Diamond Offshore Announces First Quarter 2018 Results
Diamond Offshore Announces First Quarter 2018 Results
HOUSTON, April 30, 2018 /PRNewswire/ --
-- Net income of $19 million, or $0.14 per diluted share
-- Includes a non-cash benefit of $43 million, or $0.32 per diluted
share, related to tax reform clarification
-- Adjusted net loss of $(21) million, or $(0.16) per diluted share
Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the first quarter of 2018:
Three Months Ended
------------------
Thousands of
dollars, except
per share data March 31, 2018 December 31, 2017
---------------- -------------- -----------------
Total revenues $295,510 $346,208
Operating income
(loss) 512 (6,385)
Adjusted
operating
income 3,294 27,389
Net income
(loss) 19,321 (31,941)
Adjusted net
loss (21,345) (7,343)
Earnings (loss)
per diluted
share $0.14 $(0.23)
Adjusted loss
per diluted
share $(0.16) $(0.05)
"During the first quarter of 2018, Diamond recorded earnings per share of 14 cents," said Marc Edwards, President and Chief Executive Officer. "Despite the continuing challenges in the offshore drilling market, we were able to secure additional work for the Ocean Apex and the Ocean BlackRhino, and were awarded new work for the Ocean Endeavor. We continue to have strong interest from prospective clients for our industry leading fleet."
Diamond Offshore recently launched the industry's first cybernetic BOP service, Sim-Stack(TM), which allows the Company to further reduce subsea downtime and create additional efficiencies for our clients. Edwards continued, "This is another example of Diamond's thought leadership and innovation that enables additional differentiation of our 6(th) generation assets."
As of March 31, 2018, the Company's total contracted backlog was $2.2 billion, which represents 19 rig years of work.
CONFERENCE CALL
A conference call to discuss Diamond Offshore's earnings results has been scheduled for 7:30 a.m. CDT today. A live webcast of the call will be available online on the Company's website, www.diamondoffshore.com. Those interested in participating in the question and answer session should dial 844-492-6043 or 478-219-0839 for international callers. The conference ID number is 3058315. An online replay will also be available on www.diamondoffshore.com following the call.
ABOUT DIAMOND OFFSHORE
Diamond Offshore is a leader in offshore drilling, providing contract drilling services to the energy industry around the globe. Additional information and access to the Company's SEC filings are available at www.diamondoffshore.com. Diamond Offshore is owned 53% by Loews Corporation (NYSE: L).
FORWARD-LOOKING STATEMENTS
Statements contained in this press release or made during the above conference call that are not historical facts are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are inherently uncertain and subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those anticipated or expected by management of the Company. A discussion of certain of the important risk factors and other considerations that could materially impact these matters as well as the Company's overall business and financial performance can be found in the Company's reports filed with the Securities and Exchange Commission, and readers of this press release are urged to review those reports carefully when considering these forward-looking statements. Copies of these reports are available through the Company's website at www.diamondoffshore.com. These risk factors include, among others, risks associated with worldwide demand for drilling services, level of activity in the oil and gas industry, renewing or replacing expired or terminated contracts, contract cancellations and terminations, maintenance and realization of backlog, competition and industry fleet capacity, impairments and retirements, operating risks, litigation and disputes, changes in tax laws and rates, regulatory initiatives and compliance with governmental regulations, casualty losses, and various other factors, many of which are beyond the Company's control. Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
------------------
March 31, December 31, March 31,
2018 2017 2017
---- ---- ----
Revenues:
Contract drilling $287,926 $337,809 $363,557
Revenues related to reimbursable expenses 7,584 8,399 10,669
Total revenues 295,510 346,208 374,226
