Rowan Reports Second Quarter 2018 Results

HOUSTON, Aug. 1, 2018 /PRNewswire/ -- For the quarter ended June 30, 2018, Rowan Companies plc ("Rowan" or the "Company") (NYSE: RDC) reported a net loss of $76.7 million, or $0.60 net loss per diluted share, compared to a net loss of $28.7 million, or $0.23 net loss per diluted share, in the second quarter of 2017.

Tom Burke, President and Chief Executive Officer, commented, "While overall market conditions for offshore drilling remain challenging, demand for rigs has improved year to date. Since the beginning of the second quarter 2018, Rowan has been awarded contracts for both drillships and jack-up rigs. Our recent drillship awards speak to our deepwater capabilities and asset quality. We also commenced operations on key work programs in the North Sea and Trinidad with our ultra-harsh environment jack-up rigs, where we believe we are well-positioned. Our confidence level in adding further backlog during the second half of 2018 for both our drillships and jack-ups continues to grow, based on tendering activity and improving market fundamentals. In the Middle East, our joint venture, ARO Drilling, continues to demonstrate the significant benefits of our partnership with Saudi Aramco, securing eleven new three year drilling contracts, of which two are for Rowan rigs to be sold to the joint venture later this year. Of the remaining nine, which we expect to lease to the joint venture, four are for rigs that were idle and not previously operating in Saudi Arabia and the remaining five are for rigs that are currently operating in Saudi Arabia and start their new contracts when their existing contracts conclude."

Rowan will conduct its earnings conference call on Wednesday, August 1, 2018, 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 (833) 241-4252, or internationally (647) 689-4203. The conference ID is 5579017. 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 www.rowan.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 is a global provider of offshore contract drilling services to the oil and gas industry with a fleet of 27 mobile offshore drilling units, comprised of 23 self-elevating 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. Additionally, the Company is a 50/50 partner in a joint venture with Saudi Aramco, named ARO Drilling, that owns a fleet of five self-elevating jack-up rigs that are contracted in the Arabian Gulf. Rowan'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 www.rowan.com.

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, including the timing and amount of future distributions from the joint venture or contributions to the joint venture; 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.

Non-GAAP Measures
We report our financial results in accordance with generally accepted accounting principles ("GAAP") in the United States. However, in our earnings release and during our earnings calls we may reference company information that does not conform to GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Management believes that an analysis of this data is meaningful to investors because it provides insight with respect to ongoing operating results of the Company and allows investors to better evaluate the financial results of the Company. However, these measures should not be viewed as an alternative to or substitute for GAAP measures of performance, and these non-GAAP measures may not be consistent with previously published Company reports on Forms 10-K, 10-Q and 8-K. Non-GAAP measures we may reference have been reconciled to the nearest GAAP measure in the tables entitled Reconciliation of GAAP to Non-GAAP Financial Measures below.

                                                                 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,
                                ---------------------------

                                             2018                   2017                              2018      2017
                                             ----                   ----                              ----      ----

    REVENUE                                          $241.3                                        $320.2               $452.5           $694.5


    COSTS AND EXPENSES:

    Direct operating costs
     (excluding items below)                176.3                  168.8                             333.7     340.1

    Depreciation and
     amortization                            97.4                  101.5                             195.3     200.6

    Selling, general and
     administrative                          25.2                   22.2                              50.8      46.4

    Loss on disposals of
     property and equipment                   2.2                    3.1                               3.5       6.5
                                              ---                    ---

    Total costs and expenses                301.1                  295.6                             583.3     593.6
                                            -----                  -----                             -----     -----


    Equity in earnings of
     unconsolidated subsidiary                1.6                      -                              0.3         -


    INCOME (LOSS) FROM
     OPERATIONS                            (58.2)                  24.6                           (130.5)    100.9


    OTHER INCOME (EXPENSE):

    Interest expense                       (38.9)                (38.9)                           (77.4)   (78.5)

    Interest income                           7.7                    3.2                              14.6       5.2

    Gain on extinguishment of
     debt                                       -                   2.4                                 -      2.2

    Other - net                               8.8                    1.4                               6.6       2.9

