EX-99.2 4 v192221_ex99-2.htm Unassociated Document
 
  
 
News Release

FOR IMMEDIATE RELEASE
May 4, 2010
 
Rowan Reports First Quarter 2010 Operating Results
 
HOUSTON, TEXAS – For the three months ended March 31, 2010, Rowan Companies, Inc. (“Rowan” or the “Company”) (NYSE: RDC) generated net income of $64.6 million or $0.56 per share, compared to $131.7 million or $1.16 per share in the first quarter of 2009.  Earnings for the current quarter were $93.3 million, or $0.81 per share excluding an inventory charge at the Company’s manufacturing subsidiary discussed below.  Revenues were $432.4 million in the first quarter of 2010, compared to $494.8 million in the first quarter of 2009.
 
The first quarter 2010 results included a $42.0 million pre-tax charge, or $0.25 per share after tax, for estimated losses associated with non-conforming and slow-moving inventory items in the Company’s Drilling Products and Systems manufacturing segment. The first quarter 2009 results included no such charges, but included gains on asset disposals of $4.7 million, or $0.02 per share.
 
Rowan’s drilling operations generated revenues of $331 million in the first quarter of 2010, down by 13% from the prior-year quarter but up by 30% from the fourth quarter of 2009, due primarily to changes in rig utilization.  The Company’s gross drilling margin was 59% of revenues in the first quarter of 2010, down from 62% in the prior-year quarter but up from 52% in the fourth quarter of 2009.  Income from drilling operations was $137.0 million in the first quarter of 2010, down by 27% from the prior-year quarter but up by 80% from the fourth quarter of 2009.
 
Rowan’s manufacturing operations generated external revenues of $101.4 million in the first quarter of 2010, down by 11% from the prior-year quarter.  The Company’s gross manufacturing margin was 17% of revenues in the first quarter of 2010, down from 21% in the prior-year quarter.  Excluding the charge discussed above, Income from manufacturing operations was $3.1 million in the first quarter of 2010, down by 72% from the prior-year quarter.
 
Matt Ralls, President and Chief Executive Officer, commented, “Rowan’s drilling operations experienced a strong first quarter, with good cost control and excellent uptime for our jack-up rigs under contract.  With the delivery next week of the first of our four EXL rigs under construction, half of our jack-up fleet will be high-spec rigs, which we define as rigs with hook-loads of two million pounds or more.  We are seeing strong interest by operators in several markets for rigs with this capability, and all of our high-spec rigs are currently contracted.
 
“Our new management team at LeTourneau has been going through a rigorous review of inventories at its Houston facility, and we have determined that a charge is warranted.  Notwithstanding this non-cash charge, we are optimistic about the future of LeTourneau as it continues to improve manufacturing processes and efficiencies.”
 
Rowan will conduct its earnings conference call on Tuesday, May 4, 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.
 
2800 Post Oak Blvd., Suite 5450,  Houston, Texas 77056
Tel: (713) 621-7800  Fax: (713) 960-7509
 
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.
 
Contact:
Suzanne M. McLeod
Director of Investor Relations
(713) 960-7517
smcleod@rowancompanies.com
 
-2-
 
ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED BALANCE SHEETS
  
Unaudited (In Millions)
  
             
             
   
MARCH 31,
    
DECEMBER 31,
  
   
2010
    
2009
  
             
ASSETS
            
             
Cash  and  cash  equivalents
   $ 522.1     $ 639.7  
Accounts  receivable
     420.2       343.6  
Inventories
     427.8       451.7  
Other  current  assets
     90.1       114.8  
     Total  current  assets
     1,460.2       1,549.8  
Property,  plant  and  equipment  -  net
     3,636.3       3,579.5  
Other  assets
     78.1       81.4  
     TOTAL
   $ 5,174.6     $ 5,210.7  
                 
                 
LIABILITIES  AND  STOCKHOLDERS'  EQUITY
                
                 
Current  maturities  of  long-term  debt
   $ 58.6     $ 64.9  
Accounts  payable
     105.4       124.6  
Other  current  liabilities
     303.6       378.8  
     Total  current  liabilities
     467.6       568.3  
Long-term  debt
     775.2       787.5  
Other  liabilities
     753.5       744.5  
Stockholders'  equity
     3,178.3       3,110.4  
     TOTAL
   $ 5,174.6     $ 5,210.7  
 
-3-
 
ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  
Unaudited (In Millions Except Per Share Amounts)
  
             
             
             
   
THREE MONTHS
  
   
ENDED MARCH 31
  
   
2010
    
2009
  
             
REVENUES
   $ 432.4     $ 494.8  
                 
COSTS  AND  EXPENSES:
                
Operations
     221.1       236.2  
Depreciation  and  amortization
     45.5       40.5  
Selling,  general  and  administrative
     25.8       24.6  
Gain  on  disposals  of  property  and  equipment
     (0.1 )     (4.7 )
Material  charge  for  manufacturing  inventories
     42.0       -  
Total
     334.3       296.6  
INCOME  FROM  OPERATIONS
     98.1       198.2  
Net  interest  and  other  income
     (4.0 )     1.4  
INCOME  BEFORE  INCOME  TAXES
     94.1       199.6  
Provision  for  income  taxes
     29.5       67.9  
NET  INCOME
   $ 64.6     $ 131.7  
                 
NET  INCOME  PER  DILUTED  SHARE
   $ 0.56     $ 1.16  
                 
AVERAGE  DILUTED  SHARES
     114.5       113.2  
 
-4-
 
ROWAN COMPANIES, INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  
Unaudited (In Millions)
  
             
             
   
THREE MONTHS
  
   
ENDED MARCH 31
  
   
2010
    
2009
  
CASH  PROVIDED  BY  (USED  IN):
            
   Operations:
            
      Net income
   $ 64.6     $ 131.7  
      Adjustments  to  reconcile  net  income  to  net
                
      cash  provided  by  operations:
                
         Depreciation  and  amortization
     45.5       40.5  
         Deferred  income  taxes
     4.2       25.0  
         Gain  on  disposals  of  assets
     (0.1 )     (4.7 )
         Other -  net
     (22.8 )     6.3  
      Net  changes  in  current  assets  and  liabilities
     (100.0 )     (120.7 )
      Net  changes  in  other  noncurrent  assets  and  liabilities
     (1.6 )     (0.8 )
   Net  cash  provided  by  (used  in)  operations
     (10.2 )     77.3  
                 
   Investing  activities:
                
      Property,  plant  and  equipment  additions
     (89.6 )     (93.6 )
      Proceeds  from  disposals  of  property,  plant  and  equipment
     0.3       5.3  
   Net  cash  used  in  investing  activities
     (89.3 )     (88.3 )
                 
   Financing  activities:
                
      Repayments  of  borrowings
     (18.7 )     (18.7 )
      Proceeds  from  equity  compensation  plans  and  other
     0.6       0.1  
   Net  cash  used  in  financing  activities
     (18.1 )     (18.6 )
                 
DECREASE  IN  CASH  AND  CASH  EQUIVALENTS
     (117.6 )     (29.6 )
CASH  AND  CASH  EQUIVALENTS,  BEGINNING  OF  PERIOD
     639.7       222.4  
CASH  AND  CASH  EQUIVALENTS,  END  OF  PERIOD
   $ 522.1     $ 192.8  
 
-5-
 
ROWAN  COMPANIES,  INC.
SUPPLEMENTAL  DRILLING  INFORMATION
Unaudited  (dollars  in  millions,  except  where  otherwise  indicated )
 
   
THREE  MONTHS  ENDED 
  
   
March 31, 2010
    
December 31, 2009
    
March 31, 2009 
  
   
$ (a)
    
Elims. 
    
$ (b)
    
% Revs.
    
$ (a)
    
Elims.
    
$ (b)
    
% Revs.
    
$
    
% Revs.
  
                                                             
DRILLING  OPERATIONS:
                                                            
Revenues
   $ 331.0           $ 331.0       100     $ 255.3           $ 255.3       100     $ 380.4       100  
Operating costs (excluding items shown below)
     (137.3 )   $ 0.8       (136.5 )     (41 )     (122.7 )   $ 1.0       (121.7 )     (48 )     (145.4 )     (38 )
Depreciation and amortization expense
     (41.5 )             (41.5 )     (13 )     (40.6 )             (40.6 )     (16 )     (36.8 )     (10 )
Selling, general and administrative expenses (c)
     (16.3 )             (16.3 )     (5 )     (18.5 )             (18.5 )     (7 )     (15.8 )     (4 )
Gain on sale of property and equipment
     0.3               0.3       0       1.5               1.5       1       4.7       1  
Income from operations
   $ 136.2     $ 0.8     $ 137.0       41     $ 75.0     $ 1.0     $ 76.0       30     $ 187.1       49  
EBITDA (d)
   $ 177.4     $ 0.8     $ 178.2       54     $ 114.1     $ 1.0     $ 115.1       45     $ 219.2       58  
                                                                                 
