Exhibit 99.1 | |||||
NEWS RELEASE
FOR IMMEDIATE RELEASE: April 26, 2023
HELMERICH & PAYNE, INC. ANNOUNCES FISCAL SECOND QUARTER RESULTS
•The Company reported fiscal second quarter net income of $1.55 per diluted share; including select items(1) of $0.29 per diluted share
•Quarterly North America Solutions operating income increased $37 million sequentially, while direct margins(2) increased $36 million to approximately $296 million, as revenues increased by $49 million to $676 million and expenses increased by $13 million to $380 million
•The North America Solutions segment exited the second quarter of fiscal year 2023 with 179 active rigs reflecting an increase in revenue per day of approximately $3,200/day or 10% to $36,300/day on a sequential basis, while direct margins(2) per day increased by roughly $2,300/day or 14% to $18,000/day
•H&P's North America Solutions segment anticipates averaging 163-167 rigs during the third quarter of fiscal year 2023 and exiting the quarter between 155-160 active rigs due to increased contractual churn, a softer natural gas market, and our prioritizing of disciplined pricing in the face of wavering industry utilization
•Despite more contractual churn in higher direct margin(2) spot rigs relative to lower direct margin(2) rigs under term contracts and higher cost absorption given fewer active rigs, the Company expects its North America Solutions direct margins(2) per day to remain relatively flat or increase slightly in the fiscal third quarter
•Fiscal year to date the Company has allocated approximately $250 million of capital as follows: $53 million in base dividends, $50 million in supplemental dividends and $146 million in share repurchases(3)
•On March 1, 2023, the Board of Directors of the Company declared a quarterly base cash dividend of $0.25 per share and a supplemental cash dividend of $0.235 per share; both dividends are payable on June 1, 2023 to stockholders of record at the close of business on May 18, 2023
Helmerich & Payne, Inc. (NYSE: HP) reported net income of $164 million, or $1.55 per diluted share, from operating revenues of $769 million for the quarter ended March 31, 2023, compared to net income of $97 million, or $0.91 per diluted share, from operating revenues of $720 million for the quarter ended December 31, 2022. The net income per diluted share for the second and first quarters of fiscal 2023 include $0.29 and $(0.20) of after-tax gain and losses, respectively, comprised of select items(1). For the second quarter of fiscal year 2023, select items were comprised of:
•$0.29 of after-tax gains pertaining to non-cash fair market adjustments to our equity investments
Helmerich & Payne | 1437 South Boulder Ave. | Suite 1400
Tulsa, OK 74119 | 918.588.5190 | helmerichpayne.com
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Net cash provided by operating activities was $141 million for the second quarter of fiscal year 2023, which included $114 million in tax payments compared to net cash provided by operating activities of $185 million for the first quarter of fiscal year 2023, which included $22 million in net tax refunds.
President and CEO John Lindsay commented, "H&P delivered another outstanding quarter and executed on a goal we set a year ago to generate 50%(4) direct margins in our NAS segment. The reason for setting that goal was to generate double digit returns that exceed our double digit cost of capital. With this milestone accomplished, our focus now turns to maintaining those levels of returns going forward.
"The past two decades demonstrate that even during upcycles, a certain amount of rig count variability exists, and we are witnessing that today. The macro-outlook has been challenged by political and economic insecurities in the global crude oil market and in the U.S. natural gas market. Volatility in both of these commodity markets has caused some uncertainty which has negatively impacted near-term rig demand. We see these events as shorter-term transitory issues and remain optimistic in the outlook which favors growing global demand for crude oil and natural gas over the long-term.
"H&P intends to remain firm on pricing; favoring returns over market share. That said, the juxtaposition of reduced rig activity and increased contractual churn caused by a weak natural gas market, along with our determined approach regarding fiscal discipline, necessitates a reduction in our forward rig count projections. Nevertheless, our super-spec FlexRig® fleet utilization remains high, and we are committed to sustaining this level of margin performance going forward, believing this path is in the best interest of all our stakeholders. Moreover, from our vantage point, activity in the crude oil market may create the opportunity for the Company to put rigs back into service this summer due to expected industry rig churn and perhaps again later in the calendar year as part of the recent trend of customers contracting additional rigs late in the calendar year as their new fiscal budgets are established.
"Maintaining fiscal discipline goes hand-in-hand with our customer-centric approach. By utilizing our FlexRig® fleet, technology, people and processes, we are able to consistently deliver the outcomes our customers desire, enhance their economic returns, and be compensated appropriately for the value we provide. We continue to develop new commercial models that not only demonstrate the value we create, but also expand collaborative efforts between H&P and its customers.
