Valaris(VAL) - 2025 Q2 - Quarterly Results

Valaris Second Quarter 2025 Results Financial and Operational Highlights Valaris reported a strong Q2 2025 with $114 million net income, $201 million Adjusted EBITDA, and a $4.7 billion contract backlog Q2 2025 Key Financial Metrics (in millions) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net Income (Loss) | $114 | ($39) | | Adjusted EBITDA | $201 | $181 | | Revenues (excl. reimbursable) | $572 | $578 | | Cash from Operating Activities | $120 | - | | Adjusted Free Cash Flow | $63 | - | - Secured over $1.0 billion in new contract backlog since the April fleet status report, increasing total backlog to approximately $4.7 billion[2][7] - Achieved a revenue efficiency of 96% and maintained a strong safety record with no Lost Time Incidents (LTI) in the first half of 2025[2][7] - Agreed to sell jackup VALARIS 247 for approximately $108 million in cash proceeds[7] - Q2 2025 Adjusted EBITDA of $201 million significantly exceeded the guidance of $140 to $160 million, partly due to a $24 million benefit from a favorable arbitration outcome[12] Financial Performance Analysis Segment Performance Review Q2 2025 saw Jackups and ARO Drilling revenue growth, while Floaters declined, reflecting varied segment operational dynamics Floaters Segment Floaters segment revenue decreased 10% to $320 million in Q2 2025, with expenses down 14% due to contract completion and arbitration Floaters Segment Financials (Q2 vs Q1 2025, in millions) | Metric (excl. reimbursables) | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Revenues | $320 | $356 | -10% | | Contract Drilling Expense | $176 | $204 | -14% | - The decrease in contract drilling expense was primarily driven by a $17 million accrual reversal following a favorable arbitration outcome[14] Jackups Segment Jackups segment revenue grew 14% to $212 million in Q2 2025, driven by VALARIS 144 operations and higher day rates Jackups Segment Financials (Q2 vs Q1 2025, in millions) | Metric (excl. reimbursables) | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Revenues | $212 | $186 | +14% | | Contract Drilling Expense | $124 | $117 | +6% | ARO Drilling Segment ARO Drilling revenue rose to $140 million in Q2 2025 due to contract extensions, leading to increased drilling expenses ARO Drilling Financials (Q2 vs Q1 2025, in millions) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Revenues | $140 | $135 | | Contract Drilling Expense | $96 | $86 | Other Segment The 'Other' segment revenue increased to $41 million in Q2 2025, driven by higher bareboat charter revenue from ARO-leased rigs Other Segment Financials (Q2 vs Q1 2025, in millions) | Metric (excl. reimbursables) | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Revenues | $41 | $36 | | Contract Drilling Expense | $17 | $16 | Consolidated Financial Statements Q2 2025 consolidated financials show $114.2 million net income on $615.2 million operating revenues, with $4.5 billion total assets Consolidated Statements of Operations Valaris reported Q2 2025 operating revenues of $615.2 million, achieving $114.2 million net income and $1.61 diluted EPS Q2 2025 Statement of Operations Highlights (in millions, except EPS) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Total Operating Revenues | $615.2 | $620.7 | | Operating Income | $164.1 | $143.0 | | Net Income (Loss) | $114.2 | ($39.2) | | Diluted EPS | $1.61 | ($0.53) | Consolidated Balance Sheets As of June 30, 2025, Valaris's balance sheet shows $4.50 billion total assets, $503.4 million cash, and $2.33 billion total equity Balance Sheet Highlights (as of June 30, 2025, in millions) | Metric | Jun 30, 2025 | Mar 31, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $503.4 | $441.4 | | Total Current Assets | $1,227.4 | $1,157.8 | | Total Assets | $4,503.3 | $4,386.8 | | Total Liabilities | $2,170.0 | $2,175.3 | | Total Equity | $2,333.3 | $2,211.5 | Consolidated Statements of Cash Flows In Q2 2025, Valaris generated $120.0 million net cash from operations, with cash and cash equivalents increasing to $516.2 million Q2 2025 Cash Flow Summary (in millions) | Metric | Q2 2025 | | :--- | :--- | | Net cash provided by operating activities | $120.0 | | Net cash used in investing activities | ($57.4) | | Net cash used in financing activities | ($0.1) | | Increase in Cash and Cash Equivalents | $62.5 | | Cash and Cash Equivalents, End of Period | $516.2 | Operating Statistics Contract Backlog As of July 24, 2025, Valaris's total contract backlog increased to $4.71 billion, primarily driven by the Floaters segment's $2.74 billion Contract Backlog by Segment (as of July 24, 2025, in millions) | Segment | Backlog | | :--- | :--- | | Floaters | $2,744.2 | | Jackups | $1,353.8 | | Other (Leased/Managed) | $616.4 | | Valaris Total | $4,714.4 | Key Operating Metrics In Q2 2025, Valaris maintained 96% revenue efficiency, with 61% total fleet utilization and $181,000 average daily revenue Q2 2025 Utilization Rates (%) | Fleet Type | Total Fleet Utilization | Active Fleet Utilization | | :--- | :--- | :--- | | Floaters | 60% | 78% | | Jackups | 61% | 92% | | Valaris Total | 61% | 86% | Q2 2025 Average Daily Revenue ($) | Segment | Average Daily Revenue | | :--- | :--- | | Floaters | $377,000 | | Jackups | $142,000 | | Valaris Total | $181,000 | - Overall revenue efficiency for the combined Floaters and Jackups fleet was 96% in Q2 2025, consistent with the prior quarter[46] Fleet Status As of June 30, 2025, Valaris's fleet comprised 49 rigs, including 30 active, reflecting a decrease due to three semisubmersible sales Number of Rigs by Status (as of June 30, 2025) | Status | Floaters | Jackups | Total | | :--- | :--- | :--- | :--- | | Active Fleet | 12 | 18 | 30 | | Stacked Fleet | 3 | 9 | 12 | | Leased Rigs | 0 | 7 | 7 | | Total Rigs | 15 | 34 | 49 | - The total number of rigs decreased from 52 to 49 during the quarter, reflecting the sale of three semisubmersibles (VALARIS DPS-3, DPS-5, and DPS-6) that were previously classified as held for sale[48] ARO Drilling Joint Venture Details ARO Financials and Operations ARO Drilling reported Q2 2025 revenues of $139.9 million, a net loss of $8.6 million, and a $2.35 billion contract backlog ARO Drilling Q2 2025 Financials (in millions) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Revenues | $139.9 | $134.7 | | Net Loss | ($8.6) | ($1.0) | | Adjusted EBITDA | $36.9 | $42.8 | ARO Drilling Q2 2025 Operating Metrics | Metric | Q2 2025 | | :--- | :--- | | Total Utilization | 85% | | Revenue Efficiency | 90% | | Average Daily Revenue | $113,000 | - ARO Drilling's total contract backlog was $2.35 billion as of July 24, 2025, with $1.38 billion attributed to leased rigs[52] Non-GAAP Financial Measures and Reconciliations Definitions and Reconciliations Valaris reconciles Q2 2025 net income to $200.7 million Adjusted EBITDA and operating cash to $62.6 million Adjusted Free Cash Flow - Adjusted EBITDA is defined as net income before interest, taxes, depreciation, amortization, impairment, and equity in earnings/losses of ARO[55] - Adjusted Free Cash Flow is defined as net cash from operating activities less capital expenditures, plus proceeds from asset dispositions[58] Q2 2025 Reconciliation Summary (in millions) | Measure | GAAP Value | Non-GAAP Value | | :--- | :--- | :--- | | Net Income to Adjusted EBITDA | $114.2 | $200.7 | | Net Cash from Ops to Adj. FCF | $120.0 | $62.6 |