HP Helmerich and Payne Inc

Helmerich & Payne, Inc. (NYSE: HP) reported net income of $55 million, or $0.54 per diluted share, from operating revenues of $677 million for the quarter ended December 31, 2024, compared to net income of $75 million, or $0.76 per diluted share, from operating revenues of $694 million for the quarter ended September 30, 2024. The net income per diluted share for the first quarter of fiscal 2025 and fourth quarter of fiscal year 2024 include net $(0.17) and $0.00 of after-tax gains and losses, respectively, comprised of select items(1).

Net cash provided by operating activities was $158 million for the first quarter of fiscal year 2025 compared to net cash provided by operating activities of $169 million for the fourth quarter of fiscal year 2024.

Quarter Highlights

• The Company reported fiscal first quarter Adjusted EBITDA(2) of $199 million
• The North America Solutions ("NAS") segment exited the first quarter of fiscal year 2025 with 148 active rigs and recognized revenue per day of $38,600/day with associated direct margins(3) per day of $19,400 day during the quarter
• Quarterly NAS operating income decreased $4 million to $152 million, from the fourth fiscal quarter of 2024; while direct margins(3) decreased by $9 million to $266 million as revenues decreased by $20 million to $598 million and expenses decreased by $11 million to $333 million
• Completed the exportation of eight super-spec FlexRigs into our Saudi Arabia operations
• On December 11, 2024, the Board of Directors of the Company declared a quarterly cash dividend of $0.25 per share, payable on February 28, 2025 to stockholders of record at the close of business on February 14, 2025

On January 16th, the Company completed the acquisition of KCA Deutag, which establishes H&P as a global leader in onshore drilling and positions the Company for value creation opportunities in the years ahead. Key highlights of the acquisition include:

• An increase in our contracted rig count in key Middle Eastern markets from 11 to 65, with significant sources of cash flows in Saudi Arabia, Oman, Kuwait, and Bahrain
• Substantial growth in our offshore business, with exposure now to stable markets in the North Sea, U.S. Gulf of Mexico, the Caspian Sea, and offshore Canada
• Growth in key customer relationships, with legacy KCA Deutag activity already generating incremental new commercial interest for H&P's leading technology solution offerings
• The addition of approximately $5.5(4) billion in backlog with high-quality, investment-grade customers
• Maintenance of H&P's own strong, investment-grade credit profile, with additional cash flow diversification to provide stability across a variety of market environments
• Enhances geographic footprint, with the Company levered to the most resilient basins in the world

Commentary

President and CEO John Lindsay commented, "During the first fiscal quarter of 2025, the Company executed at a high level on multiple fronts. Our NAS segment maintained its industry leading position with a financial performance and a stable rig count reflecting the value proposition we are providing to customers. In our International Solutions segment, we completed the exportation of eight rigs into Saudi Arabia during the quarter, three of which have spud. We are looking forward to more of those rigs commencing operations in the coming months.

"Crude oil prices and industry rig counts were relatively steady during the quarter, but market sentiment remained cautious in the face of a multitude of economic and geopolitical uncertainties that have materialized over the past several quarters. Contractual churn in our NAS rig count continues to characterize the market, yet we have been successful in managing that volatility by consistently delivering drilling performance and efficiencies for our customers. Looking through the remainder of the second fiscal quarter we expect our NAS rig count to remain relatively flat and exit the quarter in a range of 146-152 active rigs.

"Results in our International Solutions and Offshore Solutions segments were in line with recent quarter norms but are poised to increase significantly in the second fiscal quarter. In addition to the direct margin contributions from KCA Deutag's core Middle East operations, the eight rigs recently delivered into Saudi Arabia are also expected to be a factor in improving this segment's overall direct margins and collectively positions the Company as a leading land driller in the region. In terms of magnitude, KCA Deutag's core Middle East assets drive H&P's rig count in the Middle East from 11 rigs contracted as of December 31, 2024 to approximately 65 rigs contracted at the end of March 31, 2025. In South America, tendering activity has increased and we see the potential to add 1-3 rigs later in calendar 2025. Regarding the Offshore Solutions segment, the addition of approximately 30 management contracts from the KCA Deutag acquisition will meaningfully increase this segment's contribution to the overall Company as well."

Senior Vice President and CFO Kevin Vann also commented, "As John mentioned, we are excited about the recent completion of the KCA Deutag acquisition as it substantially accelerates our international growth, and we are looking forward to the benefits of being a larger and more diversified company. We expect operations in our North America Solutions segment to continue generating significant levels of cash flow. We believe that cash generation combined with a lower capex outlook for fiscal 2025 for H&P's legacy operations relative to fiscal 2024 and the inclusion of KCA Deutag's cash flow from operations, will create free cash flow that we intend to use to service our near-term debt reduction goals as well as continue to provide a competitive dividend to our shareholders."

