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For
Immediate Release
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29 February
2024
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Hunting PLC
("Hunting" or "the Company" or "the Group")
Results for the year ended 31
December 2023
Strong year of revenue and
profit growth, supported by international and offshore
markets
Hunting PLC (LSE:HTG), the precision
engineering group, today announces its results for the year ended
31 December 2023.
Financial Highlights
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Order book increased by 19% to
$565.2m.
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Revenue increased by 28% to
$929.1m.
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Non-oil and gas revenue increased
59% from $47.6m to $75.9m.
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Gross margin improved to 25% from
24%.
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EBITDA, ahead of previous guidance
provided, and increased by 98% to $103.0m.
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EBITDA margin of 11% up from
7%.
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$83.1m of previously unrecognised
deferred tax assets recognised at year-end.
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Total dividends declared in the year
of 10.0 cents per share, up from 9.0 cents in 2022.
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Commenting on the results Jim
Johnson, Chief Executive, said:
"Hunting has delivered a strong year of growth across most of
its product groups, demonstrating the underlying strength of our
market drivers, with security of supply and affordable energy
remaining key investment themes.
"Our offshore and international businesses have delivered
robust growth as we continue to build a more balanced and
diversified business, underpinned by the strong technology and
intellectual property that makes Hunting a market leader in
precision engineered products across our markets.
"The growth and composition of our record order book
demonstrates how much Hunting has evolved in terms of more diverse
revenue and better visibility on earnings, and provides confidence
in our near and longer-term outlook, as we deliver the Hunting 2030
Strategy."
Strategic Highlights
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Launch of Hunting's 2030 Strategy at
the Capital Markets Day in September 2023 which
included:
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o
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Leveraging
Hunting's global presence and high-technology product offering, to
drive multiple end-market sales growth.
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o
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Delivering EBITDA margin growth
through higher utilisation, stronger pricing and operating
efficiencies.
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o
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Improved shareholder returns, with
increased return on capital, along with an 11% increase in total
declared dividends in 2023.
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Driving sector leading technology
delivered through innovation and supported by robust intellectual
property.
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Progressing the sustainability
agenda with positive trends in key non-financial
metrics.
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Strong progress on revenue
diversification with non-oil and gas sales of $75.9m.
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EBITDA conversion and good cash
generation reported with $50.9m inflow delivered in H2
2023.
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Financial Summary
Financial Performance measures as
defined by the Group*
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2023
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2022
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Variance
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Revenue
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$929.1m
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$725.8m
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+$203.3m
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Non-oil and gas revenue
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$75.9m
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$47.6m
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+$28.3m
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EBITDA**
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$103.0m
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$52.0m
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+$51.0m
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EBITDA margin**
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11%
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7%
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+4pp
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Adjusted profit before
tax**
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$50.0m
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$10.2m
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+$39.8m
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Adjusted diluted earnings per
share**
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20.3 cents
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4.7
cents
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+15.6
cents
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Free cash flow**
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$(0.5)m
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$(60.4)m
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+$59.9m
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Total cash and bank**
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$(0.8)m
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$24.5m
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-$25.3m
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Net assets
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$957.1m
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$846.2m
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+$110.9m
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ROCE**
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6%
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1%
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+5pp
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Final dividend
proposed***
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5.0 cents
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4.5
cents
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+0.5
cents
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Financial Performance measures as
derived from IFRS
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2023
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2022
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Variance
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Operating profit
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$61.0m
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$2.0m
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+$59.0m
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Profit before tax
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$50.0m
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$(2.4)m
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+$52.4m
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Diluted earnings per
share
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70.0 cents
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(2.8)
cents
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+72.8
cents
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Net cash inflow (outflow) from
operating activities
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$49.3m
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$(36.8)m
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+$86.1m
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*
Adjusted results exclude adjusting items agreed by the Audit
Committee and Board.
**
Non-GAAP measure. Please see the 2023 Annual Report and Accounts
pages 239 to 244.
