Helmerich & Payne, Inc. Announces Fiscal Fourth Quarter & Fiscal Year Results

November 14, 2024

The Company reported fiscal fourth quarter and fiscal year 2024 net income of $0.76 and $3.43 per diluted share, respectively, including select items⁽¹⁾ that had a neutral impact on fiscal fourth quarter diluted earnings per share and a $(0.07) per share impact on fiscal year diluted share

The North America Solutions (“NAS”) segment exited the fourth quarter of fiscal year 2024 with 151 active rigs and recognized revenue per day of approximately $39,100/day with associated direct margins⁽²⁾ per day of $19,800/day during the quarter

Quarterly NAS operating income decreased $8 million sequentially to $156 million; while direct margins⁽²⁾ decreased $3 million to approximately $275 million, as revenues decreased by $2 million to $618 million and expenses increased by $1 million to $344 million

H&P’s North America Solutions segment anticipates exiting the first quarter of fiscal year 2025 between 147-153 active rigs

H&P expects capital expenditures for fiscal year 2025 to range between $290 and $325 million; note these current capital expenditures expectations do not include any amounts related to the pending KCA Deutag acquisition

On September 11, 2024, the Board of Directors of the Company declared a quarterly cash dividend of $0.25 per share, payable on December 2, 2024, to stockholders of record at the close of business on November 18, 2024

TULSA, Okla.–(BUSINESS WIRE)–Helmerich & Payne, Inc. (NYSE: HP) reported net income of $75 million, or $0.76 per diluted share, from operating revenues of $694 million for the quarter ended September 30, 2024, compared to net income of $89 million, or $0.88 per diluted share, from operating revenues of $698 million for the quarter ended June 30, 2024. The net income per diluted share for the fourth and third quarters of fiscal year 2024 include $0.00 and net $(0.04) of after-tax gains and losses, respectively, comprised of select items⁽²⁾. For the fourth quarter of fiscal year 2024, select items⁽²⁾ were comprised of:

$0.10 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 acquisition transaction and integration costs and fees associated with acquisition financing

Net cash provided by operating activities was $169 million for the fourth quarter of fiscal year 2024 compared to $197 million for the third quarter of fiscal year 2024.

For fiscal year 2024, the Company reported net income of $344 million, or $3.43 per diluted share, from operating revenues of $2.8 billion. The net income per diluted share includes $(0.07) of after-tax losses comprised of select items⁽²⁾. Net cash provided by operating activities was $685 million in fiscal year 2024 compared to $834 million in fiscal year 2023.

President and CEO John Lindsay commented, “The Company delivered on another strong year in fiscal 2024. Our North America Solutions segment was able to maintain its rig count within a relatively narrow-band, accrete market share, and achieve another year of solid economic performance, all despite a roughly 5% decline in the overall U.S. rig count. These results continue to exemplify our relentless focus on creating value for our customers. In our International Solutions segment, fiscal 2024 was historic for a couple of reasons. First, after years of effort and preparation, we won a sizeable tender award with Saudi Aramco and delivered our first rig to Saudi Arabia. Second, we announced our intentions to acquire KCA Deutag, which we believe firmly positions H&P as a global leader in onshore drilling.

“During the fourth fiscal quarter, our NAS rig activity trended as we expected; up by a handful of rigs from the previous quarter and exiting at 151 rigs. Along with the increasing rig count, the NAS segment was also able to sustain its direct margin at a healthy level, which again, is a testament to our ability to deliver value through our drilling solutions approach. Heading into the first fiscal quarter of 2025, we expect our rig count to remain relatively flat as incremental demand for rigs is fairly matched with rigs rolling from existing commitments. Similarly, we expect NAS direct margins to remain relatively flat as well.

“In our International Solutions segment, our first rig in Saudi Arabia has commenced operations and we have exported four more rigs to the country with a goal of exporting the remaining three rigs prior to calendar year-end. Once all of the rigs are accepted and begin operations, we will have eight rigs working for Saudi Aramco in unconventional natural gas plays. The rig count in our other international operations is holding relatively stable and while we are optimistic around current and future tendering opportunities, we do not expect a sizeable shift in that rig count during fiscal 2025.

“In late July of this year, the Company announced its intentions to acquire KCA Deutag for approximately $2.0 billion. This acquisition is transformative in that it accelerates H&P’s international growth strategy by significantly enhancing our presence in key Middle East energy markets. We believe this acquisition will greatly increase H&P’s global scale and diversification, not only in the Middle East, but also by adding a sizeable complementary, and asset-lite offshore management contract business. We have every confidence that the KCA Deutag acquisition will strengthen the Company’s overall cash flow profile with a more diversified and durable revenue stream in the long-term.”

