Good day, everyone, and welcome to the Helmerich & Payne Fiscal First Quarter Earnings Call. [Operator Instructions] Please note, this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Kris Nicol, Vice President of Investor Relations.

Welcome, everyone, to Helmerich & Payne's conference call and webcast for the first fiscal quarter of 2026. On today's call, John Lindsay, our CEO, will be joined by Trey Adams, President; Mike Lennox, Executive Vice President of the Western Hemisphere and Kevin Vann, our Chief Financial Officer. Before we begin our prepared remarks, I'd like to remind everyone that this call will include forward-looking statements as defined under securities laws. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that the expectations will prove to be correct. Please refer to our filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. Reconciliations of direct margin and certain GAAP to non-GAAP measures can be found in our earnings release. I also want to highlight that we will have a presentation, which will support the prepared remarks from the management team and can be found on the IR website. With that, I'll turn the call over to John.

Thank you, Kris. Hello, everyone. Thank you for joining us. As always, we appreciate your interest in H&P. I'll begin with an overview of our first quarter results, and then I'll turn it over to Trey and he will discuss the broader macro environment, current dynamics in the rig market and several key commercial developments from the quarter. Including an update on our latest technology initiative, FlexRobotics. Kevin will then walk through our financial results and provide guidance for the second quarter and full fiscal year. To wrap up, Trey will return to summarize the key takeaways before we open the line up for questions. Turning to Slide 4 of the presentation, I'd like to begin by highlighting some of our key achievements for the fiscal first quarter. Execution continued to strengthen across our business. Driving solid operational and financial performance. Adjusted EBITDA exceeded expectations at $230 million, supported by resilient results in our North America Solutions and Offshore Solutions segments as well as the stronger-than-anticipated performance in International Solutions. I would note that the first quarter benefited from the timing of certain rig reactivation expenses, which will be more heavily reflected in the second quarter. Beyond the rig reactivations in Saudi Arabia, we also saw meaningful margin improvement from our FlexRig fleet operating in the vast Jafurah gas field. I'm encouraged by this progress and optimistic that we will continue to see further margin expansion throughout the remainder of the year. In North America Solutions, I want to recognize the team for another quarter of strong execution. We averaged 143 rigs working and our industry-leading technology and talented teams continue to deliver for customers, generating average margins of over $18,000 per day. Our offshore segment also delivered another quarter of robust operational performance. This business typically operates under long-term…

Thank you, John. I'd like to express my gratitude both on behalf of our whole organization and personally for your outstanding leadership, discipline and the example you've provided and especially for the mentorship and friendship. You've led this company with a long-term mindset, a steady hand through multiple cycles and a deep respect for the people and values that define H&P. The strength of the company today is a direct reflection of that leadership. As I step into the role next month, I do so with a great deal of respect for what's been built and for real excitement about where we're headed. The foundation is strong, a global footprint, differentiated technology and the H&P way, a culture that truly differentiates us. Building on that foundation, our focus will be on continuing to evolve, leaning into innovation, advancing our capabilities and positioning the company to compete and create value at a global scale in what is a constantly changing energy landscape. I'm honored to take on the role of CEO and to lead the next chapter of Helmerich & Payne alongside this team. I look forward to working with our employees customers and shareholders as we move forward together. Turning our attention to the current macro environment on Slide 6. We firmly believe that in the future, the world will require significantly more energy than it consumes today, driven by expanding population and growing prosperity in emerging markets, along with the rising power needs from AI advancements in many developed nations. This dynamic supports our view that demand for oil and gas will persist and grow for many years to come, which in turn, bolsters the need for our global drilling solutions. Looking at this year, the energy landscape appears cautiously positive, but uneven as various macroeconomic and geopolitical factors…

