Company Overview - Helmerich & Payne (NYSE: HP) is recognized as one of the largest onshore drilling contractors globally, owning and operating industry-leading rigs [1] Recent Challenges - The company has faced significant penalties due to both macroeconomic factors and company-specific issues [1]

Core Insights - Helmerich & Payne reported $1.02 billion in revenue for the quarter ended March 2025, marking a year-over-year increase of 47.7% [1] - The company's EPS for the same period was $0.02, a significant decrease from $0.86 a year ago, indicating a -96.92% surprise compared to the consensus estimate of $0.65 [1] Financial Performance - The reported revenue exceeded the Zacks Consensus Estimate of $992.67 million by +2.35% [1] - Operating Revenues for International Solutions reached $247.91 million, surpassing the average estimate of $180.77 million, representing a year-over-year change of +440.4% [4] - Operating Revenues for North America Solutions were $599.69 million, slightly below the average estimate of $572.80 million, reflecting a -2.2% year-over-year change [4] - Operating Revenues from Drilling services amounted to $1.01 billion, exceeding the average estimate of $982.62 million, with a year-over-year increase of +47.8% [4] Rig Metrics - Average active rigs in North America Solutions were reported at 149, slightly above the estimated 148 [4] - The number of available rigs in North America Solutions at the end of the period was 224, compared to the estimated 226 [4] - In International Solutions, the number of available rigs was 153, significantly higher than the estimated 111 [4] - Average active rigs in International Solutions were 69, compared to the estimated 47 [4] Market Performance - Helmerich & Payne's shares have returned -4.8% over the past month, contrasting with the Zacks S&P 500 composite's +3.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Viewpoint - Helmerich & Payne, Inc. reported a fiscal second-quarter 2025 adjusted net income of 2 cents per share, significantly missing the Zacks Consensus Estimate of 65 cents, and down from 86 cents in the same quarter last year, primarily due to weakness in the International Solutions segment [1] Financial Performance - Operating revenues reached $1 billion, surpassing the Zacks Consensus Estimate of $993 million, with Drilling Services sales exceeding the consensus by 3% and a 47.7% increase from the previous year [1] - The company distributed approximately $25 million to shareholders as part of its ongoing dividend program and repaid $25 million on its existing $400 million term loan during the second quarter [2] Segmental Performance - **North America Solutions**: Operating revenues of $599.7 million, down 2.2% year over year, with an operating profit of $151.9 million, slightly up from $147.2 million in the prior year [5] - **International Solutions**: Operating revenues of $247.9 million, a significant increase of 439.4% from $45.9 million in the year-ago quarter, beating projections [6] - **Offshore Solutions**: Revenues of $149.1 million, up 475.3% from $25.9 million year over year, but missed projections; operating profit was $17.4 million, up from $78,000 in the previous year [8] Financial Position - The company spent $265.2 million on capital programs in the reported quarter, with $174.8 million in cash and cash equivalents and long-term debt totaling $2.2 billion, resulting in a debt-to-capitalization ratio of 42.3% [9] Guidance - For fiscal Q3 2025, the company expects a direct margin for North America Solutions between $235 million and $260 million, with an average rig count of approximately 143-149 [10] - The International Solutions segment is projected to have a direct margin between $25 million and $35 million, with an average rig count of around 85-91 [11] - Offshore Solutions is anticipated to contribute a direct margin of $22 million to $29 million, with management contracts and contracted platform rigs expected to range from 30 to 35 [11] Cost Synergies - The company expects to achieve over $25 million in expense synergies from the KCA Deutag acquisition, with additional permanent cost savings projected to lower the overall cost structure by approximately $50 million to $75 million [14]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, significantly impacted by the KCA Deutag acquisition [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects total assets of $7.24 billion and liabilities of $4.19 billion, largely due to the KCA Deutag acquisition Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,493,188 | $1,192,069 | | **Property, plant and equipment, net** | $4,485,344 | $3,016,277 | | **Goodwill** | $343,817 | $45,653 | | **Intangible assets, net** | $511,295 | $54,147 | | **Total