Helmerich & Payne, Inc. (NYSE: HP) reported financial results for our fiscal second quarter ended on March 31, 2025.
Operating and Financial Highlights
- Completed the acquisition of KCA Deutag, representing a major milestone in our long-term international growth strategy
- Now expects to realize in excess of $25 million in expense synergies associated with the KCA Deutag acquisition; additionally we have identified further permanent cost savings that when aggregated with the synergies, we would expect the overall cost structure to be reduced by $50 to $75 million
- Reported net income of $1.7 million, or $0.01 per diluted share, from operating revenues of $1.0 billion for the quarter ended March 31, 2025
- Continued strong performance in the North America Solutions segment with operating income of $152 million, realizing associated direct margin(1) per day of $19,800 with total direct margin of $266 million during the quarter
- Net cash provided by operating activities of $56.0 million during the fiscal second quarter
- Reported fiscal second quarter Adjusted EBITDA(2) of $242 million
- Repaid $25 million on its existing $400 million term loan funded at the close of the acquisition during the second fiscal quarter of 2025, and expects to repay approximately $175 million in calendar 2025
- Returned approximately $25 million to shareholders as part of our ongoing dividend program
Management Commentary
“This quarter marks a significant achievement for us as we completed our acquisition of KCA Deutag in January, positioning us as a leading global drilling company,” said John Lindsay, H&P president and CEO. “We're confident this international expansion will benefit us over the long-term, despite the near-term challenges the industry is facing, as we build on our position to deliver leading edge solutions for our customers around the world.”
"Our North American Solutions segment remains resilient, as our customer focus allowed us to maintain a steady rig count and realize margins that were better than our expectations going into the quarter. Looking ahead, we expect a modestly lower rig count as market volatility overrides any potential incremental demand. I would note that performance contracts and technology solutions remain a critical component of our overall contracting strategy, and we continue to see benefits for both our customers and H&P by providing a win-win value proposition.
"Our International Solutions and Offshore Solutions operating segments reflect the inclusion of the legacy KCA Deutag operations, and we look forward to fully integrating this business into our operations. We believe our track record of discipline and customer focus in North America will position us for success over the long-term, despite near-term headwinds surrounding our international growth plans, specifically the rig suspensions and the start-up of operations associated with our legacy growth plans in Saudi Arabia. While our outlook for direct margins for the International Solutions segment in the third fiscal quarter is not where we want it to be, we do expect improvement in the results on a sequential basis, and our Offshore Solutions segment continues to produce strong and steady cash flows. We continue to have a long-term view, and look at the cyclicality of the industry and the growing pains often associated with achieving greater scale as temporary, and ones we will work through," Lindsay concluded.
Senior Vice President and CFO Kevin Vann also commented, "Our integration of KCA Deutag into H&P has allowed us to take a fresh look at potential synergies in addition to our overall cost structure necessary to support the business going forward. I’m pleased that our expectations are now to realize well in excess of the $25 million in expense synergies we initially expected and that further permanent cost savings have been identified, such that in aggregate we expect our overall cost structure to be reduced by $50 to $75 million. We expect to recognize the full impact of these savings during our fiscal year 2026, but we are already starting to realize the cost savings in our current results.”
“During the quarter, the amount of cash flow generated from our North America Solutions segment is tracking with our previous expectations; however, our capital program was somewhat front loaded, and we did experience some working capital changes that adversely impacted the overall cash flow during the quarter. Despite that, our near-term debt reduction goals remain firmly intact, as does our commitment to our annual dividend. To that end, we repaid $25 million on the $400 million two-year term loan during the second fiscal quarter and we expect to redeem approximately $175 million of this term loan by end of calendar 2025.”
John Lindsay concluded, "The second fiscal quarter of 2025 is historic for the Company with the inclusion of KCA Deutag’s operations in our results, representing a milestone in our international expansion. As a Company and management team, we have experienced many cycles over our history. We are confident we’ll navigate the current uncertainty with a continued focus on providing safety, performance and value to our customers, keeping a sharp eye on our cost structure, and continuing our goal to increase long-term shareholder value."
More details, including our operating segment results and operational outlook for the third quarter, can be found at the link below.