Rowan Reports First Quarter 2018 Results

ROWAN COMPANIES PLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

Three months ended March 31,

2018

2017

(As adjusted)

REVENUE

$

211.2

$

374.3

COSTS AND EXPENSES:

Direct operating costs (excluding items below)

157.4

171.3

Depreciation and amortization

97.9

99.1

Selling, general and administrative

25.6

24.2

Loss on disposals of property and equipment

1.3

3.4

Total costs and expenses

282.2

298.0

Equity in losses of unconsolidated subsidiary

(1.3)

—

INCOME (LOSS) FROM OPERATIONS

(72.3)

76.3

OTHER INCOME (EXPENSE):

Interest expense

(38.5)

(39.6)

Interest income

6.9

2.0

Loss on extinguishment of debt

—

(0.2)

Other - net

(2.2)

1.5

Total other (expense) - net

(33.8)

(36.3)

INCOME (LOSS) BEFORE INCOME TAXES

(106.1)

40.0

Provision for income taxes

6.2

29.7

NET INCOME (LOSS)

$

(112.3)

$

10.3

NET INCOME (LOSS) PER SHARE - DILUTED

$

(0.89)

$

0.07

WEIGHTED AVERAGE SHARES - BASIC

126.5

125.7

WEIGHTED AVERAGE SHARES - DILUTED

126.5

127.4

ROWAN COMPANIES PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

March 31, 2018

December 31,
2017

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

1,214.1

$

1,332.1

Receivables - trade and other

202.8

212.8

Prepaid expenses and other current assets

15.3

15.5

Total current assets

1,432.2

1,560.4

Property and equipment - net

6,554.0

6,552.7

Long-term note receivable from unconsolidated subsidiary

270.0

270.2

Investment in unconsolidated subsidiary

29.6

30.9

Other assets

42.2

44.1

$

8,328.0

$

8,458.3

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable - trade

$

93.4

$

97.2

Deferred revenue

4.4

1.1

Accrued liabilities

139.7

159.1

Total current liabilities

237.5

257.4

Long-term debt

2,510.5

2,510.3

Other liabilities

286.0

293.6

Deferred income taxes - net

10.8

10.9

Shareholders' equity

5,283.2

5,386.1

$

8,328.0

$

8,458.3

ROWAN COMPANIES PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Three months ended March 31,

2018

(As adjusted)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

(112.3)

$

10.3

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

97.9

99.1

Equity in losses of unconsolidated subsidiary

1.3

—

Deferred income taxes

0.1

16.8

Provision for pension and other postretirement benefits

3.2

2.5

Cash loss on extinguishment of debt

—

0.3

Share-based compensation expense

4.3

6.8

Loss on disposals of property and equipment

1.3

3.4

Other

6.0

0.2

Net changes in current assets and liabilities

(2.4)

(34.8)

Other postretirement benefit claims paid

(0.5)

(0.9)

Contributions to pension plans

(5.6)

(5.9)

Deferred revenue

3.0

(6.3)

Net changes in other noncurrent assets and liabilities

(7.4)

(9.7)

Net cash provided by (used in) operating activities

(11.1)

81.8

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(35.4)

(30.9)

Purchase of rigs

(70.8)

—

Repayments of note receivable from unconsolidated subsidiary

1.3

—

Proceeds from disposals of property and equipment

1.3

0.1

Net cash used in investing activities

(103.6)

(30.8)

CASH FLOWS FROM FINANCING ACTIVITIES:

Reductions of long-term debt

—

(128.0)

Shares repurchased for tax withholdings on vesting of restricted share units

(3.3)

(5.3)

Net cash used in financing activities

(3.3)

(133.3)

DECREASE IN CASH AND CASH EQUIVALENTS

(118.0)

(82.3)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

1,332.1

1,255.5

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

1,214.1

$

1,173.2

ROWAN COMPANIES PLC

SUPPLEMENTAL OPERATING SEGMENT INFORMATION

(In millions)

(Unaudited)

Three months ended March 31,

Deepwater

Jack-ups

ARO

Unallocated
and other

Reportable
segments total

Eliminations
and adjustments

Consolidated

2018

Revenue

$

52.1

$

150.1

$

58.3

$

9.0

$

269.5

$

(58.3)

$

211.2

Operating expenses:

Direct operating costs (excluding items below)

