- The Company reported fiscal second quarter net income of $85
million, or $0.84 per diluted share; including select items(1) that
had a neutral impact on diluted earnings per share
- The North America Solutions ("NAS") segment exited the second
quarter of fiscal year 2024 with 152 active rigs with revenue per
day averaging approximately $38,200/day, flat on a sequential
basis; while direct margins(2) per day increased by approximately
$500/day to $19,200/day
- Quarterly NAS operating income increased $3 million
sequentially; while direct margins(2) increased by $15 million to
approximately $271 million, as revenues increased by $19 million to
$613 million and expenses increased by $4 million to $342
million
- H&P's NAS segment anticipates exiting the third quarter of
fiscal year 2024 between 145-151 active rigs
- During the second fiscal quarter, the Company returned
approximately $46 million of capital to shareholders as follows:
$25 million in base dividends, $17 million in supplemental
dividends and $4 million in share repurchases(3)
- On February 28, 2024, the Board of Directors of the Company
declared a quarterly base cash dividend of $0.25 per share and a
supplemental cash dividend of $0.17 per share; both dividends are
payable on May 31, 2024 to stockholders of record at the close of
business on May 17, 2024
Helmerich & Payne, Inc. (NYSE: HP) reported net income of
$85 million, or $0.84 per diluted share, from operating revenues of
$688 million for the quarter ended March 31, 2024, compared to net
income of $95 million, or $0.94 per diluted share, from operating
revenues of $677 million for the quarter ended December 31, 2023.
The net income per diluted share for the second and first quarters
of fiscal year 2024 include net $0.00 and net $(0.03) of after-tax
gains and losses, respectively, comprised of select items(1). For
the second quarter of fiscal year 2024, select items were comprised
of:
- $0.03 of after-tax gains related to the non-cash fair market
value adjustments to our equity investments
- $(0.03) of after-tax losses related to research and development
expenses associated with an asset acquisition
Net cash provided by operating activities was $144 million for
the second quarter of fiscal year 2024 compared to net cash
provided by operating activities of $175 million for the first
quarter of fiscal year 2024.
President and CEO John Lindsay commented, "Fiscal second quarter
results are reflective of the Company's continual focus on
commercial economics through value delivery in our North America
Solutions segment. The direct margins we have been generating in
what has been, and continues to be, a somewhat choppy North America
Solutions market are a testament to the value creation we provide
for our customers. From our perspective, there has been a
pronounced and necessary shift in the industry's historical
behavior, that is moving its fiscal foundation toward a more
sustainable and investable future. Along those lines, we are
extremely pleased with the announcement we made during the quarter
regarding expanding our presence in the Middle East, with the
finalization of the contractual terms with Saudi Aramco for a
seven-rig tender award.
"In the U.S. market, contractual churn is still prevalent and
pushed our rig count just below the projected exit rate late in the
quarter. This churn has been a product of the volatility created by
a weaker natural gas market, some recent E&P consolidations,
and a variety of other factors. Some of this natural gas volatility
is reminiscent of this time last year; however, we believe the
impact on our overall activity will be less this year going
forward. That said, we do expect the underlying factors causing the
churn in the market currently to persist resulting in what we
expect to be a fairly stable outlook for our rig count through the
third fiscal quarter. Furthermore, we expect stability and
resiliency in our direct margins on a per day basis as well. We
will remain focused on direct margins and believe the consistent
and reliable drilling outcomes we provide to customers is what
ultimately drives our market share.
"Regarding the International Solutions segment, our first rig
awarded by Saudi Aramco last August is expected to arrive and
commence operations later this summer. For the more recent
seven-rig tender award, preparations are ongoing from both a rig
and operational perspective with expectations that a majority of
these rigs will arrive in Saudi Arabia during the fourth calendar
quarter of 2024, and commence operations shortly thereafter. During
these preparations we will continue to spend our 2024 budgeted
capex towards this project and incur start-up operational expenses,
which may disproportionately impact near-term international segment
margins. We are looking forward to working with Saudi Aramco and
believe we are at the beginning of a longer-term presence in the
region. The Company's other international operations in South
America and Australia are expected to remain relatively stable over
the next quarter, as well as our Offshore Gulf of Mexico
operations."