"On the international front, H&P's potential for longer-term growth prospects remains in focus. During the quarter, we moved our first super-spec rig into our Middle East hub and sent another to Australia. While initially small in terms of rig count, we believe this early progress portends more to come. Along those lines, we still plan to export more super-spec rigs to the Middle East during the back half of the year after undergoing region specific modifications, including conversions to walking systems. Operations in Argentina and Colombia remain relatively steady and are now providing solid financial contributions."
Senior Vice President and CFO Mark Smith also commented, "Several adverse macro issues, such as recessionary concerns, volatile commodity prices, and even anxiety over the financial health of the U.S. regional banking industry have commanded the market's attention this past quarter. We believe this coupled with a lower outlook for rig activity in fiscal 2023 has distracted from the more tangible value the Company has created this past year through higher margins and increased financial and shareholder returns. Accordingly, we have followed through on our capital allocation strategy regarding opportunistic share repurchases and repurchased shares during the second fiscal quarter, buying approximately 2.5 million shares for approximately $107 million. While the amount of share repurchases year-to-date surpasses the $100 million mark, we still have ample cash available to conduct additional repurchases or take advantage of other investment opportunities.
"As mentioned in the previous quarter, expectations can often change quickly, and as such our rig count expectations for the remainder of fiscal 2023 have been revised lower. Our current view is that those activity revisions are far less impactful to our projected cash flow generation than a degradation in our direct margins would be if we attempt to maintain activity levels by lowering pricing. Consequently, we remain confident in our financial plans going forward, keeping our capital allocation strategy unchanged and executing on the fiscal 2023 supplemental shareholder plan."
John Lindsay concluded, “From the perspective of my 36-year career at H&P, we are working more closely with our customers than at any other time, and our collaborations are primarily focused on value added performance rather than the daily cost of the drilling rig. That is due in large part to those customers realizing the near- and long-term benefits of having H&P as their drilling solution provider coupled with our relentless focus on delivering value. All of this is driven by H&P employees utilizing our rig assets and technologies to consistently strive to deliver the desired outcomes for our customers."
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Operating Segment Results for the Second Quarter of Fiscal Year 2023
North America Solutions:
This segment had operating income of $182.1 million compared to operating income of $145.3 million during the previous quarter. The increase in operating income reflects more of our older term contracts continuing to reprice at higher contract economics which has improved the overall level of pricing across the fleet.
Direct margins(2) increased by $35.9 million to $296.2 million as both revenues and expenses increased sequentially. Quarterly operating results were impacted by the costs associated with reactivating rigs; $5.2 million in the second fiscal quarter compared to $8.6 million in the previous quarter.
International Solutions:
This segment had operating income of $4.0 million compared to operating income of $1.6 million during the previous quarter. Absent an impairment charge of $8.1 million during the first quarter of fiscal 2023, the decline in operating income was mainly driven by higher expenses associated with rig mobilizations.
Direct margins(2) during the second fiscal quarter were $8.6 million compared to $13.8 million during the previous quarter.
Offshore Gulf of Mexico:
This segment had operating income of $6.7 million compared to operating income of $6.7 million during the previous quarter. Direct margins(2) for the quarter were $9.3 million compared to $9.5 million in the prior quarter.
Operational Outlook for the Third Quarter of Fiscal Year 2023
North America Solutions:
•We expect North America Solutions direct margins(2) to be between $265-$285 million with an average active rig count of 163-167 rigs during the quarter
•We expect to exit the quarter between approximately 155-160 contracted rigs
International Solutions:
•We expect International Solutions direct margins(2) to be between $4-$7 million, exclusive of any foreign exchange gains or losses
Offshore Gulf of Mexico:
•We expect Offshore Gulf of Mexico direct margins(2) to be between $5.5-$7.5 million
Other Estimates for Fiscal Year 2023
•Gross capital expenditures are now expected to be approximately $400 to $450 million, exclusive of ongoing asset sales that include reimbursements for lost and damaged tubulars and sales of other used drilling equipment that offset a portion of the gross capital expenditures and are expected to total approximately $65 million in fiscal year 2023
•Depreciation for fiscal year 2023 is still expected to be approximately $400 million
•Research and development expenses for fiscal year 2023 are now expected to be roughly $30 million
•General and administrative expenses for fiscal year 2023 are now expected to be approximately $205 million
•Cash taxes for fiscal year 2023 are now expected to be approximately $175-$225 million, of which a net $92 million has been paid through March 31, 2023
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Select Items(1) Included in Net Income per Diluted Share
Second quarter of fiscal year 2023 net income of $1.55 per diluted share included $0.29 in after-tax gains comprised of the following:
•$0.29 of non-cash after-tax gains related to fair market value adjustments to equity investments
First quarter of fiscal year 2023 net income of $0.91 per diluted share included $(0.20) in after-tax losses comprised of the following:
•$(0.09) of non-cash after-tax losses pertaining to an impairment for fair market adjustments to decommissioned rigs and equipment that are held for sale
•$(0.11) 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 27, 2023 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 2023 results. Dial-in information for the conference call is (877) 830-2598 for domestic callers or (785) 424-1745 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, 2023, 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, share repurchases, investments, active rig count projections, budgets, projected costs and plans, objectives of management for future operations, contract terms, financing and funding, capex spending, outlook for international markets, and actions by customers 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 of 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.
