VALARIS LIMITED Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes thereto included in "Item 1. Financial Statements" and with our annual report on Form 10-K for the year endedDecember 31, 2021 . The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors" in Item 1A of our annual report and elsewhere in this quarterly report. See "Forward-Looking Statements."
EXECUTIVE SUMMARY
Our Business
We are a leading provider of offshore contract drilling services to the international oil and gas industry with operations in almost every major offshore market across six continents. We own the world's largest offshore drilling rig fleet, including one of the newest ultra-deepwater fleets in the industry and a leading premium jackup fleet. We currently own 52 rigs, including 11 drillships, four dynamically positioned semisubmersible rigs, one moored semisubmersible rig, 36 jackup rigs and a 50% equity interest in ARO, our 50/50 unconsolidated joint venture with Saudi Aramco, which owns an additional seven rigs. Additionally, we have options to purchase two recently constructed drillships on or beforeDecember 31, 2023 .
Emergence from Chapter 11 Bankruptcy and Fresh Start Accounting
OnAugust 19, 2020 (the "Petition Date"), Valaris plc ("Legacy Valaris") and certain of its direct and indirect subsidiaries (collectively, the "Debtors") filed voluntary petitions for reorganization under chapter 11 of the Bankruptcy Code in theBankruptcy Court for the Southern District of Texas (the "Chapter 11 Cases"). In connection with the Chapter 11 Cases and the plan of reorganization, on and prior toApril 30, 2021 ("Effective Date"), Legacy Valaris effectuated certain restructuring transactions, pursuant to whichValaris Limited ("Valaris") was formed and, through a series of transactions, Legacy Valaris transferred to a subsidiary of Valaris substantially all of the subsidiaries, and other assets, of Legacy Valaris. On the Effective Date, we successfully completed our financial restructuring and together with the Debtors emerged from the Chapter 11 Cases. On the Effective Date, Legacy Valaris Class A ordinary shares were cancelled and the Valaris common shares (the "Common Shares") were issued. Also, former holders of Legacy Valaris' equity were issued warrants (the "Warrants") to purchase Common Shares. References to the financial position and results of operations of the "Successor" relate to the financial position and results of operations of Valaris, together with its consolidated subsidiaries, after the Effective Date. References to the financial position and results of operations of the "Predecessor" refer to the financial position and results of operations of Legacy Valaris, together with its consolidated subsidiaries, on and prior to the Effective Date. References to the "Company," "we," "us" or "our" in this Quarterly Report are to Valaris, together with its consolidated subsidiaries, when referring to periods following the Effective Date, and to Legacy Valaris, together with its consolidated subsidiaries, when referring to periods prior to and including the Effective Date. On the Effective Date, we qualified for and applied fresh start accounting. The application of fresh start accounting resulted in a new basis of accounting, and we became a new entity for financial reporting purposes. Accordingly, our financial statements and notes after the Effective Date are not comparable to our financial statements and notes on and prior to that date. The condensed consolidated financial statements and notes have been presented with a black line division to delineate the lack of comparability between the Predecessor and Successor. 36 --------------------------------------------------------------------------------
Our Industry
Operating results in the offshore contract drilling industry are highly cyclical and are directly related to the demand for and the available supply of drilling rigs. Low demand and excess supply can independently affect day rates and utilization of drilling rigs. Therefore, adverse changes in either of these factors can result in adverse changes in our industry. While the cost of moving a rig may cause the balance of supply and demand to vary somewhat between regions, significant variations between most regions are generally of a short-term nature due to rig mobility. In 2020, the combined effects of the global COVID-19 pandemic, the significant decline in the demand for oil and the substantial surplus in the supply of oil resulted in significantly reduced demand and day rates for offshore drilling provided by the Company and increased uncertainty regarding long-term market conditions. These events had a significant adverse impact on our expected liquidity position and financial runway and led to the filing of the Chapter 11 Cases. In 2021, Brent crude oil prices increased from approximately$50 per barrel at the beginning of the year to nearly$80 per barrel by the end of the year. Increased oil prices were due to, among other factors, rebounding demand for hydrocarbons, a measured approach to production increases by OPEC+ members and a focus on cash flow and returns by major exploration and production companies. The constructive oil price environment led to an improvement in contracting and tendering activity in 2021 as compared to 2020. In 2022, Brent crude oil prices have increased dramatically and become increasingly volatile, in large part due toRussia's invasion ofUkraine , which led to sanctions being placed onRussia , including its ability to export crude oil and other petroleum products. The anticipated impact on supply drove Brent crude oil prices