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Helmerich & Payne (HP) Q4 Earnings Beat on Solid US Land Unit
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Helmerich & Payne Inc. (HP - Free Report) recently released fiscal fourth-quarter 2018 results, wherein it delivered a comprehensive beat on the back of better-than-expected performance from the U.S. Land business, backed by higher rig margins and revenues. Precisely, operating income from the U.S. Land unit came in at $64.5 million, surpassing the Zacks Consensus Estimate of $60 million.
Importantly, after posting adjusted operating loss over the past 10 quarters, the company finally witnessed a turnaround this season, posting quarterly earnings of 19 cents a share, nominally surpassing the Zacks Consensus Estimate of 18 cents. The bottom line also compares favorably with the year-ago quarter’s loss of 13 cents a share. Moreover, revenues of $696.8 million outpaced the Zacks Consensus Estimate of $680 million. The top line also surged around 31% from the year-ago level.
Helmerich & Payne, Inc. Price, Consensus and EPS Surprise
U.S. Land: During the quarter, operating revenues totaled $587.2 million (accounting for 84.3% of the total revenues), up 33.6% year over year. The average rig revenue per operating day was $24,449, up 11.4% from the year-ago period and the average rig margin per day also increased 28.6% to $10,340. Moreover, utilization levels of 65% in the quarter under review (versus 55% in fourth-quarter fiscal 2017) resulted in an operating income of $64.5 million at the segment, marking a turnaround from the year-ago loss of $4.2 million.
Offshore: Helmerich & Payne’s Offshore revenues came in at around $38.5 million compared with $32.5 million in the prior-year quarter, on the back of increased activity levels. Notably, rig utilization was 75%, up from the year-ago level of 67%. Further, daily average rig revenues were up 4.7% to $36,424. While the average rig margin per day moved down a bit by 5%, its impact was more than offset by higher average rig revenues and rig utilization. This resulted in the generation of operating income of $8.2 million vis a vis $5.1 million in the year-ago quarter.
International Land: Helmerich & Payne’s International Land operations generated revenues of $59.4 million, up from $55.1 million in the prior-year quarter on increased revenue days and higher activity levels to 55% from 37% a year ago. Nonetheless, the average daily rig revenues in the quarter under review were $30,909, down 23.7% from the corresponding period last year and rig margin per day was $8,658, decreasing from the year-ago figure of $12,386. This resulted in the segment’s operating loss to total $7.8 million, wider than the year-ago quarter’s $2 million. Further, the bottom line from the segment deteriorated sharply from the prior-quarter’s income of $4.3 million amid lower revenues and rig margins.
Capital Expenditure & Balance Sheet
During the quarter, Helmerich & Payne spent approximately $466.6 million on capital programs. As of Sep 30, 2018, the company had approximately $284.4 million in cash, and a long-term debt amounting to $493.9 million (debt-to-capitalization ratio of 10.1%).
Guidance
The Tulsa, OK-based company expects activity in the U.S. land segment to rise 4-5% sequentially during the first quarter of fiscal 2019. While average rig revenues per day are likely to be in the band of $24,500-$25,000, daily average rig cost is expected within $14,500-$14,900 during the said quarter.
Coming to the offshore segment, Helmerich & Payne expects average rig margin per day within $8,500-$11,000 in first-quarter fiscal 2019 and revenue days to increase 5% sequentially.
The international land segment revenue days will likely decrease 0-2% sequentially during the quarter, while average rig margin per day is expected within $8,000-$9,000.
For fiscal 2019, Helmerich & Payne projects a capital budget of $650-$680 million.
Zacks Rank and Key Picks
Currently, Helmerich & Payne carries a Zacks Rank #3 (Hold).
EOG Resources surpassed earnings estimates in each of the trailing four quarters, with average of 18.07%.
Energen delivered average positive earnings surprise in each of the preceding four quarters, with the average being 18.62%.
Hess pulled off average positive earnings surprise of 230.48% in the trailing four reported quarters.
