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Helmerich & Payne, Inc. Announces Fiscal Second Quarter Results

April 24, 2024

 
  • The Company reported fiscal second quarter net income of $85 million, or $0.84 per diluted share; including select items(1) that had a neutral impact on diluted earnings per share
  • The North America Solutions ("NAS") segment exited the second quarter of fiscal year 2024 with 152 active rigs with revenue per day averaging approximately $38,200/day, flat on a sequential basis; while direct margins(2) per day increased by approximately $500/day to $19,200/day
  • Quarterly NAS operating income increased $3 million sequentially; while direct margins(2) increased by $15 million to approximately $271 million, as revenues increased by $19 million to $613 million and expenses increased by $4 million to $342 million
  • H&P's NAS segment anticipates exiting the third quarter of fiscal year 2024 between 145-151 active rigs
  • During the second fiscal quarter, the Company returned approximately $46 million of capital to shareholders as follows: $25 million in base dividends, $17 million in supplemental dividends and $4 million in share repurchases(3)
  • On February 28, 2024, the Board of Directors of the Company declared a quarterly base cash dividend of $0.25 per share and a supplemental cash dividend of $0.17 per share; both dividends are payable on May 31, 2024 to stockholders of record at the close of business on May 17, 2024

TULSA, Okla.--(BUSINESS WIRE)-- Helmerich & Payne, Inc. (NYSE: HP) reported net income of $85 million, or $0.84 per diluted share, from operating revenues of $688 million for the quarter ended March 31, 2024, compared to net income of $95 million, or $0.94 per diluted share, from operating revenues of $677 million for the quarter ended December 31, 2023. The net income per diluted share for the second and first quarters of fiscal year 2024 include net $0.00 and net $(0.03) of after-tax gains and losses, respectively, comprised of select items(1). For the second quarter of fiscal year 2024, select items were comprised of:

  • $0.03 of after-tax gains related to the non-cash fair market value adjustments to our equity investments
  • $(0.03) of after-tax losses related to research and development expenses associated with an asset acquisition

Net cash provided by operating activities was $144 million for the second quarter of fiscal year 2024 compared to net cash provided by operating activities of $175 million for the first quarter of fiscal year 2024.

President and CEO John Lindsay commented, "Fiscal second quarter results are reflective of the Company's continual focus on commercial economics through value delivery in our North America Solutions segment. The direct margins we have been generating in what has been, and continues to be, a somewhat choppy North America Solutions market are a testament to the value creation we provide for our customers. From our perspective, there has been a pronounced and necessary shift in the industry's historical behavior, that is moving its fiscal foundation toward a more sustainable and investable future. Along those lines, we are extremely pleased with the announcement we made during the quarter regarding expanding our presence in the Middle East, with the finalization of the contractual terms with Saudi Aramco for a seven-rig tender award.

"In the U.S. market, contractual churn is still prevalent and pushed our rig count just below the projected exit rate late in the quarter. This churn has been a product of the volatility created by a weaker natural gas market, some recent E&P consolidations, and a variety of other factors. Some of this natural gas volatility is reminiscent of this time last year; however, we believe the impact on our overall activity will be less this year going forward. That said, we do expect the underlying factors causing the churn in the market currently to persist resulting in what we expect to be a fairly stable outlook for our rig count through the third fiscal quarter. Furthermore, we expect stability and resiliency in our direct margins on a per day basis as well. We will remain focused on direct margins and believe the consistent and reliable drilling outcomes we provide to customers is what ultimately drives our market share.

"Regarding the International Solutions segment, our first rig awarded by Saudi Aramco last August is expected to arrive and commence operations later this summer. For the more recent seven-rig tender award, preparations are ongoing from both a rig and operational perspective with expectations that a majority of these rigs will arrive in Saudi Arabia during the fourth calendar quarter of 2024, and commence operations shortly thereafter. During these preparations we will continue to spend our 2024 budgeted capex towards this project and incur start-up operational expenses, which may disproportionately impact near-term international segment margins. We are looking forward to working with Saudi Aramco and believe we are at the beginning of a longer-term presence in the region. The Company's other international operations in South America and Australia are expected to remain relatively stable over the next quarter, as well as our Offshore Gulf of Mexico operations."

