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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Valaris Limited | NYSE:VAL | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.90 | 1.62% | 56.58 | 57.39 | 56.23 | 56.97 | 88,066 | 14:51:37 |
Valaris Limited (NYSE: VAL) ("Valaris" or the "Company") today reported second quarter 2024 results.
President and Chief Executive Officer Anton Dibowitz said, “In the second quarter, we built on our excellent start to 2024 with another quarter of strong safety and operating performance, delivering revenue efficiency of 99% without a lost time incident. In addition, we achieved a meaningful improvement in our financial results during the second quarter, driven in part by a successful contract startup for VALARIS DS-7 – our sixth drillship reactivation completed since 2022.”
Dibowitz added, “In July, we secured a new multi-year contract with Equinor offshore Brazil for VALARIS DS-17, which added nearly $500 million of contract backlog. This new contract is a testament to the quality of our crews and operations, the leading-edge technical capabilities of the rig and the collaborative nature of our relationship with Equinor."
Dibowitz concluded, “Valaris is well-positioned and we continue to execute our strategy, securing attractive new contracts and building our contract backlog. We maintain our conviction in the strength and duration of this upcycle and see strong customer demand for projects that are expected to commence in 2025 and 2026. We expect to deliver significant earnings and cash flow growth over the next few years, and we intend to return all future free cash flow to shareholders unless there is a better or more value accretive use for it.”
Financial and Operational Highlights
Second Quarter Review
Net income increased to $151 million from $26 million in the first quarter 2024. Adjusted EBITDA increased to $139 million from $54 million in the first quarter primarily due to higher utilization and average daily revenue for both the floater and jackup fleets along with lower contract drilling expense. Adjusted EBITDAR increased to $150 million from $84 million in the first quarter.
Revenues increased to $610 million from $525 million in the first quarter 2024. Excluding reimbursable items, revenues increased to $573 million from $491 million in the first quarter primarily due to higher utilization and average daily revenue for both the floater and jackup fleets as several rigs commenced new contracts during the first and second quarters, including VALARIS DS-7 which commenced operations in late May following its reactivation.
Contract drilling expense decreased to $439 million from $445 million in the first quarter 2024. Excluding reimbursable items, contract drilling expense decreased to $407 million from $414 million in the first quarter primarily due to lower reactivation expense related to VALARIS DS-7 as well as lower repair and personnel costs for the jackup fleet. These items were partially offset by increased operating costs for the floater fleet due to higher utilization and costs incurred related to the stacking of VALARIS DS-13 and DS-14.
Depreciation expense increased to $30 million from $27 million in the first quarter 2024 primarily due to new assets placed in service for certain rigs following reactivation projects and capital upgrades. General and administrative expense increased to $33 million from $27 million in the first quarter 2024 primarily due to higher professional fees.
Other income increased to $12 million from $9 million in the first quarter 2024 primarily due to an increase in interest income, partially offset by an increase in interest expense and a decrease in foreign currency gains.
Tax benefit of $30 million compared to tax expense of $13 million in the first quarter 2024. The second quarter tax provision included $64 million of discrete tax benefit and the first quarter tax provision included $7 million of discrete tax benefit, which were primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years. Adjusted for discrete tax items, tax expense increased to $34 million from $20 million in the first quarter.
Cash and cash equivalents and restricted cash decreased to $410 million as of June 30, 2024, from $509 million as of March 31, 2024. The decrease was primarily due to capital expenditures, partially offset by positive operating cash flow. In the second quarter, operating cash flow was negatively impacted by changes in working capital primarily due to an increase in accounts receivable related to higher revenues.
Capital expenditures of $110 million decreased from $151 million in the first quarter 2024 due to lower capital expenditures associated with VALARIS DS-13 and DS-14, which mobilized from South Korea to Las Palmas during the first quarter and lower reactivation capital expenditures as VALARIS DS-7 commenced its contract during the second quarter following its reactivation. These items were partially offset by an increase in maintenance and upgrade capital expenditures.
Results Compared to Prior Guidance
The Company's second quarter 2024 results were better than prior guidance primarily due to strong operating performance resulting in higher revenue efficiency, certain contracts extending longer than previously anticipated and the timing of certain costs that are now expected to be recognized in subsequent quarters.
Second Quarter Segment Review
Floaters
Floater revenues increased to $384 million from $324 million in the first quarter 2024. Excluding reimbursable items, revenues increased to $370 million from $310 million in the first quarter. The increase was primarily due to a full quarter of operations for VALARIS DS-12 and DPS-5, which both commenced contracts during the first quarter, along with revenue from DS-7, which commenced operations in late May following its reactivation. In addition, VALARIS DS-15 and DS-16 started new higher day rate contracts in the second quarter, which contributed to an increase in average daily revenue.
Contract drilling expense increased to $257 million from $253 million in the first quarter 2024. Excluding reimbursable items, contract drilling expense increased to $245 million from $240 million in the first quarter primarily due to higher utilization for the floater fleet and costs incurred related to the stacking of VALARIS DS-13 and DS-14. This was partially offset by lower reactivation expense due to VALARIS DS-7 returning to work in the second quarter following its reactivation.
Jackups
Jackup revenues increased to $186 million from $152 million in the first quarter 2024. Excluding reimbursable items, revenues increased to $167 million from $139 million in the first quarter primarily due to higher utilization for the jackup fleet, including for VALARIS 107 which commenced a contract during the first quarter as well as VALARIS 123 and Stavanger, which both started new contracts during the second quarter, following out of service time during the first quarter while undergoing contract preparation and survey work.
Contract drilling expense decreased to $123 million from $134 million in the first quarter 2024. Excluding reimbursable items, contract drilling expense decreased to $108 million from $122 million in the first quarter primarily due to lower repair and maintenance expense as rigs returned to work following out of service time for contract preparations and survey work in the first quarter, and lower personnel expense.
ARO Drilling
Revenues decreased to $124 million from $138 million in the first quarter 2024 primarily due to out of service time for both scheduled repair and maintenance projects and unplanned downtime during the second quarter, partially offset by incremental operating days for VALARIS 108, which started its contract late in the first quarter. Contract drilling expense decreased to $94 million from $98 million in the first quarter primarily due to lower bareboat charter expense for leased rigs.
Other
Revenues decreased to $40 million from $48 million in the first quarter 2024 primarily due to lower revenues earned from bareboat charter agreements with ARO and lower reimbursable revenues. Contract drilling expense decreased to $20 million from $22 million in the first quarter primarily due to lower reimbursable expenses.