above$130 per barrel in early March. As ofJune 30, 2022 , the spot Brent crude price had declined to approximately$120 per barrel. Brent crude prices continued to decline in July and volatility remains high. While the spot market for crude oil is indicative of current market conditions, for larger offshore projects, our customers are more focused on medium-term and long-term commodity prices when making investment decisions. These forward prices have also reached levels that are constructive for offshore projects. The full impact that the pandemic and the volatility of oil prices will have on our results of operations, financial condition, liquidity and cash flows is uncertain due to numerous factors, including the duration and severity of the pandemic, the continued effectiveness of vaccines, the general resumption of global economic activity along with the injection of substantial government monetary and fiscal stimulus,Russia's invasion ofUkraine , inflation and the sustainability of the improvements in oil prices and demand in the face of market volatility. To date, the COVID-19 pandemic has resulted in limited operational downtime. Our operations and business may be subject to further economic disruptions as a result of the spread of COVID-19 among our workforce, the extension or imposition of further public health measures affecting supply chain and logistics, and the impact of the pandemic on key customers, suppliers, and other counterparties. There can be no assurance that these, or other issues caused by the COVID-19 pandemic, will not materially affect our ability to operate our rigs in the future. More recently, we have begun to feel the impacts of global inflation, both in increased personnel costs as well as in the prices of goods and services required to operate our rigs. While we are currently unable to estimate the ultimate impact of rising prices, we do expect that our costs will continue to rise in the near term and will impact our profitability. While certain of our long-term contracts contain provisions for escalating costs, we cannot predict with certainty our ability to successfully claim recoveries of higher costs from our customers under these contractual stipulations. 37 -------------------------------------------------------------------------------- The near-term outlook for the offshore drilling industry has improved since the beginning of 2021, as evidenced by improving global utilization and increasing day rates for offshore drilling rigs, most notably for drillships. However, heightened geopolitical tensions have increased volatility, inflation is increasing costs of operations and the global recovery from the COVID-19 pandemic remains uncertain. More recently, the combination of global inflation and a tightening of monetary policy has led to increasing fears of a global economic recession that may have a negative impact on demand for hydrocarbons. As a result, there is still uncertainty around the sustainability of the improvement in oil prices and the recovery in demand for, and profitability of, offshore drilling services.
Backlog
Our backlog was$2.3 billion and$2.4 billion as ofJuly 28, 2022 andFebruary 21, 2022 , respectively. The decline in backlog is attributable to the termination of the VALARIS DS-11 contract and revenues realized partially offset by recent contract awards and contract extensions. Our backlog excludes ARO's backlog but includes backlog of$144.1 million and$134.3 million , respectively, from our rigs leased to ARO at the contractual rates. Contract rates with ARO are subject to adjustment resulting from the shareholder agreement governing the joint venture. See " Note 3 - Equity Method Investment in ARO" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for additional information. Our backlog as ofFebruary 21, 2022 included approximately$428 million attributable to a contract awarded to VALARIS DS-11 for an eight-well deepwater project in theU.S. Gulf of Mexico that was expected to commence in mid-2024. InFebruary 2022 , the customer decided not to sanction and therefore withdrew from the project associated with this contract. InMarch 2022 , the contract was novated to another customer, which was a partner on the project. No material changes to the contract resulted from the novation, including with respect to the termination provisions in the event the project did not receive final investment decision (FID). InJune 2022 , the customer terminated the contract awarded to VALARIS DS-11. As a result of the contract termination, we received an early termination fee of$51.0 million which is included in revenues on our condensed consolidated statements of operations for the three and six months endedJune 30, 2022 . As ofJune 30, 2022 , the$51.0 million termination fee was included in Accounts receivable, net on our Condensed Consolidated Balance Sheet and was subsequently collected inJuly 2022 . As of the date of the termination, we had incurred costs to upgrade the rig pursuant to the requirements of the contract. Costs incurred for capital upgrades specific to the customer requirements were considered to be impaired and as such, we recorded a pre-tax, non-cash loss on impairment in the second quarter of 2022 of$34.5 million . Additional costs were recorded for penalties and other costs incurred upon cancellation of equipment ordered. See " Note 2 - Revenue from Contracts with Customers" and " Note 5 - Property and Equipment" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for additional information. ARO backlog was$1.5 billion as of bothJuly 28, 2022 andFebruary 21, 2022 , inclusive of backlog on both ARO owned rigs and rigs leased from us, as recent contract awards were offset by revenues realized. As a 50/50 unconsolidated joint venture, when ARO realizes revenue from its backlog, 50% of the earnings thereon would be reflected in our results in equity in earnings of ARO in our Condensed Consolidated Statement of Operations. The earnings from ARO backlog with respect to rigs leased from us will be net of, among other things, payments to us under bareboat charters for those rigs. 38 --------------------------------------------------------------------------------