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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 2023 is provided on a non-GAAP basis only because certain information necessary to calculate the cost 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 H&P repurchased approximately 2.5 million shares for approximately $107 million; fiscal year to date the Company has repurchased approximately 3.4 million shares for approximately $146 million
(4) The NAS segment direct margin percentage for the fiscal second quarter, a non-GAAP metric, is calculated by dividing the direct margin for the segment ($296.2 million) by segment revenues ($675.8 million) less reimbursements ($77.4 million).
Contact: Dave Wilson, Vice President of Investor Relations
investor.relations@hpinc.com
(918) 588‑5190
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April 26, 2023
| 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, | ||||||||||||||||||||||||
| 2023 | 2022 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
| OPERATING REVENUES | |||||||||||||||||||||||||||||
| Drilling services | $ | 766,682 | $ | 717,170 | $ | 465,370 | $ | 1,483,852 | $ | 872,904 | |||||||||||||||||||
| Other | 2,540 | 2,467 | 2,227 | 5,007 | 4,475 | ||||||||||||||||||||||||
| 769,222 | 719,637 | 467,597 | 1,488,859 | 877,379 | |||||||||||||||||||||||||
| OPERATING COSTS AND EXPENSES | |||||||||||||||||||||||||||||
| Drilling services operating expenses, excluding depreciation and amortization | 449,110 | 428,251 | 339,759 | 877,361 | 639,411 | ||||||||||||||||||||||||
| Other operating expenses | 1,188 | 1,126 | 1,181 | 2,314 | 2,363 | ||||||||||||||||||||||||
| Depreciation and amortization | 96,255 | 96,655 | 102,937 | 192,910 | 203,374 | ||||||||||||||||||||||||
| Research and development | 8,702 | 6,933 | 6,387 | 15,635 | 12,914 | ||||||||||||||||||||||||
| Selling, general and administrative | 52,855 | 48,455 | 47,051 | 101,310 | 90,766 | ||||||||||||||||||||||||
| Asset impairment charges | — | 12,097 | — | 12,097 | 4,363 | ||||||||||||||||||||||||
| Restructuring charges | — | — | 63 | — | 805 | ||||||||||||||||||||||||
| Gain on reimbursement of drilling equipment | (11,574) | (15,724) | (6,448) | (27,298) | (11,702) | ||||||||||||||||||||||||
| Other (gain) loss on sale of assets | (2,519) | (2,379) | (716) | (4,898) | 313 | ||||||||||||||||||||||||
| 594,017 | 575,414 | 490,214 | 1,169,431 | 942,607 | |||||||||||||||||||||||||
| OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS | 175,205 | 144,223 | (22,617) | 319,428 | (65,228) | ||||||||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||||||||
| Interest and dividend income | 5,055 | 4,705 | 3,399 | 9,760 | 5,988 | ||||||||||||||||||||||||
| Interest expense | (4,239) | (4,355) | (4,390) | (8,594) | (10,504) | ||||||||||||||||||||||||
| Gain (loss) on investment securities | 39,752 | (15,091) | 22,132 | 24,661 | 69,994 | ||||||||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | (60,083) | ||||||||||||||||||||||||
| Other | (743) | (660) | (476) | (1,403) | (1,018) | ||||||||||||||||||||||||
| 39,825 | (15,401) | 20,665 | 24,424 | 4,377 | |||||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes | 215,030 | 128,822 | (1,952) | 343,852 | (60,851) | ||||||||||||||||||||||||
| Income tax expense (benefit) | 51,129 | 32,395 | 2,672 | 83,524 | (4,896) | ||||||||||||||||||||||||
| Income (loss) from continuing operations | 163,901 | 96,427 | (4,624) | 260,328 | (55,955) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations before income taxes | 139 | 718 | (352) | 857 | (383) | ||||||||||||||||||||||||
| Income tax expense | — | — | — | — | — | ||||||||||||||||||||||||
| Income (loss) from discontinued operations | 139 | 718 | (352) | 857 | (383) | ||||||||||||||||||||||||
| NET INCOME (LOSS) | $ | 164,040 | $ | 97,145 | $ | (4,976) | $ | 261,185 | $ | (56,338) | |||||||||||||||||||
| Basic earnings (loss) per common share: | |||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 1.55 | $ | 0.91 | $ | (0.05) | $ | 2.45 | $ | (0.53) | |||||||||||||||||||
| Income from discontinued operations | — | 0.01 | — | 0.01 | — | ||||||||||||||||||||||||
| Net income (loss) | $ | 1.55 | $ | 0.92 | $ | (0.05) | $ | 2.46 | $ | (0.53) | |||||||||||||||||||