assets** | **$7,242,263** | **$5,781,898** | | **Total current liabilities** | $887,565 | $446,949 | | **Long-term debt, net** | $2,233,619 | $1,782,182 | | **Total liabilities** | $4,189,900 | $2,864,746 | | **Total shareholders' equity** | $3,052,263 | $2,917,152 | [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Operating revenues increased due to the KCA Deutag acquisition, but net income significantly declined for both three and six-month periods Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Operating Revenues** | $1,016,039 | $687,943 | $1,693,341 | $1,365,090 | | **Operating Income** | $42,163 | $111,167 | $133,049 | $236,405 | | **Net Income Attributable to H&P** | $1,654 | $84,831 | $56,426 | $180,004 | | **Diluted EPS** | $0.01 | $0.84 | $0.56 | $1.79 | [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income attributable to H&P significantly decreased for both the three and six-month periods ended March 31, 2025 Comprehensive Income (in thousands) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $2,986 | $84,831 | $57,758 | $180,004 | | Other Comprehensive Income | $7,051 | $134 | $7,414 | $268 | | **Comprehensive Income Attributable to H&P** | **$8,705** | **$84,965** | **$63,840** | **$180,272** | [Unaudited Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity increased to $3.05 billion, driven by the KCA Deutag acquisition's non-controlling interests, offset by dividends - Total shareholders' equity rose to **$3.05 billion**, primarily due to the recognition of a **$117.3 million** non-controlling interest acquired in the KCA Deutag transaction[12](index=12&type=chunk) - The company declared dividends totaling **$50.4 million** during the six months ended March 31, 2025[12](index=12&type=chunk) - No share repurchases were conducted in the six months ended March 31, 2025, whereas **1.4 million** shares were repurchased for **$51.6 million** in the same period of fiscal 2024[106](index=106&type=chunk)[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flows were significantly impacted by the KCA Deutag acquisition, leading to a net decrease in cash despite debt financing Cash Flow Summary (in thousands) | Activity | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $214,404 | $318,517 | | Net cash used in investing activities | $(1,815,523) | $(224,473) | | Net cash provided by (used in) financing activities | $311,107 | $(148,099) | | **Net decrease in cash, cash equivalents, and restricted cash** | **$(1,283,606)** | **$(54,055)** | - The primary use of cash in investing activities was the **$1.84 billion** payment for the acquisition of KCA Deutag, net of cash acquired[18](index=18&type=chunk) - Financing activities were driven by **$400 million** in proceeds from debt issuance, partially offset by **$50.3 million** in dividend payments[18](index=18&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail financial statements, emphasizing the KCA Deutag acquisition's impact and related accounting policies [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results, highlighting the KCA Deutag acquisition's transformative impact on operations and liquidity - The acquisition of KCA Deutag was completed on January 16, 2025, for approximately **$2.0 billion** in cash, funded by new debt, cash on hand, and monetization of an investment[175](index=175&type=chunk) - The total contract drilling backlog increased to **$7.6 billion** as of March 31, 2025, from **$1.5 billion** at September 30, 2024, primarily due to the acquisition[179](index=179&type=chunk) - The company has experienced contract suspensions for **17 rigs** in Saudi Arabia from the legacy KCA Deutag fleet[177](index=177&type=chunk) - Management anticipates realizing over **$25 million** in expense synergies from the acquisition, with total enterprise cost savings expected to be **$50 to $70 million**[178](index=178&type=chunk) [Results of Operations for the Three Months Ended March 31, 2025 and 2024](index=40&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202025%20and%202024) Operating revenues increased due to the KCA Deutag acquisition, but net income sharply declined from acquisition costs and higher interest Segment Operating Income (Loss) - Three Months Ended March 31 (in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | North America Solutions | $151,943 | $147,224 | | International Solutions | $(34,983) | $4,070 | | Offshore Solutions | $17,375 | $78 | - The KCA Deutag acquisition contributed **$320.6 million** in revenue and resulted in significant increases in direct operating expenses (**$260.7M**), depreciation (**$57.1M**), and SG&A (**$19.6M**) for the quarter[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - Acquisition transaction costs of **$29.9 million** and a **$24.0 million** increase