Three Months Ended
(Unaudited)
Floaters
Jackups
ARO (1)
Other
Reconciling Items (1)(2)
Consolidated Total
(in millions of $, except %)
Q2 2024
Q1 2024
Chg
Q2 2024
Q1 2024
Chg
Q2 2024
Q1 2024
Chg
Q2 2024
Q1 2024
Chg
Q2 2024
Q1 2024
Q2 2024
Q1 2024
Chg
Revenues
$
383.9
$
324.4
18
%
$
185.8
$
152.3
22
%
$
124.2
$
138.3
(10
)%
$
40.4
$
48.3
(16
)%
$
(124.2
)
$
(138.3
)
$
610.1
$
525.0
16
%
Operating expenses
Contract drilling
257.4
253.4
(2
)%
123.2
133.9
8
%
94.1
98.3
4
%
19.6
22.2
12
%
(55.6
)
(63.0
)
438.7
444.8
1
%
Depreciation
14.1
13.2
(7
)%
10.9
10.4
(5
)%
19.7
19.0
(4
)%
2.5
1.3
(92
)%
(17.5
)
(17.1
)
29.7
26.8
(11
)%
General and admin.
—
—
—
%
—
—
—
%
5.5
5.8
5
%
—
—
—
%
27.0
20.7
32.5
26.5
(23
)%
Equity in earnings (losses) of ARO
—
—
—
%
—
—
—
%
—
—
—
%
—
—
—
%
(0.3
)
2.4
(0.3
)
2.4
113
%
Operating income
$
112.4
$
57.8
94
%
$
51.7
$
8.0
546
%
$
4.9
$
15.2
(68
)%
$
18.3
$
24.8
(26
)%
$
(78.4
)
$
(76.5
)
$
108.9
$
29.3
272
%
Net income (loss)
$
114.1
$
64.1
78
%
$
52.8
$
8.8
500
%
$
(6.7
)
$
(1.6
)
319
%
$
18.3
$
24.8
(26
)%
$
(27.7
)
$
(70.6
)
$
150.8
$
25.5
491
%
Adjusted EBITDA
$
126.4
$
71.0
78
%
$
62.6
$
18.4
240
%
$
24.6
$
34.2
(28
)%
$
20.8
$
26.1
(20
)%
$
(95.5
)
$
(96.0
)
$
138.9
$
53.7
159
%
Adjusted EBITDAR
$
137.3
$
101.3
36
%
$
62.6
$
18.4
240
%
$
24.6
$
34.2
(28
)%
$
20.8
$
26.1
(20
)%
$
(95.5
)
$
(96.0
)
$
149.8
$
84.0
78
%
(1) The full operating results included above for ARO are not included within our consolidated results and thus deducted under "Reconciling Items" and replaced with our equity in earnings of ARO.
(2) Our onshore support costs included within contract drilling expenses are not allocated to our operating segments for purposes of measuring segment operating income (loss) and as such, these costs are included in "Reconciling Items." Further, general and administrative expense and depreciation expense incurred by our corporate office are not allocated to our operating segments for purposes of measuring segment operating income (loss) and are included in "Reconciling Items."
As previously announced, Valaris will hold its second quarter 2024 earnings conference call at 9:00 a.m. CT (10:00 a.m. ET) on Thursday, August 1, 2024. An updated investor presentation will be available on the Valaris website after the call.
About Valaris Limited
Valaris Limited (NYSE: VAL) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles, and modern shallow-water jackups, Valaris has experience operating in nearly every major offshore basin. Valaris maintains an unwavering commitment to safety, operational excellence, and customer satisfaction, with a focus on technology and innovation. Valaris Limited is a Bermuda exempted company. To learn more, visit the Valaris website at www.valaris.com.
Forward-Looking Statements
Statements contained in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "likely," "plan," "project," "could," "may," "might," "should," "will" and similar words and specifically include statements regarding expected financial performance; expected utilization, day rates, revenues, operating expenses, cash flows, contract status, terms and duration, contract backlog, capital expenditures, insurance, financing and funding; the offshore drilling market, including supply and demand, customer drilling programs and the attainment of requisite permits for such programs, stacking of rigs, effects of new rigs on the market and effect of the volatility of commodity prices; expected work commitments, awards, contracts and letters of intent; scheduled delivery dates for rigs; performance of our joint ventures, including our joint venture with Saudi Aramco; timing of the delivery of the Saudi Aramco Rowan Offshore Drilling Company ("ARO") newbuild rigs and the timing of additional ARO newbuild orders; the availability, delivery, mobilization, contract commencement, availability, relocation or other movement of rigs and the timing thereof; rig reactivations; suitability of rigs for future contracts; divestitures of assets; general economic, market, business and industry conditions, including inflation and recessions, trends and outlook; general political conditions, including political tensions, conflicts and war; cybersecurity attacks and threats; impacts and effects of public health crises, pandemics and epidemics; future operations; ability to renew expiring contracts or obtain new contracts, including for VALARIS DS-13 and VALARIS DS-14; increasing regulatory complexity; targets, progress, plans and goals related to sustainability matters; the outcome of tax disputes; assessments and settlements; and expense management. The forward-looking statements contained in this press release are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including cancellation, suspension, renegotiation or termination of drilling contracts and programs; our ability to obtain financing, service our debt, fund capital expenditures and pursue other business opportunities; adequacy of sources of liquidity for us and our customers; future share repurchases; actions by regulatory authorities, or other third parties; actions by our security holders; internal control risk; commodity price fluctuations and volatility, customer demand, loss of a significant customer or customer contract, downtime and other risks associated with offshore rig operations; adverse weather, including hurricanes; changes in worldwide rig supply, including as a result of reactivations and newbuilds; and demand, competition and technology; supply chain and logistics challenges; consumer preferences for alternative fuels and forecasts or expectations regarding the global energy transition; increased scrutiny of our sustainability targets, initiatives and reporting and our ability to achieve such targets or initiatives; changes in customer strategy; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties, including recessions, volatility affecting the banking system and financial markets, inflation and adverse changes in the level of international trade activity; terrorism, piracy and military action; risks inherent to shipyard rig reactivation, upgrade, repair, maintenance or enhancement; our ability to enter into, and the terms of, future drilling contracts; suitability of rigs for future contracts; the cancellation of letters of intent or letters of award or any failure to execute definitive contracts following announcements of letters of intent, letters of award or other expected work commitments; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; environmental or other liabilities, risks or losses; compliance with our debt agreements and debt restrictions that may limit our liquidity and flexibility, including in any return of capital plans; cybersecurity risks and threats; and changes in foreign currency exchange rates. In addition to the numerous factors described above, you should also carefully read and consider "Item 1A. Risk Factors" in Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our most recent annual report on Form 10-K, which is available on the Securities and Exchange Commission's website at www.sec.gov or on the Investor Relations section of our website at www.valaris.com. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements, except as required by law.
