Valaris Ltd (VAL)·Q4 2024 Earnings Summary

Executive Summary

• Solid quarter with 96% revenue efficiency and $142M Adjusted EBITDA; revenues of $584.4M declined sequentially on lower floater utilization, partially offset by stronger jackup operations .
• Management initiated 2025 guidance: revenues $2.15–$2.25B, Adjusted EBITDA $480–$580M, with near‑term floater idle time offset by stronger jackups; Q1’25 EBITDA guided to $145–$165M on $580–$600M revenue .
• Strategic fleet actions: retiring three semisubmersibles (DPS‑3/5/6) and selling jackup VALARIS 75; ~+$120M new backlog from multi‑year/Stavanger extension and other jackup awards .
• Near‑term headwind: backlog stepped down to $3.61B as of Feb 18, 2025 vs $4.10B Oct 30, 2024; contracting expected to reaccelerate mid‑2025 for 2026+ starts; Valaris is holding price discipline for 7G drillships at mid‑to‑high $400Ks .

What Went Well and What Went Wrong

• What Went Well

  • Execution and safety: “fleetwide revenue efficiency of 96% in the fourth quarter and 97% for the full year,” with safety awards from IADC and the Center for Offshore Safety .
  • Jackup strength: Jackup Adjusted EBITDA rose to $75.5M (from $57.0M) on more operating days; harsh‑environment day rates remain firm (Q4 avg $139K) .
  • Clear strategy and discipline: “contracting outlook for 2026 and beyond remains strong… we are willing to be patient to find the right jobs… and will not hesitate to remove rigs” .

• What Went Wrong

  • Lower floater utilization: Revenues fell to $584.4M (from $643.1M) on out of service time for DS‑15/17 (Brazil regs), DS‑4 (upgrade), and idle DS‑10/DPS‑5; floater revenues ex‑reimb fell to $327.7M (from $374.9M) .
  • Backlog drifted lower: total backlog decreased to $3.61B as of Feb 18, 2025 from $4.10B Oct 30, 2024 as award flow slowed ahead of 2026 cycles .
  • One‑off expense: EBITDA “slightly below the midpoint” of guidance due to a $16M non‑cash legal accrual; tax benefit (+$16M discrete) boosted net income vs Q3, masking operating softness .

Financial Results

Overall results vs prior quarters:

Segment revenues (ex reimbursables):

Segment profitability (Adjusted EBITDA):

Operating KPIs:

Notes: ARO results included above are 100% JV view; Valaris consolidates equity income and deducts ARO operating results via reconciling items .

Guidance Changes

Narrative: 2025 revenue/EBITDA guided below 2024 on floater idle time; jackup days/dayrates partly offset. No planned reactivation expense in 2025 vs $45M in 2024; cost actions when rigs idle to protect margins .

Earnings Call Themes & Trends

Management Commentary

• “The contracting outlook for 2026 and beyond remains strong for high‑specification assets… we are focused on securing attractive long‑term contracts for our active fleet. We are willing to be patient… and… will not hesitate to remove rigs from our fleet when it makes economic sense.” – Anton Dibowitz, CEO .
• “Adjusted EBITDA was $142 million… EBITDA was slightly below the midpoint of our guidance range due to a $16 million noncash accrual for a legal matter.” – Chris Weber, CFO .
• “We recently decided to retire three semisubmersibles… DPS‑3, DPS‑5 and DPS‑6… These actions reduce costs, benefit our cash flow and further focus our fleet on high‑specification assets.” .
• “At the midpoint of [2025 revenue] guidance, we’re about 94% contracted for the year.” – Chris Weber .

Q&A Highlights

• 2025 visibility: ~94% revenue contracted at guidance midpoint; remaining ~6% tilted later in the year .
• 7G reactivation stance: VAL will be “patient”; DS‑11/13/14 are high‑spec but no rush to reactivate; focus on long‑term development programs .
• Pricing: High‑spec 7G drillship fixtures “mid‑ to high $400Ks” affirmed; strategy is to avoid short‑term work that disrupts cost ramps .
• Idle cost management: Warm‑stack drillship OpEx down to ~$60K/day; ~3 months to ramp down/up costs .
• ARO/Aramco: Advanced discussions on extensions for five rigs; no new rig suspension discussions known .

Estimates Context

• Wall Street consensus (S&P Global) for Q4 2024 EPS, revenue, and EBITDA was unavailable due to data access limits at the time of analysis; therefore, estimate comparisons are not provided. We will update when S&P Global consensus becomes accessible.

Key Takeaways for Investors

• Near‑term softness, long‑term strength: Q4 reflected lower floater utilization and a backlog step‑down, but management sees a robust 2026–27 award cycle and is holding pricing discipline on 7G dayrates in the mid‑to‑high $400Ks .
• Jackups as ballast: Jackup profitability improved sequentially; harsh‑environment markets (North Sea, AU, Trinidad) remain resilient and help offset floater gaps .
• Positive supply action: Retirement of three semis reduces future supply and supports pricing longer term; sale of VALARIS 75 monetizes a non‑core stacked asset .
• 2025 setup: Revenues $2.15–$2.25B and EBITDA $480–$580M guided with cost controls (no reactivation expense in 2025); watch Q2–Q3 for award cadence into 2026 .
• Capital allocation: $125M of 2024 buybacks; Q4 free cash flow positive; liquidity ~ $750M (incl. revolver) provides flexibility through idle periods .
• Trading implications: Potential catalysts mid‑2025 as Petrobras and African programs award longer‑term 2026 starts; disciplined approach should protect dayrates, but backlog optics may pressure shares until award flow reaccelerates .
• Watch items: DS‑10/12/15/18 idle gaps, legal accrual resolution, ARO extension outcomes, and ADR/utilization trends by asset class –.

Citations:

• Q4 2024 8‑K press release and financials – –
• Q4 2024 earnings press release (duplicate of EX‑99.1 content) –
• Q4 2024 earnings call transcript (prepared remarks and Q&A) –
• Fleet rationalization press release (Feb 18, 2025) –
• Prior quarters: Q3 2024 press release –; Q2 2024 press release –