Transocean(RIG) - 2025 Q2 - Quarterly Results

Financial Highlights Transocean reported a $938 million net loss driven by a significant asset impairment, while demonstrating strong operational performance with increased revenues and Adjusted EBITDA | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Contract drilling revenues | $988M | $906M | $861M | | Net loss attributable to controlling interest | $(938)M | $(79)M | $(123)M | | Diluted loss per share | $(1.06) | $(0.11) | $(0.15) | | Adjusted EBITDA | $344M | $244M | $284M | | Adjusted EBITDA margin | 34.9% | 26.9% | 33.0% | | Adjusted net income (loss) | $19M | $(65)M | $(123)M | - The Q2 2025 net loss was primarily driven by net unfavorable items totaling $957 million, which included a significant $1.128 billion loss on asset impairment[2][5] - After accounting for adjustments, the company achieved an adjusted net income of $19 million for the second quarter of 2025[2] - The company's contract backlog was reported at $7.2 billion as of the July 2025 Fleet Status Report[1] Operational and Financial Review The company's Q2 2025 financial performance showed sequential revenue growth, reduced operating expenses, improved cash flow, and a strong commitment to debt reduction Revenue Analysis Contract drilling revenues increased sequentially to $988 million, driven by improved rig utilization, enhanced revenue efficiency, and higher reimbursement revenues - The $82 million sequential increase in contract drilling revenues was primarily due to improved rig utilization, better revenue efficiency, and higher reimbursement revenues[3] Expense Analysis Operating and maintenance expenses decreased sequentially due to non-recurring litigation costs, while interest expense also saw a sequential reduction - Operating and maintenance expense decreased sequentially primarily due to the non-recurrence of a non-cash cost from the resolution of litigation in the prior quarter[4] - Interest expense was $141 million, compared to $152 million in the prior quarter, excluding fair value adjustments related to exchangeable bonds[6] Cash Flow and Capital Expenditures Cash from operating activities significantly increased to $128 million, driven by higher customer receipts, while capital expenditures decreased to $24 million - Cash from operating activities increased by $102 million sequentially to $128 million, mainly due to higher cash receipts from customers[8] - Capital expenditures decreased to $24 million in Q2 2025 from $60 million in the previous quarter[8] Management Commentary Management highlighted strong operational efficiency, leading to a 35% Adjusted EBITDA margin and $104 million in free cash flow, alongside a commitment to $700 million debt reduction - Management credited safe, reliable, and efficient operations for achieving an adjusted EBITDA margin of 35% and generating $104 million in free cash flow[9] - The company is on track to reduce its debt by over $700 million this year, aiming to create long-term shareholder value[9] Financial Statements This section presents the unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows, for a detailed view of the company's financial position Condensed Consolidated Statements of Operations For Q2 2025, the company reported $988 million in revenues and a $964 million operating loss, leading to a $938 million net loss primarily due to asset impairment Statement of Operations Summary (Three Months Ended June 30) | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | Contract drilling revenues | $988 | $861 | | Operating loss | $(964) | $(59) | | Net loss attributable to controlling interest | $(938) | $(123) | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $17.81 billion, primarily due to reduced property value, with total liabilities at $8.46 billion and equity at $9.35 billion Balance Sheet Summary | (In millions) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $2,000 | $2,452 | | Property and equipment, net | $14,752 | $15,831 | | Total assets | $17,811 | $19,371 | | Total current liabilities | $1,582 | $1,663 | | Long-term debt | $5,885 | $6,195 | | Total liabilities | $8,457 | $9,086 | | Total equity | $9,354 | $10,285 | Condensed Consolidated Statements of Cash Flows For the first six months of 2025, the company generated $154 million from operations, used $70 million in investing, and $253 million in financing, resulting in a net cash decrease Cash Flow Summary (Six Months Ended June 30) | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $154 | $47 | | Net cash used in investing activities | $(70) | $(114) | | Net cash used in financing activities | $(253) | $(53) | | Net decrease in cash | $(169) | $(120) | Fleet Operating Statistics In Q2 2025, the fleet showed improved operational performance with increased average daily revenue, higher rig utilization, and strong revenue efficiency Fleet Operating Statistics Comparison | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total fleet average daily revenue | $458,600 | $443,600 | $438,300 | | Total fleet average revenue efficiency | 96.6% | 95.5% | 96.9% | | Total fleet average rig utilization | 67.3% | 63.4% | 57.8% | Non-GAAP Financial Measures and Reconciliations This section provides details and reconciliations for non-GAAP financial measures, including Adjusted Net Income, EBITDA, Adjusted EBITDA, and Free Cash Flow, to supplement U.S. GAAP results - The company presents non-GAAP measures such as EBITDA, Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow to supplement its U.S. GAAP results, believing they help assess performance period-over-period and relative to industry peers[10] Adjusted Net Income (Loss) and Adjusted Diluted EPS Transocean's Q2 2025 reported net loss of $938 million was adjusted to a $19 million net income, primarily by excluding a $1.128 billion asset impairment Q2 2025 Reconciliation of Net Loss to Adjusted Net Income (in millions) | Description | Amount | | :--- | :--- | | Net loss attributable to controlling interest, as reported | $(938) | | Loss on impairment of assets, net of tax | $1,128 | | Loss on conversion of debt to equity | $24 | | Discrete tax items | $(195) | | Net income, as adjusted | $19 | EBITDA and Adjusted EBITDA Adjusted EBITDA significantly increased to $344 million in Q2 2025, with the margin improving to 34.9%, reflecting adjustments for various non-operating items Adjusted EBITDA Performance (in millions) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net loss | $(938) | $(79) | | EBITDA | $(816) | $244 | | Adjustments (incl. impairment) | $1,160 | $0 | | Adjusted EBITDA | $344 | $244 | | Adjusted EBITDA margin | 34.9% | 26.9% | Free Cash Flow The company generated $104 million in Free Cash Flow in Q2 2025, a strong recovery from the prior quarter, derived from operating cash flow less capital expenditures Free Cash Flow Calculation (in millions) | Description | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Cash provided by operating activities | $128 | $26 | | Capital expenditures | $(24) | $(60) | | Free Cash Flow | $104 | $(34) | Company and Investor Information Transocean is a leading global offshore contract drilling provider, operating a fleet of 32 high-specification units, with details provided for an investor conference call and forward-looking statement disclaimers - Transocean operates a fleet of 32 mobile offshore drilling units, comprising 24 ultra-deepwater floaters and eight harsh environment floaters, focusing on technically demanding sectors[12][13] - A conference call to discuss the Q2 2025 results is scheduled for 9 a.m. EDT on Tuesday, August 5, 2025[15] - The report contains forward-looking statements based on current management expectations, which are subject to various risks and uncertainties that could cause actual results to differ materially[18]