读者寄语: 不管是您想投资美股, 还是想投资港股， 保持好自己的心态是最重要的。特别在美股、港股市场拥有一套成熟的金融市场，市场鼓励长期持有，而不是短期的投机炒作。选择一个好的公司, 耐心的等待, 做时间的朋友。如果您想咨询美股开户、港股开户相关的问题, 或者您对美股、港股感兴趣可以添加微信交流: xiaobei060537
McDermott International, Inc. (NYSE:MDR) Q2 2019 Results Conference Call July 29, 2019 5:00 PM ET
Scott Lamb - Vice President of Investor Relations
David Dickson - President and Chief Executive Officer
Stuart Spence - Executive VP and Chief Financial Officer
- Scott Lamb - 投资者关系副总裁
- David Dickson - 总裁兼首席执行官
- Stuart Spence - 执行副总裁兼首席财务官
Jamie Cook - Credit Suisse
Andrew Kaplowitz - Citi
Steven Fisher - UBS
Chad Dillard - Deutsche Bank
Michael Dudas - Vertical Research
- 杰米库克 - 瑞士信贷
- Andrew Kaplowitz - 花旗
- 史蒂芬费舍尔 - 瑞银
- 乍得迪拉德 - 德意志银行
- Michael Dudas - 垂直研究
Ladies and gentlemen, thank you for standing by. And welcome to McDermott International's Second Quarter 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following the Company's prepared remarks, we will conduct a question-and-answer session and instructions will be given at that time.
I will now turn the call over to Scott Lamb, McDermott's Vice President of Investor Relations. Please go ahead.
女士们，先生们，谢谢你们的支持。 并欢迎麦克德莫特国际公司2019年第二季度财务业绩电话会议。 此时，所有参与者都处于只听模式。 在公司准备好的评论之后，我们将进行问答环节，并在那时给出指示。
Thank you and good afternoon everyone. Joining us on the call today are McDermott's President and Chief Executive Officer, David Dickson and Executive VP and Chief Financial Officer, Stuart Spence.
I'd like to remind you that we are recording this call, and the replay will be available on our Web site where you can also find a copy of our press release and our Form 10-Q. We've also posted a presentation of supplemental financial information on the Web site. Additionally, our comments today include forward-looking statements and estimates. These forward-looking statements are subject to various risks, contingencies and uncertainties, and reflect management's view as of today, July 29, 2019.
Please refer to our filings with the SEC, which include and are available on our Web site, including our Form 10-K for the year ended December 31, 2018 and subsequent Form 10-Q filed today, which provide discussion of some of the factors that may cause actual results to differ from management's projections, forecasts, estimates and expectations. Please note that except to the extent required by applicable law, McDermott undertakes no obligation to update any forward-looking statements.
I will now turn the call over to David.
谢谢大家下午好。今天与我们联系的是McDermott的总裁兼首席执行官David Dickson以及执行副总裁兼首席财务官Stuart Spence。
Thanks Scott. Good afternoon, and thanks for joining us today. I'm sure you've all seen the quarterly results by now, and Stuart will offer detailed commentary on the numbers in just a few minutes. But before that, let me provide an operations update.
As our release has indicated, the news this quarter is mixed. Before we address the reasons behind our operating loss and the impact on the quarter, let me start with the positives, which we believe will position us to demonstrate sharply improved performance in 2020.
First, the company reported a record setting level of backlog and new awards, which clearly reinforces the benefits of our combination with CD&I, and the opportunities available in strong market environment.
Second, the company has more than 19 billion of new awards since the May 2018 combination. All of it under McDermott's stringent risk management protocols, which we believe paves the way for us to deliver consistent margin performance through the application of the One McDermott Way and the execution of this backlog. Third, our revenue opportunity pipeline remains at a new record level of $90 billion. This is a metric we use to look out over the coming five quarters.
And during this forward looking period, we are positioned for a continued robust flow of new awards for offshore work in the Middle East, and a number of other noteworthy headline projects; such as a large subsea contract featuring an integrated SURF and SPS EPCI solution for a client in the APAC region; a potential mega contract for EPCI work on discover gas fuel development project in Australia; a medium sized LNG project in North America; a subcontract for our QMW facility for a significant amount of module work on Arctic 2 LNG project; and potential new petrochemical facilities on the Gulf Coast with our technology has already been selected.
We also see a potential longer term Q3 opportunity in South Korea where our technology business was selected as a master licensor by S-OIL, an affiliate of Saudi Aramco, in support of its ethylene cracker and downstream petrochemicals complex, being developed as a major expansion of S-OIL's existing refinery.
Fourth, on the list of positives is that company continues to remain on schedule in executing the Cameron and Freeport LNG projects. The Cameron and settlement agreement that we signed earlier this month is a testament to the mutually productive relationship we have built with this customer with the combination, and the associated incentive provided a meaningful contribution to our second quarter results.
And in Freeport, we announced the introduction of FEED gas last week. Both projects are more than 90% complete with no schedule changes as of Q2. And what we refer to as the cone of uncertainty related to project risk is steadily shrinking with each passing quarter. And as this relates to Cameron, in particular, the uncertainty in 2020 is further diminished by meaningful incentives as we hit the associated milestones that we have negotiated with the client.
其次，自2018年5月合并以来，该公司已获得超过190亿的新奖项。所有这些都遵循McDermott严格的风险管理协议，我们相信这为我们通过应用One McDermott Way和执行此积压工作提供一致的保证金绩效铺平了道路。第三，我们的收入机会管道仍处于900亿美元的新纪录水平。这是我们用来了解未来五个季度的指标。
在这个前瞻性时期，我们的目标是为中东海外工作提供持续强劲的新奖项，以及其他一些值得注意的重要项目;例如，为亚太地区的客户提供集成SURF和SPS EPCI解决方案的大型海底合同; EPCI在澳大利亚发现天然气燃料开发项目的潜在大型合同;北美一个中型液化天然气项目;我们的QMW设施的分包合同，用于Arctic 2 LNG项目的大量模块工作;已经选择了我们的技术和墨西哥湾沿岸潜在的新石化设施。
Finally, I would say that the fundamental long-term outlook for our key market is exceptionally robust. In the strategic area of FEEDs, for example, our awards through the first half of 2019 are already more than double what we won in all of 2018 in terms of both man hours and dollar value, and that's especially important as FEED work positions us for EPC opportunities. This year, for example, we have $1.5 billion of EPC work as a result of FEED work that's been done since the combination further.
