EXHIBIT 99
News Release
Rowan Companies, Inc.
2800 Post Oak Boulevard, Suite 5450
Houston, Texas 77056 (713) 621-7800
FOR IMMEDIATE RELEASE & #160; May 2, 2007
ROWAN REPORTS FIRST QUARTER 2007 OPERATING RESULTS
HOUSTON, TEXAS -- For the three months ended March 31, 2007, Rowan Companies, Inc. (RDC-NYSE) generated net income of $86.4 million, or 77¢ per share, compared to $62.4 million, or 56¢ per share, in the fourth quarter of 2006 and $59.1 million, or 53¢ per share, in the first quarter of 2006. Revenues were a record $462.3 million in the first quarter of 2007, compared to $410.9 million in the fourth quarter of 2006 and $299.8 million in the first quarter of 2006.
The first quarter 2007 results included $24.1 million, or 14¢ per share, of gains on asset sales, compared to $2.5 million, or 1¢ per share, in the prior-year period. There were no significant asset sales in the fourth quarter of 2006, though that period included $12.8 million or 10¢ per share of charges related to environmental matters. The first quarter 2007 results also included $11.3 million, or 7¢ per share, of incremental loss recorded on the Company’s external rig construction project, bringing the total expected loss on the project to $13.4 million.
Rowan’s offshore rig utilization was 84% during the first quarter of 2007, up from 81% in the fourth quarter of 2006 and 78% in the first quarter of 2006. The Company’s average offshore day rate was $143,300 during the first quarter of 2007, down by $1,100, or less than 1%, from the fourth quarter of 2006 and up by $15,100, or 12%, from the first quarter of 2006.
Rowan’s land rig utilization was 92% during the first quarter of 2007, down from 95% in the fourth quarter of 2006 and 98% in the first quarter of 2006, though the number of rig operating days increased between periods. The Company’s average land rig day rate was $23,900 during the first quarter of 2007, up by $1,200, or 5%, from the fourth quarter of 2006 and up by $1,700, or 8%, from the first quarter of 2006.
Danny McNease, Chairman and Chief Executive Officer, commented, “Our redeployment of assets has, for the time being, been concluded and, by this time next week, all of our offshore rigs should again be generating revenues. Demand for jack-ups in the Middle East and many other foreign markets remains strong, and we are continuing to aggressively pursue long-term opportunities abroad.
“While we remain confident in the long-term viability of the Gulf of Mexico jack-up market, we believe the migration of high specification rigs to other areas will continue. We expect to have fewer of our own jack-ups located in the Gulf of Mexico a year from now than we do today.
“Our manufacturing operations contributed record revenues during the first quarter and we continue to believe that even better days are ahead. Our drilling products and systems comprise over 90% of our current backlog and we expect that demand will continue to grow.
“Our first quarter manufacturing margins were adversely impacted by the additional loss recorded on our external rig construction project, which was undoubtedly affected by the significant demands from our drilling division during the accelerated construction of the Hank Boswell, rebuilding of the Rowan-Louisiana and modifications to our Middle East rigs carried out over the past several months.”
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. Contact: William C. Provine, Vice-President - Investor Relations, 713-960-7575. Website: 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.
