| For Immediate Release | 29 August 2024 |
Hunting PLC
("Hunting" or "the Company" or "the Group")
Unaudited results for the six months to 30 June 2024
Strong progress towards the Hunting 2030 Strategic Objectives
Hunting PLC (LSE:HTG), the global, precision engineering group, today announces its unaudited half year results for the six months ended 30 June 2024.
Financial Highlights
| · | Order book increased by 32% to a record level of $699.5m |
| · | Revenue increased by 3% to $493.8m |
| · | Gross profit of $135.2m up 18% and gross margin improved to 27% from 24% |
| · | EBITDA of $60.3m up 23%, with EBITDA margin of 12% up from 10% in H1 2023 |
| · | Adjusted operating profit $40.1m and adjusted operating profit margin 8% up from 6% |
| · | Adjusted diluted EPS of 15.5 cents up from 9.6 cents |
| · | Interim dividend declared 5.5 cents per share (H1 2023 - 5.0 cents), an increase of 10% |
Commenting on the results Jim Johnson, Chief Executive, said:
"Hunting's balanced and diversified product portfolio has been decisive in delivering another set of strong results and securing a record order book, helping to underpin Hunting's continued growth.
"Over the period, there were strong performances from our OCTG, Subsea and Advanced Manufacturing product groups. Today's results demonstrate the strength of offshore and international markets and steady progress in energy transition markets. Our success with Kuwait Oil Company demonstrates Hunting's technology and supply chain leadership, and we are looking to further build on this success in the coming years. While our Perforating Systems results have been impacted by the challenging onshore market in the US, Hunting's technology offering remains compelling for clients, and will see improvements as and when market conditions recover.
"I am delighted with the progress against our Hunting 2030 strategic ambitions, with management already delivering on many of the key areas we highlighted to our stakeholders - especially around revenue diversification, profitability and progressive shareholder returns. In addition, the acceleration of commercialisation of our licensed Organic Oil Recovery technology is another great milestone to report and showcases Hunting's ability to leverage its industry leading IP to deliver value adding solutions to our global clients.
"In summary, I would like to thank our leadership team and all of our staff for their hard work and achievements in the period and we look forward to the future with confidence."
Financial Summary
Financial Performance Measures Derived from IFRS
| |
| | |
| | H1 2024 $m | H1 2023 $m | Variance |
| Operating profiti | 40.1 | 19.2 | +109% |
| Profit before taxi | 36.2 | 15.7 | +131% |
| Diluted earnings per shareii | 15.5c | 6.2c | +150% |
| Net cash inflow / (outflow) from operating activities | 24.7 | (33.8) | +173% |
| Sales order book | 699.5 | 529.7 | +32% |
| |
| | |
i Restated for the import tax provision.
ii. Restated for the import tax provision and associated tax impact.
Financial Performance Measures
| |
| | |
| | H1 2024 $m | H1 2023 $m | Variance |
| Revenue | 493.8 | 477.8 | +3% |
| Non-oil and gas revenue | 36.0 | 36.1 | |
| EBITDAi/v | 60.3 | 49.1 | +23% |
| EBITDA marginii | 12% | 10% | |
| Adjusted profit before taxi/iii | 36.2 | 23.1 | +57% |
| Adjusted diluted earnings per sharei/iii | 15.5c | 9.6c | +61% |
| |
| | |
| Free cash flowi | 2.8 | (59.5) | |
| Working capital to revenue ratio | 46% | 42% | |
| Total cash and bank / (borrowings)i | (9.7) | (51.7) | |
| Net assetsvi | 970.8 | 850.3 | |
| ROCEi | 8% | 4% | |
| Interim dividend per share declared | 5.5c | 5.0c | +10% |
| |
| | |
i Non-GAAP measure ("NGM"). Please see the 2024 Half Year Report and Accounts pages 38 to 43.
ii EBITDA as a percentage of revenue.
iii Adjusted results exclude adjusting items.
iv Adjusted operating profit as a percentage of revenue.
v Restated following the inclusion of the results from associates and joint ventures of $0.4m.
vi Restated for the import tax provision and associated tax impact.