Further, in our technology business, we are forecasting the number of license sales to increase by 25% this year versus 2018. Beyond that, as a result of recent or pending technology license sales, we continue to see roughly $40 billion of potential EPC pull-through opportunities in refining and petrochemical. And we believe that petrochemical market, in particular, is poised for another wave of investment in the next 12 to 24 months with an expected increase of more than 40% between 2019 and 2028 and world's ethylene capacity in a market where we are one of the world leaders.
However, as shown by our second quarter operating results, the bottom line benefits of the combination are not yet fully evident. Some of what we saw in our operating margin during the second quarter of 2019 was a reflection of our shift to a younger project portfolio, if I can describe it in that way. What I mean in particular is that compared to last year, our portfolio is on average in earlier stage of execution when the margin enhancing opportunities have not yet been realized.
Apart from this, yes, there have been a few operating disappointments and surprises since last year's combination. We're not happy with the magnitude of the loss for the quarter, which to a certain degree is expanding the overall timing of our transition period. But we fully expect benefits of the combination to become more evident next year.
For now, however, we are reducing our full year guidance to reflect the second -- the week of the second quarter, as well as profit recognition slippage from Q4 into 2020, and lowered expectations for the performance of legacy CD&I projects in our NCSA segment. Derek will provide additional commentary on guidance in just a few minutes.
Our Q2 results are also a reminder of the inherent volatility and quarterly results in the E&C space. Despite that, we manage our business for the long term, that certainly the perspective we adopted when we engineered the turnaround the legacy McDermott business in the 2013 to 2015 timeframe. It was a long and challenging journey. And our financial results did not begin to show the benefit of our hard work until about 18 months or so after my arrival in late 2013.
We are maintaining this long term view of value creation as we work through 2019. Clearly, the signs are positive. At the end of the second quarter of 2019, our backlog already included approximately $7.4 billion of our expected 2020 revenues, which is much higher than the $4.2 billion of 2019 roll-off that we had in backlog this time last year. Beyond 2020, we have good visibility into 2021 where we already have more than $4 billion of revenues in backlog.
此外，在我们的技术业务中，我们预测今年的许可证销售数量将比2018年增加25％。除此之外，由于近期或未决的技术许可证销售，我们继续看到大约400亿美元的潜在EPC拉动 - 通过炼油和石化的机会。而且我们认为特别是石化市场准备在未来12到24个月内进行另一波投资，预计2019年至2028年期间将增加40％以上，而在我们是其中一个市场的世界乙烯产能世界领袖。
然而，就目前而言，我们正在减少我们的全年指引，以反映第二季度 - 第二季度的一周，以及从第四季度到2020年的利润确认下滑，并降低对我们NCSA细分市场中传统CD＆I项目表现的预期。 Derek将在几分钟内提供有关指导的额外评论。
Moreover, when we look at our new record level revenue pipeline, we have a very good idea with additional awards and revenues will come from. And another encouraging sign is the steady roll off of legacy CB&I backlog, which stood at $2.9 billion as of the end of the second quarter. Of this amount, $2 billion was associated with our NCSA segment and that is projected to be below $1 billion by the end of this year and over $200 million by the end of 2020.
What we see as of today is 2020 that we expect to demonstrate significantly improved performance with higher revenues and solid operating margins. I want to emphasize that we are using the McDermott playbook to ensure that the company reaches its full potential. Specifically, we have identified the loss makers and balanced the risks and opportunities across the CB&I portfolio. We have introduced a more robust -- a bidding process and oversight. We have introduced better cash management. We have built and repaired relationships with customers and other business counterparties as evidenced by the Cameron settlement and new record bookings.
We have built a strong backlog. We introduced a new risk management system and recently established a new risk committee within our Board of Directors. And we enhance what we believe is an already best in class ethics and compliance program that enables us to avoid the kinds of problems that you've seen affecting some of our competitors. And the final element of the playbook I want to mention is that we have built and established a new leadership team. In this regard, I am particularly excited about the change we made in the technology business earlier this year. Today, we are looking at re-energizing this business with a specific emphasis on new approaches to optimizing pull through opportunities.
Moving forward, the McDermott playbook will help us continue to deliver on the legacy portfolio, complete the loss making projects, execute on a new portfolio, reduce the volatility in our quarterly results and continue to strengthen our customer relationships. When I look at what we are doing as a company, when I traveled to our various offices around the world, I see 10 plus examples of operational progress, innovative thinking and employee engagement at McDermott.
I am firmly convinced that the company is strategically and tactically focused on doing exactly the right things in exactly the right way. And I have absolutely no doubt that these efforts will create long-term value for our investors, customers and employees. And as far as the near to intermediate term, we expect to see a sharp improvement in the company's operating income by the fourth quarter this year as we build momentum heading into 2020.
And with that, I will turn it over to Stuart.
我们今天所看到的是2020年，我们期望通过更高的收入和稳定的运营利润来显示出显着改善的业绩。我想强调的是，我们正在使用McDermott手册确保公司充分发挥其潜力。具体而言，我们已经确定了损失制定者并平衡了CB＆I投资组合中的风险和机遇。我们引入了更强大的 - 招标流程和监督。我们引入了更好的现金管理。我们建立并修复了与客户和其他业务对手方的关系，这可以通过Cameron结算和新的记录预订来证明。
Thanks, David and good afternoon, everyone. Let's now take a closer look at the numbers. The company reported revenues of $2.1 billion, net loss of $146 million or $0.18 per diluted share, and an operating loss of $61 million. Excluding $101 million non-cash loss on the sale of alloyed piping products, or the APP business, as well as restructuring, integration and transaction costs, the adjusted net loss was $14 million or $0.07 per share.