BUSINESS ENVIRONMENT
Floaters
Starting in 2021, the more constructive oil price environment has led to an improvement in contracting and tendering activity. Average benign floater rig years awarded per quarter since the beginning of 2021 are more than double the amount awarded per quarter in 2020. This increase in activity is particularly evident for drillships with several multi-year contracts awarded and a meaningful improvement in day rates for this class of assets. As a result, we have recently completed the reactivation of three drillships and one semisubmersible for long-term contracts and were recently awarded an additional long-term contract for one of our stacked drillships that is expected to commence in mid-2023. While we expect the improved oil price environment to continue to support deepwater investments, heightened geopolitical tensions, includingRussia's invasion ofUkraine , have increased volatility, the global recovery from the COVID-19 pandemic remains uncertain and there are increasing fears of a global economic recession that may have a negative impact on demand for hydrocarbons. As a result, there is still uncertainty around the sustainability of the improvement in oil prices and the recovery in demand for offshore drilling services. Our backlog for our floater segment was$1.4 billion and$1.7 billion as ofJuly 28, 2022 andFebruary 21, 2022 , respectively. The decline in backlog is attributable to the termination of the VALARIS DS-11 contract, which represented approximately$428.0 million of backlog, and revenues realized, partially offset by recent contract awards and contract extensions. Utilization for our floaters was 31% during the second quarter of 2022 compared to 25% in the first quarter of 2022. Average day rates were approximately$213,000 during the second quarter of 2022 compared to approximately$197,000 in the first quarter of 2022. The increase in average day rate and utilization is primarily due to rigs that were being reactivated or undergoing special periodic survey in the first quarter and commenced drilling operations in the second quarter.
Globally, there are 22 newbuild drillships and benign environment semisubmersible rigs reported to be under construction, of which six are scheduled to be delivered before the end of 2022. Most newbuild floaters are uncontracted.
Drilling contractors have retired 136 benign environment floaters since the beginning of 2014. Nine benign environment floaters older than 20 years of age are currently idle, four additional benign environment floaters older than 20 years have contracts that will expire within six months without follow-on work, and there are a further 14 benign environment floaters that have been stacked for more than three years. Operating costs associated with keeping these rigs idle as well as expenditures required to re-certify some of these rigs may prove cost prohibitive. Drilling contractors may elect to scrap or cold stack a portion of these rigs.
A sustained constructive oil price environment and continued improvement in demand for offshore projects or further rationalization of drilling rig supply are necessary to maintain the improving floater utilization and day rate trajectory.
Jackups
Jackup demand is anticipated to increase meaningfully over the next couple of years as operators are expected to increase production to benefit from high commodity prices. We have seen a notable increase in jackup activity since the beginning of the year, primarily driven by demand from theMiddle East , with rig years awarded in the first half of 2022 more than 30% higher as compared to the first half of 2021. Our backlog for our jackup segment was$641.9 million and$643.0 million as ofJuly 28, 2022 andFebruary 21, 2022 , respectively, as revenues realized were replaced by recent contract awards and contract extensions. 39 -------------------------------------------------------------------------------- Utilization for our jackups was 67% during the second quarter of 2022 compared to 63% in the first quarter of 2022 primarily due to the retirement of certain idle rigs. Average day rates were approximately$94,000 during the second quarter of 2022 compared to approximately$89,000 in the first quarter of 2022. The increase in average day rates was primarily due to commencement of new contracts for certain rigs at higher rates. Globally, there are 27 newbuild jackup rigs reported to be under construction, of which seven are contracted. There are eight jackups scheduled to be delivered before the end of 2022, of which five are contracted. Drilling contractors have retired 163 jackups since the beginning of 2014. There are 65 jackups older than 30 years currently idle, 30 jackups that are 30 years or older have contracts expiring within the next six months without follow-on work, and there are a further 16 jackups that have been stacked for more than three years. Expenditures required to re-certify some of these rigs may prove cost prohibitive and drilling contractors may instead elect to scrap or cold stack a portion of these rigs.
