Q3 2018 SUPPLEMENTAL INFORMATION October 30, 2018 FORWARD-LOOKING - - PowerPoint PPT Presentation

October 30, 2018

Q3 2018 SUPPLEMENTAL INFORMATION

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In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott cautions that statements in this presentation which are forward-looking, and provide other than historical information, involve risks, contingencies and uncertainties that may impact actual results of operations of McDermott. These forward-looking statements include, among other things, statements about 2018 focus areas, second half 2018 guidance, project milestones and percentage of completion and expected timetables, increased opportunities in the market, backlog, bids and change orders outstanding, target projects and revenue opportunity pipeline, to the extent these may be viewed as indicators of future revenues or profitability, anticipated future intangibles amortization, targeted savings from cost synergies and the other expected impacts of CPI, including anticipated implementation costs, our expectations regarding working capital balances, expected covenant compliance, our expectations about the timelines and anticipated use of proceeds from the sales of the tank storage and pipe fabrication businesses, our anticipated amounts of project-related and other intangibles amortization, our assessments and beliefs with respect to the three legacy Focus Projects of CB&I,

• ur beliefs with respect to the combination with CB&I, integration progress and long-term prospects, expectations on future contract structure, our planned reduction in total debt and our

plans and expectations with respect to the Ras Al Khair fabrication yard. Although we believe that the expectations reflected in those forward-looking statements are reasonable, we can give no assurance that those expectations will prove to have been correct. Those statements are made by using various underlying assumptions and are subject to numerous risks, contingencies and uncertainties, including, among others: the possibility that the expected CPI savings from the recently completed combination will not be realized, or will not be realized within the expected time period; difficulties related to the integration of the two companies; disruption from the combination making it more difficult to maintain relationships with customers, employees, regulators or suppliers; the diversion of management time and attention to integration matters; adverse changes in the markets in which McDermott operates or credit markets; the inability of McDermott to execute on contracts in backlog successfully; changes in project design or schedules; the availability of qualified personnel; changes in the terms, scope or timing of contracts; contract cancellations; change orders and other modifications and actions by customers and other business counterparties of McDermott; changes in industry norms; and adverse outcomes in legal or other dispute resolution proceedings. If one or more of these risks materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected. You should not place undue reliance on forward-looking statements. For a more complete discussion of these and other risk factors, please see each of McDermott's annual and quarterly filings with the U.S. Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2017 and subsequent quarterly reports on Form 10-Q. This presentation reflects the views of McDermott's management as of the date hereof. Except to the extent required by applicable law, McDermott undertakes no obligation to update or revise any forward-looking statement.

FORWARD-LOOKING STATEMENTS NON-GAAP DISCLOSURES

This presentation includes several “non-GAAP” financial measures as defined under Regulation G of the U.S. Securities Exchange Act of 1934, as amended. McDermott reports its financial results in accordance with U.S. generally accepted accounting principles, but the company believes that certain non-GAAP financial measures provide useful supplemental information to investors regarding the underlying business trends and performance of its ongoing operations and are useful for period-over-period comparisons of those operations. The non-GAAP measures in this presentation include Backlog, Adjusted Operating Income and Margin, Adjusted Net Income, Adjusted Diluted Earnings Per Share (“EPS”), EBITDA, Adjusted EBITDA, Free Cash Flow, and Adjusted Free Cash Flow. These non-GAAP financial measures should be considered as supplemental to, and not as a substitute for or superior to, the financial measures prepared in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are provided in the Financial Appendix of this presentation.

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Deliver excellence in execution through implementation of the One McDermott Way Drive savings throughout the

• rganization and embody a best

in class cost culture

EXECUTE DRIVE

2018 FOCUS AREAS

Complete integration successfully to establish top tier, vertically integrated EPC company, competitively differentiated in technology, customer relationships, culture and geographic footprint Develop strategy to position the company for future growth by capitalizing on a robust revenue opportunity pipeline and growing end markets Exercise disciplined bidding through thorough evaluation and assessment of project risk profiles

INTEGRATE POSITION DISCIPLINE

QUARTERLY RESULTS

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Q3 2018 FINANCIAL HIGHLIGHTS

• Q3 2018 results reflect first full reporting period as a Combined company
• Adjustments for Q3 2018 include transaction-related costs of $5 million, costs to achieve Combination Profitability Initiative (CPI) of $31 million and amortization of acquired

intangible assets of $68 million

• Revenue for Q3 2018 was primarily driven by Cameron LNG, Freeport LNG, LACC and Saudi Aramco Safaniya Phase 5 projects
• Operating results primarily driven by our NCSA and MENA segments

Orders $3,052 $842 $89 Backlog 11,512 10,186 2,428 Revenues 2,289 1,735 959 Financial Metrics (Adjusted as Indicated)1 Gross Profit and Margin % $273 11.9% $237 13.7% $185 19.3% Operating Income and Margin % $129 5.6% $49 2.8% $125 13.0% Net Income Attributable to McDermott $2 $47 $95 Diluted EPS $0.01 $0.33 $1.00 EBITDA $239 $92 $155 Adjusted Operating Income and Margin % $232 10.2% $172 9.9% $125 13.0% Adjusted Net Income Attributable to McDermott $89 $59 $95 Adjusted Diluted EPS2 $0.20 $0.29 $1.00 Adjusted EBITDA $275 $208 $155 Capex $19 $24 $16 Cash from Operations ($221) $398 $45 Free Cash Flow ($240) $374 $29 Ending Cash Balance3 $905 $1,138 $435 Working Capital ($1,915) ($1,444) $260 Intangible Amortization $68 $22 $0 $ in millions except for per share data Q3'18 Q2'18 Q3'17

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Q3 2018 SEGMENT REPORTING AND PRODUCT OFFERING

• Orders were driven by the NCSA, EARC and TECH segments
• Revenues were driven by NCSA and MENA and Operating Income was driven by NCSA, MENA and TECH
• Revenues were largely driven by Downstream, LNG and Offshore & Subsea projects
• TECH continues to produce strong and steady results

$ in millions 1) The reconciliations of Adjusted Operating Income and Adjusted Operating Margin, which are Non-GAAP measures, to the most comparable GAAP measures are provided in the page entitled “Additional Disclosures – Segment Reconciliations.”