VALARIS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
OPERATING REVENUES
$
610.1
$
525.0
$
483.8
$
455.1
$
415.2
OPERATING EXPENSES
Contract drilling (exclusive of depreciation)
438.7
444.8
402.0
390.9
373.5
Depreciation
29.7
26.8
27.5
25.8
24.5
General and administrative
32.5
26.5
24.3
24.2
26.4
Total operating expenses
500.9
498.1
453.8
440.9
424.4
EQUITY IN EARNINGS (LOSSES) OF ARO
(0.3
)
2.4
8.3
2.4
(0.7
)
OPERATING INCOME (LOSS)
108.9
29.3
38.3
16.6
(9.9
)
OTHER INCOME (EXPENSE)
Interest income
31.0
21.0
27.2
26.6
24.6
Interest expense, net
(22.6
)
(17.7
)
(21.7
)
(19.4
)
(16.7
)
Other, net
3.5
5.8
(5.5
)
3.9
(0.8
)
11.9
9.1
—
11.1
7.1
INCOME (LOSS) BEFORE INCOME TAXES
120.8
38.4
38.3
27.7
(2.8
)
PROVISION (BENEFIT) FOR INCOME TAXES
(30.0
)
12.9
(790.2
)
10.7
24.5
NET INCOME (LOSS)
150.8
25.5
828.5
17.0
(27.3
)
NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(1.2
)
—
6.7
(4.1
)
(2.1
)
NET INCOME (LOSS) ATTRIBUTABLE TO VALARIS
$
149.6
$
25.5
$
835.2
$
12.9
$
(29.4
)
EARNINGS (LOSS) PER SHARE
Basic
$
2.07
$
0.35
$
11.47
$
0.18
$
(0.39
)
Diluted
$
2.03
$
0.35
$
11.30
$
0.17
$
(0.39
)
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic
72.4
72.4
72.8
73.7
74.8
Diluted
73.7
73.6
73.9
74.8
74.8
VALARIS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
As of
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
398.3
$
494.1
$
620.5
$
1,041.1
$
787.3
Restricted cash
12.0
15.0
15.2
16.2
18.0
Accounts receivable, net
631.7
510.9
459.3
492.4
473.4
Other current assets
182.6
177.6
177.2
178.7
168.7
Total current assets
$
1,224.6
$
1,197.6
$
1,272.2
$
1,728.4
$
1,447.4
PROPERTY AND EQUIPMENT, NET
1,809.4
1,732.3
1,633.8
1,159.9
1,073.7
LONG-TERM NOTES RECEIVABLE FROM ARO
259.2
289.3
282.3
275.2
268.0
INVESTMENT IN ARO
126.5
126.8
124.4
116.1
113.7
DEFERRED TAX ASSETS
841.1
854.8
855.1
53.8
48.5
OTHER ASSETS
154.8
153.6
154.4
151.5
137.1
$
4,415.6
$
4,354.4
$
4,322.2
$
3,484.9
$
3,088.4
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade
$
347.0
$
394.2
$
400.1
$
376.4
$
364.2
Accrued liabilities and other
360.6
366.5
344.2
346.6
294.7
Total current liabilities
$
707.6
$
760.7
$
744.3
$
723.0
$
658.9
LONG-TERM DEBT
1,081.0
1,080.1
1,079.3
1,079.4
681.9
DEFERRED TAX LIABILITIES
31.2
31.6
29.9
17.1
16.7
OTHER LIABILITIES
408.4
451.7
471.7
465.4
464.8
TOTAL LIABILITIES
2,228.2
2,324.1
2,325.2
2,284.9
1,822.3
TOTAL EQUITY
2,187.4
2,030.3
1,997.0
1,200.0
1,266.1
$
4,415.6
$
4,354.4
$
4,322.2
$
3,484.9
$
3,088.4
VALARIS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended June 30,
2024
2023
OPERATING ACTIVITIES
Net income
$
176.3
$
21.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense
56.5
47.8
Accretion of discount on notes receivable from ARO
(27.6
)
(14.0
)
Deferred income tax expense
15.5
7.1
Share-based compensation expense
15.4
12.7
Equity in earnings of ARO
(2.1
)
(2.6
)
(Gain) loss on asset disposals
0.1
(27.9
)
Loss on debt extinguishment
—
29.2
Changes in contract liabilities
(24.8
)
(7.5
)
Changes in deferred costs
(0.8
)
(6.9
)
Other
4.2
2.5
Changes in other operating assets and liabilities
(168.8
)
63.5
Contributions to pension plans and other post-retirement benefits
(6.1
)
(2.6
)
Net cash provided by operating activities
$
37.8
$
122.6
INVESTING ACTIVITIES
Additions to property and equipment
$
(261.5
)
$
(127.3
)
Net proceeds from disposition of assets
0.1
29.1
Net cash used in investing activities
$
(261.4
)
$
(98.2
)
FINANCING ACTIVITIES
Payments for share repurchases
$
(1.4
)
$
(64.4
)
Issuance of Second Lien Notes
—
700.0
Redemption of First Lien Notes
—
(571.8
)
Debt issuance costs
—
(31.0
)
Other
(0.4
)
(0.4
)
Net cash provided by (used in) financing activities
$
(1.8
)
$
32.4
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
$
(225.4
)
$
56.8
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
635.7
748.5
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
$
410.3
$
805.3
VALARIS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
OPERATING ACTIVITIES
Net income (loss)
$
150.8
$
25.5
$
828.5
$
17.0
$
(27.3
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense
29.7
26.8
27.5
25.8
24.5
Accretion of discount on notes receivable from ARO
(20.6
)
(7.0
)
(7.1
)
(7.2
)
(7.0
)
Deferred income tax expense (benefit)
13.5
2.0
(788.7
)
(4.8
)
2.5
Share-based compensation expense
7.4
8.0
7.8
6.8
7.0
Equity in losses (earnings) of ARO
0.3
(2.4
)
(8.3
)
(2.4
)
0.7
(Gain) loss on asset disposals
—
0.1
(0.7
)
—
(27.8
)
Loss on extinguishment of debt
—
—
—
—
29.2
Changes in contract liabilities
(17.8
)
(7.0
)
8.8
3.6
13.3
Changes in deferred costs
(3.0
)
2.2
3.2
(22.4
)
(7.4
)
Other
2.4
1.8
0.6
2.7
2.1
Changes in other operating assets and liabilities
(147.5
)
(21.3
)
27.3
31.0
(37.3
