REG - Hunting PLC - Capital Markets Day

HuntingAnnouncement

13/09/2023 07:00

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RNS Number : 2131M  Hunting PLC  13 September 2023

 For Immediate Release  13 September 2023

 

 

Hunting PLC

 

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

 

Capital Markets Day

 

Hunting PLC (LSE:HTG), the global engineering group, provides the following
update ahead of its Capital Markets Day that will be held today at 2.00pm BST
/ 8.00am CST at the London Stock Exchange.

 

The Company's senior management team will set out details of the Hunting 2030
Strategy and how they will drive the evolution of the business, whilst
building on the Group's compelling product, technology and manufacturing
platform to deliver strong growth and returns over the rest of the decade.

 

The Hunting 2030 Strategy is expected to deliver against the following
targets:

 

·           c.$1.3 billion sales p.a. by 2025 and c.$2 billion p.a.
by the end of the decade

·           EBITDA margins of c.15% by 2025 with further
progression by 2030

·           c.$325 million of cumulative free cash flow generated
by 2025 and greater than $1 billion by 2030

·           ROCE of c.15% by 2025 and further improvement by 2030

·           Net leverage of less than 1.5x through the period to
2030

·           Increasing dividend policy delivering 10%+ growth per
annum with potential for additional share buybacks

 

Management will provide further details that support the 2030 Strategy,
including a focus on driving strong cash generation and an updated capital
allocation policy aimed at supporting stronger returns.

 

The Company's belief in its ability to deliver the Hunting 2030 Strategy is
supported by:

 

·           The Company's compelling portfolio of IP, leading
technology and manufacturing expertise

·           The strength of its blue chip customer base across
multiple end markets

·           Long-term term resilience through diversification and
growth in energy transition

·           Exposure to high-growth markets, including offshore and
international

·           HSE, Quality Assurance and Carbon Ownership driving
stronger customer relationships

 

Hunting is also reiterating its forecasts for 2023 and for 2024:

 

                 2023          2024
 EBITDA          $96m - $100m  $125m - $135m
 EBITDA Margin   10 - 11%      11 - 13%
 Free Cash Flow  $30m - $60m   >70% of EBITDA

 

Jim Johnson, Chief Executive of Hunting, said:

 

"We are excited to present our focused growth strategy and the ambitious
targets associated with it. Hunting's product portfolio of industry leading,
IP protected technology and manufacturing expertise, coupled with the strong
market dynamics we can see unfolding, give us confidence in our ability to
deliver on our ambitions.

 

"The evolution of the Group's strategy is underpinned by our established
position as a global manufacturer of world-class precision engineered, high
reliability products, trusted client relationships and the diversity of our
product applications across multiple end markets. We see the energy transition
as a fantastic opportunity to enhance our existing business and enter into
high-margin, high-growth sectors that will allow Hunting to prioritise growth
and innovation, and service the long-term energy requirements of a changing
world.

 

"Over the last few years, Hunting has delivered a consistent recovery, during
which it optimised its operating footprint, grew sales and enhanced margins,
all of which leaves the Company well placed to deliver strong growth and
shareholder returns through the remainder of this decade and beyond."

 

Capital Markets Day Arrangements

 

The Capital Markets Day will be held at the London Stock Exchange, 10
Paternoster Square, London, EC4M 7LS and will also be livestreamed.

 

To register for the event in person, please email :
HTG.2023.CMD@hunting-intl.com (mailto:HTG.2023.CMD@hunting-intl.com)

 

or

 

To view / register for the live broadcast of the event, please follow the link
below:

 

https://www.lsegissuerservices.com/spark/Hunting/events/58e097af-27ca-44bc-8ef4-fb451bf3d499
(https://urldefense.com/v3/__https:/secure-web.cisco.com/1BPRQ9YHk_QfD5bUIYJsH03T62UxhSs8nEazhFjBowswaJs52Ou6B4OpLDLCf8IfeAmpYmKvaiMsclDJ3Hd738F7Iyq7e95COJA8ySi_DjLU9pEpivaTtBiw0X8eREpgqjqhGIUlOQl4b5Vrd5cLekf77OQt3iZjuMRdfS8dXTflBU-8TjFiTbGDAT3fkFUSqRluPrLwSO7Hteg3PLHm-KtqgNxvRc72GM4IhcosUOKBPMiS9RlrTIJ_USGGyA4FONCoYwyEV4gfchWSWK4TF7FP1KX-3wiuapxAdgqh8fUCLTnje_6STpHQuqum_FV-1/https*3A*2F*2Fwww.lsegissuerservices.com*2Fspark*2FHunting*2Fevents*2F58e097af-27ca-44bc-8ef4-fb451bf3d499__;JSUlJSUlJQ!!H_q-o1I4kFo!n6O-qUGz6tfMgi-yJXXEOqq5yFNgzYhgLDuX3uhzd1310ECb2OWlVZGtppQ3roAdmxnE8NXqcM-zkznu979rpPdZUdtBmmuaUsQT9UCFTTA$)

 

