Helmerich & Payne Reports Mixed Earnings for Q1 2025 Amidst Segment Challenges
Helmerich & Payne, Inc. (HP) announced an adjusted net income of 71 cents per share for its fiscal first quarter of 2025, slightly exceeding the Zacks Consensus Estimate of 69 cents. Strong performance in the North America Solutions segment drove this positive result.
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In contrast, this earnings figure reflects a decline compared to last year’s 97 cents per share, largely due to struggles in the International Solutions segment.
Operating revenues were reported at $677.3 million, which fell short of the Zacks Consensus Estimate of $691 million. Specifically, revenues from Drilling Services amounted to $674.6 million, again missing the consensus expectation of $688 million.
Insights on Helmerich & Payne’s Earnings and Stock Performance
Helmerich & Payne, Inc. price-consensus-eps-surprise-chart | Helmerich & Payne, Inc. Quote
The company’s board declared a quarterly cash dividend of 25 cents per share for common shareholders, with a record date of February 14 and a payment date set for February 28.
For fiscal year 2025, Helmerich & Payne anticipates the North America Solutions segment to keep generating substantial cash flows. The firm aims to utilize cash from a lowered capital expenditure outlook and KCA Deutag’s operational cash flow to reduce debt and return value to shareholders.
Segment Performance Breakdown
North America Solutions: Operating revenues were $598.1 million, a slight increase of 0.7% year over year. This growth is attributed to gaining market share but still fell short of the Zacks Consensus Estimate of $608 million, as overall activity levels remained low. Operating profit was $152 million, up from $144.5 million in the previous year, aided by lower expenses. This figure also surpassed the expected profit of $146 million.
International Solutions: Operating revenues decreased to $47.5 million, a drop of 13.6% from $54.8 million in the previous year and below projections of $51 million, mainly due to challenges in the Saudi Arabian market. The segment reported an operating loss of $15.2 million, contrasting with a profit of $5.4 million from the same quarter in 2024. This loss was wider than the anticipated $6.2 million, influenced by start-up costs tied to operations in Saudi Arabia.
Offshore Gulf of Mexico (Offshore Solutions): Revenues grew 14.4% to $29.2 million compared to $25.5 million in the prior-year quarter, although it slightly missed our projection of $29.3 million. Operating profit rose by 15% to $3.5 million compared to last year but did not meet our estimate of $4.2 million, primarily due to delays in material and supply expenses.
Financial Overview of HP
In the reported quarter, Helmerich & Payne incurred $106.5 million in capital expenditures. As of December 31, 2024, the company had $391.2 million in cash and cash equivalents, while long-term debt stood at $1.8 billion, reflecting a debt-to-capitalization ratio of 37.7%.
Guidance for Q2 Fiscal 2025
Looking ahead to the second quarter of fiscal year 2025, Helmerich & Payne expects operating gross margins between $240-$260 million for North America Solutions and $6-$8 million for legacy Gulf of Mexico (Offshore Solutions) operations. The firm anticipates 146-152 contracted rigs in North America Solutions by the end of the quarter.
For the International Solutions segment, direct margins are projected between $7 million and $3 million, excluding foreign exchange variations. KCA Deutag’s contribution to Gulf of Mexico margins is expected to range from $18-$25 million.
Additionally, Helmerich & Payne forecasts its capital outlay for the fiscal year 2025 to fall between $360 million and $395 million, while ongoing asset sales, including reimbursements and sales of used equipment, are expected to yield about $45 million. The company still estimates depreciation and amortization to reach $400 million, with research and development expenses at $32 million and general administrative expenses at $280 million. Cash taxes are projected between $190-$240 million.
Key Earnings Updates in the Energy Sector
Here are some important earnings highlights from the sector.
Liberty Energy (LBRT), based in Denver, CO, reported a fourth-quarter adjusted net income of 10 cents per share, exceeding the Zacks Consensus Estimate of 9 cents. This performance was aided by a decrease in costs year over year. Nonetheless, LBRT’s earnings were lower than the 54 cents reported in the previous year due to challenges with equipment and service delivery, contributing to reduced activity levels.
Ahead of the earnings release, Liberty’s board declared an 8-cent quarterly dividend per share, payable on March 20 to stockholders as of March 6. During the quarter, Liberty returned $175 million to shareholders through share buybacks and dividends.
Baker Hughes Company (BKR), a leading oilfield service provider, announced a fourth-quarter adjusted net income of 70 cents per share, outperforming the Zacks Consensus Estimate of 63 cents, as well as the prior year’s profit of 51 cents. This robust performance was bolstered by strong operational efficiency and improved margins across segments. Baker Hughes generated $894 million in free cash flow during the quarter, compared to $633 million a year earlier, and had cash and cash equivalents totaling $3,364 million as of December 31, 2024. Its long-term debt stood at $5,970 million, representing a debt-to-capitalization ratio of 26.1%.
Meanwhile, energy infrastructure company Kinder Morgan (KMI) reported fourth-quarter adjusted earnings of 32 cents per share, just below the Zacks Consensus Estimate of 33 cents. However, this result was an improvement from 28 cents in the previous year. Quarterly revenues reached $3.99 billion, missing the consensus estimate of $4.16 billion and falling from $4.04 billion from the prior quarter, primarily due to decreased volumes and asset divestitures.
At the end of the reported quarter, Kinder Morgan held $88 million in cash and had $29.8 billion in long-term debt. For 2025, Kinder Morgan predicts a net income of $2.8 billion, an 8% increase from 2024, with adjusted EPS likely to reach $1.27, a 10% rise. The company also plans to declare dividends of $1.17 per share, a 2% increase from last year.
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