in interest expense significantly impacted profitability in Q2 FY25[191](index=191&type=chunk)[192](index=192&type=chunk) [Results of Operations for the Six Months Ended March 31, 2025 and 2024](index=44&type=section&id=Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20March%2031%2C%202025%20and%202024) Consolidated revenues increased due to the KCA Deutag acquisition, but net income declined significantly due to acquisition costs and higher interest expense Segment Operating Income (Loss) - Six Months Ended March 31 (in thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | North America Solutions | $304,154 | $291,623 | | International Solutions | $(49,467) | $11,354 | | Offshore Solutions | $20,880 | $3,130 | - The KCA Deutag acquisition contributed **$320.6 million** in revenue for the **75 days** post-acquisition within the six-month period[220](index=220&type=chunk) - Acquisition transaction costs for the six-month period were **$40.4 million**, and interest expense increased by **$42.0 million** year-over-year[224](index=224&type=chunk)[225](index=225&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity was significantly altered to fund the KCA Deutag acquisition through new debt and cash, with a **$950 million** credit facility available - Net cash used in investing activities was **$1.82 billion** for the six months ended March 31, 2025, primarily for the KCA Deutag acquisition[253](index=253&type=chunk) - Financing activities provided **$311.1 million**, mainly from a **$400 million** term loan draw and issuance of **$1.25 billion** in senior notes in September 2024[253](index=253&type=chunk)[260](index=260&type=chunk)[262](index=262&type=chunk) - As of March 31, 2025, the company had **$950.0 million** available under its Amended Credit Facility[284](index=284&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks including foreign currency exchange rates, interest rates, and equity price fluctuations - The company is exposed to market risks including foreign currency exchange rates, interest rates on its variable and fixed-rate debt, and price fluctuations in its equity investments[297](index=297&type=chunk)[298](index=298&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with new systems being integrated post-KCA Deutag acquisition - Management concluded that disclosure controls and procedures were effective as of March 31, 2025[297](index=297&type=chunk) - New accounting systems and control processes are being implemented and integrated following the KCA Deutag acquisition[299](index=299&type=chunk) [PART II. OTHER INFORMATION](index=53&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, and other disclosures [Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 13 for details on legal proceedings, primarily concerning the ongoing lawsuit against Venezuela for asset expropriation - For details on legal proceedings, the report refers to Note 13, which discusses the ongoing lawsuit against Venezuela for the 2010 expropriation of assets[300](index=300&type=chunk)[154](index=154&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K[301](index=301&type=chunk) [Other Information](index=53&type=section&id=Item%205.%20Other%20Information) An executive adopted a Rule 10b5-1 trading plan to sell up to 44,157 shares of company common stock - An executive, Cara Hair, adopted a Rule 10b5-1 trading plan to sell up to **44,157** shares of common stock[302](index=302&type=chunk) [Exhibits](index=53&type=section&id=Item%206.%20Exhibits) This section lists documents filed as exhibits with the Form 10-Q, including corporate governance and financial statements - The exhibits filed with the report include corporate governance documents, Sarbanes-Oxley certifications, and XBRL data files[303](index=303&type=chunk)[304](index=304&type=chunk)

Financial Data and Key Metrics Changes - The company generated quarterly revenues of just over $1 billion, with total direct operating costs at $702 million and general and administrative expenses approximately $81 million for the quarter [18][19] - Gross capital expenditures for the second quarter were $159 million, aligning with expectations, while cash flow from operations was $56 million, negatively impacted by nonrecurring transaction-related costs [19][27] - The company maintains cash and short-term investments of $196 million, with an undrawn credit facility of $950 million, ensuring adequate liquidity for operations and debt repayment [27] Business Line Data and Key Metrics Changes - North America Solutions averaged 149 contracted rigs during the quarter, with revenues of $600 million, unchanged from the first quarter, and a direct margin of approximately $266 million, slightly stronger than the previous quarter [20][21] - The International