John Lindsay concluded, “Over the past several months H&P and KCA Deutag employees have been working on integration planning, and now with the acquisition complete that integration is underway. I have been impressed by the hard work of our employees while maintaining our focus on safety. We realize that it may take several months to fully harmonize the new organization, but we believe the leadership and plans are in place to achieve that end. During this time of internal integration, our external focus will remain on our customers. We will continue to have a customer centric approach, putting safety and value creation at the forefront of our operations."

Operating Segment Results for the First Quarter of Fiscal Year 2025

North America Solutions:

This segment had operating income of $152.0 million compared to operating income of $155.7 million during the previous quarter, a decrease of $3.7 million. The decrease in operating income was primarily attributable to lower revenue and fewer revenue days during the quarter; offset to some extent by lower depreciation and selling, general and administrative expenses. Direct margin(3) decreased by $9.1 million to $265.5 million sequentially.

International Solutions:

This segment had an operating loss of $15.2 million compared to an operating loss of $5.1 million during the previous quarter. The decrease in operating income was mainly due to start-up costs associated with our Saudi Arabia operations. Direct margin(3) during the first fiscal quarter was a loss of $7.6 million compared to $0.3 million during the previous quarter. Current quarter results included a $0.9 million foreign currency loss compared to a $1.1 million foreign currency loss in the previous quarter.

Offshore Gulf of Mexico (Note: Naming convention changed to Offshore Solutions effective 1/16/25):

This segment had operating income of $3.5 million compared to operating income of $4.3 million during the previous quarter. Direct margin(3) for the quarter was $6.5 million compared to $7.1 million in the previous quarter.

Select Items(1) Included in Net Income per Diluted Share

First quarter of fiscal year 2025 net income of $0.54 per diluted share included a net impact $(0.17) per share in after-tax gains and losses comprised of the following:

• $0.02 of after-tax gains related to an insurance claim
• $(0.01) of after-tax losses related to fees associated with acquisition financing
• $(0.08) of after-tax losses related to transaction and integration costs
• $(0.10) of non-cash after-tax losses related to fair market value adjustments to equity investments

Fourth quarter of fiscal year 2024 net income of $0.76 per diluted share included a net impact of $0.00 in after-tax gains and losses comprised of the following:

• $0.10 of non-cash after-tax gains related to fair market value adjustments to equity investments
• $(0.05) of after-tax losses related to fees associated with acquisition financing
• $(0.05) of after-tax losses related to transaction and integration costs

Operational Outlook for the Second Quarter of Fiscal Year 2025

The below guidance represents our expectations as of the date of this release.

North America Solutions:

• Direct margins(3) to be between $240-$260 million
• Exit the quarter between approximately 146-152 contracted rigs

International Solutions:

• Direct margin(3) contribution from H&P's legacy operations to be between $(7)-$(3) million, exclusive of any foreign exchange gains or losses
• Direct margin(3) contribution from KCA Deutag's legacy operations to be between $35-$50 million, exclusive of any foreign exchange gains or losses
• Collectively exit the quarter between approximately 88-94 contracted rigs, of which 71-77 are expected to be generating revenue

Offshore Solutions:

• Direct margin(3) contribution from H&P's legacy operations to be between $6-$8 million
• Direct margin(3) contribution from KCA Deutag's legacy operations to be between $18-$25 million
• Collectively exit the quarter between approximately 35-39 management contracts and contracted platform rigs

Other:

• Direct margin(3) contribution from the Company's other operations to be between $4-$6 million

Other Estimates for Fiscal Year 2025 (inclusive of KCA Deutag's legacy operations)

• Gross capital expenditures are now expected to be approximately $360-$395 million;
  • Ongoing asset sales that include reimbursements for lost and damaged tubulars and sales of other used drilling equipment offset a portion of the gross capital expenditures, and are still expected to total approximately $45 million in fiscal year 2025
• Depreciation for H&P's legacy operations fiscal year 2025 is still expected to be approximately $400 million; purchase price accounting for the KCA Deutag acquisition has not been completed
• Research and development expenses for fiscal year 2025 are still expected to be roughly $32 million
• General and administrative expenses for fiscal year 2025 are now expected to be approximately $280 million
• Cash taxes to be paid in fiscal year 2025 are now expected to be approximately $190-$240 million
• Interest expense for the remainder of fiscal year 2025 (Q2-Q4) is expected to be approximately $75 million