Senior Vice President and CFO Mark Smith also commented,
"Returning cash to shareholders remains a capital allocation
priority as the Company provided roughly $46 million in shareholder
returns under its fiscal 2024 supplemental shareholder return plan
during the quarter. There was approximately $4 million worth of
shares repurchased during the quarter and $42 million paid to
shareholders in the form of base and supplemental dividends,
representing over a 4% yield. That said, we are cognizant that the
current higher interest rate environment may be masking some of the
longer-term attractiveness of our dividend yield and flexibility
embedded in our supplemental shareholder return plan.
"Currently, we expect our rig count in the third fiscal quarter
to average in the high-140 range, which is lower compared to the
155 rig average realized during the second fiscal quarter. To
reiterate, this lower activity is a result of contractual churn and
a weaker natural gas environment and as such has not deterred the
Company's approach to pricing or the use of performance contracts
to better recognize the total value H&P provides to our
customers. We believe our commitment to preserving contract
economics is reflected in our direct margin guidance for the
upcoming quarter."
John Lindsay concluded, “Working closely with our customers and
collaborating through the use of performance contracts is really
driving improved and more reliable outcomes. Our people, FlexRigs,
and technology solutions are key components of this success and
will continue to be drivers of that success in the future."
Operating Segment Results for the Second
Quarter of Fiscal Year 2024
North America Solutions:
This segment had operating income of $147.1 million compared to
operating income of $144.5 million during the previous quarter. The
increase in operating income was primarily attributable to a higher
direct margin offset by higher depreciation expense associated with
walking rig conversions and higher research and development
expense, some of which related to a recent asset acquisition.
Direct margin(2) increased by $15.3 million to $271.4 million
sequentially.
International Solutions:
This segment had operating income of $3.6 million compared to an
operating income of $5.4 million during the previous quarter. The
decrease in operating income was mainly due to modestly lower
activity during the quarter. Direct margin(2) during the second
fiscal quarter was $8.4 million compared to $10.2 million during
the previous quarter, and was higher than anticipated due to the
financial results from our Argentina operations not being as
negatively impacted by the local currency and inflationary
environment as anticipated. Current quarter results included a $0.5
million foreign currency loss compared to a $1.8 million foreign
currency loss in the previous quarter.
Offshore Gulf of Mexico:
This segment had operating income of $0.1 million compared to
operating income of $3.1 million during the previous quarter.
Direct margin(2) for the quarter was $2.9 million compared to $6.0
million in the previous quarter and was lower than expected due
primarily to one rig moving onto full rate later in the quarter
than anticipated.
Operational Outlook for the Third Quarter
of Fiscal Year 2024
North America Solutions:
- We expect North America Solutions direct margins(2) to be
between $255-$275 million
- We expect to exit the quarter between approximately 145-151
contracted rigs
International Solutions:
- We expect International Solutions direct margins(2) to be
between $(2)-$2 million, exclusive of any foreign exchange gains or
losses, but inclusive of approximately $10-$12 million of rig
preparation and start-up expense related to our Saudi Arabia
operations
Offshore Gulf of Mexico:
- We expect Offshore Gulf of Mexico direct margins(2) to be
between $5-$8 million
Other Estimates for Fiscal Year
2024
- Gross capital expenditures are now expected to be approximately
$500 million;
- ongoing asset sales that include reimbursements for lost and
damaged tubulars and sales of other used drilling equipment offset
a portion of the gross capital expenditures, and are still expected
to total approximately $50 million in fiscal year 2024
- Depreciation for fiscal year 2024 is now expected to be
approximately $405 million
- Research and development expenses for fiscal year 2024 are now
expected to be roughly $37 million
- General and administrative expenses for fiscal year 2024 are
now expected to be approximately $240 million
- Cash taxes to be paid in fiscal year 2024 are still expected to
be approximately $150-$200 million
Select Items(1) Included in Net Income per
Diluted Share
Second quarter of fiscal year 2024 net income of $0.84 per
diluted share included a net impact $0.00 per share in after-tax
gains and losses comprised of the following:
- $0.03 of non-cash after-tax gains related to fair market value
adjustments to equity investments
