REG - Hunting PLC - Acquisition of "FES" & Capital Allocation Policy

HuntingAnnouncement

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RNS Number : 0628O  Hunting PLC  24 June 2025

This announcement contains inside information

 

 For Immediate Release  24 June 2025

 

 

 

 

 

Hunting PLC

 

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

 

Acquisition of Flexible Engineered Solutions (Group) Holdings Limited ("FES")

 

and

 

Capital Allocation Policy Update

 

Hunting acquires FES, a leading provider of fluid transfer solutions to the
offshore oil and gas and renewable energy industries, for £50 million

 

Hunting PLC (LSE:HTG), the precision engineering group, today announces that
it has completed the acquisition of the entire issued share capital of
Flexible Engineered Solutions (Group) Holdings Limited ("FES"), a company
based in the United Kingdom, for a total cash consideration of £50m, on a
cash free / debt free basis, and which is subject to customary post-completion
adjustments.

 

Acquisition highlights and strategic rationale

 

The transaction represents an important step towards the delivery of the
Hunting 2030 Strategy, strengthening Hunting's growing offshore / subsea
revenue profile and increasing the Group's product coverage of deepwater and
ultra deepwater markets:

 

·         The transaction provides access to proprietary subsea
fluid transfer technologies and system solutions for the offshore oil and gas
and renewable energy industries, which are well-aligned to Hunting's current
customer base.

·         FES's portfolio of fluid transfer solutions are used in
Floating Production Storage and Offloading vessels ("FPSOs") and Subsea
Distribution Systems ("SDSs") and provides significant product bundling and
cross-selling opportunities for Hunting's other subsea businesses across key
offshore regions.

·         FES's mission critical and highly engineered proprietary
technology has driven robust growth and delivered a strong margin profile,
which will be accretive to Hunting's EBITDA margins.

·         There is significant potential to grow FES's existing
international presence via Hunting's global footprint in key customer
locations such as Brazil, South East Asia, USA and West Africa.

·         The addition of FES to the Group is expected to be
earnings accretive in the first full financial year of ownership (before
acquisition costs and normal acquisition adjustments such as fair value
adjustments and the amortisation of intangible assets), as well as being
highly cash generative.

 

The acquisition is in line with Hunting's broader growth strategy, outlined at
the Group's Capital Markets Day in September 2023, which detailed its
expansion into the subsea equipment sub-sector of the energy industry.

 

The acquisition has completed, with the consideration being funded from
Hunting's existing cash resources. FES is being acquired from members of its
current management team, with the senior management team, comprising the
principal sellers of FES, agreeing to remain with Hunting for at least twelve
months post-acquisition.

 

FES will be integrated within Hunting's Subsea Technologies operating segment
and will report into Dane Tipton, the managing director of this operating
segment.

 

Commenting on the acquisition, Jim Johnson, Chief Executive of Hunting, said:

 

"We are pleased to complete the acquisition of FES. It immediately boosts our
subsea portfolio with proprietary products and capabilities and clearly
demonstrates progress on our Hunting 2030 Strategy.

 

"FES's fluid transfer solutions perfectly complement our existing subsea and
FPSO-related lines, creating strong product bundling and cross-selling
opportunities with our existing subsea businesses as well as the potential for
further international growth.

 

"FES's blue-chip customer base, international profile and high margin, mission
critical applications make the business an ideal fit for Hunting."

 

Capital Allocation Policy Update

 

Hunting remains a highly cash generative business with considerable financial
flexibility and, following the completion of the FES acquisition, the Group
retains total cash and bank / (borrowings) of c.$40m.

 

Following the successful acquisition of FES, the Group is reviewing its
capital allocation policy and priorities and will confirm its intentions in
the coming weeks.

 

Financial performance (unaudited)

 

For the year ended 31 December 2024, under UK GAAP, FES generated revenue of
£31.3m and EBITDA of £6.2m. Adjusting EBITDA to include the impact of IFRS
16 'Leases' and other management adjustments, FES recorded EBITDA of £6.7m in
2024.

 

At 31 December 2024, under UK GAAP, FES's balance sheet recorded net assets of
£33.1m and gross assets of £36.2m. All of FES's 2024 results are subject to
audit.

 

At completion, FES recorded a sales order book of c.£11.8m, with a robust
tender pipeline and bid opportunities extending in excess of £100m.

 

Overview of FES

 

Headquartered in Ashington, Northumberland, UK FES operates from a 35,000 sq.
ft. facility, in addition to a 6,000 sq. ft. test facility. FES currently has
46 employees. FES has diverse customer, product and market exposure and is a
leader in its three core divisions of oil and gas fluid handling, with a
portfolio of products used in FPSO and deepwater subsea distribution
applications.

 

FES's solutions have been deployed in many key offshore regions including the
Gulf of Mexico, West Africa, and South America and the majority of its
revenues coming from international business outside the UK.

 

FES also benefits from long-term relationships with a wide variety of
blue-chip customers, including super majors, independent oil and gas
companies, and international energy service companies, working on large,
multi-year projects, that provide high levels of earnings visibility.

 

FES owns intellectual property in respect of a number of its product lines
with a balanced portfolio of capabilities, which include:

 

•           Diverless Bend Stiffener Connectors ("DBSC");

•           Turret Systems;

•           Fluid Transfer Swivels;

•           Hydraulic, Electric and Fibre Stab Plates;

•           Subsea Control Panels;

•           Pig Launchers;

•           Spooling Systems;

•           Seawater Intake Systems; and

•           Suction Pile Vent Hatches.

 

FES's DBSC solution provides support and protection for the production
umbilicals, flexible and power cables used within offshore oil and gas
production infrastructure.

 

There are clear opportunities to grow FES in the floating offshore wind sector
and the business has further implemented its DBSC technology to provide a
turnkey cable connection system for the offshore renewable market.

 

For further information on FES's products please visit
https://www.fesinternational.com/ (https://www.fesinternational.com/) or visit
www.huntingplc.com/investors/fes-acquisition
(http://www.huntingplc.com/investors/fes-acquisition) .

 

Webcast and Analyst Call

 

An overview of FES and its contribution to Hunting's strategic growth path, as
laid out in its Hunting 2030 Strategy, will be provided at a webcast which
will commence at 2:00p.m. (London) / 8:00a.m. (Houston) today.

 

Jim Johnson, Chief Executive; Bruce Ferguson, Finance Director; and Dane
Tipton, managing director of the Subsea Technologies operating segment, will
provide a short presentation followed by a question and answer session.

 

To access the webcast, please contact Sodali & Co via Hunting@sodali.com
(mailto:Hunting@sodali.com) .

 

Next Trading Update

 

Hunting PLC will be announcing its H1 2025 Trading Update on Wednesday 9 July
2025.

 

For further information please contact:

 

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

 Jim Johnson, Chief Executive

 Bruce Ferguson, Finance Director

 Sodali & Co                        Tel: +44 (0) 7855 432 699

 James White

 Pete Lambie

 Tilly Abraham

 

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.

 

 

Inside information

 

The information contained within this announcement is considered by Hunting to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No.596/2014 (as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018). On the publication of this announcement
via a Regulatory Information Service, such information is now considered to be
in the public domain.

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Ben Willey, Company Secretary of Hunting.

 

 

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