)
Contributions to pension plans and other post-retirement benefits
(3.7
)
(2.4
)
(2.2
)
(1.9
)
(1.6
)
Net cash provided by (used in) operating activities
$
11.5
$
26.3
$
96.7
$
48.2
$
(29.1
)
INVESTING ACTIVITIES
Additions to property and equipment
$
(110.2
)
$
(151.3
)
$
(463.0
)
$
(105.8
)
$
(71.0
)
Net proceeds from disposition of assets
0.1
—
1.1
0.1
29.0
Net cash used in investing activities
$
(110.1
)
$
(151.3
)
$
(461.9
)
$
(105.7
)
$
(42.0
)
FINANCING ACTIVITIES
Payments for tax withholdings for share-based awards
$
(0.2
)
$
(0.2
)
$
(0.2
)
$
(4.8
)
$
(0.4
)
Payments for share repurchases
—
(1.4
)
(51.2
)
(83.0
)
(64.4
)
Debt issuance costs
—
—
(1.9
)
(5.7
)
(31.0
)
Issuance of Second Lien Notes
—
—
—
403.0
700.0
Redemption of First Lien Notes
—
—
—
—
(571.8
)
Other
—
—
(3.1
)
—
—
Net cash provided by (used in) financing activities
$
(0.2
)
$
(1.6
)
$
(56.4
)
$
309.5
$
32.4
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
$
(98.8
)
$
(126.6
)
$
(421.6
)
$
252.0
$
(38.7
)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
509.1
635.7
1,057.3
805.3
844.0
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
$
410.3
$
509.1
$
635.7
$
1,057.3
$
805.3
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(In millions)
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
REVENUES
Floaters
Drillships
$
291.5
$
249.6
$
190.7
$
168.2
$
147.2
Semisubmersibles
78.9
60.2
56.3
64.1
68.5
$
370.4
$
309.8
$
247.0
$
232.3
$
215.7
Reimbursable and Other Revenues (1)
13.5
14.6
16.2
11.0
11.7
Total Floaters
$
383.9
$
324.4
$
263.2
$
243.3
$
227.4
Jackups (2)
HD Harsh Environment
$
87.6
$
67.5
$
76.6
$
75.5
$
54.1
HD & SD Modern
63.7
56.9
79.0
68.8
67.9
SD Legacy
15.4
14.8
14.2
10.5
12.5
$
166.7
$
139.2
$
169.8
$
154.8
$
134.5
Reimbursable and Other Revenues (1)
19.1
13.1
9.5
11.1
10.1
Total Jackups
$
185.8
$
152.3
$
179.3
$
165.9
$
144.6
Other
Leased and Managed Rigs
$
35.6
$
42.1
$
36.0
$
40.1
$
37.4
Reimbursable and Other Revenues (1)
4.8
6.2
5.3
5.8
5.8
Total Other
$
40.4
$
48.3
$
41.3
$
45.9
$
43.2
Total Operating Revenues
$
610.1
$
525.0
$
483.8
$
455.1
$
415.2
Total Reimbursable and Other Revenues (1)
$
37.4
$
33.9
$
31.0
$
27.9
$
27.6
Revenues Excluding Reimbursable and Other Revenues
$
572.7
$
491.1
$
452.8
$
427.2
$
387.6
(1)Reimbursable and other revenues includes certain types of non-recurring reimbursable revenues, revenues earned during suspension periods and revenues attributable to amortization of contract intangibles.
(2)HD = Heavy Duty; SD = Standard Duty. Heavy duty jackups are well-suited for operations in tropical revolving storm areas.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(In millions)
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
ADJUSTED EBITDA (1)
Floaters
Drillships
$
91.2
$
55.6
$
16.7
$
2.8
$
0.3
Semisubmersibles
35.2
15.4
20.5
25.4
30.8
$
126.4
$
71.0
$
37.2
$
28.2
$
31.1
Jackups
HD Harsh Environment
$
36.3
$
5.4
$
21.1
$
20.9
$
6.1
HD & SD Modern
21.3
8.6
30.1
20.4
11.6
SD Legacy
5.0
4.4
4.8
2.9
3.4
$
62.6
$
18.4
$
56.0
$
44.2
$
21.1
Total
$
189.0
$
89.4
$
93.2
$
72.4
$
52.2
Other
Leased and Managed Rigs
$
20.8
$
26.1
$
23.2
$
27.2
$
24.9
Total
$
209.8
$
115.5
$
116.4
$
99.6
$
77.1
Support costs
General and administrative expense
$
32.5
$
26.5
$
24.3
$
24.2
$
26.4
Onshore support costs
38.4
35.3
34.6
35.4
35.4
$
70.9
$
61.8
$
58.9
$
59.6
$
61.8
Total
$
138.9
$
53.7
$
57.5
$
40.0
$
15.3
(1)Adjusted EBITDA is earnings before interest, tax, depreciation and amortization. Adjusted EBITDA for asset category also excludes onshore support costs and general and administrative expense.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(In millions)
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
ADJUSTED EBITDAR (1)
Active Fleet (2)
$
218.1
$
126.3
$
137.5
$
129.3
$
104.5
Leased and Managed Rigs
20.8
26.1
23.2
27.2
24.9
$
238.9
$
152.4
$
160.7
$
156.5
$
129.4
Stacked Fleet (3)
(18.2
)
(6.6
)
(5.8
)
(6.0
)
(8.2
)
$
220.7
$
145.8
$
154.9
$
150.5
$
121.2
Support costs
General and administrative expense
$
32.5
$
26.5
$
24.3
$
24.2
$
26.4
Onshore support costs
38.4
35.3
34.6
35.4
35.4
$
70.9
$
61.8
$
58.9
$
59.6
$
61.8
Total
$
149.8
$
84.0
$
96.0
$
90.9
$
59.4
Reactivation costs (4)
$
10.9
$
30.3
$
38.5
$
50.9
$
44.1
(1)
Adjusted EBITDAR is earnings before interest, tax, depreciation, amortization and reactivation costs. Adjusted EBITDAR for active fleet, leased and managed rigs and stacked fleet also excludes onshore support costs and general and administrative expense.
(2)Active fleet represents rigs that are not preservation stacked and includes rigs that are in the process of being reactivated.
(3)Stacked fleet represents the combined total of all preservation and stacking costs.
