Helmerich & Payne(HP) - 2025 Q2 - Quarterly Results

Operating and Financial Highlights 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] - 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] 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] Management Commentary 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] - The North America Solutions segment maintained a steady rig count and achieved margins better than expectations, demonstrating resilience[3] - 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] - 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] - 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] Operating Segment Results The second quarter results include 75 days of operations from the newly acquired KCA Deutag, impacting International and Offshore segments North America Solutions 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 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 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 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 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 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 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 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 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 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 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 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 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 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] Reconciliation of Adjusted EBITDA 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 |