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Helmerich & Payne (HP) Q4 Earnings Beat on Solid US Land Unit
Helmerich & Payne Inc. (HP - Free Report) recently released fiscal fourth-quarter 2018 results, wherein it delivered a comprehensive beat on the back of better-than-expected performance from the U.S. Land business, backed by higher rig margins and revenues. Precisely, operating income from the U.S. Land unit came in at $64.5 million, surpassing the Zacks Consensus Estimate of $60 million.
Importantly, after posting adjusted operating loss over the past 10 quarters, the company finally witnessed a turnaround this season, posting quarterly earnings of 19 cents a share, nominally surpassing the Zacks Consensus Estimate of 18 cents. The bottom line also compares favorably with the year-ago quarter’s loss of 13 cents a share. Moreover, revenues of $696.8 million outpaced the Zacks Consensus Estimate of $680 million. The top line also surged around 31% from the year-ago level.
Helmerich & Payne, Inc. Price, Consensus and EPS Surprise
Helmerich & Payne, Inc. Price, Consensus and EPS Surprise | Helmerich & Payne, Inc. Quote
Segmental Performance
U.S. Land: During the quarter, operating revenues totaled $587.2 million (accounting for 84.3% of the total revenues), up 33.6% year over year. The average rig revenue per operating day was $24,449, up 11.4% from the year-ago period and the average rig margin per day also increased 28.6% to $10,340. Moreover, utilization levels of 65% in the quarter under review (versus 55% in fourth-quarter fiscal 2017) resulted in an operating income of $64.5 million at the segment, marking a turnaround from the year-ago loss of $4.2 million.
Offshore: Helmerich & Payne’s Offshore revenues came in at around $38.5 million compared with $32.5 million in the prior-year quarter, on the back of increased activity levels. Notably, rig utilization was 75%, up from the year-ago level of 67%. Further, daily average rig revenues were up 4.7% to $36,424. While the average rig margin per day moved down a bit by 5%, its impact was more than offset by higher average rig revenues and rig utilization. This resulted in the generation of operating income of $8.2 million vis a vis $5.1 million in the year-ago quarter.
International Land: Helmerich & Payne’s International Land operations generated revenues of $59.4 million, up from $55.1 million in the prior-year quarter on increased revenue days and higher activity levels to 55% from 37% a year ago. Nonetheless, the average daily rig revenues in the quarter under review were $30,909, down 23.7% from the corresponding period last year and rig margin per day was $8,658, decreasing from the year-ago figure of $12,386. This resulted in the segment’s operating loss to total $7.8 million, wider than the year-ago quarter’s $2 million. Further, the bottom line from the segment deteriorated sharply from the prior-quarter’s income of $4.3 million amid lower revenues and rig margins.
Capital Expenditure & Balance Sheet
During the quarter, Helmerich & Payne spent approximately $466.6 million on capital programs. As of Sep 30, 2018, the company had approximately $284.4 million in cash, and a long-term debt amounting to $493.9 million (debt-to-capitalization ratio of 10.1%).
Guidance
The Tulsa, OK-based company expects activity in the U.S. land segment to rise 4-5% sequentially during the first quarter of fiscal 2019. While average rig revenues per day are likely to be in the band of $24,500-$25,000, daily average rig cost is expected within $14,500-$14,900 during the said quarter.
Coming to the offshore segment, Helmerich & Payne expects average rig margin per day within $8,500-$11,000 in first-quarter fiscal 2019 and revenue days to increase 5% sequentially.
The international land segment revenue days will likely decrease 0-2% sequentially during the quarter, while average rig margin per day is expected within $8,000-$9,000.
For fiscal 2019, Helmerich & Payne projects a capital budget of $650-$680 million.
Zacks Rank and Key Picks
Currently, Helmerich & Payne carries a Zacks Rank #3 (Hold).
Some better-ranked players in the energy space include EOG Resources, Inc. (EOG - Free Report) , Energen Corporation and Hess Corporation (HES - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). One can see the complete list of today’s Zacks #1 Rank stocks here.
EOG Resources surpassed earnings estimates in each of the trailing four quarters, with average of 18.07%.
Energen delivered average positive earnings surprise in each of the preceding four quarters, with the average being 18.62%.
Hess pulled off average positive earnings surprise of 230.48% in the trailing four reported quarters.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>