Our adjusted EBITDA was $112 million and the adjusted operating income was $71 million. The $71 million adjusted operating income included the benefit of the Cameron settlement under which $110 million of progress incentives were recognized during the quarter.
The adjusted operating income also reflected increased cost estimates on projects in the company's NCSA segment; including, $30 million on the Freeport LNG project as a result of increased construction and subcontractor costs on Trains 1 and 2, as we near completion on each of those trains; and $33 million on the company's offshore project for Pemex in the Gulf of Mexico related to disagreements with the customer that have coincided with changes in that company's leadership team and changes in the country's political landscape.
Turning to the performance of the operating unit. I will start with any NCSA, which reported revenues of $1.3 billion and operating income and margins of $15 million and 1.2% respectively. Excluding the loss from the APP sale, adjusted operating income for NCSA was $117 million. Segment results for the quarter included the net impact of the Cameron settlement agreement and the project charges I just mentioned.
Let me offer just a bit more color on the Cameron settlement. The $110 million that we've recognized in our statement of operations for the second quarter was an incentive related to the projected achievement of construction progress milestones. That incentive has two cash components; $75 million expected to be received in the second half of this year, including $38 million of which we received in July of 2019; the remaining $35 million of the $110 million, we expect to receive in 2020.
Now to be clear, the settlement agreement gives us additional incentive opportunity beyond what we have currently included in our revenue estimates for completion related milestones. That additional opportunity is modestly lower than the $110 million we recognized in Q2. And the benefit for the income statement and for cash flow would be in 2020, as David referenced when we become confident in our ability to achieve the milestones.
NCSA recently achieved significant operational milestones. First cargo shipped from Cameron's Train 1 during the quarter with substantial completion of phase one expected within this quarter. Trains 2 and 3 continue to progress on schedule with the overall project reaching 93% completion during the quarter. Freeport continues to progress well, reaching 95% completion for all three trains combined. Commissioning of Freeport Train 1 continues with the introduction of FEED gas early in the third quarter. The first cargo shipment is expected in the third quarter.
Our EARC segment reported revenues of $192 million and operating income and margin of $4 million and 2.1% respectively. Key contributors to revenues and operating income were the Total Tyra, Lukoil refinery and Afipsky refining projects. As the LNG cycle continues to show momentum, our EARC segment with McDermott share of the Mozambique LNG EPC contract during the quarter. And as a reminder, until June of 2020, McDermott has a unilateral right to step up its participation in the project to 45%, which would represent another $1.6 billion of approximate booking value.
In our MENA segment, we reported revenues of $399 million and operating income and margin of $29 million and 7.3% respectively; key contributors to the Saudi Aramco Safaniya Phase 5 and 6, QP Bul Hanine, ADNOC Crude Flexibility, Sasref and Liwa projects. Operating income was impacted by transitioning from mature backlog, the newer contracts secured at low pricing due to increased competitive pressure. MENA demonstrated McDermott's continued strength in the region by booking record level order intake during the second quarter, resulting in the highest level of backlog ever attained in the region. Among the new awards during the quarter were two mega projects for Saudi Aramco located in the Marjan field.
APAC reported revenues of $133 million and operating income and margin of $2 million and 1.5% respectively. Operating income was driven by various active projects and closeout-related savings in Australia and India. APAC is expected to book the Scarborough Gasfield development project in early 2020, a mega project for which we have done FEED and related work.
Moving onto our technology segment. We reported revenues of $154 million and operating income and margin of $35 million and 22.7% respectively, primarily driven by catalyst shipments, execution progress, earned fees and process performance. And to round out the discussion, let me quickly recap the corporate segment, which reported $146 million of expense items, mainly attributable to selling, general, administrative and other expenses of $52 million, $59 million of unallocated operating costs, $31 million for restructuring, integration and transaction related costs, down significantly as compared to Q1.
Cash used by operating activities in the second quarter of 2019 was $205 million. This primarily reflected the company's net loss and the usage of cash on the Cameron LNG project. Total cash availability was $1 billion at June 30, 2019, consisting of $455 million of unrestricted cash, $568 million of availability under McDermott's revolving credit facility. As of June 30, 2019, McDermott had approximately $1.4 billion of combined availability under its principle letter of credit facilities, uncommitted bilateral credit facilities and surety arrangement. McDermott was in compliance with all financial covenants under its financing arrangements as of June 30, 2019.
And now for a quick update on the status of the assets sales. During the second quarter of 2019, McDermott completed the sale of the APP business, the distribution and manufacturing arm of our pipe fabrication business. Net proceeds were $83 million. We continue to pursue the sale of the remaining portion of the pipe fabrication business.
在我们的中东和北非地区，我们报告的收入为3.99亿美元，营业收入和利润分别为2900万美元和7.3％;沙特阿美萨法尼亚5期和6期，QP Bul Hanine，ADNOC原油灵活性，Sasref和Liwa项目的主要贡献者。营业收入受到成熟积压转换的影响，由于竞争压力增加而以较低价格获得较新合约。 MENA通过在第二季度预订创纪录水平订单来证明McDermott在该地区的持续实力，从而实现了该地区有史以来最高的积压水平。本季度的新奖项包括位于Marjan油田的沙特阿美公司的两个大型项目。
As for the storage tank business, we have identified potential buyers, and sales efforts with respect to that business remain ongoing. In connection with that contemplated sales, we may retain a continuing minority ownership or other economic interest in the business. Our anticipated aggregate net cash proceeds from the pipe fabrication and storage tank transactions are now expected to be lower than the approximately $1 billion we previously estimated. Our ongoing competitive sales process is now expected to result in a closing of the sale in the fourth quarter of 2019.