Thanks, Trey. I will start by reviewing our first quarter operating results and providing details on the performance of our operating segments. I will then spend some time walking through our capital allocation framework and conclude by outlining our guidance for the fiscal second quarter before handing it back to Trey. Let me start with highlights for the recently completed quarter on Slide 11, where we exceeded the midpoint of our direct margin guidance in all our operating regions despite the dynamic market environment. Alongside our continued operational and commercial success, we also made strong progress on the deleveraging front as we have paid off $260 million on our $400 million term loan as of the end of January, remaining significantly ahead of the debt reduction goals we laid out last year. During the quarter, the company generated revenues of $1 billion, which is the third consecutive quarter at that $1 billion mark. We generated $230 million of adjusted EBITDA coming in ahead of expectations. This was primarily led by stronger-than-anticipated margin performance in International Solutions as a result of the lower-than-expected reactivation cost in Saudi during the quarter. The balance will now occur in the second fiscal quarter and is reflected in our 2Q international margin guidance. On EPS, we reported a net loss of $0.98 per diluted share. These results were negatively impacted by a non-cash impairment charge and some unusual non-cash items of $103 million. Absent those items, we generated a loss of $0.15 per share. Capital expenditures for the first quarter were $68 million, trending below our sequential run rate. This outcome was primarily driven by slower-than-anticipated CapEx associated with the Saudi reactivation capital deployment in International Solutions, along with timing changes in some of our North American solutions spend. In line with this, H&P free…

Thank you, Kevin. Turning to Slide 18. I'd like to conclude by refocusing on our compelling investment thesis. H&P today is unrivaled in our scale, geographic diversity and portfolio to capture rising global onshore drilling activity. We are clearly the technology leader and see a significant opportunity over time to deploy our cutting-edge technology across our global fleet. We believe we are only in the early stages of international shale development and are particularly excited about the prospects in the Middle East and North Africa. At the same time, we are embarking on a rewarding journey of enterprise optimization with several programs underway to streamline our portfolio, cost structure and deliver on the full potential of the KCA Deutag acquisition. Our near-term commitment remains on deleveraging our balance sheet, and we are confident in repaying our term loan ahead of schedule. Beyond that, we believe we will have the financial strength and flexibility to enhance our attractive shareholder return profile and further differentiate our portfolio. Lastly, I'm proud of the way we started the year with solid first quarter results. While we face some timing and market dynamics in the second quarter, we are optimistic about activity improving through our fiscal third and fourth quarters and remain confident in the guide we set out at the start of the year. I want to thank the employees of H&P for all of their efforts and look forward to what we can achieve together this year and beyond. That concludes our prepared remarks for the quarter. And I will now turn it back to the operator for questions.

[Operator Instructions] We'll take our first question from Scott Gruber with Citigroup.

And before I ask the question, I just want to thank you, John, for all the insights over the years. It's been a real pleasure and enjoy your next adventure.

Great. Thank you very much, Scott. I appreciate it.

Yes, indeed. And Trey, congrats on the promo to you as well.

Thank you very much. .

So I want to ask about the moving parts incorporated into the fiscal 2Q guide. We got some color, which I appreciate. It sounds like the start-up costs are going to increase in 2Q as you really push forward those reactivations in Saudi. Are you able to dimension the size of those start-up costs in fiscal 2Q? And will there still be some reactivation costs continuing into fiscal 3Q? And then you mentioned the seasonal headwinds in the U.S. business. Outside of seasonality, is the underlying profit margin for the North American services business now is pretty stable? Or is there still some contract roll headwind in that business. So just some color on those moving parts in the guide for 2Q and how some of those headwinds abate into the future.

Yes. Thank you for the question. This is Trey. I'll start, and then Kevin and Mike may fill in some additional color as we go through this question. We definitely saw some lumpiness between Q1 and Q2, and we'll discuss the 3 primary drivers of the lumpiness between the quarters here in just a second. I will firmly commit and say that we feel good on the forward guide. We feel good about our guided activity range in North America, as Kevin stated in his prepared remarks, and we feel good about the international Solutions outlook. As it relates to reactivation costs in Saudi, those costs we anticipated occurring in the first fiscal quarter now have moved into the second fiscal quarter. We will see some of those costs continue to move forward into the third quarter, but the vast majority of those will occur in the second fiscal quarter and within our guide. We did also -- the other kind of key driver was in our North American Solutions segment. As you guys are aware and as we've shown, we do expect fewer rigs in North America. This was largely driven by the end of the calendar year 2025 crude pricing. Some of the churn rates and some of the private activity that we have traditionally seen was much more moderated as we exited the calendar year 2025 and entered into our second fiscal quarter. Mike can get into some color later on the call about how we see that outlook as we progress through the year, but we feel like that's much more robust. Private E&Ps compared to a couple of years ago, definitely didn't load to the wagon in the fourth quarter and into the first quarter like they had been over the past couple of years.…