OCTG

OCTG in North America is seeing robust growth, as demand for premium and
semi-premium connections continues to build. The accessories manufacturing
business reported exceptionally strong performance in H1 2023 as turnkey
manufacturing, premium threading and well completion accessories manufacturing
orders increased materially, as well as a notable increase in sales for
offshore activity with orders received from the Gulf of Mexico and from Guyana
in support of the major drilling projects and developments in those regions.
Hunting's reputation for reliability in connection technology is an essential
competitive advantage in this market. In Hunting's Netherland's OCTG facility,
the Tubacex contract for South America has led to the facility being at full
capacity, with the order now being shared with the Group's Aberdeen facility.
The Netherlands OCTG facility also completed a number of orders for geothermal
applications as projects accelerate across Europe. The increase in
international drilling activity and the growth in energy markets have been the
core drivers of revenue growth for H1 2023 for the Asia Pacific businesses,
with the Group's China and Singapore facilities working on the large OCTG
order from CNOOC. In May 2023, Hunting won a $91m order from Cairn Oil and
Gas, Vedanta Limited. This three-year contract will see the Group providing
OCTG with Hunting's SEAL-LOCK XD™ premium connection applied, for a
programme of up to 100 wells in Rajasthan, India. The commissioning of the
Group's new threading facility in Nashik Province, India with Hunting's joint
venture partner Jindal SAW was completed in July 2023, with the opening to be
held on 19 September 2023. With this facility, the Group now has a leading
position in the manufacture and provision of Premium Connections and OCTG in
China, India, Indonesia and Singapore, with unique raw material supply
channels in place to service the Middle East and Asia Pacific.

 

Perforating Systems

Trading within Hunting Titan has been resilient, despite the decline in the
North America onshore rig count this year. The segment is seeing strong growth
in its international sales as horizontal drilling and completion technologies
that have been developed in the US are adopted in key drilling basins in South
America, the Middle East and China. Hunting Titan has a comprehensive product
offering supported by strong intellectual property and is a market leader in
components and systems technology. The H-3 Perforating System™ has continued
to be commercialised in 2023, and has seen good customer acceptance. The
self-orientating H-4 Perforating System™ is due to be launched shortly, and
will contribute to Titan's revenue mix in the second half of the year.

 

Subsea

Subsea has a diverse product offering and an extensive library of intellectual
property that underpin its position as a market leader. Subsea reported
incremental revenue growth during H1 2023 as sales of hydraulic valves and
couplings increased in line with the continued growth of offshore markets, and
orders continued to be completed for titanium stress joints for clients in the
Gulf of Mexico and South America. This has led to a strengthening financial
performance and an improvement in margins. Further sales opportunities in
South America and West Africa are being pursued as international market
activity strengthens.  We expect revenues and margins to ramp with growing
activity from this sector.

 

Advanced Manufacturing

The Advanced Manufacturing businesses have reported improving results, as both
the Dearborn and Electronics businesses have seen supply chain constraints
ease. The Electronics business has seen an increase in traditional oil and gas
orders and both the Electronics and Dearborn businesses have secured non-oil
and gas orders as defence, power generation, aviation and commercial space
market activity increases. New equipment has been commissioned at Dearborn,
which will lead to higher facility utilisation and order completion in the
second half of the year.

 

Energy Transition

The Energy Transition markets of carbon capture and geothermal provide Hunting
with immediate opportunities for its current product portfolio, as Hunting
already has a strong technology base and critical supply chain channels in
place to capitalise on these high growth markets. The geothermal energy market
outlook is supported by numerous projects across North America, Europe and
Asia Pacific and is a 'wells-driven' market with rapidly growing demand for
higher grade material and advanced performance premium connection OCTG. The
Strategic Alliance with Jiuli provides Hunting with a partner who will provide
corrosion resistant alloys including high nickel and chrome OCTG, which is
required in challenging operating conditions. Carbon capture is widely
considered by global authorities to be a vital part of their Net Zero
strategies and is the primary route for decarbonising the energy industry.
There are strong, global legislative drivers underpinning CCUS investment in
North America, Europe and Asia Pacific.

 

New Technology

Hunting's TEK-HUB facilitates entry into new sectors and product lines, and
enables Hunting to access and accelerate the commercialisation of new
technology developed by third parties, such as titanium composite tubing used
in CCUS, the Helios micro-hydro and Organic Oil Recovery that materially
enhances production in brownfield wells. The Organic Oil Recovery technology
is rapidly establishing itself as a high value product and continues to see
strong interest from a range of major international energy companies, with
pilot and field trials either underway or being planned for the UK, Europe and
the Middle East in the second half the year.

 

For further information please contact:

 

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

 Jim Johnson, Chief Executive

 Bruce Ferguson, Finance Director

 lon.ir@hunting-intl.com (mailto:lon.ir@hunting-intl.com)

 Buchanan                                                   Tel: +44 (0) 20 7466 5000

 Ben Romney

 Barry Archer

 George Pope

 

Notes to Editors:

 

About Hunting PLC

 

Hunting is a global engineering group that provides precision-engineered
equipment and premium services, which add value for our customers. Established
in 1874, it is a premium listed public company traded on the London Stock
Exchange. 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, 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.

 

Hunting PLC's Legal Entity Identifier is 2138008S5FL78ITZRN66.

 

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