L
$49.39
Loews
$.17
.35%
Earnings Details
3rd Quarter September 2017
Monday, October 30, 2017 6:00:00 AM
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Summary

Loews (L) Recent Earnings

Loews (L) reported 3rd Quarter September 2017 earnings of $0.46 per share on revenue of $3.5 billion. The consensus earnings estimate was $0.02 per share. Revenue grew 7.1% on a year-over-year basis.

Loews Corp through its subsidiaries is engaged in commercial property & casualty insurance, operation of offshore oil & gas drilling rigs, production of natural gas and liquids, operation of interstate natural gas pipeline and operation of hotels.

Results
Reported Earnings
$0.46
Earnings Whisper
-
Consensus Estimate
$0.02
Reported Revenue
$3.52 Bil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Diamond Offshore Announces Third Quarter 2017 Results

Diamond Offshore Drilling, Inc. (DO) today reported the following results for the third quarter of 2017:

Three Months Ended
Thousands of dollars, except per share data September 30, 2017
June 30, 2017
Change
Total revenues
$
366,023
$
399,289
(8)
%
Operating income
58,581
20,824
181
%
Adjusted operating income
58,581
92,092
(36) %
Net income
10,799
15,949
(32) %
Adjusted net income
33,787
62,273
(46) %
Earnings per diluted share
$
0.08
$
0.12
(33) %
Adjusted earnings per diluted share
$
0.25
$
0.45
(44) %

"Despite the continued weakness in the offshore drilling market, we achieved favorable third quarter results," said Marc Edwards, President and Chief Executive Officer. "During the quarter we were able to secure additional work for our proficient moored fleet, with new wins for the Ocean Apex and Ocean Patriot, at rates well above cash flow breakeven. In addition, we took proactive measures during the quarter to further enhance our liquidity runway and better position Diamond for the eventual recovery."

As of September 30, 2017, the Company’s total contracted backlog was $2.6 billion, which represents 20 rig years of work.

CONFERENCE CALL

A conference call to discuss Diamond Offshore’s earnings results has been scheduled for 7:30 a.m. CDT today. A live webcast of the call will be available online on the Company’s website, www.diamondoffshore.com. Those interested in participating in the question and answer session should dial 844-492-6043 or 478-219-0839 for international callers. The conference ID number is 95338408. An online replay will also be available on www.diamondoffshore.com following the call.

ABOUT DIAMOND OFFSHORE

Diamond Offshore is a leader in offshore drilling, providing contract drilling services to the energy industry around the globe. Additional information and access to the Company’s SEC filings are available at www.diamondoffshore.com. Diamond Offshore is owned 53% by Loews Corporation (L).

