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Helmerich & Payne (HP) Incurs Narrower-Than-Expected Q4 Loss
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Helmerich & Payne Inc. (HP - Free Report) recently released fourth-quarter fiscal 2020 results. The company posted adjusted quarterly loss of 74 cents per share narrower than the Zacks Consensus Estimate of a loss of 80 cents per share owing to better-than-expected revenues from International Solutions segment. Precisely, the unit generated operating revenues of $24 million beating the Zacks Consensus Estimate of $17.13 million. However, the bottom line came against the year-ago earnings of 39 cents per share. This underperformance can be attributed to steep decline in rig activity as a result of coronavirus-induced lower crude prices.
Meanwhile, operating revenues of $208.27 million missed the Zacks Consensus Estimate of $212 million and decreased 67.9% from the year-ago level of $649.05 million.
Segmental Performance
North America Solutions: During the quarter, operating revenues of $149.3 million were down 73.3% year over year as revenue days fell 68.3% to 5,945.
Rig utilization dropped to 25% from the prior-year’s 68%. The segment’s operating loss came in at $78.2 million against the year-earlier profit of $60.4 million. Moreover, the average rig margin per day declined 39% from the prior-year quarter to $6,603. Further, rig revenue per day was down in the quarter under review.
Offshore Gulf of Mexico: Revenues of $32.3 million were down from the year-ago quarter’s $38.5 million as revenue days declined 16.6% to 460. Rig utilization plummeted to 63% from the prior-year’s 75%. Moreover, higher average rig expenses per day and increased depreciation expenses resulted in the segment’s operating income of $1. 5 million, lower than the profit of $2.8 million in the prior-year quarter.
Although daily average rig revenues rose 8.9% from the year-ago figure, rig expense per day climbed 5.6%. Meanwhile, the segment recorded average rig margin per day of $7,663 in the quarter under review compared to $7,460 in the year-ago quarter.
International Solutions: Operations generated revenues of $24 million, down from $48.4 million in the prior-year quarter.
While rig utilization decreased to 15% from 56% in the prior-year quarter, average rig revenue per day increased from the year-ago quarter to $45,986. The average rig margin per day decreased 42.1% from the year-ago quarter to $3,170. The segment’s bottom line induced an operating loss of $3.47 million, narrower than the loss of $4.2 million a year ago.
Helmerich & Payne, Inc. Price, Consensus and EPS Surprise
In the reported quarter, Helmerich & Payne spent $19.8 million on capital programs. As of Sep 30, 2020, the company had $487.9 million in cash and cash equivalents while net long-term debt was $480.7 million (debt-to-capitalization of 12.7%).
Guidance
This Tulsa, OK-based company anticipates operating gross margins in the North America Solutions segment in the first quarter of fiscal 2021 to be between $40 million and $50 million.
Coming to the offshore Gulf of Mexico segment, Helmerich & Payne envisions operating gross margins within $5-7 million for the fiscal first quarter and operating income in the $1-$2 million range.
Additionally, international Solutions operating gross margins are forecast in a negative $5-$7 million range for the current quarter.
For the next fiscal year, Helmerich & Payne estimates capital outlay within $85-$105 million.
Helmerich & Payne expects its North America Solutions contracted rigs to increase by 30% during fiscal first quarter of 2021, exiting at approximately 90 rigs.
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Helmerich & Payne (HP) Incurs Narrower-Than-Expected Q4 Loss
Helmerich & Payne Inc. (HP - Free Report) recently released fourth-quarter fiscal 2020 results. The company posted adjusted quarterly loss of 74 cents per share narrower than the Zacks Consensus Estimate of a loss of 80 cents per share owing to better-than-expected revenues from International Solutions segment. Precisely, the unit generated operating revenues of $24 million beating the Zacks Consensus Estimate of $17.13 million. However, the bottom line came against the year-ago earnings of 39 cents per share. This underperformance can be attributed to steep decline in rig activity as a result of coronavirus-induced lower crude prices.
Meanwhile, operating revenues of $208.27 million missed the Zacks Consensus Estimate of $212 million and decreased 67.9% from the year-ago level of $649.05 million.
Segmental Performance
North America Solutions: During the quarter, operating revenues of $149.3 million were down 73.3% year over year as revenue days fell 68.3% to 5,945.
Rig utilization dropped to 25% from the prior-year’s 68%. The segment’s operating loss came in at $78.2 million against the year-earlier profit of $60.4 million. Moreover, the average rig margin per day declined 39% from the prior-year quarter to $6,603. Further, rig revenue per day was down in the quarter under review.
Offshore Gulf of Mexico: Revenues of $32.3 million were down from the year-ago quarter’s $38.5 million as revenue days declined 16.6% to 460. Rig utilization plummeted to 63% from the prior-year’s 75%. Moreover, higher average rig expenses per day and increased depreciation expenses resulted in the segment’s operating income of $1. 5 million, lower than the profit of $2.8 million in the prior-year quarter.
Although daily average rig revenues rose 8.9% from the year-ago figure, rig expense per day climbed 5.6%. Meanwhile, the segment recorded average rig margin per day of $7,663 in the quarter under review compared to $7,460 in the year-ago quarter.
International Solutions: Operations generated revenues of $24 million, down from $48.4 million in the prior-year quarter.
While rig utilization decreased to 15% from 56% in the prior-year quarter, average rig revenue per day increased from the year-ago quarter to $45,986. The average rig margin per day decreased 42.1% from the year-ago quarter to $3,170. The segment’s bottom line induced an operating loss of $3.47 million, narrower than the loss of $4.2 million a year ago.
Helmerich & Payne, Inc. Price, Consensus and EPS Surprise
Helmerich & Payne, Inc. price-consensus-eps-surprise-chart | Helmerich & Payne, Inc. Quote
Capital Expenditure & Balance Sheet
In the reported quarter, Helmerich & Payne spent $19.8 million on capital programs. As of Sep 30, 2020, the company had $487.9 million in cash and cash equivalents while net long-term debt was $480.7 million (debt-to-capitalization of 12.7%).
Guidance
This Tulsa, OK-based company anticipates operating gross margins in the North America Solutions segment in the first quarter of fiscal 2021 to be between $40 million and $50 million.
Coming to the offshore Gulf of Mexico segment, Helmerich & Payne envisions operating gross margins within $5-7 million for the fiscal first quarter and operating income in the $1-$2 million range.
Additionally, international Solutions operating gross margins are forecast in a negative $5-$7 million range for the current quarter.
For the next fiscal year, Helmerich & Payne estimates capital outlay within $85-$105 million.
Helmerich & Payne expects its North America Solutions contracted rigs to increase by 30% during fiscal first quarter of 2021, exiting at approximately 90 rigs.
Zacks Rank & Key Picks
Helmerich & Payne currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are CNOOC Limited (CEO - Free Report) , Antero Resources Corporation (AR - Free Report) and Noble Corporation (NE - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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