Helmerich & Payne(HP) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The unaudited financial statements show a significant year-over-year revenue increase and a return to profitability Unaudited Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets | (in thousands) | March 31, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Total current assets | $1,004,451 | $1,002,944 | | Total assets | $4,365,733 | $4,355,531 | | Total current liabilities | $413,721 | $394,810 | | Total liabilities | $1,609,927 | $1,590,059 | | Total shareholders' equity | $2,755,806 | $2,765,472 | - Total assets remained relatively stable, increasing slightly to $4.37 billion as of March 31, 2023[7] - Cash and cash equivalents decreased from $232.1 million to $159.7 million over the six-month period[7] Unaudited Condensed Consolidated Statements of Operations Three Months Ended March 31 | (in thousands, except per share) | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Operating Revenues | $769,222 | $467,597 | | Operating Income (Loss) | $175,205 | $(22,617) | | Net Income (Loss) | $164,040 | $(4,976) | | Diluted EPS | $1.55 | $(0.05) | Six Months Ended March 31 | (in thousands, except per share) | Six Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Operating Revenues | $1,488,859 | $877,379 | | Operating Income (Loss) | $319,428 | $(65,228) | | Net Income (Loss) | $261,185 | $(56,338) | | Diluted EPS | $2.46 | $(0.53) | - The company experienced a significant turnaround, with operating revenues for the three and six months ended March 31, 2023 increasing by 64.5% and 69.7% year-over-year, respectively[8] - This growth led to substantial net income compared to net losses in the prior-year periods[8] Unaudited Condensed Consolidated Statements of Shareholders' Equity - For the six months ended March 31, 2023, the company declared dividends totaling $126.7 million[10] - The company repurchased 3.4 million shares for an aggregate cost of $145.8 million during the six months ended March 31, 2023[10][57] Unaudited Condensed Consolidated Statements of Cash Flows Six Months Ended March 31 | (in thousands) | Six Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $326,254 | $18,896 | | Net cash used in investing activities | $(119,206) | $(45,321) | | Net cash used in financing activities | $(263,154) | $(680,915) | | Net decrease in cash | $(56,106) | $(707,340) | - Cash flow from operations increased dramatically to $326.3 million for the six-month period, driven by higher net income[12] - Cash used in financing activities decreased significantly year-over-year, as the prior period included a $487.1 million payment for early debt extinguishment[12] Notes to Unaudited Condensed Consolidated Financial Statements - The company's operations are organized into three segments: North America Solutions, Offshore Gulf of Mexico, and International Solutions[15][27] - The company recorded non-cash impairment charges of $12.1 million related to the decommissioning of several rigs and equipment[34][160] - As of March 31, 2023, the company had $542.7 million in long-term debt and an undrawn $750.0 million revolving credit facility[43][49] - The company's contract backlog was approximately $1.3 billion as of March 31, 2023[63] - The company is appealing a legal judgment of $60.0 million from a 2018 car accident involving an employee[100] Management's Discussion and Analysis of Financial Condition and Results of Operations Performance was driven by increased rig activity and pricing, with a constructive outlook despite some market volatility Executive Summary & Market Outlook - As of March 31, 2023, the company had 198 active contracted rigs out of a total fleet of 262[116] - There is strong customer preference for super-spec rigs, where H&P is the largest provider[120] - Recent weakness in natural gas prices has led some customers to reduce activity, lowering the active rig count forecast for fiscal 2023[123][124] - Despite the lower activity outlook, the company expects a higher average revenue per day in the latter half of fiscal 2023[124] Results of Operations Consolidated Results (Three Months) | (in millions) | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Operating Revenues | $769.2 | $467.6 | | Net Income (Loss) | $164.0 | $(5.0) | Consolidated Results (Six Months) | (in millions) | Six Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Operating Revenues | $1,488.9 | $877.4 | | Net Income (Loss) | $261.2 | $(56.3) | - The North America Solutions segment was the primary driver of growth, with revenues increasing 65.3% YoY for the quarter[138] - The International Solutions segment also saw significant growth, with revenues more than doubling and average active rigs increasing from 7 to 14 YoY[149][152] Liquidity and Capital Resources - Sources of liquidity include $159.7 million in cash, $85.1 million in short-term investments, and an undrawn $750.0 million credit facility[183][186] - Cash flow from operations for the six months was $326.3 million, a substantial increase from $18.9 million in the prior-year period[187] - Capital expenditures for the six-month period were $181.5 million, up from $104.5 million year-over-year[188] - The company returned significant capital to shareholders, paying $102.9 million in dividends and repurchasing $145.8 million of its stock[192][194] Quantitative and Qualitative Disclosures about Market Risk This section refers to other report sections for detailed disclosures on market, interest rate, and currency risks - The company directs investors to other sections for information on market risks, including equity price, interest rate, and foreign currency risk[219] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material internal control changes - Based on an evaluation, management concluded that the company's disclosure controls and procedures were effective as of the end of the period[216] - No material changes to internal controls over financial reporting occurred during the most recent fiscal quarter[217] PART II. OTHER INFORMATION Legal Proceedings This section refers to Note 12 of the financial statements for information regarding legal proceedings - For information regarding legal proceedings, the report refers to Note 12—Commitments and Contingencies in the financial statements[218] Risk Factors No material changes to risk factors previously disclosed in the 2022 Annual Report on Form 10-K are reported - There have been no material changes in the risk factors from those disclosed in the company's 2022 Annual Report on Form 10-K[220] Unregistered Sales of Equity Securities and Use of Proceeds The company details its repurchase of 2.543 million shares during the quarter under its authorized plan Share Repurchase Activity (Q2 2023) | Period (2023) | Total Shares Purchased (thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | January | 491 | $47.34 | | February | 870 | $43.13 | | March | 1,182 | $38.22 | | Total | 2,543 | N/A | - In December 2022, the Board of Directors increased the maximum number of shares authorized for repurchase in calendar year 2023 to five million common shares[221] Exhibits This section lists filed exhibits, including CEO/CFO certifications and financial statements in Inline XBRL format - The exhibits include certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[223]