- $(0.03) of after-tax losses related to research and development
expenses associated with an asset acquisition
First quarter of fiscal year 2024 net income of $0.94 per
diluted share included $(0.03) in after-tax losses comprised of the
following:
- $(0.03) of non-cash after-tax losses related to fair market
value adjustments to equity investments
Conference Call
A conference call will be held on Thursday, April 25, 2024 at
11:00 a.m. (ET) with John Lindsay, President and CEO, Mark Smith,
Senior Vice President and CFO, and Dave Wilson, Vice President of
Investor Relations, to discuss the Company’s second quarter fiscal
year 2024 results. Dial-in information for the conference call is
(800) 267-6316 for domestic callers or (203) 518-9708 for
international callers. The call access code is ‘Helmerich’. You may
also listen to the conference call that will be broadcast live over
the Internet by logging on to the Company’s website at
http://www.helmerichpayne.com and accessing the corresponding link
through the investor relations section by clicking on “Investors”
and then clicking on “News and Events - Events & Presentations”
to find the event and the link to the webcast.
About Helmerich & Payne,
Inc.
Founded in 1920, Helmerich & Payne, Inc. (H&P) (NYSE:
HP) is committed to delivering industry leading levels of drilling
productivity and reliability. H&P operates with the highest
level of integrity, safety and innovation to deliver superior
results for its customers and returns for shareholders. Through its
subsidiaries, the Company designs, fabricates and operates
high-performance drilling rigs in conventional and unconventional
plays around the world. H&P also develops and implements
advanced automation, directional drilling and survey management
technologies. At March 31, 2024, H&P's fleet included 233 land
rigs in the United States, 22 international land rigs and seven
offshore platform rigs. For more information, see H&P online at
www.helmerichpayne.com.
Forward-Looking Statements
This release includes “forward-looking statements” within the
meaning of the Securities Act of 1933 and the Securities Exchange
Act of 1934, and such statements are based on current expectations
and assumptions that are subject to risks and uncertainties. All
statements other than statements of historical facts included in
this release, including, without limitation, statements regarding
the registrant’s business strategy, future financial position,
operations outlook, future cash flow, future use of generated cash
flow, dividend amounts and timing, supplemental shareholder return
plans and amounts of any future dividends, future share
repurchases, investments, active rig count projections, projected
costs and plans, objectives of management for future operations,
contract terms, financing and funding, capex spending and budgets,
outlook for domestic and international markets, future commodity
prices, and future customer activity and relationships are
forward-looking statements. For information regarding risks and
uncertainties associated with the Company’s business, please refer
to the “Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” sections and other
disclosures in the Company’s SEC filings, including but not limited
to its annual report on Form 10‑K and quarterly reports on Form
10‑Q. As a result of these factors, Helmerich & Payne, Inc.’s
actual results may differ materially from those indicated or
implied by such forward-looking statements. Investors are cautioned
not to put undue reliance on such statements. We undertake no duty
to publicly update or revise any forward-looking statements,
whether as a result of new information, changes in internal
estimates, expectations or otherwise, except as required under
applicable securities laws.
Helmerich & Payne uses its Investor Relations website as a
channel of distribution for material company information. Such
information is routinely posted and accessible on its Investor
Relations website at www.helmerichpayne.com. Information on our
website is not part of this release.
Note Regarding Trademarks. Helmerich & Payne, Inc. owns or
has rights to the use of trademarks, service marks and trade names
that it uses in conjunction with the operation of its business.
Some of the trademarks that appear in this release or otherwise
used by H&P include FlexRig, which may be registered or
trademarked in the United States and other jurisdictions.
(1) Select items are considered non-GAAP metrics and are
included as a supplemental disclosure as the Company believes
identifying and excluding select items is useful in assessing and
understanding current operational performance, especially in making
comparisons over time involving previous and subsequent periods
and/or forecasting future periods results. Select items are
excluded as they are deemed to be outside the Company's core
business operations. See Non-GAAP Measurements.
