Rowan Reports Second Quarter 2017 Results

Source Press Release
Company Rowan Companies plc  
Tags Financial & Operating Data
Date August 02, 2017

For the quarter ended June 30, 2017, Rowan Companies plc (" Rowan " or the " Company ") (NYSE: RDC) reported a net loss of $28.7 million, or $0.23 net loss per diluted share, compared to net income of $216.7 million, or $1.72 per diluted share, in the second quarter of 2016. The net loss for the current quarter included a $2.4 million (after tax), or $0.02 per share, gain on early extinguishment of $35.8 million of debt. The net income for the prior-year quarter included a $120.0 million (after tax), or $0.95 per share, increase to net income for the Rowan Relentless contract termination. The $120.0 million reflects the incremental revenue in excess of the Rowan Relentless drillship's day rate for the quarter ended June 30, 2016. Additionally, net income for the prior-year quarter included a $1.8 million (after tax), or $0.01 per share, gain on early extinguishment of debt.

Tom Burke, President and Chief Executive Officer, commented, "Amidst challenging market conditions, we are encouraged by recent contract awards for the Rowan jack-up fleet. We continue to execute safe, reliable and efficient operations with less than 1% downtime in the quarter. Our balance sheet remains solid and we believe positions us well in a slow industry recovery."

Rowan will conduct its earnings conference call on Wednesday, August 2, 2017, at 10:00 a.m. Central 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 may dial (877) 201-0168, or internationally (647) 788-4901. The conference ID is 20418128. You should dial-in approximately five to 10 minutes prior to the scheduled start time. Alternatively, to access the online simulcast and rebroadcast of the conference call, please visit Rowan's website at . You should connect to our website at least 15 minutes prior to the conference call to register, download and install any necessary software.

Rowan is a global provider of contract drilling services with a fleet of 29 mobile offshore drilling units, comprised of 25 jack-up rigs and four ultra-deepwater drillships. The Company's fleet operates worldwide, including the United States Gulf of Mexico, the United Kingdom and Norwegian sectors of the North Sea, the Middle East and Trinidad. The Company's Class A Ordinary Shares are traded on the New York Stock Exchange under the symbol "RDC." For more information on the Company, please visit .

Statements herein that are not historical facts are 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 business, financial and operating performance and prospects of the Company. These forward-looking statements are based on our current expectations and are subject to numerous risks, assumptions, trends and uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. Among the factors that could cause actual results to differ materially include oil and natural gas prices and the impact of the economic climate; changes in the offshore drilling market, including fluctuations in supply and demand; variable levels of drilling activity and expenditures in the energy industry; changes in day rates; ability to secure future drilling contracts; cancellation, early termination or renegotiation by our customers of drilling contracts; customer credit and risk of customer bankruptcy; risks associated with fixed cost drilling operations; unplanned downtime; risks related to our joint venture with Saudi Aramco; cost overruns or delays in transportation of drilling units; cost overruns or delays in maintenance, repairs, or other rig projects; operating hazards and equipment failure; risks of collision and damage; casualty losses and limitations on insurance coverage; weather conditions in the Company's operating areas; increasing costs of compliance with regulations; changes in tax laws and interpretations by taxing authorities; hostilities, terrorism, and piracy; impairments; cyber incidents; the outcomes of disputes, including tax disputes and legal proceedings; and other risks disclosed in the Company's filings with the U.S. Securities and Exchange Commission. Each forward-looking statement speaks only as of the date hereof, and the Company expressly disclaims any obligation to update or revise any forward-looking statements, except as required by law.

ROWAN COMPANIES PLC 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
(In millions, except per share amounts) 
(Unaudited) 
 
                               
  Three months ended June 30,    Six months ended June 30, 
  2017    2016    2017    2016 
REVENUES  320.2      611.8      694.5      1,112.0   
               
COSTS AND EXPENSES:               
Direct operating costs (excluding items below)  167.5      207.5      337.5      412.3   
Depreciation and amortization  101.5      100.1      200.6      199.0   
Selling, general and administrative  22.0      26.1      46.0      53.0   
Loss on disposals of property and equipment  3.1      1.9      6.5      4.1   
Total costs and expenses  294.1      335.6      590.6      668.4   
               
INCOME FROM OPERATIONS  26.1      276.2      103.9      443.6   
               
OTHER INCOME (EXPENSE):               
Interest expense  (38.9)      (38.3)      (78.5)      (77.2)   
Interest income  3.2      0.5      5.2      0.9   
Gain on extinguishment of debt  2.4      1.8      2.2      2.4   
Other - net  (0.1)      (0.7)      (0.1)      (3.3)   
Total other (expense), net  (33.4)      (36.7)      (71.2)      (77.2)   
               
INCOME (LOSS) BEFORE INCOME TAXES  (7.3)      239.5      32.7      366.4   
Provision for income taxes  21.4      22.8      51.1      26.9   
               