Solutions segment ended the quarter with 76 rigs working and a contracted drilling backlog of approximately $4 billion, generating a direct margin of $27 million, impacted by rig suspensions in Saudi Arabia [21][23] - The Offshore Solutions segment generated $26 million in direct margins, with a current backlog of $2.5 billion, benefiting from the KCAD acquisition [24] Market Data and Key Metrics Changes - The company expects softer oil prices to lower the industry rig count as market volatility overrides potential incremental demand, with over 50% of customers preferring performance-based contracts [10][20] - The average rig count in the U.S. currently stands at about 570 rigs, with potential declines of 20 to 30 rigs if oil prices remain around $60 per barrel [54][56] Company Strategy and Development Direction - The company aims to execute its international growth strategy following the KCAD acquisition, which has positioned it as a global leader with the largest active rig count in the industry [6][15] - The focus is on enhancing value and performance for customers and shareholders, prioritizing safety, drilling efficiency, and reliability [15][16] - The company is also working on realigning cost structures, securing value-add synergies, and reducing debt on its balance sheet [16][27] Management's Comments on Operating Environment and Future Outlook - Management acknowledges headwinds from OPEC production increases and U.S. tariff initiatives, but remains optimistic about long-term demand for oil and gas [8][10] - The integration of legacy KCAD operations is progressing, with expectations for improved results in the upcoming quarters as operational challenges are addressed [12][23] - Management emphasizes the importance of performance-based contracts and technology solutions in navigating current market conditions [20][96] Other Important Information - The company is capturing synergies post-acquisition and has identified additional cost savings, projecting a full-year depreciation expense of around $595 million [25][26] - The company is evaluating broader cost reductions across the enterprise, with a potential run rate savings of $50 to $75 million by 2026 [26] Q&A Session Summary Question: What is the current state of the Saudi market regarding rig suspensions? - Management indicated uncertainty about the completion of the suspension cycle, noting that while some suspensions may be behind them, there is no clear insight into future actions [30][32] Question: How will the dynamics of rig suspensions and legacy HP rigs play out in fiscal Q4? - Management expects a positive inflection in margins for Q4 as the legacy HP rigs come online, offsetting the impact of suspensions [34][36] Question: What is the expected contribution from the eight FlexRigs in Saudi Arabia? - The historical contribution is around $25 million per year, with potential for this number to increase due to operational synergies [43][44] Question: How does the company view the potential for increased performance-based contracts? - Management noted that while the percentage of performance-based contracts has remained stable, there is ongoing effort to push for more such contracts [94][96] Question: Are pricing concessions being made to maintain market share? - Management clarified that while market share has grown, pricing is based on market conditions, and there may be some pricing reductions due to current market headwinds [105][106]

Financial Data and Key Metrics Changes - The company generated quarterly revenues of just over $1 billion, with total direct operating costs at $702 million and general and administrative expenses approximately $81 million for the quarter [16][17]. - Gross capital expenditures for the second quarter were $159 million, aligning with expectations, while cash flow from operations was $56 million, negatively impacted by nonrecurring transaction-related costs and working capital challenges [18][27]. - The company maintains cash and short-term investments of $196 million, with an undrawn credit facility of $950 million, ensuring adequate liquidity for operations and debt repayment [27]. Business Line Data and Key Metrics Changes - In the North America Solutions segment, the average contracted rig count was 149, with revenues of $600 million, unchanged from the first quarter, and a direct margin of approximately $266 million, slightly stronger than the previous quarter [19][20]. - The International Solutions segment ended the quarter with 76 rigs working and a contracted drilling backlog of approximately $4 billion, generating a direct margin of $27 million, significantly impacted by rig suspensions in Saudi Arabia [20][22]. - The Offshore Solutions segment generated $26 million in direct margins, with