(2) Direct margin, which is considered a non-GAAP metric, is
defined as operating revenues (less reimbursements) less direct
operating expenses (less reimbursements) and is included as a
supplemental disclosure. We believe it is useful in assessing and
understanding our current operational performance, especially in
making comparisons over time. See Non-GAAP Measurements for a
reconciliation of segment operating income(loss) to direct margin.
Expected direct margin for the third quarter of fiscal 2024 is
provided on a non-GAAP basis only because certain information
necessary to calculate the most comparable GAAP measure is
unavailable due to the uncertainty and inherent difficulty of
predicting the occurrence and the future financial statement impact
of certain items. Therefore, as a result of the uncertainty and
variability of the nature and amount of future items and
adjustments, which could be significant, we are unable to provide a
reconciliation of expected direct margin to the most comparable
GAAP measure without unreasonable effort.
(3) During the second fiscal quarter of fiscal 2024, H&P
repurchased approximately 102 thousand shares for approximately
$3.9 million.
HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
Three Months Ended
Six Months Ended
(in thousands, except per share
amounts)
March 31,
December 31,
March 31,
March 31,
March 31,
2024
2023
2023
2024
2023
OPERATING REVENUES
Drilling services
$
685,131
$
674,565
$
766,682
$
1,359,696
$
1,483,852
Other
2,812
2,582
2,540
5,394
5,007
687,943
677,147
769,222
1,365,090
1,488,859
OPERATING COSTS AND EXPENSES
Drilling services operating expenses,
excluding depreciation and amortization
401,851
403,303
449,110
805,154
877,361
Other operating expenses
1,026
1,137
1,188
2,163
2,314
Depreciation and amortization
104,545
93,991
96,255
198,536
192,910
Research and development
12,942
8,608
8,702
21,550
15,635
Selling, general and administrative
62,037
56,577
52,855
118,614
101,310
Asset impairment charges
—
—
—
—
12,097
Gain on reimbursement of drilling
equipment
(7,461
)
(7,494
)
(11,574
)
(14,955
)
(27,298
)
Other (gain) loss on sale of assets
2,431
(2,443
)
(2,519
)
(12
)
(4,898
)
577,371
553,679
594,017
1,131,050
1,169,431
OPERATING INCOME
110,572
123,468
175,205
234,040
319,428
Other income (expense)
Interest and dividend income
6,567
10,734
5,055
17,301
9,760
Interest expense
(4,261
)
(4,372
)
(4,239
)
(8,633
)
(8,594
)
Gain (loss) on investment securities
3,747
(4,034
)
39,752
(287
)
24,661
Other
400
(543
)
(604
)
(143
)
(546
)
6,453
1,785
39,964
8,238
25,281
Income before income taxes
117,025
125,253
215,169
242,278
344,709
Income tax expense
32,194
30,080
51,129
62,274
83,524
NET INCOME
$
84,831
$
95,173
$
164,040
$
180,004
$
261,185
Basic earnings per common share
$
0.85
$
0.95
$
1.55
$
1.79
$
2.46
Diluted earnings per common share
$
0.84
$
0.94
$
1.55
$
1.79
$
2.46
Weighted average shares outstanding:
Basic
98,774
99,143
103,968
98,960
104,615
Diluted
99,046
99,628
104,363
99,216
105,003
HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
March 31,
September 30,
(in thousands except share data and share
amounts)
2024
2023
ASSETS
Current Assets:
Cash and cash equivalents
$
193,636
$
257,174
Restricted cash
68,547
59,064
Short-term investments
83,390
93,600
Accounts receivable, net of allowance of