Senior Vice President and CFO Mark Smith also commented, "Returning cash to shareholders remains a capital allocation priority as the Company provided roughly $46 million in shareholder returns under its fiscal 2024 supplemental shareholder return plan during the quarter. There was approximately $4 million worth of shares repurchased during the quarter and $42 million paid to shareholders in the form of base and supplemental dividends, representing over a 4% yield. That said, we are cognizant that the current higher interest rate environment may be masking some of the longer-term attractiveness of our dividend yield and flexibility embedded in our supplemental shareholder return plan.

"Currently, we expect our rig count in the third fiscal quarter to average in the high-140 range, which is lower compared to the 155 rig average realized during the second fiscal quarter. To reiterate, this lower activity is a result of contractual churn and a weaker natural gas environment and as such has not deterred the Company's approach to pricing or the use of performance contracts to better recognize the total value H&P provides to our customers. We believe our commitment to preserving contract economics is reflected in our direct margin guidance for the upcoming quarter."

John Lindsay concluded, “Working closely with our customers and collaborating through the use of performance contracts is really driving improved and more reliable outcomes. Our people, FlexRigs, and technology solutions are key components of this success and will continue to be drivers of that success in the future."

Operating Segment Results for the Second Quarter of Fiscal Year 2024

North America Solutions:

This segment had operating income of $147.1 million compared to operating income of $144.5 million during the previous quarter. The increase in operating income was primarily attributable to a higher direct margin offset by higher depreciation expense associated with walking rig conversions and higher research and development expense, some of which related to a recent asset acquisition. Direct margin(2) increased by $15.3 million to $271.4 million sequentially.

International Solutions:

This segment had operating income of $3.6 million compared to an operating income of $5.4 million during the previous quarter. The decrease in operating income was mainly due to modestly lower activity during the quarter. Direct margin(2) during the second fiscal quarter was $8.4 million compared to $10.2 million during the previous quarter, and was higher than anticipated due to the financial results from our Argentina operations not being as negatively impacted by the local currency and inflationary environment as anticipated. Current quarter results included a $0.5 million foreign currency loss compared to a $1.8 million foreign currency loss in the previous quarter.

Offshore Gulf of Mexico:

This segment had operating income of $0.1 million compared to operating income of $3.1 million during the previous quarter. Direct margin(2) for the quarter was $2.9 million compared to $6.0 million in the previous quarter and was lower than expected due primarily to one rig moving onto full rate later in the quarter than anticipated.

Operational Outlook for the Third Quarter of Fiscal Year 2024

North America Solutions:

  • We expect North America Solutions direct margins(2) to be between $255-$275 million
  • We expect to exit the quarter between approximately 145-151 contracted rigs

International Solutions:

  • We expect International Solutions direct margins(2) to be between $(2)-$2 million, exclusive of any foreign exchange gains or losses, but inclusive of approximately $10-$12 million of rig preparation and start-up expense related to our Saudi Arabia operations

Offshore Gulf of Mexico:

  • We expect Offshore Gulf of Mexico direct margins(2) to be between $5-$8 million

Other Estimates for Fiscal Year 2024

  • Gross capital expenditures are now expected to be approximately $500 million;
    • ongoing asset sales that include reimbursements for lost and damaged tubulars and sales of other used drilling equipment offset a portion of the gross capital expenditures, and are still expected to total approximately $50 million in fiscal year 2024
  • Depreciation for fiscal year 2024 is now expected to be approximately $405 million
  • Research and development expenses for fiscal year 2024 are now expected to be roughly $37 million
  • General and administrative expenses for fiscal year 2024 are now expected to be approximately $240 million
  • Cash taxes to be paid in fiscal year 2024 are still expected to be approximately $150-$200 million

Select Items(1) Included in Net Income per Diluted Share

Second quarter of fiscal year 2024 net income of $0.84 per diluted share included a net impact $0.00 per share in after-tax gains and losses comprised of the following:

