Mcdermott International Ltd · OTC:MCDIF
Mcdermott International — Non-Deal Roadshow (May 2005)
37 slides from Mcdermott International's roadshow presentation, May 18, 2005
Slide 1: McDermott International, Inc. Boston / Chicago Investor Meetings
M c D E R M O T T I N T E R N A T I O N A L , I N C . Boston / Chicago Investor Meetings May 18-19, 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 (J. Ray) BWX Technologies (BWXT) Providing solutions for offshore field development to the worldwide oil and gas industry Lifecycle management of highly enriched uranium, fa
Slide 4: Financial Snapshot
Financial Snapshot Common Share Information Stock symbol (NYSE): MDR Recent price/share[1]: $19.80 Shares outstanding: 70 million Market capitalization[1]: $1.4 billion 52-week trading range: $6.72-$23.39 Daily volume average[1] 652,019 [1] As of May 12, 2005 Summary Financial Statistics[2] Revenues
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 Major 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)
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)
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 Drilling Well Completion Infrastructure Production – 2 Years 1 Year 1 Year 1 – 2 Years 5 – 20 Years Years of d
Slide 12: Industry Fundamentals Are Promising
Industry Fundamentals Are Promising [1] Commodity prices at historic highs Industry “upsteam” from fabrication is currently robust Day rates on drilling rigs/ships nearing new build levels Number of future offshore projects far exceeds those currently under construction International markets expecte
Slide 13: Strong Improvement at J. Ray
Strong Improvement at J. Ray J. Ray McDermott Operating Income by Quarter [1] $60 $40 $20 Millions) $0 -$20 (In -$40 -$60 -$80 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 [1] Reported GAAP operating income. See Appendix A for items included in J. Ray’s operating income during the years 2003 and 200
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 $1.1 bi
Slide 15: J. Ray Backlog Characteristics
J. Ray Backlog Characteristics[1] Backlog by Type of Contract Unit Rate 7% Combination 56% Fixed Price 37% Backlog by Geographic Region Middle East 33% Caspian 46% Asia Pacific 16% Americas 5% [1] Based on 3/31/05 backlog of $1.1 billion Investor Meetings: Boston & Chicago May 18-19, 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 $1.1 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. Powering TransformationSM M c D E R M O T T I N T E R N A T I O N A L , I N C .
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 manufacturing divisions Provide the critical skills and resources that produce nuclear components for the U.S. Navy Financial results are in consolidated statements Manage and operate sites
Slide 19: Primary Locations & Statistics
Primary Locations & Statistics Employees (incl. site): 10,940 2004 Revenues: $555 Million DOE Site Budgets Managed: $1.1 Billion Size of Nuclear Facilities: More than 12 mm sq. ft DOE Sites NNSA Sites BWXT Facilities Actively bidding site
Slide 20: BWXT Growth Drivers
BWXT Growth Drivers Ship & submarine building rates Refuel New DOE 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 (millions) $600 $500 $400 $300 $200 $100 $0 2000 2001 2002 2003 2004 1Q05 $444 $494 $554 $531 $555 $153 Revenue Former M&O Contract BWXT Segment Income[1] (millions) $120 $100 $80 $60 $40 $20 $0 2000 2001 2002 2003 2004 1Q05 $44 $52 $60 $86 $110 $24 Operating Income Equi
Slide 22: BWXT Backlog Amortization
BWXT Backlog Amortization[1] Manufacturing Backlog by Estimated Revenue Year Beyond 2007 27% Remainder 2005 24% 2007 20% 2006 29% [1] Based on 3/31/05 backlog of $1.7 billion Investor Meetings: Boston & Chicago May 18-19, 2005 22
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 Investor Meetings: Boston & Chicago May 18-19, 2005 23
Slide 24: McDermott International, Inc.
M c D E R M O T T I N T E R N A T I O N A L , I N C .
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 Plant Enhancement PPO/Service OEM B&W 2004 Revenues $1.4 billion
Slide 27: B&W Chapter 11 Update
B&W Chapter 11 Update Two possibilities to emerge from C11 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 reflected
Slide 28: Financial Review
Financial Review M c D E R M O T T I N T E R N A T I O N A L , I N C ..
Slide 29: McDermott's Consolidated Revenues
McDermott’s Consolidated Revenues J. Ray’s revenues have declined with completion of large, EPIC projects BWXT’s 2004 revenues increased 4.4% over 2003 Most of BWXT’s M&O business not reflected in consolidated revenues Growing J. Ray’s backlog remains major priority Revenue in millions $700 $600 $50
Slide 30: Earnings Improvement
Earnings Improvement Full year 2004 net income[1] was $61.6 mm; 1Q05 was $22.4 mm J. Ray 2004 improvement key driver to better overall results BWXT 2004 op. income up 26.7% compared to prior year Asset sales and project improvements enhanced 2004 results D&A was $40 mm in 2004; $10.5 mm in 1Q05 B&W
Slide 31: B&W Settlement Affects Liabilities & Net Income
B&W Settlement affects Liabilities & Net Income on a quarterly basis, primarily driven by stock price B&W C11 settlement liability, after-tax in millions $160 $140 $120 $100 $80 $60 $40 $20 $0 12/31/02 FV 03/31/03 FV 06/30/03 FV 09/30/03 FV 12/31/03 FV 03/31/04 FV 06/30/04 FV 9/30/04 FV 12/31/04 FV
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: Key Areas of Focus
Key Areas of Focus Return J. Ray to consistent 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 performa
Slide 34: 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 35: McDermott International, Inc. Contact
McDERMOTT INTERNATIONAL, INC. (NYSE: MDR) For more information contact: Jay Roueche Director of Investor Relations 281-870-5462
Slide 36: Appendix A – Items included in Income
Appendix A – Items included in Income (Unaudited, in millions) Twelve Months Ended 12/31/04 12/31/03 ITEMS INCLUDED IN OPERATING INCOME (LOSS) Marine Construction Services Contract cost adjustments on loss projects $46.6 $(119.7) Gain on sale of marine assets 30.3 - Miscellaneous items, net (14.5) (
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