REG-HMS Group HMS Group Reports 9m 2020 EBITDA of Rub 3.4 billion
11/12/2020 14:00
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HMS Group (HMSG)
HMS Group Reports 9m 2020 EBITDA of Rub 3.4 billion
11-Dec-2020 / 17:00 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
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HMS Group Reports 9m 2020 EBITDA of Rub 3.4 billion
Moscow, Russia - December 11, 2020 - HMS Group Plc (the "Group") (LSE:
HMSG), the leading pump, oil & gas equipment and compressor manufacturer
and provider of flow control solutions and related services in Russia and
the CIS, today announces its financial results for the nine months ended
September 30, 2020.
Financial highlights 9m 2020:
• Revenue: Rub 31.5 bn (-14% yoy)
• EBITDA 1 1 : Rub 3.4 bn (-1% yoy), EBITDA margin at 10.7%
• Operating profit: Rub 1.2 bn (-23% yoy)
• Loss for the period: Rub 224 mn
• Total debt: Rub 22.8 bn (+8% yoy)
• Net debt: Rub 13.9 bn (-18% yoy)
• Net debt-to-EBITDA LTM ratio: 2.89x
Operational highlights 9m 2020:
• Backlog: Rub 68.2 bn (+65% yoy)
• Order intake: Rub 49.8 bn (+37% yoy)
FY 2020 Guidance:
• Revenue: Rub 50-55 bn
• EBITDA: Rub 4.7-5 bn
• Current operating results don't imply net income for FY2020
• It's unlikely that HMS will pay dividends for FY2020, taking into
account expected annual results and aggregate macroeconomic risks
GROUP PERFORMANCE
9 months 2020 financial Results
in millions of Rub 9m 2020 9m 2019 Change 3Q 2020 2Q 2020 Change
yoy qoq
Orders 49,758 36,227 37% 19,359 7,256 167%
Backlog 68,175 41,395 65% 68,175 55,023 24%
Revenue 31,477 36,681 -14% 11,978 10,383 15%
EBITDA 3,371 3,392 -1% 1,264 1,030 23%
EBITDA margin 10.7% 9.2% 10.6% 9.9%
(Loss)/Profit for the 191 na 90 na
period (224) (161)
Free cash flow/(outflow) 884 (2,623) na 2,397 (3,604) na
HMS' orders portfolios demonstrate signs of recovery after a downswing in
2Q 2020, caused by the COVID-19.
Order intake grew to Rub 49.8 billion, by 37% yoy, compared with Rub 36.2
billion for 9 months 2019. Compressor and oil & gas equipment large
contracts contributed almost Rub 23 billion to the order intake portfolio,
compared with Rub 8.2 billion for 9 months 2019.
Backlog extended its record high and reached Rub 68.2 billion, up by 65%
yoy, compared with Rub 41.4 billion last year. The compressors business
segment was the main giver to this growth. In terms of contracts type,
both recurring business and large contracts grew, compared with 9 months
2019.
Revenue declined to Rub 31.5 billion, by 14% yoy, compared with Rub 36.7
billion for 9 months 2019, mainly due to a 34 percent decrease of the
compressors business segment.
EBITDA was down to Rub 3.4 billion, by a minor 1% yoy, also mainly due to
the compressors. EBITDA margin increased to 10.7%, compared with 9.2% for
9 months 2019.
Revenue from recurring business declined by 7% yoy, and revenue from large
projects was down by 30% yoy. EBITDA from recurring business increased by
15% yoy, and, in contrast, EBITDA from large contracts declined by 16%
yoy.
Loss for 9 months 2020 was Rub 224 million, compared with profit for the
period at Rub 191 million for 9 months 2019. In comparison with 6 months
2020, loss for 9 months got smaller, down from Rub 314 million loss.
Free cash inflow was Rub 884 million, compared with Rub 2.6 billion
outflow for 9 months 2019, despite lower revenue, compared with 9 months
2019, due to a cost-optimization program.