OPERATING SEGMENTS PRODUCT OFFERING

$ in millions NCSA EARC MENA APAC TECH CORP Total Orders $2,297 $329 $7 $134 $285 $ - $3,052 Backlog 6,519 1,502 2,164 713 614

• 11,512

Revenues 1,516 77 473 75 148

• 2,289

Operating Income and Margin % $97 6.4% $(13) (16.9%) $89 18.8% $9 12.0% $20 13.5% $(73) 0.0% $129 5.6% Adjusted Operating Income and Margin %1 $109 7.2% $(8) (10.1%) $96 20.3% $9 12.4% $63 42.8% $(37) 0.0% $232 10.2% Capex 2

• 2

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• 11

19 $ in millions Offshore & Subsea LNG Downstream Power Total Orders $336 $8 $2,093 $614 $3,052 Backlog 2,886 1,578 5,417 1,631 11,512 Revenues 548 553 860 328 2,289

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PURCHASE ACCOUNTING AND INTANGIBLE AMORTIZATION

• The net tangible assets acquired are recorded at our preliminary assessment of fair value as of the date of the Combination1
• Investments in unconsolidated affiliates, which are part of the net tangible assets acquired, include a fair value adjustment of $221 million as a result of the Combination; approximately $118 million of the

fair value adjustment will be amortized over a range of 2 to 30 years based on the life of the assets to which the basis difference is attributable to

• Project related intangibles represent the fair value of acquired contracts and backlog as of May 10, 2018; the fair value of acquired backlog has been adjusted to represent a normal market rate and will be

amortized over the remaining life of the project

• Project related intangible amortization is anticipated to be $31 million, $33 million, $22 million, $5 million and $7 million for the remainder of 2018 and for the years 2019, 2020, 2021 and 2022, respectively
• All other intangibles amortization (including for process technologies, trade names, trade marks and customer relationships) is anticipated to be $24 million, $84 million, $83 million, $78 million and $72

million for the remainder of 2018 and for the years 2019, 2020, 2021 and 2022, respectively

PURCHASE PRICE ALLOCATION1 INTANGIBLE ASSETS

$ in millions

Purchase Price Allocation Total equity consideration 1,693 Cash consideration transferred 2,872 Total Combination Consideration Transferred 4,565 Net tangible assets acquired (including cash) (1,326) Intangible assets acquired 1,183 Goodwill 4,708 Total purchase price 4,565 Intangible Asset Acquired Fair Value Useful Life Range, in Years Project related intangible assets 239 Project related intangible liabilities (97) Project related intangibles, net 142 2 - 6 Process technologies 498 10 - 30 Trade names 401 10 - 20 Customer relationships 115 4 - 11 Trade marks 27 10 Total 1,183

1) All purchase accounting amounts are as of the date of the Combination, 5/10/18. The purchase price allocation is based on preliminary information and is subject to change when additional information is obtained. We have not finalized our assessment of the fair values of the net tangible and intangible assets acquired. The final purchase price allocation will result in adjustments to various assets and liabilities, including the residual amount allocated to goodwill during the acquisition measurement period.

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GLOBALLY INTEGRATED

• We are ahead of our plan to become a premier, fully integrated, global EPCI provider, with product solutions spanning on-shore and off-shore from concept to commissioning
• One McDermott Way – Global operating model designed and implemented, project review processes aligned and employee total rewards and performance management aligned
• Culture – Six global culture summits with 1,000+ participants conducted, new vision and values unveiled to global organization and 100+ town halls and workshops conducted

globally to align cultures

• Revenue Synergies –$1.6 billion in revenue synergies achieved and global execution of combined product portfolio enabled
• Systems and Processes – Progress on streamlined IT systems is progressing well as the Company has now completed the global Enterprise Systems Blueprint and initiated the

Global ERP System Design Phase

• CPI - $475 million in annual run rate targeted savings identified as part of CPI

Significant progress made under all five pillars of our integration plan

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LUMMUS TECHNOLOGY

• 120+ Licensed Technologies; 3,000+ Patents, Patent Applications and Trademarks
• 40% of the world’s ethylene produced under licenses from Lummus
• Refining technologies focused on cleaner fuels (i.e. IMO 2020 bunker fuel standards)
• Generates steady and attractive returns selling licenses/catalysts and heat transfer equipment
• Longer term, this business segment will house all of the technology that underpins McDermott’s business

Leading technology licensor of proprietary gas processing, refining, petrochemical and coal gasification technologies as well as a supplier of proprietary catalysts, equipment and related engineering services

• ~$8 billion of petrochemical &

refining pull-through success in past five years resulting from licensing sales

• Significant onshore pull-through

potential identified in 2018/2019 pipeline

1) The HDPE award did not directly result from the sale of a Technology license. Rather, it resulted in part from customer relationships on other projects whose history included technology license sales.

