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Helmerich & Payne (HP) Beats on Q3 Earnings and Revenues
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Helmerich & Payne Inc. (HP - Free Report) reported fiscal third-quarter 2023 adjusted earnings of $1.09 per share, which beat the Zacks Consensus Estimate of 89 cents. In the year-ago period, the company had reported a profit of 27 cents per share. The outperformance reflects a significant uptick in HP’s North America Solutions segment.
Operating revenues of $724 million outpaced the Zacks Consensus Estimate of $702 million. The figure also increased 31.6% from the year-ago quarter’s level due to strong results from the North America Solutions and International Solutions segments.
In good news for investors, Helmerich & Payne is using the excess cash from a supportive environment to reward investors with dividends and buybacks. HP’s board of directors declared a quarterly cash dividend of 25 cents per share to its common shareholders of record as on Aug 17. The payout will be made on Aug 31. In addition to the regular dividend, HP declared a supplemental dividend of 23.5 cents per share.
During the fiscal third quarter, Helmerich & Payne repurchased about 3.2 million shares for approximately $103 million, bringing the year-to-date share repurchase total for fiscal 2023 to about 6.5 million for about $249 million.
Segmental Performance
North America Solutions: Operating revenues of $641.6 million were up 32% year over year on higher activity levels, with the average number of active rigs at 166. The figure beat our projection of $607.5 million.
Operating profit totaled $169.5 million compared with $57.4 million in the corresponding period of 2022. The figure also beat our estimate of $119.4 million. This improvement can be attributed to an increase in drilling activities owing to the surging oil and gas prices.
Offshore Gulf of Mexico: Revenues of $31.2 million decreased 4.6% from the year-ago quarter’s level of $32.7 million. The figure also missed our projection of $35.6 million.
Operating profit totaled $4.7 million, down 20% from that recorded in the prior-year period. The figure also missed our estimate of $6.7 million.
International Solutions: Sales in this segment increased to $48.7 million from $29.1 million in the comparable period of 2022. The figure, however, missed our projection of $54.7 million.
The unit incurred a loss of $1.4 million, narrower than the reported loss of $6.6 million in the prior-year period. The figure outperformed our estimate of a loss of $2 million.
Financial Position
In the reported quarter, HP spent $281.8 million on capital programs. As of Jun 30, 2023, the company had $220.6 million in cash and cash equivalents, while the long-term debt was $545 million (debt-to-capitalization of 16.8%).
Guidance
Helmerich & Payne expects operating gross margin for the North America Solutions, Offshore Gulf of Mexico and International Solutions segments in the range of $230-$250 million, $6-$8 million, and $8-$11 million, respectively, for the fiscal fourth quarter. The company anticipates 141-147 contracted rigs at the end of the quarter.
HP predicts capital expenditure of $400 million for 2023. It also estimates its research and development costs to be $30 million, and depreciation and amortization costs to be $385 million for the entire year.
Cash taxes are anticipated to be in the range of $180-$205 million. General and administrative costs are projected to be $205 million.
Zacks Rank and Key Picks
Currently, HP carries a Zacks Rank #5 (Strong Sell).
Evolution Petroleum is worth approximately $307.07 million. EPM currently pays a dividend of 48 cents per share, or 5.20% on an annual basis.
The company currently has a forward P/E ratio of 8.55. In comparison, its industry has an average forward P/E of 13.40, which means EPM is trading at a discount to the group.
Murphy USA is valued at around $6.58 billion. In the past year, its shares have risen 5.8%
MUSA currently pays a dividend of $1.52 per share, or 0.50% on an annual basis. Its payout ratio currently sits at 6% of earnings.
NGL Energy Partners is valued at around $535.63 million. In the past year, its units have risen 149.1%.
The partnership currently has a forward P/E ratio of 4.67. In comparison, its industry has an average forward P/E of 16.20, which means NGL is trading at a discount to the group.
