Q1’20 Lender Presentation May 8, 2020
D ISCLOSURES Forward-Looking Statements 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. These forward-looking statements include, among other things, statements about COVID-19 related impacts to McDermott; project milestones and percentage of completion and expected timetables; and cost estimates on identified projects. 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: negotiations with third parties; regulatory and other approvals; adverse changes in the markets in which McDermott operates or credit or capital 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; actions by lenders, other creditors, customers and other business counterparties of McDermott; 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 McDermott's annual report on Form 10-K for the year ended December 31, 2019 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. Non-GAAP Disclosures This 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 McDermott 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 are Adjusted EBITDA and Net Working Capital. These non-GAAP financial measures should be considered as supplemental to, and not as a substitute for or superior to, financial measures prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are provided in the Appendix to this presentation. 2
T ODAY ’ S A GENDA ▪ Coronavirus Update ▪ Operations Update ▪ Q1’20 Year over Year Performance ▪ Appendix 3
MDR HAS PROACTIVELY RESPONDED TO THE OPERATIONAL IMPACTS OF C OVID -19 People focus Business continuity Client engagement ▪ Force Majeure → Change in Law → ▪ No major EPC contracts suspended ▪ 209 current cases, 17 recovered, 1 fatality Change Orders ▪ Project/Vessel/Yard response plans or terminated ▪ Global communications protocols with clients ▪ One temporary demobilization in place and supply chain in place ▪ Sites/fab yards have remained at work ▪ Remote/Smart working implemented ▪ Notice and impact tracking in place ▪ Vessels have continued operating with ▪ Return to work plans under development ▪ Rapid sourcing and supply chain some impacts (crews held in country) savings/resilience plans ▪ Some FEEDs slowed, and future prospects delayed 4
O PERATIONS UPDATE LNG ▪ Freeport: T3 Ready for Start Up achieved Cameron: T3 Feed Gas In approved ▪ ▪ Golden Pass: 60% model review complete Mozambique: 30% model review complete ▪ Subsea/Offshore KG 98/2 - LV105 completed reeling for Trip 6 and ▪ ONGC KG 98/2: First Gas delivered leaving Kattuppalli Spoolbase Reliance KGD6 R Cluster & Bul Hanine: Offshore campaigns progressing ▪ Marjan Pkgs 1 & 4: FEED review complete ▪ ▪ Cassia: Jacket installed and weld-out of compression deck complete at Altamira ▪ Tyra: Maintaining progress at Batam Fabrication yard Downstream Borstar: Underground tie-ins complete and pipe rack assembly underway ▪ ▪ Total Ethane Cracker: Completed main power feeds to electrical buildings GCGV MEG: First modules shipped in early April from Altamira ▪ 3 Ethylene/PDH FEEDs launched ▪ Cameron LNG – T3 Feed Gas In Approved 5
Q1’20 Y EAR OVER Y EAR P ERFORMANCE New Orders Revenue $6,553 $2,063 $1,906 $342 Q1’20 Q1’19 Q1’20 Q1’19 Adj. EBITDA 1 Net Working Capital 1 $109 $(1,224) $19 $(1,913) Q1’19 Q1’20 Q4’19 Q1’20 1) The reconciliations of adjusted EBITDA and Net Working Capital, which are non-GAAP measures, to the most comparable GAAP measures, are provided in the Financial Appendix in this presentation 6
Financial Appendix 7
A DDITIONAL D ISCLOSURES – N ON GAAP R ECONCILIATIONS Adjusted EBITDA 1,2,3,4 Net Working Capital 5,6 1) We define EBITDA as net income plus depreciation and amortization, interest expense, net, 5) We define Net Working Capital as Current assets comprising Accounts Receivable Trade, Accounts accretion of and dividends on redeemable preferred stock and provision for income taxes. We receivable other, Contracts in progress and Other Current Assets minus Current liabilities comprising define adjusted EBITDA as EBITDA adjusted to exclude significant, non-recurring transactions, Lease obligations, Accounts payable, Advance billings on contracts and Accrued liabilities both gains and charges, to our operating income. We have included EBITDA and adjusted 6) All amounts have been rounded to the nearest million. Individual line items may not sum to totals as a EBITDA disclosures in this presentation deck because EBITDA is widely used by investors for result of rounding. 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. 2) 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 and adjusted EBITDA in isolation from, or as a substitute for, net income or cash flow measures prepared in accordance with U.S. GAAP. 3) All amounts have been rounded to the nearest million. Individual line items may not sum to totals as a result of rounding. Q1’19 has been restated for Discontinued Operations reporting. 4) 8
CONFIDENTIAL 9
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