REG - Hunting PLC - 2024 Year-end Trading Update

HuntingAnnouncement

14/01/2025 07:00

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RNS Number : 1386T  Hunting PLC  14 January 2025

 For Immediate Release  14 January 2025

 

 

 

Hunting PLC

 

("Hunting" or "the Company" or "the Group")

 

2024 Year-end Trading Update

 

Hunting PLC (LSE: HTG), the precision engineering group, today issues a
year-end trading update ahead of announcing its 2024 Final Results on Thursday
6 March 2025.

 

All financial data noted below remains subject to audit.

 

Highlights

 

 ·             Solid strategic progress in respect of the Hunting 2030 Strategy, with key
               milestones delivered within OCTG and Subsea product groups.

 ·             2024 trading and financial outturn in line with previous guidance and market
               expectations, with EBITDA in the range of $123-$126m. Group revenue is
               expected to be in the range of $1,040-$1,050m.

 ·             EBITDA margin of c.12% is likely to be reported for the year, up from 11% in
               2023, as anticipated.

 ·             Strong cash generation delivered in Q4 2024, with total cash and bank /
               (borrowings)(1) at the year-end expected to be $100-$105m, ahead of the
               guidance provided in October 2024.

 ·             Following a record order book performance in H1 2024, Hunting's sales order
               book closed the year at c.$500m following the conversion of large orders into
               revenue throughout H2 2024. This order book will be completed through 2025 and
               into 2026 and supports the Group's anticipated continued EBITDA growth.

 ·             Market conditions, while volatile through Q4 2024, appear more stable in the
               US with the Henry Hub natural gas price nearing $4 per mmBtu at the close of
               the year, further underpinned by likely improvements to industry support with
               the newly elected US administration.

 ·             Continued growth in 2025 with EBITDA expectations being in the range of
               c.$135-$145m, driven by the Group's strong order book, and a material cost
               savings programme, with the higher end of range coming from the expected more
               positive market conditions in North America.

 ·             2025 guidance does not include any earnings accretive acquisitions, for which
               we are in active discussions, nor does it reflect an active tender pipeline,
               which may contribute further to full year 2025 performance.

 

 

Jim Johnson, Chief Executive of Hunting, commented:

 

"I would like to thank the Hunting team for delivering another year of strong
growth, with firm progress towards a number of the key 2030 strategic
objectives that we identified at our Capital Markets Day, namely positive
growth of revenue, EBITDA, margins, cash and bank and continued
diversification of our service offering and revenue streams.

 

"This growth has been delivered against a challenging industry backdrop
through 2024, particularly in North America, which saw lower than expected
activity due to depressed gas prices. Pleasingly, these challenges are
beginning to subside with the natural gas price in the US ending the year
strongly, which will likely lead to more drilling in the US and Canada, which
will be further supported by the new US administration.

 

"2025 should, therefore, deliver a further year of growth and with strong
acquisition opportunities, a healthy balance sheet, and a robust cost cutting
programme that includes the consolidation of our EMEA operations, our profits
and returns should continue to advance in the year ahead."

 

2024 Full Year Trading Summary

 

Trading in Q4 2024 remained in line with management's expectations and with
the guidance issued in October 2024, with EBITDA anticipated to be in the
range of $123-$126m for the full year. EBITDA margin is likely to be c.12%.

 

Working capital has reduced since Q3 2024, to close the year at c.$360m driven
by lower inventory and improved receivables collections. Capital investment
will total c.$32m for the full year.

 

EBITDA to Free Cash Flow conversion is likely to be c.110% for 2024, with
year-end total cash and bank / (borrowings)(1) now anticipated to be above the
previous guidance at $100-$105m, supported by the accelerated receivables
programmes and discounted letters of credit used during H2 2024.

 

As noted in October 2024, the carrying values of the Hunting Titan operating
segment are being assessed for impairment, with management expecting to book a
reduction in carrying value as an adjusting item.

 

Delivery of Hunting 2030 Strategic Milestones

 

Hunting has delivered a number of strategic milestones during the year, with a
strong operational performance from the Group's OCTG and Subsea product
groups, and further growth from the Advanced Manufacturing and Other
Manufacturing product groups. As noted in the Q3 2024 Trading Update, the
operating performance of the Perforating Systems product group has been below
2023 during the year due to the lower US onshore rig count and average price
for natural gas.