FORWARD-LOOKING STATEMENTS

Statements contained in this press release or made during the above conference call that are not historical facts are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are inherently uncertain and subject to a variety of assumptions, risks and uncertainties that could cause actual results to differ materially from those anticipated or expected by management of the Company. A discussion of certain of the important risk factors and other considerations that could materially impact these matters as well as the Company’s overall business and financial performance can be found in the Company’s reports filed with the Securities and Exchange Commission, and readers of this press release are urged to review those reports carefully when considering these forward-looking statements. Copies of these reports are available through the Company’s website at www.diamondoffshore.com. These risk factors include, among others, risks associated with worldwide demand for drilling services, level of activity in the oil and gas industry, renewing or replacing expired or terminated contracts, contract cancellations and terminations, maintenance and realization of backlog, competition and industry fleet capacity, impairments and retirements, operating risks, litigation and disputes, changes in tax laws and rates, regulatory initiatives and compliance with governmental regulations, construction of new builds, casualty losses, and various other factors, many of which are beyond the Company’s control. Given these risk factors, investors and analysts should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of this press release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Revenues:
Contract drilling
$
357,683
$
339,636
$ 1,113,410
$ 1,140,568
Revenues related to reimbursable expenses 8,340
9,542
26,128
67,900
Total revenues
366,023
349,178
1,139,538
1,208,468
Operating expenses:
Contract drilling, excluding depreciation 198,072
186,654
597,812
597,831
Reimbursable expenses
8,220
7,965
25,488
51,283
Depreciation
83,281
86,473
262,492
295,729
General and administrative
17,806
15,237
54,299
48,774
Impairment of assets
-
-
71,268
678,145
Loss (gain) on disposition of assets
63
(1,222)
(2,085)
(2,265)
Total operating expenses
307,442
295,107
1,009,274
1,669,497
Operating income (loss)
58,581
54,071
130,264
(461,029)
Other income (expense):
Interest income
776
150
1,347
592
Interest expense
(28,562)
(19,032)
(83,409)
(68,704)
Foreign currency transaction loss
(677)
(712)
(517)
(7,833)
Loss on extinguishment of senior notes
(35,366)
-
(35,366)
-
Other, net
1,447
269
1,322
(11,199)
(Loss) income before income tax benefit
(3,801)
34,746
13,641
(548,173)
Income tax benefit (expense)
14,600
(20,819)
36,646
59,588
Net income (loss)
$
10,799
$
13,927
$
50,287
$
(488,585)
Income (loss) per share
$
0.08
$
0.10
$
0.37
$
(3.56)
Weighted-average shares outstanding:
Shares of common stock
137,227
137,170
137,208
137,167
Dilutive potential shares of common stock 14
84
29
-
Total weighted-average shares outstanding 137,241
137,254
137,237
137,167
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
September 30,
June 30,
September 30,
2017
2017
2016
REVENUES
Floaters:
Ultra-Deepwater
$
275,859
$
282,535
$
217,275
Deepwater
35,634
66,905
66,011
Mid-water
39,616
36,543
56,350
Total Floaters
351,109
385,983
339,636
Jack-ups
6,574
6,187
-
Total Contract Drilling Revenue
$
357,683
$
392,170
$
339,636
Revenues Related to Reimbursable Expenses $
8,340
$
7,119
$
9,542
CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater
$
139,619
$
136,661
$
124,099
Deepwater
27,139
31,340
36,226
Mid-water
17,753
15,771
17,634
Total Floaters
184,511
183,772
177,959
Jack-ups
6,197
6,978
1,833
Other
7,364
5,467
6,862
Total Contract Drilling Expense
$
198,072
$
196,217
$
186,654
Reimbursable Expenses
$
8,220
$
6,790
$
7,965
OPERATING INCOME
Floaters:
Ultra-Deepwater
$
136,240
$
145,874
$
93,176
Deepwater
8,495
35,565
29,785
Mid-water
21,863
20,772
38,716
Total Floaters
166,598
202,211
161,677
Jack-ups
377
(791)
(1,833)
Other
(7,364)
(5,467)
(6,862)
Reimbursable expenses, net
120
329
1,577
Depreciation
(83,281)
(85,982)
(86,473)
General and administrative expense
(17,806)
(19,010)
(15,237)
Impairment of assets
-
(71,268)
-
(Loss) gain on disposition of assets
(63)
802
1,222
Total Operating Income
$
58,581
$
20,824
$
54,071
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30,
December 31,
2017
2016
ASSETS
Current assets:
Cash and cash equivalents
$
276,686
$
156,233
Accounts receivable, net of allowance for bad debts
271,390
247,028
Prepaid expenses and other current assets
97,803
102,146
Assets held for sale
2,598
400
Total current assets
648,477
505,807
Drilling and other property and equipment, net of accumulated
depreciation
5,432,689
5,726,935
Other assets
117,062
139,135
Total assets
$
6,198,228
$
6,371,877
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term borrowings
$
-
$
104,200
Other current liabilities
180,970
236,299
Long-term debt
1,971,852
1,980,884
Deferred tax liability
124,929
197,011
Other liabilities
115,715
103,349
Stockholders’ equity
3,804,762
3,750,134
Total liabilities and stockholders’ equity
$
6,198,228
$
6,371,877
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine Months Ended
September 30,
2017
2016
Operating activities:
Net income (loss)
$
50,287
$
(488,585)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation
262,492
295,729
Loss on impairment of assets
71,268
678,145
Loss on extinguishment of senior notes
35,366
-
Deferred income, net
8,379
(23,381)
Deferred expenses, net
32,701
(1,099)
Deferred tax provision
(73,873)
(114,405)
Other
2,090
17,976
Net changes in operating working capital
(22,075)
127,614
Net cash provided by operating activities
366,635
491,994
Investing activities:
Capital expenditures (including rig construction)
(100,613)
(598,236)
Proceeds from disposition of assets, net of disposal costs 4,017
169,038
Other
31
4,603
Net cash used in investing activities
(96,565)
(424,595)
Financing activities:
Redemption of senior notes
(500,000)
-
Payment of debt extinguishment costs
(34,395)
-
Proceeds from issuance of senior notes
496,360
-
Net repayment of short-term borrowings
(104,200)
(104,489)
Other
(7,382)
(609)
Net cash used in financing activities
(149,617)
(105,098)
Net change in cash and cash equivalents
120,453
(37,699)
Cash and cash equivalents, beginning of period
156,233
119,028
Cash and cash equivalents, end of period
$
276,686
$
81,329
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY
(Dayrate in thousands)
Third Quarter
Second Quarter
Third Quarter
2017
2017
2016
Average Utilization Operational Average Utilization Operational Average Utilization Operational
Dayrate (2)
Efficiency
Dayrate (2)
Efficiency
Dayrate (2)
Efficiency
(1)
(3)
(1)
(3)
(1)
(3)
Ultra-Deepwater Floaters $407
61%
92.0%
$436
59%
97.1%
$452
48%
87.1%
Deepwater Floaters
$195
33%
99.6%
$270
45%
96.0%
$303
34%
94.5%
Mid-Water floaters
$322
27%
98.8%
$397
20%
100.0%
$311
33%
98.4%
Jack-ups
$75
95%
95.3%
$75
86%
90.8%
--
--
--
Fleet Total
94.3%
96.6%
91.0%
(1) Average dayrate is defined as contract drilling revenue for all of the specified rigs in our fleet per revenue-earning day.
A revenue-earning day is defined as a 24-hour period during which a rig earns a dayrate after commencement of operations and excludes mobilization, demobilization and contract preparation days.
(2) Utilization is calculated as the ratio of total revenue-earning days divided by the total calendar days in the period for all specified rigs in our fleet (including cold-stacked rigs).
Our current fleet includes three ultra-deepwater and three deepwater semisubmersible rigs that are cold stacked.
(3) Operational efficiency is calculated as the ratio of total revenue-earning days divided by the sum of total revenue-earning days plus the number of days (or portions thereof) associated with unanticipated equipment downtime.

