| FOR IMMEDIATE RELEASE | March 1, 2010 |
Rowan Reports Fourth Quarter 2009 Operating Results
HOUSTON, TEXAS – For the three months ended December 31, 2009, Rowan Companies, Inc. (“Rowan” or the “Company”) (NYSE: RDC) generated net income of $60.8 million or $0.53 per share, compared to $94.3 million or $0.83 per share in the fourth quarter of 2008. Revenues were $399.8 million in the fourth quarter of 2009, compared to $613.0 million in the fourth quarter of 2008.
Results for the fourth quarter of 2009 included $1.4 million or $0.01 per share of gains on asset disposals, compared to $39.4 million or $0.23 per share in the fourth quarter of 2008. As previously reported, the fourth quarter 2008 results included $111.2 million, or $0.68 per share of material charges and other expenses. The current year included no material charges.
For the year ended December 31, 2009, the Company generated net income of $367.5 million or $3.24 per share on revenues of $1.8 billion, compared to net income of $427.6 million or $3.77 per share on revenues of $2.2 billion in 2008. The 2009 results included $5.7 million or $0.03 per share of gains in asset disposals in 2009, compared to $67.8 million or $0.39 per share in 2008.
The 2009 results also included $25.4 million or $0.22 per share of tax benefits related to a recent third-party tax court ruling, which provided that certain foreign-source income is not taxable in the United States. Excluding these tax benefits and the material charges and disposal gains described above, earnings were $338.3 million or $2.98 per share in 2009 and $460.7 million or $4.06 per share in 2008.
Rowan’s drilling operations generated revenues of $255.3 million in the fourth quarter of 2009, down by 34% from the prior-year quarter due primarily to lower rig utilization. The Company’s gross drilling margin was 52% of revenues in the fourth quarter of 2009, down from 62% in the prior-year quarter. Income from drilling operations was $76.0 million in the fourth quarter of 2009, down by 66% from the prior-year quarter (excluding material charges).
Rowan’s manufacturing operations generated external revenues of $144.5 million in the fourth quarter of 2009, down by 36% from the prior-year quarter. The Company’s gross manufacturing margin was 17% of revenues in the fourth quarter of 2009, down from 25% in the prior-year quarter. Income from manufacturing operations was $9.1 million in the fourth quarter of 2009, down by 78% from the prior-year quarter (excluding material charges).
Matt Ralls, President and Chief Executive Officer, commented, “During the last few months, we have seen increased activity and tendering in virtually every jack-up market segment worldwide, with the Middle East, North Sea and Gulf of Mexico regions being the most significant for our fleet. We continue to see good demand for higher-specification jack-ups, and have added backlog at attractive day rates for our Super Gorillas. We are especially pleased to have played a role in McMoRan’s ultra-deep gas discovery, ‘Davy Jones,’ in the U. S. Gulf of Mexico, and we now have three high-spec jack-ups and the Rowan-Louisiana committed to or under contract with McMoRan. We are optimistic that this significant discovery will lead to future increases in ultra-deep gas drilling activity in the Gulf of Mexico requiring jack-up rigs with the advanced operating capabilities that characterize the Rowan fleet.
2800 Post Oak Blvd., Suite 5450, Houston, Texas 77056
Tel: (713) 621-7800 Fax: (713) 960-7509
“Additionally, we have seen a very strong recovery in the U. S. land rig market and have reactivated or obtained commitments for several land rigs in the fourth quarter of 2009 and so far in 2010. This pickup in activity for Rowan’s high quality land rig fleet is all the more impressive considering that there remain nearly one thousand idle land rigs in North America. It demonstrates the increasing willingness by operators to pay higher rates for more efficient equipment, enabling them to reduce overall drilling costs. We believe there is a similar high-grading trend occurring in the global jack-up market that will allow us to obtain attractive day rates for our premium and high-spec jack-ups despite the large number of idle rigs at the low end of the jack-up market.”
Rowan will conduct its earnings conference call on Monday, March 1, 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.
