Helmerich & Payne (HP) Q4 Earnings Miss Estimates, Sales In Line
Helmerich & Payne, Inc. HP reported fourth-quarter fiscal 2023 adjusted earnings of 69 cents per share, which missed the Zacks Consensus Estimate of 72 cents. This underperformance can be attributed to the poor performance of the company's Offshore Gulf of Mexico and International Solutions units. In the year-ago period, the company had reported a profit of 45 cents per share.
Meanwhile, operating revenues of $660 million were in line with the Zacks Consensus Estimate. The figure increased 4.6% from the year-ago level on the back of strong results from the North America Solutions segment. Precisely, sales from the unit totaled $575.2 million, well ahead of the consensus mark of $565 million.
HP’s board of directors declared a quarterly cash dividend of 25 cents per share on Sep 6, 2023, and a supplemental cash dividend of 17 cents per share on Oct 17, 2023. Both the dividends are payable on Dec 4, 2023, to stockholders of record as of Nov 20, 2023.
Helmerich & Payne, Inc. Price, Consensus and EPS Surprise
Helmerich & Payne, Inc. price-consensus-eps-surprise-chart | Helmerich & Payne, Inc. Quote
Segmental Performance
North America Solutions: Operating revenues of $575.2 million were up 4.1% year over year on higher activity levels, with the average number of active rigs at 149. The top line beat our projection of $572.8 million.
Operating profit totaled $128.5 million compared with $92.1 million in the corresponding period of 2022. The figure missed our estimate of $133.5 million. The decline in drilling activity levels during the quarter can be attributed to this underperformance.
Offshore Gulf of Mexico: Revenues of $28.8 million decreased 16% from the year-ago quarter’s level of $34.3 million. The figure also missed our projection of $32 million.
Operating profit totaled $4.7 million, down 28.8% from that recorded in the prior-year period. The figure also missed our estimate of $5.8 million.
International Solutions: Sales in this segment increased to $53.2 million from $42.4 million in the comparable period of 2022. The figure beat our projection of $50.3 million.
The unit incurred a loss of $5 million, wider than the reported loss of $789,000 in the prior-year period. The figure is also wider than our projection of a loss of $7,00,000.
Financial Position
In the reported quarter, HP spent $395.5 million on capital programs. As of Sep 30, 2023, the company had $257.2 million in cash and cash equivalents, while the long-term debt totaled $545.1 million (debt-to-capitalization of 16.4%).
Guidance
For the first quarter of fiscal 2024, Helmerich & Payne anticipates operating gross margin in the North America Solutions and Offshore Gulf of Mexico segments to be in the range of $235-$255 million and $3-$7 million, respectively. The company expects to exit the quarter with around 150-156 contracted rigs.
Operating gross margin in the International Solutions segment is forecasted at a loss of $7-$10 million for the next fiscal quarter.
Helmerich & Payne estimates capital outlay between $450 million and $500 million for 2023. The company projects depreciation and amortization expenses at $390 million, and research and development expenses at $30 million. General and administrative expenses are anticipated to be $230 million.
Zacks Rank and Key Picks
Currently, HP carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Liberty Energy Inc. LBRT and Oceaneering International, Inc. OII, each sporting a Zacks Rank #1 (Strong Buy), and USA Compression Partners, LP USAC, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Liberty Energy is valued at $3.26 billion. LBRT currently pays a dividend of 20 cents per share, or 1.03% on an annual basis.
LBRT is a leading provider of hydraulic fracturing and other auxiliary services to North American onshore exploration and production companies.
Oceaneering International is worth approximately $2.17 billion. In the past year, its shares have risen 50.1%.
The company provides engineered services and products, and robotic solutions to the offshore energy, defense, aerospace, manufacturing and entertainment industries worldwide.
USA Compression Partners is valued at around $2.58 billion. USAC currently pays a dividend of $2.10 per unit, or 8.01% on an annual basis.
USAC provides natural gas compression services. The company offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil. It also operates stations.
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