Atwood Oceanics Announces Fiscal 2016 Third Quarter Earnings
FOR IMMEDIATE RELEASE - EARNINGS
HOUSTON, August 1, 2016 -- Atwood Oceanics, Inc. (NYSE: ATW) ("Company"), announced today that it had earned net income of $99.5 million or $1.53 per diluted share, on revenues of $227.8 million for the quarter ended June 30, 2016 compared to $122.4 million or $1.89 per diluted share, on revenues of $296.4 million for the quarter ended March 31, 2016 and compared to net income of $113.0 million or $1.73 per diluted share on revenues of $330.6 million for the quarter ended June 30, 2015. For the nine months ended June 30, 2016, the Company earned net income of $261.0 million or $4.02 per diluted share, on revenues of $832.0 million compared to net income of $281.9 million or $4.33 per diluted share, on revenues of $1.0 billion for the nine months ended June 30, 2015.
During the three months ended June 30, 2016, we repurchased, through open market transactions, $145.8 million aggregate principal amount of our Senior Notes for $97.4 million, including $2.4 million of accrued interest, representing an average discount of 34.8%. As a result of the repurchases, we recognized a gain on debt retirement, net of the related debt issuance costs and premium of $0.3 million, of $50.5 million ($35.7 million, net of tax, or $0.55 per diluted share) in Gains on extinguishment of debt on our Condensed Consolidated Statements of Operations for the three ended June 30, 2016.
During the three months ended March 31, 2016, we repurchased, through open market transactions, $13.5 million aggregate principal of our Senior Notes at an aggregate cost of $5.1 million, including a minimal amount of accrued interest, representing an average discount of 62.2%. As a result of the repurchases, we recognized a gain on debt retirement, net of the related debt issuance costs, of $8.4 million ($8.4 million, net of tax, or $0.13 per diluted share) in Gains on extinguishment of debt on the Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2016.
On July 25, 2016, following consummation of our modified "Dutch Auction" tender offer (the "Offer"), we acquired $42.0 million aggregate principal amount of the Senior Notes. Including the purchase price for the Senior Notes, which totaled $31.5 million, and accrued interest payable on the Senior Notes acquired and related fees, the total cost of the Offer was $33.0 million. The purchase price in the Offer represented a discount to the principal amount of the Senior Notes of 25.0%.
These repurchases, in the three month periods ended March 31, 2016 and June 30, 2016 and in July 2016, allowed us to reduce our outstanding indebtedness and related interest expense at a significant discount to the face value of our Senior Notes. The gain associated with the repurchases is subject to tax and will increase our effective tax rate. However, due to the availability of operating loss carry-forwards the actual cash tax impact will be minimal. The repurchases were made using available cash balances. Following these repurchases, the Company has $448.7 million Senior Notes outstanding.
| For the Three Months Ended | |||||||||||
| (Unaudited) | |||||||||||
| (In thousands, except per share amounts) | June 30, 2016 | March 31, 2016 | June 30, 2015 | ||||||||
| Revenues | $ | 227,797 | $ | 296,351 | $ | 330,562 | |||||
| Income before Income Taxes | 120,116 | 136,426 | 122,539 | ||||||||
| Provision for Income Taxes | (20,611 | ) | (13,989 | ) | (9,547 | ) | |||||
| Net Income | $ | 99,505 | $ | 122,437 | $ | 112,992 | |||||
| Earnings per Common Share - | |||||||||||
| Basic | $ | 1.54 | $ | 1.89 | $ | 1.75 | |||||
| Diluted | $ | 1.53 | $ | 1.89 | $ | 1.73 | |||||
| Nine Months Ended | |||||||||
| (Unaudited) | |||||||||
| (In thousands, except per share amounts) | June 30, 2016 | June 30, 2015 | |||||||
| Revenues | $ | 831,967 | $ | 1,032,675 | |||||
| Income before Income Taxes | 306,837 | 312,855 | |||||||
| Provision for Income Taxes | (45,814 | ) | (30,976 | ) | |||||
| Net Income | $ | 261,023 | $ | 281,879 | |||||
| Earnings per Common Share - | |||||||||
| Basic | $ | 4.03 | $ | 4.37 | |||||
| Diluted | $ | 4.02 | $ | 4.33 | |||||
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
| (In thousands, except per share amounts) | 2016 | 2015 | 2016 | 2015 | |||||||||||
| REVENUES: | |||||||||||||||
| Contract drilling | $ | 217,818 | $ | 317,531 | $ | 794,979 | $ | 992,913 | |||||||