I'll now comment on our updated guidance for 2019, which is driven by four main factors; first, it would be the weaker than expected operating results for the second quarter of 2019; second, is the impact of reduced revenues and higher unallocated operating expenses due to slippage in certain new warrants and customer changes to schedule on several projects; third, is changes in our assumptions about the expected performance of legacy CB&I projects in our NCSA operating segment; and fourth, is a shift from the fourth quarter of 2019 into 2020 and the assumed timing of remaining incentives on the Cameron project.
As a result, we have reduced our revenue guidance for the year from about $10 billion to about $9.5 billion. We also reduced our guidance for adjusted operating income to $470 million, down from previous guidance from about $800 million on an adjusted basis. This reduction, as you would expect, flows through to corresponding reductions in EBITDA, net income and earnings per share. And we now expect to report full year adjusted loss year of about $0.32 in 2019.
We have also adjusted our guidance for cash flow from operating activities, and free cash flow for this year. We now expect negative cash flow from operating activities to be approximately $495 million as compared to previous guidance of negative $310 million. The good news here is that most of this negative cash flow has already occurred during the first half of the year, which suggests that cash flows from operating activities would be only modestly negative in the second half.
As for negative free cash flow, we have reduced our full year guidance to about $640 million on the forecast of a capital investment budget of about $145 million. As a reminder, you can find the full slate of GAAP and adjusted numbers in the guidance table of our earnings release. Even with the reduction in overall guidance, we expect to see a sharp improvement in operating income in the fourth quarter of this year.
In wrapping up my remarks, I'd also like to note that we continue to believe that the company's liquidity profile is adequate. And I will remind you that the guidance we are providing today is based on our current portfolio.
And with that, I will turn it back over to David.
Thanks Stuart. In conclusion, let me emphasize once again the long-term outlook for McDermott is exceptionally positive. We are optimizing the benefits of our combination with CB&I and steadily advancing toward completion of the Cameron and Freeport LNG projects. We remain confident in the earnings power of the company. And the adjustment in our current year guidance is largely a reflection of Q2 actions and subsequent time and related issues.
We are confident now the challenges we have confronted since the combination CB&I will be largely behind us by the end of the year, and we look forward to significantly improve 2020. Although, we are not prepared to give specific earnings guidance for next year, let me say the specific factors that support our optimistic view of 2020.
First, we should capture not only the revenues and earnings that we've previously expected to see in Q4 of this year, but we should see a much higher revenue run rate based on the growth and backlog, and the corresponding reduction in unallocated operating expense.
Second, we would expect to see a sharp reduction and eventual elimination on zero margin revenues from our existing project portfolio, as we complete the Cameron and Freeport LNG projects.
Third, we believe our backlog is sound and profitable, and we would not expect to incur material changes in project estimates across our portfolio. Fourth, we expect to see continued market strength, particularly in petrochemical where there are seven or seven very large EPC opportunities that we are tracking, as well as additional pickings for LNG EPC work and a continued rich opportunity set for offshore work, especially in the Middle East. With a reduction in and eventual elimination of integration and restriction -- and transaction expenses in conjunction with reduced interest expense due to reduced borrowings under the revolver. And lastly, we will see full year benefit of the cost reduction efforts we have made.
Before we go to Q&A, I want to leave you with one key takeaway. You've heard me say this before but it bears repeating. I firmly believe the strategic rationale for the combination with CB&I is as strong as it ever was. Turnaround of legacy McDermott was a challenge that took more than 18 months to complete, but we never lost sight of our objective. Today, we are just over 12 months into the turnaround of CB&I. And in comparison to the previous McDermott turnaround, we have a much stronger revenue pipeline with approximately $7.4 billion of 2020 revenue in the backlog, and more than $4 billion of 2021 revenue in the backlog. It's clear that we have an excellent future, and are working steadfastly and truly aligned the full potential of the new McDermott.
That concludes our prepared remarks, and we'd be happy to take your questions.
第三，我们认为我们的积压是合理且有利可图的，我们不希望在我们的投资组合中产生项目估算的重大变化。第四，我们预计市场将继续保持强势，特别是在石化领域，我们正在追踪七到七个非常大的EPC机会，以及液化天然气EPC工作的额外选择和海上工作的持续丰富机会，特别是在中东。减少并最终消除整合和限制 - 以及交易费用，同时减少因左轮手枪借款减少而产生的利息费用。最后，我们将看到我们所做的降低成本的全年效益。
[Operator Instructions] Your first question comes from line of Tahira Afzal from KeyBanc Capital. Tahira?
[操作员说明]您的第一个问题来自KeyBanc Capital的Tahira Afzal。Tahira？
Good afternoon. This is Sangeetha for Tahira, thanks for taking my questions. So the first thing I would ask is you guys guided, obviously, a different number for 2019. And you gave us some color. But can you highlight a little bit more on what projects you think will get pushed out to 2020?
下午好。 这是Tahira的Sangeetha，感谢您提出我的问题。 所以我要问的第一件事就是你们引导，显然，2019年的数字是不同的。你们给了我们一些颜色。 但是，您能否更多地强调一下您认为将推进到2020年的项目？
Hi, Sangeetha this is Stuart. Yes, so just to recap the impact on our guidance for EBITDA, or adjusted operating income for 2019. First, it was really a revenue slippage from this year to next year, as you see for about $500 million. This was across the portfolio related to the timing of some of the awards that we've seen in the second quarter, just also some project schedules we see in the second half of the year. That not only impacts the profit on the project, but it's also increasing our unallocated expense of our operating assets.
Second, we're taking into account our lower than expected to Q2 results. Third, on our common incentives, we move that into 2020 where we see the milestones come on that incentive. And then lastly, given some recent performance indicators and our NCSA portfolio, schedules haven't changed, but we've taken down our margin expectations of that whole portfolio. And that's what drives our change in guidance.
