Borr Drilling’s Earnings Call: Mixed Results and Future Prospects

Borr Drilling ((BORR)) has held its Q1 earnings call. Read on for the main highlights of the call.

Borr Drilling’s recent earnings call painted a mixed picture for investors, highlighting both operational successes and financial hurdles. While the company celebrated significant achievements in terms of operational efficiency and liquidity improvements, it also faced substantial financial challenges, including a decline in revenue and a net loss that prompted the suspension of dividends. Despite securing new contracts and expanding operations, the financial setbacks and market uncertainties pose considerable challenges for the company moving forward.

High Technical and Economic Utilization

Borr Drilling showcased strong operational performance with technical utilization reaching 99.2% and economic utilization at 97.9% for its active rigs. This high level of efficiency underscores the company’s operational capabilities and commitment to maintaining robust performance metrics.

Safety Awards and Recognition

The company received several accolades for its safety performance, with multiple rigs earning industry and customer recognition. Notably, awards were received from Qatar Energies, IADC NORC chapter, and PTT EPs, highlighting Borr Drilling’s dedication to maintaining high safety standards.

Liquidity Improvement

Borr Drilling reported an improvement in its liquidity position, collecting approximately $120 million in outstanding receivables from Mexico and additional mobilization fees. This financial maneuvering strengthens the company’s balance sheet and provides a buffer against market uncertainties.

Contract Extensions and New Contracts

The company secured nine new contract commitments, adding $221 million to its backlog with an average rate of $141,000 per day. This expansion in contracts indicates a positive trajectory in operational activity and potential revenue growth.

Increased Operating Rig Count

Borr Drilling increased its operating rig count to twenty-two, up from sixteen in the previous quarter. This ramp-up in activity demonstrates the company’s strategic efforts to enhance its operational footprint and capitalize on market opportunities.

Revenue Decline

Despite operational successes, Borr Drilling experienced a decline in total operating revenue by $46.5 million quarter over quarter. This decrease was primarily driven by reduced day rate revenues, highlighting the financial challenges the company faces.

Net Loss for Q1

The company reported a net loss of $16.9 million for the first quarter, marking a significant decrease of $43.2 million compared to the net income in the fourth quarter. This financial setback underscores the challenges Borr Drilling must navigate in the current market environment.

Suspension of Dividend

In response to uncertain market conditions, Borr Drilling’s board decided to suspend the dividend. This move aims to reinforce the company’s balance sheet and focus on long-term value creation amid financial uncertainties.

Forward-Looking Guidance

Looking ahead, Borr Drilling anticipates a ramp-up in activity with the operating rig count increasing to twenty-two, laying a foundation for improved financial performance. The company is comfortable with the Bloomberg consensus estimate of approximately $460 million for adjusted EBITDA in 2025. Despite the challenges, the company remains optimistic about its operational capabilities and future prospects.

In conclusion, Borr Drilling’s earnings call highlighted a blend of operational achievements and financial challenges. While the company has made strides in securing new contracts and improving liquidity, the decline in revenue and net loss present significant hurdles. The suspension of dividends reflects a cautious approach to navigating market uncertainties, with a focus on long-term stability and growth.