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ROWAN COMPANIES, INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
Unaudited (In Millions) | |||||||
MARCH 31 | |||||||
2007 | 2006 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 420.2 | $ | 553.2 | |||
Accounts receivable | 371.8 | 336.9 | |||||
Inventories | 394.6 | 236.2 | |||||
Other current assets | 71.0 | 65.1 | |||||
Total current assets | 1,257.6 | 1,191.4 | |||||
Restricted cash | 50.0 | - | |||||
Property, plant and equipment - net | 2,191.7 | 1,818.9 | |||||
Other assets | 55.3 | 37.1 | |||||
TOTAL | $ | 3,554.6 | $ | 3,047.4 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current maturities of long-term debt | $ | 64.9 | $ | 64.9 | |||
Accounts payable | 124.7 | 104.8 | |||||
Other current liabilities | 341.2 | 230.2 | |||||
Total current liabilities | 530.8 | 399.9 | |||||
Long-term debt | 466.7 | 531.6 | |||||
Other liabilities | 607.1 | 455.5 | |||||
Stockholders' equity | 1,950.0 | 1,660.4 | |||||
TOTAL | $ | 3,554.6 | $ | 3,047.4 | |||
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ROWAN COMPANIES, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
Unaudited (In Millions Except Per Share Amounts) | |||||||
THREE MONTHS | |||||||
ENDED MARCH 31 | |||||||
2007 | 2006 | ||||||
REVENUES | $ | 462.3 | $ | 299.8 | |||
COSTS AND EXPENSES: | |||||||
Operations | 304.4 | 172.4 | |||||
Depreciation and amortization | 27.6 | 20.1 | |||||
Selling, general and administrative | 22.4 | 20.3 | |||||
Gain on sale of property and equipment | (24.1 | ) | (2.5 | ) | |||
Total | 330.3 | 210.3 | |||||
INCOME FROM OPERATIONS | 132.0 | 89.5 | |||||
Net interest and other income | 0.6 | 2.8 | |||||
INCOME BEFORE INCOME TAXES | 132.6 | 92.3 | |||||
Provision for income taxes | 46.2 | 33.2 | |||||
NET INCOME | $ | 86.4 | $ | 59.1 | |||
NET INCOME PER DILUTED SHARE | $ | 0.77 | $ | 0.53 | |||
AVERAGE DILUTED SHARES | 111.5 | 111.8 | |||||
NOTE: See pages 6 and 7 for supplemental operating information. |
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ROWAN COMPANIES, INC. | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
Unaudited (In Millions) | |||||||
THREE MONTHS | |||||||
ENDED MARCH 31 | |||||||
2007 | 2006 | ||||||
CASH PROVIDED BY (USED IN): | |||||||
Operations: | |||||||
Net income | $ | 86.4 | $ | 59.1 | |||
Adjustments to reconcile net income to net cash provided by (used in) operations: | |||||||
Depreciation and amortization | 27.6 | 20.1 | |||||
Deferred income taxes | 10.5 | 28.3 | |||||
Gain on sale of assets | (24.1 | ) | (2.5 | ) | |||
Other - net | 9.4 | 9.6 | |||||
Net changes in current assets and liabilities | 1.1 | (94.5 | ) | ||||
Net changes in other noncurrent assets and liabilities | 19.3 | (2.2 | ) | ||||
Net cash provided by operations | 130.2 | 17.9 | |||||
Investing activities: | |||||||
Property, plant and equipment additions | (69.4 | ) | (109.0 | ) | |||
Decrease in Restricted cash balance | 106.1 | - | |||||
Proceeds from disposals of property, plant and equipment | 24.2 | 8.6 | |||||
Net cash provided by (used in) investing activities | 60.9 | (100.4 | ) | ||||
Financing activities: | |||||||
Repayments of borrowings | (18.7 | ) | (18.7 | ) | |||
Payment of cash dividends | (11.0 | ) | (27.4 | ) | |||
Proceeds from equity compensation plans and other | 0.8 | 5.9 | |||||
Net cash used in financing activities | (28.9 | ) | (40.2 | ) | |||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 162.2 | (122.7 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 258.0 | 675.9 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 420.2 | $ | 553.2 |
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ROWAN COMPANIES, INC. | |||||||||||||||||||
SUPPLEMENTAL DRILLING INFORMATION | |||||||||||||||||||
Unaudited (dollars in millions, except where otherwise indicated ) | |||||||||||||||||||
THREE MONTHS ENDED | |||||||||||||||||||
March 31, 2007 | December 31, 2006 | March 31, 2006 | |||||||||||||||||