Non-GAAP Financial Measures (Unaudited)

To supplement the Company’s unaudited condensed consolidated financial statements presented on a GAAP basis, this press release provides investors with adjusted operating income, adjusted net income and adjusted earnings per diluted share, which are non-GAAP financial measures. Management believes that these measures provide meaningful information about the Company’s performance by excluding certain charges that may not be indicative of the Company’s ongoing operating results. This allows investors and others to better compare the company’s financial results across previous and subsequent accounting periods and to those of peer companies and to better understand the long-term performance of the Company. Non-GAAP financial measures should be considered to be a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

In order to fully assess the financial operating results of the Company, management believes that the results of operations adjusted to exclude the second quarter 2017 asset impairments, the third quarter 2017 loss on extinguishment of debt, as well as the related tax effects thereof, are appropriate measures of the continuing and normal operations of the Company. However, these measures should be considered in addition to, and not as a substitute for, or superior to, contract drilling revenue, contract drilling expense, operating income, cash flows from operations or other measures of financial performance prepared in accordance with GAAP.

Three Months Ended
September 30,
June 30,
2017
2017
Reconciliation of As Reported Operating Income to
Adjusted Operating Income:
(In thousands)
As reported operating income
$
58,581
$
20,824
Impairments and other charges:
Impairment of rigs(1)
-
71,268
Adjusted operating income
$
58,581
$
92,092
Reconciliation of As Reported Net Income to Adjusted
Net Income:
(In thousands)
As reported net income
$
10,799
$
15,949
Impairments and other charges:
Impairment of rigs(1)
-
71,268
Loss on extinguishment of senior notes (2)
35,366
-
Tax effect of impairments and other charges:
Impairment of rigs (3)
-
(24,944)
Loss on extinguishment of senior notes (4)
(12,378)
-
Adjusted net income
$
33,787
$
62,273

Three Months Ended September 30, June 30, 2017 2017 Reconciliation of As Reported Income per Diluted Share to Adjusted Earnings per Diluted Share: As reported income per diluted share $ 0.08 $ 0.12 Impairments and other charges: Impairment of rigs (1) - 0.51 Loss on extinguishment of senior notes (2) 0.26 - Tax effect of impairments and other charges: Impairment of rigs (3) - (0.18) Loss on extinguishment of senior notes (4) (0.09) - Adjusted earnings per diluted share $ 0.25 $ 0.45

(1) Represents the aggregate amount of impairment loss recognized during the second quarter of 2017 related to two semisubmersible drilling rigs.
(2) Represents the loss recognized during the third quarter of 2017 related to the redemption of our 5.875% senior notes due 2019.
(3) Represents the income tax effect of the aggregate impairment loss recognized in the second quarter of 2017.
The income tax effect of the impairment loss has been calculated on a discrete tax basis, utilizing the statutory tax rates for the applicable tax jurisdictions of the rig-owning companies. We believe that this approach provides investors and others with useful information regarding the actual tax impact of these transactions when the appropriate tax returns are filed with the taxing authorities.
(4) Represents the income tax effect of the loss on extinguishment of the 2019 senior notes recognized in the third quarter of 2017.
The income tax effect of the loss was calculated using the U.S. corporate tax rate.

Contact: Samir AliSr. Director, Investor Relations & Corporate Development(281) 647-4035

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