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Helmerich & Payne (HP) Beats on Q3 Earnings and Revenues
Helmerich & Payne Inc. (HP - Free Report) reported fiscal third-quarter 2023 adjusted earnings of $1.09 per share, which beat the Zacks Consensus Estimate of 89 cents. In the year-ago period, the company had reported a profit of 27 cents per share. The outperformance reflects a significant uptick in HP’s North America Solutions segment.
Operating revenues of $724 million outpaced the Zacks Consensus Estimate of $702 million. The figure also increased 31.6% from the year-ago quarter’s level due to strong results from the North America Solutions and International Solutions segments.
In good news for investors, Helmerich & Payne is using the excess cash from a supportive environment to reward investors with dividends and buybacks. HP’s board of directors declared a quarterly cash dividend of 25 cents per share to its common shareholders of record as on Aug 17. The payout will be made on Aug 31. In addition to the regular dividend, HP declared a supplemental dividend of 23.5 cents per share.
During the fiscal third quarter, Helmerich & Payne repurchased about 3.2 million shares for approximately $103 million, bringing the year-to-date share repurchase total for fiscal 2023 to about 6.5 million for about $249 million.
Segmental Performance
North America Solutions: Operating revenues of $641.6 million were up 32% year over year on higher activity levels, with the average number of active rigs at 166. The figure beat our projection of $607.5 million.
Operating profit totaled $169.5 million compared with $57.4 million in the corresponding period of 2022. The figure also beat our estimate of $119.4 million. This improvement can be attributed to an increase in drilling activities owing to the surging oil and gas prices.
Offshore Gulf of Mexico: Revenues of $31.2 million decreased 4.6% from the year-ago quarter’s level of $32.7 million. The figure also missed our projection of $35.6 million.
Operating profit totaled $4.7 million, down 20% from that recorded in the prior-year period. The figure also missed our estimate of $6.7 million.
International Solutions: Sales in this segment increased to $48.7 million from $29.1 million in the comparable period of 2022. The figure, however, missed our projection of $54.7 million.
The unit incurred a loss of $1.4 million, narrower than the reported loss of $6.6 million in the prior-year period. The figure outperformed our estimate of a loss of $2 million.
Financial Position
In the reported quarter, HP spent $281.8 million on capital programs. As of Jun 30, 2023, the company had $220.6 million in cash and cash equivalents, while the long-term debt was $545 million (debt-to-capitalization of 16.8%).
Guidance
Helmerich & Payne expects operating gross margin for the North America Solutions, Offshore Gulf of Mexico and International Solutions segments in the range of $230-$250 million, $6-$8 million, and $8-$11 million, respectively, for the fiscal fourth quarter. The company anticipates 141-147 contracted rigs at the end of the quarter.
HP predicts capital expenditure of $400 million for 2023. It also estimates its research and development costs to be $30 million, and depreciation and amortization costs to be $385 million for the entire year.
Cash taxes are anticipated to be in the range of $180-$205 million. General and administrative costs are projected to be $205 million.
Zacks Rank and Key Picks
Currently, HP carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks for investors interested in the energy sector are Evolution Petroleum (EPM - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Murphy USA (MUSA - Free Report) and NGL Energy Partners (NGL - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum is worth approximately $307.07 million. EPM currently pays a dividend of 48 cents per share, or 5.20% on an annual basis.
The company currently has a forward P/E ratio of 8.55. In comparison, its industry has an average forward P/E of 13.40, which means EPM is trading at a discount to the group.
Murphy USA is valued at around $6.58 billion. In the past year, its shares have risen 5.8%
MUSA currently pays a dividend of $1.52 per share, or 0.50% on an annual basis. Its payout ratio currently sits at 6% of earnings.
NGL Energy Partners is valued at around $535.63 million. In the past year, its units have risen 149.1%.
The partnership currently has a forward P/E ratio of 4.67. In comparison, its industry has an average forward P/E of 16.20, which means NGL is trading at a discount to the group.