Diamond Offshore Announces Third Quarter 2019 Results
HOUSTON, Oct. 28, 2019 /PRNewswire/ -- Diamond Offshore Drilling, Inc. (NYSE: DO) today reported the following results for the third quarter of 2019:
Three Months Ended
Thousands of dollars, except per share data September 30, 2019 June 30, 2019
---
Total revenues $254,020 $216,706
Operating loss (72,834) (111,500)
Adjusted operating loss (70,291) (120,366)
Net loss (95,128) (113,988)
Adjusted net loss (92,803) (136,299)
Loss per diluted share $(0.69) $(0.83)
Adjusted loss per diluted share $(0.67) $(0.99)
"During the quarter, we secured approximately $90 million of additional backlog, including a new fixture for the Ocean Apex in Australia and the exercise of a two-well option for the Ocean Endeavor in the North Sea," said Marc Edwards, President and Chief Executive Officer. "These two awards are further confirmation of Diamond's strategy to focus on the improving moored rig market."
As of October 1, 2019, the Company's total contracted backlog was $1.8 billion, including over $540 million of backlog secured year to date and excluding approximately a $130 million margin commitment from one of the Company's customers.
CONFERENCE CALL
A conference call to discuss Diamond Offshore's earnings results has been scheduled for 8:00 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 9448907. 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 innovation, thought leadership and contract drilling services to solve complex deepwater challenges 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 Nine Months Ended
---
September 30,
June 30,
September 30,
September 30,
September 30,
2019 2019 2018 2019 2018
---
Revenues:
Contract drilling $242,315 $207,273 $280,691 $676,284 $833,970
Revenues related to reimbursable expenses 11,705 9,433 5,631 27,984 16,723
Total revenues 254,020 216,706 286,322 704,268 850,693
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Operating expenses:
Contract drilling, excluding depreciation 201,568 224,782 188,456 593,779 562,466
Reimbursable expenses 11,423 9,313 5,574 27,479 16,458
Depreciation 88,693 88,253 81,884 263,844 245,534
General and administrative 18,830 15,294 33,308 51,436 70,057
Impairment of assets 27,225
Restucturing and separation costs 649 4,925
Loss (gain) on disposition of assets 6,340 (9,436) (506) 1,191 (1,066)
Total operating expenses 326,854 328,206 309,365 937,729 925,599
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Operating loss (72,834) (111,500) (23,043) (233,461) (74,906)
Other income (expense):
Interest income 1,317 1,933 2,364 5,664 6,001
Interest expense, net of amounts capitalized (31,098) (31,159) (34,293) (92,182) (92,196)
Foreign currency transaction (loss) gain (77) (721) (743) (1,883) 115
Other, net 82 105 (179) 520 664
---
Loss before income tax benefit (102,610) (141,342) (55,894) (321,342) (160,322)
Income tax benefit 7,482 27,354 4,782 38,898 59,257
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Net loss $(95,128) $(113,988) $(51,112) $(282,444) $(101,065)
Loss per share $(0.69) $(0.83) $(0.37) $(2.05) $(0.74)
Weighted-average shares outstanding:
Shares of common stock 137,694 137,691 137,434 137,636 137,386
Dilutive potential shares of common stock -
Total weighted-average shares outstanding 137,694 137,691 137,434 137,636 137,386
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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30, December 31,
2019 2018
ASSETS
Current assets:
Cash and cash equivalents $209,132 $154,073
Marketable securities - 299,849
Accounts receivable, net of allowance for bad debts 237,621 168,620
Prepaid expenses and other current assets 66,669 163,396
Asset held for sale 1,000 -
Total current assets 514,422 785,938
Drilling and other property and equipment, net of accumulated
depreciation 5,150,876 5,184,222
Other assets 205,736 65,534
Total assets $5,871,034 $6,035,694
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LIABILITIES AND STOCKHOLDERS' EQUITY
Other current liabilities $279,206 $236,846
Long-term debt 1,975,275 1,973,922
Deferred tax liability 54,119 104,380
Other liabilities 257,110 135,893
Stockholders' equity 3,305,324 3,584,653
Total liabilities and stockholders' equity $5,871,034 $6,035,694
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DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine months ended
September 30,
2019 2018
---
Operating activities:
Net loss $(282,444) $(101,065)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities
Depreciation 263,844 245,534
Loss on impairment of assets 27,225
Deferred tax provision (48,323) (69,109)
Contract liabilities, net 15,060 (6,589)
