Helmerich & Payne(US:HP)2024-04-24 20:24Drilling Rig Fleet and Contract Backlog - The company's drilling rig fleet totaled 262 rigs as of March 31, 2024, with 233 in North America Solutions, 22 in International Solutions, and 7 in Offshore Gulf of Mexico[124] - The company had 166 active contracted rigs at the end of Q2 FY24, with 102 under fixed-term contracts and 64 working well-to-well[124] - The company's contract drilling backlog increased to $1.7 billion as of March 31, 2024, up from $1.4 billion in September 2023, with 66.6% expected to be fulfilled in FY25 and beyond[132] Financial Performance - The company reported net income of $84.8 million ($0.84 per diluted share) for Q2 FY24, compared to $164.0 million ($1.55 per diluted share) in Q2 FY23[135] - Consolidated operating revenues decreased to $687.9 million in Q2 FY24 from $769.2 million in Q2 FY23, primarily due to lower activity levels in North America Solutions and Offshore Gulf of Mexico segments[136] - Direct operating expenses decreased to $402.9 million in Q2 FY24 from $450.3 million in Q2 FY23, primarily due to lower activity levels[137] - Selling, general, and administrative expenses increased to $62.0 million in Q2 FY24 from $52.9 million in Q2 FY23, primarily due to a $4.8 million increase in labor-related expenses[138] - The company recognized a $3.7 million gain on investment securities in Q2 FY24, primarily from an $8.3 million gain on ADNOC Drilling equity investment[139] - Income tax expense decreased to $32.2 million in Q2 FY24 from $51.1 million in Q2 FY23, with a statutory federal income tax rate of 21.0%[140] - Consolidated operating revenues decreased to $1.4 billion in the six months ended March 31, 2024 compared to $1.5 billion in the same period in 2023, primarily driven by lower activity levels in North America Solutions and Offshore Gulf of Mexico segments[163] - Consolidated direct operating expenses decreased to $807.3 million in the six months ended March 31, 2024 compared to $879.7 million in the same period in 2023, primarily due to lower activity levels[164] - Selling, general and administrative expenses increased to $118.6 million in the six months ended March 31, 2024 compared to $101.3 million in the same period in 2023, primarily due to a $11.9 million increase in labor and labor-related expenses[165] - The company recognized an aggregate loss of $0.3 million on investment securities in the six months ended March 31, 2024, primarily due to a $2.1 million loss on the equity investment in ADNOC Drilling[167] - Income tax expense decreased to $62.3 million in the six months ended March 31, 2024 compared to $83.5 million in the same period in 2023, including a discrete tax benefit of $0.9 million related to equity compensation[168] Segment Performance - North America Solutions operating revenues decreased by 9.2% to $613.3 million in Q1 2024 compared to $675.8 million in Q1 2023, primarily due to a 14.3% decrease in activity levels[144] - North America Solutions direct operating expenses decreased by 9.9% to $341.9 million in Q1 2024 compared to $379.6 million in Q1 2023, driven by lower activity levels[145] - North America Solutions research and development expenses increased by 48.8% to $13.0 million in Q1 2024 compared to $8.7 million in Q1 2023, driven by an associated asset acquisition[147] - International Solutions operating revenues decreased by 17.9% to $45.9 million in Q1 2024 compared to $55.9 million in Q1 2023, primarily due to a 17.8% decrease in activity levels[152] - Offshore Gulf of Mexico operating revenues decreased by 25.9% to $25.9 million in Q1 2024 compared to $35.0 million in Q1 2023, primarily due to a 24.2% decrease in activity[157] - North America Solutions operating revenues decreased by 7.3% to $1.2 billion in the six months ended March 31, 2024, compared to $1.3 billion in the same period in 2023[170] - Research and development expenses increased by 37.3% to $21.7 million in the six months ended March 31, 2024, driven by an associated asset acquisition[170] - International Solutions operating revenues decreased by 9.1% to $100.6 million in the six months ended March 31, 2024, compared to $110.7 million in the same period in 2023[179] - Offshore Gulf of Mexico operating revenues decreased by 26.7% to $51.4 million in the six months ended March 31, 2024, compared to $70.1 million in the same period in 