*** Payable on 10 May 2024 to shareholders on the register on
12 April 2024, subject to approval at the Company's 2024
AGM.
Outlook Statement
The global outlook for energy in the
year ahead will be driven by similar themes to those reported in
2023.
Geopolitical tensions and potential
supply disruptions are a continuing threat to the oil and gas
supply/demand balance, and while commodity prices trended lower in
the past year, it is likely that they will remain in a range that
supports sustained activity levels during 2024.
Offshore market momentum is poised
to continue to increase in the coming years as major development
cycles in South America and South West Africa continue to
accelerate.
The North American onshore drilling
market is likely to be stable during 2024, with the US more focused
on oil production. Additional LNG capacity is likely to come
on-stream later in the year, which will support new natural gas
drilling in the second half. Projected growth in international
sales should also offset shifts in US onshore market
dynamics.
The Middle East will also likely
show a continuation of the activity levels reported in 2023.
Despite the pause in oil production expansion in Saudi Arabia being
announced in recent weeks, natural gas drilling in-country will
continue to grow to meet local demand, underpinning steady activity
levels in the year ahead.
In India, the Group's facility is
shortly to receive its API threading licence which will enable
premium threading activities to accelerate. Management sees a
positive profit contribution from our joint venture in 2024, given
the growth momentum in-country.
Across Asia Pacific, traditional
energy demand as well as energy transition initiatives will
continue to drive growth, with geothermal opportunities being
captured as market activity increases, particularly in the
Philippines and Indonesia.
For Hunting, the Group's OCTG
product group should deliver another year of growth, as activity in
South America continues to increase, coupled with stable activity
in the US and Canada. Our EMEA OCTG operations will continue to
support projects in Brazil, while in Asia Pacific, larger tenders
continue to be announced, which should lead to new orders being
secured. Hunting's Perforating Systems business will continue to
roll-out its leading technology to clients across North America,
while continuing to grow internationally where markets such as
Argentina present good opportunities due to reduced import tariffs
being announced.
Our Subsea Spring and Stafford
businesses should also deliver a further year of strong results as
orders for ExxonMobil and other major operators across South
America continue to be progressed. The Enpro business should also
support this growth profile given the orders secured in the second
half of 2023.
Hunting will continue to drive its
non-oil and gas diversification through the Advanced Manufacturing
businesses. Momentum remains strong, with opportunities in
aerospace and defence being pursued, supporting our 2030 strategic
objectives.
In summary, the Board sees a further
year of growth ahead, given our diverse, international product
offering, with management remaining comfortable with current market
guidance.
Operational and Corporate Highlights - Delivering on the
Hunting 2030 Strategy
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Record $91m OCTG contract award with Cairn Oil and
Gas
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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 XDTM premium connection along
with OCTG.
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Continued launch of new technology and innovative
products
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The Group continues to develop and
introduce new technology to clients. Research and development
initiatives focus on increasing in-field safety, while also
delivering completion efficiencies and lowering drilling and
development costs for clients. With approximately one-third of
North American horizontal wells relying exclusively on oriented
perforating techniques, Hunting launched the H-4 Perforating
System™ during the year, first to the US onshore and then in Q4
2023 to customers in Canada.
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Expansion into high growth Indian energy
markets
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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
Ltd. The official opening of the facility took place in September
2023. Hunting's precision engineered premium connection technology
will be applied to Jindal SAW's premium seamless casing and
tubing.
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Strong growth in Subsea businesses
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The Subsea Technologies operating
segment was formed on 1 January 2023. The segment completed a
number of significant orders in the year, especially in Guyana, as
investment in offshore projects increased. Revenue increased 43% to
$98.6m, with an EBITDA margin of 14% compared to 5% in 2022. The
Spring business had a number of material order wins for its
titanium stress joints in the year for floating production, storage
and offloading vessels in Guyana and the Turkish area of the Black
Sea. The segment ended the year with an order book of $152.2m,
including a strong backlog for Enpro.
