Shares of McDermott International Inc. (MDR, Financial) gained more than 4.5% on Monday after the company posted a fourth-quarter 2018 loss of $1.55 per share on $2.1 billion in revenue, reflecting 192.5% year-over-year growth. The company fell 17 cents short of earnings estimates and missed revenue expectations by $540 million.
President and CEO David Dickson said the loss was driven by multiple nonrecurring charges, including a $2.2 billion goodwill impairment, an $190 million reduction in the carrying value of the company's deferred tax asset and a non-cash impairment charge of $58 million on two of McDermott's marine vessels.
For the full year, the Houston-based engineering, procurement, construction and installation company registered a net loss of $2.7 billion, or $-17.94 per diluted share.
Looking ahead to 2019, McDermott expects revenue to be between $9.5 million and $10.5 billion. The operating margin is projected to range from 7% to 8% and guidance for adjusted earnings before interest, taxes, depreciation and amortization is $1 billion to $1.05 billon.
"Having closed the book on 2018, we have many reasons for optimism about the company's future," Dickson said. "In particular, we are pleased today to introduce robust earnings guidance for 2019, with a sharp improvement in most of our key metrics, including an expectation for 2019 EBITDA of approximately $1 billion, which is broadly consistent with the expectations outlined at the time of the Combination with CB&I. The market outlook is exceptionally robust for McDermott, and elements of our playbook are generating substantial results”.
During the fourth quarter, Jeremy Grantham (Trades, Portfolio) established a new position in the stock, buying 82,200 shares. Hotchkis & Wiley added to its holding during the quarter.