Expenses and Operating profit
in millions of Rub 9m 2020 9m 2019 Change yoy Share of 9m Share of 9m
2020 revenue 2019 revenue
Cost of sales 25,166 29,626 -15% 80.0% 80.8%
Materials and 16,940 20,582 -18% 53.8% 56.1%
components
Labour costs incl 5,094 5,238 -3% 16.2% 14.3%
Social taxes
Depreciation and 1,586 1,444 10% 5.0% 3.9%
amortization
Construction and 1,378 1,561 -12% 4.4% 4.3%
design 2 2
Others 168 803 -79% 0.5% 2.2%
Cost of sales was down to Rub 25.2 billion by 15% yoy, compared with Rub
29.6 billion for 9 months 2019, due to materials and components (-18% yoy)
and change in work in progress and finished goods. Materials and
components declined because of both lower HMS' revenue and lower share of
large contracts under execution in the reporting period.
Gross profit was down to Rub 4.3 billion, by 11% yoy, compared with Rub
7.1 billion for 9 months 2019.
in millions of Rub 9m 2020 9m 2019 Change yoy Share of 9m Share of 9m
2020 revenue 2019 revenue
Gross profit 6,311 7,055 -11% 20.0% 19.2%
Distribution and 1,344 1,402 -4% 4.3% 3.8%
transportation
General and 3,597 3,981 -10% 11.4% 10.9%
administrative
SG&A expenses 4,941 5,382 -8% 15.7% 14.7%
Other operating 154 90 72% 0.5% 0.2%
expenses
Operating expenses 5,095 5,472 -7% 16.2% 14.9%
ex. Cost of sales
Operating profit 1,215 1,583 -23% 3.9% 4.3%
Finance costs 1,438 1,292 11% 4.6% 3.5%
Distribution and transportation expenses were down by 4% yoy, mainly due
to reduced marketing expenses. As a share of revenue, distribution and
transportation expenses was up to 4.3%, compared with 3.8% last year.
General and administrative expenses were down by 10% yoy to Rub 3.6
billion, compared with Rub 4.0 billion last year, mainly due to a 10
percent decrease in labor costs and related social taxes. As a share of
revenue, general and administrative expenses were up to 11.4% from 10.9%
for 9 months 2019.
As a result, SG&A expenses 3 3 declined by 8% yoy, but as a share of
revenue they were up to 15.7%, compared with 14.7% for 9 months 2019.
Operating profit was Rub 1.2 billion, compared with Rub 1.6 billion for 9
months 2019, down by 23%.
in millions of Rub 9m 2020 9m 2019 Change yoy
Finance costs 1,438 1,292 11%
Interest expenses 1,398 1,279 9%
Interest rate, average 8.13% 8.72%
Interest rate Rub, average 8.26% 8.89%
Finance costs increased to Rub 1.4 billion, compared with Rub 1.3 billion
for 9 months 2019. The reason was a 9 percent increase in interest
expenses due to a higher level of total debt (+8% yoy).
Average interest rates decreased to 8.13% p.a., compared with 8.72% p.a.
last year.
BUSINESS SEGMENTS PERFORMANCE
Industrial pumps 4 i
in millions of Rub 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
Orders 13,343 16,423 -19% 5,329 3,499 52%
Backlog 19,749 18,834 5% 19,749 19,685 0%
Revenue 13,945 13,904 0% 5,657 4,594 23%
EBITDA 1,816 1,871 -3% 797 545 46%
EBITDA margin 13.0% 13.5% 14.1% 11.9%
Industrial pumps' order intake declined by 19% yoy to Rub 13.3 billion,
compared with Rub 16.4 billion for 9 months 2019. The main reason was
that there wasn't any large contract signed in the reporting period. Nine
months' order intake was fully made of the regular business.
Backlog grew by 5% yoy to Rub 19.8 billion, compared with Rub 18.8 billion
for 9 months 2019.
Revenue stood almost unchanged at Rub 13.9 billion, based on the recurring
business. EBITDA declined to Rub 1.8 billion, by 3% yoy, compared with Rub
1.9 billion for 9 months 2019, due to a larger share of the recurring
business in the reporting period that has a lower profitability. EBITDA
margin was 13.0%, compared with 13.5% for 9 months 2019.
3Q 2020 financial results demonstrated signs of recovery. Revenue grew by
23% qoq and EBITDA was up 46% qoq that resulted in EBITDA margin of 14.1%,
compared with 11.9% in 2Q 2020.