Senior Vice President and CFO Kevin Vann also commented, “During the last few months, the Company has shored up the financing of the KCA Deutag acquisition. We established a $400 million, two-year term loan, raised $1.25 billion in bonds with various maturities of three, five, and ten years with a combined average interest rate of approximately 5%, and more recently sold the Company’s stake in ADNOC Drilling through a private placement that yielded proceeds of approximately $197 million, substantially more than originally anticipated. We continue to work through the customary closing conditions and regulatory approvals for the KCA Deutag acquisition, making good progress, and still expect the transaction to close prior to calendar 2024 year end.

“Moving into fiscal 2025, our planned capital expenditures are expected to range between $290 and $325 million, representing a sizeable sequential decrease from H&P’s fiscal 2024 spend. This planned sequential decrease is driven by a lower maintenance capex per rig in our NAS segment as the Company has substantially completed capital spending related to the deferments that were made during the years impacted by the pandemic. As a consequence, maintenance capex per rig appears to be moving back towards historical levels of approximately $1.0 million per active rig. Another main contributor to the projected decrease in capex is a lower level of international growth capex as fiscal 2024 capex was heavily impacted by spending related to a 7-rig tender award with Saudi Aramco. The anticipated reduction in the planned fiscal 2025 capex relative to fiscal 2024, which we currently believe will be approximately $190 million, is projected to create a significant increase in the Company’s projected free cash flow⁽³⁾. Additionally, as a reminder, in fiscal 2024 we allocated approximately $200 million of free cash flow to a base dividend, a supplemental dividend, and share repurchases. We expect to continue to allocate approximately $100 million to our annual base dividend of $1/share; however, a priority will be placed on using the remaining free cash flow to reduce the debt incurred related to the pending KCA Deutag acquisition.”

John Lindsay concluded, “I am proud of what H&P has achieved this fiscal year and am excited about what we are building for the future. This next year will be one of integrating and becoming a larger and globally diversified company. We look forward to welcoming KCA Deutag’s talented employees to the H&P team, and together we will maintain our shared attentiveness towards safety and to creating value for our customers.”

Operating Segment Results for the Fourth Quarter of Fiscal Year 2024

North America Solutions:

This segment had operating income of $155.7 million compared to operating income of $163.4 million during the previous quarter, a decrease of $7.7 million. The decrease in operating income was primarily attributable to sequentially lower operating revenues and higher depreciation expense associated with walking rig conversions. Direct margin⁽²⁾ decreased by $2.8 million to $274.6 million sequentially.

International Solutions:

This segment had an operating loss of $5.1 million compared to an operating loss of $4.8 million during the previous quarter. Direct margin⁽²⁾ during the fourth fiscal quarter was $0.3 million compared to $0.4 million during the previous quarter. Current quarter results included a $1.1 million foreign currency loss compared to a $2.1 million foreign currency loss in the previous quarter.

Offshore Gulf of Mexico:

This segment had operating income of $4.3 million compared to operating income of $5.0 million during the previous quarter. Direct margin⁽²⁾ for the quarter was $7.1 million compared to $7.6 million in the previous quarter.

Operational Outlook for the First Quarter of Fiscal Year 2025

North America Solutions:

We expect North America Solutions direct margins⁽³⁾ to be between $260-$280 million
We expect to exit the quarter between approximately 147-153 contracted rigs

International Solutions (does not include any amounts related to the pending KCA Deutag acquisition):

We expect International Solutions direct margins⁽³⁾ to be between $(2)-$2 million, exclusive of any foreign exchange gains or losses

Offshore Gulf of Mexico (does not include any amounts related to the pending KCA Deutag acquisition):

We expect Offshore Gulf of Mexico direct margins⁽³⁾ to be between $7-$9 million

Other Estimates for Fiscal Year 2025 (does not include any amounts related to the pending KCA Deutag acquisition)

Gross capital expenditures are expected to be approximately $290 to $325 million;
- approximately 85% expected for North America Solutions, including maintenance per active rig of approximately $1.0 million, planned rig-related equipment upgrades, and six planned walking conversions
- approximately 15% expected for International Solutions and Offshore Gulf of Mexico, primarily for rig maintenance and the remaining spend related to the 7-rig tender award with Saudi Aramco
- ongoing asset sales 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 $45 million in fiscal year 2025
Depreciation for fiscal year 2025 is expected to be approximately $400 million
Research and development expenses for fiscal year 2025 are expected to be roughly $32 million
General and administrative expenses for fiscal year 2025 are expected to be approximately $235 million
Cash taxes for fiscal year 2025 are expected to be approximately $140 to $190 million

