Helmerich & Payne, Inc. Announces Fiscal Fourth Quarter & Fiscal Year Results

• H&P announced its fiscal 2023 Supplemental Shareholder Return Plan⁽¹⁾, which is currently projected to provide nearly $210 million combined in established base and supplemental dividends in fiscal year 2023
• The Company reported fiscal fourth quarter and fiscal year net income of $0.42 and $0.05 per diluted share respectively, including select items⁽²⁾ of $(0.03) and $(0.05) per diluted share respectively
• Quarterly North America Solutions operating income increased $35 million sequentially, while direct margins⁽³⁾ increased $36 million to approximately $203 million, as revenues increased by $66 million to $552 million and expenses increased by $30 million to $349 million
• The North America Solutions segment exited the fourth quarter of fiscal year 2022 with 176 active rigs reflecting an increase in revenue per day of approximately $3,000/day or 11% to $29,500/day on a sequential basis, while direct margins⁽³⁾ per day increased by roughly $2,000/day or almost 20% to $12,600/day
• H&P’s North America Solutions segment anticipates exiting the first quarter of fiscal year 2023 between 181-186 active rigs with expected direct margins⁽³⁾ per day increasing by another 20% on a sequential basis and expects to reach a maximum active rig count for fiscal year 2023 of 192 rigs by March 31, 2023
• H&P set its fiscal year 2023 capex budget to range between $425 and $475 million
• On September 7, 2022, the Board of Directors of the Company declared a quarterly base cash dividend of $0.25 per share, and on October 17, 2022 declared a supplemental cash dividend of $0.235 per share; both dividends are payable on December 1, 2022 to stockholders of record at the close of business on November 15, 2022

TULSA, Okla.–(BUSINESS WIRE)–Helmerich & Payne, Inc. (NYSE: HP) reported net income of $46 million, or $0.42 per diluted share, from operating revenues of $631 million for the quarter ended September 30, 2022, compared to net income of $18 million, or $0.16 per diluted share, from operating revenues of $550 million for the quarter ended June 30, 2022. The net income per diluted share for the fourth and third quarters of fiscal year 2022 include $(0.03) and $(0.11) of after-tax losses, respectively, comprised of select items⁽²⁾. For the fourth quarter of fiscal year 2022, select items⁽²⁾ were comprised of:

• $0.03 of after-tax gains pertaining to the sale of equipment and non-cash fair market adjustments to equity investments
• $(0.06) of after-tax losses pertaining to a lump sum settlement for a distribution from the pension plan

Net cash provided by operating activities was $117 million for the fourth quarter of fiscal year 2022 compared to $98 million for the third quarter of fiscal year 2022.

For fiscal year 2022, the Company reported net income of $7 million, or $0.05 per diluted share, from operating revenues of $2.1 billion. The net income per diluted share includes $(0.05) of after-tax losses comprised of select items⁽²⁾. Net cash provided by operating activities was $234 million in fiscal year 2022 compared to $136 million in fiscal year 2021.

President and CEO John Lindsay commented, “Supportive market conditions and our adherence to our business and capital allocation strategy have led to sequentially improving quarterly results in fiscal 2022. We are beginning to recognize economic returns at levels that we have not experienced since 2014. As such, we believe there is significant momentum heading into fiscal 2023, and we plan to continue a posture of fiscal discipline, move forward with our supplemental shareholder return plan, and further implement our strategic initiative to expand internationally. These actions align with the Company’s history of financial stewardship by increasing the Company’s financial returns through long-term investment in the business and increasing cash returns to shareholders through the augmentation of our long-standing dividend commitment.

“Customer demand during the fourth fiscal quarter was satisfied by contractual churn and by reactivating one rig out of stack early in the quarter as expected. Our financial results improved substantially quarter over quarter as pricing increases and better contract economics took hold across more of our FlexRig® fleet. We anticipate a modest 16 rig uplift in our NAS rig count in fiscal 2023 of which roughly two-thirds are already committed and to attain a maximum of 192 active rigs for fiscal 2023 sometime during the second fiscal quarter of 2023. As in prior years, we expect our 2023 rig adds to be weighted toward the front half of the fiscal year, and do anticipate experiencing additional contractual churn throughout the year. We expect our financial results for the first fiscal quarter of 2023 to follow the improving trend of the past two fiscal quarters, where strong demand from customers coupled with rollovers of term contracts, should continue to drive higher average levels of pricing across the active fleet.