$2,769 and $2,688, respectively
431,681
404,188
Inventories of materials and supplies,
net
107,210
94,227
Prepaid expenses and other, net
64,316
97,727
Assets held-for-sale
—
645
Total current assets
948,780
1,006,625
Investments
274,446
264,947
Property, plant and equipment, net
2,993,825
2,921,695
Other Noncurrent Assets:
Goodwill
45,653
45,653
Intangible assets, net
57,360
60,575
Operating lease right-of-use asset
59,730
50,400
Other assets, net
45,054
32,061
Total other noncurrent assets
207,797
188,689
Total assets
$
4,424,848
$
4,381,956
LIABILITIES & SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
158,296
$
130,852
Dividends payable
42,047
25,194
Accrued liabilities
238,494
262,885
Total current liabilities
438,837
418,931
Noncurrent Liabilities:
Long-term debt, net
545,441
545,144
Deferred income taxes
502,088
517,809
Other
135,408
128,129
Total noncurrent liabilities
1,182,937
1,191,082
Shareholders' Equity:
Common stock, $0.10 par value, 160,000,000
shares authorized, 112,222,865 shares issued as of March 31, 2024
and September 30, 2023, and 98,752,018 and 99,426,526 shares
outstanding as of March 31, 2024 and September 30, 2023,
respectively
11,222
11,222
Preferred stock, no par value, 1,000,000
shares authorized, no shares issued
—
—
Additional paid-in capital
502,586
525,369
Retained earnings
2,786,495
2,707,715
Accumulated other comprehensive loss
(7,713
)
(7,981
)
Treasury stock, at cost, 13,470,847 shares
and 12,796,339 shares as of March 31, 2024 and September 30, 2023,
respectively
(489,516
)
(464,382
)
Total shareholders’ equity
2,803,074
2,771,943
Total liabilities and shareholders'
equity
$
4,424,848
$
4,381,956
HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Six Months Ended March
31,
(in thousands)
2024
2023
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income
$
180,004
$
261,185
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
198,536
192,910
Asset impairment charges
—
12,097
Provision for credit loss
90
3,222
Stock-based compensation
16,101
15,704
(Gain) loss on investment securities
287
(24,661
)
Gain on reimbursement of drilling
equipment
(14,955
)
(27,298
)
Other gain on sale of assets
(12
)
(4,898
)
Deferred income tax expense (benefit)
(15,933
)
3,165
Other
1,630
1,780
Changes in assets and liabilities
(47,231
)
(106,952
)
Net cash provided by operating
activities
318,517
326,254
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures
(254,711
)
(181,479
)
Purchase of short-term investments
(74,749
)
(64,418
)
Purchase of long-term investments
(8,013
)
(18,771
)
Proceeds from sale of short-term
investments
87,122
97,744
Insurance proceeds from involuntary
conversion
4,980
—
Proceeds from asset sales
20,898
47,718
Net cash used in investing activities
(224,473
)
(119,206
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Dividends paid
(84,371
)
(102,941
)
Payments for employee taxes on net
settlement of equity awards
(12,176
)
(14,410
)
Share repurchases
(51,302
)
(145,013
)
Other
(250
)
(790
)
Net cash used in financing activities
(148,099
)
(263,154
)
Net increase (decrease) in cash and cash
equivalents and restricted cash
(54,055
)
(56,106
)
Cash and cash equivalents and restricted
cash, beginning of period
316,238
269,009
Cash and cash equivalents and restricted
cash, end of period
$
262,183
$
212,903
HELMERICH & PAYNE, INC.