嗨，Sangeetha这是Stuart。 是的，只是为了回顾一下我们对EBITDA指引的影响，或者调整2019年的营业收入。首先，从今年到明年实际上是收入下滑，正如您所看到的那样，约为5亿美元。 这与我们在第二季度看到的一些奖项的时间安排相关，也是我们在下半年看到的一些项目时间表。 这不仅会影响项目的利润，还会增加我们运营资产的未分配费用。
其次，我们考虑到第二季度业绩低于预期。 第三，根据我们的共同激励措施，我们将其推进到2020年，在那里我们看到了这一激励措施的里程碑。 最后，鉴于最近的一些绩效指标和我们的NCSA投资组合，时间表没有改变，但我们已经降低了对整个投资组合的保证金预期。 这就是推动我们改变指导的因素。
And if I can ask another one on the asset sales, I understand what you said in your prepared remarks. But would you be willing to give us a new range for what you expect from the sales and how realistic your 4Q outlook looks at this point?
As you hear, we're in the middle of our competitive process. So obviously, anything we say is commercially sensitive. And as a result of that, we'd like to stick to our prepared remarks.
如您所知，我们正处于竞争过程中。 很明显，我们说的任何东西都是商业敏感的。 因此，我们要坚持准备好的言论。
And our next question is from the line of Jamie Cook from Credit Suisse. Jamie?
我们的下一个问题来自Credit Suisse的Jamie Cook。 杰米？
I guess just to follow, Stuart, on the guidance reduction for 2019. I understand you gave the buckets of why we're lowering each one. But besides like a $500 million of revenue you talked about. Can you just put a dollar amount associated with each of the four buckets, or we can see what -- so we're able to quantify how big each bucket is. And then I guess my second question, just how do we think about the ramp Q3 versus Q4, because obviously that has implications for the earnings trajectory to 2020. And is there any way you can help us think about a more normalized margin for the company in 2020, assuming you can execute against the existing portfolio? Thanks.
我想跟随，斯图尔特，关于2019年的指导减少。我明白你给了我们降低每个人的原因。 但除了你谈到的5亿美元收入之外。 你能不能把四个桶中的每一个都加上一美元金额，或者我们可以看到什么 - 所以我们能够量化每个桶的大小。 然后我想我的第二个问题，我们如何看待第三季度与第四季度之间的关系，因为这显然会对2020年的盈利轨迹产生影响。您有什么方法可以帮助我们考虑公司更加规范化的利润率 在2020年，假设您可以针对现有投资组合执行？ 谢谢。
So I'll take the first question around the drop in guidance. So when we look at the impact of, I would say, the revenue fall, impacts on margin and the change in our expectations for NCSA portfolio, those are roughly the same numbers. And you saw that our Q2 earnings was impacted by two project charges. And our common incentive is a similar amount to that charge. On the cadence of timing in the back half of the year, I think we see Q3 as having slightly higher revenues, but also like kind of a challenged profit environment. So we see a significant uptick in revenues in Q4 with a real step up in operating income performance. Hopefully, that's helpful to you.
所以我将围绕指导下降的第一个问题。 因此，当我们考虑收入下降，对保证金的影响以及我们对NCSA投资组合的预期变化的影响时，这些数字大致相同。 你看到我们的第二季度收益受到两项项目费用的影响。 而我们的共同激励与该指控相似。 关于今年下半年的时间节奏，我认为我们认为第三季度的收入略高，但也有点像一个受到挑战的利润环境。 因此，我们看到第四季度收入大幅增长，实际营业收入增长。 希望这对你有所帮助。
And anyway, you could help us think about a normalized margin for what's on backlog as we think about 2020? And I know you don't want to answer 2020. But I'm assuming it's more backed loaded versus frontend loaded, just in terms of how the projects ramping with us finishing Freeport -- we'll still have Freeport and Cameron in our numbers in the first time here at least?
无论如何，你可以帮我们考虑一下我们在2020年考虑积压的标准化利润率吗？ 而且我知道你不想回答2020年。但我认为它更多的是支持加载而不是前端加载，只是在项目如何与我们完成自由港完成 - 我们仍然会有自由港和卡梅隆的数字 至少在这里第一次？
Sure. When we look at 2020, we would all say it's early. But you see we do have $7.4 billion of revenue already secured for next year. We are expecting some additional awards in the back half of this year that will also add to that number. And as we've commented, we have an option on the Anadarko LNG project and also the seat to EPC conversion on Scarborough. So we see a very, very healthy backlog environment going into 2020, and that should drive significant revenue growth from 2019.
In terms of a margin profile or a cadence to the business, first, the cadence we see a steady growth throughout the year building from Q4. And from a profit recognition perspective, we would see a growing portfolio, almost in line with the revenues but also getting higher in the back half of next year.
当然。 当我们看2020年时，我们都会说它还早。 但是你知道我们明年已经获得了74亿美元的收入。 我们期待在今年下半年获得额外奖励，这也将增加这个数字。 正如我们所评论的那样，我们可以选择阿纳达科液化天然气项目以及斯卡伯勒的EPC转换席位。 因此，我们看到一个非常非常健康的积压环境将进入2020年，这将推动2019年的收入增长。
And our next question is line of Andrew Kaplowitz from Citi. Andrew?
我们的下一个问题是来自花旗的Andrew Kaplowitz。 安德鲁？
So you mentioned the changes in assumptions in the legacy CB&I projects within NCSA. And that the CB&I legacy projects are now only 14% of your backlog. I mean as you guys know, it's been over a year since CB&I closed. So in general, when do you think that investors could get comfortable that the vast majority of your backlog at risk will get better? And I know you mentioned that CB&I and NCSA backlog would be under $1 billion by the end of this year and $20 million by the end of '20. But what's the risk that we have to wait until the end of 2020 for you to reduce the noise in the backlog?
所以你提到了NCSA中遗留CB＆I项目中假设的变化。 而CB＆I遗留项目现在只占您积压的14％。 我的意思是你们知道，自从CB＆I关闭以来已经过去了一年多。 所以一般来说，你认为投资者什么时候可以放心，你的大部分风险积压会好转？ 而且我知道你提到CB＆I和NCSA积压到今年年底将低于10亿美元，到20年底将达到2000万美元。 但是，为了减少积压的噪音，我们必须等到2020年底的风险是什么？
If you look at also the majority of this backlog still relates to Cameron and Freeport. And as you can see in the supplemental deck, the completion dates for those projects haven't changed since Q1. So once we have those two, obviously, those two projects ongoing and we'll obviously continue to -- these are zero margin revenue projects. But the balance of the portfolio, I would say today that and I said in prepared remarks is obviously of our confidence level is growing as we've gone through with each and every one of them.