a current backlog of $2.5 billion, benefiting from the KCAD acquisition [12][20]. Market Data and Key Metrics Changes - The company expects softer oil prices to lower the industry rig count as market volatility overrides potential incremental demand, with over 50% of customers preferring performance-based contracts [8][19]. - The average rig count in the North American Solutions segment is projected to range between 143 and 149 for the third quarter, with a revenue backlog of approximately $700 million [21][22]. Company Strategy and Development Direction - The company aims to execute its international growth strategy following the KCAD acquisition, which has positioned it as a global leader with the largest active rig count in the industry [5][6]. - The focus is on enhancing value and performance for customers and shareholders by prioritizing safety, drilling efficiency, and reliability [13][14]. - The company plans to realign cost structures, secure value-added synergies, and reduce debt on its balance sheet while remaining optimistic about scaling in prolific oil and gas regions [14][27]. Management's Comments on Operating Environment and Future Outlook - Management acknowledges headwinds from OPEC production increases and US tariff initiatives, but remains bullish about the long-term outlook for oil and gas markets, expecting demand to continue increasing [7][8]. - The company is focused on integrating operations and minimizing costs while addressing challenges in Saudi operations, with expectations for improvement in results as integration progresses [11][20]. - Management emphasizes the importance of performance-based contracts and technology solutions in driving efficiency and reliability for customers [9][22]. Other Important Information - The company is capturing synergies post-acquisition and has identified additional cost savings exceeding the original $25 million target by 2026 [26]. - The projected depreciation expense for the full year is around $595 million, with general and administrative expenses expected to be approximately $280 million [25][26]. Q&A Session Summary Question: What is the current state of the Saudi market regarding rig suspensions? - Management indicated uncertainty about the completion of the suspension cycle but noted that historically, rigs have returned to work after suspensions [30][32]. Question: How will the dynamics of rig suspensions and legacy HP rigs affect fiscal Q4? - Management expects a positive inflection in margins for Q4 as legacy HP rigs come online, offsetting the impact of suspensions [34][36]. Question: What is the expected contribution from the eight rigs in Saudi Arabia? - The anticipated contribution is around $25 million annually, with potential for this number to increase due to operational synergies [42][44]. Question: Will there be pressure on day rates in the domestic market due to rig count declines? - Management acknowledged the potential for pricing concessions but emphasized the importance of maintaining margins through performance-based contracts [52][102]. Question: Are there plans to relocate land rigs from Saudi Arabia to other markets? - Management confirmed that relocating rigs to neighboring countries is a possibility if they do not return to work [87][88]. Question: Is there potential for an increase in performance-based contracts? - While the current adoption rate is stable, management is actively pushing for more performance-based contracts as a means to provide value to customers [89][92].

Company Overview - Helmerich & Payne (H&P) is a premier U S driller with 149 contracted rigs[10] - The company has a strong presence in the Middle East with 65 contracted rigs, including 17 rigs that are temporarily suspended or notified to suspend operations in Saudi Arabia[10] - H&P has an asset-light offshore business with 37 offshore rigs and management contracts[10] - The company is a major provider of rigs in Vaca Muerta, indicating growth market exposure[10] Financial Performance and Strategy - H&P is targeting a 50% direct margin with a focus on NAS Direct margin/day[11] - The company repaid $25 million on its existing $400 million term loan during the second fiscal quarter and expects to repay approximately $175 million in calendar year 2025[11] - H&P anticipates realizing $50-$75 million in synergies and other cost savings[22] - Q2 Fiscal Year 2025 Adjusted EBITDA was $241.5 million, with a diluted EPS of $0.01 and adjusted EPS of $0.02[20] - Net capital expenditures for Q2 Fiscal Year 2025 were $144.8 million[20] Market Position and Outlook - Approximately 50% of North America Solutions segment contracts are performance-based[12] - Total liquidity stands at $1.15 billion, comprising cash and an undrawn credit facility, with a debt reduction goal of $400 million in 2025-2026[22] - The company's backlog is approximately $7.6 billion, supported by large investment-grade customers[22]