SEGMENT REPORTING
Three Months Ended
Six Months Ended
March 31,
December 31,
March 31,
March 31,
March 31,
(in thousands, except operating
statistics)
2024
2023
2023
2024
2023
NORTH AMERICA SOLUTIONS
Operating revenues
$
613,339
$
594,282
$
675,780
$
1,207,621
$
1,302,943
Direct operating expenses
341,938
338,208
379,611
680,146
746,466
Depreciation and amortization
97,573
87,019
89,070
184,592
178,884
Research and development
13,006
8,689
8,738
21,695
15,797
Selling, general and administrative
expense
13,692
15,876
16,212
29,568
30,402
Asset impairment charges
—
—
—
—
3,948
Segment operating income
$
147,130
$
144,490
$
182,149
$
291,620
$
327,446
Financial Data and Other Operating
Statistics1:
Direct margin (Non-GAAP)2
$
271,401
$
256,074
$
296,169
$
527,475
$
556,477
Revenue days3
14,123
13,711
16,488
27,834
33,067
Average active rigs4
155
149
183
152
182
Number of active rigs at the end of
period5
152
151
179
152
179
Number of available rigs at the end of
period
233
233
233
233
233
Reimbursements of "out-of-pocket"
expenses
$
73,584
$
69,728
$
77,442
$
143,312
$
156,601
INTERNATIONAL SOLUTIONS
Operating revenues
$
45,878
$
54,752
$
55,890
$
100,630
$
110,691
Direct operating expenses
37,514
44,519
47,275
82,033
88,252
Depreciation
2,418
2,334
1,652
4,752
3,044
Selling, general and administrative
expense
2,377
2,476
3,008
4,853
5,717
Asset impairment charges
—
—
—
—
8,149
Segment operating income
$
3,569
$
5,423
$
3,955
$
8,992
$
5,529
Financial Data and Other Operating
Statistics1:
Direct margin (Non-GAAP)2
$
8,364
$
10,233
$
8,615
$
18,597
$
22,439
Revenue days3
1,038
1,173
1,263
2,211
2,403
Average active rigs4
11
13
14
12
13
Number of active rigs at the end of
period5
11
12
15
11
15
Number of available rigs at the end of
period
22
22
22
22
22
Reimbursements of "out-of-pocket"
expenses
$
1,964
$
3,384
$
2,789
$
5,348
$
5,645
OFFSHORE GULF OF MEXICO
Operating revenues
$
25,913
$
25,531
$
34,979
$
51,444
$
70,143
Direct operating expenses
23,010
19,579
25,688
42,589
51,379
Depreciation
1,941
2,068
1,904
4,009
3,798
Selling, general and administrative
expense
884
832
700
1,716
1,533
Segment operating income
$
78
$
3,052
$
6,687
$
3,130
$
13,433
Financial Data and Other Operating
Statistics1:
Direct margin (Non-GAAP)2
$
2,903
$
5,952
$
9,291
$
8,855
$
18,764
Revenue days3
273
289
360
562
728
Average active rigs4
3
3
4
3
4
Number of active rigs at the end of
period5
3
3
4
3
4
Number of available rigs at the end of
period
7
7
7
7
7
Reimbursements of "out-of-pocket"
expenses
$
8,857
$
7,827
$
7,994
$
16,684
$
15,183
(1)
These operating metrics and financial
data, including average active rigs, are provided to allow
investors to analyze the various components of segment financial
results in terms of activity, utilization and other key results.
Management uses these metrics to analyze historical segment
financial results and as the key inputs for forecasting and
budgeting segment financial results.
(2)
Direct margin, which is considered a
non-GAAP metric, is defined as operating revenues (less
reimbursements) less direct operating expenses (less
reimbursements) and is included as a supplemental disclosure
because we believe it is useful in assessing and understanding our
current operational performance, especially in making comparisons
over time. See — Non-GAAP Measurements below for a reconciliation
of segment operating income (loss) to direct margin.
(3)
Defined as the number of contractual days
we recognized revenue for during the period.
(4)
Active rigs generate revenue for the
Company; accordingly, 'average active rigs' represents the average
number of rigs generating revenue during the applicable time
period. This metric is calculated by dividing revenue days by total
days in the applicable period (i.e. 91 days for the three months
ended March 31, 2024, 92 days for the three months ended December
31, 2023, 90 days for the three months ended March 31, 2023, 183
days for the six months ended March 31, 2024, 182 days for the six
months ended March 31, 2023).
(5)
Defined as the number of rigs generating
revenue at the applicable end date of the time period.
Segment operating income for all segments is a non-GAAP
financial measure of the Company’s performance, as it excludes gain
on sale of assets, corporate selling, general and administrative
expenses and corporate depreciation. The Company considers segment
operating income (loss) to be an important supplemental measure of
operating performance for presenting trends in the Company’s core
businesses. This measure is used by the Company to facilitate
period-to-period comparisons in operating performance of the
Company’s reportable segments in the aggregate by eliminating items
that affect comparability between periods. The Company believes
that segment operating income (loss) is useful to investors because
it provides a means to evaluate the operating performance of the
segments and the Company on an ongoing basis using criteria that
are used by our internal decision makers. Additionally, it
highlights operating trends and aids analytical comparisons.
