Valaris Reports Third Quarter 2023 Results
HAMILTON, Bermuda–(BUSINESS WIRE)–Valaris Limited (NYSE: VAL) (“Valaris” or the “Company”) today reported third quarter 2023 results.
President and Chief Executive Officer Anton Dibowitz said, “We are pleased that VALARIS DS-17 commenced its contract offshore Brazil during the quarter and expect that it will contribute meaningful earnings and cash flow going forward. While our floater revenue efficiency for the quarter was below our expectations, our year to date fleetwide revenue efficiency remains strong at 97%, and we remain committed to delivering safe and efficient operations.”
Dibowitz added, “During the third quarter, we were awarded new contracts and extensions with associated contract backlog of approximately $465 million. Our long-term contract for VALARIS DS-7 was the seventh contract awarded to our previously stacked floaters since mid-2021. Following this reactivation we will have 10 drillships working and will remain disciplined in exercising our operational leverage with only one stacked drillship and two newbuild drillship options remaining.”
Dibowitz concluded, “The outlook for Valaris is positive, with increasing demand and constrained supply tightening the market. We are confident in the strength and duration of this upcycle, and we expect to deliver meaningfully improved earnings in both 2024 and 2025 due to the impact of recent and ongoing drillship reactivations at attractive day rates, as well as the repricing of rigs from legacy day rate contracts to higher markets rates.”
Financial and Operational Highlights
- Net income of $17 million, Adjusted EBITDA of $40 million and Adjusted EBITDAR of $91 million;
- Delivered revenue efficiency of 94% during the quarter and 97% year to date;
- Recognized by the Center for Offshore Safety with its 2023 Safety Leadership Award for the Valaris Basic Training program;
- Awarded new contracts and extensions with associated contract backlog of approximately $465 million during the third quarter;
- Additional new contracts and extensions awarded following quarter end, with associated contract backlog of approximately $335 million;
- Executed $400 million add-on to Senior Secured Second Lien Notes to finance expected exercise of purchase options for newbuild drillships VALARIS DS-13 and DS-14;
- Repurchased $85 million of shares during the third quarter and $171 million to date;
- Remain on track to deliver on our 2023 share repurchase target of $200 million;
- ARO Drilling secured attractive financing for newbuild jackups Kingdom 1 and 2.
Third Quarter Review
Net income was $17 million compared to net loss of $27 million in the second quarter 2023. Adjusted EBITDA increased to $40 million from $15 million in the second quarter primarily due to two jackups and one floater commencing contracts during the quarter after not working in the second quarter, as well as an increase in average daily revenue for both the floater and jackup fleets. These items were partially offset by higher reactivation expense and an increase in unplanned downtime related to several floaters. Adjusted EBITDAR increased to $91 million from $59 million in the second quarter.
Revenues increased to $455 million from $415 million in the second quarter 2023. Excluding reimbursable items, revenues increased to $427 million from $388 million in the second quarter. The increase was primarily due to two jackups and one floater commencing contracts during the quarter after not working in the second quarter, as well as an increase in average daily revenue for both the floater and jackup fleets. These items were partially offset by an increase in unplanned downtime related to several floaters.
Contract drilling expense increased to $391 million from $374 million in the second quarter 2023. Excluding reimbursable items, contract drilling expense increased to $369 million from $348 million in the second quarter. The increase was primarily due to higher reactivation expense and higher operating costs resulting from the contract startups mentioned above.
Depreciation expense increased to $26 million from $25 million in the second quarter 2023. General and administrative expense decreased to $24 million from $26 million in the second quarter 2023.
Other income increased to $11 million from $7 million in the second quarter 2023. This was primarily due to foreign currency exchange gains during the quarter compared to losses in the second quarter.
Tax expense decreased to $11 million from $25 million in the second quarter 2023. The third quarter tax provision included $2 million of discrete tax benefit, which was primarily attributable to the resolution of prior period tax matters, partially offset by changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years. The second quarter tax provision included $6 million of discrete tax expense, which was primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years. Adjusted for discrete items, tax expense decreased to $13 million from $18 million in the second quarter primarily due to a reduction in deferred tax asset valuation allowances.