(4)Reactivation costs, all of which are attributed to Valaris' active fleet, are excluded from adjusted EBITDAR.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(In millions)
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
ADJUSTED EBITDAR (1)
Floaters
Drillships
$
102.1
$
85.9
$
55.2
$
53.7
$
44.4
Semisubmersibles
35.2
15.4
20.5
25.4
30.9
$
137.3
$
101.3
$
75.7
$
79.1
$
75.3
Jackups
HD Harsh Environment
$
36.3
$
5.4
$
21.1
$
20.9
$
6.1
HD & SD Modern
21.3
8.6
30.1
20.4
11.5
SD Legacy
5.0
4.4
4.8
2.9
3.4
$
62.6
$
18.4
$
56.0
$
44.2
$
21.0
Total
$
199.9
$
119.7
$
131.7
$
123.3
$
96.3
Other
Leased and Managed Rigs
$
20.8
$
26.1
$
23.2
$
27.2
$
24.9
Total
$
220.7
$
145.8
$
154.9
$
150.5
$
121.2
Support costs
General and administrative expense
$
32.5
$
26.5
$
24.3
$
24.2
$
26.4
Onshore support costs
38.4
35.3
34.6
35.4
35.4
$
70.9
$
61.8
$
58.9
$
59.6
$
61.8
Total
$
149.8
$
84.0
$
96.0
$
90.9
$
59.4
(1)Adjusted EBITDAR is earnings before interest, tax, depreciation, amortization and reactivation costs. Adjusted EBITDAR for asset category also excludes onshore support costs and general and administrative expense.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(In millions)
(Unaudited)
As of
Jul 29, 2024
Apr 30, 2024
Feb 15, 2024
Nov 1, 2023
Aug 1, 2023
CONTRACT BACKLOG (1)
Floaters
Drillships
$
2,508.3
$
2,223.9
$
2,307.6
$
1,726.5
$
1,684.9
Semisubmersibles
122.1
180.7
224.1
259.5
272.4
$
2,630.4
$
2,404.6
$
2,531.7
$
1,986.0
$
1,957.3
Jackups
HD Harsh Environment
$
665.0
$
607.0
$
646.8
$
327.9
$
307.4
HD & SD Modern
438.9
449.1
347.1
406.8
366.8
SD Legacy
189.0
128.8
173.5
186.9
118.4
$
1,292.9
$
1,184.9
$
1,167.4
$
921.6
$
792.6
Total
$
3,923.3
$
3,589.5
$
3,699.1
$
2,907.6
$
2,749.9
Other (2)
Leased and Managed Rigs
$
384.2
$
427.7
$
222.3
$
250.5
$
291.4
Total
$
4,307.5
$
4,017.2
$
3,921.4
$
3,158.1
$
3,041.3
(1)
Our contract drilling backlog reflects commitments, represented by signed drilling contracts, and is calculated by multiplying the contracted day rate by the contract period. Contract drilling backlog includes drilling contracts subject to FID and drilling contracts which grant the customer termination rights if FID is not received with respect to projects for which the drilling rig is contracted. The contracted day rate excludes certain types of lump sum fees for rig mobilization, demobilization, contract preparation, as well as customer reimbursables and bonus opportunities.
(2)In late July, ARO received suspension notices for the drilling contracts for VALARIS 147 and VALARIS 148, which are two of our jackups leased to ARO. Discussions are ongoing with Saudi Aramco regarding whether other Valaris leased rigs or ARO-owned rigs could be subject to the suspensions instead of VALARIS 147 and VALARIS 148 as well as when the suspensions will be effective. As of July 29, 2024, these two rigs accounted for $35 million of Valaris' contract backlog.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
AVERAGE DAILY REVENUE (1)
Floaters
Drillships
$
358,000
$
328,000
$
307,000
$
288,000
$
253,000
Semisubmersibles
289,000
261,000
229,000
257,000
252,000
$
340,000
$
312,000
$
285,000
$
279,000
$
252,000
Jackups
HD Harsh Environment
$
134,000
$
123,000
$
111,000
$
116,000
$
100,000
HD & SD Modern
115,000
103,000
119,000
105,000
102,000
SD Legacy
85,000
81,000
79,000
83,000
81,000
$
120,000
$
108,000
$
111,000
$
108,000
$
99,000
Total
$
217,000
$
197,000
$
174,000
$
171,000
$
158,000
Other
Leased and Managed Rigs
$
37,000
$
45,000
$
39,000
$
44,000
$
41,000
Total
$
167,000
$
153,000
$
136,000
$
134,000
$
124,000
(1)Average daily revenue is derived by dividing contract drilling revenues, adjusted to exclude certain types of non-recurring reimbursable revenues, revenues earned during suspension periods and revenues attributable to amortization of drilling contract intangibles, by the aggregate number of operating days.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
UTILIZATION - TOTAL FLEET (1)
Floaters
Drillships
69 %
64 %
60 %
58 %
58 %
Semisubmersibles
60 %
51 %
53 %
54 %
60 %
66 %
61 %
58 %
57 %
59 %
Jackups
HD Harsh Environment
65 %
55 %
68 %
64 %
55 %
HD & SD Modern
45 %
44 %
52 %
51 %
52 %
SD Legacy
100 %
100 %
97 %
69 %
78 %
58 %
53 %
62 %
58 %
55 %
Total
61 %
56 %
60 %
57 %
56 %
Other
Leased and Managed Rigs
100 %
100 %
100 %
100 %
100 %
Total
69 %
64 %
68 %
65 %
65 %
Pro Forma Jackups (2)
68 %
64 %
70 %
67 %
65 %
(1)Rig utilization is derived by dividing the number of operating days by the number of available days in the period for the total fleet.
(2)Includes all Valaris jackups including those leased to ARO Drilling.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
UTILIZATION - ACTIVE FLEET (1) (2)
Floaters
Drillships
90 %
84 %
68 %
63 %
71 %
Semisubmersibles
100 %
85 %
89 %
90 %
100 %
92 %
84 %
72 %
70 %
78 %
Jackups
HD Harsh Environment
80 %
67 %
83 %
79 %
67 %
HD & SD Modern
81 %
69 %
80 %
79 %
81 %
SD Legacy
100 %
100 %
97 %
68 %
78 %
82 %
71 %
83 %
78 %
74 %
Total
86 %
76 %
79 %
75 %
76 %
Other
Leased and Managed Rigs
100 %
100 %
100 %
100 %
100 %
Total
90 %
82 %
84 %
81 %
82 %
Pro Forma Jackups (3)
88 %
80 %
88 %
84 %
82 %
(1)Rig utilization is derived by dividing the number of operating days by the number of available days in the period for the active fleet.
(2)Active fleet represents rigs that are not preservation stacked and includes rigs that are in the process of being reactivated.