Conference Call

A conference call will be held on Thursday, February 6, 2024 at 11:00 a.m. (ET) with John Lindsay, President and CEO, Kevin Vann, Senior Vice President and CFO, and Dave Wilson, Vice President of Investor Relations, to discuss the Company’s first quarter fiscal year 2025 results. Dial-in information for the conference call is (800) 445-7795 for domestic callers or (785) 424-1699 for international callers. The call access code is ‘Helmerich’. You may also listen to the conference call that will be broadcast live over the Internet and can access the Company's earnings presentation by logging on to the Company’s website at http://www.helmerichpayne.com and accessing the corresponding link through the investor relations section by clicking on “Investors” and then clicking on “News and Events - Events & Presentations” to find the event and the link to the webcast and presentation.

About Helmerich & Payne, Inc.

Founded in 1920, Helmerich & Payne, Inc. (H&P) (NYSE: HP) is committed to delivering industry leading levels of drilling productivity and reliability. H&P operates with the highest level of integrity, safety and innovation to deliver superior results for its customers and returns for shareholders. Through its subsidiaries, the Company designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. H&P also develops and implements advanced automation, directional drilling and survey management technologies. At December 31, 2024, H&P's fleet included 225 land rigs in the United States, 30 international land rigs and seven offshore platform rigs. For more information, see H&P online at www.helmerichpayne.com.

Forward-Looking Statements

This release includes “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and such statements are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, including, without limitation, statements regarding the anticipated benefits (including synergies and cash flow and free cash flow accretion) of the acquisition and integration of KCA Deutag, the anticipated impact of the acquisition of KCA Deutag on the Company's business and future financial and operating results, the anticipated timing of expected synergies and returns from the acquisition of KCA Deutag, the anticipated impact of suspended rigs related to the Acquisition, the timing and terms of recommencement of suspended rigs related to the Acquisition, the Company’s business strategy, future financial position, operations outlook, future cash flow, future use of generated cash flow, dividend amounts and timing, amounts of any future dividends, investments, active rig count projections, projected costs and plans, objectives of management for future operations, contract terms, financing and funding, capex spending and budgets, outlook for domestic and international markets, future commodity prices, future customer activity and relationships and the expected impact of the integration of KCA Deutag are forward-looking statements. For information regarding risks and uncertainties associated with the Company’s business, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and other disclosures in the Company’s SEC filings, including but not limited to its annual report on Form 10‑K and quarterly reports on Form 10‑Q. As a result of these factors, Helmerich & Payne, Inc.’s actual results may differ materially from those indicated or implied by such forward-looking statements. Investors are cautioned not to put undue reliance on such statements. We undertake no duty to publicly update or revise any forward-looking statements, whether as a result of new information, changes in internal estimates, expectations or otherwise, except as required under applicable securities laws.

Helmerich & Payne uses its Investor Relations website as a channel of distribution for material company information. Such information is routinely posted and accessible on its Investor Relations website at www.helmerichpayne.com. Information on our website is not part of this release.

 

Note Regarding Trademarks. Helmerich & Payne, Inc. owns or has rights to the use of trademarks, service marks and trade names that it uses in conjunction with the operation of its business. Some of the trademarks that appear in this release or otherwise used by H&P include FlexRig, which may be registered or trademarked in the United States and other jurisdictions.

(1) Select items are considered non-GAAP metrics and are included as a supplemental disclosure as the Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future periods results. Select items are excluded as they are deemed to be outside the Company's core business operations. See Non-GAAP Measurements.

(2) Adjusted EBITDA is considered to be a non-GAAP metric. Adjusted EBITDA is defined as net income (loss) before taxes, depreciation and amortization, gains and losses on asset sales, other income and expense - which includes interest income and interest expense, and excludes the impact of 'select items' which management defines as certain items that do not reflect the ongoing performance of our core business operations. Adjusted EBITDA is included as supplemental disclosure as management uses it to assess and understand current operational performance, especially in analyzing historical trends which are used in forecasting future period results. For this reason, we believe this measure will be useful to information to investors. The presence of non-GAAP metrics is not intended to suggest that such measures should be considered as a substitute for certain GAAP metrics and, given that not all companies define Adjusted EBITDA the same way, this financial measure may not be comparable to similarly titled metrics disclosed by other companies. See Non-GAAP Measurements for a reconciliation of net income to Adjusted EBITDA.