Deferred contract costs, net 49,866 34,901
Other 8,524 (931)
Net changes in operating working capital (20,738) 58,790
Net cash (used in) provided by operating activities (14,211) 188,756
---
Investing activities:
Capital expenditures (249,819) (159,751)
Proceeds from maturities of marketable securities 2,300,000 775,000
Purchase of marketable securities (1,996,996) (1,047,453)
Proceeds from disposition of assets, net of disposal costs 16,097 69,533
Net cash provided by (used in) investing activities 69,282 (362,671)
---
Financing activities:
Other (12) (269)
Net cash used in financing activities (12) (269)
---
Net change in cash and cash equivalents 55,059 (174,184)
Cash and cash equivalents, beginning of period 154,073 376,037
Cash and cash equivalents, end of period $209,132 $201,853
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY
(Dayrate in thousands)
TOTAL FLEET
Third Quarter Second Quarter Third Quarter
2019 2019 2018
Average Utilization Operational Average Utilization Operational Average Utilization Operational
Dayrate (2) Efficiency Dayrate (2) Efficiency Dayrate (2) Efficiency
(1) (3) (1) (3) (1) (3)
---
$253 65% 96.6% $273 51% 88.7% $333 54% 97.0%
(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 two
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, non-
revenue earning 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 loss, adjusted net loss and adjusted loss 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 items 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 various items and their related tax effects are appropriate measures of the continuing and normal operations of the Company. The amounts excluded from our adjusted results include i) settlement costs for a legal claim, restructuring and separation costs incurred and a loss on the sale of a rig during the second quarter of 2018, ii) a gain recognized in the second quarter of 2019 from the sale of the Ocean Guardian, iii) the loss on sale of mooring equipment recognized during the second and third quarters of 2019 in relation to a new leasing initiative and iv) other discrete tax items recognized in the second quarter of 2019. 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 or loss, cash flows from operations or other measures of financial performance prepared in accordance with GAAP.
Three Months Ended
September 30,
June 30,
September 30,
2019 2019 2018
Reconciliation of As Reported Operating Loss to
Adjusted Operating Loss:
(In thousands)
As reported operating loss $(72,834) $(111,500) $(23,043)
Adjustments:
(Gain) loss on sale of rig - (14,300) 100
Loss on sale of mooring equipment 2,543 5,434 -
Legal settlement - 17,500
Restructuring and separation costs - 649
---
Adjusted operating loss $(70,291) $(120,366) $(4,794)
===
Reconciliation of As Reported Net Loss to Adjusted Net
Loss:
(In thousands)
As reported net loss $(95,128) $(113,988) $(51,112)
Adjustments:
(Gain) loss on sale of rig - (14,300) 100
Loss on sale of mooring equipment 2,543 5,434 -
Legal settlement - 17,500
Restructuring and separation costs - 649
Tax effect of adjustments:
(Gain) loss on sale of rig - 1,227 (13)
Loss on sale of mooring equipment (218) (466) -
Legal settlement - (2,296)
Restructuring and separation costs - (85)
Other discrete items (1) - (14,206)
---
Adjusted net loss $(92,803) $(136,299) $(35,257)
===
Three Months Ended
September 30,
June 30,
September 30,
2019 2019 2018
Reconciliation of As Reported Loss per Diluted
Share to Adjusted Loss per Diluted Share:
As reported loss per diluted share $(0.69) $(0.83) $(0.37)
Adjustments:
(Gain) loss on sale of rig (0.10)
Loss on sale of mooring equipment 0.02 0.04
Legal settlement 0.12
Restructuring and separation costs 0.01
Tax effect of adjustments:
(Gain) loss on sale of rig 0.01
Loss on sale of mooring equipment (0.01)
Legal settlement (0.02)
Restructuring and separation costs
Other discrete items (1) (0.10)
Adjusted loss per diluted share $(0.67) $(0.99) $(0.26)
(1) Represents a discrete income
tax adjustment recognized
during the second quarter of
2019 in relation to final
regulations issued by the
Internal Revenue Service in
June 2019 with respect to the
calculation of the toll
charge associated with the
deemed repatriation of
previously deferred earnings
of our non-U.S. subsidiaries
in response to the Tax Cuts
and Jobs Act enacted in 2017,
or Transition Tax. Based on
the new regulations, we
recorded a net tax benefit of
$14.2 million in the second
quarter of 2019.
Contact:
Samir Ali
Vice President, Investor Relations & Corporate Development
(281) 647-4035
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SOURCE Diamond Offshore Drilling, Inc.