Cash and cash equivalents and restricted cash increased to $1.1 billion as of September 30, 2023, from $805 million as of June 30, 2023. The increase was primarily due to the issuance of $400 million of additional 8.375% Senior Secured Second Lien Notes due 2030, partially offset by capital expenditures and share repurchases. The net proceeds from this issuance are intended to fund the purchase of drillships VALARIS DS-13 and DS-14, and for general corporate purposes.
Capital expenditures increased to $106 million from $71 million in the second quarter 2023 primarily due to an increase in reactivation and customer-specific capital expenditures associated with VALARIS DS-17, DS-8 and DS-7.
Third Quarter Segment Review
Floaters
Floater revenues increased to $243 million from $227 million in the second quarter 2023. Excluding reimbursable items, revenues increased to $232 million from $216 million in the second quarter. The increase was primarily due to VALARIS DS-17 commencing its contract with Equinor offshore Brazil in early September, following its reactivation, as well as an increase in average daily revenue for the rest of the floater fleet during the third quarter. These benefits were partially offset by fewer operating days for several floaters primarily due to unplanned downtime events.
Contract drilling expense increased to $215 million from $196 million in the second quarter 2023. Excluding reimbursable items, contract drilling expense increased to $206 million from $185 million in the second quarter. The increase was primarily due to higher reactivation expense associated with VALARIS DS-7 following a contract award in July for which the rig is being reactivated and VALARIS DS-17 commencing a contract in early September.
Jackups
Jackup revenues increased to $166 million from $145 million in the second quarter 2023. Excluding reimbursable items, revenues increased to $155 million from $135 million in the second quarter primarily due to more operating days and an increase in average daily revenue. Revenues from the jackup fleet benefited from contract startups for VALARIS 121 and 249, as well as several rigs commencing new contracts at higher day rates.
Contract drilling expense decreased to $122 million from $124 million in the second quarter 2023. Excluding reimbursable items, contract drilling expense of $114 million was in line with the second quarter. Lower repair and maintenance costs across the fleet and lower costs resulting from the sale of VALARIS 54 were offset by higher operating costs for VALARIS 249, which commenced a contract offshore Trinidad during the quarter after mobilizing from New Zealand during the second quarter.
ARO Drilling
Revenues increased to $122 million from $118 million in the second quarter 2023 primarily due to more operating days resulting from less out of service time for planned maintenance during the third quarter. Contract drilling expense decreased to $92 million from $95 million in the second quarter primarily due to lower repair costs associated with the previously mentioned planned maintenance.
Other
Revenues increased to $46 million from $43 million in the second quarter 2023 and contract drilling expense increased to $19 million from $18 million in the second quarter.