(3) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues (less reimbursements) less direct operating expenses (less reimbursements) and is included as a supplemental disclosure. We believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See Non-GAAP Measurements for a reconciliation of segment operating income(loss) to direct margin. Expected direct margin for the second quarter of fiscal 2025 is provided on a non-GAAP basis only because certain information necessary to calculate the most comparable GAAP measure is unavailable due to the uncertainty and inherent difficulty of predicting the occurrence and the future financial statement impact of certain items. Therefore, as a result of the uncertainty and variability of the nature and amount of future items and adjustments, which could be significant, we are unable to provide a reconciliation of expected direct margin to the most comparable GAAP measure without unreasonable effort.

(4) With the completion of the KCA Deutag acquisition on January 16, 2025, the Company added approximately $5.5 billion to its contract backlog.

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Ended

(in thousands, except per share amounts)

December 31,

 

September 30,

 

December 31,

2024

 

2024

 

2023

OPERATING REVENUES

 

 

 

 

 

Drilling services

$

674,613

 

 

$

691,293

 

 

$

674,565

 

Other

 

2,689

 

 

 

2,500

 

 

 

2,582

 

 

 

677,302

 

 

 

693,793

 

 

 

677,147

 

OPERATING COSTS AND EXPENSES

 

 

 

 

 

Drilling services operating expenses, excluding depreciation and amortization

 

411,857

 

 

 

408,043

 

 

 

403,303

 

Other operating expenses

 

1,156

 

 

 

1,176

 

 

 

1,137

 

Depreciation and amortization

 

99,080

 

 

 

100,992

 

 

 

93,991

 

Research and development

 

9,359

 

 

 

8,862

 

 

 

8,608

 

Selling, general and administrative

 

63,062

 

 

 

66,923

 

 

 

56,577

 

Acquisition transaction costs

 

10,535

 

 

 

7,452

 

 

 

—

 

Gain on reimbursement of drilling equipment

 

(9,403

)

 

 

(8,622

)

 

 

(7,494

)

Other (gain) loss on sale of assets

 

1,673

 

 

 

2,421

 

 

 

(2,443

)

 

 

587,319

 

 

 

587,247

 

 

 

553,679

 

OPERATING INCOME

 

89,983

 

 

 

106,546

 

 

 

123,468

 

Other income (expense)

 

 

 

 

 

Interest and dividend income

 

21,741

 

 

 

11,979

 

 

 

10,734

 

Interest expense

 

(22,298

)

 

 

(16,124

)

 

 

(4,372

)

Gain (loss) on investment securities

 

(13,367

)

 

 

13,851

 

 

 

(4,034

)

Other

 

360

 

 

 

102

 

 

 

(543

)

 

 

(13,564

)

 

 

9,808

 

 

 

1,785

 

Income before income taxes

 

76,419

 

 

 

116,354

 

 

 

125,253

 

Income tax expense

 

21,647

 

 

 

40,878

 

 

 

30,080

 

NET INCOME

$

54,772

 

 

$

75,476

 

 

$

95,173

 

 

 

 

 

 

 

Basic earnings per common share

$

0.55

 

 

$

0.75

 

 

$

0.95

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.54

 

 

$

0.76

 

 

$

0.94

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

Basic

 

98,867

 

 

 

98,755

 

 

 

99,143

 

Diluted

 

99,159

 

 

 

98,995

 

 

 

99,628

 

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

December 31,

 

September 30,

(in thousands except share data and share amounts)

2024

 

2024

ASSETS

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

391,179

 

 

$

217,341

 

Restricted cash

 

73,216

 

 

 

68,902

 

Short-term investments

 

135,317

 

 

 

292,919

 

Accounts receivable, net of allowance of $2,720 and $2,977, respectively

 

426,933

 

 

 

418,604

 

Inventories of materials and supplies, net

 

127,288

 

 

 

117,884

 

Prepaid expenses and other, net

 

70,898

 

 

 

76,419

 

Total current assets

 

1,224,831

 

 

 

1,192,069

 

 

 

 

 

Investments

 

101,652

 

 

 

100,567

 

Property, plant and equipment, net

 

3,009,360

 

 

 

3,016,277

 

Other Noncurrent Assets:

 

 

 

Goodwill

 

45,653

 

 

 

45,653

 

Intangible assets, net

 

52,547

 

 

 

54,147

 

Operating lease right-of-use asset

 

67,510

 

 

 

67,076

 

Restricted cash

 

1,242,124

 

 

 

1,242,417

 

Other assets, net

 

72,944

 

 

 

63,692

 

Total other noncurrent assets

 

1,480,778

 

 

 

1,472,985

 

 

 

 

 

Total assets

$

5,816,621

 

 

$

5,781,898

 

 

 

 

 

LIABILITIES & SHAREHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

148,752

 

 

$

135,084

 

Dividends payable

 

25,154

 

 

 

25,024

 