A sustained constructive oil price environment and continued improvement in demand for offshore projects or further rationalization of drilling rig supply are necessary to maintain the improving jackup utilization and day rate trajectory.
Divestitures Our business strategy has been to focus on ultra-deepwater floater and premium jackup operations and de-emphasize other assets and operations that are not part of our long-term strategic plan or that no longer meet our standards for economic returns. We continue to focus on our fleet management strategy in light of the composition of our rig fleet. While taking into account certain restrictions on the sales of assets under our Indenture datedApril 30, 2021 that governs our First Lien Notes (the "Indenture"), as part of our strategy, we may act opportunistically from time to time to monetize assets to enhance stakeholder value and improve our liquidity profile, in addition to reducing holding costs by selling or disposing of lower-specification or non-core rigs. To this end, we continually assess our rig portfolio and actively work with rig brokers to market certain rigs. See " Note 8 - Debt" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for additional information on restrictions on the sales of assets. InApril 2022 , VALARIS 113 and VALARIS 114 were sold resulting in a combined pre-tax gain on sale of$120.0 million and inMay 2022 , VALARIS 36 was sold resulting in a pre-tax gain on sale of$8.5 million . Also inMay 2022 , we received additional proceeds of$7.0 million on our 2020 sale of VALARIS 68 resulting from post-sale conditions of that sale agreement. These incremental proceeds were recorded as a pre-tax gain on sale. Gains on sales are included in Other, net on the Condensed Consolidated Statements of Operations for the three and six months endedJune 30, 2022 (Successor). 40 --------------------------------------------------------------------------------
RESULTS OF OPERATIONS
The following table summarizes our Condensed Consolidated Results of Operations for the three months endedJune 30, 2022 (Successor) (the "current quarter"), three months endedMarch 31, 2022 (Successor) (the "preceding quarter"), six months endedJune 30, 2022 (Successor), two months endedJune 30, 2021 (Successor) and four months endedApril 30, 2021 (Predecessor), and the combined Successor and Predecessor results for the six months endedJune 30, 2021 (Non-GAAP) (in millions):
Successor
Three Months Ended Three Months Ended
June 30, 2022 March 31, 2022
Revenues $ 413.3 $ 318.4
Operating expenses
Contract drilling (exclusive of depreciation) 361.8 331.3
Loss on impairment 34.5 -
Depreciation 22.3 22.5
General and administrative 19.0 18.8
Total operating expenses 437.6 372.6
Equity in earnings of ARO 8.7 4.3
Operating loss (15.6) (49.9)
Other income, net 148.6 9.4
Provision (benefit) for income taxes 20.2 (0.7)
Net income (loss) 112.8 (39.8)
Net (income) loss attributable to noncontrolling interests (1.2) 1.2
Net income (loss) attributable to Valaris $ 111.6 $ (38.6)
Combined
Successor Successor Predecessor (Non-GAAP)(1)
Six Months Ended Two Months Ended Four Months Ended Six Months Ended
June 30, 2022 June 30, 2021 April 30, 2021 June 30, 2021
Revenues $ 731.7 $ 202.8 $ 397.4 $ 600.2
Operating expenses
Contract drilling (exclusive of
depreciation) 693.1 168.6 343.8 512.4
Loss on impairment 34.5 - 756.5 756.5
Depreciation 44.8 16.6 159.6 176.2
General and administrative 37.8 12.7 30.7 43.4
Total operating expenses 810.2 197.9 1,290.6 1,488.5
Equity in earnings of ARO 13.0 4.8 3.1 7.9
Operating income (loss) (65.5) 9.7 (890.1) (880.4)
Other income (expense), net 158.0 1.3 (3,557.5) (3,556.2)
Provision for income taxes 19.5 15.1 16.2 31.3
Net income (loss) 73.0 (4.1) (4,463.8) (4,467.9)
Net income attributable to
noncontrolling interests - (2.1) (3.2) (5.3)
Net income (loss) attributable to
Valaris $ 73.0 $ (6.2) $ (4,467.0) $ (4,473.2)
(1) We believe that the discussion of our results of operations for the two
months ended June 30, 2021 combined with the four-month period ended April 30,
2021 provide more meaningful comparisons to the comparable periods in 2022 and
are more useful in understanding operational trends. These combined results do
not comply with GAAP and have not been prepared as pro forma results under
applicable SEC rules.