| Diluted earnings (loss) per common share: | |||||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 1.55 | $ | 0.90 | $ | (0.05) | $ | 2.45 | $ | (0.53) | |||||||||||||||||||
| Income from discontinued operations | — | 0.01 | — | 0.01 | — | ||||||||||||||||||||||||
| Net income (loss) | $ | 1.55 | $ | 0.91 | $ | (0.05) | $ | 2.46 | $ | (0.53) | |||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||||||
| Basic | 103,968 | 105,248 | 105,393 | 104,615 | 106,494 | ||||||||||||||||||||||||
| Diluted | 104,363 | 106,104 | 105,393 | 105,003 | 106,494 | ||||||||||||||||||||||||
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April 26, 2023
| HELMERICH & PAYNE, INC. | |||||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| March 31, | September 30, | ||||||||||
| (in thousands except share data and share amounts) | 2023 | 2022 | |||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | 159,672 | $ | 232,131 | |||||||
| Restricted cash | 53,231 | 36,246 | |||||||||
| Short-term investments | 85,090 | 117,101 | |||||||||
Accounts receivable, net of allowance of $6,096 and $2,975, respectively | 525,611 | 458,713 | |||||||||
| Inventories of materials and supplies, net | 99,408 | 87,957 | |||||||||
| Prepaid expenses and other, net | 80,090 | 66,463 | |||||||||
| Assets held-for-sale | 1,349 | 4,333 | |||||||||
| Total current assets | 1,004,451 | 1,002,944 | |||||||||
| Investments | 261,960 | 218,981 | |||||||||
| Property, plant and equipment, net | 2,931,301 | 2,960,809 | |||||||||
| Other Noncurrent Assets: | |||||||||||
| Goodwill | 45,653 | 45,653 | |||||||||
| Intangible assets, net | 63,790 | 67,154 | |||||||||
| Operating lease right-of-use asset | 37,150 | 39,064 | |||||||||
| Other assets, net | 21,428 | 20,926 | |||||||||
| Total other noncurrent assets | 168,021 | 172,797 | |||||||||
| Total assets | $ | 4,365,733 | $ | 4,355,531 | |||||||
| LIABILITIES & SHAREHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 160,101 | $ | 126,966 | |||||||
| Dividends payable | 50,409 | 26,693 | |||||||||
| Accrued liabilities | 203,211 | 241,151 | |||||||||
| Total current liabilities | 413,721 | 394,810 | |||||||||
| Noncurrent Liabilities: | |||||||||||
| Long-term debt, net | 542,734 | 542,610 | |||||||||
| Deferred income taxes | 540,316 | 537,712 | |||||||||
| Other | 113,156 | 114,927 | |||||||||
| Total noncurrent liabilities | 1,196,206 | 1,195,249 | |||||||||
| Shareholders' Equity: | |||||||||||
Common stock, $0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of March 31, 2023 and September 30, 2022, and 102,584,517 and 105,293,662 shares outstanding as of March 31, 2023 and September 30, 2022, respectively | 11,222 | 11,222 | |||||||||
Preferred stock, no par value, 1,000,000 shares authorized, no shares issued | — | — | |||||||||
| Additional paid-in capital | 509,205 | 528,278 | |||||||||
| Retained earnings | 2,608,100 | 2,473,572 | |||||||||
| Accumulated other comprehensive loss | (11,560) | (12,072) | |||||||||
Treasury stock, at cost, 9,638,348 shares and 6,929,203 shares as of March 31, 2023 and September 30, 2022, respectively | (361,161) | (235,528) | |||||||||
| Total shareholders’ equity | 2,755,806 | 2,765,472 | |||||||||
| Total liabilities and shareholders' equity | $ | 4,365,733 | $ | 4,355,531 | |||||||
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| HELMERICH & PAYNE, INC. | |||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| Six Months Ended March 31, | |||||||||||
| (in thousands) | 2023 | 2022 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net income (loss) | $ | 261,185 | $ | (56,338) | |||||||
| Adjustment for (income) loss from discontinued operations | (857) | 383 | |||||||||
| Income (loss) from continuing operations | 260,328 | (55,955) | |||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 192,910 | 203,374 | |||||||||
| Asset impairment charges | 12,097 | 4,363 | |||||||||
| Amortization of debt discount and debt issuance costs | 664 | 559 | |||||||||
| Loss on extinguishment of debt | — | 60,083 | |||||||||
| Provision for credit loss | 3,222 | 669 | |||||||||
| Stock-based compensation | 15,704 | 14,163 | |||||||||
| Gain on investment securities | (24,661) | (69,994) | |||||||||
| Gain on reimbursement of drilling equipment | (27,298) | (11,702) | |||||||||
| Other (gain) loss on sale of assets | (4,898) | 313 | |||||||||
