This summary is based on the third quarter fiscal 2007 earnings call conducted by McDermott International Inc. (MDR: chart) on November 8, 2007.

Management:

Vice President of Investor Relations: Jay Roueche
Chairman and Chief Executive Officer: Bruce Wilkinson
Senior Vice President and Chief Financial Officer: Mike Taff

Key Investors Issues

- Net income rose 37% to $140.4 million, from $103 million in 2006.
- Revenues were up 18% to $1.3 billion.
- Consolidated backlog was $9.3 billion, up from $8.6 billion in the prior year.

Year-to-date Highlights

- Revenues increased by 46% from $2.8 billion in 2006 to $4.1 billion.
- Expenses rose from $2.5 billion in the prior year to $3.6 billion.
- Net income was up 118% to $447.8 million or $1.96 a share.

Third Quarter Highlights

Net income was $140.4 million or 61 cents per share, up 36.7% from $102.7 million or 45 cents per share in 2006 due to improved results at the Offshore Oil and Gas Construction and the Power Generation segment.

- Operating income was $155.2 million, an improvement of over $30 million from the prior year as Offshore Oil and Gas Construction and Power Generation Systems segments led the way, increasing $30 million and over $12 million respectively.
- Partially offsetting the increase in operating income was lower segment income from Power, in the Government Operations as a result of the cost savings recognized a year ago.
- The firm generated substantial one-time savings from a true-up of the backlog when it consolidated two previous divisions.

The 18% rise in revenue from $1.1 billion in the prior year to $1.3 billion, is attributable to the Offshore Oil and Gas Construction segment which had a 32% increase in references.

- The firm ended the period with $1.2 billion in cash and investments after completing the $260 million cash acquisition of the Secunda assets.
- Shareholder equity is now 20% of total assets, and the firm has less than $20 million in long-term debt and notes payable.

Segment Highlights:

- The Offshore Oil and Gas Construction segment realised income of $88.1 million, compared to $58.3 million in 2006 led by increased activities in worldwide marine.
- Project closeouts were also up, as a result of an increasing workload, but on a percentage basis, represented a lower portion of total income.
- Superior project execution, change orders, harvests of contingencies combined with the high level of work provided the upside to our target range in this segment, with delivered margins in the quarter of over 15%.
- Revenues grew to $580 million, up 32% versus a year ago, though this was below expectation as some offshore projects had their installation scope shift.

Bookings were $900 million, bringing the total backlog to the $4.9 billion level, with the bulk of new awards coming from the Middle East with the largest being the long-term agreement signed with Saudi Aramco.

- Worldwide bids outstanding in oil and gas were over $3 billion and the current focus is on projects that have a combined value of twice the current bids outstanding.
- The Mexico facility is currently being facilitized and is nearly fully staffed and should be up and running by the end of the year, positioned to receive materials and equipment in early January.
- The firm has also started bidding PEMEX work and expects to be awarded projects in the not too distant future at this new facility.

- Power Generation Systems reported segment income of $49.4 million, up 33.5% from $37 million in 2006.
- Bore and environmental equipment projects, parts, settlements and service were the primarily drivers, offsetting declines in construction and boiler auxiliary equipment.
- Revenues realised amounted to $570 million, with backlog growing by $300 million bringing the total backlog to $3 billion.
- The firm recorded a large award from Prairie States, a coal fired boiler and SCR for the Whelan Energy Center and replacement nuclear steam generators in Canada for Bruce Power.

Despite the strong bookings and the growing backlog, the company still has over $2 billion of bids outstanding.

- By all current forecasts, reserve margins are declining and energy demand continues to exceed supply projected to come on-line over the foreseeable future.
- The firm anticipates that electricity needs will be deferred until Congress determines the rules that the industry must live by, especially as to CO2 abatement and once this is resolved, would expect an accelerated building program for new capacity to proceed. In the meantime we
- In addition to the oxycoal combustion process, the company is also pursuing various scrubbing technologies using regenerable solvents and enzymes.
- The oxy combustion testing reached a major milestone at the 30-megawatt clean environment development facility in Ohio recently, delivering the largest scale demonstration of this process by burning 400 tons of bituminous coal over a 72-hour period.

The company will continue the testing throughout the rest of the year, moving to lignite and then to Powder River Basin coal.