OFFSHORE  RIG  DAYS:
                                                                                
Operating
                     1,556                               1,277               1,841          
Available
                     2,070                               2,024               1,980          
Utilization
                     75 %                             63 %             93 %        
                                                                                 
LAND  RIG  DAYS:
                                                                                
Operating
                     2,044                               1,747               2,055          
Available
                     2,880                               2,944               2,766          
Utilization
                     71 %                             59 %             74 %        
                                                                                 
AVERAGE  DAY  RATES  (in  thousands):
                                                                                
Gulf  of  Mexico  rigs
                   $ 142.0                             $ 123.3             $ 155.5          
Middle  East  rigs
                     161.6                               164.2               150.1          
North  Sea  rigs
                     287.7                               195.9               279.8          
All  offshore  rigs
                     183.2                               167.7               173.6          
Land  rigs
                     20.4                               21.8               25.5          
 
  (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 less gain on sale.  
 
-6-
 
ROWAN  COMPANIES,  INC.
SUPPLEMENTAL  MANUFACTURING  INFORMATION
Unaudited  (dollars  in  millions)
 
   
THREE  MONTHS  ENDED
  
   
March 31, 2010
    
December 31, 2009
    
March 31, 2009
  
   
$ (a)
    
% Revs.
    
Elims.
    
$ (b)
    
% Revs.
    
$ (a)
    
% Revs.
    
Elims.
    
$ (b)
    
% Revs.
    
$
    
% Revs.
  
                                                                         
MANUFACTURING  OPERATIONS:
                                                                        
Revenues
   $ 147.1       100     $ (45.7 )   $ 101.4       100     $ 230.7       100     $ (86.2 )   $ 144.5       100     $ 114.4       100  
Operating costs (excluding items shown below)
     (118.8 )     (81 )     34.2       (84.6 )     (83 )     (168.9 )     (73 )     48.5       (120.4 )     (83 )     (90.8 )     (79 )
Depreciation and amortization expense
     (4.0 )     (3 )             (4.0 )     (4 )     (4.0 )     (2 )             (4.0 )     (3 )     (3.7 )     (3 )
Selling, general and administrative expenses (c)
     (9.5 )     (6 )             (9.5 )     (9 )     (10.9 )     (5 )             (10.9 )     (8 )     (8.8 )     (8 )
Loss on sale of property and equipment
     (0.2 )     (0 )             (0.2 )     (0 )     (0.1 )     (0 )             (0.1 )     (0 )     -       -  
Material charge for inventories
     (42.0 )     (29 )             (42.0 )     (41 )     -       -               -       -       -       -  
Income from operations
   $ (27.4 )     (19 )   $ (11.5 )   $ (38.9 )     (38 )   $ 46.8       20     $ (37.7 )   $ 9.1       6     $ 11.1       10  
EBITDA (d)
   $ 18.8       13     $ (11.5 )   $ 7.3       7     $ 50.9       22     $ (37.7 )   $ 13.2       9     $ 14.8       13  
                                                                                                 
                                                                                                 
REVENUES:
                                                                                                
Drilling  Products  and  Systems
   $ 96.0       65     $ (45.7 )   $ 50.3       50     $ 184.2       80     $ (86.2 )   $ 98.0       68     $ 71.1       62  
Mining,  Forestry  and  Steel  Products
     51.1       35       -       51.1       50       46.5       20       -       46.5       32       43.3       38  
Total
   $ 147.1       100     $ (45.7 )   $ 101.4       100     $ 230.7       100     $ (86.2 )   $ 144.5       100     $ 114.4       100  
                                                                                                 
                                                                                                 
MANUFACTURING  BACKLOG:
                                                                                                
Drilling  Products  and  Systems
   $ 521.1             $ (218.9 )   $ 302.2             $ 593.1             $ (261.6 )   $ 331.5             $ 545.9          
Mining,  Forestry  and  Steel  Products
     89.8               -       89.8               81.9               -       81.9               47.5          
Total
   $ 610.9             $ (218.9 )   $ 392.0             $ 675.0             $ (261.6 )   $ 413.4             $ 593.4          
 
  (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 less gain on sale.
 
-7-