| Deferred income tax expense (benefit) | 3,165 | (11,597) | |||||||||
| Other | 2,024 | (4,287) | |||||||||
| Changes in assets and liabilities | (106,952) | (111,051) | |||||||||
| Net cash provided by operating activities from continuing operations | 326,305 | 18,938 | |||||||||
| Net cash used in operating activities from discontinued operations | (51) | (42) | |||||||||
| Net cash provided by operating activities | 326,254 | 18,896 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Capital expenditures | (181,479) | (104,482) | |||||||||
| Other capital expenditures related to assets held-for-sale | — | (10,550) | |||||||||
| Purchase of short-term investments | (64,418) | (68,565) | |||||||||
| Purchase of long-term investments | (18,771) | (14,124) | |||||||||
| Proceeds from sale of short-term investments | 97,744 | 117,456 | |||||||||
| Proceeds from asset sales | 47,718 | 34,944 | |||||||||
| Net cash used in investing activities | (119,206) | (45,321) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Dividends paid | (102,941) | (54,007) | |||||||||
| Payments for employee taxes on net settlement of equity awards | (14,410) | (5,503) | |||||||||
| Payment of contingent consideration from acquisition of business | (250) | (250) | |||||||||
| Payments for early extinguishment of long-term debt | — | (487,148) | |||||||||
| Make-whole premium payment | — | (56,421) | |||||||||
| Share repurchases | (145,013) | (76,999) | |||||||||
| Other | (540) | (587) | |||||||||
| Net cash used in financing activities | (263,154) | (680,915) | |||||||||
| Net decrease in cash and cash equivalents and restricted cash | (56,106) | (707,340) | |||||||||
| Cash and cash equivalents and restricted cash, beginning of period | 269,009 | 936,716 | |||||||||
| Cash and cash equivalents and restricted cash, end of period | $ | 212,903 | $ | 229,376 | |||||||
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| 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) | 2023 | 2022 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||
| NORTH AMERICA SOLUTIONS | |||||||||||||||||||||||||||||
| Operating revenues | $ | 675,780 | $ | 627,163 | $ | 408,814 | $ | 1,302,943 | $ | 749,848 | |||||||||||||||||||
| Direct operating expenses | 379,611 | 366,855 | 294,397 | 746,466 | 550,965 | ||||||||||||||||||||||||
| Depreciation and amortization | 89,070 | 89,814 | 95,817 | 178,884 | 189,438 | ||||||||||||||||||||||||
| Research and development | 8,738 | 7,059 | 6,420 | 15,797 | 12,988 | ||||||||||||||||||||||||
| Selling, general and administrative expense | 16,212 | 14,190 | 10,883 | 30,402 | 21,712 | ||||||||||||||||||||||||
| Asset impairment charges | — | 3,948 | — | 3,948 | 1,868 | ||||||||||||||||||||||||
| Restructuring charges | — | — | — | — | 473 | ||||||||||||||||||||||||
| Segment operating income (loss) | $ | 182,149 | $ | 145,297 | $ | 1,297 | $ | 327,446 | $ | (27,596) | |||||||||||||||||||
Financial Data and Other Operating Statistics1: | |||||||||||||||||||||||||||||
Direct margin (Non-GAAP)2 | $ | 296,169 | $ | 260,308 | $ | 114,417 | $ | 556,477 | $ | 198,883 | |||||||||||||||||||
Revenue days3 | 16,488 | 16,578 | 14,752 | 33,067 | 27,698 | ||||||||||||||||||||||||
Average active rigs4 | 183 | 180 | 164 | 182 | 152 | ||||||||||||||||||||||||
Number of active rigs at the end of period5 | 179 | 184 | 171 | 179 | 171 | ||||||||||||||||||||||||
| Number of available rigs at the end of period | 233 | 235 | 236 | 233 | 236 | ||||||||||||||||||||||||
| Reimbursements of "out-of-pocket" expenses | $ | 77,442 | $ | 79,159 | $ | 46,664 | $ | 156,601 | $ | 89,793 | |||||||||||||||||||
| INTERNATIONAL SOLUTIONS | |||||||||||||||||||||||||||||
| Operating revenues | $ | 55,890 | $ | 54,801 | $ | 27,422 | $ | 110,691 | $ | 64,581 | |||||||||||||||||||
| Direct operating expenses | 47,275 | 40,977 | 25,171 | 88,252 | 49,302 | ||||||||||||||||||||||||
| Depreciation | 1,652 | 1,392 | 1,049 | 3,044 | 1,804 | ||||||||||||||||||||||||
| Selling, general and administrative expense | 3,008 | 2,709 | 2,050 | 5,717 | 3,779 | ||||||||||||||||||||||||
| Asset impairment charge | — | 8,149 | — | 8,149 | 2,495 | ||||||||||||||||||||||||
| Segment operating income (loss) | $ | 3,955 | $ | 1,574 | $ | (848) | $ | 5,529 | $ | 7,201 | |||||||||||||||||||
