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Helmerich & Payne, Inc. (HP)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 revenue was $1.01B, exceeding S&P Global consensus ($0.97B*) while adjusted EPS was -$0.01, missing the normalized EPS consensus (+$0.26*) and reflecting non‑recurring items; adjusted EBITDA was ~$225M, roughly in line with consensus ($224M*) . Values retrieved from S&P Global.
  • North America Solutions (NAS) continued to lead peers: direct margin of ~$242M, margin/day ~$18,620 on 141 average rigs; sequential margins softened modestly versus Q3 .
  • International Solutions improved sequentially (operating loss -$75M vs -$167M in Q3) and announced reactivation of 7 Saudi rigs (operating to reach 24 rigs in-country by mid‑2026); offshore posted record direct margin ~$35M and stronger operating income .
  • FY 2026 guidance reduced capex ($280–$320M vs ~$380–$395M prior year), G&A ($265–$285M; >$50M reduction vs pro forma 2025), and cash taxes ($95–$145M vs $190–$220M in 2025); debt paydown ahead of plan with $210M repaid, targeting full $400M term loan repayment by Q3 FY2026 .

What Went Well and What Went Wrong

What Went Well

  • NAS execution and customer alignment sustained industry‑leading economics: Q4 NAS direct margin ~$242M and ~50% of rigs on performance contracts, supporting margin/day ~$18,620 .
  • Offshore Solutions delivered record direct margin ($35M) and operating income ($20M) on higher utilization; outlook remains constructive with 30–35 management contracts expected in Q1 FY26 .
  • Management underscored global scale and momentum: “Fiscal 2025 was a historic year… we grew our global drilling footprint to over 200 operating rigs… welcomed KCA Deutag… well‑positioned to capitalize on international opportunities” – CEO John Lindsay .

What Went Wrong

  • GAAP net loss (-$57M; -$0.58 EPS) driven by select items: losses on investment securities (-$0.28), impairment (-$0.12), credit loss on a note (-$0.08), restructuring (-$0.07), transaction/integration (-$0.05) .
  • International still loss‑making (-$75.7M operating loss), though improved YoY/sequential; Q1 FY26 margins will be weighed by reactivation costs not capitalized .
  • NAS margins/day guided modestly lower near‑term as certain one‑time and seasonal opex flowed through; management expects stabilization with performance contracts and cost focus .

Financial Results

MetricQ4 2024Q2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$693.793 $1,016.039 $1,040.924 $1,011.748
GAAP Diluted EPS ($USD)$0.76 $0.01 $(1.64) $(0.58)
Adjusted EPS ($USD)—$0.02 $0.22 $(0.01)
Adjusted EBITDA ($USD Millions)$218.452 $241.504 $268.063 $224.869

Segment performance (operating revenues, operating income/loss, direct margin, activity):

Segment MetricQ4 2024Q3 2025Q4 2025
NAS Operating Revenues ($MM)$618.285 $592.214 $572.274
NAS Segment Operating Income ($MM)$155.593 $157.649 $118.158
NAS Direct Margin ($MM)$274.516 $266.172 $242.039
NAS Average Active Rigs (#)151 147 141
International Operating Revenues ($MM)$45.463 $265.803 $241.234
International Segment Operating Income (Loss) ($MM)$(3.954) $(166.513) $(75.715)
International Direct Margin ($MM)$1.453 $34.108 $29.518
International Average Active Rigs (#)15 72 62
Offshore Operating Revenues ($MM)$27.545 $161.777 $180.327
Offshore Segment Operating Income ($MM)$4.275 $8.769 $20.293
Offshore Direct Margin ($MM)$7.077 $22.773 $34.761
Offshore Average Active Rigs (#)3 3 3

KPIs and operating stats:

KPIQ4 2024Q3 2025Q4 2025
NAS Revenue Days13,871 13,400 12,999
NAS Margin/Day ($USD)—$19,860 $18,620
NAS Rigs on Performance Contracts (%)—~50% ~50%
International Revenue Days1,336 6,573 5,691
Offshore Revenue Days276 273 276
U.S. Land Contracted Rigs (End of Period)151 141 143
International Contracted Rigs (End of Period)27 89 86
Offshore Management Contracts33 33 33