    Total other (expense) - net            (22.4)                (31.9)                           (56.2)   (68.2)
                                            -----                  -----                             -----     -----


    INCOME (LOSS) BEFORE INCOME
     TAXES                                 (80.6)                 (7.3)                          (186.7)     32.7

    Provision (benefit) for
     income taxes                           (3.9)                  21.4                               2.3      51.1
                                             ----                   ----                               ---      ----


    NET LOSS                                        $(76.7)                                      $(28.7)            $(189.0)         $(18.4)
                                                     ======                                        ======              =======           ======



    NET LOSS PER SHARE -
     DILUTED                                        $(0.60)                                      $(0.23)             $(1.49)         $(0.15)
                                                     ======                                        ======               ======           ======


    WEIGHTED AVERAGE SHARES -
     BASIC AND DILUTED                      127.0                  126.3                                     $126.8            $126.0
                                            =====                  =====                                     ======            ======

                                   ROWAN COMPANIES PLC

                          CONDENSED CONSOLIDATED BALANCE SHEETS

                                      (In millions)

                                       (Unaudited)


                                               June 30, 2018            December 31,
                                                                              2017
                                                                                ----

                         ASSETS


    CURRENT ASSETS:

    Cash and
     cash
     equivalents                                               $1,132.7                      $1,332.1

    Receivables
     -trade and
     other                                             238.1                           212.8

    Prepaid
     expenses
     and other
     current
     assets                                             15.1                            15.5
                                                        ----                            ----

    Total
     current
     assets                                          1,385.9                         1,560.4

    Property
     and
     equipment
     -net                                            6,498.0                         6,552.7

    Long-term
     note
     receivable
     from
     unconsolidated
     subsidiary                                        269.6                           270.2

    Investment
     in
     unconsolidated
     subsidiary                                         31.2                            30.9

    Other
     assets                                             46.2                            44.1
                                                        ----                            ----

                                                               $8,230.9                      $8,458.3
                                                               ========                      ========


                                          LIABILITIES AND
                                     SHAREHOLDERS' EQUITY


    CURRENT LIABILITIES:

    Accounts
     payable -
     trade                                                        $89.5                         $97.2

    Deferred
     revenue                                             6.8                             1.1

    Accrued
     liabilities                                       131.3                           159.1
                                                       -----                           -----

    Total
     current
     liabilities                                       227.6                           257.4


    Long-term
     debt                                            2,510.6                         2,510.3

    Other
     liabilities                                       251.9                           293.6

    Deferred
     income
     taxes -
     net                                                11.1                            10.9

     Shareholders'
     equity                                          5,229.7                         5,386.1
                                                     -------                         -------

                                                               $8,230.9                      $8,458.3
                                                               ========                      ========

                                           ROWAN COMPANIES PLC

                             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              (In millions)

                                               (Unaudited)


                                                              Six months ended June 30,
                                                            -------------------------

                                                               2018                     2017
                                                               ----                     ----

    CASH FLOWS FROM OPERATING ACTIVITIES:

    Net loss                                                           $(189.0)              $(18.4)

    Adjustments to reconcile net loss to
     net cash provided by (used in)
     operating activities:

    Depreciation and
     amortization                                             195.3                    200.6

    Equity in earnings of
     unconsolidated
     subsidiary                                               (0.3)                       -

    Deferred income taxes                                     (4.4)                    36.4

    Provision for pension
     and other
     postretirement
     benefits                                                 (4.6)                     5.1

    Share-based
     compensation expense                                      11.0                     12.2

    Loss on disposals of
     property and
     equipment                                                  3.5                      6.5

    Other                                                       6.5                      1.4

    Net changes in
     current assets and
     liabilities                                             (46.9)                  (26.5)

    Other postretirement
     benefit claims paid                                      (1.0)                   (1.8)

    Contributions to
     pension plans                                           (11.2)                  (12.0)

    Deferred revenue                                            5.4                   (39.9)

    Net changes in other
     noncurrent assets
     and liabilities                                         (10.2)                  (25.1)
                                                              -----                    -----

    Net cash provided by
     (used in) operating
     activities                                              (45.9)                   138.5
                                                              -----                    -----


    CASH FLOWS FROM INVESTING ACTIVITIES:

    Capital expenditures                                     (76.9)                  (57.3)

    Purchase of rigs                                         (70.8)                       -

    Investment in
     unconsolidated
     subsidiary                                                   -                  (25.0)

    Repayments of note
     receivable from
     unconsolidated
     subsidiary                                                 1.7                        -

    Proceeds from
     disposals of
     property and
     equipment                                                  2.0                      1.3
                                                                ---                      ---

    Net cash used in
     investing activities                                   (144.0)                  (81.0)
                                                             ------                    -----


    CASH FLOWS FROM FINANCING ACTIVITIES:

    Reductions of long-
     term debt                                                    -                 (163.4)

    Debt issue costs                                          (6.0)                       -

    Shares repurchased
     for tax withholdings
     on vesting of
     restricted share
     units                                                    (3.5)                   (4.4)
                                                               ----                     ----

    Net cash used in
     financing activities                                     (9.5)                 (167.8)
                                                               ----                   ------


    DECREASE IN CASH AND
     CASH EQUIVALENTS                                       (199.4)                 (110.3)

    CASH AND CASH
     EQUIVALENTS,
     BEGINNING OF PERIOD                                    1,332.1                  1,255.5
                                                            -------                  -------

    CASH AND CASH
     EQUIVALENTS, END OF
     PERIOD                                                            $1,132.7              $1,145.2
                                                                       ========              ========

                                                                                                                             ROWAN COMPANIES PLC

                                                                                                                  SUPPLEMENTAL OPERATING SEGMENT INFORMATION

                                                                                                                                (In millions)

                                                                                                                                 (Unaudited)



                                                       Three months ended June 30,
                                                       ---------------------------

                           Deepwater        Jack-ups        ARO                   Unallocated                Reportable                 Eliminations         Consolidated
                                                                     and other                   segments                      and
                                                                                                   total                  adjustments


    2018

    Revenue                           $65.8                  $166.6                                    $70.8                                       $8.9                             $312.1        $(70.8)      $241.3

    Operating expenses:

    Direct operating costs
     (excluding items
     below)                     40.8             135.5          35.9                           -                     212.2                        (35.9)                 176.3

    Depreciation and
     amortization               27.0              69.9          16.8                         0.5                      114.2                        (16.8)                  97.4

    Selling, general and
     administrative                -                -          6.8                        25.2                       32.0                         (6.8)                  25.2

    Other operating items
     -expense                      -              2.2           0.9                           -                       3.1                         (0.9)                   2.2

    Equity in earnings of
     unconsolidated
     subsidiary                    -                -            -                          -                         -                          1.6                    1.6
                                 ---              ---          ---                        ---                       ---                          ---                    ---

    Income (loss) from
     operations                      $(2.0)                $(41.0)                                   $10.4                                    $(16.8)                           $(49.4)        $(8.8)     $(58.2)
                                      =====                  ======                                    =====                                     ======                             ======          =====       ======


    2017 (1)

    Revenue                          $122.7                  $197.5                           $            -                          $              -                            $320.2    $         -      $320.2

    Operating expenses:

    Direct operating costs
     (excluding items
     below)                     39.0             129.8             -                          -                     168.8                             -                 168.8

    Depreciation and
     amortization               28.4              72.4             -                        0.7                      101.5                             -                 101.5

    Selling, general and
     administrative                -                -            -                       22.2                       22.2                             -                  22.2

    Other operating items
     -(income) expense             -              3.2             -                      (0.1)                       3.1                             -                   3.1

    Income (loss) from
     operations                       $55.3                  $(7.9)                          $            -                                   $(22.8)                             $24.6    $         -       $24.6
                                      =====                   =====                         ===          ===                                    ======                              =====  ===       ===       =====

    (1) ARO commenced operations October 17, 2017.

