Helmerich & Payne, Inc. (“H&P” or the “Company”) (NYSE:
HP) today announced its supplemental shareholder return plan and
capital budget for fiscal year 2023. The Company also announced the
timing of the upcoming conference call and webcast for its fiscal
fourth quarter of 2022.
President and CEO John Lindsay commented, “I am pleased to
announce the Company’s 2023 supplemental shareholder return plan,
which augments our long-standing commitment to returning cash to
shareholders. Our current base dividend of $1/share per annum is
meant to serve as a foundation of that cash return commitment
throughout the cycles inherent in our industry. The supplemental
dividend for fiscal 2023, which we anticipate will be approximately
$100 million in aggregate, is meant to further boost shareholder
returns. This plan, and any potential subsequent ones for future
fiscal years, are not only designed to further enhance base cash
returns, but also allow the Company the flexibility to further
invest in the business, supplement additional dividend returns,
and/or repurchase shares as those opportunities arise.
“Implementation of this plan is also reflective of the Company’s
ability to execute across multiple capital allocation strategies
simultaneously. In North America Solutions, we plan to reactivate
up to 16 rigs by March 31, 2023, for appropriate prices and terms.
This would take our rig count from 176 as of September 30, 2022, to
an upper target of 192 active rigs for fiscal 2023. H&P’s
continued efforts to expand its international presence and
operations in fiscal 2023 is another such strategy. We realize some
of the international capital investments H&P makes this fiscal
year, captured in our capex budget, will take time to fully develop
and generate returns for the Company. However, we have previously
stated that our international strategy, particularly with regards
to the Middle East, is a long-term play, knowing that there will be
upfront investments to secure our success.”
2023 Supplemental Shareholder Return Plan:
The Company has established its 2023 supplemental shareholder
return plan, which is currently projected to provide approximately
$100 million in additional cash returns to shareholders in the form
of additional dividends. These supplemental dividends are expected
to be paid in four, approximately equal, installments during fiscal
2023. These additional cash returns represent approximately 50% of
the Company’s projected cash flow generation in fiscal 2023 after
planned capital expenditures and after the Company’s already
established “base” annual dividend of $1.00/share, which is roughly
$110 million on an annualized basis. All such established base and
supplemental dividends are subject to the determination and
approval of the Company’s Board of Directors on a quarterly
basis.
Under the plan, the Company may utilize remaining cash flow
projected to be generated in fiscal year 2023, after planned
capital expenditures, established base and supplemental dividends,
as well as cash on hand, to fund additional supplemental dividends
or opportunistically repurchase shares of its common stock under
its evergreen four million shares per annum repurchase
authorization. Such repurchases will be dependent upon several
factors, including market and industry conditions and other
investment opportunities available to the Company.
The 2023 supplemental shareholder return plan is specific to
fiscal year 2023 and is derived from current forecasts and
projections for fiscal year 2023, which are subject to change based
on industry factors and market conditions. The intention is to
refresh the plan in subsequent fiscal years with adjustments made
based on relevant factors and market conditions at that time,
including the Company’s projected cash flow generation, and
accretive investment opportunities.
On October 17, 2022, the Board of Directors of the Company
declared a quarterly cash supplemental dividend of $0.235 per
share, payable on December 1, 2022, to stockholders of record at
the close of business on November 15, 2022. The payable date and
record date of this supplemental dividend coincide with the dates
applicable to the Company’s base dividend of $0.25 per share, which
was declared on September 7, 2022.
Capex for Fiscal Year 2023:
The Company has set its initial fiscal year 2023 capex budget to
range between $425 and $475 million, representing a sizeable
sequential increase and highlighting the capital-intensive nature
of H&P’s business as well as planned international expansion.
H&P’s North America Solutions segment accounts for
approximately two-thirds of the expected spend as the Company plans
to reactivate up to 16 idle rigs from its super-spec FlexRig®
fleet, of which six rigs will be converted to a walking
configuration and as maintenance capex per rig is expected to
modestly exceed the high-end of the historic normalized range. The
Company’s International Solutions segment accounts for roughly a
quarter of the planned expenditures in anticipation of reactivating
more rigs during the fiscal year, upgrading five rigs in Argentina
to super-spec and converting six additional super-spec rigs
domiciled in the U.S. to walking configurations that are currently
planned to be exported to international operations later in the
fiscal year. The remainder of the fiscal 2023 capex budget is
slated for corporate and information technology purposes as the
Company continues to invest in and modernize its own operational
and business-driven technologies.
Senior Vice President and CFO Mark Smith also commented, “The
Company has consistently maintained its strong financial position
and is able to capitalize on that position to the benefit of its
shareholders. H&P is well-positioned to execute on its capital
allocation plans for fiscal 2023, which cumulatively represent over
$650 million - $425 million to $475 million in capex plus
approximately $210 million of expected cash returns to
shareholders. Furthermore, based on current expectations, we look
to have additional cash generation beyond our planned capital
commitments which can be used for opportunistic share repurchases,
additional supplemental dividends or other investment
opportunities.
“Our North America Solutions segment’s fiscal 2023 capital
expenditures budget is adversely impacted by higher maintenance
capex, which looks to modestly exceed the historic range of $750
thousand to $1 million per rig per year. The fiscal 2023 range is
expected to be between $1.1 million and $1.3 million per active
rig. The reasons for this are twofold – one is due to the reduced
spending during the pandemic years in which time the Company
judiciously preserved capital spending by utilizing component
equipment from idle rigs - we now must make up for those capital
spending deferments, and two is due to the current inflationary
environment and supply chain challenges that the industry is
experiencing. Capital expenditures for our International Solutions
segment are much more meaningful in fiscal 2023 as we anticipate
converting some super-spec rigs in the U.S. to walking
configurations that are earmarked for export and upgrading some
international rigs to super-spec. Both of these planned spends are
indicative of international markets escalating their focus on
unconventional drilling.
