Helmerich & Payne, Inc. Announces Fiscal Third Quarter Results

July 25, 2024

The Company reported fiscal third quarter net income of $89 million, or $0.88 per diluted share; including select items⁽¹⁾ of $(0.04) per diluted share

The North America Solutions (“NAS”) segment exited the third quarter of fiscal year 2024 with 146 active rigs and recognized revenue per day of $39,800/day with associated direct margins⁽²⁾ per day of $20,300/day during the quarter

Quarterly NAS operating income increased $16 million sequentially; while direct margins⁽²⁾ increased by $6 million to $277 million, as revenues increased by $6 million to $620 million and expenses remained relatively flat at $343 million

H&P’s NAS segment anticipates exiting the fourth quarter of fiscal year 2024 between 147-153 active rigs

On June 5, 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 August 30, 2024 to stockholders of record at the close of business on August 16, 2024

TULSA, Okla.–(BUSINESS WIRE)–Helmerich & Payne, Inc. (NYSE: HP) reported net income of $89 million, or $0.88 per diluted share, from operating revenues of $698 million for the quarter ended June 30, 2024, compared to net income of $85 million, or $0.84 per diluted share, from operating revenues of $688 million for the quarter ended March 31, 2024. The net income per diluted share for the third and second quarters of fiscal year 2024 include net $(0.04) and net $0.00 of after-tax gains and losses, respectively, comprised of select items⁽¹⁾. For the third quarter of fiscal year 2024, select items were comprised of:

$0.06 of after-tax gains related to the non-cash fair market value adjustments to our equity investments
$(0.10) of after-tax losses related to a Blue Chip Swap transaction and non-recurring professional service fees

Net cash provided by operating activities was $197 million for the third quarter of fiscal year 2024 compared to net cash provided by operating activities of $144 million for the second quarter of fiscal year 2024.

President and CEO John Lindsay commented, “Our financial results for the third fiscal quarter continue to demonstrate the resilience of our strategy in the North America Solutions segment. Once again, it was particularly notable, that 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. On the international front, the Company’s first super-spec FlexRig® arrived in Saudi Arabia, which is another step in our strategy to increase our operational presence in the region.

“Macro headwinds, both directly and indirectly related to the oil and gas industry, persist and are still causing a more cautionary outlook for the industry. With the cyclical nature of our industry, we are hopeful that these will subside and bring about a more positive outlook for the industry in the coming quarters. Contractual churn remains prevalent in the U.S. market, but our people are doing a good job managing through this. We expect the churn to continue and as we have seen in recent summers, we also anticipate our active rig count to be flat with perhaps a modest incline heading into our fiscal year-end.

“Activity levels in the International Solutions segment in the fourth fiscal quarter are expected to remain consistent with the third fiscal quarter with the exception that the first of the eight Saudi Arabia rigs is expected to commence work in the fiscal fourth quarter once contractual acceptance procedures are completed. The preparation work for the remaining seven super-spec rigs is progressing as planned with export dates expected through the balance of the calendar year. We are looking forward to working with Saudi Aramco and building a long-term, valuable relationship with our new customer.”

Senior Vice President and CFO Mark Smith also commented, “Currently, we expect our active NAS rig count in the fourth fiscal quarter to remain consistent with our third fiscal quarter average. Accordingly, our NAS direct margin guidance also remains relatively consistent with the level recognized during the third fiscal quarter. Contract economics remain the cornerstone of our NAS strategy and we do not anticipate the same level of volatility or correlation to overall rig counts that we have experienced in the past. Recent quarterly results continue to provide evidence of that.

“The Company returned another $42 million to shareholders in the form of base and supplemental dividends during the quarter and the Board of Directors declared the fourth and final installment of the supplemental dividend under the 2024 Supplemental Shareholder Return Plan. 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 with the biggest swing factor related to any international tender awards that would result in additional capex. As part of its budgeting process for the fiscal year ahead, the Company continuously evaluates the uses of cash and capital allocation priorities.”