Project Name Shintech – Ethane Cracker Project Afipsky Oil Refinery Expansion – Hydrocracker Project Phillips 66 – Gas Desulfurization Project Naftna Industrija Srbije – Delayed Coking Unit JSC Lukoil – Delayed Coking Unit LACC – Ethane Cracker LACC – Monoethylene Glycol Facility Total Petrochemicals & Refining – Ethane Cracker Project Oman Oil Refineries & Petrochemical Institute – Steam Cracker Occidental Chemical – Ethane Cracker Project KNPC – Clean Fuels Project Bayport Polymers – High-Density Polyethylene (HDPE) Plant1

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• Targeted CPI savings being increased from $350 million to $475 million
• Implemented $319 million of annualized savings as of Q3 2018
• CPI resulted in $40 million positive impact to Q3 2018 earnings and $57 million in cash savings achieved in the third quarter
• One-time benefit of $52 million recognized during the third quarter due to sale of former CB&I administrative headquarters
• Planned headcount reduction of approximately 1,100 with approximately 800 separations as of September 30, 2018
• Estimated costs to achieve have been reduced from $210 million to $190 million as a result of a recent accounting pronouncement that provides for the capitalization of

certain implementation costs of our ERP system on the balance sheet; these implementation costs will then be amortized over the useful life of the ERP software license

COMBINATION PROFITABILITY INITIATIVE (“CPI”)

CATEGORY SOURCE TOTAL ACTIONED/TARGETED CPI SAVINGS/COSTS

COSTS OF OPERATIONS SUPPLY CHAIN

• Consolidate buying power to negotiate improved pricing or rebates with suppliers
• Improved category management and strategic sourcing
• Negotiate improved sub-contract pricing with providers based on volume

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OPERATIONS & PROJECT

• Pooling of operations support resources in high value centers
• Consolidate offices and facilities based on proximity and reduce office footprint
• Increase asset and tool utilization by transferring or reusing on subsequent projects
• Reduce spend on travel expenses by encouraging video conferencing and adjusting policies

166

SG&A BACK OFFICE SUPPORT

• Move transactional back-office support to high value centers
• Optimize functional staffing levels to industry or internal best practices
• Eliminating duplicate services

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SYSTEMS & APPLICATIONS

• Eliminate redundant systems
• Reduce applications and associated support
• Consolidate duplicate technology licenses and reduce number of overall user licenses required

40 TOTAL TARGETED CPI SAVINGS 475 ESTIMATED TOTAL COSTS TO ACHIEVE 190

$99 $138 $73 $9 $319 $106 $75 $28 $22 $31 $156 $84

Savings actioned / costs incurred to date Remaining run-rate savings / costs to achieve

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• Capital expenditures primarily driven by project and maintenance capex of $10 million and upgrades to the Amazon of $6 million
• Cash flows used for other investing primarily represents ($110) million in advances from third party participants of proportionately consolidated consortiums, net,

partially offset by proceeds from asset dispositions of approximately $53 million

• Cash flows from financing activities include $109 million in advances from joint ventures and consortiums (including proportionately consolidated joint ventures

and equity-method investments), partially offset by repayments of debt and capital lease obligations of ($16) million

$1,138 million

cash, cash equivalents & restricted cash as of June 30, 20181

$905 million

cash, cash equivalents & restricted cash as of Sept. 30, 20182

Q3 2018 SUMMARY CASH FLOW

$ in millions

CASH FLOWS FOR CAPEX

(19)

CASH FLOWS USED FOR OTHER INVESTING ACTIVITIES & FX

(85)

CASH FLOWS FROM FINANCING ACTIVITIES

92

NET CHANGE IN CASH

(233)

1) Includes restricted cash of $324 million as of Jun. 30, 2018 2) Includes restricted cash of $325 million as of Sep. 30, 2018

CASH FLOWS USED FOR OPERATING ACTIVITIES

(221)

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• Cash paid for interest primarily represents interest paid on the Term Loan B
• Increase in cash paid for taxes from prior quarter primarily related to state taxes associated with the gain on technology sale accrued prior to the Combination
• Changes in current assets and liabilities are primarily driven by significant increases in advance billings on contracts due to the changes in estimate on the three Focus

Projects, partially offset by collections on trade receivables

Q3 2018 EBITDA TO FREE CASH FLOW

$ in millions

Decrease Increase

1) The reconciliations of EBITDA and Free Cash Flow, all of which are Non-GAAP measures, to the most comparable GAAP measures are provided in the pages entitled “Additional Disclosures – Quarterly Reconciliations” and “Additional Disclosures – EBITDA Reconciliations.”

Q3'18 EBITDA Cash Paid for Interest Cash Paid for Taxes Changes in Current Assets & Liabilities Changes in Long-term Assets & Liabilities Q3'18 Cash Flows from Operations Capex Q3'18 Free Cash Flow Transaction Costs and Costs to Achieve CPI Q3'18 Adjusted Free Cash Flow

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• Increase in negative working capital from the prior quarter was primarily a result of $744 million in changes in estimates on the legacy Focus Projects which significantly increased contract

liabilities

• The Freeport, Cameron, and Calpine projects used ($156) million, ($562) million, and ($43) million of net working capital, respectively
• Negative working capital acquired from the Combination as of May 10, 2018 was ($2.4) billion; this was driven by significant cash advances and front-end milestones on onshore LNG and

Downstream projects in NCSA and subsequent changes in estimates on the legacy Focus Projects

NET WORKING CAPITAL TREND COMPARISON

$ in millions

$ (1,444) $ (1,915)

(5,000) (4,000) (3,000) (2,000) (1,000) 1,000 2,000 3,000

Q2 2018 Q3 2018

Accounts receivable Contract assets Other assets Accounts payable Contract liabilities Other liabilities Net Working Capital

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LEGACY FOCUS PROJECTS HIGHLIGHTS

• After five months of ownership and significant operational changes, we believe we have reached a

definitive and complete understanding of the schedule and cost position on the three “focus” legacy CB&I projects and have taken steps to de-risk them: Changes in project and oversight personnel, reporting structures, execution plans, forecast cost base methodology, and improved communication with customers and consortium members

• Cameron LNG: the changes in estimates followed a detailed reassessment of the schedule and cost base.

