McDermott Swings to Profit

McDermott International Inc. (MDR) swung to a surprise second-quarter profit as the engineering and construction company posted better-than-expected revenue growth.

For the year, the company raised its operating earnings outlook to $50 million to $70 million, from its previous view for $25 million to $50 million, which McDermott attributed to improved execution and its focus on cost management.

McDermott slightly lowered its revenue guidance by $300 million and now expects $3 billion to $3.3 billion.

The Houston-based engineering and construction company builds infrastructure for offshore oil and gas producers.

Like other companies serving the oil and gas sector, McDermott has been cutting costs as it grapples with pressures from its customers to charge them less. During the first-quarter McDermott said that it cut roughly 1,700 workers worldwide, including 475 employees and more than 1,200 contractors that worked in McDermott's fabrication yards.

Chief Executive David Dickson said in prepared remarks on Monday said that while the timing of new orders remains volatile as commodity prices remain low, the company continues to win contracts in its key markets, including a new project for Saudi Aramco and two new projects in the Americas.

"Additionally, we remain disciplined in bidding new projects and continue to actively manage our cost structure," Mr. Dickson stated.

Overall, McDermott reported a profit of $11.5 million, or four cents a share, compared with a year-earlier loss of $7.4 million, or three cents a share. Excluding items such as restructuring-related charges, asset sales losses and write-downs, per-share earnings were 12 cents.

Revenue more than doubled to $1.05 billion.

Analysts polled by Thomson Reuters expected per-share loss of five cents and revenue of $830 million.

As of June 30, the company's backlog reached $3.13 billion, compared $3.75 billion as of March 31.

Write to Tess Stynes at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires