Rowan Reports Third Quarter 2010 Operating Results
HOUSTON, Nov. 2, 2010 /PRNewswire-FirstCall/ — For the three months ended September 30, 2010, Rowan Companies, Inc. (“Rowan” or the “Company”) (NYSE: RDC) generated net income of $67.2 million or $0.57 per share, compared to $78.4 million or $0.69 per share in the third quarter of 2009. Revenues were $437.9 million in the third quarter of 2010, compared to $393.4 million in the third quarter of 2009. Results for the prior-year period included a $17.0 million or $0.15 per share net tax benefit related to a third-party tax court ruling which provided that certain foreign-source income is not taxable in the United States.
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Rowan’s drilling operations generated revenues of $289.9 million in the third quarter of 2010, up by 12% over the prior-year quarter as the impact of offshore fleet additions and higher rig utilization more than offset lower average day rates. The Company’s gross drilling margin was 51% of revenues in the third quarter of 2010, down from 53% in the prior-year quarter. Income from drilling operations was $82.9 million in the third quarter of 2010, up by 2% over the prior-year quarter.
Rowan’s manufacturing operations generated external revenues of $148.0 million in the third quarter of 2010, up by 10% over the prior-year quarter. The Company’s gross manufacturing margin was 15% of revenues in the third quarter of 2010, up from 13% in the prior-year quarter. Income from manufacturing operations was $5.3 million in the third quarter of 2010, down by 12% from the prior-year quarter.
Matt Ralls, President and Chief Executive Officer, commented, “During the third quarter, we took delivery of our second EXL class jack-up rig, which is now in Trinidad preparing to begin a three-year contract. We added significantly to our contract drilling backlog, obtaining two three-year contracts with Saudi Aramco and additional deep-well commitments from McMoRan in the Gulf of Mexico. We completed the acquisition of Skeie Drilling, adding three of the world’s most capable jack-ups to the Rowan fleet, the first of which – the Rowan Viking – will soon mobilize for a 19-month assignment in the UK at a day rate in the low $200s. And, we raised $1 billion of new financing during the quarter to refinance the assumed Skeie debt, complete our newbuild program, and remain well-positioned for further growth opportunities.
“Our contract drilling operations provided solid results in the third quarter, tracking closely with consensus expectations. Similarly, our manufacturing results were in line with expectations, with the performance again led by the mining products group. LeTourneau expects continuing strong demand for new mining equipment and has recently seen a significant increase in requests for jack-up kit quotations. Our third quarter results also benefitted from continuing progress in lowering our effective income tax rate, which we expect will improve further in 2011 and beyond as we expand our international operations.”
Rowan will conduct its earnings conference call on Tuesday, November 2, 2010, at 10:00 a.m. Central Daylight Time. Interested parties are invited to listen to the call by telephone or over the Internet. Individuals who wish to participate on the conference call by telephone can dial (877) 869-3847, or internationally (201) 689-8261. Alternatively, to access the online simulcast and rebroadcast of the conference call, please visit Rowan’s website at www.rowancompanies.com. You should connect to our website at least 15 minutes prior to the conference call to register, download and install any necessary software.
Rowan Companies, Inc. is a major provider of international and domestic contract drilling services. The Company also owns and operates a manufacturing division that produces equipment for the drilling, mining and timber industries. The Company’s stock is traded on the New York Stock Exchange. Common Stock trading symbol: RDC. For more information on Rowan, please visit www.rowancompanies.com.
This report contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements as to the expectations, beliefs and future expected financial performance of the Company that are based on current expectations and are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected by the Company. Among the factors that could cause actual results to differ materially include oil and natural gas prices, the level of offshore expenditures by energy companies, energy demand, the general economy, including inflation, weather conditions in the Company’s principal operating areas and environmental and other laws and regulations. Other relevant factors have been disclosed in the Company’s filings with the U.S. Securities and Exchange Commission.
ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited (In Millions)
SEPTEMBER 30, DECEMBER 31,
2010 2009
---- ----
ASSETS
Cash and cash equivalents $917.8 $639.7
Restricted cash 192.8 -
Accounts receivable 407.0 343.6
Inventories 382.7 451.7
Other current assets 127.6 114.8
----- -----
Total current assets 2,027.9 1,549.8
Property, plant and equipment -
net 4,440.7 3,579.5
Other assets 92.3 81.4
---- ----
TOTAL $6,560.9 $5,210.7
======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current maturities of long-term
debt $536.9 $64.9
Accounts payable 130.9 124.6
Other current liabilities 239.4 378.8
----- -----
Total current liabilities 907.2 568.3
Long-term debt 1,147.3 787.5
Other liabilities 822.8 744.5
Stockholders' equity 3,683.6 3,110.4
------- -------
TOTAL $6,560.9 $5,210.7
======== ========
ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited (In Millions Except Per Share Amounts)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER
30 ENDED SEPTEMBER 30
---------------- ------------------
2010 2009 2010 2009
---- ---- ---- ----
REVENUES $437.9 $393.4 $1,360.4 $1,370.4
COSTS AND EXPENSES:
Operations 267.0 238.2 765.2 758.6
Depreciation and
amortization 47.3 43.7 139.3 126.8
Selling, general and
administrative 34.7 24.1 96.6 73.4
Loss (gain) on
disposals of property
and equipment 0.7 0.3 0.6 (4.3)
Material charge for
manufacturing
inventories - - 42.0 -
Total 349.7 306.3 1,043.7 954.5
----- ----- ------- -----
INCOME FROM OPERATIONS 88.2 87.1 316.7 415.9
Net interest and other
income (5.0) (0.7) (15.4) 3.1
---- ---- ----- ---
INCOME BEFORE INCOME
TAXES 83.2 86.4 301.3 419.0
Provision for income
taxes 16.0 8.0 78.6 112.3
---- --- ---- -----
NET INCOME $67.2 $78.4 $222.7 $306.7
===== ===== ====== ======
NET INCOME PER DILUTED
SHARE $0.57 $0.69 $1.92 $2.70
AVERAGE DILUTED SHARES 118.4 113.9 116.0 113.6
NOTE: See pages 6 and 7 for supplemental operating information.
ROWAN COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (In Millions)
NINE MONTHS
ENDED SEPTEMBER 30
--------------------
2010 2009
---- ----
CASH PROVIDED BY (USED IN):
Operations:
Net income $222.7 $306.7
Adjustments to reconcile net income to
net
cash provided by operations:
Depreciation and amortization 139.3 126.8
Deferred income taxes 12.2 70.6
Gain on disposals of assets 0.6 (4.3)
Other - net 30.3 4.5
Net changes in current assets and
liabilities (115.7) (62.1)
Net changes in other noncurrent assets
and liabilities (10.3) (33.2)
----- -----
Net cash provided by operations 279.1 409.0
----- -----
Investing activities:
Property, plant and equipment additions (316.6) (393.2)
Proceeds from disposals of property,
plant and equipment 3.0 5.7
Net cash acquired from SKDP 8.5 -
Net cash used in investing activities (305.1) (387.5)
------ ------
Financing activities:
Proceeds from borrowings 395.5 491.7
Repayments of borrowings (96.1) (51.2)
Proceeds from equity compensation plans
and other 4.7 (3.3)
--- ----
Net cash provided by financing
activities 304.1 437.2
----- -----
INCREASE IN CASH AND CASH EQUIVALENTS 278.1 458.7
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 639.7 222.4
----- -----
CASH AND CASH EQUIVALENTS, END OF
PERIOD $917.8 $681.1
====== ======
ROWAN COMPANIES, INC.
SUPPLEMENTAL DRILLING INFORMATION
Unaudited (dollars in millions, except where otherwise indicated)
THREE MONTHS ENDED
--------------------
September 30, 2010
------------------
$(a) Elims. $(b) % Revs.
--- ------ --- -------
DRILLING OPERATIONS:
Revenues $289.9 $289.9 100
Operating costs (excluding
items shown below) (142.6) $0.9 (141.7) (49)
Depreciation and amortization
expense (44.6) 1.6 (43.0) (15)
Selling, general and
administrative expenses (c) (21.6) (21.6) (7)
Gain (loss) on sale of property
and equipment (0.7) (0.7) (0)
---- ----
Income from operations $80.4 $2.5 $82.9 29
===== ==== ===
EBITDA (d) $125.7 $0.9 $126.6 44
====== ==== ====== ===
OFFSHORE RIG DAYS:
Operating 1,580
Available 2,208
-----
Utilization 72%
===
LAND RIG DAYS:
Operating 2,322
Available 2,760
-----
Utilization 84%
===
AVERAGE DAY RATES (in
thousands):
Gulf of Mexico rigs $126.2
Middle East rigs 131.2
North Sea rigs 194.9
All offshore rigs 147.3
Land rigs 21.0
THREE MONTHS ENDED
--------------------
June 30, 2010
-------------
$(a) Elims. $(b) % Revs.
--- ------ --- -------
DRILLING OPERATIONS:
Revenues $328.3 $328.3 100
Operating costs
(excluding items shown
below) (139.7) $0.7 (139.0) (42)
Depreciation and
amortization expense (43.3) 1.4 (41.9) (13)
Selling, general and
administrative expenses
(c) (23.4) (23.4) (7)
Gain (loss) on sale of
property and equipment - - -
--- ---
Income from operations $121.9 $2.1 $124.0 38
====== ==== ===
EBITDA (d) $165.2 $0.7 $165.9 51
====== ==== ====== ===
OFFSHORE RIG DAYS:
Operating 1,589
Available 2,128
-----
Utilization 75%
===
LAND RIG DAYS:
Operating 2,265
Available 2,912
-----
Utilization 78%
===
AVERAGE DAY RATES (in
thousands):
Gulf of Mexico rigs $137.2
Middle East rigs 142.7
North Sea rigs 269.3
All offshore rigs 174.5
Land rigs 19.8
THREE MONTHS ENDED
--------------------
September 30,
2009
--------------
$ % Revs.
--- -------
DRILLING OPERATIONS:
Revenues $258.4 100
Operating costs (excluding
items shown below) (121.3) (47)
Depreciation and amortization
expense (39.8) (15)
Selling, general and
administrative expenses (c) (16.3) (6)
Gain (loss) on sale of property
and equipment 0.1 0
---
Income from operations $81.1 31
===== ===
EBITDA (d) $120.8 47
====== ===
OFFSHORE RIG DAYS:
Operating 1,197
Available 2,024
-----
Utilization 59%
===
LAND RIG DAYS:
Operating 1,652
Available 2,944
-----
Utilization 56%
===
AVERAGE DAY RATES (in
thousands):
Gulf of Mexico rigs $137.9
Middle East rigs 161.4
North Sea rigs 209.2
All offshore rigs 182.5
Land rigs 22.5
(a) Amounts include effects of intercompany transactions between
drilling and manufacturing operations.
(b) Amounts exclude effects of intercompany transactions.
(c) Amounts include corporate SG&A costs that are allocated between
operating segments.
(d) EBITDA (earnings before interest, taxes, depreciation and
amortization) is a non-GAAP financial measure that we believe is
relevant to our stockholders. We measure EBITDA as operating income
plus depreciation and any loss on sale, less any gain on sale.
ROWAN COMPANIES, INC.
SUPPLEMENTAL MANUFACTURING INFORMATION
Unaudited (dollars in millions)
THREE MONTHS ENDED
--------------------
September 30, 2010
------------------
$(a) % Revs. Elims. $(b) % Revs.
--- ------- ------ --- -------
MANUFACTURING
OPERATIONS:
Revenues $197.4 100 $(49.4) $148.0 100
Operating costs
(excluding
items shown
below) (160.5) (81) 35.2 (125.3) (85)
Depreciation and
amortization
expense (4.3) (2) (4.3) (3)
Selling, general
and
administrative
expenses (c) (13.1) (7) (13.1) (9)
Loss on sale of
property and
equipment - - - -
--- ---
Income from
operations $19.5 10 $(14.2) $5.3 4
===== === ====== ==== ===
EBITDA (d) $23.8 12 $(14.2) $9.6 6
===== === ====== ==== ===
REVENUES:
Drilling
Products and
Systems $127.4 65 $(49.4) $78.0 53
Mining,
Forestry and
Steel Products 70.0 35 - 70.0 47
---- --- ----
Total $197.4 100 $(49.4) $148.0 100
====== === ====== ====== ===
MANUFACTURING
BACKLOG:
Drilling
Products and
Systems $332.8 $(132.7) $200.1
Mining,
Forestry and
Steel Products 66.8 - 66.8
---- --- ----
Total $399.6 $(132.7) $266.9
====== ======= ======
THREE MONTHS ENDED
--------------------
June 30, 2010
-------------
$(a) % Revs. Elims. $(b) % Revs.
--- ------- ------ --- -------
MANUFACTURING
OPERATIONS:
Revenues $214.2 100 $(52.4) $161.8 100
Operating costs
(excluding items
shown below) (175.3) (82) 37.2 (138.1) (85)
Depreciation and
amortization
expense (4.6) (2) (4.6) (3)
Selling, general
and
administrative
expenses (c) (12.7) (6) (12.7) (8)
Loss on sale of
property and
equipment - - - -
--- ---
Income from
operations $21.6 10 $(15.2) $6.4 4
===== === ====== ==== ===
EBITDA (d) $26.2 12 $(15.2) $11.0 7
===== === ====== ===== ===
REVENUES:
Drilling Products
and Systems $124.1 58 $(52.4) $71.7 44
Mining, Forestry
and Steel
Products 90.1 42 - 90.1 56
---- --- ----
Total $214.2 100 $(52.4) $161.8 100
====== === ====== ====== ===
MANUFACTURING
BACKLOG:
Drilling Products
and Systems $434.4 $(175.8) $258.6
Mining, Forestry
and Steel
Products 78.1 - 78.1
---- --- ----
Total $512.5 $(175.8) $336.7
====== ======= ======
THREE MONTHS ENDED
--------------------
September 30, 2009
------------------
$ % Revs.
--- -------
MANUFACTURING OPERATIONS:
Revenues $135.0 100
Operating costs (excluding items shown
below) (116.9) (87)
Depreciation and amortization expense (3.9) (3)
Selling, general and administrative
expenses (c) (7.8) (6)
Loss on sale of property and equipment (0.4) (0)
----
Income from operations $6.0 4
==== ===
EBITDA (d) $10.3 8
===== ===
REVENUES:
Drilling Products and Systems $93.4 69
Mining, Forestry and Steel Products 41.6 31
----
Total $135.0 100
====== ===
MANUFACTURING BACKLOG:
Drilling Products and Systems $404.5
Mining, Forestry and Steel Products 35.3
----
Total $439.8
======
(a) Amounts include effects of intercompany transactions between
manufacturing and drilling operations.
(b) Amounts exclude effects of intercompany transactions.
(c) Amounts include corporate SG&A costs that are allocated between
operating segments.
(d) EBITDA (earnings before interest, taxes, depreciation and
amortization) is a non-GAAP financial measure that we believe is
relevant to our stockholders. We measure EBITDA as operating income
plus depreciation and any loss on sale, less any gain on sale.
SOURCE Rowan Companies, Inc.