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McDermott Q3 Earnings Call Transcript
Author: 123jump.com Staff
123jump.com
Last Update: 11:46 AM ET December 01 2008


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I think the mix that we have in the J. Ray side will be fairly typical of the mix going forward. Often Jamie, it''s not our decision. It''s all from the client''s decision as to whether or not he''s going to try to go to lump sum contracting or whether or not he is willing to go to some type of sharing arrangement or some reimbursable basis. Certainly, if you go to our power experience, we''ve worked really very hard with our clients to try to look at risk sharing on an ongoing basis. We''ve done that very successfully domestically in the power business and so there is no reason that we wouldn''t try to keep our wits about us and keep our philosophies consistent there, but often that''s really not our choice, it''s more the clients'' choice in terms of where they want to proceed. But we certainly understand what these risks are; we understand the variances that have occurred over the last year or so and will certainly work to the best extent we can to minimize the risk of the corporation in this bidding. All that being said, the general split that we have talked to you about in the past will probably remain about the same.

Jamie Cook - Credit Suisse

Thank you. I''ll get back in queue.

Operator

And your next question comes from the line of John Rogers of D.A. Davidson. Please proceed.

John Rogers - D.A. Davidson & Co.

Hi, good morning.

John A. Fees

Good morning John.

Michael S. Taff

Good morning, John.

John Rogers - D.A. Davidson & Co.

Just switching for a second to the power gen side. How much of your business, if you look out into ''08 and or excuse me ''09 and beyond. Do you expect to be new facilities as opposed to upgrades or retrofits of existing equipment?

John A. Fees

I would say the majority of our business going into ''09 will be related to existing infrastructure. If you take that...we are probably on a run rate basis, probably run roughly about 20% and then what we will consider to be the new business area but recognize that some of that''s coming out of backlog and I would say at the bookings level it might even be a little bit less than that. So, I would say the grand majority of the business going forward into the next year or so - it is based upon our estimates is coming predominately already out of the installed base and that will cover not only coal but nuclear as well. We would anticipate the majority of the awards that we would announce in the nuclear area are going to be service and components, steam generator replacements, things along those lines.

Now, that profile will change into the future once we see some release of the constraints that we have relative to carbon and CO2 and legislation that might occur and we''re certainly working to prepare ourselves for that environment when it happens but that''s going to be a 2010 and beyond environment not within the next year.

John Rogers - D.A. Davidson & Co.

Okay. Are there any existing boiler projects, in not only the power generation, but, something up in Canada as well that are at risk that are in backlog now?

John A. Fees

No, I would say no. I mean on any project you see things being accelerated and things being delayed. But, what we see right now I would not consider to be outside of the normal mix. Generally, these things are financed and before the first step moves of the project, the financing is generally 100% available to complete the project out. So, once these things get licensed, authorized, financed, and there still is an increasing demand for power domestically and around the world, these things are pretty solid and generally proceed.


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