John Lindsay concluded, “The Company will continue to execute as it always has with a customer-centric approach and safety focus, which is ingrained in our Company culture. We look forward to commencing work in Saudi Arabia and taking advantage of additional opportunities as those arise in the coming quarters.”

Operating Segment Results for the Third Quarter of Fiscal Year 2024

North America Solutions:

This segment had operating income of $163.4 million compared to operating income of $147.1 million during the previous quarter. The increase in operating income was primarily attributable to a higher direct margin and the prior quarter experiencing higher depreciation and research and development expenses. Direct margin⁽²⁾ increased by $6.0 million to $277.4 million sequentially.

International Solutions:

This segment had an operating loss of $4.8 million compared to operating income of $3.6 million during the previous quarter. The decrease in operating income was mainly due to recommissioning expenses for rigs that will be exported to Saudi Arabia and related start-up costs. Direct margin⁽²⁾ during the third fiscal quarter was $0.4 million compared to $8.4 million during the previous quarter. Current quarter results included a $2.1 million foreign currency loss compared to a $0.5 million foreign currency loss in the previous quarter.

Offshore Gulf of Mexico:

This segment had operating income of $5.0 million compared to operating income of $0.1 million during the previous quarter. Direct margin⁽²⁾ for the quarter was $7.6 million compared to $2.9 million in the previous quarter. The increase in operating income was primarily attributable to rigs moving to full operating rates earlier than planned.

Operational Outlook for the Fourth Quarter of Fiscal Year 2024

North America Solutions:

We expect North America Solutions direct margins⁽²⁾ to be between $260-$280 million
We expect to exit the quarter between approximately 147-153 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
Projected International Solutions direct margins⁽²⁾ for the fourth fiscal quarter are inclusive of approximately $6-$8 million of rig preparation and start-up expense related to our Saudi Arabia operations, higher than previous guidance as some costs shifted from the third fiscal quarter into the fourth fiscal quarter

Offshore Gulf of Mexico:

We expect Offshore Gulf of Mexico direct margins⁽²⁾ to be between $6-$8 million

Other Estimates for Fiscal Year 2024

Gross capital expenditures are still 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 now expected to total approximately $45 million in fiscal year 2024
Depreciation for fiscal year 2024 is now expected to be approximately $400 million
Research and development expenses for fiscal year 2024 are now expected to be roughly $40 million
General and administrative expenses for fiscal year 2024 are now expected to be approximately $250 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

Third quarter of fiscal year 2024 net income of $0.88 per diluted share included a net impact $(0.04) per share in after-tax gains and losses comprised of the following:

$0.06 of non-cash after-tax gains related to fair market value adjustments to equity investments
$(0.05) of after-tax losses on a Blue Chip Swap transaction to repatriate cash to the U.S. from Argentina
$(0.05) of after-tax losses related to non-recurring professional service fees

Second quarter of fiscal year 2024 net income of $0.84 per diluted share included $0.00 in after-tax 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

Conference Call

A conference call will be held on Thursday, July 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 third quarter fiscal year 2024 results. Dial-in information for the conference call is (800) 225-9448 for domestic callers or (203) 518-9814 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 June 30, 2024, H&P’s fleet included 232 land rigs in the United States, 23 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.

HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended									Nine Months Ended
(in thousands, except per share amounts)	June 30,			March 31,			June 30,			June 30,			June 30,
(in thousands, except per share amounts)	2024			2024			2023			2024			2023
OPERATING REVENUES
Drilling services	$	695,139		$	685,131		$	721,567		$	2,054,835		$	2,205,419
Other		2,585			2,812			2,389			7,979			7,396
		697,724			687,943			723,956			2,062,814			2,212,815
OPERATING COSTS AND EXPENSES
Drilling services operating expenses, excluding depreciation and amortization		417,028			401,851			429,182			1,222,182			1,306,543
Other operating expenses		1,144			1,026			1,003			3,307			3,317
Depreciation and amortization		97,816			104,545			94,811			296,352			287,721
Research and development		10,555			12,942			7,085			32,105			22,720
Selling, general and administrative		66,870			62,037			49,271			185,484			150,581
Asset impairment charges		—			—			—			—			12,097
Gain on reimbursement of drilling equipment		(9,732	)		(7,461	)		(10,642	)		(24,687	)		(37,940	)
Other (gain) loss on sale of assets		2,730			2,431			4,504			2,718			(394	)
		586,411			577,371			575,214			1,717,461			1,744,645
OPERATING INCOME		111,313			110,572			148,742			345,353			468,170
Other income (expense)
Interest and dividend income		11,888			6,567			10,748			29,189			20,508
Interest expense		(4,336	)		(4,261	)		(4,324	)		(12,969	)		(12,918	)
Gain (loss) on investment securities		389			3,747			(18,538	)		102			6,123
Other		3,134			400			(672	)		2,991			(1,218	)
		11,075			6,453			(12,786	)		19,313			12,495
Income before income taxes		122,388			117,025			135,956			364,666			480,665
Income tax expense		33,703			32,194			40,663			95,977			124,187
NET INCOME	$	88,685		$	84,831		$	95,293		$	268,689		$	356,478

Basic earnings per common share	$	0.89		$	0.85		$	0.93		$	2.68		$	3.40

Diluted earnings per common share	$	0.88		$	0.84		$	0.93		$	2.67		$	3.39

Weighted average shares outstanding:
Basic		98,752			98,774			101,163			98,891			103,464
Diluted		99,007			99,046			101,550			99,116			103,852

HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
	June 30,			September 30,
(in thousands except share data and share amounts)	2024			2023
ASSETS
Current Assets:
Cash and cash equivalents	$	203,633		$	257,174
Restricted cash		78,369			59,064
Short-term investments		86,088			93,600
Accounts receivable, net of allowance of $2,377 and $2,688, respectively		415,395			404,188
Inventories of materials and supplies, net		115,312			94,227
Prepaid expenses and other, net		71,522			97,727
Assets held-for-sale		—			645
Total current assets		970,319			1,006,625

Investments		292,229			264,947
Property, plant and equipment, net		3,014,345			2,921,695
Other Noncurrent Assets:
Goodwill		45,653			45,653
Intangible assets, net		55,752			60,575
Operating lease right-of-use asset		57,315			50,400
Other assets, net		49,369			32,061
Total other noncurrent assets		208,089			188,689

Total assets	$	4,484,982		$	4,381,956

LIABILITIES & SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	158,896		$	130,852
Dividends payable		42,045			25,194
Accrued liabilities		255,851			262,885
Total current liabilities		456,792			418,931

Noncurrent Liabilities:
Long-term debt, net		545,589			545,144
Deferred income taxes		494,412			517,809
Other		131,344			128,129
Total noncurrent liabilities		1,171,345			1,191,082

Shareholders’ Equity:
Common stock, $0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of June 30, 2024 and September 30, 2023, and 98,755,412 and 99,426,526 shares outstanding as of June 30, 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		510,379			525,369
Retained earnings		2,833,136			2,707,715
Accumulated other comprehensive loss		(8,499	)		(7,981	)
Treasury stock, at cost, 13,467,453 shares and 12,796,339 shares as of June 30, 2024 and September 30, 2023, respectively		(489,393	)		(464,382	)
Total shareholders’ equity		2,856,845			2,771,943
Total liabilities and shareholders’ equity	$	4,484,982		$	4,381,956

HELMERICH & PAYNE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Nine Months Ended June 30,
(in thousands)	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	268,689		$	356,478
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		296,352			287,721
Asset impairment charges		—			12,097
Provision for credit loss		(213	)		2,165
Stock-based compensation		23,777			23,884
Gain on investment securities		(102	)		(6,123	)
Gain on reimbursement of drilling equipment		(24,687	)		(37,940	)
Other (gain) loss on sale of assets		2,718			(394	)
Deferred income tax expense (benefit)		(23,634	)		4,197
Other		3,011			3,960
Changes in assets and liabilities		(30,004	)		(27,045	)
Net cash provided by operating activities		515,907			619,000

