McDermott: Analysts’ Top Revenue Growth Oilfield Company

McDermott International’s revenue trend

In the first quarter, McDermott International’s (MDR) revenues increased 17% YoY (year-over-year). Sequentially, its revenues decreased 15%.

MDR’s YoY revenues in the first quarter increased, primarily due to significantly higher revenues from its AEA (Americas, Europe, and Africa) segment. That was led by fabrication activity progress in a turnkey EPCI (engineering, procurement, and construction) project in the Gulf of Mexico, the substantial completion of onshore activity in Brazil, and fabrication activity progress for BP’s Angelin EPCI contract.

MDR’s MEA (Middle East and Africa) segment also saw higher first-quarter revenues YoY. But its ASA (Asia) segment exhibited weakness in the first quarter due to a reduction in active projects.

McDermott: Analysts’ Top Revenue Growth Oilfield Company

MDR’s revenues versus estimates

In the second quarter, Wall Street analysts expect 36% sequential revenue growth for MDR. Year-over-year, its revenues are expected to increase 5%. From Q2 2016 to Q1 2018, its reported revenues fell short of sell-side analysts’ estimates by 6.3% on average.

Why MDR’s revenues could increase

On May 8, MDR completed the Chicago Bridge & Iron Company (or CB&I) acquisition. It combines MDR’s upstream and subsea EPCI activities with CB&I’s petrochemical, refining, power, gasification, and gas processing technologies and solutions. The acquisition is expected to be revenue-accretive in the coming quarters.

MDR’s $25 billion revenue pipeline as of March 31 was the highest in the past five quarters. Strong upstream activity in the Middle East is expected to drive MDR’s growth. Its bids for engineering activity in the upstream segment increased 70% sequentially in the first quarter. In June, MDR began engineering, procurement, and construction work on a new ethane cracker facility in the US Gulf Coast. All these could translate to remarkable revenue growth in the second quarter.

OFS companies with the lowest expected revenue growth

Wall Street analysts expect Tenaris (TS), Dril-Quip (DRQ), and Now (DNOW) to register the largest sequential fall in the industry for revenue in the second quarter. TS’s revenue is expected to decline 5.2%, DRQ’s revenue is expected to fall 4.3%, and DNOW’s revenue is expected to decline 0.8%.

Next, we’ll take a look at U.S. Silica Holdings’ (SLCA) past revenue trend and why sell-side analysts expect to see strong revenue growth in the second quarter.