Yes. Scott, yes. And if you think about second quarter international guidance of $12 million to $22 million. We've got all of the additional start-up reactivation costs that are hitting margin. We've got them plugged into that quarter. We're pretty confident they'll all hit next quarter. But what you're going to see, without giving you third quarter guidance, you're going to see a material step-up in gross margin coming out of our International Solutions segment from the second to third quarter. So again, from an International Solutions perspective, it's really just kind of sliding some costs between quarters, but we still anticipate when you think about those reactivation or those reactivated rigs in Saudi. We're anticipating a little over $5 million of EBITDA per year contribution out of those rigs. And then on top of that, with our FlexRig performance continuing to get better in Saudi. I think what we've talked about historically has been between $20 million and $25 million for that fleet, those rigs to contribute to annualized EBITDA. So again, second quarter, kind of a lull. Some of that's activity driven. Some of that's, that's just getting ready to really ramp up our International Solutions segment. So -- and as Trey mentioned on cost, using all that as the opportunity from a capital perspective really to take a long hard look in the mirror and make sure that -- we've got capital allocated to the best projects and the ones that are going to return the most value the quickest. And so we're lowering our capital guidance a slight touch. But again, I think that's demonstrative of just us keeping our eye on the ball.

We'll take our next question from Arun Jayaram with JPMorgan.

Yes. Good morning, gentlemen. Trey, I wanted to start -- see if we could start with your vision for H&P. You talked about this being a new chapter for the company as you take over for John next month. But I was wondering if you could talk about your vision for the company, including what you see as some of the opportunities internationally, particularly as we see growth in unconventionals and geotherm?

Yes. Thank you. And first, I just want to take a moment to say how excited I am about the future and about where we're positioned today. John is sitting here and his vision has been manifested in is coming to reality across the organization. The company is well founded. And our foundation is strong. If you think about where we were 14 months ago prior to the KCA Deutag acquisition and the True from 2 of H&P today versus where we were then, we're a truly different company in business today than we were 14 months ago. We're the global leader in onshore drilling. We have a great base of operations in offshore, the leader in platform, operations and maintenance services globally and having an incredible customer base to be levered and build upon as we look into the future. In addition to that, if you think about the geographic diversity and talent we have at the organization today, it's just incredible. From an engineering resource, drilling expertise, our office-based employees, we just have an incredibly talented organization to build and leverage for a lot of future growth. When you think about the vision over the next 3 to 5 years, obviously, this will continue to be dynamic and very iterative as we look forward. But it's really founded on 4 kind of key notes and nodes, if you will, right? And the first one being international growth and expansion that you referenced. We are very, very focused on continuing to build our Eastern Hemisphere land exposure, the Middle East and North Africa, backed by our rig reactivations in Saudi, key IOC relationships. And then the transference of our models and technology from the North American business will really underpin what we believe is going to be a growth…

No, no, go ahead. Go ahead.