Outlook Statement
As noted in our July 2024 Trading Update, Hunting has raised its 2024 full-year EBITDA guidance to c.$134-138m, reflecting the impact of the Kuwait Oil Company ("KOC") orders to be delivered prior to the year-end, offsetting trading headwinds seen in the Perforating Systems product group. The KOC orders will continue to be worked through during H1 2025, which supports a positive outlook for the Group's trading well into 2025.
The Directors continue to see strong international and offshore demand given the current price for WTI crude oil, with tender activity for its OCTG product lines remaining strong in the Middle East and Asia Pacific. Activity in South America continues to be robust, while in Africa longer-term growth opportunities are opening, following oil and gas discoveries in Namibia and Mozambique.
Management anticipates a firming in the Henry Hub natural gas price by 2025, which will support onshore and gas-focused drilling activity in the US and Canada, which will also enable oil focused drilling to increase given the limitations on flaring in certain US onshore basins, such as the Permian.
The Group's Subsea product lines are pursuing new international opportunities across its three major product families. Tender activity remains positive with South America and West Africa remaining key areas of focus.
Energy Transition opportunities will continue to be pursued, with the Group's focus to be more weighted towards geothermal markets.
In summary, the Board remains comfortable with current market consensus with the overall outlook positive given the activity levels across multiple regions and product groups and the diversity of Hunting's portfolio.
Corporate Highlights
Strong progress against Hunting 2030 strategic objectives
The Group continued to deliver against its 2030 strategic objectives, including progress within our OCTG, Subsea, Advanced Manufacturing, and Other Manufacturing product groups, including Energy Transition and non-oil and gas diversification. Hunting delivered period-on-period revenue growth of 3% to $493.8m; an EBITDA margin of 12% (H1 2023 - 10%); a working capital to revenue ratio of 46%; and dividend growth of 10%, all in line with our targets announced at the Capital Markets Day in 2023 and the Company is, therefore, on track to meet its 2025 financial objectives, which were communicated to stakeholders last year.
$231 million of OCTG orders secured with KOC
Hunting announced in May and June 2024 that it had secured two orders with KOC for a total of c.90,000 metric tonnes of OCTG, with the Group's SEAL-LOCK XD™ premium connection applied. The orders are a result of over six years of collaboration between Hunting, KOC and Hengyang Valin Steel in China to qualify the Group's connections and OCTG raw material for the deep gas drilling programmes in Kuwait. The order will be delivered between Q3 2024 and Q2 2025, with revenue being recognised across this period.
$60 million of orders secured for the Group's licensed Organic Oil Recovery technology
In August 2024, Hunting signed a contract with a major North Sea operator for the treatment of a number of fields on the UKCS. This order, together with a number of other orders, have a combined value of up to $60m and are to be completed over the coming five years. The Directors are delighted with the commercial progress made in the past year.
Progress with the Energy Transition strategy
The Group has continued to secure orders for geothermal projects in the US, Europe and Asia Pacific. Interest and market momentum for geothermal projects continues to accelerate in California, Germany, the Netherlands and in the Philippines, with projects being commissioned. Hunting is focusing its strategy on providing high-value alloy OCTG, tubulars and premium connections.
Investment in CRA Tubulars B.V.
In August 2024, the Group invested c.$0.3m in CRA Tubulars B.V. ("CRA"), a developer of novel titanium and composite tubular technology, for application to energy transition projects. The investment brings a closer relationship between Hunting and CRA as its tubular technology is assessed against stringent mechanical testing by a supermajor E&P company.
Securing API threading licence at Nashik, India, facility
The Group's joint venture facility in Nashik, India, received its API threading licence in May 2024, which will support new tender activity across India. Management anticipates that the addressable market in India is c.$300-400m per year for OCTG and accessories manufacturing, with the Jindal Hunting Energy Services joint venture being an early mover in-country, as local content requirements increase.
Continued roll out of new technology to support long-term growth
The Group continued to introduce new technologies to clients across most of its product groups throughout the period. The Group completed qualification and testing of new premium and semi-premium connections in support of Hunting's energy-related and Energy Transition growth initiatives. Hunting Titan is to introduce shortly a 'Tandem' H-4 Perforating System variant to customers to support more complex well completions. Subsea Technologies has introduced new stress joint solutions in the period, supporting its access to new FPSO build outs for deep and ultra deepwater projects.