|
|
|
Third Quarter |
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|
|
Floaters |
|
Jackups |
|
ARO (1) |
|
Other |
|
Reconciling Items (1)(2) |
|
Consolidated Total |
|||||||||||
|
(in millions of $, except %) |
Q3 |
Q2 |
Chg |
|
Q3 |
Q2 |
Chg |
|
Q3 |
Q2 |
Chg |
|
Q3 |
Q2 |
Chg |
|
Q3 |
Q2 |
|
Q3 |
Q2 |
Chg |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
243.3 |
227.4 |
7% |
|
165.9 |
144.6 |
15% |
|
121.5 |
117.8 |
3% |
|
45.9 |
43.2 |
6% |
|
(121.5) |
(117.8) |
|
455.1 |
415.2 |
10% |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract drilling |
215.2 |
196.2 |
(10)% |
|
121.7 |
123.5 |
1% |
|
92.0 |
95.0 |
3% |
|
18.8 |
18.2 |
(3)% |
|
(56.8) |
(59.4) |
|
390.9 |
373.5 |
(5)% |
|
Depreciation |
14.2 |
13.6 |
(4)% |
|
10.2 |
9.6 |
(6)% |
|
15.8 |
15.6 |
(1)% |
|
1.3 |
1.2 |
(8)% |
|
(15.7) |
(15.5) |
|
25.8 |
24.5 |
(5)% |
|
General and admin. |
— |
— |
—% |
|
— |
— |
—% |
|
5.6 |
5.7 |
2% |
|
— |
— |
—% |
|
18.6 |
20.7 |
|
24.2 |
26.4 |
8% |
|
Equity in earnings (losses) of ARO |
— |
— |
—% |
|
— |
— |
—% |
|
— |
— |
—% |
|
— |
— |
—% |
|
2.4 |
(0.7) |
|
2.4 |
(0.7) |
nm |
|
Operating income (loss) |
13.9 |
17.6 |
(21)% |
|
34.0 |
11.5 |
196% |
|
8.1 |
1.5 |
440% |
|
25.8 |
23.8 |
8% |
|
(65.2) |
(64.3) |
|
16.6 |
(9.9) |
nm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
14.5 |
17.9 |
(19)% |
|
34.4 |
39.1 |
(12)% |
|
(1.3) |
(7.3) |
(82)% |
|
25.8 |
23.8 |
8% |
|
(56.4) |
(100.8) |
|
17.0 |
(27.3) |
nm |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
28.2 |
31.1 |
(9)% |
|
44.2 |
21.1 |
109% |
|
23.9 |
17.1 |
40% |
|
27.2 |
24.9 |
9% |
|
(83.5) |
(78.9) |
|
40.0 |
15.3 |
161% |
|
Adjusted EBITDAR |
79.1 |
75.3 |
5% |
|
44.2 |
21.0 |
110% |
|
23.9 |
17.1 |
40% |
|
27.2 |
24.9 |
9% |
|
(83.5) |
(78.9) |
|
90.9 |
59.4 |
53% |
|
(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.” |
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Third Quarter Results Versus Guidance
The Company’s third quarter 2023 results were lower than prior guidance primarily due to lower than expected floater revenue efficiency and two contract commencement delays.
As previously announced, Valaris will hold its third quarter 2023 earnings conference call at 9:00 a.m. CT (10:00 a.m. ET) on Tuesday, November 7, 2023. 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, 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 (such as the ongoing conflict in Ukraine); cybersecurity attacks and threats; impacts and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic; future operations; any exercise of our options for delivery of the VALARIS DS-13 and VALARIS DS-14; increasing regulatory complexity; targets, progress, plans and goals related to environmental, social and governance (“ESG”) 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 ESG targets, including our Scope 1 emissions intensity reduction target, 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; 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) |
