Valaris(VAL) - 2024 Q3 - Quarterly Results

Financial Performance - Net income for Q3 2024 was $63 million, down from$ 151 million in Q2 2024, with an adjusted EBITDA of $150 million, up from$ 139 million[4]. - Revenue increased to $643 million in Q3 2024 from$ 610 million in Q2 2024, primarily due to a full quarter of operations for VALARIS DS-7 and higher average daily revenue for the floater fleet[5]. - Free cash flow for the quarter was $111 million, with$ 193 million generated from operating activities, and the company repurchased $100 million of shares[3]. - Operating revenues for Q3 2024 were$ 643.1 million, an increase of 5.0% from $610.1 million in Q2 2024 and up 23.5% from$ 525.0 million in Q1 2024[24]. - Operating income for Q3 2024 was $94.9 million, down 12.0% from$ 108.9 million in Q2 2024 but significantly higher than $29.3 million in Q1 2024[24]. - Net income attributable to Valaris for Q3 2024 was$ 64.6 million, a decrease of 56.7% from $149.6 million in Q2 2024, but an increase from$ 25.5 million in Q1 2024[24]. - Basic earnings per share for Q3 2024 were $0.89, down from$ 2.07 in Q2 2024 and up from $0.35 in Q1 2024[24]. - Cash provided by operating activities was$ 193.0 million, significantly higher than $11.5 million in the previous quarter[31]. - The company reported a significant increase in depreciation expense to$ 31.7 million, compared to $29.7 million in the previous quarter[31]. - Adjusted EBITDA for the total fleet reached$ 198.3 million in September 2024, up from $189.0 million in June 2024, representing a 0.7% increase[35]. Operational Efficiency - The company achieved a fleetwide revenue efficiency of 98%, reflecting strong operational performance[2]. - Average daily revenue for drillships increased to$ 386,000 in September 2024, up from $288,000 in September 2023, representing a 34% increase[42]. - Total fleet utilization improved to 69% in September 2024, compared to 65% in September 2023, indicating a 4 percentage point increase[44]. - Active fleet utilization for floaters reached 91% in September 2024, up from 63% in September 2023, showing a significant increase of 28 percentage points[46]. - Revenue efficiency for drillships was 98% in September 2024, slightly down from 99% in June 2024, but up from 89% in September 2023[51]. Contract and Backlog - A three-year contract extension for jackup VALARIS 118 was awarded in October, adding$ 168 million to the contract backlog[3]. - The contract backlog as of October 30, 2024, totaled $4,104.8 million, slightly down from$ 4,307.5 million in July 2024, indicating a 4.7% decline[40]. - The total contract backlog for semisubmersibles was $106.0 million in October 2024, down from$ 122.1 million in July 2024, indicating a 13.1% decline[40]. - The total contract backlog for ARO Drilling as of October 30, 2024, is $1,581.3 million, down from$ 1,982.2 million in April 2024[57]. Cash and Liquidity - Cash and cash equivalents decreased to $392 million as of September 30, 2024, from$ 410 million at the end of Q2 2024, primarily due to share repurchases and capital expenditures[10]. - The company experienced a net cash outflow of $18.1 million in cash and cash equivalents during the quarter[31]. - Cash used in investing activities amounted to$ 81.8 million, compared to $110.1 million in the previous quarter, indicating a reduction in capital expenditures[31]. - Payments for share repurchases totaled$ 100.0 million, reflecting the company's commitment to returning value to shareholders[31]. Market Outlook - The company remains optimistic about the long-term outlook, despite some customer demand being deferred, with a robust outlook for 2026 and beyond[2]. - The company anticipates continued volatility in the offshore drilling market, influenced by commodity price fluctuations and customer demand[21]. Safety and Recognition - Valaris was recognized with the 2024 Safety Leadership Award for the development of its Restricted Zone Analysis tool, highlighting its commitment to safety[3].