------- ------- -------
Operating expenses:
Contract drilling, excluding depreciation 184,689 204,152 203,523
Reimbursable expenses 7,470 8,256 10,478
Depreciation 81,825 86,203 93,229
General and administrative 18,513 20,206 17,483
Impairment of assets - 28,045 -
Restructuring and separation costs 3,011 14,146 -
Gain on disposition of assets (510) (8,415) (1,346)
Total operating expenses 294,998 352,593 323,367
------- ------- -------
Operating income (loss) 512 (6,385) 50,859
Other income (expense):
Interest income 1,637 1,126 175
Interest expense, net of amounts capitalized (28,318) (30,119) (27,596)
Foreign currency transaction loss 447 (611) 1,087
Other, net 580 908 (63)
--- --- ---
(Loss) income before income tax benefit (expense) (25,142) (35,081) 24,462
Income tax benefit (expense) 44,463 3,140 (923)
------ ----- ----
Net income (loss) $19,321 $(31,941) $23,539
======= ======== =======
Income (loss) per share $0.14 $(0.23) $0.17
===== ====== =====
Weighted-average shares outstanding:
Shares of common stock 137,294 137,228 137,173
Dilutive potential shares of common stock 201 - 77
--- --- ---
Total weighted-average shares outstanding 137,495 137,228 137,250
======= ======= =======
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31, December 31,
2018 2017
---- ----
ASSETS
Current assets:
Cash and cash equivalents $429,684 $376,037
Accounts receivable, net of allowance for bad debts 199,615 256,730
Prepaid expenses and other current assets 155,630 157,625
Assets held for sale 95,040 96,261
------ ------
Total current assets 879,969 886,653
Drilling and other property and equipment, net of accumulated
depreciation 5,221,709 5,261,641
Other assets 91,405 102,276
------ -------
Total assets $6,193,083 $6,250,570
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities $195,026 $223,288
Long-term debt 1,972,638 1,972,225
Deferred tax liability 135,745 167,299
Other liabilities 110,042 113,497
Stockholders' equity 3,779,632 3,774,261
--------- ---------
Total liabilities and stockholders' equity $6,193,083 $6,250,570
========== ==========
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three months ended
March 31,
---------
2018 2017
---- ----
Operating activities:
Net income $19,321 $23,539
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 81,825 93,229
Deferred tax provision (49,089) (5,988)
Other 13,624 17,367
Net changes in operating working capital 18,088 (29,471)
Net cash provided by operating activities 83,769 98,676
------ ------
Investing activities:
Capital expenditures (31,483) (29,487)
Proceeds from disposition of assets, net of disposal costs 1,427 2,097
Other - 11
Net cash used in investing activities (30,056) (27,379)
------- -------
Financing activities:
Net repayment of short-term borrowings - (104,200)
Other (66) (14)
Net cash used in financing activities (66) (104,214)
--- --------
Net change in cash and cash equivalents 53,647 (32,917)
Cash and cash equivalents, beginning of period 376,037 156,233
Cash and cash equivalents, end of period $429,684 $123,316
======== ========
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY
(Dayrate in thousands)
First Quarter Fourth Quarter First Quarter
2018 2017 2017
Average Utilization Operational Average Utilization Operational Average Utilization Operational
Dayrate (2) Efficiency Dayrate (2) Efficiency Dayrate (2) Efficiency
(1) (3) (1) (3) (1) (3)
--- --- --- --- --- ---
Floaters $351 52% 97.0% $366 49% 98.7% $366 47% 94.1%
Jack-ups -- -- -- $75 65% 100.0% $75 29% 99.9%
Fleet Total 97.0% 98.8% 94.3%
---- ---- ----
(1) Average dayrate is defined as contract
drilling revenue for all of the
specified rigs in our fleet per
revenue-earning day. A revenue-
earning day is defined as a 24-hour
period during which a rig earns a
dayrate after commencement of
operations and excludes mobilization,
demobilization and contract
preparation days.
(2) Utilization is calculated as the ratio
of total revenue-earning days divided
by the total calendar days in the
period for all specified rigs in our
fleet (including cold-stacked rigs).
Our current fleet includes four
floaters that are cold stacked.
(3) Operational efficiency is calculated as
the ratio of total revenue-earning
days divided by the sum of total
revenue-earning days plus the number
of days (or portions thereof)
associated with unanticipated
equipment downtime.