                                                                                                                               ROWAN COMPANIES PLC

                                                                                                                   SUPPLEMENTAL OPERATING SEGMENT INFORMATION

                                                                                                                                  (In millions)

                                                                                                                                   (Unaudited)


                                                         Six months ended June 30,
                                                       -------------------------

                           Deepwater        Jack-ups       ARO                   Unallocated                Reportable                 Eliminations           Consolidated
                                                                    and other                   segments                     and
                                                                                                  total                  adjustments


    2018

    Revenue                          $117.9                 $316.7                                   $129.1                                      $17.9                                $581.6        $(129.1)       $452.5

    Operating expenses:

    Direct operating costs
     (excluding items
     below)                     69.8             263.9         69.3                           -                     403.0                        (69.3)                   333.7

    Depreciation and
     amortization               53.9             140.2         33.4                         1.2                      228.7                        (33.4)                   195.3

    Selling, general and
     administrative                -                -        13.2                        50.8                       64.0                        (13.2)                    50.8

    Other operating items
     -expense                      -              3.5          1.0                           -                       4.5                         (1.0)                     3.5

    Equity in earnings of
     unconsolidated
     subsidiary                    -                -           -                          -                         -                          0.3                      0.3
                                 ---              ---         ---                        ---                       ---                          ---                      ---

    Income (loss) from
     operations                      $(5.8)               $(90.9)                                   $12.2                                    $(34.1)                             $(118.6)        $(11.9)     $(130.5)
                                      =====                 ======                                    =====                                     ======                               =======          ======       =======


    2017 (1)

    Revenue                          $283.4                 $411.1                           $            -                          $              -                               $694.5    $          -       $694.5

    Operating expenses:

    Direct operating costs
     (excluding items
     below)                     83.9             256.2            -                          -                     340.1                             -                   340.1

    Depreciation and
     amortization               56.7             142.5            -                        1.4                      200.6                             -                   200.6

    Selling, general and
     administrative                -                -           -                       46.4                       46.4                             -                    46.4

    Other operating items
     -(income) expense             -              6.6            -                      (0.1)                       6.5                             -                     6.5
                                 ---              ---          ---                       ----                        ---                           ---                     ---

    Income (loss) from
     operations                      $142.8                   $5.8                           $            -                                   $(47.7)                               $100.9    $          -       $100.9
                                     ======                   ====                         ===          ===                                    ======                                ======  ===        ===       ======

    (1) ARO commenced operations October 17, 2017.

                                                                                                 ROWAN COMPANIES PLC

                                                                                         SUPPLEMENTAL OPERATING INFORMATION

                                                                                                     (Unaudited)



                                                          Three months ended                                           Six months ended
                                                          ------------------

                                         June 30,         March 31,             June 30,                         June 30,


                                              2018               2018                  2017                    2018                    2017
                                              ----               ----                  ----                    ----                    ----

    RIG DAYS (1)

    Deepwater:

    Revenue-producing                           70                           90                                204                              160     474

    Available                                  364                          360                                364                              724     724


    Jack-ups:

    Revenue-producing (2)                    1,173                          949                              1,503                            2,122   3,050

    Available (2)                            1,729                        1,710                              2,093                            3,439   4,164


    Total:

    Revenue-producing (2)                    1,243                        1,039                              1,707                            2,282   3,524

    Available (2)                            2,093                        2,070                              2,457                            4,163   4,888


    UTILIZATION (1)

    Deepwater                                  19%                         25%                               56%                             22%    65%

    Jack-ups (2)                               68%                         56%                               72%                             62%    73%

    Total (2)                                  59%                         50%                               69%                             55%    72%


    AVERAGE DAY RATES (3) (in thousands)

    Deepwater (4)                                  $929.0                                     $574.6                                        $599.6          $729.6 $595.3

    Jack-ups (2)                                   $131.4                                     $138.9                                        $129.9          $134.8 $132.8

    Total (2) (4)                                  $176.3                                     $176.7                                        $186.0          $176.5 $195.0


    REBILLABLES (5) (in millions)

    Deepwater                                        $0.8                                       $0.4                                          $0.5            $1.2   $1.3

    Jack-ups (2) (6)                          11.6                         16.8                                2.1                             28.4     5.5
                                              ----                                                            ---                             ----     ---

    Total (2) (6)                                   $12.4                                      $17.2                                          $2.6           $29.6   $6.8
                                                    =====                                      =====                                          ====           =====   ====

    (1)              Available rig days and
                     utilization exclude cold-
                     stacked days.