Oil and Gas equipment & projects (OGEP) 5 ii
in millions of Rub 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
Orders 10,237 11,096 -8% 3,514 1,789 96%
Backlog 9,916 9,374 6% 9,916 8,282 20%
Revenue 8,394 8,599 -2% 3,241 2,078 56%
EBITDA 290 na 47 na
(171) (111)
EBITDA margin 3.5% -2.0% 1.4% -5.3%
Order intake declined to Rub 10.2 billion, by 8% yoy, compared with Rub
11.1 billion for 9 months 2019, due to substantially less contracts signed
in 2Q 2020. In 3Q 2020, order intake grew almost twofold, compared with
2Q 2020, based on the grown recurring orders portfolio and a large
contract signed.
Backlog was up by 6% yoy to Rub 9.9 billion, compared with Rub 9.4 billion
for 9 months 2019.
Revenue declined to Rub 8.4 billion, by 2% yoy, compared with Rub 8.6
billion for 9 months 2019. EBITDA was up to Rub 290 million, compared
with Rub (171) million, and EBITDA margin was 3.5% vs. (2.0)% for 9 months
2019, thanks to the recovery of recurring business after the deterioration
in 2Q 2020.
Compressors 6 iii
in millions of Rub 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
Orders 25,963 8,578 203% 10,512 1,961 436%
Backlog 36,859 11,931 209% 36,859 26,366 40%
Revenue 8,868 13,326 -33% 3,075 3,599 -15%
EBITDA 1,142 1,266 -10% 489 432 13%
EBITDA margin 12.9% 9.5% 15.9% 12.0%
Order intake grew threefold to Rub 26.0 billion, compared with Rub 8.6
billion. Backlog increased also threefold to Rub 36.9 billion, compared
with Rub 11.9 billion last year. The growth of orders portfolios was based
on both the recurring business and large contracts.
Revenue was down by 33% yoy to Rub 8.9 billion, compared with Rub 13.3
billion. EBITDA declined by 10% yoy to Rub 1.1 billion, compared with Rub
1.3 billion for 9 months 2019. EBITDA margin was up to 12.9%, compared
with 9.5% for 9 months 2019.
In the first three quarters of 2019 there was a drop in order intake that
led to lower financial results for 9 months 2020. The situation has
recovered, based on the current order portfolio.
Construction 7 iv
in millions of Rub 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
Orders 215 129 66% 5 7 -26%
Backlog 1,652 1,256 32% 1,652 690 139%
Revenue 580 1,098 -47% 174 169 3%
EBITDA (20) 49 na (59) 17 na
EBITDA margin -3.4% 4.5% -34.0% 9.8%
Order intake equaled Rub 215 million. Backlog was up to Rub 1.7 billion.
Revenue was down to Rub 580 million, compared with Rub 1.1 billion for 9
months 2019. EBITDA was Rub (20) million, compared with Rub 49 million
last year.
Working capital and Capital expenditures
in millions of Rub 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
Working capital 8,715 11,522 -24% 8,715 10,486 -17%
Working capital / 18.9% 20.1% 18.9% 22.1%
Revenue LTM
Capex 1,141 1,203 -5% 399 408 -2%
Acquisition 0 670 - -
Working capital declined to Rub 8.7 billion, by 24% yoy, compared with Rub
11.5 billion for 9 months 2019, due to a quarterly volatility, related to
execution of large contracts. As a share of revenue, working capital was
down to 18.9%, compared with 20.1% for 9 months 2019.
HMS continued reducing its maintenance capital expenditures. They were
decreased to Rub 1.1 billion, by 5% yoy, compared with Rub 1.2 billion
last year.
DEBT POSITION
in millions of Rub 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
Total debt 22,832 21,115 8% 22,832 22,752 0%
Net debt 13,897 16,960 -18% 13,897 16,177 -14%
Net debt / EBITDA 2.89 2.98 2.89 3.25
LTM
Total debt increased to Rub 22.8 billion, by 8% yoy, compared with Rub
21.1 billion for 9 months 2019. Net debt, in contrast, was down to Rub
13.9 billion, by 18% yoy, compared with Rub 17.0 billion for 9 months
2019.
