McDermott International, Inc.
- Company Name
- McDermott International, Inc.
- Stock Symbol
- Class Period
- January 24, 2018 to October 30, 2018
- Motion Deadline
- January 15, 2019
- Southern District of Texas
The complaint charges McDermott and certain of its officers with violations of the Securities Exchange Act of 1934. McDermott provides engineering, procurement, construction, and installation and technology solutions to the energy industry and designs and builds infrastructure and technology solutions to transport and transform oil and gas into a variety of products. In May 2018, McDermott completed the acquisition of Chicago Bridge & Iron Company (“CB&I”).
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse facts about the Company’s business, operations and prospects. Specifically, defendants failed to disclose that the Company was facing strong headwinds and would fail to meet revenue and earnings estimates; that there were material problems with the integration of the CB&I business acquired in May 2018; that certain CB&I projects were reasonably likely to incur higher costs; and that, as a consequence, the fair value of these CB&I projects would be materially impacted. As a result of these false statements and/or omissions, McDermott securities traded at artificially inflated prices during the Class Period, with the Company’s share price reaching a high of $27 per share.
Then on October 30, 2018, after the close of trading, McDermott reported financial results for third quarter of 2018 that fell far below analysts’ estimates. McDermott reported revenues of $2.29 billion, compared to midpoint estimates of $2.51 billion, and earnings per share of $0.20, versus midpoint estimates of $0.29. The Company also reported a $744 million change in the value of certain projects it had acquired from CB&I and further disclosed plans to sell McDermott’s storage tank business and its U.S. pipe fabrication business, as those businesses “are not core to the Company’s long term strategic objectives.” On this news, the Company’s share price fell $5.14 per share, or nearly 40%, to close at $7.73 per share on October 31, 2018.