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
| ROWAN COMPANIES, INC. | |
| CONDENSED CONSOLIDATED BALANCE SHEETS | |
| Unaudited (In Millions) | |
| | | | | | | |
| | | | | | | |
| | | DECEMBER 31 | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| ASSETS | | | | | | |
| | | | | | | |
| Cash and cash equivalents | | $ | 639.7 | | | $ | 222.4 | |
| Accounts receivable | | | 343.6 | | | | 485.0 | |
| Inventories | | | 451.7 | | | | 551.4 | |
| Other current assets | | | 114.8 | | | | 110.4 | |
| Total current assets | | | 1,549.8 | | | | 1,369.2 | |
| Property, plant and equipment - net | | | 3,579.5 | | | | 3,147.5 | |
| Other assets | | | 81.4 | | | | 32.2 | |
| TOTAL | | $ | 5,210.7 | | | $ | 4,548.9 | |
| | | | | | | | | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| Current maturities of long-term debt | | $ | 64.9 | | | $ | 64.9 | |
| Accounts payable | | | 124.6 | | | | 235.0 | |
| Other current liabilities | | | 378.8 | | | | 444.7 | |
| Total current liabilities | | | 568.3 | | | | 744.6 | |
| Long-term debt | | | 787.5 | | | | 355.6 | |
| Other liabilities | | | 744.5 | | | | 788.9 | |
| Stockholders' equity | | | 3,110.4 | | | | 2,659.8 | |
| TOTAL | | $ | 5,210.7 | | | $ | 4,548.9 | |
| ROWAN COMPANIES, INC. | |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |
| Unaudited (In Millions Except Per Share Amounts) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | THREE MONTHS | | | TWELVE MONTHS | |
| | | ENDED DECEMBER 31 | | | ENDED DECEMBER 31 | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | |
| REVENUES | | $ | 399.8 | | | $ | 613.0 | | | $ | 1,770.2 | | | $ | 2,212.7 | |
| | | | | | | | | | | | | | | | | |
| COSTS AND EXPENSES: | | | | | | | | | | | | | | | | |
| Operations | | | 242.1 | | | | 316.7 | | | | 1,000.7 | | | | 1,254.6 | |
| Depreciation and amortization | | | 44.6 | | | | 38.6 | | | | 171.4 | | | | 141.4 | |
| Selling, general and administrative | | | 29.4 | | | | 29.4 | | | | 102.8 | | | | 115.2 | |
| Gain on disposals of property and equipment | | | (1.4 | ) | | | (39.4 | ) | | | (5.7 | ) | | | (67.8 | ) |
| Material charges and other operating expenses | | | - | | | | 111.2 | | | | - | | | | 111.2 | |
| Total | | | 314.7 | | | | 456.5 | | | | 1,269.2 | | | | 1,554.6 | |
| INCOME FROM OPERATIONS | | | 85.1 | | | | 156.5 | | | | 501.0 | | | | 658.1 | |
| Net interest and other income | | | (3.1 | ) | | | (8.1 | ) | | | 0.1 | | | | (4.0 | ) |
| INCOME BEFORE INCOME TAXES | | | 82.0 | | | | 148.4 | | | | 501.1 | | | | 654.1 | |
| Provision for income taxes | | | 21.2 | | | | 54.1 | | | | 133.6 | | | | 226.5 | |
| NET INCOME | | $ | 60.8 | | | $ | 94.3 | | | $ | 367.5 | | | $ | 427.6 | |
| | | | | | | | | | | | | | | | | |
| NET INCOME PER DILUTED SHARE | | $ | 0.53 | | | $ | 0.83 | | | $ | 3.24 | | | $ | 3.77 | |
| | | | | | | | | | | | | | | | | |
| AVERAGE DILUTED SHARES | | | 114.0 | | | | 113.1 | | | | 113.6 | | | | 113.3 | |
| ROWAN COMPANIES, INC. | |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |
| Unaudited (In Millions) | |
| | | | | | | |
| | | TWELVE MONTHS | |
| | | ENDED DECEMBER 31 | |
| | | 2009 | | | 2008 | |
| CASH PROVIDED BY (USED IN): | | | | | | |
| Operations: | | | | | | |
| Net income | | $ | 367.5 | | | $ | 427.6 | |
| Adjustments to reconcile net income to net | | | | | | | | |
| cash provided by operations: | | | | | | | | |
| Depreciation and amortization | | | 171.4 | | | | 141.4 | |
| Deferred income taxes | | | 15.8 | | | | 51.1 | |
| Gain on disposals of assets | | | (5.7 | ) | | | (67.8 | ) |
| Other - net | | | 12.9 | | | | 27.1 | |
| Net changes in current assets and liabilities | | | 7.1 | | | | 131.9 | |
| Net changes in other noncurrent assets and liabilities | | | (24.9 | ) | | | (16.9 | ) |
| Net cash provided by operations | | | 544.1 | | | | 694.4 | |
| | | | | | | | | |
| Investing activities: | | | | | | | | |
| Property, plant and equipment additions | | | (566.4 | ) | | | (829.2 | ) |
| Proceeds from disposals of property, plant and equipment | | | 8.6 | | | | 97.7 | |
| Decrease in Restricted cash balance | | | - | | | | 50.0 | |
| Net cash used in investing activities | | | (557.8 | ) | | | (681.5 | ) |
| | | | | | | | | |