Core Insights - Helmerich & Payne reported $1.02 billion in revenue for the quarter ended March 2025, a year-over-year increase of 47.7% [1] - The EPS for the same period was $0.02, down from $0.86 a year ago, indicating a significant decline [1] - The revenue exceeded the Zacks Consensus Estimate of $992.67 million by 2.35%, while the EPS fell short of the consensus estimate of $0.65 by 96.92% [1] Financial Performance Metrics - Average active rigs in North America Solutions were 149, slightly above the three-analyst average estimate of 148 [4] - The number of available rigs in North America Solutions was 224, close to the average estimate of 226 [4] - In International Solutions, the number of available rigs was 153, significantly higher than the estimated 111 [4] - Average active rigs in International Solutions reached 69, compared to the average estimate of 47 [4] - Operating Revenues for Other segments were $3.65 million, below the average estimate of $22.47 million, but showed a year-over-year increase of 29.6% [4] - Operating Revenues for International Solutions were $247.91 million, exceeding the average estimate of $180.77 million, with a remarkable year-over-year change of 440.4% [4] - Operating Revenues for North America Solutions were $599.69 million, slightly below the average estimate of $572.80 million, reflecting a year-over-year decrease of 2.2% [4] - Drilling services generated $1.01 billion in revenue, surpassing the average estimate of $982.62 million, with a year-over-year increase of 47.8% [4] - Segment operating income for International Solutions was a loss of $34.98 million, compared to the average estimate of a $4.09 million profit [4] - Segment operating income for North America Solutions was $151.94 million, exceeding the average estimate of $136.91 million [4] Stock Performance - Helmerich & Payne's shares returned +1.2% over the past month, underperforming the Zacks S&P 500 composite's +10.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Company Performance - Helmerich & Payne reported quarterly earnings of $0.02 per share, missing the Zacks Consensus Estimate of $0.65 per share, and down from $0.86 per share a year ago, representing an earnings surprise of -96.92% [1] - The company posted revenues of $1.02 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.35%, compared to year-ago revenues of $687.94 million [2] - Over the last four quarters, Helmerich & Payne has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - Helmerich & Payne shares have lost about 40% since the beginning of the year, while the S&P 500 has declined by 4.7% [3] - The current status of estimate revisions translates into a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the coming quarter is $0.56 on $1.04 billion in revenues, and $2.66 on $3.81 billion in revenues for the current fiscal year [7] - The outlook for the oil and gas drilling industry is currently in the bottom 17% of over 250 Zacks industries, which may impact the performance of Helmerich & Payne's stock [8]

[Operating and Financial Highlights](index=1&type=section&id=Operating%20and%20Financial%20Highlights) Helmerich & Payne reported fiscal second quarter 2025 net income of **$1.7 million** on **$1.0 billion** revenue, with **$242 million** Adjusted EBITDA, highlighted by the KCA Deutag acquisition and debt reduction efforts - Completed the acquisition of KCA Deutag, significantly advancing the company's long-term international growth strategy[4](index=4&type=chunk) - Increased expected cost savings from the KCA Deutag acquisition, now anticipating over **$25 million** in expense synergies and a total cost structure reduction of **$50 to $75 million**[4](index=4&type=chunk) Q2 FY2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Operating Revenues | $1.0 billion | | Net Income | $1.7 million | | Diluted EPS | $0.01 | | Adjusted EBITDA | $242 million | | Net Cash from Operating Activities | $56.0 million | | North America Direct Margin per Day | $19,800 | - The company repaid **$25 million** on its term loan during the quarter and expects to repay a total of approximately **$175 million** in calendar year 2025[4](index=4&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management emphasized the KCA Deutag acquisition as a historic milestone for international expansion, positioning H&P as a leading global drilling company - The KCA Deutag acquisition is a significant achievement, positioning H&P as a leading global drilling company for long-term international expansion[3](index=3&type=chunk) - The North America Solutions segment maintained a steady