|||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||
|
|
Sep 30, |
|
Jun 30, |
|
Mar 31, |
|
Dec 31, |
|
Sep 30, |
||||||||||
|
OPERATING REVENUES |
$ |
455.1 |
|
|
$ |
415.2 |
|
|
$ |
430.1 |
|
|
$ |
433.6 |
|
|
$ |
437.2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
||||||||||
|
Contract drilling (exclusive of depreciation) |
|
390.9 |
|
|
|
373.5 |
|
|
|
377.2 |
|
|
|
353.4 |
|
|
|
336.7 |
|
|
Depreciation |
|
25.8 |
|
|
|
24.5 |
|
|
|
23.3 |
|
|
|
23.8 |
|
|
|
22.6 |
|
|
General and administrative |
|
24.2 |
|
|
|
26.4 |
|
|
|
24.4 |
|
|
|
23.9 |
|
|
|
19.2 |
|
|
Total operating expenses |
|
440.9 |
|
|
|
424.4 |
|
|
|
424.9 |
|
|
|
401.1 |
|
|
|
378.5 |
|
|
EQUITY IN EARNINGS (LOSSES) OF ARO |
|
2.4 |
|
|
|
(0.7 |
) |
|
|
3.3 |
|
|
|
8.6 |
|
|
|
2.9 |
|
|
OPERATING INCOME (LOSS) |
|
16.6 |
|
|
|
(9.9 |
) |
|
|
8.5 |
|
|
|
41.1 |
|
|
|
61.6 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
|
||||||||||
|
Interest income |
|
26.6 |
|
|
|
24.6 |
|
|
|
23.0 |
|
|
|
15.5 |
|
|
|
27.9 |
|
|
Interest expense, net |
|
(19.4 |
) |
|
|
(16.7 |
) |
|
|
(11.1 |
) |
|
|
(10.5 |
) |
|
|
(11.7 |
) |
|
Other, net |
|
3.9 |
|
|
|
(0.8 |
) |
|
|
0.6 |
|
|
|
(5.2 |
) |
|
|
13.7 |
|
|
|
|
11.1 |
|
|
|
7.1 |
|
|
|
12.5 |
|
|
|
(0.2 |
) |
|
|
29.9 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
INCOME (LOSS) BEFORE INCOME TAXES |
|
27.7 |
|
|
|
(2.8 |
) |
|
|
21.0 |
|
|
|
40.9 |
|
|
|
91.5 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
PROVISION (BENEFIT) FOR INCOME TAXES |
|
10.7 |
|
|
|
24.5 |
|
|
|
(27.6 |
) |
|
|
9.8 |
|
|
|
13.8 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
NET INCOME (LOSS) |
|
17.0 |
|
|
|
(27.3 |
) |
|
|
48.6 |
|
|
|
31.1 |
|
|
|
77.7 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS |
|
(4.1 |
) |
|
|
(2.1 |
) |
|
|
(1.9 |
) |
|
|
(1.9 |
) |
|
|
(3.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
NET INCOME (LOSS) ATTRIBUTABLE TO VALARIS |
$ |
12.9 |
|
|
$ |
(29.4 |
) |
|
$ |
46.7 |
|
|
$ |
29.2 |
|
|
$ |
74.3 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
EARNINGS (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic |
$ |
0.18 |
|
|
$ |
(0.39 |
) |
|
$ |
0.62 |
|
|
$ |
0.39 |
|
|
$ |
0.99 |
|
|
Diluted |
$ |
0.17 |
|
|
$ |
(0.39 |
) |
|
$ |
0.61 |
|
|
$ |
0.38 |
|
|
$ |
0.98 |
|
|
WEIGHTED-AVERAGE SHARES OUTSTANDING |
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic |
|
73.7 |
|
|
|
74.8 |
|
|
|
75.2 |
|
|
|
75.2 |
|
|
|
75.1 |
|
|
Diluted |
|
74.8 |
|
|
|
74.8 |
|
|
|
76.4 |
|
|
|
76.0 |
|
|
|
75.6 |
|
|
VALARIS LIMITED AND SUBSIDIARIES |
|
CONSOLIDATED BALANCE SHEETS |
|
(In millions) |
|
|
As of |