41
--------------------------------------------------------------------------------Overview
Revenue increased
Revenues increased$131.5 million , or 22%, for the six months endedJune 30, 2022 (Successor) as compared to the combined Successor and Predecessor prior year period, primarily due to$79.3 million from increased operating days across the fleet, a$51.0 million fee related to the termination of the VALARIS DS-11 contract and$20.7 million from higher customer reimbursable revenue. This increase was partially offset by an$19.8 million decrease in revenue from rigs operating at lower day rates. Contract drilling expense increased$30.5 million , or 9%, for the current quarter as compared to the preceding quarter, primarily due to a$27.7 million increase in costs attributable to rigs stacked or idle in the preceding quarter, a$25.9 million increase in the costs for certain claims and a$6.8 million increase in repair costs for a certain rig. This increase is partially offset by$37.2 million decrease in reactivation costs compared to the preceding quarter. Contract drilling expense increased$180.7 million , or 35%, for the six months endedJune 30, 2022 (Successor) as compared to the combined Successor and Predecessor prior year period, primarily due to a$70.5 million increase in costs attributable to rigs stacked or idle in the prior year, a$50.6 million increase in reactivation costs, a$30.6 million increase in the costs for certain claims and a$26.6 million increase in reimbursable costs. During the three and six months endedJune 30, 2022 (Successor), we recorded non-cash losses on impairment totaling$34.5 million , with respect to customer-specific capital upgrades for VALARIS DS-11 made pursuant to the terms of the drilling contract that was terminated during the second quarter of 2022. During the four months endedApril 30, 2021 (Predecessor), we recorded non-cash losses on impairment totaling$756.5 million , with respect to certain assets in our fleet. See " Note 5 - Property and Equipment" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for additional information. Depreciation expense decreased$131.4 million , or 75%, for the six months endedJune 30, 2022 (Successor) as compared to the combined Successor and Predecessor prior year period, primarily as a result of the reduction in values of property and equipment from the application of fresh start accounting on the Effective Date. General and administrative expenses decreased by$5.6 million , or 13%, for the six months endedJune 30, 2022 (Successor) as compared to the combined Successor and Predecessor prior year period, primarily due to the change in incentive compensation structure following the Effective Date. Other income, net, increased$139.2 million for the current quarter as compared to the preceding quarter. Gains of$135.5 million were recognized during the current quarter due to the sale of VALARIS 113, VALARIS 114 and VALARIS 36 as well as additional proceeds received in the current quarter on the sale of a rig in a prior year as a result of post-sale conditions of that sale agreement. Other income (expense), net, changed from an expense of$3.6 billion in the combined Successor and Predecessor prior year period to income of$158.0 million for the six months endedJune 30, 2022 (Successor). We recorded$3.6 billion of reorganization costs incurred directly related to the Chapter 11 Cases in the prior year period and in the current year, we recognized a$137.6 million gain on sale of property. 42 --------------------------------------------------------------------------------
Rig Counts, Utilization and Average
The following table summarizes our and ARO's offshore drilling rigs as of the
following dates:
June 30, 2022 March 31, 2022 June 30, 2021
Floaters 16 16 16
Jackups(1) 29 31 34
Other(2) 7 8 9
Held-for-sale(3) - - 1
Total Valaris 52 55 60
ARO(4) 7 7 7
(1)During the fourth quarter of 2021, we sold VALARIS 142. During the first quarter of 2022, we sold VALARIS 67 and leased VALARIS 140 to ARO. During the second quarter of 2022, we sold VALARIS 113 and VALARIS 114.