(3)Includes all Valaris jackups including those leased to ARO Drilling.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
AVAILABLE DAYS - TOTAL FLEET (1)
Floaters
Drillships
1,183
1,183
1,032
1,012
1,001
Semisubmersibles
455
455
460
460
455
1,638
1,638
1,492
1,472
1,456
Jackups
HD Harsh Environment
1,001
1,001
1,012
1,012
990
HD & SD Modern
1,225
1,258
1,288
1,288
1,274
SD Legacy
182
182
184
184
199
2,408
2,441
2,484
2,484
2,463
Total
4,046
4,079
3,976
3,956
3,919
Other
Leased and Managed Rigs
959
926
920
920
910
Total
5,005
5,005
4,896
4,876
4,829
(1)Represents the maximum number of days available in the period for the total fleet, calculated by multiplying the number of rigs in each asset category by the number of days in the period, irrespective of asset status.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
AVAILABLE DAYS - ACTIVE FLEET (1)
Floaters
Drillships
910
910
920
920
819
Semisubmersibles
273
273
276
276
273
1,183
1,183
1,196
1,196
1,092
Jackups
HD Harsh Environment
819
819
828
828
808
HD & SD Modern
683
803
828
828
819
SD Legacy
182
182
184
184
199
1,684
1,804
1,840
1,840
1,826
Total
2,867
2,987
3,036
3,036
2,918
Other
Leased and Managed Rigs
959
926
920
920
910
Total
3,826
3,913
3,956
3,956
3,828
(1)Represents the maximum number of days available in the period for the active fleet, calculated by multiplying the number of rigs in each asset category by the number of days in the period, for active rigs only. Active rigs are defined as rigs that are not preservation stacked.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
OPERATING DAYS (1)
Floaters
Drillships
815
761
622
584
583
Semisubmersibles
273
231
245
249
272
1,088
992
867
833
855
Jackups
HD Harsh Environment
655
549
691
652
540
HD & SD Modern
552
555
665
654
663
SD Legacy
182
182
178
126
155
1,389
1,286
1,534
1,432
1,358
Total
2,477
2,278
2,401
2,265
2,213
Other
Leased and Managed Rigs
959
926
920
920
910
Total
3,436
3,204
3,321
3,185
3,123
(1)Represents the total number of days under contract in the period. Days under contract equals the total number of days that rigs have earned and recognized day rate revenue, including days associated with early contract terminations, compensated downtime and mobilizations. When revenue is deferred and amortized over a future period, for example when we receive fees while mobilizing to commence a new contract or while being upgraded in a shipyard, the related days are excluded from days under contract.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
REVENUE EFFICIENCY (1)
Floaters
Drillships
99 %
94 %
88 %
89 %
95 %
Semisubmersibles
100 %
99 %
94 %
93 %
100 %
99 %
95 %
90 %
90 %
96 %
Jackups
HD Harsh Environment
99 %
100 %
99 %
99 %
99 %
HD & SD Modern
100 %
99 %
97 %
97 %
98 %
SD Legacy
100 %
100 %
97 %
99 %
100 %
99 %
99 %
98 %
98 %
99 %
Total
99 %
97 %
93 %
94 %
97 %
(1)Revenue efficiency is day rate revenue earned as a percentage of maximum potential day rate revenue.
VALARIS LIMITED AND SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
As of
NUMBER OF RIGS
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Active Fleet (1)
Floaters
Drillships
10
10
10
10
9
Semisubmersibles
3
3
3
3
3
13
13
13
13
12
Jackups
HD Harsh Environment
9
9
9
9
9
HD & SD Modern
7
8
9
9
9
SD Legacy
2
2
2
2
2
18
19
20
20
20
Total Active Fleet
31
32
33
33
32
Stacked Fleet
Floaters
Drillships
3
3
3
1
2
Semisubmersibles
2
2
2
2
2
5
5
5
3
4
Jackups
HD Harsh Environment
2
2
2
2
2
HD & SD Modern
6
5
5
5
5
8
7
7
7
7
Total Stacked Fleet
13
12
12
10
11
Leased Rigs (2)
Jackups
HD Harsh Environment
1
1
1
1
1
HD & SD Modern
8
8
7
7
7
Total Leased Rigs
9
9
8
8
8
Total
53
53
53
51
51
Managed Rigs (2)
2
2
2
2
2
(1)Active fleet represents rigs that are not preservation stacked, including rigs that are in the process of being reactivated.
(2)Leased rigs and managed rigs included in Other reporting segment.
ARO DRILLING
CONDENSED BALANCE SHEET INFORMATION
(In millions)
(Unaudited)
As of
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Cash
$
131.7
$
69.5
$
92.9
$
110.3
$
100.6
Other current assets
157.8
198.3
184.0
191.2
188.3
Non-current assets
1,214.4
1,094.2
1,081.0
915.3
879.6
Total assets
$
1,503.9
$
1,362.0
$
1,357.9
$
1,216.8
$
1,168.5
Current liabilities
$
173.2
$
135.0
$
136.0
$
173.6
$
122.6
Non-current liabilities
1,172.2
1,057.6
1,056.8
886.2
887.5
Total liabilities
$
1,345.4
$
1,192.6
$
1,192.8
$
1,059.8
$
1,010.1
Shareholders' equity
$
158.5
$
169.4
$
165.1
$
157.0
$
158.4
Total liabilities and shareholders' equity
$
1,503.9
$
1,362.0
$
1,357.9
$
1,216.8
$
1,168.5
ARO DRILLING
CONDENSED INCOME STATEMENT INFORMATION
(In millions)
(Unaudited)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Revenues
$
124.2
$
138.3
$
133.7
$
121.5
$
117.8
Operating expenses
Contract drilling (exclusive of depreciation)
94.1
98.3
88.0
92.0
95.0
Depreciation
19.7
19.0
19.5
15.8
15.6
General and administrative
5.5
5.8
6.3
5.6
5.7
Operating income
$
4.9
$
15.2
$
19.9
$
8.1
$
1.5
Other expense, net
13.4
13.1
3.6
9.0
8.8
Provision (benefit) for income taxes
(1.8
)
3.7
6.0
0.4
—
Net income (loss)
$
(6.7
)
$
(1.6
)
$
10.3
$
(1.3
)
$
(7.3
)
EBITDA
$
24.6
$
34.2
$
39.4
$
23.9
$
17.1
ARO Drilling condensed balance sheet and income statement information presented above represents 100% of ARO. Valaris has a 50% ownership interest in ARO.
ARO DRILLING
OPERATING STATISTICS
(Unaudited)
As of
(In millions)
Jul 29, 2024
Apr 30, 2024
Feb 15, 2024
Nov 1, 2023
Aug 1, 2023
CONTRACT BACKLOG (1)
Owned Rigs
$
1,322.9
$
1,398.9
$
1,475.4
$
1,547.0
$
686.3
Leased Rigs (2)
510.4
583.3
662.7
743.7
815.0
Total
$
1,833.3
$
1,982.2
$
2,138.1
$
2,290.7
$
1,501.3
(1)
Contract drilling backlog reflects commitments, represented by signed drilling contracts, and is calculated by multiplying the contracted day rate by the contract period. The contracted day rate excludes certain types of lump sum fees for rig mobilization, demobilization, contract preparation, as well as customer reimbursables and bonus opportunities.