Financial Data and Other Operating Statistics1: | |||||||||||||||||||||||||||||
Direct margin (Non-GAAP)2 | $ | 8,615 | $ | 13,824 | $ | 2,251 | $ | 22,439 | $ | 15,279 | |||||||||||||||||||
Revenue days3 | 1,263 | 1,140 | 636 | 2,403 | 1,283 | ||||||||||||||||||||||||
Average active rigs4 | 14 | 12 | 7 | 13 | 7 | ||||||||||||||||||||||||
Number of active rigs at the end of period5 | 15 | 13 | 6 | 15 | 6 | ||||||||||||||||||||||||
| Number of available rigs at the end of period | 22 | 20 | 28 | 22 | 28 | ||||||||||||||||||||||||
| Reimbursements of "out-of-pocket" expenses | $ | 2,789 | $ | 2,856 | $ | 1,226 | $ | 5,645 | $ | 2,669 | |||||||||||||||||||
| OFFSHORE GULF OF MEXICO | |||||||||||||||||||||||||||||
| Operating revenues | $ | 34,979 | $ | 35,164 | $ | 29,147 | $ | 70,143 | $ | 58,461 | |||||||||||||||||||
| Direct operating expenses | 25,688 | 25,691 | 20,884 | 51,379 | 41,595 | ||||||||||||||||||||||||
| Depreciation | 1,904 | 1,894 | 2,401 | 3,798 | 4,781 | ||||||||||||||||||||||||
| Selling, general and administrative expense | 700 | 833 | 584 | 1,533 | 1,341 | ||||||||||||||||||||||||
| Segment operating income | $ | 6,687 | $ | 6,746 | $ | 5,278 | $ | 13,433 | $ | 10,744 | |||||||||||||||||||
Financial Data and Other Operating Statistics1: | |||||||||||||||||||||||||||||
Direct margin (Non-GAAP)2 | $ | 9,291 | $ | 9,473 | $ | 8,263 | $ | 18,764 | $ | 16,866 | |||||||||||||||||||
Revenue days3 | 360 | 368 | 360 | 728 | 728 | ||||||||||||||||||||||||
Average active rigs4 | 4 | 4 | 4 | 4 | 4 | ||||||||||||||||||||||||
Number of active rigs at the end of period5 | 4 | 4 | 4 | 4 | 4 | ||||||||||||||||||||||||
| Number of available rigs at the end of period | 7 | 7 | 7 | 7 | 7 | ||||||||||||||||||||||||
| Reimbursements of "out-of-pocket" expenses | $ | 7,994 | $ | 7,189 | $ | 5,809 | $ | 15,183 | $ | 11,884 | |||||||||||||||||||
(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 direct operating expenses 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. 90, 92 or 182 days).
(5)Defined as the number of rigs generating revenue at the applicable end date of the time period.
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Segment reconciliation amounts were as follows:
| Three Months Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||
| (in thousands) | North America Solutions | International Solutions | Offshore Gulf of Mexico | Other | Eliminations | Total | |||||||||||||||||||||||||||||
| Operating revenue | $ | 675,780 | $ | 55,890 | $ | 34,979 | $ | 2,573 | $ | — | $ | 769,222 | |||||||||||||||||||||||
| Intersegment | — | — | — | 17,662 | (17,662) | — | |||||||||||||||||||||||||||||
| Total operating revenue | $ | 675,780 | $ | 55,890 | $ | 34,979 | $ | 20,235 | $ | (17,662) | $ | 769,222 | |||||||||||||||||||||||
| Direct operating expenses | $ | 366,714 | $ | 47,036 | $ | 23,716 | $ | 12,551 | $ | — | $ | 450,017 | |||||||||||||||||||||||
| Intersegment | 12,897 | 239 | 1,972 | 105 | (15,213) | — | |||||||||||||||||||||||||||||
| Total drilling services & other operating expenses | $ | 379,611 | $ | 47,275 | $ | 25,688 | $ | 12,656 | $ | (15,213) | $ | 450,017 | |||||||||||||||||||||||
| Six Months Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||
| (in thousands) | North America Solutions | International Solutions | Offshore Gulf of Mexico | Other | Eliminations | Total | |||||||||||||||||||||||||||||
| Operating revenue | $ | 1,302,943 | $ | 110,691 | $ | 70,143 | $ | 5,082 | $ | — | $ | 1,488,859 | |||||||||||||||||||||||
| Intersegment | — | — | — | 34,064 | (34,064) | — | |||||||||||||||||||||||||||||
| Total operating revenue | $ | 1,302,943 | $ | 110,691 | $ | 70,143 | $ | 39,146 | $ | (34,064) | $ | 1,488,859 | |||||||||||||||||||||||
| Direct operating expenses | $ | 718,029 | $ | 87,737 | $ | 47,517 | $ | 26,111 | $ | — | $ | 879,394 | |||||||||||||||||||||||
| Intersegment | 28,437 | 515 | 3,862 | 134 | (32,948) | — | |||||||||||||||||||||||||||||
| Total drilling services & other operating expenses | $ | 746,466 | $ | 88,252 | $ | 51,379 | $ | 26,245 | $ | (32,948) | $ | 879,394 | |||||||||||||||||||||||
Segment operating income (loss) 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, corporate restructuring charges, 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 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.
