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Helmerich & Payne (HP) Down 21.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Helmerich & Payne (HP - Free Report) . Shares have lost about 21.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Helmerich & Payne due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Helmerich & Payne Q3 Earnings and Sales Beat Estimates
Helmerich & Paynere reported a fiscal third-quarter 2024 adjusted net income of 92 cents per share, which beat the Zacks Consensus Estimate of 77 cents. The outperformance signifies an improvement in the company's Offshore Gulf of Mexico Segment performance. However, the bottom line was below the year-ago quarter’s reported figure of $1.09. This was primarily due to the poor performance of the company's International Solutions and North America Solutions segments.
Operating revenues of $697.7 million outpaced the Zacks Consensus Estimate of $669 million. Sales from the Drilling Services totaled $695 million, which beat the consensus mark of $664 million. However, the figure decreased 3.6% from the year-ago quarter’s level.
In good news for investors, Helmerich & Payne is using the excess cash from a supportive environment to reward its 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 of Aug 16. The payout will be made on Aug 30.
In addition to the regular dividend, HP declared a supplemental cash dividend of 17 cents per share. In the third quarter, the company returned an additional $42 million to its shareholders through base and supplemental dividends.
Segmental Performance
North America Solutions: Operating revenues of $620 million were down 3.1% year over year on lower activity levels, with the average number of active rigs at 150. The top line beat our projection of $591.6 million.
Operating profit totaled $163.4 million compared with $169.5 million in the prior-year period. The decline in drilling activity levels was due to this underperformance. However, the reported figure beat our estimate of $122 million.
Offshore Gulf of Mexico: Operating revenues of $47.9 million decreased 1.6% from the year-ago quarter’s level of $48.7 million. However, the top line beat our projection of $46.1 million.
Operating loss reached $4.8 million, a 246.7% increase from that recorded in the prior-year period. The figure also missed our projection of a profit of $0.6 million.
International Solutions: Revenues of $27.2 million decreased 12.8% from the year-ago quarter’s level of $31.2 million. However, the top line beat our projection of $25.6 million.
Operating profit totaled $5 million, up 6.5% from that recorded in the prior-year period. The figure also beat our estimate of $2.8 million.
Financial Position
In the reported quarter, HP spent $389.1 million on capital programs. As of Jun 30, 2024, the company had $203.6 million in cash and cash equivalents, while the long-term debt totaled $545.6 million (debt-to-capitalization of 16%).
Guidance
In the fourth quarter of fiscal 2024, Helmerich & Payne expects operating gross margin to be in the range of $260-$280 million and $6-$8 million for North America Solutions and Offshore Gulf of Mexico, respectively. The company anticipates ending the quarter with 147-153 contracted rigs for North America Solutions.
HP expects International Solutions' direct margins to be between $(2) million and $2 million, exclusive of any foreign exchange gains or losses. The company projects that International Solutions' direct margins in the fourth fiscal quarter will include $6-$8 million in rig preparation and start-up expenses related to Saudi Arabia operations. This is higher than previous guidance due to some costs being shifted from the third fiscal quarter into the fourth fiscal quarter. The company also expects offshore Gulf of Mexico direct margins to be in the band of $6-$8 million.
Helmerich & Payne estimates a capital outlay of $500 million for fiscal year 2024. The company anticipates that ongoing asset sales, including reimbursements for lost and damaged tubulars and sales of other used drilling equipment, will offset a portion of these expenditures and are projected to total $45 million for the same period.
The company expects depreciation and amortization expenses of $400 million and research and development expenses of $40 million. General and administrative expenses are anticipated to be $250 million. Cash taxes are anticipated to be in the $150-$200 million range.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Helmerich & Payne has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Helmerich & Payne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Helmerich & Payne (HP) Down 21.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Helmerich & Payne (HP - Free Report) . Shares have lost about 21.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Helmerich & Payne due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Helmerich & Payne Q3 Earnings and Sales Beat Estimates
Helmerich & Paynere reported a fiscal third-quarter 2024 adjusted net income of 92 cents per share, which beat the Zacks Consensus Estimate of 77 cents. The outperformance signifies an improvement in the company's Offshore Gulf of Mexico Segment performance. However, the bottom line was below the year-ago quarter’s reported figure of $1.09. This was primarily due to the poor performance of the company's International Solutions and North America Solutions segments.
Operating revenues of $697.7 million outpaced the Zacks Consensus Estimate of $669 million. Sales from the Drilling Services totaled $695 million, which beat the consensus mark of $664 million. However, the figure decreased 3.6% from the year-ago quarter’s level.
In good news for investors, Helmerich & Payne is using the excess cash from a supportive environment to reward its 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 of Aug 16. The payout will be made on Aug 30.
In addition to the regular dividend, HP declared a supplemental cash dividend of 17 cents per share. In the third quarter, the company returned an additional $42 million to its shareholders through base and supplemental dividends.
Segmental Performance
North America Solutions: Operating revenues of $620 million were down 3.1% year over year on lower activity levels, with the average number of active rigs at 150. The top line beat our projection of $591.6 million.
Operating profit totaled $163.4 million compared with $169.5 million in the prior-year period. The decline in drilling activity levels was due to this underperformance. However, the reported figure beat our estimate of $122 million.
Offshore Gulf of Mexico: Operating revenues of $47.9 million decreased 1.6% from the year-ago quarter’s level of $48.7 million. However, the top line beat our projection of $46.1 million.
Operating loss reached $4.8 million, a 246.7% increase from that recorded in the prior-year period. The figure also missed our projection of a profit of $0.6 million.
International Solutions: Revenues of $27.2 million decreased 12.8% from the year-ago quarter’s level of $31.2 million. However, the top line beat our projection of $25.6 million.
Operating profit totaled $5 million, up 6.5% from that recorded in the prior-year period. The figure also beat our estimate of $2.8 million.
Financial Position
In the reported quarter, HP spent $389.1 million on capital programs. As of Jun 30, 2024, the company had $203.6 million in cash and cash equivalents, while the long-term debt totaled $545.6 million (debt-to-capitalization of 16%).
Guidance
In the fourth quarter of fiscal 2024, Helmerich & Payne expects operating gross margin to be in the range of $260-$280 million and $6-$8 million for North America Solutions and Offshore Gulf of Mexico, respectively. The company anticipates ending the quarter with 147-153 contracted rigs for North America Solutions.
HP expects International Solutions' direct margins to be between $(2) million and $2 million, exclusive of any foreign exchange gains or losses. The company projects that International Solutions' direct margins in the fourth fiscal quarter will include $6-$8 million in rig preparation and start-up expenses related to Saudi Arabia operations. This is higher than previous guidance due to some costs being shifted from the third fiscal quarter into the fourth fiscal quarter. The company also expects offshore Gulf of Mexico direct margins to be in the band of $6-$8 million.
Helmerich & Payne estimates a capital outlay of $500 million for fiscal year 2024. The company anticipates that ongoing asset sales, including reimbursements for lost and damaged tubulars and sales of other used drilling equipment, will offset a portion of these expenditures and are projected to total $45 million for the same period.
The company expects depreciation and amortization expenses of $400 million and research and development expenses of $40 million. General and administrative expenses are anticipated to be $250 million. Cash taxes are anticipated to be in the $150-$200 million range.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
At this time, Helmerich & Payne has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Helmerich & Payne has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.