L
$44.88
Loews
($.13)
(.29%)
Earnings Details
3rd Quarter September 2016
Monday, October 31, 2016 6:00:00 AM
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Summary

Loews Beats

Loews (L) reported 3rd Quarter September 2016 earnings of $0.97 per share on revenue of $3.3 billion. The consensus earnings estimate was $0.69 per share. The Earnings Whisper number was $0.71 per share. Revenue grew 3.7% 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
$0.97
Earnings Whisper
$0.71
Consensus Estimate
$0.69
Reported Revenue
$3.29 Bil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Diamond Offshore Announces Third Quarter 2016 Results

Diamond Offshore Drilling, Inc. (DO) today reported results for the third quarter of 2016.

Three Months Ended
Thousands of dollars, except per share data September 30, 2016
June 30, 2016
Change
Total revenues
$
349,178
$
388,747
(10)%
Operating income (loss)
54,071
(626,669)
--
Adjusted operating income
54,071
51,476
5%
Net income (loss)
13,927
(589,937)
--
Adjusted net income
13,927
22,295
(38)%
Earnings (loss) per diluted share
$
0.10 $
(4.30) --
Adjusted earnings per diluted share
$
0.10 $
0.16 (38)%

"Despite continued market headwinds, Diamond Offshore achieved earnings per share of $0.10," said Marc Edwards, President and Chief Executive Officer. "Overall, I am pleased with our third quarter results and our ability to manage costs, while remaining focused on maintaining our backlog position."

During the quarter, the Company announced new contracts for the Ocean Valiant and Ocean Scepter with Maersk in the UK and Fieldwood in Mexico, respectively. The addition of these two contracts adds 20 months of backlog.

As of September 30, 2016, the Company’s total contracted backlog was $4.1 billion, which represents 27 rig years of work. Approximately 96% of the Company’s available ultra-deepwater rig days for the remainder of 2016 are contracted with top tier customers.