  • $0.03 of non-cash after-tax gains related to fair market value adjustments to equity investments
  • $(0.03) of after-tax losses related to research and development expenses associated with an asset acquisition

First quarter of fiscal year 2024 net income of $0.94 per diluted share included $(0.03) in after-tax losses comprised of the following:

  • $(0.03) of non-cash after-tax losses related to fair market value adjustments to equity investments

Conference Call

A conference call will be held on Thursday, April 25, 2024 at 11:00 a.m. (ET) with John Lindsay, President and CEO, Mark Smith, Senior Vice President and CFO, and Dave Wilson, Vice President of Investor Relations, to discuss the Company’s second quarter fiscal year 2024 results. Dial-in information for the conference call is (800) 267-6316 for domestic callers or (203) 518-9708 for international callers. The call access code is ‘Helmerich’. You may also listen to the conference call that will be broadcast live over the Internet by logging on to the Company’s website at http://www.helmerichpayne.com and accessing the corresponding link through the investor relations section by clicking on “Investors” and then clicking on “News and Events - Events & Presentations” to find the event and the link to the webcast.

About Helmerich & Payne, Inc.

Founded in 1920, Helmerich & Payne, Inc. (H&P) (NYSE: HP) is committed to delivering industry leading levels of drilling productivity and reliability. H&P operates with the highest level of integrity, safety and innovation to deliver superior results for its customers and returns for shareholders. Through its subsidiaries, the Company designs, fabricates and operates high-performance drilling rigs in conventional and unconventional plays around the world. H&P also develops and implements advanced automation, directional drilling and survey management technologies. At March 31, 2024, H&P's fleet included 233 land rigs in the United States, 22 international land rigs and seven offshore platform rigs. For more information, see H&P online at www.helmerichpayne.com.

Forward-Looking Statements

This release includes “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, and such statements are based on current expectations and assumptions that are subject to risks and uncertainties. All statements other than statements of historical facts included in this release, including, without limitation, statements regarding the registrant’s business strategy, future financial position, operations outlook, future cash flow, future use of generated cash flow, dividend amounts and timing, supplemental shareholder return plans and amounts of any future dividends, future share repurchases, investments, active rig count projections, projected costs and plans, objectives of management for future operations, contract terms, financing and funding, capex spending and budgets, outlook for domestic and international markets, future commodity prices, and future customer activity and relationships are forward-looking statements. For information regarding risks and uncertainties associated with the Company’s business, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and other disclosures in the Company’s SEC filings, including but not limited to its annual report on Form 10‑K and quarterly reports on Form 10‑Q. As a result of these factors, Helmerich & Payne, Inc.’s actual results may differ materially from those indicated or implied by such forward-looking statements. Investors are cautioned not to put undue reliance on such statements. We undertake no duty to publicly update or revise any forward-looking statements, whether as a result of new information, changes in internal estimates, expectations or otherwise, except as required under applicable securities laws.

Helmerich & Payne uses its Investor Relations website as a channel of distribution for material company information. Such information is routinely posted and accessible on its Investor Relations website at www.helmerichpayne.com. Information on our website is not part of this release.

 

Note Regarding Trademarks. Helmerich & Payne, Inc. owns or has rights to the use of trademarks, service marks and trade names that it uses in conjunction with the operation of its business. Some of the trademarks that appear in this release or otherwise used by H&P include FlexRig, which may be registered or trademarked in the United States and other jurisdictions.

(1) Select items are considered non-GAAP metrics and are included as a supplemental disclosure as the Company believes identifying and excluding select items is useful in assessing and understanding current operational performance, especially in making comparisons over time involving previous and subsequent periods and/or forecasting future periods results. Select items are excluded as they are deemed to be outside the Company's core business operations. See Non-GAAP Measurements.

