Rowan Reports Strong 1Q
For the three months ended March 31, 2010, Rowan generated net income of $64.6 million or $0.56 per share, compared to $131.7 million or $1.16 per share in the first quarter of 2009. Earnings for the current quarter were $93.3 million, or $0.81 per share excluding an inventory charge at the Company's manufacturing subsidiary discussed below. Revenues were $432.4 million in the first quarter of 2010, compared to $494.8 million in the first quarter of 2009.
The first quarter 2010 results included a $42.0 million pre-tax charge, or $0.25 per share after tax, for estimated losses associated with non-conforming and slow-moving inventory items in the Company's Drilling Products and Systems manufacturing segment. The first quarter 2009 results included no such charges, but included gains on asset disposals of $4.7 million, or $0.02 per share.
Rowan's drilling operations generated revenues of $331 million in the first quarter of 2010, down by 13% from the prior-year quarter but up by 30% from the fourth quarter of 2009, due primarily to changes in rig utilization. The Company's gross drilling margin was 59% of revenues in the first quarter of 2010, down from 62% in the prior-year quarter but up from 52% in the fourth quarter of 2009. Income from drilling operations was $137.0 million in the first quarter of 2010, down by 27% from the prior-year quarter but up by 80% from the fourth quarter of 2009.
Rowan's manufacturing operations generated external revenues of $101.4 million in the first quarter of 2010, down by 11% from the prior-year quarter. The Company's gross manufacturing margin was 17% of revenues in the first quarter of 2010, down from 21% in the prior-year quarter. Excluding the charge discussed above, Income from manufacturing operations was $3.1 million in the first quarter of 2010, down by 72% from the prior-year quarter.
Matt Ralls, President and Chief Executive Officer, commented, "Rowan's drilling operations experienced a strong first quarter, with good cost control and excellent uptime for our jack-up rigs under contract. With the delivery next week of the first of our four EXL rigs under construction, half of our jack-up fleet will be high-spec rigs, which we define as rigs with hook-loads of two million pounds or more. We are seeing strong interest by operators in several markets for rigs with this capability, and all of our high-spec rigs are currently contracted.
"Our new management team at LeTourneau has been going through a rigorous review of inventories at its Houston facility, and we have determined that a charge is warranted. Notwithstanding this non-cash charge, we are optimistic about the future of LeTourneau as it continues to improve manufacturing processes and efficiencies."