However, segment operating income (loss) has limitations and should
not be used as an alternative to operating income or loss, a
performance measure determined in accordance with GAAP, as it
excludes certain costs that may affect the Company’s operating
performance in future periods.
Income from discontinued operations was presented as a separate
line item on our Unaudited Condensed Consolidated Statements of
Operations during the three and six months ended March 31, 2023. To
conform with the current fiscal year presentation, we reclassified
amounts previously presented in Income from discontinued
operations, which were not material, to Other within Other income
(expense) on our Unaudited Condensed Consolidated Statements of
Operations for the three and six months ended March 31, 2023.
The following table reconciles operating income per the
information above to income (loss) from continuing operations
before income taxes as reported on the Unaudited Condensed
Consolidated Statements of Operations:
Three Months Ended
Six Months Ended
March 31,
December 31,
March 31,
March 31,
March 31,
(in thousands)
2024
2023
2023
2024
2023
Operating income (loss)
North America Solutions
$
147,130
$
144,490
$
182,149
$
291,620
$
327,446
International Solutions
3,569
5,423
3,955
8,992
5,529
Offshore Gulf of Mexico
78
3,052
6,687
3,130
13,433
Other
2,785
(67
)
6,823
2,718
11,500
Eliminations
(772
)
334
(2,267
)
(438
)
43
Segment operating income
$
152,790
$
153,232
$
197,347
$
306,022
$
357,951
Gain on reimbursement of drilling
equipment
7,461
7,494
11,574
14,955
27,298
Other gain (loss) on sale of assets
(2,431
)
2,443
2,519
12
4,898
Corporate selling, general and
administrative costs and corporate depreciation
(47,248
)
(39,701
)
(36,235
)
(86,949
)
(70,719
)
Operating income
$
110,572
$
123,468
$
175,205
$
234,040
$
319,428
Other income (expense):
Interest and dividend income
6,567
10,734
5,055
17,301
9,760
Interest expense
(4,261
)
(4,372
)
(4,239
)
(8,633
)
(8,594
)
Gain (loss) on investment securities
3,747
(4,034
)
39,752
(287
)
24,661
Other
400
(543
)
(604
)
(143
)
(546
)
Total unallocated amounts
6,453
1,785
39,964
8,238
25,281
Income before income taxes
$
117,025
$
125,253
$
215,169
$
242,278
$
344,709
SUPPLEMENTARY STATISTICAL
INFORMATION
Unaudited
U.S. LAND RIG COUNTS &
MARKETABLE FLEET STATISTICS
April 24,
March 31,
December 31,
Q2FY24
2024
2024
2023
Average
U.S. Land Operations
Term Contract Rigs
86
96
89
95
Spot Contract Rigs
64
56
62
60
Total Contracted Rigs
150
152
151
155
Idle or Other Rigs
82
81
82
78
Total Marketable Fleet
232
233
233
233
H&P GLOBAL FLEET UNDER
TERM CONTRACT STATISTICS
Number of Rigs Already Under
Long-Term Contracts(*)
(Estimated Quarterly Average —
as of 3/31/24)
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Segment
FY24
FY24
FY25
FY25
FY25
FY25
FY26
U.S. Land Operations
84.9
73.2
47.9
32.9
23.4
21.8
19.2
International Land Operations
8.7
7.5
10.1
12.8
11.7
11.0
10.9
Offshore Operations
—
—
—
—
—
—
—
Total
93.6
80.7
58.0
45.6
35.1
32.8
30.1
(*) All of the above rig contracts have
original terms equal to or in excess of six months and include
provisions for early termination fees.
