Helmerich & Payne Inc HP

Helmerich & Payne ended its fiscal-year 2021 (ended September 2021) with total revenue 31% lower than its fiscal-year 2020. Operating margins dropped to negative 29% compared with negative 5% last year. After rolling our model to incorporate the full fiscal year, we slightly increase our fair value estimate to $29 from $27. We expect H&P’s steadily improving utilization rates will continue through fiscal 2022. Near-term headwinds include rig reactivation costs--reaching upwards of $1 million per rig--that will weigh on margins as H&P prepares to return to prepandemic utilization levels. However, we expect those additional costs will dissipate over the next year or so and forecast a midcycle operating margin of 13% by 2030, slightly lower than our prior estimate of 14.5%