North Atlantic Drilling US Listing : NADL - North Atlantic Drilling Ltd. second quarter 2016 results

NADL - North Atlantic Drilling Ltd. Second quarter 2016 results

Highlights for the second quarter

• Economic Utilization1 of 99%.
• Revenues of $164.6 million.
• Operating income of $54.0 million.
• EBITDA of $109.0 million.
• Net income of $16.6 million and net income attributable to shareholders of $12.9 million. The earnings per share was $0.53.

Financial highlights

Second quarter 2016 results
Revenues for the second quarter 2016 were $164.6 million compared to $151.6 million for the first quarter of 2016. The primary reason for the increase is the West Phoenix which returned to drilling operations on March 6, 2016 after concluding its idle period over the winter months.

Operating income for the second quarter was $54.0 million, an increase of $21.0 million compared to the first quarter of 2016 operating income of $33.0 million. The increase in operating income is primarily due to the West Phoenix returning to operations as stated above.

Net financial items for the second quarter of 2016 amounted to a charge of $35.8 million. The charge included
$26.8 million in interest expenses and a loss on financial derivatives of $8.5 million, partly offset by a foreign exchange gain of $1.4 million related to the NOK1,500 million bond loan. The first quarter of 2016 incurred a net financial charge of $35.1 million, including interest expenses of $26.0 million and a loss on foreign exchange of
$7.3 million mainly related to the NOK1,500 million bond loan.

Income tax expense for the second quarter was $1.6 million, compared to $4.0 million in the first quarter of 2016. The decrease is attributable to a change estimate of the tax expense initially recognized relating to prior reporting periods, following the submission of tax returns.

Net income for the second quarter was $16.6 million and net income attributable to shareholders was $12.9 million, resulting in a basic earnings per share of $0.53. This is compared to net loss of $6.1 million and a net loss attributable to shareholders of $9.9 million for the first quarter of 2016.

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1 Economic utilization is calculated as total revenue, excluding bonuses, for the period as a proportion of the full operating dayrate multiplied by the number of days on contract in the period.
2 EBITDA is defined as 'Earnings Before Interest, Tax, Depreciation and Amortization' and has been calculated by taking operating income plus depreciation, but excluding gains or losses on disposals and impairment charges.
The Company reports operating revenues of $316.2 million, operating income of $87.0 million and a net income of $10.5 million for the six months ended June 30, 2016. This compares to operating revenues of $402.7 million, operating income of $101.4 million and a net income of $32.9 million for the six months ended June 30, 2015.

Balance sheet as at June 30, 2016

As at June 30, 2016, total assets decreased to $3,119.1 million from $3,157.0 million compared to the previous quarter.

Total current assets increased to $258.0 million from $243.5 million compared to the previous quarter. The increase was mainly due to an increase in accounts receivables, partly offset by a fall in cash balances.

Total non-current assets decreased to $2,861.1 million from $2,913.5 million compared to the previous quarter. The decrease was mainly due to depreciation on drilling units.

Total current liabilities increased to $1,400.1 million from $444.2 million compared to the previous quarter. The increase is largely due to the outstanding balance on the $2 billion senior secured credit facility being presented in 'Current portion of long-term debt' as it matures in June 2017. Refer to the Financing update section below for more information.

Total interest bearing debt, including related party debt and the current portion, decreased to $2,384.8 million from $2,411.6 million during the quarter. During the second quarter the Company repaid $42.0 million on the $2 billion credit facility and $12.0 million on the $475 million credit facility.

Total equity decreased to $402.6 million from $416.6 million compared to the previous quarter. The decrease is primarily due to the fall in the non-controlling interest, as the Ship Finance International leasing entity that we consolidate, SFL Linus Limited, declared a dividend of $32 million in the period to Ship Finance International. The decrease in equity was partly offset by net income for the quarter.

Cash flow

As at June 30, 2016, cash and cash equivalents decreased to $80.0 million from $87.4 million compared to the previous quarter.

For the six-month period ending June 30, 2016, net cash provided by operating activities was $35.8 million, net cash provided by investing activities amounted to $0.4 million, and net cash used in financing activities was $111.2 million. For the six-month period ending June 30, 2015, net cash provided by operating activities was $197.8 million, net cash used in investing activities amounted to $21.0 million, and net cash used in financing activities was $157.1 million. The fall in net cash from operating activities compared to the prior year is due to the increase in outflows of working capital balances, primarily the increase in accounts receivable balances.