“For our International Solutions segment, the Company plans to deploy capital in preparation for more substantive growth in the future. We are seeing opportunities to bid in areas of existing operations as well as in countries that would be new to H&P. Most of these tenders are taking place where unconventional drilling is in its nascent stages, such as in the Middle East, and where we believe our proven drilling solutions can provide a lot of value to customers. We believe our international business is an important avenue of growth for the future and serves as a potential outlet for some of our currently idle super-spec rigs in the U.S. This initiative also adds more diversification to the Company’s revenue streams over the long-term and this current allocation of investment capital plays an important part in executing on this strategy.”

Senior Vice President and CFO Mark Smith also commented, “Maintaining economic discipline in our capital-intensive business remains paramount, and has resulted in increased capital efficiency and a positive impact on our financial returns. The Company will continue to allocate capital with this mindset. Our North America Solutions direct margins continue to improve, led by our fiscal discipline and robust pricing despite the current inflationary and supply chain challenges, which have been more apparent as of late with a labor-related cost increase just at the end of the fiscal fourth quarter and in our recently announced fiscal 2023 capex budget reflecting higher levels of maintenance expenditures.

“Looking out to fiscal 2023, we expect to see increased profitability for the Company propelling us forward to execute on other strategic capital allocation priorities, such as the recently announced 2023 supplemental shareholder return plan and diversification through further investment in our international operations. We believe both provide incremental returns; one that is more near-term and one that will develop over time. Even beyond these planned capital commitments, the Company should have flexibility to be positioned to take advantage of additional investment opportunities and/or further augment shareholder returns through additional supplemental dividends and/or share repurchases. Essentially in fiscal 2023, we plan to allocate roughly two-thirds of our cash flow generation after capex commitments to shareholders in the form of base and supplemental dividends, which would currently represent an approximate dividend yield of 4%, very competitive for our industry. The remaining one-third we believe, should give us an adequate amount of flexibility. This is further testament to the Company’s strong cash flow generation and financial position.”

John Lindsay concluded, “We enter fiscal 2023 with momentum and increased confidence that our initiatives in our North America Solutions segment have gained traction and are delivering positive financial results. We are also excited by the prospects and opportunities before us, particularly in our International Solutions segment. The successes the Company has achieved and plans to achieve would not be possible without our devoted and hard-working employee base, which I am proud to say continues to set the standard for our industry.”

Operating Segment Results for the Fourth Quarter of Fiscal Year 2022

North America Solutions:

This segment had operating income of $92.1 million compared to operating income of $57.4 million during the previous quarter. The increase in operating income was primarily due to improving contract economics as market pricing continued to increase coupled with term contracts rolling onto market rates.

Direct margins⁽³⁾ increased by $35.9 million to $203.5 million as both revenues and expenses increased sequentially. Quarterly operating results were impacted by the costs associated with reactivating rigs; $7.5 million in the fourth fiscal quarter compared to $6.5 million in the previous quarter.

International Solutions:

This segment had an operating loss of $0.8 million compared to an operating loss of $6.6 million during the previous quarter. The decrease in operating loss is primarily attributable to increased activity in Latin America, particularly with operations in Argentina.

Direct margins⁽³⁾ during the fourth fiscal quarter were $3.3 million compared to a negative $3.2 million during the previous quarter. Current quarter results included a $1.2 million foreign currency loss compared to a $1.1 million foreign currency loss in the previous quarter.

Offshore Gulf of Mexico:

This segment had operating income of $6.6 million compared to operating income of $5.9 million during the previous quarter. Direct margins⁽³⁾ for the quarter were $9.4 million compared to $8.8 million in the prior quarter.

Operational Outlook for the First Quarter of Fiscal Year 2023

North America Solutions:

• We expect North America Solutions direct margins⁽³⁾ to be between $250-$270 million, which includes approximately $8.5 million in estimated reactivation costs
• We expect to exit the quarter between approximately 181-186 contracted rigs

International Solutions:

• We expect International Solutions direct margins⁽³⁾ to be between $7-$10 million, exclusive of any foreign exchange gains or losses
• International Solutions direct margins⁽²⁾ are expected to be reduced by operating costs related to establishing our Middle East hub

Offshore Gulf of Mexico:

• We expect Offshore Gulf of Mexico direct margins⁽³⁾ to be between $8-$10 million

Other Estimates for Fiscal Year 2023

• Gross capital expenditures are expected to be approximately $425 to $475 million;
  • approximately two-thirds expected for North America Solutions, including maintenance per active rig of $1.1 to $1.3 million and reactivating up to 16 super-spec rigs of which six are planned walking conversions
  • approximately one-quarter for International Solutions, including five super-spec upgrades and six reactivations that will be also converted to walking capabilities for export from the U.S. fleet
  • remainder for corporate and information technology expenditures
  • ongoing asset sales include reimbursements for lost and damaged tubulars and sales of other used drilling equipment that offset a portion of the gross capital expenditures and are expected to total approximately $50 million in fiscal year 2023
• Depreciation for fiscal year 2023 is expected to be approximately $400 million
• Research and development expenses for fiscal year 2023 are expected to be roughly $28 million
• General and administrative expenses for fiscal year 2023 are expected to be approximately $195 million
• Cash taxes for fiscal year 2023 are expected to be approximately $190-$240 million
  • inclusive of approximately $45 million relating to fiscal year 2022 amounts to be paid in fiscal 2023
  • exclusive of roughly $28 million in income tax receivables of which $25 million was already received during the fiscal first quarter of 2023