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(389,095	)		(281,790	)
Purchase of short-term investments		(148,451	)		(102,140	)
Purchase of long-term investments		(9,167	)		(18,813	)
Proceeds from sale of short-term investments		152,034			148,651
Insurance proceeds from involuntary conversion		5,533			—
Proceeds from asset sales		35,148			63,048
Net cash used in investing activities		(353,998	)		(191,044	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid		(126,417	)		(152,579	)
Payments for employee taxes on net settlement of equity awards		(12,176	)		(14,410	)
Payment of contingent consideration from acquisition of business		(6,250	)		(250	)
Share repurchases		(51,302	)		(247,213	)
Other		—			(540	)
Net cash used in financing activities		(196,145	)		(414,992	)
Net increase (decrease) in cash and cash equivalents and restricted cash		(34,236	)		12,964
Cash and cash equivalents and restricted cash, beginning of period		316,238			269,009
Cash and cash equivalents and restricted cash, end of period	$	282,002		$	281,973

HELMERICH & PAYNE, INC.
SEGMENT REPORTING
	Three Months Ended								Nine Months Ended
	June 30,			March 31,		June 30,			June 30,		June 30,
(in thousands, except operating statistics)	2024			2024		2023			2024		2023
NORTH AMERICA SOLUTIONS
Operating revenues	$	620,040		$	613,339	$	641,612		$	1,827,661	$	1,944,555
Direct operating expenses		342,617			341,938		364,688			1,022,763		1,111,154
Depreciation and amortization		89,207			97,573		87,209			273,799		266,093
Research and development		10,623			13,006		7,254			32,318		23,051
Selling, general and administrative expense		14,234			13,692		12,962			43,802		43,364
Asset impairment charges		—			—		—			—		3,948
Segment operating income	$	163,359		$	147,130	$	169,499		$	454,979	$	496,945
Financial Data and Other Operating Statistics¹:
Direct margin (Non-GAAP)²	$	277,423		$	271,401	$	276,924		$	804,898	$	833,401
Revenue days³		13,683			14,123		15,075			41,516		48,142
Average active rigs⁴		150			155		166			152		176
Number of active rigs at the end of period⁵		146			152		153			146		153
Number of available rigs at the end of period		232			233		233			232		233
Reimbursements of “out-of-pocket” expenses	$	74,915		$	73,584	$	82,688		$	218,227	$	239,288

INTERNATIONAL SOLUTIONS
Operating revenues	$	47,882		$	45,878	$	48,692		$	148,512	$	159,383
Direct operating expenses		47,446			37,514		45,390			129,479		133,642
Depreciation		2,797			2,418		2,171			7,549		5,215
Selling, general and administrative expense		2,483			2,377		2,528			7,336		8,245
Asset impairment charges		—			—		—			—		8,149
Segment operating income (loss)	$	(4,844	)	$	3,569	$	(1,397	)	$	4,148	$	4,132
Financial Data and Other Operating Statistics¹:
Direct margin (Non-GAAP)²	$	436		$	8,364	$	3,302		$	19,033	$	25,741
Revenue days³		1,067			1,038		1,215			3,278		3,618
Average active rigs⁴		12			11		13			12		13
Number of active rigs at the end of period⁵		12			11		13			12		13
Number of available rigs at the end of period		23			22		22			23		22
Reimbursements of “out-of-pocket” expenses	$	2,069		$	1,964	$	2,098		$	7,417	$	7,743

OFFSHORE GULF OF MEXICO
Operating revenues	$	27,218		$	25,913	$	31,221		$	78,662	$	101,364
Direct operating expenses		19,611			23,010		23,913			62,200		75,292
Depreciation		1,798			1,941		1,873			5,807		5,671
Selling, general and administrative expense		799			884		730			2,515		2,263
Segment operating income	$	5,010		$	78	$	4,705		$	8,140	$	18,138
Financial Data and Other Operating Statistics¹:
Direct margin (Non-GAAP)²	$	7,607		$	2,903	$	7,308		$	16,462	$	26,072
Revenue days³		273			273		364			835		1,092
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	$	7,746		$	8,857	$	7,823		$	24,430	$	23,006