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NAS Direct Margin ($MM)Q1 FY26—$225–$250 New
NAS Avg Contracted Rig Count (#)Q1 FY26—138–144 New
International Direct Margin ($MM)Q1 FY26—$13–$23 New
International Avg Operating Rigs (#)Q1 FY26—57–63 New
Offshore Direct Margin ($MM)Q1 FY26—$27–$33 New
Offshore Mgmt Contracts/Platform Rigs (#)Q1 FY26—30–35 New
Gross Capex ($MM)FY 2026$380–$395 (FY25) $280–$320 Lowered
G&A Expense ($MM)FY 2026~$280 (FY25) $265–$285 (>$50M reduction vs pro forma FY25) Lowered
Cash Taxes ($MM)FY 2026$190–$220 (FY25) $95–$145 Lowered
Depreciation ($MM)FY 2026~$595 (FY25) ~$690 Raised
Offshore Direct Margin ($MM)FY 2026—$100–$115; mgmt contracts 30–35 New
Debt Reduction (Term Loan)Timing$175–$200 by YE 2025 $210 repaid by Oct; full $400 by Q3 FY26 Accelerated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Technology/AutomationScaling drilling automation in US; app adoption up; intent to export tech abroad Continued uptake; rig floor automation deployed on ~⅓ of fleet; expanding automation globally Positive adoption expanding internationally
Supply chain/tariffsTariffs and macro pressures mentioned; moderating guidance prudently Less focus; cost savings through ERP harmonization and scale Stabilizing; cost focus mitigates
Macro & commoditySofter oil prices pressuring rig counts; constructive forward curve Expect Lower 48 stability if prices hold; gas demand bolstered by data center power needs More constructive; gas narrative strengthening
Saudi rigs & international marginsRig suspensions; FlexRig start‑up; margins to inflect in Q4 FY25 and FY26 7 rig reactivations in 1H FY26; reactivation costs near‑term; margins to improve mid‑2026 Improving visibility; near‑term opex headwinds
Offshore operationsAdded scale post‑KCAD; stable cash flows Record margins; Q1 FY26 direct margin $27–$33 Strengthening utilization
Cost reduction & deleveragingIdentified $50–$75M run‑rate savings; term loan paydown plans $210M repaid; $100M base dividend; broader ERP/SG&A reduction Ahead of plan; further SG&A cuts in FY26

Management Commentary

  • CEO John Lindsay: “Fiscal 2025 was a historic year for H&P… we’re confident our proven drilling solutions and technologies can deliver significant value to international clients” .
  • CFO Kevin Vann: “Our fiscal year 2026 G&A guidance represents a decrease of over $50 million… we expect to fully repay all $400 million by the end of the third fiscal quarter of 2026” .
  • President Trey Adams: “We will be resuming operations on seven previously idled rigs in Saudi Arabia… with these seven... we will go from 17 active rigs to 24” .
  • NAS execution: “We have ~50% of rigs on performance contracts… leading revenue and lowest opex” – Mike Lennox (SVP Americas) .

Q&A Highlights

  • International margin trajectory: Q4 was a trough; reactivation opex will pressure Q1–Q2 FY26; expect run‑rate margins to improve by late FY26 .
  • NAS daily margins/opex: Some one‑time/seasonal costs in Q4; management expects operating expenses per day to decline; commodity stability supports margins .
  • Capex detail: Maintenance capex ~$1.0M per US rig; $1.3–$1.5M per international rig; focus on setbacks/top drives/automation .
  • Cash taxes: FY26 cash tax guidance benefits from recent US tax law changes tied to accelerated capital expensing; sustainability depends on capex levels .
  • Permian share and rig churn: Permian share grew to ~37%; strong churn management added 19 new customers over the year .

Estimates Context

Metric (Q4 2025)S&P Global Consensus*ActualSurprise
Revenue ($USD Millions)$973.080*$1,011.748 +$38.668
EPS (Normalized, $USD)$0.262*$(0.01) (Adjusted EPS) -$0.272
EBITDA ($USD Millions)$224.358*$224.869 (Adjusted EBITDA) +$0.511

Values retrieved from S&P Global.
Implications: Strong top‑line beat contrasted with an EPS miss driven by select items (investment securities loss, impairment, credit loss, restructuring/integration), likely prompting downward EPS estimate revisions but limited changes to revenue/EBITDA paths near‑term .

Key Takeaways for Investors

  • The revenue engine remains durable (third straight ~$1B+ quarter), with NAS leading and offshore strengthening; adjusted EBITDA broadly in line, but GAAP EPS impacted by discrete items .
  • International trajectory is turning: 7 Saudi reactivations in 1H FY26 and improving FlexRig margins support a 2H FY26 margin uplift; monitor near‑term reactivation opex drag .
  • Cost discipline and deleveraging are tangible catalysts: FY26 SG&A down >$50M, cash taxes down sharply, capex reduced; $210M term loan repaid and path to full repayment by Q3 FY26 .
  • NAS margins/day should stabilize as seasonal/overtime costs abate and performance contracts/automation scale; watch commodity stability and churn management to hold 138–144 rigs in Q1 FY26 .
  • Offshore record margins plus 30–35 management contracts guide a resilient, asset‑light cash flow stream through FY26 .
  • Estimate revisions: Expect EPS normalization lower near‑term on select items; limited EBITDA changes given strong execution; revenue likely nudged higher after Q4 beat (consensus currently ~$0.98B*) . Values retrieved from S&P Global.
  • Trading set‑up: Positive catalysts include Saudi reactivations, continued debt paydown and SG&A savings; risks include commodity volatility, international reactivation opex, and investment securities marks .