The analysis included a comprehensive review of the work to go, including work for which we may not be compensated -- such as rework -- and a reduction in productivity estimates. The reassessed schedule and estimates reflect regional limitations on labor availability and quality, the elimination of an incentive

• pportunity, and the addition of liquidated damages associated with the completion schedule.
• Freeport LNG: the changes in estimates followed a detailed reassessment of the schedule and cost base

and a reduction in forecasted labor productivity resulting from regional limitations on labor availability and

• quality. The change was also impacted by the Company’s decision, reached in conjunction with
• ngoing customer discussions, to include liquidated damages associated with the pre-Hurricane

Harvey schedule.

• Calpine: the changes in estimates resulted from a comprehensive review and reassessment of

productivity, which resulted in the Company reducing the productivity factor on future work by 20%. The newly-assumed productivity factor also considered lessons learned on the closeout experience on the recently completed IPL project. First fire is anticipated during the fourth quarter of 2018.

$ in millions

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LEGACY FOCUS PROJECTS DETAIL

1) Represents the cumulative percentage of completion (“POC”), which includes progress achieved prior to the Combination. POC calculated in accordance with GAAP, which requires the project progress to be reset to 0% as of the date of the Combination for accounting purposes, was 36%, 37% and 53% for the Freeport, Cameron and Calpine projects, respectively, as of September 30, 2018. 2) Represents the net change in gross profit as a result of changes in estimates of the revenues and costs at completion as of the date of the Combination which were identified in Q3 2018. These changes in estimates were made by McDermott when reassessing the fair value of acquired contracts. These changes in estimate did not directly impact our Q3 2018 earnings due to the application of purchase accounting. 3) Includes the Freeport Trains 1 & 2 and Freeport Train 3 projects, which are performed by two separate consortiums. As of September 30, 2018, the Freeport Train 3 project was profitable and was not in a loss position. $ in millions

FREEPORT3 CAMERON CALPINE

Cumulative POC1 82% 83% 91% Gross Profit Loss Loss Loss Accrued Loss Position ($28) ($127) ($43) Operational Update

• Train 1 88% complete with construction.
• Train 2 progressing as expected with improved

productivity due to lessons learned from Train 1 and nearing 81% complete with construction.

• Train 3 impacted more significantly by effects of

Harvey but still making progress and is 70% complete with construction.

• Phase 1 utility systems and existing facilities

substantially complete; fuel gas introduction and main compressor runs planned for Q4

• Commenced Train 2 main compressor motors

lube oil flushing

• Construction completion: Phase 1 – 95%; Train 2

– 62%; Train 3 – 49%

• Overall Progress is 92% complete with

Construction at 88%

• Commissioning 29% complete; 54 of 105

subsystems required for First Fire complete

• Now executing project as an integrated MDR /

Calpine team.

• First Fire planned for Q4 2018 and substantial

completion in Q1 2019

Other JV Members Chiyoda and Zachry Construction Chiyoda N/A Revenues in Q3 2018 $220 $191 $29 Backlog Roll-off in Q4 2018 $210 $173 $19 Backlog Roll-off 2019 Onwards $412 $385 $8 Cash Flow Use in Q3 2018 ($115) ($34) ($14) Projected Cash Flow Use in Q4 2018 ($174) ($81) ($29) Projected Cash Flow Use in 2019 ($64) ($320) ($41) Change in Estimate at Completion Identified in Q3 20182 ($194) ($482) ($68) Targeted Completion Train 1: Q3 2019 Train 2: Q1 2020 Train 3: Q2 2020 Phase 1: Q2 2019 Train 2: Q4 2019 Train 3: Q1 2020 Q1 2019

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• In accordance with U.S. GAAP, McDermott was required to reset the POC for all acquired contracts to zero as of the date of the Combination; in the table above, the

cumulative POC, including progress achieved prior to the Combination, is provided for all projects being performed by CB&I as of the date of the Combination, in addition to the reset POC calculated in accordance with U.S. GAAP

• Significant progress has been achieved on the remaining project portfolio; no additional projects have been identified with substantial remaining project execution risk
• The Aramco Marjan Power System project in the MENA segment was successfully completed during the quarter

REMAINING PORTFOLIO CONTINUES TO PERFORM WELL1

Status update on projects >$500 Million (excluding Focus Projects)