29.0

128.4

33.4

—

190.8

(33.4)

157.4

Depreciation and amortization

26.9

70.3

16.6

0.7

114.5

(16.6)

97.9

Selling, general and administrative

—

—

6.4

25.6

32.0

(6.4)

25.6

Other operating items - expense

—

1.3

0.1

—

1.4

(0.1)

1.3

Equity in losses of unconsolidated subsidiary

—

—

—

—

—

(1.3)

(1.3)

Income (loss) from operations

$

(3.8)

$

(49.9)

$

1.8

$

(17.3)

$

(69.2)

$

(3.1)

$

(72.3)

2017 ⁽¹⁾

Revenue

$

160.7

$

213.6

$

—

$

—

$

374.3

$

—

$

374.3

Operating expenses:

Direct operating costs (excluding items below)

44.9

126.4

—

—

171.3

—

171.3

Depreciation and amortization

28.3

70.1

—

0.7

99.1

—

99.1

Selling, general and administrative

—

—

—

24.2

24.2

—

24.2

Other operating items - expense

—

3.4

—

—

3.4

—

3.4

Income (loss) from operations

$

87.5

$

13.7

$

—

$

(24.9)

$

76.3

$

—

$

76.3

(1) ARO commenced operations October 17, 2017.

ARO DRILLING

SUPPLEMENTAL FINANCIAL INFORMATION

(In millions)

(Unaudited)

March 31, 2018

December 31, 2017

Current assets

$

121.0

$

108.6

Non-current assets

456.5

459.7

Total assets

$

577.5

$

568.3

Current liabilities

$

43.4

$

29.2

Non-current liabilities

542.7

545.1

Total liabilities

$

586.1

$

574.3

Three months ended
March 31, 2018

Revenue

$

58.3

Direct operating costs (excluding items below)

33.4

Depreciation and amortization

16.6

Selling, general and administrative

6.4

Loss on disposals of property and equipment

0.1

Income from operations

1.8

Interest expense

(5.6)

Benefit for income taxes

(1.2)

Net Loss

$

(2.6)

Three months ended
March 31, 2018

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA):

GAAP NET LOSS

$

(2.6)

Depreciation and amortization

16.6

Loss on disposals of property and equipment

0.1

Interest expense

5.6

Benefit for income taxes

(1.2)

NON-GAAP ADJUSTED EBITDA

$

18.5

ROWAN COMPANIES PLC

SUPPLEMENTAL OPERATING INFORMATION

(Unaudited)

Three months ended

March 31,

December 31,

March 31,

2018

2017

2017

RIG DAYS ⁽¹⁾

Deepwater:

Revenue-producing ⁽²⁾

90

125

270

Available

360

368

360

Jack-ups:

Revenue-producing ⁽³⁾

949

1,448

1,547

Available ⁽³⁾

1,710

1,883

2,071

Total:

Revenue-producing ^{(2) (3)}

1,039

1,573

1,817

Available ⁽³⁾

2,070

2,251

2,431

UTILIZATION ⁽¹⁾

Deepwater ⁽²⁾

25

%

34

%

75

%

Jack-ups ⁽³⁾

56

%

77

%

75

%

Total ^{(2) (3)}

50

%

70

%

75

%

AVERAGE DAY RATES ⁽⁴⁾ (in thousands)

Deepwater ⁽²⁾

$

574.6

$

767.1

$

592.1

Jack-ups ⁽³⁾

$

138.9

$

123.3

$

135.7

Total ^{(2) (3)}

$

176.7

$

174.5

$

203.5

REBILLABLES ⁽⁵⁾ (in millions)

Deepwater

$

0.4

$

0.2

$

0.8

Jack-ups ^{(3) (6)}

16.8

13.8

3.4

Total ^{(3) (6)}

$

17.2

$

14.0

$

4.2

ROWAN COMPANIES PLC

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except per share amounts)

(Unaudited)

Three months ended

March 31,

2018

2017

(As adjusted)

ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA):

GAAP NET INCOME (LOSS)

$

(112.3)

$

10.3

Depreciation and amortization

97.9

99.1

Equity in losses of unconsolidated subsidiary

1.3

—

Interest (income) expense and other, net

33.8

36.3

Income tax expense

6.2

29.7

Loss on disposals of property and equipment

1.3

3.4

NON-GAAP ADJUSTED EBITDA

$

28.2

$

178.8