|||||||||||||
|
|
Sep 30, |
Jun 30, |
Mar 31, |
Dec 31, |
Sep 30, |
|||||||||
|
ASSETS |
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|||||||||
|
CURRENT ASSETS |
|
|
|
|
|
|||||||||
|
Cash and cash equivalents |
$ |
1,041.1 |
$ |
787.3 |
$ |
822.5 |
$ |
724.1 |
$ |
406.0 |
||||
|
Restricted cash |
|
16.2 |
|
18.0 |
|
21.5 |
|
24.4 |
|
18.2 |
||||
|
Short-term investments |
|
— |
|
— |
|
— |
|
— |
|
220.0 |
||||
|
Accounts receivable, net |
|
492.4 |
|
473.4 |
|
393.4 |
|
449.1 |
|
535.5 |
||||
|
Other current assets |
|
178.7 |
|
168.7 |
|
158.1 |
|
148.6 |
|
162.9 |
||||
|
Total current assets |
$ |
1,728.4 |
$ |
1,447.4 |
$ |
1,395.5 |
$ |
1,346.2 |
$ |
1,342.6 |
||||
|
|
|
|
|
|
|
|||||||||
|
PROPERTY AND EQUIPMENT, NET |
|
1,159.9 |
|
1,073.7 |
|
1,015.5 |
|
977.2 |
|
953.6 |
||||
|
|
|
|
|
|
|
|||||||||
|
LONG-TERM NOTES RECEIVABLE FROM ARO |
|
275.2 |
|
268.0 |
|
261.0 |
|
254.0 |
|
246.9 |
||||
|
|
|
|
|
|
|
|||||||||
|
INVESTMENT IN ARO |
|
116.1 |
|
113.7 |
|
114.4 |
|
111.1 |
|
102.6 |
||||
|
|
|
|
|
|
|
|||||||||
|
OTHER ASSETS |
|
205.3 |
|
185.6 |
|
164.8 |
|
171.8 |
|
175.5 |
||||
|
|
|
|
|
|
|
|||||||||
|
|
$ |
3,484.9 |
$ |
3,088.4 |
$ |
2,951.2 |
$ |
2,860.3 |
$ |
2,821.2 |
||||
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|||||||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|||||||||
|
CURRENT LIABILITIES |
|
|
|
|
|
|||||||||
|
Accounts payable – trade |
$ |
376.4 |
$ |
364.2 |
$ |
324.1 |
$ |
256.5 |
$ |
256.6 |
||||
|
Accrued liabilities and other |
|
346.6 |
|
294.7 |
|
267.7 |
|
247.9 |
|
262.5 |
||||
|
Total current liabilities |
$ |
723.0 |
$ |
658.9 |
$ |
591.8 |
$ |
504.4 |
$ |
519.1 |
||||
|
|
|
|
|
|
|
|||||||||
|
LONG-TERM DEBT |
|
1,079.4 |
|
681.9 |
|
542.8 |
|
542.4 |
|
541.8 |
||||
|
|
|
|
|
|
|
|||||||||
|
OTHER LIABILITIES |
|
482.5 |
|
481.5 |
|
464.6 |
|
515.6 |
|
523.2 |
||||
|
|
|
|
|
|
|
|||||||||
|
TOTAL LIABILITIES |
|
2,284.9 |
|
1,822.3 |
|
1,599.2 |
|
1,562.4 |
|
1,584.1 |
||||
|
|
|
|
|
|
|
|||||||||
|
TOTAL EQUITY |
|
1,200.0 |
|
1,266.1 |
|
1,352.0 |
|
1,297.9 |
|
1,237.1 |
||||
|
|
|
|
|
|
|
|||||||||
|
|
$ |
3,484.9 |
$ |
3,088.4 |
$ |
2,951.2 |
$ |
2,860.3 |
$ |
2,821.2 |
||||
|
VALARIS LIMITED AND SUBSIDIARIES |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(In millions) |
|
|
Nine Months Ended |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
OPERATING ACTIVITIES |
|
|
|
||||
|
Net income |
$ |
38.3 |
|
|
$ |
150.7 |
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
||||
|
Depreciation expense |
|
73.6 |
|
|
|
67.4 |
|
|
Amortization |
|
— |
|
|
|
6.1 |
|
|
Loss on extinguishment of debt |
|
29.2 |
|
|
|
— |
|
|
Gain on asset disposals |
|
(27.9 |
) |
|
|
(137.7 |
) |
|
Accretion of discount on notes receivable from ARO |
|
(21.2 |
) |
|
|
(37.8 |
) |
|
