Borr Drilling Limited

Income statement

Notes and sources: Revenue FY2021–FY2023, operating income, pre-tax income FY2021–FY2024, net income, EPS and D&A FY2021–FY2024 from 20-F filings via S&P Global Market Intelligence/TipRanks/Equibles. FY2024–FY2025 revenue = sum of reported geographic revenue. Gross profit per S&P Global definition (revenue less rig operating expenses, excluding D&A); an earlier S&P vintage showed FY2024 554.2 and FY2025 520.2 — discrepancy reflects reclassification. EBITDA FY2021–FY2024 is derived (operating income + D&A); FY2024 derived value (505.4) exactly matches company Adjusted EBITDA (FY2025 USD 470.1m was a USD 35.3m decline). FY2025 EBITDA = company-reported Adjusted EBITDA (Q4 2025 6-K); FY2025 D&A is derived (470.1 − 322.1). FY2025 pre-tax income derived from S&P pre-tax margin (8.41%). FY2025 basic EPS assumed equal to reported diluted EPS of USD 0.17 (basic not separately verified). Dividends by year paid.

Margins and growth

Revenue CAGR FY2021–FY2025: ~42.8% (derived: (1020.8/245.3)^(1/4) − 1).

Quarterly progression

Sources: Q2 2025, Q4 2025, Q1 2026, Q2 2026 6-Ks. Q1 2025 and Q3 2025 values are derived from reported QoQ changes; quarterly sums reconcile exactly to FY2025 totals (revenue 1020.8; Adjusted EBITDA 470.1; net income 45.0).

Commentary — income statement. Borr's five-year arc is a textbook offshore-cycle recovery followed by a plateau. Revenue quadrupled from FY2021 to FY2024 as the fleet went from largely stacked to near-fully active and dayrates recovered; FY2025 was flat (+1%) as dayrate softness (leading-edge jack-up rates fell ~20.6% in 2025 per Westwood), Saudi Aramco suspensions, PEMEX payment problems and sanctions-driven terminations offset more operating days. Margins peaked in FY2024 (EBITDA margin 50.0%) and compressed in FY2025 (46.1%) as rigs re-contracted at lower rates. The net-income line remains thin relative to EBITDA because interest absorbs the bulk of operating profit: cash interest paid was USD 205.1m in FY2025 and USD 186.9m in FY2024 (20-F FY2025), against operating income of USD 322.1m and USD 374.2m respectively. The 2026 trajectory has been weak: Q2 2026 Adjusted EBITDA of USD 43.8m was the lowest since the recovery began, driven by (i) USD 22.5m of Odin preparation and regulatory costs, (ii) six rigs in transition, (iii) USD 7.3m QoQ higher insurance and fuel costs linked to the Middle East conflict, and (iv) USD 10.8m credit losses on a former West African customer (Q2 2026 6-K). The Q2 net loss of USD 241.4m includes a USD 176.3m non-cash debt extinguishment charge; excluding it, the underlying loss was roughly USD 65m (derived). Management guided to a "significant" Q3 2026 Adjusted EBITDA improvement on ~23 average active rigs and Odin's September start.

Balance sheet

Sources: 20-F FY2025 (total assets, liabilities, equity per EDGAR-derived data); cash, total debt and net debt from S&P Global Market Intelligence. FY2025 short-term debt = current portion of 2028 notes (USD 101.0m) + 2030 notes (USD 42.6m) per Q2 2026 interim report Note 17; long-term debt derived as remainder. Goodwill: none identified in sources reviewed.

30 June 2026 debt position (Q2 2026 interim report, Note 17; StockAnalysis): total debt ~USD 2,487m; cash ~USD 223.6m; net debt ~USD 2,263m. Components: 2032 notes USD 1,100.0m; 2034 notes USD 935.0m; 2033 convertible notes USD 300.0m; balance (~USD 150m) consistent with seller notes issued to Noble in the January 2026 acquisition. All 2028/2030 notes were retired.

Commentary — balance sheet. Leverage is the defining feature of the Borr investment case. Net debt rose from USD 1.60bn (FY2023) to USD 2.05bn (FY2024) as the last newbuilds were delivered and paid for, fell to USD 1.77bn at end-FY2025 helped by equity raises (July and December 2025) and strong operating cash flow, then rose again to ~USD 2.26bn by mid-2026 after the Noble purchase (USD 360m, of which ~USD 210m cash and USD 150m seller notes) and the upsized refinancing. Liquidity at 31 March 2026 was USD 480m (USD 246m cash plus USD 234m undrawn facilities); the super-senior RCF was subsequently upsized to USD 250m with a lower margin and later maturity (Q2 2026 6-K). Equity of USD 1.22bn at end-FY2025 will have been reduced by the H1 2026 losses (~USD 270m), implying mid-2026 book equity in the order of USD 0.95bn (derived, before any equity component of the new convertibles).

Cash flow

Sources: 20-F FY2025 cash flow table (FY2024–FY2025 operating, investing, financing, interest, taxes); S&P Global Market Intelligence for FY2021–FY2023 and capex series (S&P uses net investing cash flow as capex proxy). TTM to June 2026: OCF USD 133.2m, investing −USD 277.2m, FCF −USD 144.0m (S&P).