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 800-247-9979 or 973-321-1100, for international callers. The conference ID number is 89455433. 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 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, 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Revenues:
Contract drilling
$
339,636
$
599,036
$ 1,140,568
$
1,816,055
Revenues related to reimbursable expenses 9,542
10,706
67,900
47,775
Total revenues
349,178
609,742
1,208,468
1,863,830
Operating expenses:
Contract drilling, excluding depreciation 186,654
277,944
597,831
971,471
Reimbursable expenses
7,965
10,476
51,283
46,904
Depreciation
86,473
118,086
295,729
378,714
General and administrative
15,237
16,888
48,774
50,888
Impairment of assets
--
2,546
678,145
361,074
Restructuring and separation costs
--
1,574
--
8,735
(Gain) loss on disposition of assets
(1,222)
794
(2,265)
19
Total operating expenses
295,107
428,308
1,669,497
1,817,805
Operating income (loss)
54,071
181,434
(461,029)
46,025
Other income (expense):
Interest income
150
629
592
1,796
Interest expense
(19,032)
(21,350)
(68,704)
(70,800)
Foreign currency transaction (loss) gain
(712)
(1,163)
(7,833)
954
Other, net
269
217
(11,199)
702
Income (loss) before income tax (expense) 34,746
159,767
(548,173)
(21,323)
benefit
Income tax (expense) benefit
(20,819)
(23,345)
59,588
(7,578)
Net income (loss)
$
13,927
$
136,422
$
(488,585)
$
(28,901)
Income (loss) per share
$
0.10
$
0.99
$
(3.56)
$
(0.21)
Weighted-average shares outstanding:
Shares of common stock
137,170
137,159
137,167
137,156
Dilutive potential shares of common stock 84
44
--
--
Total weighted-average shares outstanding 137,254
137,203
137,167
137,156
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
(Unaudited)
(In thousands)
Three Months Ended
September 30,
June 30,
September 30,
2016
2016
2015
REVENUES
Floaters:
Ultra-Deepwater
$
217,275
$
214,102
$
376,195
Deepwater
66,011
67,191
136,668
Mid-water
56,350
56,694
69,500
Total Floaters
339,636
337,987
582,363
Jack-ups
--
19,422
16,673
Total Contract Drilling Revenue
339,636
$
357,409
$
599,036
Revenues Related to Reimbursable Expenses $
9,542
$
31,338
$
10,706
CONTRACT DRILLING EXPENSE
Floaters:
Ultra-Deepwater
$
124,099
$
127,185
$
156,107
Deepwater
36,226
34,776
67,630
Mid-water
17,634
25,862
35,784
Total Floaters
177,959
187,823
259,521
Jack-ups
1,833
6,876
12,507
Other
6,862
3,637
5,916
Total Contract Drilling Expense
$
186,654
$
198,336
$
277,944
Reimbursable Expenses
$
7,965
$
16,527
$
10,476
OPERATING INCOME (LOSS)
Floaters:
Ultra-Deepwater
$
93,176
$
86,917
$
220,088
Deepwater
29,785
32,415
69,038
Mid-water
38,716
30,832
33,716
Total Floaters
161,677
150,164
322,842
Jack-ups
(1,833)
12,546
4,166
Other
(6,862)
(3,637)
(5,916)
Reimbursable expenses, net
1,577
14,811
230
Depreciation
(86,473)
(105,016)
(118,086)
General and administrative expense
(15,237)
(18,139)
(16,888)
Impairment of assets
--
(678,145)
(2,546)
Restructuring and separation costs
--
--
(1,574)
Gain (loss) on disposition of assets
1,222
747
(794)
Total Operating
Income (Loss)
$
54,071
$
(626,669)
$
181,434
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
September 30,
December 31,
2016
2015
ASSETS
Current assets:
Cash and cash equivalents
$
81,329
$
119,028
Marketable securities
46
11,518
Accounts receivable, net of allowance for bad debts
273,982
405,370
Prepaid expenses and other current assets
114,166
119,479
Assets held for sale
7,600
14,200
Total current assets
477,123
669,595
Drilling and other property and equipment, net of accumulated 5,819,309
6,378,814
depreciation
Other assets
112,743
101,485
Total assets
$
6,409,175
$
7,149,894
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term borrowings
$
182,100
$
286,589
Other current liabilities
297,781
339,134
Long-term debt
1,980,602
1,979,778
Deferred tax liability
164,389
276,529
Other liabilities
151,375
155,094
Stockholders’ equity
3,632,928
4,112,770
Total liabilities and stockholders’ equity
$
6,409,175
$
7,149,894
DIAMOND OFFSHORE DRILLING, INC. AND SUBSIDIARIES
AVERAGE DAYRATE, UTILIZATION AND OPERATIONAL EFFICIENCY
(Dayrate in thousands)
Third Quarter
Second Quarter
Third Quarter
2016
2016
2015
Average
Utilization (2) Operational Efficiency Average
Utilization (2) Operational Efficiency Average Utilization (2) Operational Efficiency
Dayrate (1)
(3)
Dayrate (1)
(3)
Dayrate
(3)
(1)
Ultra-Deepwater Floaters $452
48%
87.1%
$452
47%
86.7%
$479
71%
96.8%
Deepwater Floaters
$303
34%
94.5%
$301
35%
100%
$361
59%
90.3%
Mid-Water floaters
$311
33%
98.4%
$313
30%
99.4%
$289
31%
97.5%
Jack-ups
--
--
--
$335
13%
100%
$97
31%
99.8%
Fleet Total
91.0%
92.7%
95.5%
(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, but excluding rigs under construction).
As of September 30, 2016, our cold-stacked rigs included four ultra-deepwater semisubmersibles, three deepwater semisubmersibles, three mid-water semisubmersibles and four marketed-for-sale jack-up rigs.
(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 2016 impairment of rigs and associated inventory, as well as the related tax effect thereof and other second quarter discrete tax items, 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,
2016
2016
Reconciliation of As Reported Operating (Loss) Income to
Adjusted Operating Income:
(In thousands)
As reported operating income (loss)
$
54,071
$
(626,669)
Impairments and other charges:
Impairment of rigs and associated inventory (1)
--
678,145
Adjusted operating income
$
54,071
$
51,476
Reconciliation of As Reported Net Loss to Adjusted Net Income:
(In thousands)
As reported net income (loss)
$
13,927
$
(589,937)
Impairments and other charges:
Impairment of rigs and associated inventory (1)
--
678,145
Tax effect of impairments and other charges:
Impairment of rigs and associated inventory (2)
--
(143,165)
Discrete tax items (3)
77,252
Adjusted net income
$
13,927
$
22,295
Three Months Ended
September 30,
June 30,
2016
2016
Reconciliation of As Reported Income (Loss) per Diluted Share
to Adjusted Earnings per Diluted Share:
As reported income (loss) per diluted share
$
0.10
$
(4.30)
Impairments and other charges:
Impairment of rigs and associated inventory (1)
--
4.94
Tax effect of impairments and other charges:
Impairment of rigs and associated inventory (2)
--
(1.04)
Other discrete tax items (3)
--
0.56
Adjusted earnings per diluted share
$
0.10
$
0.16
(1) Represents the aggregate amount of impairment losses recognized during the second quarter of 2016 related to eight of our drilling rigs and associated inventory.
(2) Represents the income tax effects of the aggregate impairment loss recognized in the second quarter of 2016.
(3) Represents the aggregate of certain discrete income tax adjustments recognized during the second quarter of 2016, primarily related to valuation allowances for current and prior year tax assets associated with foreign tax credits, which we no longer expect to be able to utilize to offset income taxes in the U.S. tax jurisdiction.

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

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SOURCE Diamond Offshore Drilling, Inc.

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