(2) Direct margin, which is considered a non-GAAP metric, is defined as operating revenues (less reimbursements) less direct operating expenses (less reimbursements) and is included as a supplemental disclosure. We believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See Non-GAAP Measurements for a reconciliation of segment operating income(loss) to direct margin. Expected direct margin for the third quarter of fiscal 2024 is provided on a non-GAAP basis only because certain information necessary to calculate the most comparable GAAP measure is unavailable due to the uncertainty and inherent difficulty of predicting the occurrence and the future financial statement impact of certain items. Therefore, as a result of the uncertainty and variability of the nature and amount of future items and adjustments, which could be significant, we are unable to provide a reconciliation of expected direct margin to the most comparable GAAP measure without unreasonable effort.

(3) During the second fiscal quarter of fiscal 2024, H&P repurchased approximately 102 thousand shares for approximately $3.9 million.

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Ended

 

Six Months Ended

(in thousands, except per share amounts)

March 31,

 

December 31,

 

March 31,

 

March 31,

 

March 31,

 

2024

 

 

 

2023

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

OPERATING REVENUES

 

 

 

 

 

 

 

 

 

Drilling services

$

685,131

 

 

$

674,565

 

 

$

766,682

 

 

$

1,359,696

 

 

$

1,483,852

 

Other

 

2,812

 

 

 

2,582

 

 

 

2,540

 

 

 

5,394

 

 

 

5,007

 

 

 

687,943

 

 

 

677,147

 

 

 

769,222

 

 

 

1,365,090

 

 

 

1,488,859

 

OPERATING COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

Drilling services operating expenses, excluding depreciation and amortization

 

401,851

 

 

 

403,303

 

 

 

449,110

 

 

 

805,154

 

 

 

877,361

 

Other operating expenses

 

1,026

 

 

 

1,137

 

 

 

1,188

 

 

 

2,163

 

 

 

2,314

 

Depreciation and amortization

 

104,545

 

 

 

93,991

 

 

 

96,255

 

 

 

198,536

 

 

 

192,910

 

Research and development

 

12,942

 

 

 

8,608

 

 

 

8,702

 

 

 

21,550

 

 

 

15,635

 

Selling, general and administrative

 

62,037

 

 

 

56,577

 

 

 

52,855

 

 

 

118,614

 

 

 

101,310

 

Asset impairment charges

 

 

 

 

 

 

 

 

 

 

 

 

 

12,097

 

Gain on reimbursement of drilling equipment

 

(7,461

)

 

 

(7,494

)

 

 

(11,574

)

 

 

(14,955

)

 

 

(27,298

)

Other (gain) loss on sale of assets

 

2,431

 

 

 

(2,443

)

 

 

(2,519

)

 

 

(12

)

 

 

(4,898

)

 

 

577,371

 

 

 

553,679

 

 

 

594,017

 

 

 

1,131,050

 

 

 

1,169,431

 

OPERATING INCOME

 

110,572

 

 

 

123,468

 

 

 

175,205

 

 

 

234,040

 

 

 

319,428

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

6,567

 

 

 

10,734

 

 

 

5,055

 

 

 

17,301

 

 

 

9,760

 

Interest expense

 

(4,261

)

 

 

(4,372

)

 

 

(4,239

)

 

 

(8,633

)

 

 

(8,594

)

Gain (loss) on investment securities

 

3,747

 

 

 

(4,034

)

 

 

39,752

 

 

 

(287

)

 

 

24,661

 

Other

 

400

 

 

 

(543

)

 

 

(604

)

 

 

(143

)

 

 

(546

)

 

 

6,453

 

 

 

1,785

 

 

 

39,964

 

 

 

8,238

 

 

 

25,281

 

Income before income taxes

 

117,025

 

 

 

125,253

 

 

 

215,169

 

 

 

242,278

 

 

 

344,709

 

Income tax expense

 

32,194

 

 

 

30,080

 

 

 

51,129

 

 

 

62,274

 

 

 

83,524

 

NET INCOME

$

84,831

 

 

$

95,173

 

 

$

164,040

 

 

$

180,004

 

 

$

261,185

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.85

 

 

$

0.95

 

 

$

1.55

 

 

$

1.79

 

 

$

2.46

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.84

 

 

$

0.94

 

