Borr Drilling BORR Q4 2023 Earnings Presentation

Summary

The board drilling company reported strong Q4 2023 earnings with a 15% revenue increase and a 20% adjusted EBITDA growth. They achieved significant milestones, including a full year adjusted EBITDA of $350 million and a backlog growth. The company's operational excellence was recognized with awards and they maintain a positive outlook for 2024 with an adjusted EBITDA estimate of $500 to $550 million, underpinned by a robust contract portfolio and a strong market demand.

Takeaways

• 📈 Strong Q4 2023 performance with a 15% revenue increase to $220 million and a 20% adjusted EBITDA increase to $105 million.
• 🚀 Full year 2023 adjusted EBITDA reached $350 million, with a 48% adjusted EBITDA margin.
• 📊 Backlog growth in 2023, adding $728 million in revenue with an implied average day rate of $161 per day.
• 🏭 Excellent operational efficiency with a technical utilization of 98.7% for the quarter and a recordable injury frequency of 0.65.
• 🏆 Recognitions include awards from Shell and IADC Southeast Asia for safety and operational excellence.
• 🌍 Board drilling maintains operations in four main hubs: Mexico, West Africa, the Middle East, and Asia, benefiting from economies of scale and diversified activity levels.
• 📝 Focus on controllable factors such as relentless pursuit of safety and operational excellence to deliver value to customers.
• 💰 Adjusted EBITDA estimate for full year 2024 remains between $500 to $550 million, based on a strong contracted fleet coverage.
• 💹 Dividend payment of 5 cents per share approved for Q4, reflecting commitment to shareholder distributions.
• 🛠️ Jackup market update shows increasing utilization levels, particularly for modern rigs, with a total order book representing less than 4% of the global jackup fleet.
• 🔄 Expectations for the market scenario indicate continued demand outpacing supply growth, with a potential increase in demand for 20 to 25 jackup rigs in the next 24 months.

Q & A

What was the revenue increase in the fourth quarter of 2023 for the company?

The revenue increased by 15% to $220 million in the fourth quarter of 2023.

How much did the adjusted EBITDA increase in the fourth quarter of 2023 compared to the previous quarter?

The adjusted EBITDA increased by $20 million, which is 20% over the previous quarter, resulting in a $105 million adjusted EBITDA for Q4 2023.

What was the adjusted EBITDA margin for the full year 2023?

The full year 2023 adjusted EBITDA reached $350 million, with an adjusted EBITDA margin of 48%.

How much did the company's backlog grow in 2023, and what was the average day rate implied by this growth?

In 2023, the company's backlog grew by $728 million, with an implied average day rate of $161 per day.

What was the total recordable injury frequency for the company in the fourth quarter, and how does it compare to the industry average?

The total recordable injury frequency was 0.65, which is well below the industry average.

Which awards did the company receive in recognition of its performance?

The company received the 'Global Jackup Rig of the Year' award from Shell and the 'Best Recordable Incident Rate' award from the IADC Southeast Asia chapter.

How many rigs does the company have in its fleet, and how many are working in the Kingdom of Saudi Arabia?

The company has a fleet of 24 rigs, out of which three are working in the Kingdom of Saudi Arabia.

What is the company's estimate for adjusted EBITDA for the full year 2024?

The company maintains its estimate of adjusted EBITDA for the full year 2024 to be between $500 to $550 million.

What was the free cash position at the end of Q4 2023, and how much liquidity was available to the company?

The free cash position at the end of Q4 2023 was $102.5 million, and the company had an undrawn RCF facility of $150 million, totaling approximately $250 million of available liquidity.

How has the jackup market utilization level changed since the last report, and what is the current utilization level for modern rigs?

Jackup market utilization levels have continued to increase since the last report, with the market utilization for modern rigs now exceeding 95%.

What is the company's view on the demand for modern jackup rigs over the next 18 to 24 months?

The company anticipates demand for modern jackup rigs to increase by 20 to 25 rigs over the next 18 to 24 months, with several programs already in the tendering phase.

What is the company's strategy for balancing new rig deployments in the spot market versus term contracts?

The company aims to find work with volume and longevity for the new rigs, ideally programs that are 18 months or more, to ensure a good balance between attractive day rates and seamless integration into work.