NET INCOME (LOSS)  (28.7)      216.7      (18.4)      339.5   
               
               
NET INCOME (LOSS) PER SHARE - DILUTED  (0.23)      1.72      (0.15)      2.70   
               
WEIGHTED AVERAGE SHARES - BASIC  126.3      125.4      126.0      125.2   
               
WEIGHTED AVERAGE SHARES - DILUTED  126.3      126.3      126.0      125.9   
ROWAN COMPANIES PLC 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(In millions) 
(Unaudited) 
 
               
  June 30, 2017    December 31, 
2016 
ASSETS       
       
CURRENT ASSETS:       
Cash and cash equivalents  1,145.2      1,255.5   
Receivables - trade and other  310.1      301.3   
Prepaid expenses and other current assets  29.5      23.5   
Total current assets  1,484.8      1,580.3   
Property and equipment - net  6,901.3      7,060.0   
Investment in unconsolidated subsidiary  25.0      —   
Other assets  45.0      35.3   
  8,456.1      8,675.6   
       
LIABILITIES AND SHAREHOLDERS' EQUITY       
       
CURRENT LIABILITIES:       
Current portion of long-term debt  —      126.8   
Accounts payable - trade  87.8      94.3   
Deferred revenues  74.5      103.9   
Accrued liabilities  134.9      158.8   
Total current liabilities  297.2      483.8   
       
Long-term debt, less current portion  2,516.6      2,553.4   
Other liabilities  309.8      338.8   
Deferred income taxes - net  22.4      185.7   
Shareholders' equity  5,310.1      5,113.9   
  8,456.1      8,675.6   
ROWAN COMPANIES PLC 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In millions) 
(Unaudited) 
 
               
  Six months ended June 30, 
  2017    2016 
CASH FLOWS FROM OPERATING ACTIVITIES:       
Net income (loss)  (18.4)      339.5   
Adjustments to reconcile net income (loss) to net cash provided by operations:       
Depreciation and amortization  200.6      199.0   
Deferred income taxes  36.4      (5.2)   
Provision for pension and other postretirement benefits  5.1      9.5   
Share-based compensation expense  12.2      17.5   
Loss on disposals of property and equipment  6.5      4.1   
Contingent payment derivative  0.1      (6.4)   
Other  1.3      0.4   
Net changes in current assets and liabilities  (26.5)      (135.6)   
Other postretirement benefit claims paid  (1.8)      (4.9)   
Contributions to pension plans  (12.0)      (8.2)   
Deferred revenues  (39.9)      (9.4)   
Net changes in other noncurrent assets and liabilities  (25.1)      (7.1)   
Net cash provided by operating activities  138.5      393.2   
       
CASH FLOWS FROM INVESTING ACTIVITIES:       
Capital expenditures  (57.3)      (64.4)   
Investment in unconsolidated subsidiary  (25.0)      —   
Proceeds from disposals of property and equipment  1.3      1.1   
Net cash used in investing activities  (81.0)      (63.3)   
       
CASH FLOWS FROM FINANCING ACTIVITIES:       
Reductions of long-term debt  (163.4)      (47.9)   
Shares repurchased for tax withholdings on vesting of restricted share units  (4.4)      (4.8)   
Net cash used in financing activities  (167.8)      (52.7)   
       
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  (110.3)      277.2   
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD  1,255.5      484.2   
CASH AND CASH EQUIVALENTS, END OF PERIOD  1,145.2      761.4   
ROWAN COMPANIES PLC 
SUPPLEMENTAL OPERATING SEGMENT INFORMATION 
(In millions) 
(Unaudited) 
 
                                 
  Three months ended June 30,    Six months ended June 30,   
  2017    2016    2017    2016   
Deepwater:                 
Revenues  122.7      341.4      283.4      563.9     
Operating expenses:                 
Direct operating costs (excluding items below)  38.7      56.0      83.3      123.0     
Depreciation and amortization  28.4      29.9      56.7      57.2     
Other operating items  —      —      —      0.3     
Income from Operations  55.6      255.5      143.4      383.4     
                 
Jack-ups:                 
Revenues  197.5      270.4      411.1      548.1     
Operating expenses:                 
Direct operating costs (excluding items below)  128.8      151.5      254.2      289.3     
Depreciation and amortization  72.4      71.1      142.5      139.5     
Other operating items  3.2      1.8      6.6      3.7     
Income (loss) from Operations  (6.9)      46.0      7.8      115.6     
                 
Unallocated costs and other:                 
Operating expenses:                 
Depreciation and amortization  0.7      (0.9)      1.4      2.3     
Selling, general and administrative  22.0      26.1      46.0      53.0     
Other operating items  (0.1)      0.1      (0.1)      0.1     
Loss from Operations  (22.6)      (25.3)      (47.3)      (55.4)     
                 