Accrued liabilities

 

261,807

 

 

 

286,841

 

Total current liabilities

 

435,713

 

 

 

446,949

 

 

 

 

 

Noncurrent Liabilities:

 

 

 

Long-term debt, net

 

1,781,674

 

 

 

1,782,182

 

Deferred income taxes

 

485,682

 

 

 

495,481

 

Other

 

166,771

 

 

 

140,134

 

Total noncurrent liabilities

 

2,434,127

 

 

 

2,417,797

 

 

 

 

 

Shareholders' Equity:

 

 

 

Common stock, $0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of December 31, 2024 and September 30, 2024, and 99,186,843 and 98,755,412 shares outstanding as of December 31, 2024 and September 30, 2024, respectively

 

11,222

 

 

 

11,222

 

Preferred stock, no par value, 1,000,000 shares authorized, no shares issued

 

—

 

 

 

—

 

Additional paid-in capital

 

501,516

 

 

 

518,083

 

Retained earnings

 

2,913,211

 

 

 

2,883,590

 

Accumulated other comprehensive loss

 

(5,987

)

 

 

(6,350

)

Treasury stock, at cost, 13,036,022 shares and 13,467,453 shares as of December 31, 2024 and September 30, 2024, respectively

 

(473,181

)

 

 

(489,393

)

Total shareholders’ equity

 

2,946,781

 

 

 

2,917,152

 

Total liabilities and shareholders' equity

$

5,816,621

 

 

$

5,781,898

 

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Three Months Ended December 31,

(in thousands)

2024

 

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

54,772

 

 

$

95,173

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

99,080

 

 

 

93,991

 

Amortization of debt discount and debt issuance costs

 

2,390

 

 

 

148

 

Stock-based compensation

 

6,851

 

 

 

7,672

 

Loss on investment securities

 

13,367

 

 

 

4,034

 

Gain on reimbursement of drilling equipment

 

(9,403

)

 

 

(7,494

)

Other (gain) loss on sale of assets

 

1,673

 

 

 

(2,443

)

Deferred income tax benefit

 

(9,923

)

 

 

(7,829

)

Other

 

(381

)

 

 

305

 

Changes in assets and liabilities

 

(68

)

 

 

(8,759

)

Net cash provided by operating activities

 

158,358

 

 

 

174,798

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Capital expenditures

 

(106,485

)

 

 

(136,411

)

Purchase of short-term investments

 

(95,956

)

 

 

(46,250

)

Purchase of long-term investments

 

(646

)

 

 

(291

)

Proceeds from sale of short-term investments

 

242,920

 

 

 

57,956

 

Insurance proceeds from involuntary conversion

 

698

 

 

 

—

 

Proceeds from asset sales

 

12,120

 

 

 

11,929

 

Net cash provided by (used in) investing activities

 

52,651

 

 

 

(113,067

)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Dividends paid

 

(25,021

)

 

 

(42,294

)

Debt issuance costs

 

(1,216

)

 

 

—

 

Payments for employee taxes on net settlement of equity awards

 

(6,913

)

 

 

(8,820

)

Payment of contingent consideration from acquisition of business

 

—

 

 

 

(250

)

Share repurchases

 

—

 

 

 

(47,364

)

Net cash used in financing activities

 

(33,150

)

 

 

(98,728

)

Net increase (decrease) in cash and cash equivalents and restricted cash

 

177,859

 

 

 

(36,997

)

Cash and cash equivalents and restricted cash, beginning of period

 

1,528,660

 

 

 

316,238

 

Cash and cash equivalents and restricted cash, end of period

$

1,706,519

 

 

$

279,241

 

HELMERICH & PAYNE, INC.

SEGMENT REPORTING

 

Three Months Ended

 

December 31,

 

September 30,

 

December 31,

(in thousands, except operating statistics)

2024

 

2024

 

2023

NORTH AMERICA SOLUTIONS

 

 

 

 

 

Operating revenues

$

598,145

 

 

$

618,285

 

 

$

594,282

Direct operating expenses

 

332,602

 

 

 

343,651

 

 

 

338,208

 

Depreciation and amortization

 

88,336

 

 

 

92,647

 

 

 

87,019

 

Research and development

 

9,440

 

 

 

8,987

 

 

 

8,689

 

Selling, general and administrative expense

 

15,773

 

 

 

17,305

 

 

 

15,876

 

Segment operating income

$

151,994

 

 

$

155,695

 

 

$

144,490

 

Financial Data and Other Operating Statistics1:

 

 

 

 

 

Direct margin (Non-GAAP)2

$

265,543

 

 

$

274,634

 

 

$

256,074

 

