Hunting PLC (LSE: HTG), the global precision engineering group,
today announces a further major subsea order and also issues a Q3
2023 trading update.
Highlights
- $59 million order for titanium stress joints received in
October 2023.
- Group EBITDA of $75 million, with the result in Q3 2023 similar
to Q2; and 2023 full year guidance remaining unchanged at $96-100
million.
- Total cash and bank / (borrowings)1 of $(68) million at quarter
end. Year-end position now anticipated to be broadly zero.
- $511 million sales order book as at 30 September 2023.
- Launch of the Hunting 2030 Strategy.
- Opening of the Company’s joint venture threading facility in
Nashik, India.
- Robust demand across most product lines.
- Outlook continues to be positive, driven by international
activity.
Jim Johnson, Chief Executive of Hunting, commented:
“We are delighted to have received another major order for
Hunting’s titanium stress joints. The technology is gaining further
acceptance for application to offshore production vessels and we
are pleased to be supporting clients with technology which delivers
safer and faster cash flows for them.
“The performance of the Group has been encouraging in the period
driven by strong international demand for oil and gas, underpinned
by an increasing global focus on energy security and continued
economic growth. Each of Hunting’s product groups continues to
execute on its strategy of growth, as we outlined at our Capital
Markets Day.
“Our diverse product platform plays to the long-term investment
themes of the industry, including strong growth in offshore work
and international activity levels growing at a robust rate.
“We are also pleased to note that commodity prices are showing
resilience. This strength will continue to deliver commitments to
new drilling and completion activity as we enter 2024 and positions
the Group strongly going forward.”
Major Subsea Order
The Company is pleased to announce that in October 2023 it
received a further large order for its titanium stress joints for a
client operating in South America. In line with the Hunting 2030
Strategy, the Group has continued to pursue growth opportunities in
the offshore segment of the global energy market, with today’s
announcement confirming the continued success of Hunting’s stress
joint technology for application to Floating, Production, Storage
and Offloading facilities. The $59 million order will be completed
over the next 28 months with revenue being recognised over this
timescale. With this new order, the Group’s total sales order book
has increased from the position reported at quarter end.
Q3 Trading Update
Hunting’s trading performance during Q3 2023 has continued its
positive momentum, as international drilling activity continues to
drive demand for its major product lines. Activity in South
America, the Middle East and Asia Pacific markets continues to be
high, offsetting some softness seen within the North American
onshore market. Year-to-date EBITDA of $75 million reflects a near
doubling compared to the same period in 2022, as the focus on
energy security and global economic growth increases. Hunting’s
EBITDA result in Q3 2023 is similar to Q2 and well ahead of Q1 2023
respectively, demonstrating the broad-based strength of the Group’s
diverse product portfolio. Group EBITDA margin has also exceeded
11% in the quarter, with pricing and demand remaining firm.
The Group’s balance sheet remains strong, with net assets as at
30 September 2023 of $865 million. Working capital increased by $28
million over the quarter as investment to meet secured orders
continued, resulting in total cash and bank / (borrowings)1 of
$(68) million as at 30 September 2023.
Management believes that cash generation will accelerate in the
balance of the year and going into 2024, with a cash and bank /
(borrowings)1 position at year-end now anticipated to be broadly
zero, due largely to new orders received in the period, coupled
with order completions and payment timings.
The 2023 interim dividend of 5.0 cents per share will be paid on
Friday 27 October 2023, which will absorb $8 million. Capital
expenditure for the full year is also now anticipated to be c.$35
million.
In summary, the Board remains comfortable with current EBITDA
expectations of $96-100 million as sales momentum and profitability
are sustained.
Product Line Overview
The Group’s global OCTG, Premium Connections and Accessories
businesses have reported a strong performance in the year-to-date.
Well completion activity in South America has delivered robust
growth in the year, as activity in Guyana and Brazil remain strong.
In Asia Pacific, tender activity in China, India and the Middle
East is also reporting good momentum.
Hunting’s Perforating Systems business has reported headwinds
during the past two trading quarters due to the reducing North
American onshore rig count; however, EBITDA results remain broadly
similar to 2022 as margins remain solid due to the prevailing
product mix in the year-to-date.
Within the Advanced Manufacturing product group, the Dearborn
business has reported strengthening results in the year, with
pricing and margins increasing. Non-oil and gas sales continue to
increase.
The Subsea Technologies product lines have reported strong
results during the quarter, with demand for hydraulic valves and
couplings delivering record results within the Stafford business,
supported by ongoing activity in the Spring business as orders for
titanium stress joints continue. New orders for Flow Access Modules
within the Enpro Subsea business have also accelerated in the
quarter.
Other Manufacturing, which includes well intervention, well
testing and trenchless products also report good results.
Segmental Overview
The Hunting Titan operating segment has reported flat results in
the year-to-date, compared to the prior period. This result
demonstrates the strength of the segment’s product offering and its
steady pricing and margins, despite the reduced US onshore rig
count. International sales continue to improve, in line with its
strategy to grow its presence in South America, the Middle East and
Asia Pacific.
The North America operating segment has delivered very strong
results, driven mostly by the OCTG and Advanced Manufacturing
businesses. As noted above, activity in South America has been
extremely strong in the year given the drilling success in Guyana
and the long-term development commitments made by major operators
in the period.
As noted above, the Group’s Subsea Technologies businesses have
also reported strong increases in activity in the period.
The EMEA operating segment continues to complete work for
Tubacex for Brazil, supported by growing momentum in the Middle
East.
Hunting’s Asia Pacific operating segment also reports strong
tender activity in the period, and will benefit from the new
threading facility in Nashik, India, which opened in September.
Hunting 2030 Strategy / Capital Markets Day
At the Capital Markets Day in September 2023, Hunting’s
management set out its strategy for growth to 2030. The Group plans
to deliver c.$2 billion of sales per annum by the end of decade, at
EBITDA margins in excess of 15%.
Key areas of opportunity include growth of its OCTG businesses,
driven by strong international oil and gas demand and the
high-growth energy transition markets of geothermal and carbon
capture, with an increase seen this quarter for geothermal tenders
for delivery in 2024.
Hunting also sees strong growth in its Subsea businesses as
offshore investment by the global industry is projected to double
throughout the remainder of the decade.
The Group also plans to accelerate its non-oil and gas sales,
predominantly through its Advanced Manufacturing businesses, as it
targets the high-end markets of aviation, commercial space, defence
and medical.
The above strategy is underpinned by a focus on delivering
strong free cash flow to the end of the decade and an increasing
dividend distribution.
Date of Next Trading Update
The Group’s next Trading Update is scheduled for Wednesday 10
January 2024.
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.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026812856/en/
Hunting PLC Jim Johnson, Chief Executive Bruce Ferguson,
Finance Director lon.ir@hunting-intl.com Tel: +44 (0) 20 7321
0123 Buchanan Ben Romney Barry Archer George Pope
Tel: +44 (0) 20 7466 5000
Hunting (LSE:HTG)
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