Select Items⁽²⁾ Included in Net Income per Diluted Share

Fourth quarter of fiscal year 2024 net income of $0.76 per diluted share included a net impact of $0.00 per share in after-tax gains and losses comprised of the following:

$0.10 of non-cash after-tax gains related to fair market value adjustments to our equity investments
$(0.05) of after-tax losses related to fees associated with acquisition financing
$(0.05) of after-tax losses related to transaction and integration costs

Third quarter of fiscal year 2024 net income of $0.88 per diluted share included $(0.04) 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 transaction and integration costs

Fiscal year 2024 net income of $3.43 per diluted share included $(0.07) in after-tax gains and losses comprised of the following:

$0.16 of non-cash after-tax gains related to 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
$(0.05) of after-tax losses related to fees associated with acquisition financing
$(0.05) of after-tax losses on a Blue Chip Swap transaction to repatriate cash to the U.S. from Argentina
$(0.10) of after-tax losses related to transaction and integration costs

Conference Call

A conference call will be held on Thursday, November 14, 2024 at 11:00 a.m. (ET) with John Lindsay, President and CEO, Kevin Vann, Senior Vice President and CFO, and Dave Wilson, Vice President of Investor Relations, to discuss the Company’s fourth quarter fiscal year 2024 results. Dial-in information for the conference call is (800) 225-9448 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 September 30, 2024, H&P’s fleet included 228 land rigs in the United States, 27 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, future 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 domestic and international markets, and actions by customers, and statements regarding the consummation and expected impact of the KCA Deutag acquisition 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 of 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 first quarter of fiscal 2025 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⁾ Free cash flow, which is considered a non-GAAP metric, is defined as net cash provided by/used in operating activities less capital expenditures. We believe that free cash flow is useful measure to assess and understand the financial performance of the Company. This financial measure 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.

HELMERICH & PAYNE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended									Year Ended
(in thousands, except per share amounts)	September 30,			June 30,			September 30,			September 30,
(in thousands, except per share amounts)	2024			2024			2023			2024			2023
OPERATING REVENUES
Drilling services	$	691,293		$	695,139		$	657,258		$	2,746,128		$	2,862,677
Other		2,500			2,585			2,348			10,479			9,744
		693,793			697,724			659,606			2,756,607			2,872,421
OPERATING COSTS AND EXPENSES
Drilling services operating expenses, excluding depreciation and amortization		408,043			417,028			408,555			1,630,225			1,715,098
Other operating expenses		1,176			1,144			1,160			4,483			4,477
Depreciation and amortization		100,992			97,816			94,593			397,344			382,314
Research and development		8,862			10,555			7,326			40,967			30,046
Selling, general and administrative		66,923			60,190			56,076			244,877			206,657
Asset impairment charges		—			—			—			—			12,097
Acquisition transaction costs		7,452			6,680			—			14,982			—
Gain on reimbursement of drilling equipment		(8,622	)		(9,732	)		(10,233	)		(33,309	)		(48,173	)
Other loss on sale of assets		2,421			2,730			8,410			5,139			8,016
		587,247			586,411			565,887			2,304,708			2,310,532
OPERATING INCOME		106,546			111,313			93,719			451,899			561,889
Other income (expense)
Interest and dividend income		11,979			11,888			7,885			41,168			28,393
Interest expense		(16,124	)		(4,336	)		(4,365	)		(29,093	)		(17,283	)
Gain on investment securities		13,851			389			5,176			13,953			11,299
Other		102			3,134			10,299			3,093			9,081
		9,808			11,075			18,995			29,121			31,490
Income before income taxes		116,354			122,388			112,714			481,020			593,379
Income tax expense		40,878			33,703			35,092			136,855			159,279
NET INCOME	$	75,476		$	88,685		$	77,622		$	344,165		$	434,100

Basic earnings per common share	$	0.75		$	0.89		$	0.78		$	3.43		$	4.18

Diluted earnings per common share	$	0.76		$	0.88		$	0.77		$	3.43		$	4.16

Weighted average shares outstanding:
Basic		98,755			98,752			99,427			98,857			102,447
Diluted		98,995			99,007			99,884			99,067			102,852