Revenue days3

 

13,708

 

 

 

13,871

 

 

 

13,711

 

Average active rigs4

 

149

 

 

 

151

 

 

 

149

 

Number of active rigs at the end of period5

 

148

 

 

 

151

 

 

 

151

 

Number of available rigs at the end of period

 

225

 

 

 

228

 

 

 

233

 

Reimbursements of "out-of-pocket" expenses

$

68,426

 

 

$

76,148

 

 

$

69,728

 

 

 

 

 

 

 

INTERNATIONAL SOLUTIONS

 

 

 

 

 

Operating revenues

$

47,480

 

 

$

45,463

 

 

$

54,752

 

Direct operating expenses

 

55,114

 

 

 

45,155

 

 

 

44,519

 

Depreciation

 

4,828

 

 

 

3,314

 

 

 

2,334

 

Selling, general and administrative expense

 

2,708

 

 

 

2,091

 

 

 

2,476

 

Segment operating income (loss)

$

(15,170

)

 

$

(5,097

)

 

$

5,423

 

Financial Data and Other Operating Statistics1:

 

 

 

 

 

Direct margin (Non-GAAP)2

$

(7,634

)

 

$

308

 

 

$

10,233

 

Revenue days3

 

1,689

 

 

 

1,336

 

 

 

1,173

 

Average active rigs4

 

18

 

 

 

15

 

 

 

13

 

Number of active rigs at the end of period5

 

20

 

 

 

16

 

 

 

12

 

Number of available rigs at the end of period

 

30

 

 

 

27

 

 

 

22

 

Reimbursements of "out-of-pocket" expenses

$

2,119

 

 

$

1,065

 

 

$

3,384

 

 

 

 

 

 

 

OFFSHORE GULF OF MEXICO

 

 

 

 

 

Operating revenues

$

29,210

 

 

$

27,545

 

 

$

25,531

 

Direct operating expenses

 

22,661

 

 

 

20,468

 

 

 

19,579

 

Depreciation

 

1,980

 

 

 

1,723

 

 

 

2,068

 

Selling, general and administrative expense

 

1,064

 

 

 

1,079

 

 

 

832

 

Segment operating income

$

3,505

 

 

$

4,275

 

 

$

3,052

 

Financial Data and Other Operating Statistics1:

 

 

 

 

 

Direct margin (Non-GAAP)2

$

6,549

 

 

$

7,077

 

 

$

5,952

 

Revenue days3

 

276

 

 

 

276

 

 

 

289

 

Average active rigs4

 

3

 

 

 

3

 

 

 

3

 

Number of active rigs at the end of period5

 

3

 

 

 

3

 

 

 

3

 

Number of available rigs at the end of period

 

7

 

 

 

7

 

 

 

7

 

Reimbursements of "out-of-pocket" expenses

$

7,225

 

 

$

7,287

 

 

$

7,827

 

(1)

These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.

(2)

Direct margin, which is considered a non-GAAP metric, is defined as operating revenues (less reimbursements) less direct operating expenses (less reimbursements) and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.

(3)

Defined as the number of contractual days we recognized revenue for during the period.

(4)

Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e. 92 days for the three months ended December 31, 2024, September 30, 2024, and December 31, 2023.)

(5)

Defined as the number of rigs generating revenue at the applicable end date of the time period.

Segment operating income (loss) for all segments is a non-GAAP financial measure of the Company’s performance, as it excludes acquisition transaction costs, gain on reimbursement of drilling equipment, other gain (loss) on sale of assets, corporate selling, general and administrative expenses and corporate depreciation. The Company considers segment operating income (loss) to be an important supplemental measure of operating performance for presenting trends in the Company’s core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Company’s reportable segments in the aggregate by eliminating items that affect comparability between periods. The Company believes that segment operating income (loss) is useful to investors because it provides a means to evaluate the operating performance of the segments and the Company on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income (loss) has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect the Company’s operating performance in future periods.

The following table reconciles operating income per the information above to income (loss) from continuing operations before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:

 

Three Months Ended

 

December 31,

 

September 30,

 

December 31,

(in thousands)

2024

 

2024

 

2023

Operating income (loss)

 

 

 

 

 

North America Solutions

$

151,994

 

 

$

155,695

 

 

$

144,490

 

International Solutions

 

(15,170

)

 

 

(5,097

)

 

 

5,423

 

Offshore Gulf of Mexico

 

3,505

 

 

 

4,275

 

 

 

3,052

 

Other

 

774

 

 

 

714

 

 

 

(67

)

Eliminations

 

102

 

 

 

2,315

 

 

 

334

 

Segment operating income

$

141,205

 