Commentary — cash flow. FY2025 was Borr's first year of meaningfully positive free cash flow (USD 127.4m), driven by a USD 174.6m increase in operating cash flow (higher average rates and active rigs plus working-capital timing, including recovery of PEMEX receivables — about USD 46m collected in Q4 2025 alone) and much lower capex once the newbuild programme ended. That improvement reversed in H1 2026, when the Noble acquisition, Odin preparation and weaker EBITDA pushed TTM FCF negative. Dividends were modest and have been suspended since early 2025; no share buyback activity was verified for the period.

Ratios

Derivation: ROE = 45.0/1220; ROA = 45.0/3630; ROIC = (operating income 322.1 − cash taxes 59.7)/(equity 1220 + net debt 1771); D/E = 2151/1220; net debt/EBITDA uses derived/company EBITDA above; interest coverage = EBITDA/cash interest paid. A third-party (Lightyear) TTM current ratio of 1.28 and Moody's-adjusted gross leverage expectation of ~3.8x were noted but not dated precisely. S&P (Dec 2025) projected debt/EBITDA of 4.5–5.0x for 2025–2026. On TTM June 2026 Adjusted EBITDA (USD 373.1m, derived as Q3 2025 + Q4 2025 + Q1 2026 + Q2 2026), net debt/EBITDA is ~6.1x (derived) — a material deterioration that management expects to reverse as the enlarged fleet deploys.

Management guidance (latest)

• Q3 2026 Adjusted EBITDA to improve significantly from USD 43.8m, on ~23 average active rigs and Odin earning from 11 September 2026.

• 2026 contract coverage 73% at ~USD 134,000/day; H2 2026 coverage 70%.

• Market expected to strengthen as Middle East stability returns; near-term visibility reduced by the conflict.

• Priorities: deploy the expanded 34-rig fleet, use scale to navigate conditions, deliver shareholder value as the cycle improves.

Consensus expectations

Consensus 12-month price target ~USD 5.00 (+~12% vs USD 4.44); recent estimate revisions skew negative for Q3 2026 (Citi).

Bull case

1. Operating leverage on a larger fleet: with 34 rigs (vs 24 a year ago) and Q2 2026 as the trough (EBITDA USD 43.8m), a return to 2025 run-rate dayrates and ~25+ active rigs could lift EBITDA well above FY2025's USD 470.1m, given that each USD 10,000/day on ~25 rigs equals ~USD 90m/year (derived).

2. Supply tightness in premium jack-ups: 95% marketed utilisation for high-spec units and 28% of the fleet over 40 years old point to pricing power once Middle East tendering resumes.

3. De-risked capital structure: no bond maturities until 2032, lower coupons, RCF at USD 250m and insider buying (Sept 2026) reduce tail risk and support re-rating.

Bear case

1. Leverage meets uncertainty: TTM net debt/EBITDA ~6x and B/B3 ratings leave little cushion if Middle East delays extend or dayrates soften further (average 2026 coverage rate already slipped from ~USD 137k to ~USD 134k/day).

2. Execution and counterparty risk: Odin's delay, recurring West African credit losses, PEMEX payment history and sanctions terminations show earnings can be repeatedly derailed.

3. Equity dilution and returns: ROE of 3.7% in FY2025, net loss TTM, suspended dividends and a history of equity raises (two in H2 2025) cap equity upside; convertibles add potential dilution.

Catalysts and monitorables (next 12 months)

Analyst verdict

Borr Drilling enters Q4 2026 at an inflection that is easier to identify than to time. Operationally, the business is sound: it owns the youngest premium jack-up fleet in an industry where more than a quarter of rigs are over 40 years old, it runs those rigs at 98–99% technical utilisation, and it has used the 2025 downturn exactly as its founding thesis prescribed — buying ten modern units in 2026 at USD 57–72 million each, well below replacement cost. Contracting momentum is real, with 21 commitments in the first seven months of 2026 and long-dated PEMEX extensions running to 2030.

The financial picture is weaker than the operational one. Q2 2026 was the worst quarter since the recovery began; TTM leverage of roughly six times EBITDA is uncomfortable for a B/B3 credit; and the equity story has been punctuated by dilution, a short-lived dividend, and recurring one-off shocks (sanctions, PEMEX arrears, West African bad debts, the Odin delay). The June 2026 refinancing was the single most important de-risking event of the year: it removes all bond maturities before 2032 and modestly lowers annual coupon cost, buying management time for the market to turn.

On our derived numbers, the shares trade at ~7.7x FY2025 EBITDA but ~9.7x trough TTM EBITDA, with consensus implying only ~12% upside. The asymmetry therefore hinges on fleet deployment: if the enlarged fleet averages 25-plus active rigs at mid-USD 130,000s dayrates through 2027, EBITDA can exceed the FY2025 peak and leverage falls quickly; if Middle East disruption persists and transitions keep recurring, equity holders remain subordinated to a USD 2.5 billion debt stack. Our synthesis: a high-beta, cycle-dependent recovery equity with improved survivability but unproven earnings normalisation — the Q3 2026 print and the contracting of the remaining idle units are the decisive near-term evidence points.