efficient project execution and higher activity.
Half yearly results show the business with a steady half yearly revenue of $1.3billion, only down slightly on the $1.4billion made during the same period last year.
Adjusted net income was also steady, $58.3million for the first six months of the year, compared to $59.1million in the same period last year.
The adjustment accounts for nearly $9million of restructuring costs and a £32.2million impairment charge that hit the books in the first half of 2016.
McDermott reported first half 2017 revenues of $1,308.1 million, a decrease of $127.6 million, compared to revenues of $1,435.7 million for the prior-year first half.
The key projects driving revenue in 2017 so far have been the Saudi Aramco LTA II, ONGC Vashishta and Inpex Ichthys projects.
The decrease from the prior-year first half was primarily due to decreased activity on the Ichthys project, as the project progresses through the installation phase.
Cash provided by operating activities in the first half of 2017 was $90.2 million, an increase compared to the $75.8 million of cash provided in the first half of 2016.
The increase was primarily driven by higher operating results and a lower than anticipated working capital build with national oil companies through our efficient working capital management.
David Dickson, president and chief executive officer of McDermott, said: “Strong project execution and higher activity led McDermott to another successful quarter, with increased profitability and free cash flow generation.
Efficient execution, coupled with constant focus on safety through our Taking the Lead initiative led us to surpass 50-million man-hours Lost Time Incident free as a company.
“Building off successful pre-FEED and FEED work, the BP Angelin award to design, fabricate and install a jacket, platform and pipeline is our first pre-FEED and FEED to EPCIC award and is a direct result of our strategic focus on engineering as a differentiator.
“Also during the quarter, we closed on an $810 million credit facility, with a five-year term demonstrating the confidence shown by our lenders, and providing us with a more flexible capital structure while allowing for continued growth.
“As the extended low oil price environment continues to drive uncertainty of award timing, our revenue pipeline of around $20 billion remains robust, and we continue to remain focused on disciplined bidding, efficient project execution and liquidity.”
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