 

$

1.55

 

 

$

1.79

 

 

$

2.46

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

98,774

 

 

 

99,143

 

 

 

103,968

 

 

 

98,960

 

 

 

104,615

 

Diluted

 

99,046

 

 

 

99,628

 

 

 

104,363

 

 

 

99,216

 

 

 

105,003

 

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

March 31,

 

September 30,

(in thousands except share data and share amounts)

 

2024

 

 

 

2023

 

ASSETS

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

193,636

 

 

$

257,174

 

Restricted cash

 

68,547

 

 

 

59,064

 

Short-term investments

 

83,390

 

 

 

93,600

 

Accounts receivable, net of allowance of $2,769 and $2,688, respectively

 

431,681

 

 

 

404,188

 

Inventories of materials and supplies, net

 

107,210

 

 

 

94,227

 

Prepaid expenses and other, net

 

64,316

 

 

 

97,727

 

Assets held-for-sale

 

 

 

 

645

 

Total current assets

 

948,780

 

 

 

1,006,625

 

 

 

 

 

Investments

 

274,446

 

 

 

264,947

 

Property, plant and equipment, net

 

2,993,825

 

 

 

2,921,695

 

Other Noncurrent Assets:

 

 

 

Goodwill

 

45,653

 

 

 

45,653

 

Intangible assets, net

 

57,360

 

 

 

60,575

 

Operating lease right-of-use asset

 

59,730

 

 

 

50,400

 

Other assets, net

 

45,054

 

 

 

32,061

 

Total other noncurrent assets

 

207,797

 

 

 

188,689

 

 

 

 

 

Total assets

$

4,424,848

 

 

$

4,381,956

 

 

 

 

 

LIABILITIES & SHAREHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

158,296

 

 

$

130,852

 

Dividends payable

 

42,047

 

 

 

25,194

 

Accrued liabilities

 

238,494

 

 

 

262,885

 

Total current liabilities

 

438,837

 

 

 

418,931

 

 

 

 

 

Noncurrent Liabilities:

 

 

 

Long-term debt, net

 

545,441

 

 

 

545,144

 

Deferred income taxes

 

502,088

 

 

 

517,809

 

Other

 

135,408

 

 

 

128,129

 

Total noncurrent liabilities

 

1,182,937

 

 

 

1,191,082

 

 

 

 

 

Shareholders' Equity:

 

 

 

Common stock, $0.10 par value, 160,000,000 shares authorized, 112,222,865 shares issued as of March 31, 2024 and September 30, 2023, and 98,752,018 and 99,426,526 shares outstanding as of March 31, 2024 and September 30, 2023, respectively

 

11,222

 

 

 

11,222

 

Preferred stock, no par value, 1,000,000 shares authorized, no shares issued

 

 

 

 

 

Additional paid-in capital

 

502,586

 

 

 

525,369

 

Retained earnings

 

2,786,495

 

 

 

2,707,715

 

Accumulated other comprehensive loss

 

(7,713

)

 

 

(7,981

)

Treasury stock, at cost, 13,470,847 shares and 12,796,339 shares as of March 31, 2024 and September 30, 2023, respectively

 

(489,516

)

 

 

(464,382

)

Total shareholders’ equity

 

2,803,074

 

 

 

2,771,943

 

Total liabilities and shareholders' equity

$

4,424,848

 

 

$

4,381,956

 

HELMERICH & PAYNE, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Six Months Ended March 31,

(in thousands)

 

2024

 

 

 

2023

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income

$

180,004

 

 

$

261,185

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

198,536

 

 

 

192,910

 

Asset impairment charges

 

 

 

 

12,097

 

Provision for credit loss

 

90

 

 

 

3,222

 

Stock-based compensation

 

16,101

 

 

 

15,704

 

(Gain) loss on investment securities

 

287

 

 

 

(24,661

)

Gain on reimbursement of drilling equipment

 

(14,955

)

 

 

(27,298

)

Other gain on sale of assets

 

(12

)

 

 

(4,898

)

Deferred income tax expense (benefit)