Select Items⁽²⁾ Included in Net Income per Diluted Share

Fourth quarter of fiscal year 2022 net income of $0.42 per diluted share included $(0.03) in after-tax losses comprised of the following:

• $0.02 of non-cash after-tax gains related to fair market value adjustments to equity investments
• $0.01 of after-tax gains related to the sale of equipment
• $(0.06) of after-tax losses related to a lump sum settlement for a distribution from the pension plan

Third quarter of fiscal year 2022 net income of $0.16 per diluted share included $(0.11) in after-tax losses comprised of the following:

• $(0.11) of non-cash after-tax gains related to fair market value adjustments to equity investments
• $(0.00) of after-tax losses related to restructuring charges

Fiscal year 2022 net income of $0.05 per diluted share included $(0.05) in after-tax losses comprised of the following:

• $0.42 of non-cash after-tax gains related to fair market value adjustments to equity investments
• $0.13 of after-tax gains related to a settlement of a previous contractual dispute with an international customer
• $(0.01) of after-tax losses related to restructuring charges
• $(0.03) of after-tax losses related to the sale of equipment
• $(0.03) of non-cash after-tax losses for impairments related to fair market value adjustments to decommissioned rigs and equipment that are held for sale
• $(0.06) of after-tax losses related to a lump sum settlement for a distribution from the pension plan
• $(0.47) of after-tax losses related to a debt make-whole premium and write-off of debt discount and issuance costs

Conference Call

A conference call will be held on Thursday, November 17, 2022 at 11:00 a.m. (ET) with John Lindsay, President and CEO, Mark Smith, Senior Vice President and CFO, and Dave Wilson, Vice President of Investor Relations, to discuss the Company’s fourth quarter fiscal year 2022 results. Dial-in information for the conference call is (877) 830-2596 for domestic callers or (785) 424-1877 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 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.

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 September 30, 2022, H&P’s fleet included 236 land rigs in the United States, 28 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 registrant’s business strategy, future financial position, operations outlook, future cash flow, future use of generated cash flow, dividend amounts and timing, supplemental shareholder return plans, share repurchases, investments, active rig count projections, budgets, projected costs and plans, objectives of management for future operations, contract terms, financing and funding, capex spending, outlook for international markets, and actions by customers 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 of 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⁾ The Company’s planned base and supplemental dividends represent our current intention of returning capital to shareholders during fiscal year 2023 based upon our outlook of market and industry conditions at present, including our current expectations surrounding rig pricing, activity levels, margins, cash generation, capital expenditures and other investment opportunities. In determining whether to proceed with the fiscal year 2023 base dividends and the supplemental dividends, management and the Board of Directors will continue to review the Company’s financial position and performance together with relative market conditions at that time in order for the Board of Directors to determine the amount, timing and approval of any dividend payments.

⁽²⁾ 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.

⁽³⁾ Direct margin, which is considered a non-GAAP metric, is defined as operating revenues less direct operating expenses 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 first quarter of fiscal 2023 is provided on a non-GAAP basis only because certain information necessary to calculate the cost 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.