HELMERICH & PAYNE, INC.
CONSOLIDATED BALANCE SHEETS
	September 30,			September 30,
(in thousands except share data and share amounts)	2024			2023
ASSETS
Current Assets:
Cash and cash equivalents	$	217,341		$	257,174
Restricted cash		68,902			59,064
Short-term investments		292,919			93,600
Accounts receivable, net of allowance of $2,977 and $2,688, respectively		418,604			404,188
Inventories of materials and supplies, net		117,884			94,227
Prepaid expenses and other, net		76,419			97,727
Assets held-for-sale		—			645
Total current assets		1,192,069			1,006,625

Investments, net		100,567			264,947
Property, plant and equipment, net		3,016,277			2,921,695
Other Noncurrent Assets:
Goodwill		45,653			45,653
Intangible assets, net		54,147			60,575
Operating lease right-of-use asset		67,076			50,400
Restricted cash		1,242,417			—
Other assets, net		63,692			32,061
Total other noncurrent assets		1,472,985			188,689

Total assets	$	5,781,898		$	4,381,956

LIABILITIES & SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	135,084		$	130,852
Dividends payable		25,024			25,194
Accrued liabilities		286,841			262,885
Total current liabilities		446,949			418,931

Noncurrent Liabilities:
Long-term debt, net		1,782,182			545,144
Deferred income taxes		495,481			517,809
Other		140,134			128,129
Total noncurrent liabilities		2,417,797			1,191,082

Shareholders’ Equity:
Common stock, $0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of September 30, 2024 and 2023, and 98,755,412 and 99,426,526 shares outstanding as of September 30, 2024 and 2023, respectively		11,222			11,222
Preferred stock, no par value, 1,000,000 shares authorized, no shares issued		—			—
Additional paid-in capital		518,083			525,369
Retained earnings		2,883,590			2,707,715
Accumulated other comprehensive loss		(6,350	)		(7,981	)
Treasury stock, at cost, 13,467,453 shares and 12,796,339 shares as of September 30, 2024 and 2023, respectively		(489,393	)		(464,382	)
Total shareholders’ equity		2,917,152			2,771,943
Total liabilities and shareholders’ equity	$	5,781,898		$	4,381,956

HELMERICH & PAYNE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
	Year Ended September 30,
(in thousands)	2024			2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	344,165		$	434,100		$	6,953
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		397,344			382,314			403,170
Asset impairment charges		—			12,097			4,363
Amortization of debt discount and debt issuance costs		10,560			1,079			1,200
Loss on extinguishment of debt		—			—			60,083
Stock-based compensation		31,198			32,456			28,032
Gain on investment securities		(13,953	)		(11,299	)		(57,937	)
Gain on reimbursement of drilling equipment		(33,309	)		(48,173	)		(29,443	)
Other (gain) loss on sale of assets		5,139			8,016			(5,432	)
Deferred income tax benefit		(23,191	)		(20,400	)		(28,488	)
Other		5,132			8,979			7,140
Changes in assets and liabilities		(38,422	)		34,513			(155,728	)
Net cash provided by operating activities		684,663			833,682			233,913

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(495,072	)		(395,460	)		(250,894	)
Other capital expenditures related to assets held-for-sale		—			—			(21,645	)
Purchase of short-term investments		(200,653	)		(180,993	)		(165,109	)
Purchase of long-term investments		(9,120	)		(20,748	)		(51,241	)
Proceeds from sale of short-term investments		204,152			195,311			244,728
Proceeds from sale of long-term investments		—			—			22,042
Proceeds from asset sales		46,412			70,085			62,304
Insurance proceeds from involuntary conversion		5,533			9,221			—
Other		(10,000	)		—			(7,500	)
Net cash used in investing activities		(458,748	)		(322,584	)		(167,315	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid		(168,459	)		(201,456	)		(107,395	)
Proceeds from debt issuance		1,247,629			—			—
Debt issuance costs		(22,934	)		—			—
Payments for employee taxes on net settlement of equity awards		(12,177	)		(14,410	)		(5,505	)
Payment of contingent consideration from acquisition of business		(6,250	)		(250	)		(250	)
Payments for early extinguishment of long-term debt		—			—			(487,148	)
Make-whole premium payment		—			—			(56,421	)
Share repurchases		(51,302	)		(247,213	)		(76,999	)
Other		—			(540	)		(587	)
Net cash provided by (used in) financing activities		986,507			(463,869	)		(734,305	)
Net increase (decrease) in cash and cash equivalents and restricted cash		1,212,422			47,229			(667,707	)
Cash and cash equivalents and restricted cash, beginning of period		316,238			269,009			936,716
Cash and cash equivalents and restricted cash, end of period	$	1,528,660		$	316,238		$	269,009