Helmerich & Payne, Inc. Q1 FY2026 earnings call

• Execution strengthened across the business, driving solid operational and financial performance. Adjusted EBITDA was $230 million, supported by resilient results in North America Solutions, Offshore Solutions, and stronger-than-anticipated performance in International Solutions.
• Progress in rig reactivations in Saudi Arabia, with 2 rigs having their masts raised and anticipation of completing reactivations by mid-2026. Also, commercial developments in various regions including Australia, Pakistan, Venezuela, and geothermal rig interest in Europe and North America.
• The FlexRobotics technology initiative was successfully deployed on 3 pads for a Super Major customer in the Permian Basin, delivering results in line or better across several operational metrics, focusing on automating routine tasks to improve safety and operational performance.

North America Solutions: Averaged 143 contracted rigs during the first quarter. Segment direct margin was $239 million, which came in above the midpoint of the guidance range. International Solutions: Ended the first quarter with 59 rigs working and generated approximately $29 million in direct margins, exceeding the high end of the guidance range of $13 million to $23 million. Offshore Solutions: Generated a direct margin of approximately $31 million during the quarter, slightly ahead of the midpoint of the guidance range. It had 3 active rigs and 33 management contracts in operation during the quarter.

• North America Solutions: Expect direct margins in the second quarter to range between $205 million to $230 million based on an anticipated rig count of between 132 to 138 rigs. Full year rig count expected to be 132 to 148 rigs.
• International Solutions: Anticipates the rig count to average between 57 to 63 rigs in the second quarter and direct margin between $12 million to $22 million. Expects direct margin in the third and fourth quarters to be materially higher than the first quarter.
• Offshore Solutions: Anticipates an average of 30 to 35 management contracts and operating rigs, with margin rate in the second quarter ranging between $20 million and $30 million. Full year direct margin guidance remains $100 million to $115 million. 2026 gross capital expenditure budget trimmed slightly to between $270 million to $310 million.

• Timing difference of reactivation costs causing lumpiness in direct margin between the first and second quarters.
• Market volatility impacting oil and gas investment levels.
• Accounting-related impairments for certain rigs that had been idle for a long time, driven by accounting rules and the need to rationalize the rig fleet.

Q: About the moving parts in the fiscal 2Q guide, including reactivation costs in Saudi and seasonal headwinds in North America A: Trey Adams stated reactivation costs anticipated in Q1 moved to Q2, some continuing into Q3. North America Solutions saw fewer rigs due to end of 2025 crude pricing and fiscally disciplined public E&P customers. Offshore had seasonal lumpiness but optimistic on full year.

Q: Vision for H&P, including international opportunities and geothermal A: Raymond Adams mentioned international growth and expansion, focus on Eastern Hemisphere land exposure, maintaining North America leadership, deleveraging, and enterprise optimization. Geothermal in Europe and North America is exciting with ongoing projects and contracts.

Q: International outlook and profitability with reactivated rigs A: Raymond Adams said reactivated rigs in Saudi anticipate annualized EBITDA of roughly $5 million per rig, expecting International Solutions segment direct margin to exceed $45 million per quarter by Q4.

Q: FlexRobotics details, including capital required, payback, etc.

A: Michael Lennox discussed FlexRobotics being meaningful long term, already deployed in Permian with positive results, and Trey Adams mentioned appropriate commercial constructs and customer interest.

Q: Free cash flow conversion A: Kevin Vann talked about clear line of sight on paying down the term loan and confidence in executing portfolio optimization to increase free cash flow.