Helmerich & Payne(HP)2023-01-31 21:56Financial Data and Key Metrics Changes - The company reported quarterly revenues of 631 million in the previous quarter, primarily due to higher average pricing in the North America Solutions segment [9][28] - The effective tax rate for Q1 was approximately 25%, consistent with previous guidance [11] - Earnings per diluted share were 0.42 in the previous quarter, with adjusted diluted earnings per share at 0.45 in the fourth quarter [28][28] - Operating cash flow for Q1 was approximately 260 million, up from 9.5 million, with expectations for Q2 margins between 10 million [16] - The International Solutions segment saw an increase to 13 active rigs, with results exceeding guidance due to timing delays in costs associated with the Middle East hub [152] Market Data and Key Metrics Changes - Utilization of the active super-spec fleet is currently over 80%, supporting current pricing levels [22] - The average revenue per day for the North America Solutions segment was reported at 1.1 billion for rigs under term contract in North America [135] Company Strategy and Development Direction - The company remains focused on three strategic objectives: pricing and margin dynamics in North America, international opportunities, and investments in technology and sustainability [4] - Plans to add no more than 16 incremental rigs in North America during fiscal 2023, depending on customer demand [5] - The company is pursuing additional work in the Middle East and expects to establish an operational hub in the latter half of fiscal 2023 [124] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the outlook for 2023, citing strong customer relationships and the value proposition provided by the company [24] - The company anticipates continued upward momentum in financial results, with direct margins per day moving closer to the target level of 50% [130] - Management emphasized the importance of capital discipline and maintaining pricing power in a cyclical industry [122][164] Other Important Information - The company incurred capital expenditures of 425 million to 39.1 million, with total fiscal 2023 repurchases reaching approximately 1.28 million shares for about $60 million [31][42] Q&A Session Summary Question: What is the company's strategy if rig demand decreases by 5% or 10%? - Management indicated that a decline of 20 to 40 rigs would be a small percentage of the overall fleet, and they would focus on pricing rather than adjusting operations significantly [35][164] Question: How does the company view the current appetite for term contracts among E&Ps? - Management noted that the appetite for term contracts remains strong, with a historical focus on maintaining 50% to 60% of contracts as term agreements [72] Question: What is the expected trend for capital expenditures? - The company expects capital expenditures to be lumpy, with timing affecting the spend across quarters [178] Question: How is the company addressing supply chain challenges? - Management highlighted that they have secured supply needs for 2023 and expect costs for materials and supplies to remain stable [74] Question: What is the outlook for performance-based contracts? - Management noted that performance-based contracts are becoming more common, with technology and automation driving increased adoption [99]