“To re-iterate, the supplemental shareholder return plan
represents our current intention of returning capital to
shareholders during fiscal 2023 based upon our outlook of market
and industry conditions at present, including our current
expectations surrounding rig pricing, activity levels, margins,
cash generation, capital expenditures and other investments
opportunities. In determining whether to proceed with the 2023
supplemental shareholder return plan as originally intended and any
future supplemental shareholder return plans in later fiscal years,
management and our board of directors will continue to review the
Company’s financial position and performance together with relative
market conditions at that time.
“Our focus on a complete fiscal year multi-pronged capital
allocation plan is in part a result of our customers’ and the
upstream energy industry’s adhering to their annual budgets, which
underpins confidence in our annual planning horizon. We believe the
announced supplemental shareholder return plan will boost our
already competitive yield. Additionally, the plan provides
flexibility to allow for share repurchases or other investment
opportunities, which remain prominent options to the deployment of
capital.”
John Lindsay concluded, “These planned actions of enhancing
shareholder cash returns and investing in future growth of the
Company would not be possible without our strong capital
stewardship and financial discipline. These principles will
continue to drive our actions going forward enabling the Company to
be a leader within the oilfield service industry in not only
providing financial returns, but also returns in the form of cash
to shareholders as we continue our 60-year history of dividend
payments.”
Investor slides for October 2022 are available for download on
the Company’s website, within Investors, under Presentations.
Fiscal Fourth Quarter 2022 Conference Call and
Webcast:
The Company’s financial guidance for the fiscal fourth quarter
of 2022 and full fiscal year 2022 are consistent with those
provided in the Company’s press release dated July 27, 2022. Those
items are enumerated below:
Fiscal Fourth Quarter 2022:
- North America Solutions direct margins(1) are now expected to
be towards the high end of the previous expected range of $185-$205
million
- North America Solutions active rig count was 176 rigs as of
September 30, 2022
- International Solutions direct margins(1) are still expected to
be between $4-$7 million, exclusive of any foreign exchange gains
or losses
- Offshore Gulf of Mexico direct margins(1) are still expected to
be between $9-$11 million
Fiscal Year 2022:
- Gross capital expenditures are still expected to be
approximately $250 to $270 million
- Depreciation and amortization expenses are still expected to be
approximately $405 million
- Research and development expenses are still expected to be
roughly $27 million
- Selling, general and administrative expenses are still expected
to be just over $180 million
- Cash, cash equivalents and short-term investments are now
expected to be towards the low end of the previous expected range
of $350-$400 million
The financial guidance set forth above do not represent a
comprehensive statement of operational results or financial
position for or as of the fiscal quarter and fiscal year ended
September 30, 2022. The final comprehensive statements of
operational results and financial position for and as of the fiscal
quarter and fiscal year ended September 30, 2022, will be contained
in our Annual Report on Form 10-K. Our final operational results
and audited financial statements may vary from the financial
guidance described above as our quarterly and yearly financial
statement close processes are not yet complete and additional
developments and adjustments may arise between now and the time the
financial information and operational results for these periods are
finalized. In addition, the financial guidance is not necessarily
indicative of the results to be achieved for any future period.
The Company’s fiscal fourth quarter 2022 conference call will
take place on Thursday, November 17, 2022, 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.
Investors may listen to the conference call either by phone or
audio webcast.
What:
Helmerich & Payne, Inc.’s
Fiscal Fourth Quarter 2022 Earnings Release. Other material
developments may also be discussed.
When:
11:00 a.m. ET (10:00 a.m. CT),
Thursday, November 17, 2022
Via Phone:
Domestic: 877-830-2596 Access
Code: Helmerich
International: 785-424-1877
Access Code: Helmerich
Via Internet:
Visit http://www.helmerichpayne.com then click on
“Investors” and then click on “News & Events – Event &
Presentations” to find the link to the webcast.
Questions:
Dave Wilson,
investor.relations@hpinc.com, 918-588-5190
If you are unable to listen during the live webcast, the call
will be archived for 365 days on Helmerich & Payne, Inc.’s
website, http://www.helmerichpayne.com, under “News & Events –
Event & Presentations”, which can be accessed through the
“Investors” section of the website.
About Helmerich & Payne, Inc.
Founded in 1920, Helmerich & Payne, Inc. is committed to
delivering industry leading drilling productivity and reliability.
H&P operates with the highest level of integrity, safety and
innovation to deliver superior results for our 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. For more information,
visit 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
our future cash flow, use of generated cash flow, dividend amounts
and timing, supplemental shareholder return plans, future financial
position, operations outlook, business strategy, share repurchases,
investments, budgets, projected costs and plans, objectives of
management for future operations, contract terms, financing and
funding, capex spending, outlook for international markets, actions
by customers, and results of completed periods 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 of 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, including preliminary estimates of the results of
completed periods. 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 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.
(1) Direct margin, which is considered a
non-GAAP metric, is defined as operating revenues less direct
operating expenses 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. Expected direct margin for the fourth quarter of fiscal 2022
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 financial statement impact of
certain items based on preliminary results. Therefore, as a result
of the uncertainty and variability of the nature and amount of
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221018006160/en/
Dave Wilson, investor.relations@hpinc.com,
918-588-5190
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