1) Projects as of September 30, 2018. The list excludes projects that were substantially complete (>95%) in prior periods. 2) Represents the project size at time of award. Project sizes are as follows: Substantial ($500 million – $750 million), Major ($750 million - $1 billion), and Mega (>$1 billion). PROJECT NAME1 SEGMENT PRODUCT OFFERING PROJECT SIZE2 BACKLOG GAAP POC CUMULATIVE POC STATUS Saudi Aramco LTA II MENA Offshore/ Subsea Mega $147 91% 91% Preparation for BRRI offshore campaign is underway. Hook up and commissioning ongoing. Saudi Aramco Safaniya Phase 5 MENA Offshore/ Subsea Substantial $221 86% 86% Pipeline pre-commissioning in progress and vessel arrived for hook-up of last deck. SFNY-228, SFNY-19 and SFNY-28 energized on 25th Sep 2018. This project builds on legacy of successfully executed projects under LTA II Contract. Shintech NCSA Downstream Mega $62 80% 97% Systems completion and completion of refractory building. Fuel gas was introduced to the site as well as firing boiler A & B. Remaining activities are gradually incorporating close-out tasks Entergy #1 - St. Charles NCSA Power Substantial $98 55% 91% The STG area continues to be a main focus of work. With Inner and Outer casing installations complete, the final coupling installations are the focus. LACC Ethylene Production Facility NCSA Downstream Mega $284 51% 87% Project is in commissioning phase. The mechanical completion (key milestone) is forecasted for October 31st. Entergy - Lake Charles NCSA Power Substantial $340 29% 53% The primary focus is completion of the electrical engineering scope and finalization of designed quantities. Working closely with the subcontractors to ensure that the progress targets are achieved. Total Ethane Cracker NCSA Downstream Mega $1,014 19% 32% Project recently completed a comprehensive model review aimed at gaining further confidence on remaining installation quantities. Project moving from engineering and procurement into construction. Saudit Aramco Safaniya Phase 6 MENA Offshore/ Subsea Major $716 16% 16% PO's have been issued for critical long lead procurement items. This project builds on legacy of successfully executed projects under LTA II Contract. Entergy Montgomery County NCSA Power Substantial $550 9% 9% Project recently awarded. This is the third project in the Entergy power portfolio. ADNOC Takreer MENA Downstream Substantial $489 8% 9% Teams fully mobilised with all critical equipment ordered and design review ongoing. Total Tyra EARC Offshore/ Subsea Substantial $692 8% 8% Package 1 - Comprehensive model review planned for Dec-18. Procurement cycle to benefit from scale; volume discounts are being solicited. Package 2 - Overall engineering deliverables continue to stay ahead of plan. Bayport Polymers Borstar Bay 3 NCSA Downstream Mega $1,215 0% 0% Project recently awarded. This is a second recent project with Total.

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• Onshore construction activity driven by high levels of utilization in NCSA and MENA
• Lower vessel utilization driven by decreased activity this quarter in subsea fleet
• Unallocated DOE is primarily driven by the underutilization of certain marine assets and bid and proposal costs recorded in each segment

ONSHORE CONSTRUCTION1

(Wkhr 000s)

UNALLOCATED DIRECT OPERATING EXPENSES

(in millions)

$49

$37

OFFSHORE FABRICATION

(Wkhr 000s)

ASSET UTILIZATION SUMMARY

Actual: 1,047 Standard: 1,631

64%

Actual: 3,740 Standard: 4,500

83%

Actual: 8,083 Standard: 6,130

132%

Actual: 382 Standard: 750

Q2’18

ONSHORE FABRICATION

(Wkhr 000s)

OFFSHORE/SUBSEA VESSELS

(Days)

51%

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• No cash draws on revolver; $142 million is being utilized for the issuance of letters of credit
• No significant debt maturities in the near term
• Higher debt issuance costs related to Combination related financing

CAPITALIZATION

Sept 30, 2018 ($ in millions) Cash, Cash Equivalents and Restricted Cash $905 Senior Secured Term Loan 2,249 10.625% Six-Year Senior Unsecured Notes 1,300 North Ocean 105 Loan 20 Vendor Equipment Financing (“VEF”) 5 Gross Debt $3,574 Debt Issuance Costs (142) Total Debt $3,432 Net Debt1 $2,669

Q3 2018 CAPITAL STRUCTURE, REVOLVER AND LC AVAILABILITY

1) Net Debt is defined as Gross Debt net of Cash, Cash Equivalents and Restricted Cash.

142M 858M Revolver Availability 1,376M 928M 419M 278M 14M 681M 409M 32M LC Facility Uncommitted Bilaterals Surety Cash Secured Availability Usage REVOLVER AVAILABILITY

$1Bn $1.6Bn $1.4Bn

LC AVAILABILITY

$0.8Bn $0.3Bn

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CREDIT AGREEMENT FINANCIAL COVENANT COMPLIANCE

Compliance calculations as of September 30, 2018

• In compliance with covenants under Credit Agreement, with ample headroom
• Additional details and full calculations are included in this presentation on the pages titled “Additional Disclosures – Covenant EBITDA Calculation” and

“Additional Disclosures – Covenant Calculations”

• Covenant Liquidity includes available cash of $580 million, unused revolver availability of $858M and cash collateral for LC’

s less LC obligations of $33 million

Leverage Ratio Covenant FCC Ratio Covenant Liquidity Covenant

2.46x 4.25x 2.40x 1.50x $1,472M $200M

LEVERAGE RATIO COVERAGE RATIO MINIMUM LIQUIDITY

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• Focus remains on technology pull through with differentiated vertical integration capabilities
• Identified U.S. Pipe Fabrication and Tank Storage businesses as divestiture candidates
• Process underway with expected completion of U.S. Pipe Fabrication sale and Tank Business sale in 2019
• 2017 Revenues of ~$1.5 Billion

COMPLETED STRATEGIC PORTFOLIO REVIEW

• Provides fabricated piping systems and piping fabrication, with

capabilities in induction bending. Develops and uses proprietary welding techniques, computer applications for material control, production scheduling and fabrication management

• APP – Maintains and distributes extensive inventory of

commodity fittings and specialty piping components in stainless, alloy and carbon steel for sale to third parties and for internal fabrication use

• Provides services and solutions for storage tanks and pressure

vessels for the oil & gas, power, water, wastewater, and metals and mining industry

• Solutions include LNG storage, storage terminals for bulk liquids and

refrigerated products, water storage tanks and pressure spheres

• Has built over 46,000 storage structures in more than 100 countries
• Plate fabrication facilities located in Houston, TX; Clive, IA; Everett,

WA; Al Aujam, Saudi Arabia and Kwinana, Australia

U.S. PIPE FABRICATION BUSINESS TANK BUSINESS

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0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 OGP IMCA Construction Industry Institute McDermott

TAKING THE LEAD WITH SAFETY

QHSES: DRIVING TOWARD INDUSTRY LEADING PERFORMANCE

International Association

• f Oil & Gas Producers

International Marine Contractors Association McDermott International, Inc.

