BORR — Borr Drilling Limited

Borr Drilling Limited Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Revenue: $247 million, a decrease of 4.8% from Q4 2025.
• Adjusted EBITDA: $88.5 million, down $16.7 million quarter-on-quarter, impacted by an $8.4 million credit loss provision and the delayed startup of the Odin rig.
• Net Loss: $29 million for the quarter.
• Cash Position: Ended the quarter with $246 million in cash and total liquidity of $480 million.
• Operating Expenses: Increased to $201 million, primarily due to higher depreciation and rig operating expenses.
• Fleet Expansion: Acquired 5 premium jack-up rigs for $287 million, increasing the fleet from 29 to 34 rigs.

2. Strategic Updates and Business Highlights:

• Achieved high operational metrics with technical utilization at 99.4% and economic utilization at 97%.
• Secured 8 contract commitments since the last earnings report, increasing 2026 coverage to 71% at an average day rate of $137,000.
• Focused on increasing near-term coverage while balancing dayrates and contract duration.
• Notable contracts include extensions in Mexico and new commitments in West Africa and Asia.
• Emphasized a strong safety culture with multiple rigs achieving significant LTI-free milestones.

3. Forward Guidance and Outlook:

• Anticipated continued impact from the Odin's delayed startup, now expected to commence operations in late June.
• Confident in a constructive market environment for 2027 and 2028, driven by rising oil prices and energy security concerns.
• Expecting improved activity and dayrates to lag behind oil price increases by 6 to 12 months.
• Positive outlook for the Middle East, with expectations for pent-up demand once disruptions normalize.

4. Bad News, Challenges, or Points of Concern:

• Delayed Startup: The Odin rig's delayed commencement has negatively impacted revenue and EBITDA.
• Middle East Tensions: Rising hostilities in the region have created operational uncertainties, although limited financial impact was reported.
• Increased Operating Costs: Higher rig operating expenses and depreciation due to recent acquisitions.
• Net Loss: The company reported a net loss, indicating challenges in achieving profitability in the current environment.

5. Notable Q&A Insights:

• Fleet Expansion: CEO Bruno Morand indicated that while the fleet is now at a satisfactory size, future expansion will depend on finding employment for the newly acquired rigs.
• Market Demand: Positive demand signals noted in West Africa, Asia, and Mexico, with expectations for increased activity driven by energy security.
• M&A Environment: Morand expressed that the ongoing conflict has not significantly altered the company's M&A strategy, although he acknowledged the potential for increased consolidation in the sector.
• U.S. Gulf Operations: Challenges faced in starting operations in the U.S. Gulf were acknowledged, but there is optimism about the Odin's capabilities and potential future contracts.

Overall, Borr Drilling's Q1 2026 results reflect a mix of strong operational performance and strategic fleet expansion, tempered by challenges related to market conditions and operational delays. The outlook remains cautiously optimistic, with a focus on leveraging the expanded fleet in a recovering market.