Moving to international excitement, right? We sit here today, and we're talking about the reactivations in Saudi that are going to be foundational for our Eastern Hemisphere land growth. What we haven't referenced in a big way, I think Kevin touched on it a little bit earlier, but we are adding a second rig in Australia today, excited about that opportunity. In addition to that, we saw a little bit of activity moderation going from 1Q to 2Q in Argentina. We expect that activity to pick back up through the second half of the year. And what we're taking advantage of through that activity moderation period is we're investing in technology in Argentina. And so our digital applications and fleet we'll be able to be levered by our customers down there that's going to create exponential value for us as we look forward in Argentina. Today, as we stand here on the call, we're rolling out technology and our digital solutions in Oman as well for some key IOC clients. We're excited about that progression. And so as we stated in prepared remarks, we believe we're in the early innings of a really long game here and a long great growth story in the international market. Outside of some of the rig reactivations in Saudi, there's continuing ongoing discussions with IOCs and NOCs in North Africa and in the Middle East. Those are great conversations. We look forward to providing more material updates as the quarters move through the year. But it's really, really exciting to see kind of where we're going. I think you mentioned geothermal. Geothermal, both in Europe and North America continue to be exciting for us. We've added a second rig in the North American market. We've signed an LOI for a third rig in North America. And then Europe, geothermal, we're proud to be over the most advanced extended-reach complex geothermal project in Europe today with more activity points that are coming in the near term. And so that's really starting to gain some good momentum.

Great. John, I wanted to wish you the best. John, I want to wish you the best as you joined Hans and George Doty in retirement?

Yes. Thank you very much. I appreciate it. It's an exciting time for the company, and I'm looking forward to my next chapter as well. Thank you.

We'll take next question from Saurabh Pant with Bank of America.

And John, I'll echo Arun, and Scott, congrats on your retirement. It's been a pleasure to hear your patient and reassuring voice over all these years. John, Thank you.

You're welcome. Thank you very much. It's been a great journey.

Yes. I'm sure you're looking forward to slowing down a little bit. But Trey, you will face the tougher questions now. So -- maybe I'll throw one at you. Maybe I want to dig in a little bit on the international outlook, Trey or Kevin, if you don't mind. I know you alluded to this a little bit in your prepared remarks and in response to Scott's question, but how should we think about profitability when all these 8 FlexRigs are done fully ramping up and the 7 rigs we are reactivating in Saudi. I know activity moved up, right? But keeping everything else steady. How should we think about where margins can go, I think, let's say, perhaps by the fourth fiscal quarter of this year. Just some idea of where things might land.

Yes. Thank you. And I'll start and then turn it over to Kevin for additional color on anything I missed. So we're excited today, as we sit here on the call, we have 2 masts in the air of the planned reactivations and a third mast that's ready to be raised imminently. So we're making good progress on our rig reactivations, working closely with our customer there in the Kingdom to make sure that those start-ups move seamlessly and go really, really well. Overall, we expect 6 of those 7 reactivations to resume prior to the first half of calendar year 2026. The seventh rig, we're still working on timing for rig #7, as it relates to some of the financials around those reactivations, our CapEx for those reactivations has been built into our CapEx guide. So there's no additional CapEx that is being planned or will come out. It's based into our FY '26 assumptions as we sit here today. Beyond that in Saudi Arabia, that being a really core and key area for us on Eastern Hemisphere growth. We're continuing to have ongoing conversations with our primary NOC customer there in the Kingdom and really think that there's plenty of opportunity as we look through '26 and '27. Nothing that we can comment on materially today, but a lot of encouraging conversations. It's all underpinned by safety and performance. So we have great safe start-ups and our FlexRig performance has been moving in a direction that's providing a lot of tailwinds for us for incremental activity. That operations team continues to drill very safe and efficient wells. The more we do that, the more opportunities will be right there in front of us. As the rigs come out of suspension, the 7 reactivations, we anticipate annualized EBITDA of roughly $5 million per rig. And as you alluded to, we expect that to get there into full run rate by Q4 of our fiscal year. In addition to that, we referenced on some commentary earlier that our FlexRig margins continue to improve, and we expect those rigs to get to full annualized run rate numbers by the end of FY '26 as well. So it provides a pretty robust and well-founded business for us there in Saudi through this fiscal year. I will just hit more broadly on the international segment direct margin before turning it to Kevin to see if there's anything I missed here is once everything is reactivated in Saudi, and it's still -- obviously, there's still a lot more to happen and more opportunity in front of us, but these reactivations come online. We expect our International Solutions segment, to be right around a direct margin rate exceeding $45 million per quarter. And so it's just a good testament to getting these reactivations behind us and we can get to a very stabilized run rate as we're looking beyond FY '26.