 

(15,933

)

 

 

3,165

 

Other

 

1,630

 

 

 

1,780

 

Changes in assets and liabilities

 

(47,231

)

 

 

(106,952

)

Net cash provided by operating activities

 

318,517

 

 

 

326,254

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Capital expenditures

 

(254,711

)

 

 

(181,479

)

Purchase of short-term investments

 

(74,749

)

 

 

(64,418

)

Purchase of long-term investments

 

(8,013

)

 

 

(18,771

)

Proceeds from sale of short-term investments

 

87,122

 

 

 

97,744

 

Insurance proceeds from involuntary conversion

 

4,980

 

 

 

 

Proceeds from asset sales

 

20,898

 

 

 

47,718

 

Net cash used in investing activities

 

(224,473

)

 

 

(119,206

)

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Dividends paid

 

(84,371

)

 

 

(102,941

)

Payments for employee taxes on net settlement of equity awards

 

(12,176

)

 

 

(14,410

)

Share repurchases

 

(51,302

)

 

 

(145,013

)

Other

 

(250

)

 

 

(790

)

Net cash used in financing activities

 

(148,099

)

 

 

(263,154

)

Net increase (decrease) in cash and cash equivalents and restricted cash

 

(54,055

)

 

 

(56,106

)

Cash and cash equivalents and restricted cash, beginning of period

 

316,238

 

 

 

269,009

 

Cash and cash equivalents and restricted cash, end of period

$

262,183

 

 

$

212,903

 

HELMERICH & PAYNE, INC.

SEGMENT REPORTING

 

Three Months Ended

 

Six Months Ended

 

March 31,

 

December 31,

 

March 31,

 

March 31,

 

March 31,

(in thousands, except operating statistics)

2024

 

2023

 

2023

 

2024

 

2023

NORTH AMERICA SOLUTIONS

 

 

 

 

 

 

 

 

 

Operating revenues

$

613,339

 

$

594,282

 

$

675,780

 

$

1,207,621

 

$

1,302,943

Direct operating expenses

 

341,938

 

 

338,208

 

 

379,611

 

 

680,146

 

 

746,466

Depreciation and amortization

 

97,573

 

 

87,019

 

 

89,070

 

 

184,592

 

 

178,884

Research and development

 

13,006

 

 

8,689

 

 

8,738

 

 

21,695

 

 

15,797

Selling, general and administrative expense

 

13,692

 

 

15,876

 

 

16,212

 

 

29,568

 

 

30,402

Asset impairment charges

 

 

 

 

 

 

 

 

 

3,948

Segment operating income

$

147,130

 

$

144,490

 

$

182,149

 

$

291,620

 

$

327,446

Financial Data and Other Operating Statistics1:

 

 

 

 

 

 

 

 

 

Direct margin (Non-GAAP)2

$

271,401

 

$

256,074

 

$

296,169

 

$

527,475

 

$

556,477

Revenue days3

 

14,123

 

 

13,711

 

 

16,488

 

 

27,834

 

 

33,067

Average active rigs4

 

155

 

 

149

 

 

183

 

 

152

 

 

182

Number of active rigs at the end of period5

 

152

 

 

151

 

 

179

 

 

152

 

 

179

Number of available rigs at the end of period

 

233

 

 

233

 

 

233

 

 

233

 

 

233

Reimbursements of "out-of-pocket" expenses

$

73,584

 

$

69,728

 

$

77,442

 

$

143,312

 

$

156,601

 

 

 

 

 

 

 

 

 

 

INTERNATIONAL SOLUTIONS

 

 

 

 

 

 

 

 

 

Operating revenues

$

45,878

 

$

54,752

 

$

55,890

 

$

100,630

 

$

110,691

Direct operating expenses

 

37,514

 

 

44,519

 

 

47,275

 

 

82,033

 

 

88,252

Depreciation

 

2,418

 

 

2,334

 

 

1,652

 

 

4,752

 

 

3,044

Selling, general and administrative expense

 

2,377

 

 

2,476

 

 

3,008

 

 

4,853

 