Share-based compensation expense |
|
19.5 |
|
|
|
11.5 |
|
|
Equity in earnings of ARO |
|
(5.0 |
) |
|
|
(15.9 |
) |
|
Deferred income tax expense |
|
2.3 |
|
|
|
7.1 |
|
|
Net periodic pension and retiree medical income |
|
(0.3 |
) |
|
|
(12.1 |
) |
|
Loss on impairment |
|
— |
|
|
|
34.5 |
|
|
Other |
|
5.5 |
|
|
|
1.8 |
|
|
Changes in contract liabilities |
|
(3.9 |
) |
|
|
58.9 |
|
|
Changes in deferred costs |
|
(29.3 |
) |
|
|
(47.7 |
) |
|
Changes in other operating assets and liabilities |
|
90.0 |
|
|
|
(114.5 |
) |
|
Net cash provided by (used in) operating activities |
$ |
170.8 |
|
|
$ |
(27.7 |
) |
|
|
|
|
|
||||
|
INVESTING ACTIVITIES |
|
|
|
||||
|
Additions to property and equipment |
$ |
(233.1 |
) |
|
$ |
(153.1 |
) |
|
Net proceeds from disposition of assets |
|
29.2 |
|
|
|
146.8 |
|
|
Purchases of short-term investments |
|
— |
|
|
|
(220.0 |
) |
|
Repayments of note receivable from ARO |
|
— |
|
|
|
40.0 |
|
|
Net cash used in investing activities |
$ |
(203.9 |
) |
|
$ |
(186.3 |
) |
|
|
|
|
|
||||
|
FINANCING ACTIVITIES |
|
|
|
||||
|
Issuance of Second Lien Notes |
$ |
1,103.0 |
|
|
$ |
— |
|
|
Redemption of First Lien Notes |
|
(571.8 |
) |
|
|
— |
|
|
Payments for share repurchases |
|
(147.4 |
) |
|
|
— |
|
|
Debt issuance costs |
|
(36.7 |
) |
|
|
— |
|
|
Payments related to tax withholdings for share-based awards |
|
(5.2 |
) |
|
|
(2.5 |
) |
|
Consent solicitation fees |
|
— |
|
|
|
(3.9 |
) |
|
Net cash provided by (used in) financing activities |
$ |
341.9 |
|
|
$ |
(6.4 |
) |
|
|
|
|
|
||||
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
$ |
308.8 |
|
|
$ |
(220.4 |
) |
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD |
|
748.5 |
|
|
|
644.6 |
|
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD |
$ |
1,057.3 |
|
|
$ |
424.2 |
|
|
VALARIS LIMITED AND SUBSIDIARIES |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(In millions) |
|
|
Three Months Ended |
||||||||||||||
|
|
Sep 30, |
Jun 30, |
Mar 31, |
Dec 31, |
Sep 30, |
||||||||||
|
OPERATING ACTIVITIES |
|
|
|
|
|
||||||||||
|
Net income (loss) |
$ |
17.0 |
|
$ |
(27.3 |
) |
$ |
48.6 |
|
$ |
31.1 |
|
$ |
77.7 |
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
|
|
|
|
|
||||||||||
|
Depreciation expense |
|
25.8 |
|
|
24.5 |
|
|
23.3 |
|
|
23.8 |
|
|
22.6 |
|
|
Amortization |
|
— |
|
|
— |
|
|
— |
|
|
2.0 |
|
|
2.1 |
|
|
Accretion of discount on notes receivable from ARO |
|
(7.2 |
) |
|
(7.0 |
) |
|
(7.0 |
) |
|
(7.1 |
) |
|
(22.4 |
) |
|
Share-based compensation expense |
|
6.8 |
|
|
7.0 |
|
|
5.7 |
|
|
5.9 |
|
|
4.6 |
|
|
Deferred income tax expense (benefit) |
|
(4.8 |
) |
|
2.5 |
|
|
4.6 |
|
|
0.8 |
|
|
0.4 |
|
|
Equity in (earnings) losses of ARO |
|
(2.4 |
) |
|
0.7 |
|
|
(3.3 |
) |
|
(8.6 |
) |
|
(2.9 |
) |
|
Net periodic pension and retiree medical income |