Net debt to EBITDA LTM ratio decreased to 2.89x compared with 2.98x for 9
months 2019.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE & FINANCIAL MANAGEMENT
FINANCIAL MANAGEMENT
After the reporting date, HMS Group shifted a number of debt repayments
from 2022 to 2023.
HMS' debt repayment schedule, Rub mn 2020 2021 2022 2,023
Debt to be repaid 167 1,229 13,187 7,233
LARGE CONTRACTS
After the reporting date, in November 2020, HMS announced the signature of
a compressor contract worth Rub 3.2 billion to manufacture gas
transportation units to be installed at a client's oil & gas condensate
field.
Also, in December 2020, the company announced the signature of a Rub 1.3
billion contract to engineer and manufacture pumping stations to be
installed at a client's gas condensate field.
***
HMS GROUP WILL NOT HOLD THE WEBCAST DUE TO THE COVID-2019 SITUATION AND
WORKING IN THE REMOTE MODE.
Contacts: 8 ir@hms.ru
***
HMS Group is the leading pump and compressor manufacturer, as well as
provider of flow control solutions and related services to the oil and
gas, nuclear and thermal power generation and water utilities sectors in
Russia and the CIS. HMS Group's products are mission-critical elements of
projects across a diverse range of industries. It has participated in a
number of large-scale infrastructure projects in Russia, including
providing pumps and modular equipment to the Vankor oil field and pumping
stations on recent trunk pipelines projects linking Russia's core oil
producing areas to export ports on the Pacific Ocean and Baltic Sea. HMS
Group's global depositary receipts ("GDRs") are listed under the symbol
"HMSG" on the London Stock Exchange.
Press Release Information Accuracy Disclaimer
Information published in press releases was accurate at the time of
publication but may be superseded by subsequent releases or other
information.
LEI: 254900DDFETNLASV8M53
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9 1 EBITDA is defined as operating profit/(loss) adjusted for other
operating income/expenses, depreciation and amortisation, amortisation of
government grants, impairment of assets, excess of fair value of net
assets acquired over the cost of acquisition, defined benefits scheme
expense and provisions (including provision for obsolete inventory, ECL
allowance and provision for impairment of trade and other receivables and
other financial assets, unused vacation allowance, warranty provision,
provision for legal claims, tax provision and other provisions). This
measurement basis, therefore, excludes the effects of a number of
non-recurring income and expenses on the results of the operating
segments.
10 2 Construction and design and engineering services of subcontractors
11 3 SG&A expenses - Selling, General and Administrative Expenses,
compiled of distribution & transportation expenses plus general &
administrative ones
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12 i The industrial pumps business segment designs, engineers,
manufactures and supplies a diverse range of pumps and pump-based
integrated solutions to customers in the oil and gas, power generation and
water utilities sectors in Russia, the CIS and internationally. The
business segment's principal products include customized pumps and
integrated solutions as well as pumps built to standard specifications; it
also provides aftermarket maintenance and repair services and other
support for its products.
13 ii The oil and gas equipment and projects business segment
manufactures, installs and commissions modular pumping stations, automated
metering equipment, oil, gas and water processing and preparation units
and other equipment and systems for use primarily in oil extraction and
transportation. The segment's core products are equipment packages and
systems installed inside a self-contained, free-standing structure which
can be transported on trailers and delivered to and installed on the
customer's site as a modular but fully integrated part of the customer's
technological process.
14 iii The compressors business segment designs, engineers,
manufactures and supplies a diverse range of compressors and
compressor-based solutions, including compressor units and compressor
stations, to customers in the oil and gas, metals and mining and other
basic industries in Russia. The business segment's principal products
include customized compressors, series-produced compressors built to
standard specifications, and compressor-based integrated solutions.
15 iv The construction provides construction works for projects for
customers in the oil upstream and midstream, gas upstream.
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ISIN: US40425X4079
Category Code: QRT
TIDM: HMSG
LEI Code: 254900DDFETNLASV8M53
OAM Categories: 1.3. Payments to governments
2.2. Inside information
2.3. Major shareholding notifications
Sequence No.: 89560
EQS News ID: 1154665
End of Announcement EQS News Service
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