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April 26, 2023
The following table reconciles operating income (loss) 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) | 2023 | 2022 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||
| Operating income (loss) | |||||||||||||||||||||||||||||
| North America Solutions | $ | 182,149 | $ | 145,297 | $ | 1,297 | $ | 327,446 | $ | (27,596) | |||||||||||||||||||
| International Solutions | 3,955 | 1,574 | (848) | 5,529 | 7,201 | ||||||||||||||||||||||||
| Offshore Gulf of Mexico | 6,687 | 6,746 | 5,278 | 13,433 | 10,744 | ||||||||||||||||||||||||
| Other | 6,823 | 4,677 | 3,167 | 11,500 | 7,096 | ||||||||||||||||||||||||
| Eliminations | (2,267) | 2,310 | (2,031) | 43 | (3,313) | ||||||||||||||||||||||||
| Segment operating income (loss) | $ | 197,347 | $ | 160,604 | $ | 6,863 | $ | 357,951 | $ | (5,868) | |||||||||||||||||||
| Gain on reimbursement of drilling equipment | 11,574 | 15,724 | 6,448 | 27,298 | 11,702 | ||||||||||||||||||||||||
| Other gain (loss) on sale of assets | 2,519 | 2,379 | 716 | 4,898 | (313) | ||||||||||||||||||||||||
| Corporate selling, general and administrative costs, corporate depreciation and corporate restructuring charges | (36,235) | (34,484) | (36,644) | (70,719) | (70,749) | ||||||||||||||||||||||||
| Operating income (loss) | $ | 175,205 | $ | 144,223 | $ | (22,617) | $ | 319,428 | $ | (65,228) | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||
| Interest and dividend income | 5,055 | 4,705 | 3,399 | 9,760 | 5,988 | ||||||||||||||||||||||||
| Interest expense | (4,239) | (4,355) | (4,390) | (8,594) | (10,504) | ||||||||||||||||||||||||
| Gain (loss) on investment securities | 39,752 | (15,091) | 22,132 | 24,661 | 69,994 | ||||||||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | (60,083) | ||||||||||||||||||||||||
| Other | (743) | (660) | (476) | (1,403) | (1,018) | ||||||||||||||||||||||||
| Total unallocated amounts | 39,825 | (15,401) | 20,665 | 24,424 | 4,377 | ||||||||||||||||||||||||
| Income (loss) from continuing operations before income taxes | $ | 215,030 | $ | 128,822 | $ | (1,952) | $ | 343,852 | $ | (60,851) | |||||||||||||||||||
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April 26, 2023
SUPPLEMENTARY STATISTICAL INFORMATION
Unaudited
U.S. LAND RIG COUNTS & MARKETABLE FLEET STATISTICS
| April 26, | March 31, | December 31, | Q2FY23 | ||||||||||||||||||||
| 2023 | 2023 | 2022 | Average | ||||||||||||||||||||
| U.S. Land Operations | |||||||||||||||||||||||
| Term Contract Rigs | 101 | 101 | 105 | 103 | |||||||||||||||||||
| Spot Contract Rigs | 68 | 78 | 79 | 80 | |||||||||||||||||||
| Total Contracted Rigs | 169 | 179 | 184 | 183 | |||||||||||||||||||
| Idle or Other Rigs | 64 | 54 | 51 | 51 | |||||||||||||||||||
| Total Marketable Fleet | 233 | 233 | 235 | 234 | |||||||||||||||||||
H&P GLOBAL FLEET UNDER TERM CONTRACT STATISTICS
Number of Rigs Already Under Long-Term Contracts(*)
(Estimated Quarterly Average — as of 3/31/23)
| Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||||||||||||||||||||||
| Segment | FY23 | FY23 | FY24 | FY24 | FY24 | FY24 | FY25 | ||||||||||||||||||||||||||||||||||
| U.S. Land Operations | 97.2 | 84.5 | 59.7 | 39.6 | 34.7 | 27.0 | 12.7 | ||||||||||||||||||||||||||||||||||
| International Land Operations | 9.5 | 8.7 | 8.0 | 6.0 | 5.7 | 4.1 | 4.0 | ||||||||||||||||||||||||||||||||||
| Offshore Operations | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Total | 106.7 | 93.2 | 67.7 | 45.6 | 40.4 | 31.1 | 16.7 | ||||||||||||||||||||||||||||||||||
(*) All of the above rig contracts have original terms equal to or in excess of six months and include provisions for early termination fees.