2023[184] - Other Operations operating revenues decreased by 7.1% to $36.4 million in the six months ended March 31, 2024, compared to $39.1 million in the same period in 2023[188] - North America Solutions average active rigs decreased by 15.8% to 152 in the six months ended March 31, 2024, compared to 182 in the same period in 2023[170] - International Solutions average active rigs decreased by 8.0% to 12 in the six months ended March 31, 2024, compared to 13 in the same period in 2023[179] - Offshore Gulf of Mexico average active rigs decreased by 22.8% to 3 in the six months ended March 31, 2024, compared to 4 in the same period in 2023[184] - North America Solutions direct margin (Non-GAAP) decreased by 5.2% to $527.5 million in the six months ended March 31, 2024, compared to $556.5 million in the same period in 2023[170] - International Solutions direct margin (Non-GAAP) decreased by 17.1% to $18.6 million in the six months ended March 31, 2024, compared to $22.4 million in the same period in 2023[179] - North America Solutions segment operating income for Q1 2024 was $147,130 thousand, a decrease of 19.2% compared to $182,149 thousand in Q1 2023[223] - International Solutions segment operating income for Q1 2024 was $3,569 thousand, a decrease of 9.8% compared to $3,955 thousand in Q1 2023[223] - Offshore Gulf of Mexico segment operating income for Q1 2024 was $78 thousand, a significant decrease of 98.8% compared to $6,687 thousand in Q1 2023[223] - North America Solutions direct margin (Non-GAAP) for Q1 2024 was $271,401 thousand, a decrease of 8.4% compared to $296,169 thousand in Q1 2023[223] - International Solutions direct margin (Non-GAAP) for Q1 2024 was $8,364 thousand, a decrease of 2.9% compared to $8,615 thousand in Q1 2023[223] - Offshore Gulf of Mexico direct margin (Non-GAAP) for Q1 2024 was $2,903 thousand, a decrease of 68.8% compared to $9,291 thousand in Q1 2023[223] - North America Solutions segment operating income for the six months ended March 31, 2024 was $291,620 thousand, a decrease of 10.9% compared to $327,446 thousand for the same period in 2023[223] - International Solutions segment operating income for the six months ended March 31, 2024 was $8,992 thousand, an increase of 62.6% compared to $5,529 thousand for the same period in 2023[223] - Offshore Gulf of Mexico segment operating income for the six months ended March 31, 2024 was $3,130 thousand, a decrease of 76.7% compared to $13,433 thousand for the same period in 2023[223] Cash Flow and Capital Expenditures - Cash and cash equivalents as of March 31, 2024, were $193.6 million, with restricted cash of $68.5 million and short-term investments of $83.4 million[194] - Net cash provided by operating activities for the six months ended March 31, 2024, was $318.5 million, compared to $326.3 million in the same period in 2023[194] - Operating net working capital (non-GAAP) increased to $262.1 million as of March 31, 2024, from $239.6 million as of September 30, 2023[195] - Capital expenditures for the six months ended March 31, 2024, were $254.7 million, up from $181.5 million in the same period in 2023[197] - Net sales of short-term investments for the six months ended March 31, 2024, were $12.4 million, down from $33.3 million in the same period in 2023[198] - Dividends paid during the six months ended March 31, 2024, totaled $84.4 million, compared to $102.9 million in the same period in 2023[202] - The company repurchased 1.4 million common shares at an aggregate cost of $51.6 million during the six months ended March 31, 2024[203] Debt and Tax Liabilities - The 2018 Credit Facility has $750.0 million in aggregate availability, with no borrowings or letters of credit outstanding as of March 31, 2024[208] - The long-term debt to total capitalization ratio was 16.4% at March 31, 2024, compared to 16.6% at September 30, 2023[215] - A deferred tax liability of $502.1 million was recorded as of March 31, 2024, primarily related to temporary differences in property, plant, and equipment[212] Customer Capital Spending and Market Outlook - The company expects customer capital spending in 2024 to remain flat or decrease by approximately 5% compared to 2023[125] Internal Controls and Reporting - The company's disclosure controls and procedures were effective as of March 31, 2024, ensuring timely and accurate reporting of required information[225]