$ | % Revenues | $ | % Revenues | $ | % Revenues | ||||||||||||||
DRILLING OPERATIONS (a): | |||||||||||||||||||
Revenues | $ | 288.3 | 100 | $ | 280.6 | 100 | $ | 217.1 | 100 | ||||||||||
Operating costs | (146.8 | ) | (51 | ) | (146.9 | ) | (52 | ) | (107.0 | ) | (49 | ) | |||||||
Depreciation and amortization expense | (24.1 | ) | (8 | ) | (21.3 | ) | (8 | ) | (17.4 | ) | (8 | ) | |||||||
Selling, general and administrative expenses (b) | (15.7 | ) | (5 | ) | (14.0 | ) | (5 | ) | (15.3 | ) | (7 | ) | |||||||
Gain on sale of property and equipment | 24.1 | 8 | 0.1 | 0 | 2.2 | 1 | |||||||||||||
Charge for estimated environmental fine | - | - | (9.0 | ) | (3 | ) | - | - | |||||||||||
Income from operations | $ | 125.8 | 44 | $ | 89.5 | 32 | $ | 79.6 | 37 | ||||||||||
OFFSHORE RIG DAYS: | |||||||||||||||||||
Operating | 1,587 | 1,514 | 1,338 | ||||||||||||||||
Available | 1,890 | 1,860 | 1,710 | ||||||||||||||||
Utilization | 84 | % | 81 | % | 78 | % | |||||||||||||
LAND RIG DAYS: | |||||||||||||||||||
Operating | 2,154 | 2,036 | 1,505 | ||||||||||||||||
Available | 2,352 | 2,148 | 1,530 | ||||||||||||||||
Utilization | 92 | % | 95 | % | 98 | % | |||||||||||||
AVERAGE DAY RATES (in thousands): | |||||||||||||||||||
Gulf of Mexico rigs | $ | 127.7 | $ | 140.1 | $ | 123.0 | |||||||||||||
Middle East rigs | 132.3 | 114.3 | - | ||||||||||||||||
North Sea rigs | 213.4 | 195.6 | 147.3 | ||||||||||||||||
All offshore rigs | 143.3 | 144.4 | 128.2 | ||||||||||||||||
Land rigs | 23.9 | 22.7 | 22.2 | ||||||||||||||||
(a) Amounts exclude effects of intercompany transactions. | |||||||||||||||||||
(b) Amounts include corporate SG&A costs that are allocated between operating segments. |
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ROWAN COMPANIES, INC. | |||||||||||||||||||
SUPPLEMENTAL MANUFACTURING INFORMATION | |||||||||||||||||||
Unaudited (dollars in millions) | |||||||||||||||||||
THREE MONTHS ENDED | |||||||||||||||||||
March 31, 2007 | December 31, 2006 | March 31, 2006 | |||||||||||||||||
$ | % Revenues | $ | % Revenues | $ | % Revenues | ||||||||||||||
MANUFACTURING OPERATIONS (a): | |||||||||||||||||||
Revenues | $ | 174.0 | 100 | $ | 130.3 | 100 | $ | 82.7 | 100 | ||||||||||
Direct cost of sales | (148.7 | ) | (85 | ) | (103.4 | ) | (79 | ) | (58.9 | ) | (71 | ) | |||||||
Other operating costs | (8.9 | ) | (5 | ) | (7.9 | ) | (6 | ) | (6.5 | ) | (8 | ) | |||||||
Depreciation and amortization expense | (3.5 | ) | (2 | ) | (3.3 | ) | (3 | ) | (2.7 | ) | (3 | ) | |||||||
Selling, general and administrative expenses (b) | (6.7 | ) | (4 | ) | (6.3 | ) | (5 | ) | (5.0 | ) | (6 | ) | |||||||
Gain on sale of property and equipment | - | - | (0.1 | ) | (0 | ) | 0.3 | 0 | |||||||||||
Income from operations | $ | 6.2 | 4 | $ | 9.3 | 7 | $ | 9.9 | 12 | ||||||||||
REVENUES (a): | |||||||||||||||||||
Drilling Products and Systems: | |||||||||||||||||||
Offshore Products | $ | 67.1 | 39 | $ | 45.0 | 35 | $ | 19.1 | 23 | ||||||||||
Drilling Systems | 35.6 | 20 | 22.3 | 17 | 15.9 | 19 | |||||||||||||
Power Systems | 17.4 | 10 | 13.6 | 10 | 3.6 | 4 | |||||||||||||
Mining, Forestry and Steel Products | 53.9 | 31 | 49.4 | 38 | 44.1 | 54 | |||||||||||||
Total | $ | 174.0 | 100 | $ | 130.3 | 100 | $ | 82.7 | 100 | ||||||||||
MANUFACTURING BACKLOG: | |||||||||||||||||||
Drilling Products and Systems: | |||||||||||||||||||
Offshore Products | $ | 209.0 | $ | 263.5 | $ | 277.1 | |||||||||||||
Drilling Systems | 192.3 | 190.4 | 76.1 | ||||||||||||||||
Power Systems | 25.9 | 22.7 | 24.7 | ||||||||||||||||
Mining, Forestry and Steel Products | 34.3 | 53.4 | 63.9 | ||||||||||||||||
Total | $ | 461.5 | $ | 530.0 | $ | 441.8 | |||||||||||||
(a) Amounts exclude effects of intercompany transactions. | |||||||||||||||||||
(b) Amounts include corporate SG&A costs that are allocated between operating segments. |
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