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Rowan Companies (RDC) Q4 Loss Wider Than Expected, Sales Top

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Rowan Companies plc’s adjusted fourth-quarter 2018 loss from continuing operations of $1.11 per share was wider than the Zacks Consensus Estimate of loss of $1.07 due to increased expenses. Moreover, the quarterly loss was wider than the year-ago adjusted figure of 29 cents.

On the flip side, total revenues of $179.4 million in the fourth quarter beat the Zacks Consensus Estimate of $169.8 million, which can be attributed to Rowan Norway and Rowan Stavanger’s recommencing of operations, along with leasing the EXL I and EXL IV to ARO Drilling. However, the top line was down from $296.7 million in the prior-year quarter due to the divestment of Yeargain and Boswell rigs to ARO Drilling and fall in average dayrates.

Dayrates and Utilization

The company's deepwater rigs recorded an average dayrate of $138,100, down from $767,100 in the year-ago quarter. Moreover, jackup rigs saw a dayrate of $84,200, down from $123,300 in the prior-year quarter.

The overall dayrate of all the rigs was $90,200 compared with $174,500 in fourth-quarter 2017. Average utilization of the company's rigs was 83% compared with 70% in the comparable quarter last year.

Total revenue-producing rig days increased 2.3% year over year to 1,609 in the fourth quarter of 2018.

Total Expenses

In the fourth quarter, the company reported $230.2 million in total costs, much higher than $151.9 million in the year-ago period. However, direct operating expenses fell from $176.2 million in the prior-year quarter to $166.7 million.

Financials

Capital expenditure in fourth-quarter 2018 was $52.3 million compared with $22 million in the prior-year period.

As of Dec 31, 2018, the company's cash balance was $1,026.7 million and long-term debt amounted to $2,309.7 million. The long-term debt-to-capitalization ratio of the company was 31.4%.

Zacks Rank and Stocks to Consider

Currently, Rowan Companies carries a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for some better-ranked stocks as given below:

Austin, TX-based Jones Energy, Inc. (JONE - Free Report) is an exploration and production company. For 2019, its bottom line, which has witnessed one upside revision over the past 60 days, is expected to grow 19% year over year. The company currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Madrid, Spain-based Repsol, S.A. (REPYY - Free Report) is an integrated energy company. Its bottom line for 2019 is expected to increase 13.7% year over year. The company delivered average positive earnings surprise of 9% in the trailing four quarters. The stock currently has a Zacks Rank #2.

Enbridge Inc. (ENB - Free Report) is a Calgary, Canada-based energy infrastructure provider. The company delivered average positive earnings surprise of 33.2% in the trailing four quarters. It currently has a Zacks Rank #2.

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