Valaris(VAL) - 2025 Q1 - Quarterly Report

Financial Performance - Total operating revenues for Q1 2025 were $620.7 million, a 18.2$525.0 million in Q1 2024[16] - Operating income for Q1 2025 was $143.0 million, compared to$29.3 million in Q1 2024, representing a significant improvement[16] - Net loss attributable to Valaris for Q1 2025 was $37.9 million, compared to a net income of$25.5 million in Q1 2024[16] - Basic and diluted earnings per share for Q1 2025 were both $(0.53), down from$0.35 in Q1 2024[16] - Net cash provided by operating activities for Q1 2025 was $155.9 million, a significant increase from$26.3 million in Q1 2024[21] - The company reported capital expenditures of $100.2 million for the three months ended March 31, 2025, compared to$151.3 million in the same period of 2024, reflecting a decrease of 33.8%[85][86] - The net gain on the sale of property for the three months ended March 31, 2025, was $27.1 million, compared to a loss of$0.1 million in the same period of 2024[91] Assets and Liabilities - Cash and cash equivalents increased to $441.4 million as of March 31, 2025, up from$368.2 million at the end of 2024[19] - Total assets decreased slightly to $4,386.8 million as of March 31, 2025, from$4,419.8 million at the end of 2024[19] - Total liabilities remained stable at $2,175.3 million as of March 31, 2025, compared to$2,175.5 million at the end of 2024[19] - Current contract assets increased to $1.5 million as of March 31, 2025, up from$1.3 million on December 31, 2024[35] - Noncurrent contract assets rose to $5.6 million as of March 31, 2025, compared to$5.5 million at the end of 2024[35] - Current contract liabilities (deferred revenue) decreased to $78.0 million from$87.2 million[35] - Noncurrent contract liabilities (deferred revenue) declined to $61.2 million from$71.4 million[35] Tax and Deferred Income - The company reported a deferred income tax expense of $169.8 million for Q1 2025, compared to$2.0 million in Q1 2024[21] - The consolidated effective tax rate for the three months ended March 31, 2025, was 15.1%, excluding the impact of discrete tax items[70] - During the three months ended March 31, 2025, the company recognized $168.8 million of deferred tax expense due to a valuation allowance on deferred tax assets[69] - The company recorded a tax benefit of approximately$65.0 million in 2024 related to the reversal of uncertain tax position liabilities from Luxembourg tax assessments[72] Operational Highlights - The geographic distribution of drilling rigs as of March 31, 2025, included 18 floaters and 27 jackups, totaling 52 for Valaris, with an additional 9 rigs for ARO[87] - The company owns 49 rigs, including 34 jackup rigs and 13 drillships, and has a 50% equity interest in ARO, which owns an additional nine rigs[95] - Total backlog as of April 30, 2025, was $4,237.6 million, up from$3,608.5 million on February 18, 2025, with floaters contributing $2,170.9 million[102] - The global marketed jackup fleet utilization was 90$1.2 billion due to five-year contract extensions for several rigs[102] Market Conditions - Inflationary pressures have increased personnel costs and prices of goods and services, with expectations of continued cost rises in the near term[99] - Brent crude oil prices have declined into the $60-$70 range per barrel, impacting demand and pricing for offshore drilling services[96] - The company anticipates contract commencements for its floater fleet in mid-2026 and beyond, despite current market uncertainties[103] Shareholder Returns and Financing - The company issued $700.0 million of Second Lien Notes in April 2023, with an additional$400.0 million issued in August 2023, maturing on April 30, 2030[59] - As of March 31, 2025, the company had approximately $275.0 million available for share repurchases under the authorized program of up to$600.0 million[66][67] - The board of directors has authorized a share repurchase program of up to $600.0 million, with approximately$275.0 million available for repurchases as of March 31, 2025[175] Legal and Compliance - The company accrued $25.0 million in 2024 related to patent litigation efforts, which is included in accrued liabilities as of March 31, 2025[79] - The arbitration hearings regarding the patent litigation concluded in March 2025, with a decision expected in the second quarter of 2025[78] - The company has filed certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002[31.1][31.2] - The report includes certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer and Chief Financial Officer[32.1][32.2]