| Financing activities: | | | | | | | | |
| Proceeds from borrowings | | | 491.7 | | | | 80.0 | |
| Repayments of borrowings | | | (64.9 | ) | | | (144.9 | ) |
| Payment of cash dividends | | | - | | | | (45.0 | ) |
| Proceeds from equity compensation plans and other | | | 4.2 | | | | 34.9 | |
| Net cash provided by (used in) financing activities | | | 431.0 | | | | (75.0 | ) |
| | | | | | | | | |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 417.3 | | | | (62.1 | ) |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | | | 222.4 | | | | 284.5 | |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | | $ | 639.7 | | | $ | 222.4 | |
| ROWAN COMPANIES, INC. |
| SUPPLEMENTAL DRILLING INFORMATION |
| Unaudited (dollars in millions, except where otherwise indicated ) |
| | | THREE MONTHS ENDED | |
| | | December 31, 2009 | | | September 30, 2009 | | | December 31, 2008 | |
| | | $ (a) | | | Elims. | | | $ (b) | | | % Revs. | | | $ (a) | | | Elims. | | | $ (b) | | | % Revs. | | | $ | | | % Revs. | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| DRILLING OPERATIONS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Revenues | | $ | 255.3 | | | | | | $ | 255.3 | | | | 100 | | | $ | 258.4 | | | | | | $ | 258.4 | | | | 100 | | | $ | 386.7 | | | | 100 | |
| Operating costs (excluding items shown below) | | | (122.7 | ) | | $ | 1.0 | | | | (121.7 | ) | | | (48 | ) | | | (122.2 | ) | | $ | 0.9 | | | | (121.3 | ) | | | (47 | ) | | | (146.7 | ) | | | (38 | ) |
| Depreciation and amortization expense | | | (40.6 | ) | | | | | | | (40.6 | ) | | | (16 | ) | | | (39.8 | ) | | | | | | | (39.8 | ) | | | (15 | ) | | | (34.7 | ) | | | (9 | ) |
| Selling, general and administrative expenses (c) | | | (18.5 | ) | | | | | | | (18.5 | ) | | | (7 | ) | | | (16.3 | ) | | | | | | | (16.3 | ) | | | (6 | ) | | | (18.6 | ) | | | (5 | ) |
| Gain on sale of property and equipment | | | 1.5 | | | | | | | | 1.5 | | | | 1 | | | | 0.1 | | | | | | | | 0.1 | | | | 0 | | | | 39.6 | | | | 10 | |
| Material charges and other operating expenses | | | - | | | | | | | | - | | | | - | | | | - | | | | | | | | - | | | | - | | | | (24.6 | ) | | | (6 | ) |
| Income from operations | | $ | 75.0 | | | $ | 1.0 | | | $ | 76.0 | | | | 30 | | | $ | 80.2 | | | $ | 0.9 | | | $ | 81.1 | | | | 31 | | | $ | 201.7 | | | | 52 | |
| EBITDA (d) | | $ | 114.1 | | | $ | 1.0 | | | $ | 115.1 | | | | 45 | | | $ | 119.9 | | | $ | 0.9 | | | $ | 120.8 | | | | 47 | | | $ | 221.4 | | | | 57 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OFFSHORE RIG DAYS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating | | | | | | | | | | | 1,277 | | | | | | | | | | | | | | | | 1,197 | | | | | | | | 1,911 | | | | | |
| Available | | | | | | | | | | | 2,024 | | | | | | | | | | | | | | | | 2,024 | | | | | | | | 1,926 | | | | | |
| Utilization | | | | | | | | | | | 63 | % | | | | | | | | | | | | | | | 59 | % | | | | | | | 99 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| LAND RIG DAYS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating | | | | | | | | | | | 1,747 | | | | | | | | | | | | | | | | 1,652 | | | | | | | | 2,485 | | | | | |
| Available | | | | | | | | | | | 2,944 | | | | | | | | | | | | | | | | 2,944 | | | | | | | | 2,758 | | | | | |
| Utilization | | | | | | | | | | | 59 | % | | | | | | | | | | | | | | | 56 | % | | | | | | | 90 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AVERAGE DAY RATES (in thousands): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gulf of Mexico rigs | | | | | | | | | | $ | 123.3 | | | | | | | | | | | | | | | $ | 137.9 | | | | | | | $ | 144.6 | | | | | |
| Middle East rigs | | | | | | | | | | | 164.2 | | | | | | | | | | | | | | | | 161.4 | | | | | | | | 156.9 | | | | | |
| North Sea rigs | | | | | | | | | | | 195.9 | | | | | | | | | | | | | | | | 209.2 | | | | | | | | 272.1 | | | | | |
| All offshore rigs | | | | | | | | | | | 167.7 | | | | | | | | | | | | | | | | 182.5 | | | | | | | | 170.1 | | | | | |
| Land rigs | | | | | | | | | | | 21.8 | | | | | | | | | | | | | | | | 22.5 | | | | | | | | 23.7 | | | | | |
| | (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. |
| ROWAN COMPANIES, INC. |
| SUPPLEMENTAL MANUFACTURING INFORMATION |
| Unaudited (dollars in millions) |
