Oil rig operator Helmerich & Payne posts Q3 loss on impairment charges, adj EPS beats

Overview

• Helmerich & Payne fiscal Q3 net loss of of $163 mln due to $173 mln goodwill impairment

• Adjusted EPS for fiscal Q3 beats consensus, per LSEG data

• Co repaid $120 mln on $400 mln term loan, expects $200 mln by year-end

Outlook

• Helmerich & Payne expects Q4 direct margin for North America Solutions between $230-$250 mln

• Company anticipates Q4 North America Solutions rig count to be approximately 138-144 rigs

• International Solutions Q4 direct margin expected between $22-$32 mln

• Offshore Solutions Q4 direct margin forecasted between $22-$30 mln

• Gross capital expenditures for FY 2025 expected to be $380-$395 mln

Result Drivers

• GOODWILL IMPAIRMENT - $173 mln impairment charge affected overall results, including $128 mln from KCAD acquisition

• NORTH AMERICA SOLUTIONS - Operating income rose to $158 mln, with stable direct margins despite lower rig activity

• INTERNATIONAL SOLUTIONS - Operating loss widened due to KCAD acquisition impact, but direct margins exceeded guidance expectations

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 4 "strong buy" or "buy", 12 "hold" and 3 "sell" or "strong sell"

• The average consensus recommendation for the oil & gas drilling peer group is "buy."

• Wall Street's median 12-month price target for Helmerich and Payne Inc is $20.00, about 22% above its August 5 closing price of $15.61

• The stock recently traded at 15 times the next 12-month earnings vs. a P/E of 7 three months ago

Press Release: ID:nBw8LGPjBa