 

$

157,902

 

 

$

153,232

 

Acquisition transaction costs

 

(10,535

)

 

 

(7,452

)

 

 

—

 

Gain on reimbursement of drilling equipment

 

9,403

 

 

 

8,622

 

 

 

7,494

 

Other gain (loss) on sale of assets

 

(1,673

)

 

 

(2,421

)

 

 

2,443

 

Corporate selling, general and administrative costs and corporate depreciation

 

(48,417

)

 

 

(50,105

)

 

 

(39,701

)

Operating income

$

89,983

 

 

$

106,546

 

 

$

123,468

 

Other income (expense):

 

 

 

 

 

Interest and dividend income

 

21,741

 

 

 

11,979

 

 

 

10,734

 

Interest expense

 

(22,298

)

 

 

(16,124

)

 

 

(4,372

)

Gain (loss) on investment securities

 

(13,367

)

 

 

13,851

 

 

 

(4,034

)

Other

 

360

 

 

 

102

 

 

 

(543

)

Total unallocated amounts

 

(13,564

)

 

 

9,808

 

 

 

1,785

 

Income before income taxes

$

76,419

 

 

$

116,354

 

 

$

125,253

 

SUPPLEMENTARY STATISTICAL INFORMATION

Unaudited

 

 

 

 

 

 

 

 

H&P GLOBAL LAND RIG COUNTS, MARKETABLE FLEET

& MANAGEMENT CONTRACT STATISTICS

 

 

February 5,

 

December 31,

 

September 30,

 

Q1F25

 

2025

 

2024

 

2024

 

Average

North American Solutions

 

 

 

 

 

 

 

Term Contract Rigs

87

 

87

 

88

 

86

Spot Contract Rigs

61

 

61

 

63

 

63

Total Contracted Rigs

148

 

148

 

151

 

149

Idle or Other Rigs

77

 

77

 

77

 

77

Total Marketable Fleet

225

 

225

 

228

 

226

 

 

 

 

 

 

 

 

International Solutions

 

 

 

 

 

 

 

Total Contracted Rigs(1)

89

 

20

 

16

 

18

Idle or Other Rigs

64

 

10

 

11

 

11

Total Marketable Fleet

153

 

30

 

27

 

29

 

 

 

 

 

 

 

 

Offshore Solutions

 

 

 

 

 

 

 

Total Platform Rigs

3

 

3

 

3

 

3

Idle or Other Rigs

4

 

4

 

4

 

4

Total Fleet

7

 

7

 

7

 

7

 

 

 

 

 

 

 

 

Total Management Contracts

34

 

3

 

3

 

3

(1)

Includes 17 rigs, 5 rigs, and 5 rigs as February 5, 2025, December 31, 2024, and September 30, 2024, respectively that are contracted but not earning revenue.

NON-GAAP MEASUREMENTS

 

 

NON-GAAP RECONCILIATION OF SELECT ITEMS AND ADJUSTED NET INCOME(**)

 

 

Three Months Ended December 31, 2024

(in thousands, except per share data)

Pretax

 

Tax Impact

 

Net

 

EPS

Net income (GAAP basis)

 

 

 

 

$

54,772

 

 

$

0.54

 

(-) Gains related to an insurance claim

$

2,366

 

 

$

656

 

 

$

1,710

 

 

$

0.02

 

(-) Losses related to fees associated with acquisition financing

$

(1,468

)

 

$

(407

)

 

$

(1,061

)

 

$

(0.01

)

(-) Losses related to transaction and integration costs

$

(10,535

)

 

$

(2,918

)

 

$

(7,617

)

 

$

(0.08

)

(-) Fair market adjustment to equity investments

$

(13,427

)

 

$

(3,719

)

 

$

(9,708

)

 

$

(0.10

)

Adjusted net income

 

 

 

 

$

71,448

 

 

$

0.71

 

 

 

Three Months Ended September 30, 2024

(in thousands, except per share data)

Pretax

 

Tax Impact

 

Net

 

EPS

Net income (GAAP basis)

 

 

 

 

$

75,476

 

 

$

0.76

 

(-) Fair market adjustment to equity investments

$

13,764

 

 

$

4,073

 

 

$

9,691

 

 

$

0.10

 

(-) Fees associated with the acquisition financing

$

(7,167

)

 

$

(2,043

)

 

$

(5,124

)

 

$

(0.05

)

(-) Expenses related to transaction and integration costs

$

(7,452

)

 

$

(2,287

)

 

$

(5,165

)

 

$

(0.05

)

Adjusted net income

 

 

 

 

$

76,074

 

 

$

0.76

 

(**)The Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future period results. Select items are excluded as they are deemed to be outside of the Company's core business operations.