And as you're seeing once we get through to the back end of 2020, we're essentially through that, we only $200 million of the backlog left. So I think that after 12 months -- and obviously, a lot of our focus as you know has been on Cameron and Freeport, because of the quantum -- the charges we'll have to take on both of those projects. And what we'd say today is, obviously, we've made a lot of good progress. The incentive discussion with the customer -- the customer has been very fair with us. But unfortunately, a large part of those incentives won't be realized until 2020. But generally over the portfolio, I think we're as times progress, we're getting our arms around it more and more. But I think the two big remaining initiatives will always be Cameron and Freeport until we've got them completely done.
如果你看一下这个积压的大部分仍然与卡梅隆和自由港有关。正如您在补充套牌中看到的那样，这些项目的完工日期自第一季度以来没有变化。因此，一旦我们拥有这两个，显然，这两个项目正在进行中，我们显然会继续 - 这些是零保证金收入项目。但是我今天要说的是投资组合的平衡，而且我在准备好的评论中说，显然我们的信心水平正在增长，因为我们已经完成了每一个。
正如你所看到的，一旦我们进入2020年末，我们基本上就是这样，我们只剩下2亿美元的积压。所以我认为在12个月之后 - 很明显，我们关注的重点是卡梅伦和弗里波特，因为量子 - 我们将不得不对这两个项目收取费用。而我们今天所说的显然是我们取得了很多进展。与客户的激励讨论 - 客户对我们非常公平。但不幸的是，这些激励措施的很大一部分要到2020年才能实现。但总的来说，在投资组合中，我认为我们随着时间的推移，我们越来越多地搂着它。但我认为剩下的两项重大举措将永远是卡梅隆和弗里波特，直到我们完全完成它们为止。
And what were the -- were there other changes in other projects? I mean, it sounded like there were other changes in other projects were there? Or was it really just -- I mean, we noticed, you obviously talked Freeport but what else was there in the CB&I backlog that you changed?
那是什么 - 其他项目还有其他变化吗？ 我的意思是，听起来其他项目还有其他变化吗？ 或者它真的只是 - 我的意思是，我们注意到，你明显地谈到了自由港，但是在你改变的CB＆I积压中还有什么？
Andy, it's Stuart. So if you think about what was in the segment, NCSA, it's really around the petrochemical, the power projects. I think it's there where we're resetting the expectation level based on the overall performance that we've been seeing. So not all of those contracts are lost contracts, but they're relatively low margins. We and the NCSA management team have been working extremely hard to try and increase the profitability. But as we're finding, they're too late in their lifecycle to really make any significant impact. And that's what's driving this change in our expectation and then feeding into the change in the second half guidance.
安迪，这是斯图尔特。 因此，如果你考虑一下这个细分市场，NCSA，它实际上是围绕石化，电力项目。 我认为我们正在根据我们所看到的整体表现重新设定期望水平。 因此，并非所有这些合同都是合同丢失，但它们的利润率相对较低。 我们和NCSA管理团队一直在努力尝试并提高盈利能力。 但正如我们所发现的那样，他们的生命周期太晚才能真正产生重大影响。 而这正是推动我们期望的这种变化，然后为下半年指导的变化付出代价的原因。
And then Stuart, you've got $1 billion of liquidity that you talked about. You talk about less burn in the second half, $150 million, I think is the number. Obviously, you have your asset sales that will go along with to help your liquidity. But what if your asset sales continue to push out, or probably extend a bit more for cash here. We know you have $800 million in liquidity versus your covenants. But is a certain level that you'd get to where you might have to think about other solutions. And what is it that slipping in the asset sales themselves?
然后斯图尔特，你谈到了10亿美元的流动资金。 你谈到下半年烧伤少，1.5亿美元，我认为是这个数字。 显然，您的资产销售将伴随您的流动资金。 但是，如果您的资产销售继续推出，或者可能在这里扩大一点现金，那该怎么办呢？ 我们知道您的流动性与您的契约相比有8亿美元。 但是，您可能需要考虑其他解决方案的某个级别。 什么是资产销售自身下滑？
So just as a reminder, Andy, our guidance for the full year does not include the divestiture of our time storage business, or the remaining pipe fabrication assets. So our guidance includes the benefit of those businesses all the way to the end of the year. We are comfortable with the liquidity at the end of Q2, which is $1 billion. We're guiding -- giving guidance for the back half of the year. And given our credit facilities and bilateral facilities, we are comfortable with the overall liquidity profile of the company.
If you look at the asset sales, just in general, our times business this is a global business. It has a high level of interest. It was the foundation entity of CB&I. So it has taken us a little bit longer to prepare for sales. It's taken a little bit longer for our buyers to understand the global scale and growth opportunities of that business. But we would hope to drive that process to conclusions relatively soon.
因此，作为提醒，安迪，我们对全年的指导不包括剥离我们的时间存储业务，或其余的管道制造资产。 因此，我们的指导包括这些企业一直到年底的利益。 我们对第二季度末的流动性感到满意，这是10亿美元。 我们正在指导 - 为今年下半年提供指导。 鉴于我们的信贷设施和双边设施，我们对公司的整体流动性状况感到满意。
如果你看一下资产销售，一般来说，我们的时代业务这是一项全球业务。 它具有很高的兴趣。 它是CB＆I的基础实体。 所以我们花了一点时间准备销售。 我们的买家需要更长的时间来了解该业务的全球规模和增长机会。 但我们希望相对较快地推动这一进程得出结论。
And our next question is one of Steven Fisher from UBS. Steven?
So I guess just to follow up on some of the previous questions. What continues to surprise you on the project execution? Is it all just labor productivity? Is there something else going on there? And I know you basically just talked about that it was Freeport and some power and chemicals. But are you -- as it relates to Cameron, I mean, you mentioned doing a good job of keeping the project on schedule. Are you just spending more now to make sure they stay on schedule?
