Mcdermott International Ltd · OTC:MCDIF
Mcdermott International — The Oil Service Conference III 2005
36 slides from Mcdermott International's conference presentation, Feb 18, 2005
Slide 1: McDermott International, Inc. - The Oil Service Conference III
McDERMOTT INTERNATIONAL, INC. The Oil Service Conference III February 18, 2005
Slide 2: Cautionary Statements / Safe Harbor
Cautionary Statements / Safe Harbor Statements in this presentation which express a forecast, expectation or estimate, as well as those which are not historical fact, are forward looking. They involve a number of risks and uncertainties, including audit risks, which may cause actual results to diffe
Slide 3: McDermott Operating Segments
McDermott Operating Segments[1] Consolidated Operating Subsidiaries Marine Construction Government Operations J. Ray McDermott BWX Technologies (J. Ray) (BWXT) Providing solutions for offshore field development to the worldwide oil and gas industry Lifecycle management of special nuclear materials,
Slide 4: Financial Snapshot
Financial Snapshot Common Share Information Stock symbol (NYSE): MDR Recent price/share[1]: $18.01 Shares outstanding: 66.9 million Market capitalization[1]: $1.2 billion 52-week trading range: $6.72-$19.60 Daily volume average[1] 550,320 [1] As of February 10, 2005 2004 Forecasted Financial Statist
Slide 5: Investment Highlights
Investment Highlights Industry-leading, franchise-name businesses Valued supplier to our customers Improved bidding discipline at J. Ray Solid, predictable backlog at BWXT B&W Chapter 11 bankruptcy resolution in sight Financial restructuring complete, liquidity improved Experienced, shareholder-focu
Slide 6: McDermott International, Inc.
McDERMOTT INTERNATIONAL, INC.
Slide 7: J. Ray's Core Capabilities
J. Ray’s Core Capabilities Providing solutions for offshore field developments worldwide Engineering and Procurement Fabrication: Jackets, Hulls, FPSOs, TLP’s and Topsides Installation: Platforms, Hulls, FPSOs, TLP’s, Topsides and Pipelines Subsea/Deepwater Technology
Slide 8: J. Ray McDermott Snapshot
J. Ray McDermott Snapshot Long, established track record as a pioneer in the marine construction industry Worldwide operations Location Facility Vessels Asia Pacific (Batam) Fab 3 Caspian (Baku) Fab 1 (Operate only) Gulf of Mexico (Morgan City) Fab 3 Middle East (Dubai) Fab 1 Mexico (Veracruz) Ship
Slide 9: Spectrum of Offshore Infrastructure
Spectrum of Offshore Infrastructure J. Ray’s experience covers shallow to the deepest water Graphics compliments of Offshore Magazine (2002 Offshore Oil & Gas Industry Deepwater Solutions for Concept Selections Poster May 2002) Fixed Platform Compliant Tower (CT) Mini-TLP Conventional Tension Leg Pl
Slide 10: Strong Relationships with Major Offshore Operators
Strong Relationships with Major Offshore Operators
Slide 11: Field Development Lifecycle
Field Development Lifecycle Field infrastructure fabrication and installation accounts for a small portion of operators’ overall costs to first production Seismic / Reservoir Identification Well Completion Drilling Infrastructure Production 1 – 2 Years 1 Year 1 Year 1 – 2 Years 5 – 20 Years Years of
Slide 12: Industry Fundamentals Are Promising
Industry Fundamentals Are Promising [1] Commodity prices at historic highs Highest growth rates expected for deepwater and pipelay projects Deep water necessitates floating production solutions for field development International markets expected to grow faster than GOM Worldwide Identified Offshore
Slide 13: Strong Improvement at J. Ray
Strong Improvement at J. Ray Range 2003 2004 est. [1] J. Ray Op. Income 4Q04 Est. $100 $50 $0 -$50 Operating Income ($ millions) [1] Forecasted J. Ray 2004 operating income. 9/30/04 YTD actual plus 4Q04 forecast.
Slide 14: J. Ray Turnaround in Progress
J. Ray Turnaround in Progress Recruited and built new leadership organization Substantial improvements in business development, bidding, execution, and planning processes Maintain strong historical relationships with key customers Expect to successfully execute current backlog; approximately $1.2 bi
Slide 15: J. Ray Backlog Characteristics
J. Ray Backlog Characteristics[1] Backlog by Type of Contract Unit Rate 9% Fixed Price 37% Combination 54% Backlog by Geographic Region Middle East 33% Caspian 48% Americas 7% Asia Pacific 12% Enercom 2005 Oil Service Conference III [1] Based on 9/30/04 backlog of $1.4 billion February 18, 2005 15
Slide 16: J. Ray Summary
J. Ray Summary Well positioned to capture industry growth Strong franchise in strategic geographical locations New management team leading change in all areas $1.2 billion backlog and good growth prospects Turnaround is underway but not yet complete
Slide 17: BWXT is the premier manager of nuclear and national security operations
BWXT is the premier manager of complex, high-consequence nuclear and national security operations. We are disciplined operators and managers of nuclear production facilities, who deliver value and customer confidence. McDERMOTT INTERNATIONAL, INC.
