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Mar 31, 2020
Helmerich & Payne Q2 2020 Earnings Report
Helmerich & Payne experienced a net loss due to significant asset impairments amidst the COVID-19 pandemic and oil market challenges.
Key Takeaways
Helmerich & Payne reported a net loss of $421 million, or $(3.88) per diluted share, on operating revenues of $634 million for the quarter ended March 31, 2020. The results were impacted by a $563 million non-cash impairment charge. The company is focused on maintaining financial strength through cost controls and revised capital allocation policies.
U.S. Land revenue increased sequentially to $531 million, with operating gross margins increasing to $183 million.
A non-cash impairment charge of $563 million was incurred related to goodwill, less capable rigs, and excess equipment.
The company is reducing annual dividends by $200 million and capital expenditures by approximately $95 million.
H&P is focused on new commercial models, digital technology offerings, international presence, and cost management.
Revenue by Segment
Forward Guidance
Helmerich & Payne anticipates challenges in the third fiscal quarter due to the impact of COVID-19 on the oil market. However, they expect positive operating gross margins for U.S. Land and Offshore Operations.
Positive Outlook
- U.S. Land operating gross margins are expected to be between $90-$105 million, including $45 million from contract early termination compensation.
- Offshore operating gross margins are expected to be between $4-$6 million.
- Management contracts are expected to generate approximately $2 million in operating income.
- Fiscal third quarter revenue for HP Technologies is expected to be between $4-$7 million.
- Asset sales are expected to total $30 to $40 million in fiscal year 2020.
Challenges Ahead
- The company expects to end the quarter below 70 rigs due to rig release notifications.
- International Land operating gross margins are expected to be negative, between $(4)-$(6) million.
- Gross capital expenditures are expected to be approximately $185 to $205 million.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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