NON-GAAP RECONCILIATION OF DIRECT MARGIN

Direct margin is considered a non-GAAP metric. We define "direct margin" as operating revenues (less reimbursements) less direct operating expenses (less reimbursements). Direct margin is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. Direct margin is not a substitute for financial measures prepared in accordance with GAAP and should therefore be considered only as supplemental to such GAAP financial measures.

The following table reconciles direct margin to segment operating income (loss), which we believe is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to direct margin.

 

Three Months Ended

 

December 31,

 

September 30,

 

December 31,

(in thousands)

2024

 

2024

 

2023

NORTH AMERICA SOLUTIONS

 

 

 

 

 

Segment operating income

$

151,994

 

 

$

155,695

 

 

$

144,490

Add back:

 

 

 

 

 

Depreciation and amortization

 

88,336

 

 

 

92,647

 

 

 

87,019

 

Research and development

 

9,440

 

 

 

8,987

 

 

 

8,689

 

Selling, general and administrative expense

 

15,773

 

 

 

17,305

 

 

 

15,876

 

Direct margin (Non-GAAP)

$

265,543

 

 

$

274,634

 

 

$

256,074

 

 

 

 

 

 

 

INTERNATIONAL SOLUTIONS

 

 

 

 

 

Segment operating income (loss)

$

(15,170

)

 

$

(5,097

)

 

$

5,423

 

Add back:

 

 

 

 

 

Depreciation and amortization

 

4,828

 

 

 

3,314

 

 

 

2,334

 

Selling, general and administrative expense

 

2,708

 

 

 

2,091

 

 

 

2,476

 

Direct margin (Non-GAAP)

$

(7,634

)

 

$

308

 

 

$

10,233

 

 

 

 

 

 

 

OFFSHORE GULF OF MEXICO

 

 

 

 

 

Segment operating income

$

3,505

 

 

$

4,275

 

 

$

3,052

 

Add back:

 

 

 

 

 

Depreciation and amortization

 

1,980

 

 

 

1,723

 

 

 

2,068

 

Selling, general and administrative expense

 

1,064

 

 

 

1,079

 

 

 

832

 

Direct margin (Non-GAAP)

$

6,549

 

 

$

7,077

 

 

$

5,952

 

NON-GAAP RECONCILIATION OF ADJUSTED EBITDA

Adjusted EBITDA and 'Select Items' are considered to be non-GAAP metrics. Adjusted EBITDA is defined as net income(loss) before taxes, depreciation and amortization, gains and losses on asset sales, other income and expense - which includes interest income and interest expense, and excludes the impact of 'select items' which management defines as certain items that do not reflect the ongoing performance of our core business operations. These metrics are included as supplemental disclosures as management uses them to assess and understand current operational performance, especially in analyzing historical trends which are used in forecasting future period results. For this reason, we believe this measure will be useful to information to investors. The presence of non-GAAP metrics is not intended to suggest that such measures should be considered as a substitute for certain GAAP metrics and, given that not all companies define Adjusted EBITDA the same way, this financial measure may not be comparable to similarly titled metrics disclosed by other companies.

 

Three Months Ended

 

December 31,

 

September 30,

 

December 31,

(in thousands)

2024

 

2024

 

2023

Net income

$

54,772

 

 

$

75,476

 

 

$

95,173

 

Add back:

 

 

 

 

 

Income tax expense

 

21,647

 

 

 

40,878

 

 

 

30,080

 

Other income (expense)

 

 

 

 

 

Interest and dividend income

 

(21,741

)

 

 

(11,979

)

 

 

(10,734

)

Interest expense

 

22,298

 

 

 

16,124

 

 

 

4,372

 

(Gain) loss on investment securities

 

13,367

 

 

 

(13,851

)

 

 

4,034

 

Other

 

(360

)

 

 

(102

)

 

 

543

 

Depreciation and amortization

 

99,080

 

 

 

100,992

 

 

 

93,991

 

Other (gain) loss on sale of assets

 

1,673

 

 

 

2,421

 

 

 

(2,443

)

Excluding Select Items (Non-GAAP)

 

 

 

 

 

Expenses related to transaction and integration costs

 

10,535

 

 

 

7,452

 

 

 

—

 

Gains related to an insurance claim

 

(2,366

)

 

 

—

 

 

 

—

 

Adjusted EBITDA (Non-GAAP)

$

198,905

 

 

$

217,411

 

 

$

215,016

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250205447985/en/

Dave Wilson, Vice President of Investor Relations investor.relations@hpinc.com (918) 588‑5190