No, and this is Kevin. I don't really have much to add other than as Trey mentioned, getting gross margin above $45 million, hopefully relatively soon when I think about the big step-up that I mentioned earlier between the second and third quarter. But even more important to that, Trey mentioned all the potential new business and growth that we're going to see out of the Eastern Hemisphere. The acquisition of KCAD basically enabled us to be in this position where now we have that footprint to continue to grow from it. And so $45 million is a good start, but I'm anticipating for years to come now that number to continue to grow.

We'll move next to Eddie Kim with Barclays.

I wanted to circle back to a comment you made about North America likely remaining the most restrained market in the quarter ahead as evidenced by recent behaviors of competitors. Are you still seeing some bad actors out there in terms of pricing? And I know you expressed confidence in maintaining your full year rig count in North America, which does imply a ramp up as we move through the year. Does that same confidence apply to pricing as well? Or do you think that ramp-up will take a bit longer to materialize.

Eddie, I'll start. This is Mike. I appreciate the question. Yes. So let's start with the customers and kind of what we're seeing is there's kind of 2 camps out there, the ones that are just disciplined and staying true to what their plans are. And then we have the ones that are more sensitive to the commodity prices. And so what we saw in the quarter, and we've already rebounded essentially, as I described it, where they had pulled back kind of a wait and see, but they still have plans to pick up, and we're starting to see those conversations pick up. And that's why in the back half of the year, we're very optimistic of picking up. Most of those players that were obviously sensitive are your smaller E&Ps, your independents, as far as pricing, we're still saying true. We're not wavering from the 45% to 50% direct margins that we've been on. We're not chasing market share. And really why 45% to 50% direct margins, it's what we need as an organization to continue to invest back in the organization and to achieve the outcomes that our customers are looking to achieve. Again, we're confident in our ability just to navigate the near term and we're very optimistic about the back half of the year.

And just a quick follow-up. Do you think direct margins in North America you'll be able to hold around that $18,000 a day level for the full year? Or does that look more like an upside case based on pricing trends you're seeing right now?

Yes, kind of more short term, I'd call it flat. Yes, we're holding -- trying to hold on to that 18 roughly a day. The back half is kind of -- let's -- we'll see. We do think -- like I said, there's some opportunity there. And of course, that's on the revenue side. And then on the expense side, we're obviously working that. Just from a Trey had mentioned just leveraging our scale, we had some great opportunity there, and we continue to work on our expenses as well.

We take our next question from Derek Podhaizer with Piper Sandler.

I just wanted to discuss the opportunity for FlexRobotics. I mean could you please explain the details around how much capital is required to retrofit an active rig? How many rigs you see being upgraded to FlexRobotics? Will this be customer-funded? How should we think about the paybacks? And how meaningful could this be for your earnings over the near to medium term?

Derek, this is Mike again. I'll start, and then Trey probably add in. I'll just start bluntly. I think it is meaningful in the long term. There's a lot of excitement and really proud of the efforts we've made on our robotics so far. I think Trey mentioned in his earlier comments, we have a test rig that we've been testing this on for quite some time, and we're rolling it out. It's already proven I'll talk about the rigs that's already deployed for a Super Major in the Permian. We work very closely with them to establish goals. We weren't just going to do robotics for robotics just for fun, it was going to have to at least perform at P50 level. So the average level for that operator in the Permian Basin. And after 10 wells, we've drilled and completed. We've moved the rig twice, so 2 pads we're roughly at P40. So we're exceeding that. And really, that's a lot of hard work by our employees, our rig crews, our customer working with us very closely as well as our vendors. It's taken some vendors interacting and setting that goal and going out and achieving. So very optimistic. The demand, the pipeline, the discussion around it. Yes, we think it's very optimistic and look forward to progressing that.