| Revenues related to reimbursable expenses | 9,979 | 13,031 | 36,988 | 39,762 | |||||||||||
| Total revenues | 227,797 | 330,562 | 831,967 | 1,032,675 | |||||||||||
| COSTS AND EXPENSES: | |||||||||||||||
| Contract drilling | 80,524 | 134,258 | 301,094 | 401,847 | |||||||||||
| Reimbursable expenses | 5,489 | 9,066 | 22,898 | 29,634 | |||||||||||
| Depreciation | 41,084 | 42,534 | 124,964 | 129,637 | |||||||||||
| General and administrative | 12,028 | 10,473 | 38,693 | 42,619 | |||||||||||
| Asset impairment | (659 | ) | - | 64,773 | 60,777 | ||||||||||
| Loss on sale of assets | - | 27 | 77 | 15,362 | |||||||||||
| Other, net | 16 | - | (1,044 | ) | - | ||||||||||
| 138,482 | 196,358 | 551,455 | 679,876 | ||||||||||||
| OPERATING INCOME | 89,315 | 134,204 | 280,512 | 352,799 | |||||||||||
| OTHER INCOME (EXPENSE): | |||||||||||||||
| Interest expense, net of capitalized interest | (19,674 | ) | (11,677 | ) | (50,533 | ) | (40,028 | ) | |||||||
| Interest income | 9 | 12 | 19 | 84 | |||||||||||
| Gains on extinguishment of debt | 50,466 | - | 58,863 | - | |||||||||||
| Other income | - | - | 17,976 | - | |||||||||||
| 30,801 | (11,665 | ) | 26,325 | (39,944 | ) | ||||||||||
| INCOME BEFORE INCOME TAXES | 120,116 | 122,539 | 306,837 | 312,855 | |||||||||||
| PROVISION FOR INCOME TAXES | 20,611 | 9,547 | 45,814 | 30,976 | |||||||||||
| NET INCOME | $ | 99,505 | $ | 112,992 | $ | 261,023 | $ | 281,879 | |||||||
| EARNINGS PER COMMON SHARE (NOTE 2): | |||||||||||||||
| Basic | $ | 1.54 | $ | 1.75 | $ | 4.03 | $ | 4.37 | |||||||
| Diluted | $ | 1.53 | $ | 1.73 | $ | 4.02 | $ | 4.33 | |||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (NOTE 2): | |||||||||||||||
| Basic | 64,795 | 64,649 | 64,750 | 64,557 | |||||||||||
| Diluted | 64,847 | 65,130 | 64,852 | 65,063 | |||||||||||
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
UNAUDITED ANALYSIS OF REVENUES AND DRILLING COSTS
| REVENUES | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| (In millions) | June 30, 2016 | March 31, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | ||||||||||||||
| Ultra-Deepwater | $ | 182 | $ | 189 | $ | 174 | $ | 553 | $ | 524 | |||||||||
| Deepwater | - | 59 | 77 | 131 | 257 | ||||||||||||||
| Jackups | 36 | 34 | 67 | 111 | 212 | ||||||||||||||
| Reimbursable | 10 | 14 | 13 | 37 | 40 | ||||||||||||||
| $ | 228 | $ | 296 | $ | 331 | $ | 832 | $ | 1,033 | ||||||||||
| DRILLING COSTS | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| (In millions) | June 30, 2016 | March 31, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | ||||||||||||||
| Ultra-Deepwater | $ | 54 | $ | 54 | $ | 75 | $ | 168 | $ | 206 | |||||||||
| Deepwater | 10 | 19 | 29 | 71 | 102 | ||||||||||||||
| Jackups | 16 | 19 | 29 | 62 | 91 | ||||||||||||||
| Reimbursable | 5 | 9 | 9 | 23 | 30 | ||||||||||||||
| Other | 1 | (2 | ) | 1 | - | 3 | |||||||||||||
| $ | 86 | $ | 99 | $ | 143 | $ | 324 | $ | 432 | ||||||||||
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| (In thousands, except par value) | June 30, 2016 | September 30, 2015 | |||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Cash | $ | 198,974 | $ | 113,983 | |||
| Accounts receivable, net | 166,534 | 311,514 | |||||
| Income tax receivable | 8,194 | 8,705 | |||||
| Inventories of materials and supplies, net | 113,161 | 137,998 | |||||
| Prepaid expenses, deferred costs and other current assets | 10,040 | 33,735 | |||||
| Total current assets | 496,903 | 605,935 | |||||
| Property and equipment, net | 4,198,069 | 4,172,132 | |||||
| Other receivables | 11,831 | 11,831 | |||||
| Deferred income taxes | 150 | 150 | |||||
| Deferred costs and other assets | 8,174 | 11,285 | |||||
| Total assets | $ | 4,715,127 | $ | 4,801,333 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Accounts payable | $ | 43,252 | $ | 70,161 | |||
| Accrued liabilities | 12,496 | 23,572 | |||||
| Dividends payable | - | 16,164 | |||||
| Interest payable | 15,506 | 7,704 | |||||
| Income tax payable | 13,530 | 13,906 | |||||
| Deferred credits and other liabilities | 1,486 | 3,941 | |||||
| Total current liabilities | 86,270 | 135,448 | |||||
| Long-term debt | 1,374,780 | 1,678,268 | |||||
| Deferred income taxes | 1,148 | 1,658 | |||||
| Deferred credits | - | 800 | |||||
| Other | 30,409 | 37,989 | |||||
| Total long-term liabilities | 1,406,337 | 1,718,715 | |||||
| Commitments and contingencies (Note 8) | |||||||
| Preferred stock, no par value, 1,000 shares authorized, none outstanding | - | - | |||||
| Common stock, $1.00 par value, 180,000 shares authorized with 64,798 issued and outstanding as of June 30, 2016 and 180,000 shares authorized and 64,654 shares issued and outstanding as of September 30, 2015 | 64,798 | 64,654 | |||||
| Paid-in capital | 235,043 | 213,096 | |||||
| Retained earnings | 2,925,589 | 2,670,148 | |||||
| Accumulated other comprehensive income | (2,910 | ) | (728 | ) | |||
| Total shareholders' equity | 3,222,520 | 2,947,170 | |||||
| Total liabilities and shareholders' equity | $ | 4,715,127 | $ | 4,801,333 | |||
ATWOOD OCEANICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended June 30, | |||||||
| (In thousands) | 2016 | 2015 | |||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 261,023 | $ | 281,879 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation | 124,964 | 129,637 | |||||
| Amortization | 2,407 | 5,179 | |||||
| Provision for doubtful accounts | 4,619 | 3,337 | |||||
| Deferred income tax benefit | (378 | ) | (3,453 | ) | |||
| Share-based compensation expense | 8,224 | 9,277 | |||||
| Asset impairment | 64,753 | 60,777 | |||||
| Loss on sale of assets | (71 | ) | 15,362 | ||||
| (Gain) on extinguishment of debt | (58,863 | ) | - | ||||
| Other, net | (1,137 | ) | - | ||||
| Changes in assets and liabilities: | |||||||
| Accounts receivable | 121,964 | (17,917 | ) | ||||
| Income tax receivable | 511 | (3,868 | ) | ||||
| Inventories of materials and supplies | 12,988 | (16,917 | ) | ||||
| Prepaid expenses, deferred costs and other current assets | 19,377 | 13,274 | |||||
| Deferred costs and other assets | (1,019 | ) | (341 | ) | |||
| Accounts payable | (33,674 | ) | (17,511 | ) | |||
| Accrued liabilities | (3,274 | ) | 24,049 | ||||
| Income tax payable | (376 | ) | (5,450 | ) | |||
| Deferred credits and other liabilities | (6,623 | ) | 6,291 | ||||
| Net cash provided by operating activities | 515,415 | 483,605 | |||||
| Cash flows from investing activities: | |||||||
| Capital expenditures | (198,248 | ) | (420,077 | ) | |||
| Proceeds from sale of assets | 20,813 | 2,339 | |||||
| Net cash used in investing activities | (177,435 | ) | (417,738 | ) | |||
| Cash flows from financing activities: | |||||||
| Proceeds from borrowing of long-term debt | 45,000 | 225,000 | |||||
| Principal repayments on long-term debt | (290,110 | ) | (250,000 | ) | |||
| Repayments on short-term debt, net | - | (11,885 | ) | ||||
| Debt issuance costs paid | - | - | |||||
| Dividends paid | (21,746 | ) | (32,397 | ) | |||
| Proceeds (payments) related to exercise of stock options | (930 | ) | 1,279 | ||||
| Windfall tax benefits from share-based payment arrangements | 14,797 | - | |||||
| Net cash used by financing activities | (252,989 | ) | (68,003 | ) | |||
| Net increase in cash and cash equivalents | 84,991 | (2,136 | ) | ||||
| Cash and cash equivalents, at beginning of period | 113,983 | 80,080 | |||||
| Cash and cash equivalents, at end of period | $ | 198,974 | $ | 77,944 | |||
| Non-cash activities: | |||||||
| Increase (decrease) in accounts payable and accrued liabilities related to capital expenditures | $ | 7,902 | $ | (15,501 | ) | ||
Atwood Oceanics, Inc. is a leading offshore drilling company engaged in the drilling and completion of exploration and development wells for the global oil and gas industry. The Company currently owns 10 mobile offshore drilling units and is constructing two ultra-deepwater drillships. The Company was founded in 1968 and is headquartered in Houston, Texas. Atwood Oceanics, Inc. common stock is traded on the New York Stock Exchange under the symbol "ATW." For more information about the Company, please visit www.atwd.com.
Conference Call
The Company has scheduled a conference call and webcast related to its third quarter 2016 results on Tuesday, August 2, 2016, at 9:00 A.M. CDT (10:00 A.M. EDT). Interested parties are invited to listen to the call by dialing 1-800-862-9098, or internationally 1-785-424-1051, Conference ID - ATWOOD, Password 62456. Interested parties may also listen over the Internet through a link posted in the Investor Relations section of the Company's Web site.
A replay of the conference call will be available on the Company's Web site following the end of the live call.
Contact: Mark W. Smith
Senior Vice President and Chief Financial Officer
(281) 749-7840
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Atwood Oceanics, Inc. via Globenewswire