Non-GAAP Financial Measures (Unaudited)
To supplement the Company's unaudited condensed consolidated financial statements presented on a GAAP basis, this press release provides investors with adjusted operating income, adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures. Management believes that these measures provide meaningful information about the Company's performance by excluding certain charges that may not be indicative of the Company's ongoing operating results. This allows investors and others to better compare the company's financial results across previous and subsequent accounting periods and to those of peer companies and to better understand the long-term performance of the Company. Non-GAAP financial measures should be considered to be a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
In order to fully assess the financial operating results of the Company, management believes that the results of operations adjusted to exclude gains on the sale of rigs, restructuring and separation costs, the impairment charge recorded in the fourth quarter of 2017, as well as the related tax effects thereof and other discrete tax items, are appropriate measures of the continuing and normal operations of the Company. However, these measures should be considered in addition to, and not as a substitute for, or superior to, contract drilling revenue, contract drilling expense, operating income, cash flows from operations or other measures of financial performance prepared in accordance with GAAP.
Three Months Ended
------------------
March 31, December 31,
2018 2017
---- ----
Reconciliation of As Reported Operating Income (Loss) to
Adjusted Operating Income:
(In thousands)
As reported operating income (loss) $512 $(6,385)
Impairments and other charges:
Impairment of rigs(1) - 28,045
Restructuring and separation costs (2) 3,011 14,146
Gain on sale of rigs (3) (229) (8,417)
---- ------
Adjusted operating income $3,294 $27,389
====== =======
Reconciliation of As Reported Net Income (Loss) to Adjusted Net Loss:
(In thousands)
As reported net income (loss) $19,321 $(31,941)
Impairments and other charges:
Impairment of rigs(1) - 28,045
Restructuring and separation costs (2) 3,011 14,146
(Gain) loss on sale of rigs (3) (229) (8,417)
Tax effect of impairments and other charges:
Impairment of rigs (4) - (9,816)
Restructuring and separation costs (4) (274) (1,070)
Gain on sale of rigs (4) 146 556
Other discrete items (5) (43,320) 1,154
------- -----
Adjusted net loss $(21,345) $(7,343)
======== =======
Three Months Ended
------------------
March 31, December 31,
2018 2017
---- ----
Reconciliation of As Reported Income (Loss) per Diluted
Share to Adjusted Earnings per Diluted Share:
As reported income (loss) per diluted share $0.14 $(0.23)
Impairments and other charges:
Impairment of rigs(1) - 0.21
Restructuring and separation costs (2) 0.02 0.10
Gain on sale of rigs (3) - (0.06)
Tax effect of impairments and other charges:
Impairment of rigs (4) - (0.07)
Restructuring and separation costs (4) - (0.01)
Gain on sale of rigs (4) - -
Other discrete items (5) (0.32) 0.01
----- ----
Adjusted loss per diluted share $(0.16) $(0.05)
====== ======
(1) Represents the impairment loss
recognized during the fourth
quarter of 2017 related to the
write down of our jack-up rig.
(2) Represents restructuring and
separation costs recognized
associated with a plan to
restructure our world-wide
operations, including a
reduction in workforce at our
corporate facilities and
onshore bases, and costs
associated with the termination
of our Brazilian agency
agreement.
(3) Represents the aggregate gain
recognized during fourth
quarter of 2017 related to the
sale of five floaters and the
gain recognized in first
quarter of 2018 related to the
sale of one floater.
(4) Represents the income tax
effects of the aggregate
restructuring and separation
costs and gains on the sale of
rigs recognized during fourth
quarter of 2017 and first
quarter of 2018 and the
impairment loss recognized in
the fourth quarter of 2017.
The income tax effects have
been calculated on a discrete
tax basis, utilizing the
statutory tax rates for the
applicable tax jurisdictions.
We believe that this approach
provides investors and others
with useful information
regarding the actual tax impact
of these transactions when the
appropriate tax returns are
filed with the taxing
authorities.
(5) Represents the aggregate of
certain discrete income tax
adjustments recognized during
the fourth quarter of 2017 and
first quarter of 2018, related
to the recently enacted U.S.
tax reform legislation,
including the reversal of a
$43.3 million liability in the
first quarter of 2018 for an
uncertain tax position related
to the toll charge recognized
in the fourth quarter of 2017.
Contact:
Samir Ali
Vice President, Investor Relations & Corporate Development
(281) 647-4035
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SOURCE Diamond Offshore Drilling, Inc.