 

Management notes that the OCTG and Subsea product groups have delivered EBITDA
margins well in excess of the target of 15% published at the Company's Capital
Markets Day ("CMD") in September 2023. The Advanced Manufacturing product
group has reported further progress in margin during 2024, while the
Perforating Systems product group will likely report low-single digit margin.

 

Free Cash Flow has improved significantly in the year, with a c.110%
conversion to EBITDA. The working capital to revenue ratio is also likely to
be c.30%, which is better than the CMD target.

 

Capital Allocation

 

The Group has considerable balance sheet strength, and we continue to pursue
value accretive opportunities to grow and diversify our portfolio in line with
the strategic goals outlined at Hunting's CMD.

 

When assessing any opportunity, the Group has a disciplined capital allocation
policy. In line with this policy, the Group also regularly considers if
additional shareholder returns are appropriate.

 

The Group's dividend distribution ambitions remain on track.

 

EMEA Restructuring and Cost Savings

 

As announced separately today, the Directors have taken the decision to
restructure the Group's EMEA operating segment, given the low levels of future
drilling activity anticipated in the North Sea.

 

The Directors reiterate the strong outlook for the global oil and gas
industry; and recognise that its operating footprint needs to align with
future activity, which will likely focus on North and South America, the
Middle East, Africa and Asia Pacific out to 2030.

 

A review of sales, general and administration costs is also underway.

 

In total, management plans to eliminate up to c.$10m of costs in the year, the
majority of which being from the restructuring of the EMEA operating segment,
noted above.

 

Further information on this initiative will be reported at the Company's 2024
Final Results, on Thursday 6 March 2025.

 

2025 Full Year Trading Guidance

 

Following a record order book in H1 2024, the Group's sales order book
continued to be strong with a year-end position of c.$500m following the
conversion of large orders into revenue in H2 2024. Tendering activity
continues to be positive across our key regions of operation with
opportunities in North and South America, the Middle East, and Asia Pacific.

 

Management continues to pursue earnings accretive bolt-on acquisitions that
are focused on subsea opportunities, which remains a robust end-market to the
end of the decade. Active discussions are underway with a number of targets,
in line with the Hunting 2030 Strategic ambitions. Following the securing of
the new banking facilities, as detailed in the October 2024 update, the
Company has total liquidity(2) of c.$400m, as of today's date, available to
pursue this focused growth initiative.

 

As noted above, in addition to the organic growth in the business, a programme
of cost savings and restructuring is underway underpinning the EBITDA guidance
for the full year 2025 of $135-$145m.

 

Free Cash Flow conversion continues to be an area of focus for the Group, with
management anticipating an EBITDA to free cash flow conversion of c.50%.
Year-end total cash and bank / (borrowings)(1) are targeted to be $135-$145m.

 

Investor Presentation via Investor Meet Company

 

The Company will be giving an investor presentation hosted by Investor Meet
Company covering its Trading Update for the financial year ended 31 December
2024.

 

The online event will take place at 10:00 a.m. GMT today with Jim Johnson
(Chief Executive) and Bruce Ferguson (Finance Director) presenting from the
Company.

 

Investors can sign up to Investor Meet Company for free and add to meet
Hunting via:

 

https://www.investormeetcompany.com/hunting-plc/register-investor
(https://url.usb.m.mimecastprotect.com/s/iE_5CA8LMjfNgvNyUGf5SGBP6_?domain=investormeetcompany.com)

 

Investors who already follow Hunting on the Investor Meet Company platform
will automatically be invited.

 

For further information please contact:

 

 Hunting PLC                        Tel: +44 (0) 20 7321 0123

 Jim Johnson, Chief Executive

 Bruce Ferguson, Finance Director

 Buchanan                           Tel: +44 (0) 20 7466 5000

 Ben Romney

 Barry Archer

 

or

 

lon.IR@hunting-intl.com

 

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.

 

Note 1 - Total cash and bank / (borrowings) comprises cash and cash
equivalents less bank debt and excludes the long-term shareholder loan of $3.9
million and IFRS 16 lease liabilities.

 

Note 2 - Total liquidity comprises secured committed facilities (the RCF and
term loan) and unsecured uncommitted facilities, including the four facilities
available to our Chinese subsidiary, combined with our year end cash and bank
/ (borrowings).

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