NON-GAAP MEASUREMENTS
NON-GAAP RECONCILIATION OF
SELECT ITEMS AND ADJUSTED NET INCOME(**)
Three Months Ended March 31,
2024
(in thousands, except per share data)
Pretax
Tax Impact
Net
EPS
Net income (GAAP basis)
$
84,831
$
0.84
(-) Fair market adjustment to equity
investments
$
3,777
$
920
$
2,857
$
0.03
(-) Research and development expenses
associated with an asset acquisition
$
(3,840
)
$
(995
)
$
(2,845
)
$
(0.03
)
Adjusted net income
$
84,819
$
0.84
Three Months Ended December
31, 2023
(in thousands, except per share data)
Pretax
Tax Impact
Net
EPS
Net income (GAAP basis)
$
95,173
$
0.94
(-) Fair market adjustment to equity
investments
$
(4,102
)
$
(1,005
)
$
(3,097
)
$
(0.03
)
Adjusted net income
$
98,270
$
0.97
(**)The Company believes identifying and
excluding select items is useful in assessing and understanding
current operational performance, especially in making comparisons
over time involving previous and subsequent periods and/or
forecasting future period results. Select items are excluded as
they are deemed to be outside of the Company's core business
operations.
NON-GAAP
RECONCILIATION OF DIRECT MARGIN
Direct margin is considered a non-GAAP metric. We define "direct
margin" as operating revenues (less reimbursements) less direct
operating expenses (less reimbursements). Direct margin is included
as a supplemental disclosure because we believe it is useful in
assessing and understanding our current operational performance,
especially in making comparisons over time. Direct margin is not a
substitute for financial measures prepared in accordance with GAAP
and should therefore be considered only as supplemental to such
GAAP financial measures.
The following table reconciles direct margin to segment
operating income (loss), which we believe is the financial measure
calculated and presented in accordance with GAAP that is most
directly comparable to direct margin.
Three Months Ended March 31,
2024
(in thousands)
North America
Solutions
International
Solutions
Offshore Gulf of
Mexico
Segment operating income
$
147,130
$
3,569
$
78
Add back:
Depreciation and amortization
97,573
2,418
1,941
Research and development
13,006
—
—
Selling, general and administrative
expense
13,692
2,377
884
Direct margin (Non-GAAP)
$
271,401
$
8,364
$
2,903
Three Months Ended December
31, 2023
(in thousands)
North America
Solutions
International
Solutions
Offshore Gulf of
Mexico
Segment operating income
$
144,490
$
5,423
$
3,052
Add back:
Depreciation and amortization
87,019
2,334
2,068
Research and development
8,689
—
—
Selling, general and administrative
expense
15,876
2,476
832
Direct margin (Non-GAAP)
$
256,074
$
10,233
$
5,952
Three Months Ended March 31,
2023
(in thousands)
North America
Solutions
International
Solutions
Offshore Gulf of
Mexico
Segment operating income
$
182,149
$
3,955
$
6,687
Add back:
Depreciation and amortization
89,070
1,652
1,904
Research and development
8,738
—
—
Selling, general and administrative
expense
16,212
3,008
700
Direct margin (Non-GAAP)
$
296,169
$
8,615
$
9,291
Six Months Ended March 31,
2024
(in thousands)
North America
Solutions
International
Solutions
Offshore Gulf of
Mexico
Segment operating income (loss)
$
291,620
$
8,992
$
3,130
Add back:
Depreciation and amortization
184,592
4,752
4,009
Research and development
21,695
—
—
Selling, general and administrative
expense
29,568
4,853
1,716
Direct margin (Non-GAAP)
$
527,475
$
18,597
$
8,855
Six Months Ended March 31,
2023
(in thousands)
North America
Solutions
International
Solutions
Offshore Gulf of
Mexico
Segment operating income
$
327,446
$
5,529
$
13,433
Add back:
Depreciation and amortization
178,884
3,044
3,798
Research and development
15,797
—
—
Selling, general and administrative
expense
30,402
5,717
1,533
Asset impairment charges
3,948
8,149
—
Direct margin (Non-GAAP)
$
556,477
$
22,439
$
18,764
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240424794664/en/
Dave Wilson, Vice President of Investor Relations
investor.relations@hpinc.com (918) 588‑5190
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