Helmerich & Payne Today: Thehow to bend a cotter pin Story behind Fiscal 2Q16

Helmerich & Payne’s fiscal 2Q16 revenue

Helmerich & Payne (HP) released its fiscal 2Q16 financial results on May 2. The company recorded total revenues of ~$439.2 million in fiscal 2Q16, which is 50.4% lower than the ~$885.7 million it recorded in fiscal 2Q15. Helmerich & Payne’s revenues for the latest quarter decreased mostly due to the slowdown in North American drilling operations, which led to a lower rig count.

Compared to fiscal 1Q16, Helmerich & Payne’s revenues decreased by 10%. In comparison, fiscal 1Q16 revenue for Nabors Industries (NBR), HP’s lower market cap peer, decreased by 70% YoY (year-over-year).

Helmerich & Payne’s fiscal 2Q16 earnings

The fiscal 2Q16 adjusted net EPS (earnings per share) for Helmerich & Payne came in at -$0.278. This missed the consensus sell-side analyst estimate of -$0.236. The sharp drop in operating profit in HP’s Offshore Operations segments primarily contributed to HP’s adjusted earnings falling short of analyst estimates. Compared to fiscal 2Q15, when HP’s adjusted earnings were $0.96, HP’s EPS has switched to an adjusted loss in fiscal 2Q16.

On average, HP’s adjusted EPS has exceeded the consensus estimate by ~5.6% during the past 13 quarters. Helmerich & Payne makes up 4.3% of the Market Vectors Oil Services ETF (OIH), an ETF that tracks an index of 25 OFS companies.

What affected HP’s earnings in fiscal 2Q16?

In fiscal 2Q16, Helmerich & Payne reported net income of ~$21.2 million. This represents an 86% decline over fiscal 2Q15, when HP reported $153.5 million net income. Compared to fiscal 1Q16, when Helmerich & Payne’s net income was ~$16 million, the company’s fiscal 2Q16 reported earnings improved. HP’s fiscal 2Q16 net income was boosted by gains from long-term contracts, early termination compensation, and gains from the sale of used drilling equipment.

Now let’s discuss HP’s growth drivers.

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Browse this series on Market Realist:

Part 2 - Which of Helmerich & Payne’s Segments Suffered the Most in Fiscal 2Q16?

Part 3 - Inside Helmerich & Payne’s Recent Share Price and Returns

Part 4 - Behind Analyst Forecasts for Helmerich & Payne after Fiscal 2Q16 Results

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