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April 26, 2023
NON-GAAP MEASUREMENTS
NON-GAAP RECONCILIATION OF SELECT ITEMS AND ADJUSTED NET INCOME(**)
| Three Months Ended March 31, 2023 | |||||||||||||||||||||||
| (in thousands, except per share data) | Pretax | Tax | Net | EPS | |||||||||||||||||||
| Net income (GAAP basis) | $ | 164,040 | $ | 1.55 | |||||||||||||||||||
| (-) Fair market adjustment to equity investments | $ | 39,583 | $ | 9,755 | $ | 29,828 | $ | 0.29 | |||||||||||||||
| Adjusted net income | $ | 134,212 | $ | 1.26 | |||||||||||||||||||
| Three Months Ended December 31, 2022 | |||||||||||||||||||||||
| (in thousands, except per share data) | Pretax | Tax | Net | EPS | |||||||||||||||||||
| Net income (GAAP basis) | $ | 97,145 | $ | 0.91 | |||||||||||||||||||
| (-) Impairments for fair market value adjustments | $ | (12,097) | $ | (3,049) | $ | (9,048) | $ | (0.09) | |||||||||||||||
| (-) Fair market adjustment to equity investments | $ | (15,152) | $ | (3,818) | $ | (11,334) | $ | (0.11) | |||||||||||||||
| Adjusted net income | $ | 117,527 | $ | 1.11 | |||||||||||||||||||
(**)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.
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April 26, 2023
NON-GAAP RECONCILIATION OF DIRECT MARGIN
Direct margin is considered a non-GAAP metric. We define "direct margin" as operating revenues less direct operating expenses. 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, 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 | |||||||||||
| Three Months Ended December 31, 2022 | |||||||||||||||||
| (in thousands) | North America Solutions | International Solutions | Offshore Gulf of Mexico | ||||||||||||||
| Segment operating income | $ | 145,297 | $ | 1,574 | $ | 6,746 | |||||||||||
| Add back: | |||||||||||||||||
| Depreciation and amortization | 89,814 | 1,392 | 1,894 | ||||||||||||||
| Research and development | 7,059 | — | — | ||||||||||||||
| Selling, general and administrative expense | 14,190 | 2,709 | 833 | ||||||||||||||
| Asset impairment charge | 3,948 | 8,149 | — | ||||||||||||||
| Direct margin (Non-GAAP) | $ | 260,308 | $ | 13,824 | $ | 9,473 | |||||||||||
| Three Months Ended March 31, 2022 | |||||||||||||||||
| (in thousands) | North America Solutions | International Solutions | Offshore Gulf of Mexico | ||||||||||||||
| Segment operating income (loss) | $ | 1,297 | $ | (848) | $ | 5,278 | |||||||||||
| Add back: | |||||||||||||||||
| Depreciation and amortization | 95,817 | 1,049 | 2,401 | ||||||||||||||
| Research and development | 6,420 | — | — | ||||||||||||||
| Selling, general and administrative expense | 10,883 | 2,050 | 584 | ||||||||||||||
| Direct margin (Non-GAAP) | $ | 114,417 | $ | 2,251 | $ | 8,263 | |||||||||||
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| 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 | |||||||||||
| Six Months Ended March 31, 2022 | |||||||||||||||||
| (in thousands) | North America Solutions | International Solutions | Offshore Gulf of Mexico | ||||||||||||||
| Segment operating income (loss) | $ | (27,596) | $ | 7,201 | $ | 10,744 | |||||||||||
| Add back: | |||||||||||||||||
| Depreciation and amortization | 189,438 | 1,804 | 4,781 | ||||||||||||||
| Research and development | 12,988 | — | — | ||||||||||||||
| Selling, general and administrative expense | 21,712 | 3,779 | 1,341 | ||||||||||||||
| Asset impairment charges | 1,868 | 2,495 | — | ||||||||||||||
| Restructuring charges | 473 | — | — | ||||||||||||||
| Direct margin (Non-GAAP) | $ | 198,883 | $ | 15,279 | $ | 16,866 | |||||||||||