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Enhanced strategic supply channels for OCTG to support energy
transition strategy
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On 5 June 2023, the Company
announced a ten-year strategic alliance with Zhejiang Jiuli Hi-Tech
Metals Co. Ltd ("Jiuli"), for the supply of corrosion resistant
alloys ("CRA") for OCTG, geothermal and carbon capture and storage
("CCUS") applications. The partnership brings together Hunting's
SEAL-LOCKTM 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.
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Entered new marketing, manufacturing and technology
partnership to expand product offering
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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.
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Continued restructuring to increase operational efficiencies
and returns on capital
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Hunting is continuing to drive
stronger internal operational efficiencies throughout its global
footprint, which will lower our operating costs and lower our
carbon footprint. During the year, Hunting Titan closed its
Oklahoma City operating site and transferred the manufacture of
perforating systems to the
Group's Pampa, Texas, and Monterrey,
Mexico, facilities. A distribution centre has been retained in
Oklahoma City to continue to service clients in the Mid-Continent
Region of the US.
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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 in
2024, which will lead to the closure of a facility at Velsen-Noord,
with activities in the Netherlands to be merged into a single
location.
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In January 2024, further
consolidation of our footprint and cost base in the UK continued as
the Enpro operations were transferred to the existing Badentoy,
Aberdeen facility.
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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
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.
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Group Results Narrative
For access to narrative on the
Group's results (incorporating the Company Chair's and Chief
Executive's Statements, Outlook, Market Analysis, Product Line and
Segmental Review and Group Financial Review) for the year ended 31
December 2023 please click on the following link.
http://www.rns-pdf.londonstockexchange.com/rns/8690E_1-2024-2-28.pdf
Financial Statements and Notes to the
Accounts
For access to the Financial
Statements and Notes to the Accounts for the year ended 31 December
2023 please click on the following link.
http://www.rns-pdf.londonstockexchange.com/rns/8690E_2-2024-2-28.pdf
Listing Rules / Disclosure Guidance and Transparency Rules
Information
For access to Hunting's Key
Performance Indicators, Business Model and Strategy, ESG and
Sustainability, Risk Management (including Principal Risks), and
the Statement of the Directors' Responsibilities for the year ended
31 December 2023, please click on the following link.
http://www.rns-pdf.londonstockexchange.com/rns/8690E_3-2024-2-28.pdf
Page number references refer to the
full Annual Report when available.
The linked documents provide access to all major financial and
operational disclosures contained in the Group's 2023 Annual Report
and Accounts. The complete 2023 Annual Report and Accounts will be
published on 14 March 2024 and can then be accessed
at www.huntingplc.com.
The financial information set out in
the above links does not constitute the Company's statutory
accounts for the years ended 31 December 2023 or 31 December 2022,
but is extracted from those accounts. Statutory accounts for 2022
have been delivered to the Registrar of Companies and those for
2023 will be delivered in due course. The auditor has reported on
those accounts; their reports were unqualified, did not draw
attention to any matter by way of emphasis without qualifying their
report and did not contain statements under s498(2) or (3) of the
Companies Act 2006. Whilst the financial information included in
this preliminary announcement has been computed in accordance with
International Financial Reporting Standards, this announcement does
not itself contain sufficient information to comply with
IFRS.
Analyst Briefing and Webcast
Hunting PLC will host an analyst
briefing and webcast at the offices of CMS Cannon Place, 78 Cannon
St, London EC4N 6AF on 29 February 2024 commencing at 9:00a.m. GMT.
Attendees should arrive by 8:45a.m. to clear building security in
good time.
The live webcast can be accessed by
copying and pasting the following link into your
browser:
https://stream.buchanan.uk.com/broadcast/65b93d2f6371e5b884f62831
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.
For further information please
contact:
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Hunting PLC
Jim Johnson, Chief
Executive
Bruce Ferguson, Finance
Director
lon.ir@hunting-intl.com
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Tel: +44 (0) 20 7321
0123
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Buchanan
Ben Romney
Barry Archer
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Tel: +44 (0) 20 7466
5000
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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.