所以我想只是跟进一些以前的问题。 项目执行会让您感到惊讶的是什么？ 这一切只是劳动生产率吗？ 那里还有别的东西吗？ 而且我知道你基本上只是谈到自由港和一些动力和化学品。 但是，你是否 - 因为它与卡梅隆有关，我的意思是，你提到要做好按时完成项目的工作。 你现在只是花更多钱来确保他们按时完成吗？
Steven, its David. I mean in Cameron and Freeport, as we said, we're sticking to the schedule. We've taken the charge, obviously, on Freeport for this quarter. With regards to Cameron, I mean, we continue to see the project progress. You've seen all the good announcements over the last few weeks. We've now delivered a number of cargoes from Train 1. Obviously, we take those lessons round into Trains 2 and 3.
And as we said, we're still on track. But until these projects are finished, then we'll never say we're done. I think going back to what Stuart was highlighting is that when we look at generally across the portfolio, although, a number of these projects are not moving and feel loss making, they just don't carry the levels of the contingency on whatever that allows us to enhance or maximize the profits. So there's just not that depth across -- and it's mainly the NCSA portfolio, and that's what we highlighted in prepared remarks.
And then when we're having these charges, unfortunately, we do have a very young portfolio, moving forward. Again, we highlighted about the 19 billion of new contracts that have been awarded since the completion. So again, it's going to take a period of time for these projects to start to materialize and really deliver on the upside that we would expect to see. So there aren't any other buckets in the NCSA portfolio that we can go into.
Now, have we seen for any further deterioration with regards to productivity or have found out? And we haven't really seen any further changes. I think, we've got to the bottom of that when we really analyzed more Cameron than Freeport. So I think it's generally, it's just the quality of the portfolio is just not there, and that's what doing, when the future beckons us, to really enhance the overall quality of the portfolio.
正如我们所说，我们仍然在轨道上。但是在这些项目完成之前，我们永远不会说我们已经完成了。我想回到斯图尔特所强调的是，当我们大致考虑整个投资组合时，虽然这些项目中的一些项目并没有移动并感到亏损，但他们只是没有承担任何允许的意外水平我们要增加或最大化利润。所以这并没有那么深 - 而且主要是NCSA的投资组合，而这正是我们在准备好的评论中所强调的。
And then, Stuart, you mentioned that the $110 million of incentives is based on projected achievement of milestones. And it sounds like maybe you achieved some of them in July. But what happens if you don't achieve those projected milestones?
然后，斯图尔特，你提到1.1亿美元的激励措施是基于预期的里程碑成就。 听起来好像你在七月份取得了一些成绩。 但是，如果你没有达到预期的里程碑，会发生什么？
So the initial recognition, as a reminder there, Steve, was around what we call the construction milestone related incentives. So those are set on various construction activities for Train 2 and Train 3. As we look at the projected schedule of the project, we see an attainment of those milestones with a degree of error or safety in the attainment. And that's what gives us the confidence to recognize them before they're actually attained. Obviously, if we don't attain those construction milestones, that will be an adjustment to the incentives that we recognized.
因此，最初的认可，作为一个提醒，史蒂夫，围绕我们所谓的建设里程碑相关的激励。 因此，我们将对列车2和列车3的各种建设活动进行研究。当我们查看项目的预计时间表时，我们看到这些里程碑的实现具有一定程度的错误或安全性。 这就是让我们有信心在实际达到之前认识到它们的原因。 显然，如果我们没有达到这些建设里程碑，那将是对我们认可的激励措施的调整。
And our next question is from the line of Chad Dillard from Deutsche Bank. Chad?
So I was hoping to get a little more color on the Freeport charge. Just which trains were they related to, your comfort that this is about the right amount to take a charge? And then also on the Pemex project, just like what's the percent completion. And just little more detail on the discrepancy in the timeframe for potential resolution? And just lastly, just how much zero margin revenues in 2019?
所以我希望在自由港收费上多一点颜色。 他们与哪些列车相关，您的安慰是否适合收费？ 然后是Pemex项目，就像完成百分比一样。 关于潜在解决方案的时间差异，还有更多细节？ 最后，2019年的零保证金收入是多少？
Chad, its Stuart. I'll just take the first part of that question, Freeport. So as you'll see from the Q when you get time to go through it, we made an adjustment on T1 and T2 for about $27 million. That's really related to just refining our cost estimates as we get closer to the completion of those two trains. As you've seen, we've introduced FEED gas into train one, which is a critical part of the commissioning. And we're looking forward to seeing the first cargo from T1 this quarter as well.
And then we also made a small adjustment to T3 of about $11 million. Again, that's us just looking at the overall performance of T1 and T2, and then rolling that assumption or basis assumption into T3. With that, I'll hand to David for Abkatun.
乍得，它的斯图尔特。 我只想解决那个问题的第一部分，自由港。 因此，当你有时间通过它时，你会从Q中看到，我们在T1和T2上做了大约2700万美元的调整。 这与我们接近完成这两列火车时的成本估算有关。 如您所见，我们已将FEED气体引入第一列，这是调试的关键部分。 我们期待看到本季度T1的第一批货物。
然后我们对T3进行了一次小幅调整，约为1,100万美元。 再一次，我们只是看一下T1和T2的整体表现，然后将这个假设或基础假设滚动到T3。 有了这个，我会把大卫交给阿布卡通。
And then, Chad on the Pemex side, disappointingly, we did have some more charges during Q2 and both of those projects are literally days away from completion. So we're now comfortable in the costs. A big part of the charge, however, is applied for LDs now. The disappointing thing for us as a company is we've been working with Pemex a long time, and this is the first time we've seen this type of behavior, where obviously we are in disagreement with a customer when the application of the LDs.
But we felt it was prudent at this time to take that charge until we can resolve this situation with Pemex, which working with Pemex could take a number of months, or a number of quarters, to finalize or reach a resolution. So we felt this time it was prudent to take the charge associated with LDs until we get an agreement with the customer.