rig count and achieved margins better than expectations, demonstrating resilience[3](index=3&type=chunk) - The International Solutions segment is facing near-term headwinds from rig suspensions and start-up costs related to Saudi Arabia operations, impacting the Q3 outlook, though sequential improvement is expected[6](index=6&type=chunk) - The company has identified permanent cost savings and synergies from the acquisition, expecting to reduce its overall cost structure by **$50 to $75 million**, with the full impact realized during fiscal year 2026[7](index=7&type=chunk) - Debt reduction remains a key priority, with a **$25 million** repayment on the term loan in Q2 and a target of approximately **$175 million** in repayments by the end of calendar 2025[7](index=7&type=chunk) [Operating Segment Results](index=2&type=section&id=Operating%20Segment%20Results%20for%20the%20Second%20Quarter%20of%20Fiscal%20Year%202025) The second quarter results include 75 days of operations from the newly acquired KCA Deutag, impacting International and Offshore segments [North America Solutions](index=2&type=section&id=North%20America%20Solutions) This segment's performance was stable, with operating income of **$151.9 million**, a slight decrease from **$152.2 million** in the previous quarter North America Solutions Performance (Q2'25 vs Q1'25) | Metric | Q2 FY2025 | Q1 FY2025 | | :--- | :--- | :--- | | Operating Income | $151.9 million | $152.2 million | | Direct Margin | $265.7 million | $265.8 million | [International Solutions](index=2&type=section&id=International%20Solutions) The segment's operating loss increased to **$35.0 million** from **$14.9 million** sequentially, primarily due to start-up costs and rig suspensions in Saudi Arabia International Solutions Performance (Q2'25 vs Q1'25) | Metric | Q2 FY2025 | Q1 FY2025 | | :--- | :--- | :--- | | Operating Loss | $(35.0) million | $(14.9) million | | Direct Margin | $26.9 million | $(6.9) million | [Offshore Solutions](index=3&type=section&id=Offshore%20Solutions) This segment experienced substantial growth, with operating income rising to **$17.4 million** from **$3.5 million** in the previous quarter, primarily due to KCA Deutag's offshore operations Offshore Solutions Performance (Q2'25 vs Q1'25) | Metric | Q2 FY2025 | Q1 FY2025 | | :--- | :--- | :--- | | Operating Income | $17.4 million | $3.5 million | | Direct Margin | $26.2 million | $6.5 million | [Operational Outlook for Q3 FY2025](index=3&type=section&id=Operational%20Outlook%20for%20the%20Third%20Quarter%20of%20Fiscal%20Year%202025) For the third quarter of fiscal 2025, Helmerich & Payne anticipates a modestly lower rig count in North America and provides direct margin guidance for all segments Q3 FY2025 Segment Guidance | Segment | Metric | Guidance | | :--- | :--- | :--- | | **North America Solutions** | Direct Margin | $235 - $260 million | | | Average Rig Count | 143 - 149 rigs | | **International Solutions** | Direct Margin | $25 - $35 million | | | Average Rig Count | 85 - 91 rigs | | **Offshore Solutions** | Direct Margin | $22 - $29 million | | | Avg. Management Contracts | 30 - 35 contracts | [Other Estimates for Fiscal Year 2025](index=3&type=section&id=Other%20Estimates%20for%20Fiscal%20Year%202025) The company updated its full-year fiscal 2025 guidance, now expecting depreciation of approximately **$595 million**, while other key estimates remain unchanged Full-Year Fiscal 2025 Financial Estimates | Metric | Expected Value | | :--- | :--- | | Gross Capital Expenditures | $360 - $395 million | | Depreciation | ~$595 million | | Research & Development Expenses | ~$32 million | | General & Administrative Expenses | ~$280 million | | Cash Taxes | $190 - $240 million | | Interest Expense (Q3-Q4) | ~$50 million | [Interim Financial Information](index=6&type=section&id=Interim%20Financial%20Information) This section presents the unaudited condensed consolidated financial statements as of March 31, 2025, reflecting the significant impact of the KCA Deutag acquisition [Consolidated Statements of Operations](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the second quarter ended March 31, 2025, H&P reported operating revenues of **$1.016 billion**, a substantial increase from **$677.3 million**, though net income fell to **$1.7 million** due to acquisition costs Q2 FY2025 Income Statement Highlights (vs. Q1 FY2025) | (in thousands) | Q2 FY2025 (3 mo. ended Mar 31, '25) | Q1 FY2025 (3 mo. ended Dec 31, '24) | | :--- | :--- | :--- | | Operating Revenues | $1,016,039 | $677,302 | | Operating Income | $42,163 | $90,886 | | Net Income Attributable to H&P | $1,654 | $54,772 | | Diluted EPS | $0.01 | $0.54 | [Consolidated Balance Sheets](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, total