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Rowan Cos. Inc. has a market cap of $4.23 billion; its shares were traded at around $33.19 with a P/E ratio of 20.6 and P/S ratio of 2.3. Rowan Cos. Inc. had an annual average earning growth of 25.5% over the past 10 years. GuruFocus rated Rowan Cos. Inc. the business predictability rank of 3.5-star.
Highlight of Business Operations:During the period from January 2010 through March 2011, we accepted delivery of six newly constructed rigs, including the EXL II and EXL III in the third and fourth quarters of 2010 and the Viking and Stavanger, which began working in the second quarter of 2011. These four rigs contributed 368 incremental revenue-producing days in the third quarter of 2011 compared to the third quarter of 2010.
Newbuild additions to the fleet contributed 828 incremental revenue-producing days in the nine months ended September 30, 2011 compared to the comparable period of 2010.
Our operating margin (revenues in excess of operating costs, other than depreciation, selling, general and administrative expenses and charges to settle litigation) declined to 48% of revenues in the nine months ended September 30, 2011, from 61% in the comparable period of 2010 primarily as a result of lower day rates and utilization of our existing rigs, which more than offset the impact of fleet additions over the periods. Depreciation expense increased by $26.9 million or 26.3% between periods due to the rig additions. Selling, general and administrative expenses increased by $10.0 million or 18.1% due primarily to higher labor costs and tax consulting fees.
As Rowan s operations have diversified internationally, a greater portion of our revenues has been generated through foreign subsidiaries whose associated earnings are expected to be permanently invested abroad. As of September 30, 2011, approximately $124.4 million of the $892.6 million cash and cash equivalents was held by foreign subsidiaries. As of September 30, 2011, we had undistributed earnings from foreign subsidiaries in the amount of approximately $202 million. Given the growing significance of our foreign subsidiaries and their capital needs relative to our domestic operations, we do not expect this permanent foreign investment to create any liquidity constraints for at least the next twelve months.
In June and September 2011, the Company completed the sales of its manufacturing and land drilling businesses, and received net cash proceeds of approximately $1.051 billion and $510 million, respectively. The Company intends to use the proceeds in part for its rig construction program.
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