0.351 0.191 0.291

Total Recordable Incident Rate

0.221

Construction Industry Institute

1) Figures as of December 31, 2017

ORDER INTAKE, BACKLOG & BID PIPELINE

ORDER INTAKE, BACKLOG & BID PIPELINE

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Details of $11.5B Backlog as September 30, 2018

$2.3 $6.2 $3.1

2018 2019 Thereafter

Off/Sub $3.2 28% LNG $1.6 14% Downstream $5.0 43% Power $1.7 15% NCSA $6.5 57% EARC $1.5 13% MENA $2.2 19% APAC $0.7, 6% TECH $0.6, 5%

Q3 2018 BACKLOG & EXPECTED ROLL-OFF

$ in millions

BACKLOG

By Product Offering

BACKLOG

By Segment

BACKLOG

Roll-Off by Year

• Strong Q3 2018 order intake led to increased backlog quarter over quarter
• Backlog balanced across US and international markets with majority of backlog related to onshore projects
• Good visibility into 2019 and thereafter

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Off/Sub $0.3 4% LNG $1.6 24% Downstream $3.1 47% Power $1.6 25%

Q3 2018 BACKLOG BY SEGMENT AND PRODUCT OFFERING

$ in millions

NCSA - $6.5B

• NCSA segment diversified across all of our product offerings
• Backlog outside of NCSA attributable to offshore/subsea and downstream product offerings
• Technology segment backlog driven by downstream product offering

EARC - $1.5B MENA - $2.2B APAC - $0.7B TECH - $0.6B

Off/Sub $0.7 45% Downstream $0.8 55% Off/Sub $1.3 61% Downstream $0.8 39% Off/Sub $0.6 88% Downstream $0.1 12% Downstream $0.6 100%

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REVENUE PIPELINE 5 QUARTER LOOK AHEAD

$ in billions, except $/Bbl

$2.4 $3.9 $3.4 $10.2 $11.5 $5.4 $4.4 $7.5 $19.0 $20.7 $12.6 $16.2 $14.1 $49.3 $48.1

3Q'17 4Q'17 1Q'18 2Q'18 3Q'18

Backlog Bids & COs Targets

$20.4 $24.5 $25.0 $78.5 $80.3

57 67 69 77 83

Oil Price $/bbl

• Continuing to see recovery in the offshore & subsea, LNG and downstream markets with highest McDermott revenue opportunity pipeline in company history
• Pipeline replenished as projects are awarded and move into backlog
• Decrease in targets as projects move to bids outstanding and backlog

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PRODUCT OFFERING RESOURCE REPORTING SEGMENT

$35.7 $7.9 $16.4 $6.6 $1.8 $31.8 $9.7 $17.8 $7.3 $2.2

Q2’18 Q3’18

CONTRACT TYPE2 CUSTOMER

BIDS & CHANGE ORDERS OUTSTANDING AND TARGET PROJECTS1

$68.8 billion as of September 30, 2018 compared to $68.3 billion as of June 30, 2018

• Bids and change orders outstanding and target projects driven by NCSA and balanced across remainder of portfolio
• Improving macro conditions drive increased opportunity pipeline
• Bids and change orders outstanding and targets balanced across customer type

$23.5 $42.3 $2.5 $23.7 $40.4 $4.6

$18.4 $9.4 $40.5 $20.8 $8.1 $39.9

$67.7 $0.6 $65.4 $3.4

GREENFIELD / BROWNFIELD

$47.6 $20.6 $46.8 $22.0

$27.1 $17.2 $2.5 $21.5 $25.1 $20.0 $1.1 $22.6

$ in Billions

2018 GUIDANCE

SECOND HALF 2018 GUIDANCE

28

SECOND HALF 2018 GUIDANCE

$ in millions, except per share amounts, or as indicated

• This guidance is based on the Company’s existing portfolio and capital structure as of September 30, 2018
• McDermott is updating its guidance for the second half of 2018, primarily to reflect increased intangibles amortizations, ourupdated tax forecast, and the

changes in estimates on the legacy focus projects

• Continue to see solid revenues and adjusted EBITDA reflecting the continued strong, growing revenue opportunity pipeline
• Cash flow and net working capital guidance has been adjusted to reflect the anticipated incremental cash usage due to the cha

nges in estimates on the legacy focus projects

Earnings Metrics Second Half 2018 Guidance Revenues $4.8B - 5.1B Operating Income $200 - 230 Operating Margin 4.2 - 4.5% Net Interest Expense1 ~$170 Income Tax Expense ~$65 Net Income $(10) - (20) Diluted Net Income, Per Share $(0.06) - (0.11) Diluted Share Count ~180 EBITDA2 $375 - 415 Adjustments Transaction Costs3 ~$5 Costs to Achieve CPI4 ~$75 Intangibles Amortization5 ~$130 Adjusted Earnings Metrics Adjusted Operating Income2 $405 - 435 Adjusted Operating Margin2 8.0% - 8.5% Adjusted Net Income2 $150 - 160 Adjusted EPS2 $0.31 - 0.36 Adjusted EBITDA2 $450 - 490 Cash Flow & Other Metrics Cash from Operating Activities $(520) - (540) Capex ~$60 Free Cash Flow 2 $(580) - (600) Cash Interest / DIC Amortization Interest ~$150 / ~$20 Cash Taxes ~$95 Corporate and Other Operating Income 6 $(200) - (225) Cash, Restricted Cash and Cash Equivalents $450 - 500 Gross Debt7 ~$3.6B Net Working Capital ~$(1.5B) ~ = approximately 1) Net Interest Expense is gross interest expense less capitalized interest and interest income. 2) The calculations of EBITDA, Adjusted Operating Income, Adjusted Operating Margin, Adjusted Net Income, Adjusted Diluted Net Income Per Share, Adjusted EBITDA and Free Cash Flow, which are Non-GAAP measures, are shown in the appendix entitled “Reconciliation of Forecast Non-GAAP Financial Measures to Forecast GAAP Financial Measures.” 3) Transaction costs primarily represent success fees incurred after the Combination. No tax impact is forecasted for these costs. 4) Costs to achieve CPI include restructuring and integration costs. The forecasted tax impact of these costs is approximately $5 million. 5) Intangibles amortization represents the amortization of project-related and other intangibles. The forecasted tax impact of the amortization is approximately $30 million. 6) Corporate and Other represents the operating income (loss) from corporate and non-operating activities, including corporate expenses, certain centrally managed initiatives, impairments, year-end mark-to-market (“MTM”) pension actuarial gains and losses, costs not attributable to a particular reporting segment, and unallocated direct operating expenses associated with the underutilization of vessels, fabrication facilities and engineering resources. 7) Ending Gross Debt excludes debt issuance costs and capital lease obligations.