 

5,717

Asset impairment charges

 

 

 

 

 

 

 

 

 

8,149

Segment operating income

$

3,569

 

$

5,423

 

$

3,955

 

$

8,992

 

$

5,529

Financial Data and Other Operating Statistics1:

 

 

 

 

 

 

 

 

 

Direct margin (Non-GAAP)2

$

8,364

 

$

10,233

 

$

8,615

 

$

18,597

 

$

22,439

Revenue days3

 

1,038

 

 

1,173

 

 

1,263

 

 

2,211

 

 

2,403

Average active rigs4

 

11

 

 

13

 

 

14

 

 

12

 

 

13

Number of active rigs at the end of period5

 

11

 

 

12

 

 

15

 

 

11

 

 

15

Number of available rigs at the end of period

 

22

 

 

22

 

 

22

 

 

22

 

 

22

Reimbursements of "out-of-pocket" expenses

$

1,964

 

$

3,384

 

$

2,789

 

$

5,348

 

$

5,645

 

 

 

 

 

 

 

 

 

 

OFFSHORE GULF OF MEXICO

 

 

 

 

 

 

 

 

 

Operating revenues

$

25,913

 

$

25,531

 

$

34,979

 

$

51,444

 

$

70,143

Direct operating expenses

 

23,010

 

 

19,579

 

 

25,688

 

 

42,589

 

 

51,379

Depreciation

 

1,941

 

 

2,068

 

 

1,904

 

 

4,009

 

 

3,798

Selling, general and administrative expense

 

884

 

 

832

 

 

700

 

 

1,716

 

 

1,533

Segment operating income

$

78

 

$

3,052

 

$

6,687

 

$

3,130

 

$

13,433

Financial Data and Other Operating Statistics1:

 

 

 

 

 

 

 

 

 

Direct margin (Non-GAAP)2

$

2,903

 

$

5,952

 

$

9,291

 

$

8,855

 

$

18,764

Revenue days3

 

273

 

 

289

 

 

360

 

 

562

 

 

728

Average active rigs4

 

3

 

 

3

 

 

4

 

 

3

 

 

4

Number of active rigs at the end of period5

 

3

 

 

3

 

 

4

 

 

3

 

 

4

Number of available rigs at the end of period

 

7

 

 

7

 

 

7

 

 

7

 

 

7

Reimbursements of "out-of-pocket" expenses

$

8,857

 

$

7,827

 

$

7,994

 

$

16,684

 

$

15,183

(1)

 

These operating metrics and financial data, including average active rigs, are provided to allow investors to analyze the various components of segment financial results in terms of activity, utilization and other key results. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results.

(2)

 

Direct margin, which is considered a non-GAAP metric, is defined as operating revenues (less reimbursements) less direct operating expenses (less reimbursements) and is included as a supplemental disclosure because we believe it is useful in assessing and understanding our current operational performance, especially in making comparisons over time. See — Non-GAAP Measurements below for a reconciliation of segment operating income (loss) to direct margin.

(3)

 

Defined as the number of contractual days we recognized revenue for during the period.

(4)

 

Active rigs generate revenue for the Company; accordingly, 'average active rigs' represents the average number of rigs generating revenue during the applicable time period. This metric is calculated by dividing revenue days by total days in the applicable period (i.e. 91 days for the three months ended March 31, 2024, 92 days for the three months ended December 31, 2023, 90 days for the three months ended March 31, 2023, 183 days for the six months ended March 31, 2024, 182 days for the six months ended March 31, 2023).

(5)

 

Defined as the number of rigs generating revenue at the applicable end date of the time period.

Segment operating income for all segments is a non-GAAP financial measure of the Company’s performance, as it excludes gain on sale of assets, corporate selling, general and administrative expenses and corporate depreciation. The Company considers segment operating income (loss) to be an important supplemental measure of operating performance for presenting trends in the Company’s core businesses. This measure is used by the Company to facilitate period-to-period comparisons in operating performance of the Company’s reportable segments in the aggregate by eliminating items that affect comparability between periods. The Company believes that segment operating income (loss) is useful to investors because it provides a means to evaluate the operating performance of the segments and the Company on an ongoing basis using criteria that are used by our internal decision makers. Additionally, it highlights operating trends and aids analytical comparisons. However, segment operating income (loss) has limitations and should not be used as an alternative to operating income or loss, a performance measure determined in accordance with GAAP, as it excludes certain costs that may affect the Company’s operating performance in future periods.

