Rowan Reports Lower Earnings, Remains Confident in Long-Term Prospects
For the three months ended June 30, 2009, Rowan Companies generated net income of $96.6 million or $0.85 per share, compared to $120.6 million or $1.06 per share in the second quarter of 2008 and $131.7 million or $1.16 per share in the first quarter of 2009. Revenues were $482.2 million in the second quarter of 2009, compared to $587.1 million in the second quarter of 2008 and $494.8 million in the first quarter of 2009.
The second quarter results included an $8.0 million or $0.07 per share tax benefit related to a recent tax court ruling which provides that certain foreign-source income is not taxable in the US. The prior periods included gains on asset disposals of $1.5 million or $0.01 per share during the second quarter of 2008 and $4.7 million or $0.02 per share in the first quarter of 2009. There were no significant asset disposals in the second quarter of 2009.
Rowan's drilling operations generated revenues of $320.8 million in the second quarter of 2009, down by 13% from the prior-year quarter and by 16% from the first quarter of 2009 due primarily to lower rig utilization. The Company's income from drilling operations was $127.9 million in the second quarter of 2009, or 40% of drilling revenues, down by 19% from the prior-year quarter and by 32% from the first quarter of 2009.
The Company's manufacturing operations generated external revenues of $161.4 million in the second quarter of 2009, down by 27% from the prior-year quarter but up by 41% over the first quarter of 2009. Income from manufacturing operations was $2.7 million in the second quarter of 2009, or 2% of revenues, down by 89% from the prior-year quarter and by 76% from the first quarter of 2009.
Matt Ralls, President and Chief Executive Officer, commented, "Despite continued weakness in worldwide jack-up markets, our contract backlog and heightened focus on cost reduction contributed to a solid performance from our drilling operations during the second quarter. Our manufacturing operations showed sequential top-line growth, but margins were adversely affected by the mix of sales and warranty cost accruals related to certain drilling products. Regarding the latter, we are committed to ensuring that all LeTourneau products meet our proven standards for reliability and performance.
"Looking forward, we expect that excess rig capacity will continue to put downward pressure on day rates. Though we are seeing signs of a pick-up in drilling demand in certain areas, there are still more available rigs than drilling tenders. Nonetheless, we continue to believe that the quality of our rigs and our operational reputation will enable us to maintain above-average utilization and day rates for our available jack-ups.
"Rowan has weathered many down cycles in our 86-year history, and our strong liquidity following our recent note offering puts us in an excellent position to get through this one. We remain very confident in the long-term prospects for offshore drilling in general and for jack-ups in particular."