FREQUENTLY ASKED QUESTIONS

30

Question Response

1) What are the long-term prospects for the McDermott and CB&I combination?

McDermott is on track to be a market leader in key upstream and downstream markets. We have made enormous progress in integrating the two organizations and our focus is now on optimizing our combined strengths to create long-term value for our investors, customers and employees.

2) How confident is the management team in achieving the $350 million of cost synergies announced at the close of the Combination?

We are increasing our CPI target from $350 million to $475 million. We have already made significant progress toward this objective, actioning $319 million of run rate synergies as of Q3 2018.

3) How is the integration process proceeding?

The company has made significant progress in integrating the two organizations. For example, prior to closing of the transaction, we had determined the new organizational structure of the combined company and identified the new senior leadership team. Additionally, within four days of closing the transaction, we had consolidated nearly all corporate functions for the combined organization into our headquarters location in Houston.

4) Do you expect to remain a largely fixed-price contractor?

• Yes. Most of the customers in the markets we serve have expressed a strong preference for fixed-price contracts,

and we expect that the majority of our new awards will continue to be fixed-price. Such contracts can offer attractive margins when they are screened for appropriate risk, negotiated carefully and executed efficiently.

FREQUENTLY ASKED QUESTIONS

31

Question Response

5) Do you have plans to reduce your debt level over time?

• Yes. Our objective is to reduce the ratio of total debt to EBITDA to 2.0x by the end of 2020.

6) What kind of feedback have you had from customers regarding the Combination?

The feedback from customers has been extremely positive since we announced the transaction in December 2017. Specifically, many customers have been excited by the enhanced modularization capabilities of the combined company.

7) What is the status of the MOU with Saudi Aramco and the new yard in Saudi Arabia?

This long-range plan continues to move forward. As previously announced, we plan to build a new fabrication and marine complex at Ras Al Khair in Saudi Arabia to increase McDermott’s abilities to serve its growing Middle East and Caspian markets. As originally announced, the new facility is expected to be at full capacity by the mid-2020s.

8) What is the status of the Net Power project?

Net Power achieved first fire of its supercritical carbon dioxide (CO₂) demonstration power plant and test facility in May 2018. This milestone included the firing of the 50MWth Toshiba commercial-scale combustor. The firing of the combustor involved the integrated operation of the full NET Power process. Following a period of rigorous testing, the combustor will be integrated with the turbine and power will be generated.

FREQUENTLY ASKED QUESTIONS

FINANCIAL APPENDIX

33

Note: Amounts have been rounded to the nearest million, except per share amounts. Totals may not foot as a result of rounding. 1) We recognized $5 million and $37 million of transaction costs associated with the Combination during the third and second quarters of 2018, respectively. 2) Costs to achieve our Combination Profitability Initiative (CPI) include restructuring and integration costs. We incurred $31 million and $63 million of costs from CPI in the third and second quarters of 2018, respectively. 3) Intangibles amortization includes the amortization of all acquired intangibles from the Combination, including project-related intangibles, other intangible assets (process technologies, trade names, trade marks, and customer relationships), and amortization of investments in unconsolidated affiliates. 4) As part of the financing of the Combination and establishment of our new capital structure during Q2 2018, we incurred costs associated with the prepayment of

• ur prior credit facility and senior notes of $14 million, which includes a make-

whole premium and the accelerated write-off of debt issuance costs. 5) During Q2 2018, we benefited from the tax benefit of $117 million resulting from the internal transfer of certain intellectual property rights. 6) The adjustments to GAAP Net Income have been income tax effected when included in net income based on the respective tax jurisdiction in which the adjustments were incurred. 7) Includes the Non-GAAP adjustments described in footnotes 1, 2, and 3 above. Adjustments to operating income exclude the debt extinguishment costs and tax benefit on the intercompany transfer of IP, as these items are not included in the computation of operating income. 8) Adjusted diluted EPS includes the intangibles amortization described in footnote 3 above.

