Helmerich & Payne (HP) Reveals Fiscal 2024 Financial Strategy
Helmerich & Payne, Inc. HP announced its comprehensive financial strategy for fiscal 2024. Its plans include the eagerly awaited supplemental shareholder return plan and the allocation of capital expenditures for the year ahead.
Let's dive into the details of the quarterly supplemental dividend declaration, shareholder return plan for 2024 and strategy for capex allocation.
Quarterly Supplemental Dividend Declaration
HP’s board recently announced a quarterly cash supplemental dividend of 23.5 cents per share, payable on Dec 4, 2023, to stockholders of record at the close of business on Nov 20, 2023. Additionally, the company expects to return $168 million in cash to its shareholders.
Key Components of the 2024 Supplemental Shareholder Return Plan
HP's 2024 plan comprises the following components:
Established Base Dividend: A projected $100 million in established base dividends will be provided in fiscal 2024, maintaining a strong foundation for shareholder returns.
Supplemental Dividend: A planned $68-million supplemental dividend will enhance shareholder returns further.
Unallocated Cash: Approximately $68 million of unallocated cash will be available for flexible use, which, when combined with around $350 million of cash on hand, is expected to provide ample financial flexibility.
These additional cash returns represent approximately 50% of HP's projected cash flow generation in fiscal 2024 after planned capex and HP's already established "base" annual dividend of $1 per share, which is approximately $100 million on an annualized basis. All such established base and supplemental dividends are subject to quarterly determination and approval by HP's board of directors.
Shareholder Returns and Repurchases
The 2024 supplemental shareholder return plan is specific to the fiscal year and will include approximately four equal dividend installments throughout the year. The company may utilize additional cash flow generated in 2024, after accounting for planned expenditures and established dividends, to fund further supplemental dividends or repurchase common shares.
This year, the company still has around 1.3 million shares under its 2023 authorization for share repurchases. Decisions regarding share repurchases will be influenced by market and industry conditions, as well as available investment opportunities.
Helmerich & Payne has planned its capital spending for fiscal 2024, which amounts to a range of $450-$500 million.
North America Solutions: Approximately 60% of the planned expenditures are earmarked for this segment. Funds will be used for maintaining capex and converting rigs to walking configurations, addressing the evolving needs of North Americas’ market.
International Growth: Approximately 33% of the planned expenditures will support international expansion efforts, which include modifying and converting rigs to walking configurations for international export and responding to increased global interest in unconventional drilling.
General Corporate and IT: The remaining budget is primarily allocated to general corporate and information technology expenditures, as HP continues to modernize its operational and business-driven technologies.
In conclusion, Helmerich & Payne’sfiscal 2024 financial strategy represents a multi-faceted approach that addresses both shareholder value and the company's growth and competitiveness in the energy sector. The 2024 supplemental shareholder return plan reflects HP's commitment to rewarding its investors with substantial dividends and share repurchases. Simultaneously, the capital expenditure plan highlights the company’s dedication to innovation and adaptability in a dynamic industry.
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 CVR Energy CVI and USA Compression Partners USAC, each sporting a Zacks Rank #1 (Strong Buy), and Harbour Energy HBRIY, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CVR Energy is valued at $3.16 billion. In the past year, its shares have lost 22.6%.
CVI currently pays a dividend of $2 per share or 6.36% on an annual basis. Its payout ratio currently sits at 30% of earnings.
USA Compression Partners is valued at around $2.48 billion. USAC currently pays a dividend of $2.10 per unit, or 8.34% on an annual basis.
USAC provides natural gas compression services and offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil. It also operates stations.
Harbour Energy is worth approximately $2.30 billion. HBRIY currently pays a dividend of 21 cents per share, or 6.69% on an annual basis.
The company's activities include acquiring, exploring, developing, and producing oil and gas reserves. It has ownership stakes in several properties in the United Kingdom, Norway, Indonesia, Vietnam and Mexico.
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Helmerich & Payne, Inc. (HP) : Free Stock Analysis Report
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