REG - Hunting PLC - Unaudited results for the 6 months to 30 June 2023

HuntingAnnouncement

24/08/2023 07:00

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RNS Number : 2679K  Hunting PLC  24 August 2023

 For Immediate Release  24 August 2023

 

Hunting PLC

 

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

 

Unaudited results for the six months to 30 June 2023

 

Strong performance in H1 2023 with progress across all segments of the Group

 

Hunting PLC (LSE:HTG), the global engineering group, today announces its
unaudited half year results for the six months ended 30 June 2023.

 

Financial Highlights

 

 ·                 Order book increased by 63% to $529.7m (H1 2022 - $325.9m)
 ·                 Revenue increased by 42% to $477.8m (H1 2022 - $336.1m)
 ·                 Gross profit $114.2m up 51% (H1 2022 - $75.8m)
 ·                 Gross margin improved to 24% from 23%
 ·                 EBITDA of $48.7m (H1 2022 - $23.6m)
 ·                 Adjusted operating profit $26.2m (H1 2022 - $4.7m)
 ·                 Interim dividend declared 5.0 cents per share (H1 2022 - 4.5 cents)

 

Commenting on the results Jim Johnson, Chief Executive, said:

 

"Today's results confirm the positive trend of increased investment in the oil
and gas industry following years of under investment, driven by global energy
demand and increased focus on energy security. We believe that the sector is
in the early days of a long term growth cycle which, coupled with our
non-energy businesses, positions the Company for increased revenue and
earnings going forward. All our businesses have performed well during the
period, and we are particularly pleased to have continued to secure major OCTG
orders, which has increased our sales order book strongly since year-end.
Management believes this performance indicator provides good visibility of the
Group's trading outlook in the short to medium term.

 

"Alongside our core oil and gas businesses, Hunting has made good progress in
positioning itself as a critical provider of technology, as well as a key
supplier of important raw materials for the energy transition. Management
anticipates this market will provide strong growth in the long term as the
world solves the challenge of energy security and low carbon. Hunting will
play a major role in this complex solution and we look forward to delivering
on our objectives over the coming years."

 

Financial Summary

 

Financial Performance Measures

 

                                                    H1 2023  H1 2022  Variance

                                                    $m       $m
 Revenue                                            477.8    336.1    +42%
 EBITDA*                                            48.7     23.6     +106%
 EBITDA margin**                                    10%      7%
 Adjusted operating profit*(/)***                   26.2     4.7      +457%
 Adjusted operating profit margin****               5%       1%
 Adjusted diluted earnings (loss) per share*(/)***  9.6c     (0.5)c

 Free cash flow*                                    (39.8)   (3.2)
 Total cash and bank borrowings*                    (51.7)   85.6

 

*      Non-GAAP measure ("NGM"). Please see the 2023 Half Year Report and
Accounts pages 33 to 38.

**    EBITDA as a percentage of revenue.

***   Adjusted results exclude adjusting items.

**** Adjusted operating profit as a percentage of revenue.

 

Financial Performance Measures Derived from IFRS

 

                                      H1 2023  H1 2022  Variance

                                      $m       $m
 Operating profit                     26.2     1.7      +1,441%
 Diluted earnings (loss) per share    9.6c     (2.4)c
 Interim dividend declared per share  5.0c     4.5c     +11%
 Sales order book                     529.7    325.9    +63%

 

Outlook Statement

 

Global energy markets continue to display growth, stability and resilience,
despite the macroeconomic narrative from some Western economies. Activity
across the oil and gas industry continues to be strong, particularly within
the offshore segment of the market and drilling continues to increase in
momentum in South America, West Africa, the Middle East and Asia Pacific.

 

On this basis, the Board believes Hunting has good momentum going into the
second half of the year, with an EBITDA performance similar to what has been
delivered in H1 2023. Further improvements in working capital efficiencies are
expected in H2 2023, with the Group's total cash and bank borrowing position
expected to unwind by the year-end as larger projects are completed in H2 2023
which will deliver strong cash generation from operating activities.

 

Opportunities within energy transition markets are accelerating fast, driven
by legislation in North America, Europe and Asia Pacific, as well as the
decarbonisation initiatives announced by many companies and governments.
Hunting will continue to increase its position in this market in the months
ahead, by offering new technology and critical supply channels to the many
stakeholders in this increasingly important sector.

 

The Company's Capital Markets Day is an exciting opportunity for Hunting to
reinforce its investment case to investors as global energy markets return to
robust growth and as traditional and new technologies and markets contribute
to the ever-increasing complexity of the energy industry and future landscape.
The Group has a strong position and reputation across multiple industries and
end markets, and is well positioned to deliver strong long-term cash flows and
returns for stakeholders into the medium and long term.

 

Corporate Highlights

 

Further Strengthening of Sales Order Book

The Company continued to build its sales order book during the period and at
30 June 2023 this stood at $529.7m (31 December 2022 - $473.0m; 30 June 2022 -
$325.9m). The order book comprises 4% Perforating Systems; 47% OCTG; 28%
Advanced Manufacturing; 19% Subsea; and 2% Other Manufacturing. Of this order
book, approximately 70% is expected to be completed by the year-end; 20%
during 2024; and 10% from 2025 onwards, underlying the changing profile of
Hunting's revenue visibility.

 

$91m Contract Award with Cairn Oil and Gas, Vedanta Limited

On 30 May 2023, the Company announced a record contract that management
estimates to be worth up to $91m with Cairn Oil and Gas, Vedanta Limited, for
the supply of Hunting's SEAL-LOCK XD(TM) Premium Connection along with OCTG.
The contract is for an estimated 100 wells and is to extend up to three years
for Cairn's operations in Rajasthan, India. This order supports management's
belief that international market sentiment remains extremely strong as
governments and countries address the challenges of energy security, the
development of domestic supply and post-COVID economic recovery.