然后，Chame在Pemex方面，令人失望的是，我们确实在第二季度收到了更多的费用，这两个项目距离完成还有几天。 所以我们现在对成本感到满意。 然而，很大一部分费用现在适用于LD。 我们作为一家公司令人失望的是我们很长一段时间以来一直与Pemex合作，这是我们第一次看到这种行为，显然我们在LD的应用时与客户意见不一致。
And Chad, could you repeat the last part of your question?
Yes. So just how much zero margin revenue is baked into 2019?
So we haven't given that number out completely. But I think part of our reason to show you the legacy CB&I portfolio was really to highlight the amount of very low margin, or zero margin work that we have going through our backlog.
So just one more question on your cash flow cadence, just trying to understand, I guess, like what visibility do you have with your cash flow to turning positive? And secondly, what's embedded in terms of as cash advances for the back end of the year?
When we look at the cadence of cash for Q3 and Q4, we're seeing the operating activity level, we're seeing a consumption in Q3, but almost a breakeven level in Q4. Obviously, you take the CapEx from that to get to free cash flow. You'll know from our CapEx plan that we have deferred or pushed an amount of our CapEx from the first half of the year into the second half, and we continue to live to optimize that number.
That said, free cash flow will still be negative, assuming we spend the CapEx budget in Q4. But as we look into 2020, we see the dynamics given the younger portfolio and its progress along with some additional bookings. The dynamics are getting set up for positive free cash flow in 2020. In terms of advances in the second half, Chad, so we have some certain order intakes. But we don't see our second half free cash flow guidance as being the line on one single advance from one single customer, or one project, its spread evenly and risked over the portfolio.
当我们看到第三季度和第四季度的现金节奏时，我们看到了经营活动水平，我们看到第三季度的消费量，但在第四季度几乎达到盈亏平衡水平。 显然，您从中获取资本支出以获得自由现金流。 您可以从我们的资本支出计划中了解到，我们已将我们的资本支出从上半年推迟或推迟到下半年，并且我们将继续努力优化该数字。
也就是说，假设我们在第四季度花费了资本支出预算，自由现金流仍然是负数。 但是，当我们展望2020年时，我们会看到动态因为年轻的投资组合及其进展以及一些额外的预订。 2020年，积极的自由现金流正在形成动态。就下半年的进展而言，乍得，我们有一定的订单量。 但我们认为，我们的下半年自由现金流指引并不是单一客户或一个项目的单一预付款，其均匀分布和风险投资组合。
We have time for one more question. It comes from the line of Michael Dudas from Vertical Research. Michael?
我们还有时间再问一个问题。 它来自Vertical Research的Michael Dudas系列。迈克尔？
Good afternoon. Thanks for squeezing me in. I just wanted to touch on, you mentioned in your prepared remarks about the technology business, as you made some changes there from a management or maybe a structure standpoint. And just elaborate on what you did there, why and what you anticipate the outlook is for that business, going forward, given the visibility on some new business that you guys have booked in the last quarter or two?
下午好。 感谢您挤进我。我只是想谈谈，您在准备好的关于技术业务的评论中提到过，因为您从管理层或结构角度进行了一些更改。 并且只是详细说明你在那里做了什么，为什么以及你预期该业务的前景是什么，未来，考虑到你们在过去一两个季度预订的一些新业务的可见性？
A - David Dickson
Michael, I mean, the changes was we had retirement of the Head of Technology. Dan has agreed to stay on for approximately 12 months as he knew that we'll be busy and the management team is busy fixing some other things and also, got a lot of confidence in the technology business. What we've done since beginning of this year is we have put a new person in charge for that business, Dan has retired. And we have also challenged the new team to really re-energize the technology business. And the reason we say that is that, one has a strong position already in the marketplace. There was feedback from our customers we feel that Lummus has an even stronger position in the marketplace.
So we are doing a review of the whole business, looking at whole portfolio of the technologies. And the big things that we really are driving though and really taken opportunity to buy, sell license, also takes us into FEED, the sale of critical equipment and then ultimately, the EPC. So what we've noticed is just in the last three and six months is those number of opportunities have significantly increased.
In addition, what we've done is, although, we operate the technology businesses in the segment, we've also integrated it more with regards to our business development efforts. And so when we are sitting across from a customer, we're not just talking about down a license, we were actually talking about how we can support a customer through the various stages of developing the project, so starting to see some positives on that. And with S-OIL award, in South Korea was a major award, although, it's only a master license at this stage. But it's an example of a project which can lead to the award of the various next stages and including some high margin activity.
All right. Well, thank you everyone for taking the time to participate in our call today. As a reminder, a recording of the call will be available on the McDermott Web site for seven days. Operator that concludes our call.
行。 好的，谢谢大家今天花时间参加我们的电话会议。 作为提醒，麦克德莫特网站上将提供七天的电话录音。 结束我们电话的接线员。
Thank you for joining. This concludes today's call.
- 迈克德莫特国际 电话会议
- 迈克德莫特国际 财务报告
- 老虎证券开户教程 美股8折佣金， 11股小米股票（价值385港币）, 还会邀请你进付费交流群
- 雪盈证券开户教程 开户后 最高可领取1066港币。美股佣金最低0.002美元/股，港股小额免佣，打新手续费全免
- 富途牛牛证券开户教程 开户即可领取1股汇丰，入金达到2万港币即可领取1股腾讯；新股一键认购，最高支持10倍杠杆融资，免新股认购手续费，暗盘交易免佣；
- 长桥证券开户教程 开通后 可获得15美金~25美金奖励
- 必贝证券开户教程 开通后 享有280元现金奖励
- 如何办理新加坡卡, 在线办理, 没有资金门槛
- 美股开户教程, 请查看
- 港股开户教程, 请查看
- 美股、港股入金教程, 请查看
- 美股、港股投资交流群, 请查看
- 美股、港股开户优惠汇总, 请查看
- 美股、港股付费交流群, 请查看