Specialist
Former Director at McDermott International Inc
Agenda
- Onshore project vs offshore projects key trends
- McDermott's (NYSE: MDR) strengths and weaknesses in light of its recent struggles
- 2019 outlook and beyond
Questions
1.
What is your updated perspective on McDermott, are there any particularly interesting key themes or trends of late?
2.
What is your perspective on the competitive landscape – how is McDermott positioned?
3.
How would you characterise McDermott’s overall reputation in the industry? Going forward, what is the customers’ perception of McDermott?
4.
How are you assessing the Chinese EPC [engineering, procurement, construction] companies and the pressure they are putting on players like McDermott?
5.
Do you think McDermott has any competitive advantage in terms of the quality piece or anything else?
6.
What are your thoughts on the CB&I execution issues on the legacy contracts? What led to having so many underwater contracts there?
7.
Thinking about closing out the remainder of the legacy contracts, what are the further challenges or opportunities within the CB&I LNG project? What are your thoughts about ending on time and on budget?
8.
Can you walk us through how competitive McDermott’s bids are compared with competitors' proposals? Why would you ultimately choose McDermott over all other bids?
9.
Historically, would you say McDermott is an aggressive bidder on projects? Or was there discipline, you mentioned how it is trying to tighten that up a bit?
10.
Where do you think McDermott is maybe most at risk for cost overruns on the projects it is performing?
11.
Do you think the state of McDermott’s liquidity and balance sheet will play negatively on a customer’s decision to award projects to McDermott moving forward?
12.
You described the Lummus piece as a big differentiator. If thinking about competitors who can run a lot of business without owning any IP, what is the strategic value of the Lummus business to McDermott?
13.
Are the Lummus ends of legacy CBI EPC business worth more together to a strategic buyer?
14.
If McDermott sells Lummus, can it still be a successful bidder as a user of Lummus technology?
15.
Thinking about the success in recent LNG bids, these were very competitive contenders. How should we think about the bidding process and awards? Do you believe these project wins within the LNG side are above or below the corporate margin average, or profitable, given how competitive they were?
16.
Turning to the Cameron and Freeport projects. Now that the first cargo has been delivered, how do you characterise the risk profile on the remaining trains 2 and 3 on both projects?
17.
Cameron has recently declared force majeure, possibly due to equipment failure. What do you think the EPC liabilities on contracts are in such an event?
18.
Do you think winning more LNG projects is a net positive or a negative for E&C companies such as McDermott? Especially given the complexity of LNG projects and possible further challenges, particularly in unknown geographies such as Mozambique?
19.
What do you estimate as the minimum liquidity needed to run the business? You mentioned assigning cash up front, what does that look like in today’s environment?
20.
Thinking about the working capital cycle, why does McDermott use so much cash in the first two or three quarters of the year, following the backdrop you mentioned?
21.
Who could be perspective buyers on asset sales – buyers of part of the company, depending on how you see that playing out? What timing would you expect and what could be divested?
22.
What value would you put behind the tank and the Lummus segment?
23.
Thinking about how McDermott boasts financial and operational restructuring advisers, how do you think it will address the balance sheet in operations going forward?
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