    (2)              All revenue and performance
                     metrics exclude the results from
                     rigs owned by ARO beginning on
                     October 17, 2017, the date the
                     rigs were sold to ARO.

    (3)              Average day rates exclude other
                     revenue, which is revenue
                     received for rebillables,
                     secondment, transition services
                     and other miscellaneous.

    (4)              For the three and six months
                     ended June 30, 2018, revenue for
                     this calculation includes $27.8
                     million related to the Anadarko
                     early contract termination fee
                     to which there are no associated
                     revenue-producing days.

    (5)              Rebillable operating costs
                     equally offset with rebillable
                     revenue.

    (6)              Includes secondment revenue from
                     ARO.

                                                        ROWAN COMPANIES PLC

                                       RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

                                              (In millions, except per share amounts)

                                                            (Unaudited)


                                                                                             Three months ended         Six months ended

                                                                                                  June 30,                  June 30,
                                                                                                  --------                  --------

                                                                                                           2018                      2017        2018              2017
                                                                                                           ----                      ----        ----              ----

    ADJUSTED EARNINGS BEFORE INTEREST,
     TAXES, DEPRECIATION AND
     AMORTIZATION (EBITDA):

    GAAP NET LOSS                                                                                               $(76.7)                               $(28.7)           $(189.0)    $(18.4)

    Depreciation and amortization                                                                          97.4                            101.5                 195.3        200.6

    Equity in earnings of
     unconsolidated subsidiary                                                                            (1.6)                               -                (0.3)            -

    Interest (income) expense and
     other, net                                                                                            22.4                             34.3                  56.2         70.4

    Income tax expense (benefit)                                                                          (3.9)                            21.4                   2.3         51.1

    Gain on extinguishment of debt                                                                            -                           (2.4)                     -       (2.2)

    Loss on disposals of property and
     equipment                                                                                              2.2                              3.1                   3.5          6.5

    NON-GAAP ADJUSTED EBITDA                                                                                      $39.8                                 $129.2               $68.0      $308.0
                                                                                                                  =====                                 ======               =====      ======

                                                         ARO DRILLING

                                              SUPPLEMENTAL FINANCIAL INFORMATION

                                                         (In millions)

                                                          (Unaudited)


                                                   June 30, 2018                   December 31,
                                                                                           2017
                                                                                             ----

    Current assets                                                       $139.1                                 $108.6

    Non-current assets                                       447.9                                  459.7
                                                             -----                                  -----

    Total assets                                                         $587.0                                 $568.3
                                                                         ======                                 ======


    Current liabilities                                                   $49.8                                  $29.2

    Non-current liabilities                                  542.6                                  545.1

    Total liabilities                                                    $592.4                                 $574.3
                                                                         ======                                 ======



                                                Three months ended               Six months ended
                                                   June 30, 2018                   June 30, 2018
                                                   -------------                   -------------

    Revenue                                                               $70.8                           129.1

    Direct operating costs
     (excluding items below)                                  35.9                                   69.3

    Depreciation and
     amortization                                             16.8                                   33.4

    Selling, general and
     administrative                                            6.8                                   13.2

    Loss on disposals of
     property and equipment                                    0.9                                    1.0
                                                               ---                                    ---

    Income from operations                                    10.4                                   12.2

    Interest expense                                         (5.6)                                (11.2)

    Provision for income taxes                                 1.6                                    0.4


    Net income                                                             $3.2                                   $0.6
                                                                           ====                                   ====



                                                Three months ended               Six months ended
                                                   June 30, 2018                   June 30, 2018
                                                   -------------                   -------------

    ADJUSTED EARNINGS BEFORE INTEREST, TAXES,
     DEPRECIATION AND AMORTIZATION (EBITDA):

    GAAP NET INCOME                                                        $3.2                             0.6

    Depreciation and
     amortization                                             16.8                                   33.4

    Loss on disposals of
     property and equipment                                    0.9                                    1.0

    Interest expense                                           5.6                                   11.2

    Provision for income taxes                                 1.6                                    0.4
                                                               ---                                    ---

    NON-GAAP ADJUSTED EBITDA                                              $28.1                                  $46.6
                                                                          =====                                  =====

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SOURCE Rowan Companies plc