On July 24, 2024, Helmerich & Payne Inc (HP, Financial) released its 8-K filing for the fiscal third quarter, showcasing a robust financial performance that surpassed analyst expectations. Helmerich & Payne, a leading provider of land drilling rigs in the US, reported net income of $89 million, or $0.88 per diluted share, against the analyst estimate of $0.77 per share. The company also reported operating revenues of $698 million, exceeding the estimated $672.31 million.
Company Overview
Helmerich & Payne Inc (HP, Financial) maintains one of the largest fleets of land drilling rigs in the US. The company's FlexRig line is the leading choice for drilling horizontal wells for the production of US tight oil and gas. H&P is present in nearly every major US shale play and has a small but growing presence internationally.
Performance and Challenges
Helmerich & Payne Inc (HP, Financial) reported fiscal third-quarter net income of $89 million, or $0.88 per diluted share, including select items of $(0.04) per diluted share. This performance is significant as it demonstrates the company's resilience amid a declining industry rig count. The North America Solutions (NAS) segment exited the quarter with 146 active rigs and recognized revenue per day of $39,800, with associated direct margins per day of $20,300.
Despite macro headwinds and a more cautionary industry outlook, H&P's NAS segment managed to maintain a stable rig count, reflecting the company's focus on providing value to its customers. However, challenges such as contractual churn in the US market and recommissioning expenses for international rigs remain prevalent.
Financial Achievements
Helmerich & Payne Inc (HP, Financial) achieved several financial milestones in the third quarter. The NAS segment saw a sequential increase in operating income by $16 million, with direct margins increasing by $6 million to $277 million. The company's international operations also marked a significant milestone with the arrival of its first super-spec FlexRig in Saudi Arabia.
Additionally, the company declared a quarterly base cash dividend of $0.25 per share and a supplemental cash dividend of $0.17 per share, payable on August 30, 2024. These achievements underscore H&P's commitment to returning value to shareholders.
Income Statement Highlights
| Metric | Q3 FY2024 | Q2 FY2024 |
|---|---|---|
| Operating Revenues | $698 million | $688 million |
| Net Income | $89 million | $85 million |
| Earnings Per Share (Diluted) | $0.88 | $0.84 |
Balance Sheet and Cash Flow
Helmerich & Payne Inc (HP, Financial) reported total assets of $4.48 billion as of June 30, 2024, with cash and cash equivalents amounting to $203.6 million. The company's net cash provided by operating activities was $197 million for the third quarter, compared to $144 million in the previous quarter. This increase in cash flow highlights the company's strong operational efficiency and financial health.
Commentary from Management
"Our financial results for the third fiscal quarter continue to demonstrate the resilience of our strategy in the North America Solutions segment. Despite a more sizeable decline in the overall industry rig count, our NAS active rig count remained relatively stable during the third fiscal quarter, which is a reflection of H&P’s unyielding focus on providing value to our customers," said President and CEO John Lindsay.
"The Company returned another $42 million to shareholders in the form of base and supplemental dividends during the quarter. Looking ahead, we have just begun the process of establishing our fiscal 2025 capital budget and preliminarily we believe the projected maintenance and walking rig conversions capex will be similar to fiscal 2024 levels," added Senior Vice President and CFO Mark Smith.
Operational Outlook
For the fourth quarter of fiscal year 2024, Helmerich & Payne Inc (HP, Financial) expects the NAS segment to exit with 147-153 active rigs and direct margins between $260-$280 million. The International Solutions segment anticipates direct margins between $(2)-$2 million, inclusive of rig preparation and start-up expenses related to Saudi Arabia operations. The Offshore Gulf of Mexico segment expects direct margins between $6-$8 million.
Helmerich & Payne Inc (HP, Financial) continues to navigate industry challenges with a focus on operational efficiency and shareholder value, positioning itself for sustained growth in the coming quarters.
Explore the complete 8-K earnings release (here) from Helmerich & Payne Inc for further details.