(2)
Leased rigs backlog as of July 29, 2024, includes $113 million related to the drilling contracts for VALARIS 147 and VALARIS 148, which have received suspension notices from Saudi Aramco.
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
AVERAGE DAILY REVENUE (1)
Owned Rigs
$
104,000
$
105,000
$
100,000
$
91,000
$
90,000
Leased Rigs (2)
101,000
99,000
97,000
98,000
98,000
Total
$
102,000
$
102,000
$
98,000
$
95,000
$
95,000
UTILIZATION (3)
Owned Rigs
77
%
91
%
96
%
91
%
83
%
Leased Rigs (2)
86
%
93
%
94
%
95
%
98
%
Total
82
%
92
%
95
%
93
%
91
%
REVENUE EFFICIENCY (4)
Owned Rigs
90
%
98
%
94
%
99
%
95
%
Leased Rigs (2)
91
%
99
%
98
%
97
%
99
%
Total
91
%
98
%
96
%
98
%
97
%
NUMBER OF RIGS (AT QUARTER END)
Owned Rigs
9
8
8
7
7
Leased Rigs (2)
9
9
8
8
8
Total
18
17
16
15
15
AVAILABLE DAYS (5)
Owned Rigs
728
728
695
644
637
Leased Rigs (2)
765
744
736
736
728
Total
1,493
1,472
1,431
1,380
1,365
OPERATING DAYS (6)
Owned Rigs
561
664
668
585
532
Leased Rigs (2)
657
692
691
697
713
Total
1,218
1,356
1,359
1,282
1,245
(1)
Average daily revenue is derived by dividing contract drilling revenues, adjusted to exclude certain types of non-recurring reimbursable revenues, revenues earned during suspension periods and revenues attributable to amortization of drilling contract intangibles, by the aggregate number of operating days.
(2)
All ARO leased rigs are leased from Valaris.
(3)
Rig utilization is derived by dividing the number of operating days by the number of available days in the period for the rig fleet.
(4)
Revenue efficiency is day rate revenue earned as a percentage of maximum potential day rate revenue.
(5)
Represents the maximum number of days available in the period for the rig fleet, calculated by multiplying the number of rigs in each asset category by the number of days in the period, irrespective of asset status.
(6)
Represents the total number of days under contract in the period. Days under contract equals the total number of days that rigs have earned and recognized day rate revenue, including days associated with early contract terminations, compensated downtime and mobilizations. When revenue is deferred and amortized over a future period, for example when we receive fees while mobilizing to commence a new contract or while being upgraded in a shipyard, the related days are excluded from days under contract.
Non-GAAP Financial Measures (Unaudited)
To supplement Valaris’ condensed consolidated financial statements presented on a GAAP basis, this press release provides investors with Adjusted EBITDA and Adjusted EBITDAR, which are non-GAAP measures.
Valaris defines "Adjusted EBITDA" as net income (loss) before income tax expense, interest expense, other (income) expense, depreciation expense, amortization, and equity in (earnings) losses of ARO. Adjusted EBITDA is a non-GAAP measure that our management uses to facilitate period-to-period comparisons of our core operating performance and to evaluate our long-term financial performance against that of our peers. We believe that this measure is useful to investors and analysts in allowing for greater transparency of our core operating performance and makes it easier to compare our results with those of other companies within our industry. Adjusted EBITDA should not be considered (a) in isolation of, or as a substitute for, net income (loss), (b) as an indication of cash flows from operating activities, or (c) as a measure of liquidity. Adjusted EBITDA may not be comparable to other similarly titled measures reported by other companies.
Valaris defines "Adjusted EBITDAR" as Adjusted EBITDA before reactivation costs. Adjusted EBITDAR is a non-GAAP measure that our management uses to assess the performance of our fleet excluding one-time rig reactivation costs. We believe that this measure is useful to investors and analysts in allowing for greater transparency of our core operating performance. Adjusted EBITDAR should not be considered (a) in isolation of, or as a substitute for, net income (loss), (b) as an indication of cash flows from operating activities, or (c) as a measure of liquidity. Adjusted EBITDAR may not be comparable to other similarly titled measures reported by other companies.
Valaris defines ARO "EBITDA" as net income (loss) before income tax expense, other expense, net and depreciation expense. EBITDA is a non-GAAP measure that our management uses to facilitate period-to-period comparisons of ARO's core operating performance and to evaluate ARO's long-term financial performance against that of ARO's peers. We believe that this measure is useful to investors and analysts in allowing for greater transparency of ARO's core operating performance and makes it easier to compare ARO's results with those of other companies within ARO's industry. EBITDA should not be considered (a) in isolation of, or as a substitute for, net income (loss), (b) as an indication of cash flows from operating activities, or (c) as a measure of liquidity. EBITDA may not be comparable to other similarly titled measures reported by other companies.
The Company is not able to provide a reconciliation of the Company's forward-looking Adjusted EBITDA, as discussed on its second quarter 2024 earnings conference call, to the most directly comparable GAAP measure without unreasonable effort because of the inherent difficulty in forecasting and quantifying certain amounts necessary for such a reconciliation, including forward-looking tax expense and other income (expense).
Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
A reconciliation of net income (loss) as reported to Adjusted EBITDA is included in the tables below (in millions):
Three Months Ended
Jun 30, 2024
Mar 31, 2024
VALARIS
Net income
$
150.8
$
25.5
Add (subtract):
Income tax expense (benefit)
(30.0
)
12.9
Interest expense
22.6
17.7
Other income
(34.5
)
(26.8
)
Operating income
$
108.9
$
29.3
Add (subtract):
Depreciation expense
29.7
26.8
Equity in (earnings) losses of ARO
0.3
(2.4
)
Adjusted EBITDA
$
138.9
$
53.7
Three Months Ended
Jun 30, 2024
Mar 31, 2024
ARO
Net loss
$
(6.7
)
$
(1.6
)
Add (subtract):
Income tax expense (benefit)
(1.8
)
3.7
Other expense, net
13.4
13.1
Operating income
$
4.9
$
15.2
Add:
Depreciation expense
19.7
19.0
EBITDA
$
24.6
$
34.2
Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBITDAR
(In millions)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
FLOATERS
Net income
$
114.1
$
64.1
Subtract:
Other income
(1.7
)
(6.3
)
Operating income
$
112.4
$
57.8
Add (subtract):
Depreciation
14.1
13.2
Other costs
(0.1
)
—
Adjusted EBITDA (1)
$
126.4
$
71.0
Add:
Reactivation costs
10.9
30.3
Adjusted EBITDAR (1)
$
137.3
$
101.3
JACKUPS
Net income
$
52.8
$
8.8
Subtract:
Other income
(1.1
)
(0.8
)
Operating income
$
51.7
$
8.0
Add:
Depreciation
10.9
10.4
Adjusted EBITDA (1)
$
62.6
$
18.4
Adjusted EBITDAR (1)
$
62.6
$
18.4
OTHER
Net income
$
18.3
$
24.8
Operating income
$
18.3
$
24.8
Add:
Depreciation
2.5
1.3
Adjusted EBITDA (1)
$
20.8
$
26.1
Adjusted EBITDAR (1)
$
20.8
$
26.1
(1) Adjusted EBITDA and EBITDAR excludes onshore support costs and general and administrative expense.
