Valaris(VAL) - 2024 Q4 - Annual Results

Financial Performance - Net income increased to $131 million in Q4 2024, up from $63 million in Q3 2024, including a tax benefit of $7 million[6] - Net income attributable to Valaris for Q4 2024 was $133.7 million, compared to $64.6 million in Q3 2024, representing a 106.5% increase[23] - Operating income for Q4 2024 was $119.2 million, up from $94.9 million in Q3 2024, indicating a 25.5% increase[23] - Net income for the year ended December 31, 2024, was $369.8 million, a decrease of 57.3% compared to $866.8 million in 2023[27] - Net income for the same period was $15.1 million, a significant recovery from a net loss of $54.0 million in the previous quarter[71] - Valaris reported a net income of $130.6 million for the three months ended December 31, 2024, compared to $62.9 million for the previous quarter[85] Revenue and Utilization - Total operating revenues for Q4 2024 were $584.4 million, a decrease of 9.1% from $643.1 million in Q3 2024[23] - Revenues exclusive of reimbursable items decreased to $548 million in Q4 2024 from $600 million in Q3 2024, primarily due to lower utilization for the floater fleet[7] - Average daily revenue for drillships increased to $405,000 in Q4 2024, up from $307,000 in Q4 2023, representing a 32% increase year-over-year[47] - Total fleet utilization decreased to 58% in Q4 2024 from 60% in Q4 2023, while jackup utilization remained stable at 60%[50] - Total active fleet remains stable at 31 rigs as of December 31, 2024, compared to 33 rigs a year earlier, indicating a decrease of 6.1% year-over-year[68] Cash Flow and Expenditures - Generated $125 million of cash from operating activities and $13 million of Free Cash Flow in Q4 2024[8] - Cash and cash equivalents decreased to $381 million as of December 31, 2024, from $392 million as of September 30, 2024[11] - Capital expenditures increased to $112 million in Q4 2024 from $82 million in Q3 2024, primarily due to higher rig upgrade expenditures[11] - Net cash provided by operating activities increased to $355.4 million in 2024 from $267.5 million in 2023, representing a growth of 32.8%[27] - Free cash flow for the three months ended December 31, 2024, was $12.9 million, a decrease from $111.1 million in the previous quarter[93] Backlog and Contracts - Secured approximately $120 million of contract backlog, including a multi-year contract for jackup VALARIS Stavanger in the North Sea[8] - The total contract backlog as of February 18, 2025, was $3.6085 billion, a decrease from $4.1048 billion reported on October 30, 2024, representing a decline of 12.1%[44] - Contract backlog for owned rigs was $1,124.9 million as of February 18, 2025, down from $1,475.4 million a year earlier, representing a decline of 23.7%[73] Adjusted EBITDA and Performance Metrics - Adjusted EBITDA decreased to $142 million in Q4 2024 from $150 million in Q3 2024, primarily due to lower utilization for the floater fleet[6] - Adjusted EBITDA for the total fleet was $207.2 million for the three months ended December 31, 2024, compared to $216.6 million for the previous quarter, reflecting a decrease of 6.4%[35] - Adjusted EBITDA for HD Harsh Environment Jackups reached $50.0 million, a significant increase from $31.4 million in the prior quarter, reflecting a 59.4% growth[92] - Adjusted EBITDA for HD & SD Modern Jackups was $19.5 million, down from $20.0 million in the previous quarter, indicating a decrease of 2.5%[92] Assets and Liabilities - Total current assets decreased to $1,078.7 million as of December 31, 2024, from $1,111.5 million as of September 30, 2024[25] - Long-term debt remained stable at $1,082.7 million as of December 31, 2024, compared to $1,081.8 million as of September 30, 2024[25] - Total liabilities decreased to $2,175.5 million as of December 31, 2024, from $2,209.6 million as of September 30, 2024[25] - The company reported equity of $2,244.3 million as of December 31, 2024, an increase from $2,123.8 million as of September 30, 2024[25] Market Outlook and Challenges - The company anticipates continued volatility in the offshore drilling market, influenced by commodity price fluctuations and customer demand[20] - The contracting outlook for 2026 and beyond remains strong for high-specification assets, with a focus on securing long-term programs for active rigs[4] Segment Performance - The JACKUPS segment reported an Adjusted EBITDA of $75.5 million for Q4 2024, compared to $57.0 million in the previous quarter[87] - The total revenue from jackups was $75.5 million for the three months ended December 31, 2024, compared to $57.0 million in the previous quarter, an increase of 32.5%[41] - The total revenue from drillships was $108.4 million for the three months ended December 31, 2024, compared to $130.9 million in the previous quarter, a decrease of 17.2%[35]