Helmerich & Payne: FY3Q26 Preview: Anticipating a Solid NAS Update with Line of Sight Toward International Gross Margin Target

Research evidence excerpt

Helmerich & Payne: FY3Q26 Preview: Anticipating a Solid NAS Update with Line of Sight Toward International Gross Margin Target

26E ($ mn) 854 865 1.3%

activity inflection. Looking ahead, we expect incremental NAS and International Adj. EBITDA - 27E ($ mn) 990 1,009 1.9%

activity to continue, driving FY4Q26 EBITDA of $239mm. We expect a step up

Quarterly Forecasts (FYE Sep)in the NAS rig count to ~145 rigs on average, and we anticipate a modest sequential

margin tailwind of $93 per rig day to $18.7K, with upside supported by HP’s ability Adj. EPS ($)

2025A 2026E 2027E

to reactivate rigs quickly and cost-effectively. The pool of reactivatable rigs and Q1 0.71 (0.14)A 0.39

ongoing self-help initiatives, including the FlexRobotics rollout, should Q2 0.02 (0.38)A 0.31

compound labor-driven efficiency gains alongside digital and autonomous Q3 0.22 0.19 0.36

Q4 0.01 0.34 0.44

capabilities. FY 0.96 0.01 1.49

On the International side, the company’s profitability should improve as Saudi Style Exposure

reactivations advance, with four of seven rigs spudded, a 5th imminent (set to land

in 3Q or 4Q depending on timing), and the 6th and 7th expected in FY4Q26.

However, we think the path to the stated $45mm per quarter gross margin run-rate

is more likely a FY1Q27 event than FY4Q26, given the cadence and remaining

logistical friction across the Middle East. Following our conference and dinner

with management last week, the company’s leadership transitions appear

constructive, as new CEO Trey Adams and the planned CFO handoff from Kevin

Vann to Todd Scruggs align with consistent priorities to accelerate international

margin accretion, defend the core NAM engine (where HP has led share for more

than 10 years), and continue deleveraging toward ~1x leverage, with management