Slide 18: BWXT Serves Two Key Roles
BWXT Serves Two Key Roles Manufactures, and is the premier supplier of, nuclear components for the U.S. Navy 2 divisions: Nuclear products & nuclear equipment Provide the critical skills and resources that produce propulsion systems for the U.S. Navy Financial results are in consolidated statements
Slide 19: Primary Locations & Statistics
Primary Locations & Statistics Employees (incl. site): 10,940 Est. 2004 Revenues: $550 Million DOE Site Budgets Managed: $1.1 Billion Size of Nuclear Facilities: More than 12 mm sq. ft INL – ICP Bettis Rocky Flats Mound Y-12 ORNL LANL Pantex SRS SPR Sites DOE Sites NNSA Sites BWXT Facilities Activel
Slide 20: BWXT Growth Drivers
BWXT Growth Drivers Ship & submarine building rates Refuel New M&O opportunities Space reactor programs Down-blending services Funding of strategic & environmental programs Regulatory and policy changes
Slide 21: BWXT is Growing
BWXT is Growing BWXT Revenue $600 $500 (millions) $400 $300 $200 $100 $0 $554 $550 $531 $494 $444 2000 2001 2002 2003 Est. 2004 $120 $100 (millions) $80 $60 $40 $20 $0 $108-$111 $86 $60 $52 $44 2000 2001 2002 2003 Est. 2004 Revenue Former M&O Contract Operating Income Equity Income Expected 4th qtr.
Slide 22: BWXT Backlog
BWXT Backlog Amortization[1] Manufacturing Backlog by Estimated Revenue Year Beyond 2006 32% 4Q04 11% 2005 34% 2006 23% [1] Based on 9/30/04 backlog of $1.5 billion
Slide 23: BWXT's Strategy
BWXT’s Strategy Maintain leadership position Maintain customer confidence Generate cost reductions Explore opportunities selectively outside the U.S. Continue strong operational and financial performance Enercom 2005 Oil Service Conference III February 18, 2005 23
Slide 24: McDermott International, Inc.
McDERMOTT INTERNATIONAL, INC.
Slide 25: B&W Snapshot
B&W Snapshot The Babcock & Wilcox Company was incorporated in 1881 Premier coal-fired boiler manufacturer for electricity generation Today’s key products and services OEM boilers and related equipment to generate steam and power Environmental and emission reduction equipment Upgrades, service and re
Slide 26: Majority of Business is Services & Upgrades
Majority of Business is Services & Upgrades A repeatable, baseload business Services, Parts O&M Project Upgrades OEM – New Plants B&W 2003 Revenues $1.4 billion
Slide 27: B&W Chapter 11 Update
B&W Chapter 11 Update Two possibilities to emerge from C11 1) Negotiated settlement with claimants Approved by MDR shareholders & claimants in 2003 B&W equity, 4.75mm MDR shares plus price guarantee, MI note & insurance policies Waiting court / BOD approval; appeals remain possible Currently reflect
Slide 28: Financial Review
Financial Review McDERMOTT INTERNATIONAL, INC.
Slide 29: McDermott's Consolidated Revenues
McDermott’s Consolidated Revenues J. Ray’s revenue decline due to completion of large projects BWXT’s revenues increased year-over-year Most of BWXT’s M&O business not reflected in revenues Increasing J. Ray’s backlog remains major priority $2,500 $2,000 $1,500 Revenues ($ millions) $1,000 $500 $0 2
Slide 30: Operating Income
Operating Income Improving $120 $90 $60 Operating Income ($ millions) $30 $0 -$30 -$60 Range 2003 2004 est. Operating Income 4Q04 Est. 2004 between $110-118 million[1] J. Ray improvement key driver BWXT income up +/- 25 percent Corporate expenses down Asset sales and project improvement contribute t
Slide 31: B&W Settlement
B&W Settlement affects Liabilities & Net Income on a quarterly basis, driven by stock price changes B&W C11 settlement liability, after-tax in millions $160 $140 $120 $100 $80 $60 $40 $20 $0 $110.0 $4.38 12/31/02 FV $86.4 $2.90 03/31/03 FV $126.4 $6.33 06/30/03 FV $118.2 $5.71 09/30/03 FV $127.9 $11
Slide 32: Financial Restructuring Complete
Financial Restructuring Complete J. Ray completed $200 mm note offering (12/03) BWXT signed a $135 mm credit facility (12/03) J. Ray’s asset sales lowered capital employed DB 60 vessel - $44 mm (7/04) Shearleg Crane barge - $18.7 mm (7/04) DB 17 vessel - $8.6 mm (7/04) Scottish fabrication facility
Slide 33: Liquidity at 2/7/05
Liquidity at 2/7/05 ($ in millions) J. Ray MI (BWXT) MII Total Cash, equivalents & investments $341 $42 $167 $550 Less restricted amounts: Letters of credit (71) - (5) (76) Captive insurer (16) - (25) (41) Pledged securities - - (41) (41) Cap-x, vessel reserve (51) - - (51) Foreign accts, other (5)
Slide 34: Key Areas of Focus
Key Areas of Focus Return J. Ray to long-term earnings growth and industry leadership Successfully execute existing backlog Build profitable backlog while managing risk/reward profile and pricing guidelines Manage operating and G&A costs for expected revenue level Maintain strong performance at BWXT
Slide 35: Investment Highlights
Investment Highlights Industry-leading, franchise-name businesses Valued supplier to our customers Improved bidding discipline at J. Ray Solid, predictable backlog at BWXT B&W Chapter 11 bankruptcy resolution in sight Financial restructuring complete, liquidity improved Experienced, shareholder-focu
Slide 36: McDermott International, Inc. - For more information contact
McDERMOTT INTERNATIONAL, INC. (NYSE: MDR) For more information contact: Jay Roueche Director of Investor Relations 281-870-5462
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