Yes. And I'll just -- this is Trey. I'll just share that on your question around pricing and commercial constructs, right? We intend to make these investments with appropriate returns. Obviously, we're focused on improving safety out at the edge. And then the performance related to robotics is going to be another step change in uplift for us and for our customers. And so those creative commercial constructs that we've levered throughout the rest of our business will be looked at and levered here as well. And we're not going to make this investment without an appropriate returns profile. But it's still early days. The conversations are moving with customers. There's great customer interest and intrigue in the FlexRobotics system and look forward to providing additional color as we move forward.

We'll move next to Keith MacKey with RBC Capital Markets.

Maybe just a question on free cash flow conversion, very strong for Q1. We have some of the pieces for how 2026 will unfold. But can you help us maybe fill in some of those gaps for how we should be thinking about free cash flow conversion for the full year?

Yes. I mean, obviously, without giving full year guidance, when you think about how much cash we're going to be able to generate, as I mentioned earlier, and we've talked about in some of Trey's prepared remarks, we have a clear line of sight on the paying down of the remaining $140 million of our term loan, and that's just from organic cash flow. And that should happen by the end of our third quarter or right around the end of our fiscal year third quarter. So very optimistic about that. But that tells you that how much additional free cash flow, obviously, the dividend is still of primary importance to us. And so we'll continue to obviously pay that. But then when you think about just the capital guidance that we're giving this quarter, obviously, a slight reduction, but or -- but again, just the free cash flow will continue to increase. This quarter was a little bit higher just because of the lower CapEx numbers. But again, for the full year, again, clear line of sight on being able to pay down just organically, the remaining balance on the term loan. And then on top of that, we haven't really talked about it, but we've got -- as we said on the call, we've got $100 million of clear or clarity around some portfolio optimization that we're doing coming out of the acquisition. Feel very strongly about our ability to execute and get those deals pulled across the line by the end of the year.

And we'll move next to Ati Modak with Goldman Sachs.

I guess on the rig rationalizations in the quarter, should we expect more? Can you talk about that? And can you give us any more color on what your thoughts are for market to reduce capacity?

Yes. This is Kevin. I'll begin just in terms of rig rationalization and the impairments that we took for the quarter. It's very difficult. Accounting rules will drive a lot of those impairment decisions and impairment accruals that we have to take. But I'll let Mike touch a little bit on just kind of what those stem from in terms of the rigs that we've had on the sidelines for a while. And if you look at the amount of capital that was going to be necessary in order to put those rigs back to work versus the rigs that, obviously, we're just continually trying to churn and get those put back into our operating system. We just -- from an accounting perspective, we looked at that as too much of a hurdle. And so as a result of it, again, these impairments happen from time to time. But I'll let Mike touch on kind of the specific rigs.

Yes, Ati, more on the details. So we're talking about 30 rigs. Most of them had already been decommissioned. We had been pulling a componentry, reusing that across our fleet. These rigs had not worked since COVID or prior to COVID. So they had been idle for quite some time. And some of the components that we're talking about, for example, on 42 of our rigs today, we have what I call Level 1 automation. So it's a rig floor automation that's removing people from the Red Zones on the floor. So as we've put new equipment on those rigs, the equipment that we've pulled off is what we're talking about that we've -- we're decommissioning and impairing. Another example would be, as we've upgraded our entire fleet, at least domestically, we've had to put new drillers cabins with new technology to run our full suite of tech on those rigs. So these drillers cabins, we've used about as much as we can on them, and it's time to clean the yards and dispose of that equipment. So that's kind of the nature of what we're talking about on equipment.

And congratulations, John.

Thank you. I appreciate it.

And that does conclude our question-and-answer session for today. I would now like to turn the call back to John Lindsay for any additional or closing remarks.

I just want to thank everyone for joining us on the call today. It has truly been honored to lead the company as CEO, serving our shareholders, our Board of Directors and our amazing employees. It has really been the dream of a lifetime and we'll be forever thankful. I truly believe Trey and team will achieve great success. I have complete confidence in their ability to execute the strategy going forward. And with that, operator, you may now close the call.

Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at this time.