Helmerich & Payne(US:HP)2025-05-09 20:26PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis Financial Statements This section presents the unaudited condensed consolidated financial statements, significantly impacted by the KCA Deutag acquisition Unaudited Condensed Consolidated Balance Sheets 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 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 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 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 transaction12 - The company declared dividends totaling $50.4 million during the six months ended March 31, 202512 - 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 202410614 Unaudited Condensed Consolidated Statements of Cash Flows 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 acquired18 - Financing activities were driven by $400 million in proceeds from debt issuance, partially offset by $50.3 million in dividend payments18 Notes to Unaudited Condensed Consolidated Financial Statements 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 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 investment175 - 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 acquisition179 - The company has experienced contract suspensions for 17 rigs in Saudi Arabia from the legacy KCA Deutag fleet177 - Management anticipates realizing over $25 million in expense synergies from the acquisition, with total enterprise cost savings expected to be $50 to $70 million178 Results of Operations for the Three Months Ended March 31, 2025 and 2024 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 quarter187188189190 - Acquisition transaction costs of $29.9 million and a $24.0 million increase in interest expense significantly impacted profitability in Q2 FY25191192 Results of Operations for the Six Months Ended March 31, 2025 and 2024 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 period220 - Acquisition transaction costs for the six-month period were $40.4 million, and interest expense increased by $42.0 million year-over-year224225 Liquidity and Capital Resources 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 acquisition253 - 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 2024253260262 - As of March 31, 2025, the company had $950.0 million available under its Amended Credit Facility284 Quantitative and Qualitative Disclosures about Market Risk 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 investments297298 Controls and Procedures 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, 2025297 - New accounting systems and control processes are being implemented and integrated following the KCA Deutag acquisition299 PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, and other disclosures Legal Proceedings 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 assets300154 Risk Factors 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-K301 Other Information 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 stock302 Exhibits 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 files303304