Q2 2026 McDermott International Ltd Earnings Call Transcript
Key Points
- McDermott International Ltd (MCDIF) reported a net income of $41 million in Q2 2026, marking a significant milestone in its turnaround.
- The company secured approximately $3.8 billion in new orders after the quarter-end, significantly strengthening its backlog and revenue visibility.
- Backlog remains substantial at approximately $15.8 billion, providing strong revenue visibility and supporting the long-term outlook.
- Adjusted EBITDA for Q2 2026 was $143 million, exceeding the plan of $137 million, driven by higher asset utilization and improved project margins.
- The company received a letter of intent for ExxonMobil's Rovuma LNG development in Mozambique, positioning it for one of the world's most significant LNG projects.
- Market conditions remain favorable across LNG, offshore energy, subsea infrastructure, and offshore transmission, with an opportunity pipeline of approximately $137 billion.
- The rights offering saw approximately 97% of rights exercised, indicating strong investor confidence in the refinancing plan.
- The ongoing Middle East conflict poses risks to operations, with potential timing-related impacts on project execution and cash flow.
- New orders for Q2 2026 were only $610 million, significantly below the plan of $1.4 billion, indicating a shortfall in quarterly order intake.
- Cash flow used in operating activities was $76 million in Q2, worse than the plan of $17 million, due to accelerated collections into Q1.
- The refinancing process is not yet complete, with final documentation and commitments still pending, creating uncertainty.
- Revenue outperformance was largely driven by change orders on legacy projects with lower profitability, which may continue to pressure margins until legacy backlog is fully worked off.
- The company faces potential delays in awards and revenue due to the Middle East conflict, though management expects impacts to be immaterial.
- Net working capital was negative $1.9 billion at quarter-end, reflecting ongoing working capital challenges despite collection efforts.
Thank you for standing by and welcome to McDermott's second quarter 2026 earnings call. (Operator Instructions) Today's call is being recorded. If you object, you may disconnect. I will now turn the call over to Kevin Leader, McDermott's Vice President and Treasurer. Please go ahead.
Thank you for joining us and welcome to our second quarter 2026 earnings call. I am joined today by McDermott's Chief Executive Officer and Chair of the Board, Michael McKelvy and Chief Financial Officer, Travis Brantley.
As a reminder, our comments today include forward-looking statements and estimates. These forward-looking statements are subject to various risks, contingencies and uncertainties and reflect management view as of today, August 21, 2026. If you are currently a lender, you should have received our second quarter 2026 financial results and supplemental slides from the facility agent. If you are an equity investor, you can access the material through the public website at mcdermott.com
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