McDermott Posts Tripling of Q1 Profit; Shares Rise

Shares of McDermott International surged almost 11% to $65.30 in AH trading Monday after the company reported a near-tripling of Q1 profit on the performance of its Babcock & Wilcox subsidiary and rising demand from the offshore oil industry. Q1 net income came in at $158.1 million ($1.38/share), up from $55.3 million ($0.49) a year ago. Revenue was $1.36 billion against $644.9 million last year. Analysts were expecting Q1 EPS of $0.75 on revenue of $1.27 billion. Operating income reached $192.5 million from $67.7 million. The strong performance was attributable primarily to revenue from Babcock & Wilcox, which came out of bankruptcy in Q1 last year. That unit brought in $655.4 million in revenue this quarter against $189 million in the year-ago quarter (when only one month's worth of results were reported). Babcock & Wilcox, a manufacturer of power generation systems, was in Chapter 11 for about six months while it addressed costs from asbestos liability. McDermott's oil and gas construction services segment, meanwhile, enjoyed an 86% rise in revenue to $550.3 million from $295.4 million last year.

Sources: Press release, MarketWatch, Forbes
Commentary: McDermott International: An Inexpensive Energy Play - Barron's • Jim Cramer's Mad Money In-Depth Stock Picks, May 4 • Building a Climate Change Portfolio
Stocks/ETFs to watch: McDermott International (MDR). Competitors: Global Industries Ltd. (GLBL), NRG Energy Inc. (NRG). ETFs: Utilities SPDR ETF (XLU), HOLDRS Utilities (UTH), iShares Dow Jones US Utilities Index (IDU)

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