Consolidated:                 
Revenues  320.2      611.8      694.5      1,112.0     
Operating expenses:                 
Direct operating costs (excluding items below)  167.5      207.5      337.5      412.3     
Depreciation and amortization  101.5      100.1      200.6      199.0     
Selling, general and administrative  22.0      26.1      46.0      53.0     
Other operating items  3.1      1.9      6.5      4.1     
Income from Operations  26.1      276.2      103.9      443.6     
ROWAN COMPANIES PLC 
SUPPLEMENTAL OPERATING INFORMATION 
(Unaudited) 
 
                                       
  Three months ended    Six months ended 
  June 30,    March 31    June 30,    June 30, 
  2017    2017    2016    2017    2016 
RIG DAYS (1)                   
Deepwater:                   
Operating  204      270      325      474      686   
Available  364      360      364      724      728   
                   
Jack-up:                   
Operating  1,503      1,547      1,605      3,050      3,101   
Available  2,093      2,071      2,184      4,164      4,368   
                   
Total:                   
Operating  1,707      1,817      1,930      3,524      3,787   
Available  2,457      2,431      2,548      4,888      5,096   
                   
UTILIZATION (1)                   
Deepwater  56    75    89    65    94 
Jack-up  72    75    73    73    71 
Total  69    75    76    72    74 
                   
AVERAGE DAY RATES (2) (in thousands)                   
Deepwater (3)  599.6      592.1      607.0      595.3      609.8   
Jack-up  129.9      135.7      164.9      132.8      173.3   
Total (3)  186.0      203.5      239.4      195.0      252.4   
                   
REBILLABLES (4) (in millions)                   
Deepwater  0.4      0.8      1.5      1.2      2.7   
Jack-up  2.1      3.4      5.0      5.5      8.4   
Total  2.5      4.2      6.5      6.7      11.1   
               
(1) Available rig days and utilization exclude cold-stacked days. 
(2) Average day rates exclude other revenue, which is primarily revenue received for contract reimbursable costs. 
(3) Average day rate for the three and six months ended June 30, 2016 includes operating days for the drillship Rowan Relentless up to the contract termination which was 52 days and 143 days for the three and six months ended June 30, 2016, respectively. 
(4) Rebillable operating costs equally offset with rebillable revenue. 
ROWAN COMPANIES PLC 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES 
(In millions, except per share amounts) 
(Unaudited) 
 
                                                                 
    Three months ended June 30, 2017    Three months ended June 30, 2016 
    Pretax    Tax    Net    Diluted 
EPS* 
  Pretax    Tax    Net    Diluted 
EPS* 
GAAP NET INCOME (LOSS)    (7.3)      (21.4)      (28.7)      (0.23)      239.5      (22.8)      216.7      1.72   
Gain on extinguishment of debt    (2.4)      —      (2.4)      (0.02)      (1.8)      —      (1.8)      (0.01)   
Customer contract termination settlement    —      —      —      —      (120.0)      —      (120.0)      (0.95)   
NON-GAAP NET INCOME (LOSS)    (9.7)      (21.4)      (31.1)      (0.25)      117.7      (22.8)      94.9      0.75   
                                 
    Six months ended June 30, 2017    Six months ended June 30, 2016 
    Pretax    Tax    Net    Diluted 
EPS* 
  Pretax    Tax    Net    Diluted 
EPS* 
GAAP NET INCOME (LOSS)    32.7      (51.1)      (18.4)      (0.15)      366.4      (26.9)      339.5      2.70   
Gain on extinguishment of debt    (2.2)      —      (2.2)      (0.02)      (2.4)      —      (2.4)      (0.02)   
Customer contract termination settlement    —      —      —      —      (120.0)      —      (120.0)      (0.95)   
NON-GAAP NET INCOME (LOSS)    30.5      (51.1)      (20.6)      (0.16)      244.0      (26.9)      217.1      1.73   
* Per share amounts may not sum due to rounding.                                 
                                 
    Three months ended    Six months ended                 
    June 30,    June 30,                 
    2017    2016    2017    2016                 
ADJUSTED EARNINGS BEFORE INTEREST, TAXES AND DEPRECIATION (EBITDA):                                 
GAAP NET INCOME (LOSS)    (28.7)      216.7      (18.4)      339.5                   
Depreciation and amortization    101.5      100.1      200.6      199.0                   
Interest (income) expense and other, net    35.8      38.5      73.4      79.6                   
Income tax expense    21.4      22.8      51.1      26.9                   
Gain on extinguishment of debt    (2.4)      (1.8)      (2.2)      (2.4)                   
Loss on disposals of property and equipment    3.1      1.9      6.5      4.1                   
Customer contract termination settlement    —      (120.0)      —      (120.0)                   
NON-GAAP ADJUSTED EBITDA    130.7      258.2      311.0      526.7                           
                                 
Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd