(RTTNews) - Contract drilling services provider Rowan Companies Inc. (RDC: News ) posted a steep decline in third-quarter profit, reflecting weak performance at its drilling and manufacturing operations. Quarterly revenues fell from last year and missed the Street view.

The Houston, Texas-based company's third-quarter net income was $78.4 million or $0.69 per share, compared to $114.1 million or $1.00 per share in the year-ago quarter.

The company noted that the most recent quarter results included a $17.0 million or $0.15 per share net tax benefit related to a recent third-party tax court ruling, which provided that certain foreign-source income is not taxable in the United States. This is in addition to the $8.0 million or $0.07 per share tax benefit recorded during the second quarter related to the same issue. Results for the year-earlier quarter included gains on asset disposals of $21.4 million or $0.12 per share.

Excluding the tax benefit, earnings in the latest quarter totaled $61.4 million or $0.54 per share. On average, 30 analysts polled by Thomson Reuters expected the company to post earnings of $0.52 per share. Analysts' estimates typically exclude special items.

Quarterly revenues dropped to $393.4 million from $527.1 million reported in the comparable quarter of the previous year. Twenty-one Wall Street analysts had a consensus revenue estimate of $383.16 million for the quarter.
Matt Ralls, President and Chief Executive Officer of Rowan Companies, said, "Our third quarter results, both in drilling and manufacturing, benefited from our contract backlog and great execution by our employees. While excess rig supply has, and will likely continue to, put pressure on day rates, we believe global demand for jack-ups and land rigs bottomed during the third quarter."

The company's drilling operations reported third-quarter revenues of $258.4 million, a decline of 28%, compared with $357.1 million last year, due primarily to lower rig utilization. The company's gross drilling margin was 53% of revenues in the third quarter of 2009, down from 54% in the prior-year quarter. Income from drilling operations plunged 51% to $81.1 million from $166.9 million a year ago.

Manufacturing operations generated external revenues of $135.0 million in the third quarter of 2009, 21% lower than the previous year's $170.0 million. Gross manufacturing margin in the quarter was 13% of revenues, up from 12% in the prior-year quarter. Income from manufacturing operations was $6.0 million in the third quarter of 2009, up by 13% from the prior-year's $5.3 million.

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