assets grew to **$7.24 billion** from **$5.78 billion**, driven by the KCA Deutag acquisition, which also increased total liabilities to **$4.19 billion** Balance Sheet Comparison (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,493,188 | $1,192,069 | | Property, Plant and Equipment, net | $4,485,344 | $3,016,277 | | Total Assets | $7,242,263 | $5,781,898 | | Total Current Liabilities | $887,565 | $446,949 | | Long-term Debt, net | $2,233,619 | $1,782,182 | | Total Shareholders' Equity | $3,052,263 | $2,917,152 | [Consolidated Statements of Cash Flows](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended March 31, 2025, net cash from operating activities was **$214.4 million**, while investing activities used **$1.82 billion**, primarily for the KCA Deutag acquisition Cash Flow Summary (Six Months Ended March 31, 2025) | (in thousands) | Amount | | :--- | :--- | | Net cash provided by operating activities | $214,404 | | Net cash used in investing activities | $(1,815,523) | | Net cash provided by financing activities | $311,107 | | Net decrease in cash | $(1,283,606) | [Segment Reporting](index=9&type=section&id=SEGMENT%20REPORTING) This section provides a detailed financial and operational breakdown for each business segment, highlighting significant revenue growth in International and Offshore segments due to the KCA Deutag acquisition Segment Performance - Q2 FY2025 (in thousands) | Segment | Operating Revenues | Direct Margin (Non-GAAP) | Segment Operating Income (Loss) | | :--- | :--- | :--- | :--- | | North America Solutions | $599,694 | $265,621 | $151,943 | | International Solutions | $247,909 | $26,926 | $(34,983) | | Offshore Solutions | $149,080 | $26,176 | $17,375 | Average Active Rigs (Q2'25 vs Q1'25) | Segment | Q2 FY2025 | Q1 FY2025 | | :--- | :--- | :--- | | North America Solutions | 149 | 149 | | International Solutions | 69 | 18 | | Offshore Solutions | 3 | 3 | [Supplementary Statistical Information](index=11&type=section&id=SUPPLEMENTARY%20STATISTICAL%20INFORMATION) As of May 7, 2025, H&P's fleet included 149 contracted rigs in North America and 88 contracted rigs in its International segment, reflecting expanded operational scale post-acquisition Rig Count and Fleet Status (as of May 7, 2025) | Segment | Total Contracted Rigs | Total Marketable Fleet | | :--- | :--- | :--- | | North American Solutions | 149 | 224 | | International Solutions | 88 | 153 | | Offshore Solutions (Platform Rigs) | 3 | 7 | | Offshore Solutions (Mgmt. Contracts) | 34 | N/A | [Non-GAAP Measurements](index=12&type=section&id=NON-GAAP%20MEASUREMENTS) This section provides reconciliations for non-GAAP financial measures to their most comparable GAAP counterparts, including Adjusted Net Income, Direct Margin, and Adjusted EBITDA [Reconciliation of Adjusted Net Income](index=12&type=section&id=NON-GAAP%20RECONCILIATION%20OF%20SELECT%20ITEMS%20AND%20ADJUSTED%20NET%20INCOME) For the second quarter of fiscal 2025, the company's GAAP net income of **$1.7 million** ($0.01 per share) was adjusted to **$1.9 million**, or **$0.02** per share, after accounting for various items Q2 FY2025 Net Income to Adjusted Net Income Reconciliation (in thousands) | Description | Net Amount | EPS Impact | | :--- | :--- | :--- | | **Net income (GAAP basis)** | **$1,654** | **$0.01** | | (-) Fair market adjustment to equity investments | $16,206 | $0.16 | | (-) Losses related to transaction and integration costs | $(10,665) | $(0.11) | | Other Adjustments | $(5,747) | $(0.06) | | **Adjusted net income (Non-GAAP)** | **$1,860** | **$0.02** | [Reconciliation of Direct Margin](index=13&type=section&id=NON-GAAP%20RECONCILIATION%20OF%20DIRECT%20MARGIN) The report reconciles the non-GAAP direct margin metric to the GAAP-compliant segment operating income (loss), defining direct margin as operating revenues less direct operating expenses - Direct margin is defined as operating revenues less direct operating expenses (both excluding reimbursements) and is used by the company to assess operational performance[44](index=44&type=chunk) [Reconciliation of Adjusted EBITDA](index=14&type=section&id=NON-GAAP%20RECONCILIATION%20OF%20ADJUSTED%20EBITDA) For the second quarter of fiscal 2025, H&P reconciled its net income of **$1.7 million** to an Adjusted EBITDA of **$241.5 million** by adding back income tax, interest, depreciation, and other select items Q2 FY2025 Net Income to Adjusted EBITDA Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | **Net income** | **$1,654** | | Add back: Income tax expense | $41,462 | | Add back: Net Interest & Other Expense | $21,095 | | Add back: Depreciation and amortization | $157,657 | | Add back: Select Items (Transaction costs, etc.) | $41,644 | | **Adjusted EBITDA (Non-GAAP)** | **$241,504** |