(2)This represents the jackup rigs leased to ARO through bareboat charter agreements whereby substantially all operating costs are incurred by ARO. Rigs leased to ARO operate under three-year contracts with Saudi Aramco. During the fourth quarter of 2021, we sold VALARIS 22 and VALARIS 37, which were previously leased to ARO. During the first quarter of 2022, VALARIS 140 was leased to ARO. During the second quarter of 2022, we sold VALARIS 36, which was previously leased to ARO.
(3)During the third quarter of 2021, we sold VALARIS 100 which was classified as
held-for-sale as of
(4)This represents the seven jackup rigs owned by ARO which are operating under long-term contracts with Saudi Aramco.
We provide management services in the
We are a party to contracts whereby we have the option to take delivery of two recently constructed drillships that are not included in the table above.
Additionally, ARO has ordered two jackups which are under construction in theMiddle East that are not included in the table above. These newbuild rigs are expected to be delivered in the first or second quarter of 2023. 43 --------------------------------------------------------------------------------
The following table summarizes our and ARO's rig utilization and average day rates by reportable segment:
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021
Rig Utilization(1)
Floaters 31 % 25 % 28 % 26 %
Jackups 67 % 63 % 65 % 53 %
Other (2) 100 % 100 % 100 % 100 %
Total Valaris 61 % 57 % 59 % 54 %
ARO 96 % 91 % 94 % 89 %
Average Day Rates (3)
Floaters $ 213,452 $ 197,394 $ 206,290 $ 197,905
Jackups 93,851 88,641 91,215 97,476
Other (2) 39,076 39,227 39,149 31,137
Total Valaris $ 97,717 $ 89,609 $ 93,726 $ 88,091
ARO $ 92,397 $ 95,867 $ 94,066 $ 94,485
(1)Rig utilization is derived by dividing the number of days under contract by
the number of days in the period. Days under contract equals the total number of
days that rigs have earned and recognized day rate revenue, including days
associated with early contract terminations, compensated downtime and
mobilizations and excluding suspension periods. When revenue is deferred and
amortized over a future period, for example, when we receive fees while
mobilizing to commence a new contract or while being upgraded in a shipyard, the
related days are excluded from days under contract.
For newly-constructed or acquired rigs, the number of days in the period begins
upon commencement of drilling operations for rigs with a contract or when the
rig becomes available for drilling operations for rigs without a contract.
(2)Includes our two management services contracts and our rigs leased to ARO under bareboat charter contracts.
(3)Average day rates are derived by dividing contract drilling revenues, adjusted to exclude certain types of non-recurring reimbursable revenues, lump-sum revenues, revenues earned during suspension periods and revenues attributable to amortization of drilling contract intangibles, by the aggregate number of contract days, adjusted to exclude contract days associated with certain suspension periods, mobilizations and demobilizations.
Operating Income by Segment
Our business consists of four operating segments: (1) Floaters, which includes
our drillships and semisubmersible rigs, (2) Jackups, (3) ARO and (4) Other,
which consists of management services on rigs owned by third-parties and the
activities associated with our arrangements with ARO under the Lease Agreements.
Floaters, Jackups and ARO are also reportable segments.
Our onshore support costs included within contract drilling expenses are not
allocated to our operating segments for purposes of measuring segment operating
income (loss) and as such, those costs are included in "Reconciling Items."
Further, General and administrative expense and Depreciation expense incurred by
our corporate office are not allocated to our operating segments for purposes of
measuring segment operating income (loss) and are included in "Reconciling
Items."
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The full operating results included below for ARO are not included within our consolidated results and thus deducted under "Reconciling Items" and replaced with our equity in earnings of ARO. See " Note 3 -Equity Method Investment in ARO" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for additional information. Segment information for the current quarter, the preceding quarter and, the six months endedJune 30, 2022 (Successor), the two months endedJune 30, 2021 (Successor) and the four months endedApril 30, 2021 (Predecessor) and the combined Successor and Predecessor results for the six months endedJune 30, 2021 (Non-GAAP) was as follows (in millions):
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