Income from discontinued operations was presented as a separate line item on our Unaudited Condensed Consolidated Statements of Operations during the three and six months ended March 31, 2023. To conform with the current fiscal year presentation, we reclassified amounts previously presented in Income from discontinued operations, which were not material, to Other within Other income (expense) on our Unaudited Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2023.

The following table reconciles operating income per the information above to income (loss) from continuing operations before income taxes as reported on the Unaudited Condensed Consolidated Statements of Operations:

 

Three Months Ended

 

Six Months Ended

 

March 31,

 

December 31,

 

March 31,

 

March 31,

 

March 31,

(in thousands)

 

2024

 

 

 

2023

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Operating income (loss)

 

 

 

 

 

 

 

 

 

North America Solutions

$

147,130

 

 

$

144,490

 

 

$

182,149

 

 

$

291,620

 

 

$

327,446

 

International Solutions

 

3,569

 

 

 

5,423

 

 

 

3,955

 

 

 

8,992

 

 

 

5,529

 

Offshore Gulf of Mexico

 

78

 

 

 

3,052

 

 

 

6,687

 

 

 

3,130

 

 

 

13,433

 

Other

 

2,785

 

 

 

(67

)

 

 

6,823

 

 

 

2,718

 

 

 

11,500

 

Eliminations

 

(772

)

 

 

334

 

 

 

(2,267

)

 

 

(438

)

 

 

43

 

Segment operating income

$

152,790

 

 

$

153,232

 

 

$

197,347

 

 

$

306,022

 

 

$

357,951

 

Gain on reimbursement of drilling equipment

 

7,461

 

 

 

7,494

 

 

 

11,574

 

 

 

14,955

 

 

 

27,298

 

Other gain (loss) on sale of assets

 

(2,431

)

 

 

2,443

 

 

 

2,519

 

 

 

12

 

 

 

4,898

 

Corporate selling, general and administrative costs and corporate depreciation

 

(47,248

)

 

 

(39,701

)

 

 

(36,235

)

 

 

(86,949

)

 

 

(70,719

)

Operating income

$

110,572

 

 

$

123,468

 

 

$

175,205

 

 

$

234,040

 

 

$

319,428

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest and dividend income

 

6,567

 

 

 

10,734

 

 

 

5,055

 

 

 

17,301

 

 

 

9,760

 

Interest expense

 

(4,261

)

 

 

(4,372

)

 

 

(4,239

)

 

 

(8,633

)

 

 

(8,594

)

Gain (loss) on investment securities

 

3,747

 

 

 

(4,034

)

 

 

39,752

 

 

 

(287

)

 

 

24,661

 

Other

 

400

 

 

 

(543

)

 

 

(604

)

 

 

(143

)

 

 

(546

)

Total unallocated amounts

 

6,453

 

 

 

1,785

 

 

 

39,964

 

 

 

8,238

 

 

 

25,281

 

Income before income taxes

$

117,025

 

 

$

125,253

 

 

$

215,169

 

 

$

242,278

 

 

$

344,709

 

SUPPLEMENTARY STATISTICAL INFORMATION

Unaudited

 

U.S. LAND RIG COUNTS & MARKETABLE FLEET STATISTICS

               

 

April 24,

 

March 31,

 

December 31,

 

Q2FY24

 

2024

 

2024

 

2023

 

Average

U.S. Land Operations

 

 

 

 

 

 

 

Term Contract Rigs

86

 

96

 

89

 

95

Spot Contract Rigs

64

 

56

 

62

 

60

Total Contracted Rigs

150

 

152

 

151

 

155

Idle or Other Rigs

82

 

81

 

82

 

78