ADDITIONAL DISCLOSURES – QUARTERLY RECONCILIATIONS

Reconciliation of Non-GAAP to GAAP financial measures

Sep 30, 2018 Jun 30, 2018 Sep 30, 2017 (Dollars in millions, except share and per share amounts) Net Income (Loss) Attributable to MDR $2 $47 $95 Less: Adjustments Transaction costs1 5 37 - Costs to achieve CPI2 31 63 - Intangibles amortization3 68 22 - Debt extinguishment costs4

• 14 -

Tax benefit on intercompany transfer of IP 5

• (117) -

Total Non-GAAP Adjustments 103 21 - Tax Effect of Non-GAAP Changes6 (17) (8) - Total Non-GAAP Adjustments (After Tax) 87 12 - Non-GAAP Adjusted Net Income Attributable to McDermott $89 $59 $95 Operating Income $129 $49 $125 Non-GAAP Adjustments7 103 123 - Non-GAAP Adjusted Operating Income $232 $172 $125 Non-GAAP Adjusted Operating Margin 10.2% 9.9% 13.0% Diluted EPS $0.01 $0.33 $1.00 Non-GAAP Adjustments8 0.19 (0.04)

• Non-GAAP EPS

$0.20 $0.29 $1.00 Shares used in computation of earnings (loss) per share: Basic 180 144 95 Diluted 181 144 95 Cash flows from operating activities $(221) $398 $45 Capital expenditures 19 24 16 Free cash flow $(240) $374 $29 Revenues $2,289 $1,735 $959 Three Months Ended

34

Note: Amounts have been rounded to the nearest million. Totals may not foot as a result of rounding. 1) We recognized $5 million of transaction costs associated with the Combination during the third quarter of 2018. 2) Costs to achieve CPI include restructuring and integration costs. We recognized $31 million of costs to achieve CPI in the third quarter of 2018. 3) Intangibles amortization includes the amortization of all acquired intangibles from the Combination, including project-related intangibles, other intangible assets (process technologies, trade names, trade marks, and customer relationships) and amortization of investments in unconsolidated affiliates.

ADDITIONAL DISCLOSURES – SEGMENT RECONCILIATIONS

Reconciliation of Non-GAAP to GAAP financial measures

35

1) We define EBITDA as net income plus depreciation and amortization, interest expense, net, and provision for income taxes. We define Adjusted EBITDA as EBITDA less the transaction costs, costs to achieve CPI and debt extinguishment costs detailed in the immediately preceding pages. We have included EBITDA and Adjusted EBITDA disclosures in this supplemental deck because EBITDA is widely used by investors for valuation and comparing our financial performance with the performance of other companies in our industry and because Adjusted EBITDA provides a consistent measure of EBITDA relating to our underlying business. Our management also uses EBITDA and Adjusted EBITDA to monitor and compare the financial performance of our operations. EBITDA and Adjusted EBITDA do not give effect to the cash that we must use to service our debt or pay our income taxes, and thus do not reflect the funds actually available for capital expenditures, dividends or various other purposes. In addition, our presentation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures in other companies’ reports. You should not consider EBITDA or Adjusted EBITDA in isolation from, or as a substitute for, net income or cash flow measures prepared in accordance with U.S. GAAP.

ADDITIONAL DISCLOSURES – EBITDA RECONCILIATIONS

Reconciliation of Non-GAAP to GAAP financial measures

Sep 30, 2018 Jun 30, 2018 Sep 30, 2017 (Dollars in millions) Net income (loss) attributable to McDermott $2 $47 $95 Add: Depreciation & amortization 107 57 28 Interest expense, net 86 72 12 Provision for income taxes 44 (84) 19 EBITDA1 $239 $92 $155 EBITDA $239 $92 $155 Adjustments: Transaction costs 5 37

• Costs to achieve CPI

31 63

• Debt extinguishment costs
• 14
• Adjusted EBITDA1

$275 $208 $155 Three Months Ended

36

1) The definition of Covenant EBITDA is provided in our credit agreement entered into on May 10, 2018. Covenant EBITDA is presented for the purpose of disclosing our compliance with the covenants in our credit agreement. Covenant EBITDA may differ in the method of calculation from similarly titled measures used by us in other presentations or used by other companies. Please see our quarterly report on Form 10-Q for the quarter ended September 30, 2018, as filed with the SEC, for additional information. 2) Covenant EBITDA amounts for Q4 2017 and Q1 2018 are explicitly defined in our credit agreement and do not reconcile to McDermott’s historically reported net

• income. The Covenant EBITDA amounts for these periods were agreed upon with
• ur lenders based on pro-forma historical financials for McDermott and CB&I

combined. 3) Our Covenant EBITDA calculation includes the pro-forma combined results of McDermott and CB&I prior to the Combination. Per the terms of the credit agreement, we must include the net income (loss), tax, interest, and depreciation and amortization recorded by CB&I during the period from April 1, 2018 to May 10, 2018 in our calculation of Covenant EBITDA. 4) Under the definition of Covenant EBITDA, McDermott is permitted to add back the impact of charges on selected projects (referred to as the “Focus Projects”) up to $75 million per quarter, not to exceed $200 million in total. The aggregate amount

• f project charges used for the Q2 2018 calculation of Covenant EBITDA was $43
• million. This amount represents a charge of $43 million on the now completed IPL

combined cycle gas power project that was recorded by CB&I in April 2018 prior to the closing of the Combination. The $43 million IPL charge is excluded from McDermott’s GAAP financial statements for the second quarter of 2018.

ADDITIONAL DISCLOSURES – COVENANT EBITDA RECONCILIATION1

Reconciliation of Net Income to Covenant EBITDA in accordance with our credit agreement

• Amortization of acquired intangibles or acquisition costs

• Annualized CPI savings

• Costs to achieve CPI

• Gain (loss) on asset disposal

• Amortization of acquired intangibles or acquisition costs

• Covenant EBITDA Attributable to CB&I prior to the Combination 3
• $31
• Total Covenant EBITDA

37

ADDITIONAL DISCLOSURES – COVENANT CALCULATIONS

Covenant calculations in accordance with our credit agreement

• -

• 19

• NO 105
• 4
• 4

• Total Debt Principal Repayments - In Period

38

ADDITIONAL DISCLOSURES – 2018 GUIDANCE RECONCILIATIONS

Reconciliation of Forecast Non-GAAP to US GAAP financial measures