 

10-Year Strategic Alliance Signed with Zhejiang Jiuli Hi-Tech Metals Co. Ltd
("Jiuli")

On 5 June 2023, the Company announced a 10-year strategic alliance with
Zhejiang Jiuli Hi-Tech Metals Co. Ltd ("Jiuli"), for the supply of corrosion
resistant alloys ("CRA") for OCTG, Carbon Capture and Storage ("CCUS") and
geothermal applications. The partnership brings together Hunting's
SEAL-LOCK(TM) Premium Connection technology with Jiuli's CRA, such as
duplex/super duplex and high nickel-based alloys, for downhole casing and
production tubing applications, which meet some of the harshest well
conditions in the traditional oil and gas industry as well as the emerging
CCUS and geothermal markets. The partnership also adds to Hunting's existing
OCTG product portfolio and enables the supply of the widest range of premium
OCTG for its client base, within the international oil and gas and energy
transition markets, as projects accelerate in the key areas of North America,
Middle East and Africa and Asia Pacific. CCUS and geothermal are two
end-markets that Hunting is pursuing as part of its strategy to become a key
supplier to these sectors by providing project developers with critical supply
channels and the premium connections required for these increasingly
challenging technical projects, which operate in demanding sub-surface
environments. All these end-markets are believed to show robust demand and
growth in the medium and long term.

 

Collaboration Agreement with CRA-Tubulars B.V.

On 13 July 2023, Hunting announced a collaboration agreement with CRA-Tubulars
B.V., to further develop the Company's presence in energy transition markets.
The collaboration provides the Company with access to novel titanium composite
tubing technology, which is showing strong potential in CCUS project
applications. The technology has won awards within the Shell 'Game Changer'
technology programme, and Hunting is exploring the use of the technology
alongside its SEAL-LOCK(TM) Premium Connection technology. The collaboration
agreement includes exclusive marketing, distribution and manufacturing rights
for oil and gas and carbon capture and storage markets in North America for a
period of five years.

 

Restructuring and Operational Efficiency

As separately announced today, Hunting is continuing to drive stronger
internal operational efficiencies throughout its global footprint. Hunting
Titan has commenced the closure of its Oklahoma City operating site and will
transfer the manufacture of perforating systems to the Group's Pampa, Texas
and Monterrey, Mexico facilities. A distribution centre will be retained to
continue to service clients in the Mid-Continent Region of the USA.

 

Within the EMEA operating segment, the manufacturing and assembly operations
of the Group's main well testing site are to be transferred from the
Netherlands to Dubai, which will lead to the closure of a facility at
Velsen-Noord, with activities in the Netherlands to be merged into a single
location. Sales, engineering and service support functions will be maintained
in the Netherlands to support European clients. Hunting's Dubai operations are
to be relocated to a larger, higher efficiency facility in the UAE to
accommodate the manufacturing operations of the well testing business, which
also positions Hunting to capitalise on the strong market outlook for the
Middle East in the long term. Hunting will retain a single facility in
Velsen-Noord to support oil and gas energy transition clients across Europe.

 

Disposal of Exploration and Production Assets

During H1 2023, the Group has completed a disposal process of all but one of
its US onshore and offshore oil and gas producing assets, which are held by
Hunting's wholly-owned subsidiary, Tenkay Resources, Inc ("Tenkay"). The
assets have been sold on an asset-by-asset basis to a variety of third
parties. In addition, the Group has negotiated the transfer of the majority of
the non-producing assets and respective future plug and abandonment
liabilities, which have reduced Hunting's possible exposure to future
decommissioning costs. The transfer of these non-producing assets was
completed in July 2023 and, therefore, the assets were shown as held for sale
at 30 June 2023. As at 24 August 2023, Tenkay retains a working interest in
the South Timbalier 34 asset, for which management is continuing to pursue a
disposal in the short term.

 

Completion of Threading Facility in India, with Joint Venture Partner Jindal
SAW

In Q2 2023, the Company completed the construction and commissioning of its
new threading facility at Nashik Province, India, with its joint venture
partner, Jindal SAW. The official opening of the facility is planned for 19
September 2023.

 

Half Year Management Report

 

For access to the Half Year Management Report narrative for the six months to
30 June 2023 please click on the following link.

 

http://www.rns-pdf.londonstockexchange.com/rns/2679K_1-2023-8-23.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2679K_1-2023-8-23.pdf)

 

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 2023 please click on the following link.

 

http://www.rns-pdf.londonstockexchange.com/rns/2679K_2-2023-8-23.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2679K_2-2023-8-23.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 2023 Half Year Report and Accounts and
can be accessed at www.huntingplc.com (http://www.huntingplc.com) .

Analyst Briefing and Webcast

 

Hunting PLC will host an analyst briefing and webcast at the offices of
Buchanan (107 Cheapside, London, EC2V 6DN) on 24 August 2023 commencing at
9:30a.m. BST.

 

The live webcast can be accessed via the following link.

 

https://stream.buchanan.uk.com/broadcast/64a58b8ca0226e2268697ad8
(https://stream.buchanan.uk.com/broadcast/64a58b8ca0226e2268697ad8)

 

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
(mailto:hunting@buchanan.uk.com) .

 

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

 Buchanan                           Tel: +44 (0) 20 7466 5000

 Ben Romney

 George Pope

 

Notes to Editors:

 

Hunting is a global engineering group that provides precision-manufactured
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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