|
(0.1 |
) |
|
(0.1 |
) |
|
(0.1 |
) |
|
(4.3 |
) |
|
(4.0 |
) |
|
Loss on extinguishment of debt |
|
— |
|
|
29.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
Gain on asset disposals |
|
— |
|
|
(27.8 |
) |
|
(0.1 |
) |
|
(3.5 |
) |
|
(0.1 |
) |
|
Other |
|
2.8 |
|
|
2.2 |
|
|
0.5 |
|
|
(1.6 |
) |
|
0.3 |
|
|
Changes in contract liabilities |
|
3.6 |
|
|
13.3 |
|
|
(20.8 |
) |
|
3.6 |
|
|
38.0 |
|
|
Changes in deferred costs |
|
(22.4 |
) |
|
(7.4 |
) |
|
0.5 |
|
|
8.8 |
|
|
1.8 |
|
|
Changes in other operating assets and liabilities |
|
29.1 |
|
|
(38.9 |
) |
|
99.8 |
|
|
103.8 |
|
|
(31.8 |
) |
|
Net cash provided by (used in) operating activities |
$ |
48.2 |
|
$ |
(29.1 |
) |
$ |
151.7 |
|
$ |
154.7 |
|
$ |
86.3 |
|
|
|
|
|
|
|
|
||||||||||
|
INVESTING ACTIVITIES |
|
|
|
|
|
||||||||||
|
Additions to property and equipment |
$ |
(105.8 |
) |
$ |
(71.0 |
) |
$ |
(56.3 |
) |
$ |
(53.9 |
) |
$ |
(53.5 |
) |
|
Net proceeds from disposition of assets |
|
0.1 |
|
|
29.0 |
|
|
0.1 |
|
|
3.5 |
|
|
0.3 |
|
|
Purchases of short-term investments |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(220.0 |
) |
|
Maturities of short-term investments |
|
— |
|
|
— |
|
|
— |
|
|
220.0 |
|
|
— |
|
|
Repayments of note receivable from ARO |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
40.0 |
|
|
Net cash provided by (used in) investing activities |
$ |
(105.7 |
) |
$ |
(42.0 |
) |
$ |
(56.2 |
) |
$ |
169.6 |
|
$ |
(233.2 |
) |
|
|
|
|
|
|
|
||||||||||
|
FINANCING ACTIVITIES |
|
|
|
|
|
||||||||||
|
Issuance of Second Lien Notes |
$ |
403.0 |
|
$ |
700.0 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Payments for share repurchases |
|
(83.0 |
) |
|
(64.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
Debt issuance costs |
|
(5.7 |
) |
|
(31.0 |
) |
|
— |
|
|
— |
|
|
— |
|
|
Payments for tax withholdings for share-based awards |
|
(4.8 |
) |
|
(0.4 |
) |
|
— |
|
|
— |
|
|
(2.3 |
) |
|
Redemption of First Lien Notes |
|
— |
|
|
(571.8 |
) |
|
— |
|
|
— |
|
|
— |
|
|
Consent solicitation fees |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.9 |
) |
|
Net cash provided by (used in) financing activities |
$ |
309.5 |
|
$ |
32.4 |
|
$ |
— |
|
$ |
— |
|
$ |
(6.2 |
) |
|
|
|
|
|
|
|
||||||||||
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH |
$ |
252.0 |
|
$ |
(38.7 |
) |
$ |
95.5 |
|
$ |
324.3 |
|
$ |
(153.1 |
) |
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD |
|
805.3 |
|
|
844.0 |
|
|
748.5 |
|
|
424.2 |
|
|
577.3 |
|
|
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD |
$ |
1,057.3 |
|
$ |
805.3 |
|
$ |
844.0 |
|
$ |
748.5 |
|
$ |
424.2 |
|
Contacts
Investor & Media Contacts:
Darin Gibbins
Vice President – Investor Relations and Treasurer
+1-713-979-4623
Tim Richardson
Director – Investor Relations
+1-713-979-4619