Reconciliation of Net Income (Loss) to Adjusted EBITDAR
(In millions)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
ACTIVE FLEET (1)
Net income
$
186.6
$
80.8
$
78.7
$
57.5
$
68.2
Subtract:
Other income
(2.8
)
(7.0
)
(3.3
)
(1.0
)
(27.4
)
Operating income
$
183.8
$
73.8
$
75.4
$
56.5
$
40.8
Add (subtract):
Reactivation costs
10.9
30.3
38.5
50.9
44.1
Depreciation
23.5
22.2
23.5
21.9
19.6
Other
(0.1
)
—
0.1
—
—
Adjusted EBITDAR (2)
$
218.1
$
126.3
$
137.5
$
129.3
$
104.5
LEASED AND MANAGED RIGS
Net income
$
18.3
$
24.8
$
22.1
$
25.8
$
23.8
Operating income
$
18.3
$
24.8
$
22.1
$
25.8
$
23.8
Add (subtract):
Depreciation
2.5
1.3
1.2
1.3
1.2
Other
—
—
(0.1
)
0.1
(0.1
)
Adjusted EBITDAR (2)
$
20.8
$
26.1
$
23.2
$
27.2
$
24.9
STACKED FLEET
Net loss
$
(19.7
)
$
(7.9
)
$
(8.3
)
$
(8.6
)
$
(11.7
)
Subtract:
Other income
—
(0.1
)
(0.1
)
—
—
Operating loss
$
(19.7
)
$
(8.0
)
$
(8.4
)
$
(8.6
)
$
(11.7
)
Add (subtract):
Depreciation
1.5
1.4
2.7
2.5
3.6
Other
—
—
(0.1
)
0.1
(0.1
)
Adjusted EBITDAR (2)
$
(18.2
)
$
(6.6
)
$
(5.8
)
$
(6.0
)
$
(8.2
)
TOTAL FLEET
Net income
$
185.2
$
97.7
$
92.5
$
74.7
$
80.3
Subtract:
Other income
(2.8
)
(7.1
)
(3.4
)
(1.0
)
(27.4
)
Operating income
$
182.4
$
90.6
$
89.1
$
73.7
$
52.9
Add (subtract):
Reactivation costs
10.9
30.3
38.5
50.9
44.1
Depreciation
27.5
24.9
27.4
25.7
24.4
Other
(0.1
)
—
(0.1
)
0.2
(0.2
)
Adjusted EBITDAR (2)
$
220.7
$
145.8
$
154.9
$
150.5
$
121.2
(1)
Active fleet represents rigs that are not preservation stacked and includes rigs that are in the process of being reactivated.
(2)
Adjusted EBITDAR for active fleet, leased and managed rigs and stacked fleet excludes onshore support costs and general and administrative expense.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(In millions)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
DRILLSHIPS
Net income (loss)
$
79.6
$
49.4
$
4.7
$
(9.9
)
$
(12.0
)
Subtract:
Other income
(1.5
)
(6.2
)
(2.0
)
(0.6
)
(0.4
)
Operating income (loss)
78.1
43.2
2.7
(10.5
)
(12.4
)
Add (subtract):
Depreciation
13.2
12.4
14.0
13.2
12.8
Other
(0.1
)
—
—
0.1
(0.1
)
Adjusted EBITDA (1)
$
91.2
$
55.6
$
16.7
$
2.8
$
0.3
SEMISUBMERSIBLES
Net income
$
34.5
$
14.7
$
19.6
$
24.4
$
29.9
Add (subtract):
Other (income) expense
(0.2
)
(0.1
)
(0.1
)
—
0.1
Operating income
34.3
14.6
19.5
24.4
30.0
Add:
Depreciation
0.9
0.8
1.0
1.0
0.8
Adjusted EBITDA (1)
$
35.2
$
15.4
$
20.5
$
25.4
$
30.8
(1) Adjusted EBITDA for asset category excludes onshore support costs and general and administrative expense.
Reconciliation of Net Income to Adjusted EBITDA
(In millions)
Three Months Ended
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
HD HARSH ENVIRONMENT
Net income
$
31.0
$
0.4
$
15.4
$
15.4
$
0.4
Subtract:
Other income
(0.3
)
(0.3
)
(0.1
)
(0.2
)
—
Operating income
30.7
0.1
15.3
15.2
0.4
Add:
Depreciation
5.6
5.3
5.8
5.7
5.7
Adjusted EBITDA (1)
$
36.3
$
5.4
$
21.1
$
20.9
$
6.1
HD & SD MODERN JACKUPS
Net income
$
19.2
$
6.4
$
28.2
$
17.7
$
8.9
Subtract:
Other income
(0.8
)
(0.6
)
(1.2
)
(0.2
)
(0.1
)
Operating income
18.4
5.8
27.0
17.5
8.8
Add (subtract):
Depreciation
2.9
2.8
3.0
2.9
2.9
Other
—
—
0.1
—
(0.1
)
Adjusted EBITDA (1)
$
21.3
$
8.6
$
30.1
$
20.4
$
11.6
SD LEGACY JACKUPS
Net income
$
2.6
$
2.0
$
2.5
$
1.3
$
29.8
Add (subtract):
Other (income) expense
—
0.1
—
—
(27.5
)
Operating income
2.6
2.1
2.5
1.3
2.3
Add (subtract):
Depreciation
2.4
2.3
2.4
1.6
1.0
Other
—
—
(0.1
)
—
0.1
Adjusted EBITDA (1)
$
5.0
$
4.4
$
4.8
$
2.9
$
3.4
(1) Adjusted EBITDA for asset category excludes onshore support costs and general and administrative expense.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240730726374/en/
Investor & Media Contacts:
Nick Georgas Vice President - Treasurer and Investor Relations +1-713-979-4632
Tim Richardson Director - Investor Relations +1-713-979-4619
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