HELMERICH & PAYNE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended												Year Ended
(in thousands, except per share amounts)	September 30,				June 30,				September 30,				September 30,
		2022				2022				2021				2022				2021
OPERATING REVENUES
Drilling services	$	629,031			$	547,906			$	342,219			$	2,049,841			$	1,210,800
Other		2,301				2,327				1,588				9,103				7,768
		631,332				550,233				343,807				2,058,944				1,218,568
OPERATING COSTS AND EXPENSES
Drilling services operating expenses, excluding depreciation and amortization		410,968				376,210				268,127				1,426,589				952,600
Other operating expenses		1,222				1,053				1,021				4,638				5,138
Depreciation and amortization		99,055				100,741				101,955				403,170				419,726
Research and development		7,138				6,511				5,197				26,563				21,724
Selling, general and administrative		46,667				44,933				51,824				182,366				172,195
Asset impairment charges		—				—				14,436				4,363				70,850
Restructuring charges		—				33				2,070				838				5,926
Gain on reimbursement of drilling equipment		(7,846	)			(9,895	)			(2,115	)			(29,443	)			(12,322	)
Other (gain) loss on sale of assets		(2,670	)			(3,075	)			(1,672	)			(5,432	)			11,280
		554,534				516,511				440,843				2,013,652				1,647,117
OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS		76,798				33,722				(97,036	)			45,292				(428,549	)
Other income (expense)
Interest and dividend income		6,789				5,313				2,029				18,090				10,254
Interest expense		(4,327	)			(4,372	)			(6,094	)			(19,203	)			(23,955	)
Gain (loss) on investment securities		2,253				(14,310	)			(1,126	)			57,937				6,727
Loss on extinguishment of debt		—				—				—				(60,083	)			—
Other		(8,949	)			(1,148	)			(2,630	)			(11,115	)			(5,657	)
		(4,234	)			(14,517	)			(7,821	)			(14,374	)			(12,631	)
Income (loss) from continuing operations before income taxes		72,564				19,205				(104,857	)			30,918				(441,180	)
Income tax expense (benefit)		27,532				1,730				(25,323	)			24,366				(103,721	)
Income (loss) from continuing operations		45,032				17,475				(79,534	)			6,552				(337,459	)
Income from discontinued operations before income taxes		507				277				373				401				11,309
Income tax provision		—				—				—				—				—
Income from discontinued operations		507				277				373				401				11,309
NET INCOME (LOSS)	$	45,539			$	17,752			$	(79,161	)		$	6,953			$	(326,150	)
Basic earnings (loss) per common share:
Income (loss) from continuing operations	$	0.42			$	0.16			$	(0.74	)		$	0.05			$	(3.14	)
Income from discontinued operations		—				—				—				—				0.10
Net income (loss)	$	0.42			$	0.16			$	(0.74	)		$	0.05			$	(3.04	)
Diluted earnings (loss) per common share:
Income (loss) from continuing operations	$	0.42			$	0.16			$	(0.74	)		$	0.05			$	(3.14	)
Income from discontinued operations		—				—				—				—				0.10
Net income (loss)	$	0.42			$	0.16			$	(0.74	)		$	0.05			$	(3.04	)
Weighted average shares outstanding:
Basic		105,292				105,289				107,899				105,891				107,818
Diluted		106,078				106,021				107,899				106,555				107,818

HELMERICH & PAYNE, INC.
CONSOLIDATED BALANCE SHEETS
	September 30,				September 30,
(in thousands except share data and share amounts)		2022				2021
ASSETS
Current Assets:
Cash and cash equivalents	$	232,131			$	917,534
Restricted cash		36,246				18,350
Short-term investments		117,101				198,700
Accounts receivable, net of allowance of $2,975 and $2,068, respectively		458,713				228,894
Inventories of materials and supplies, net		87,957				84,057
Prepaid expenses and other, net		66,463				67,578
Assets held-for-sale		4,333				71,453
Total current assets		1,002,944				1,586,566
Investments		218,981				135,444
Property, plant and equipment, net		2,960,809				3,127,287
Other Noncurrent Assets:
Goodwill		45,653				45,653
Intangible assets, net		67,154				73,838
Operating lease right-of-use asset		39,064				49,187
Other assets, net		20,926				16,153
Total other noncurrent assets		172,797				184,831
Total assets	$	4,355,531			$	5,034,128
LIABILITIES & SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	126,966			$	71,996
Dividends payable		26,693				27,332
Current portion of long-term debt, net		—				483,486
Accrued liabilities		241,151				283,492
Total current liabilities		394,810				866,306
Noncurrent Liabilities:
Long-term debt, net		542,610				541,997
Deferred income taxes		537,712				563,437
Other		113,387				147,757
Noncurrent liabilities – discontinued operations		1,540				2,013
Total noncurrent liabilities		1,195,249				1,255,204
Shareholders’ Equity:
Common stock, $0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of September 30, 2022 and 2021, and 105,293,662 and 107,898,859 shares outstanding as of September 30, 2022 and 2021, respectively		11,222				11,222
Preferred stock, no par value, 1,000,000 shares authorized, no shares issued		—				—
Additional paid-in capital		528,278				529,903
Retained earnings		2,473,572				2,573,375
Accumulated other comprehensive loss		(12,072	)			(20,244	)
Treasury stock, at cost, 6,929,203 shares and 4,324,006 shares as of September 30, 2022 and 2021, respectively		(235,528	)			(181,638	)
Total shareholders’ equity		2,765,472				2,912,618
Total liabilities and shareholders’ equity	$	4,355,531			$	5,034,128

Contacts

Dave Wilson, Vice President of Investor Relations

investor.relations@hpinc.com
(918) 588‑5190

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