Restructuring of Hunting Titan to save c.$6-7 million per year
In July 2024, the Group announced a cost saving programme within the Hunting Titan (Perforating Systems) operating segment due to low market activity within the US onshore market, which includes the closure of one operating site and two distribution centres and a workforce reduction of up to 92 employees - being c.15% of Hunting Titan's headcount. The resultant savings will be c.$6-7m per year, with a saving of c.$3m to be realised in 2024, which will improve forward trading performance.
Operational footprint
With the cost reduction programme ongoing within Hunting Titan, at 30 June 2024, the Group has 25 operating sites (31 December 2023 - 27) and 15 distribution centres (31 December 2023 - 16). The Nashik facility is not included in this data as Hunting holds a 49% interest.
Half Year Management Report
For access to the Half Year Management Report narrative for the six months to 30 June 2024 please click on the following link.
http://www.rns-pdf.londonstockexchange.com/rns/0680C_1-2024-8-28.pdf
The Company has changed its accounting policies to include within operating profit the contribution from its share of associates' and joint ventures' results. The Company's definition of free cash flow has also been amended to aid comparability, with tangible and intangible capital expenditure now reported within the free cash flow figure. The Company's financial statements have also been restated for the 2023 half year to reflect an increase of $7.6 million in provisions held on the Company's consolidated balance sheet, in respect of the import tax matter noted on page 4 of the 2024 Half Year Report.
Financial Statements and Notes to the Accounts
For access to the Financial Statements and Notes to the Accounts for the half year ended 30 June 2024 please click on the following link.
http://www.rns-pdf.londonstockexchange.com/rns/0680C_2-2024-8-28.pdf
Page number references refer to the full Half Year Report.
The linked documents provide access to all financial and operational disclosures contained in the Group's 2024 Half Year Report and Accounts and can be accessed at www.huntingplc.com.
Half Year Results Analyst Briefing and Webcast
Hunting PLC will host an analyst briefing and webcast at 9:00am (UK) on Thursday 29 August 2024, at the offices of CMS at Cannon Place, 78 Cannon St, London, EC4N 6AF.
The live webcast can be accessed via the following link.
https://webcasting.buchanan.uk.com/broadcast/66a0f81a27d380a9b7f03ee8
Analysts and investors wishing to participate in a Q&A session can do so by submitting questions via the chat function of the webcast and these will be addressed by management during the live webcast. If you have any queries relating to this then please email hunting@buchanan.uk.com.
Investor Meet Company Webcast
After this, Hunting's management will provide a live presentation via the Investor Meet Company platform commencing at 10:30am (UK). The presentation is open to all existing and potential shareholders. Questions can be submitted prior to this presentation via the Investor Meet Company dashboard up until 9:00am the day before the meeting or at any time during the live presentation. Investors can sign up to Investor Meet Company for free and add to meet Hunting PLC at:
https://www.investormeetcompany.com/hunting-plc/register-investor
Investors who already follow Hunting on the Investor Meet Company platform will automatically be invited.
For further information please contact:
| Hunting PLC Jim Johnson, Chief Executive Bruce Ferguson, Finance Director
lon.ir@hunting-intl.com
| Tel: +44 (0) 20 7321 0123
|
| Buchanan Ben Romney Barry Archer George Pope | Tel: +44 (0) 20 7466 5000 |
Notes to Editors:
About Hunting PLC
Hunting is a global, precision engineering group that provides precision-manufactured equipment and premium services, which add value for our customers. Established in 1874, it is a listed public company, quoted on the London Stock Exchange in the Equity Shares in Commercial Companies ("ESCC") category. The Company maintains a corporate office in Houston and is headquartered in London. As well as the United Kingdom, the Company has operations in China, India, Indonesia, Mexico, Netherlands, Norway, Saudi Arabia, Singapore, United Arab Emirates and the United States of America.
The Group reports in US dollars across five operating segments: Hunting Titan; North America; Subsea Technologies; Europe, Middle East and Africa ("EMEA") and Asia Pacific.
The Group also reports revenue and EBITDA financial metrics based on five product groups: OCTG, Perforating Systems, Subsea, Advanced Manufacturing and Other Manufacturing.
Hunting PLC's Legal Entity Identifier is 2138008S5FL78ITZRN66.
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