H1 2023 Trading Update & Capital Markets Day
Hunting PLC (LSE:HTG), the global engineering group, today issues a trading update, ahead of its Half Year Results to be released on Thursday 24 August 2023.
H1 2023 trading has been ahead of management's expectations driven by strength across most international markets, with both revenue and operating profit ahead of the targets set at the start of the year. Performance in the period has also been materially ahead of the comparable period in 2022.
EBITDA for the first half of 2023 is likely to be in the range of $48m-$50m.
Sales order books continue to be robust across all product lines, with the Group position at 30 June 2023 being c.$530m-$550m compared to $473m as at 31 December 2022.
North America segment reports a performance materially ahead of expectations, primarily due to international orders for South America, which are driving the performance of the US Manufacturing business.
Hunting Titan's international revenue is building as US completion techniques and technology are adopted globally. The segment reports stable operating profits during the period.
Subsea Technologies segment reports growth in revenue and profits as major orders for titanium stress joints are completed.
EMEA segment reports a broadly break-even performance as international activity supports higher revenue.
Asia Pacific segment reports a material step up in revenue and a return to profitability as the CNOOC order continues to be delivered.
Balance sheet remains robust with net debt expected to be $51m-$52m at 30 June 2023.
The Company's Capital Markets Day is confirmed for Wednesday 13 September 2023, where the Hunting 2030 Strategy will be presented by management.
Group performance for H2 2023 is likely to be similar to H1, therefore management is increasing EBITDA guidance for the 2023 full-year to $96m-$100m.
Management anticipates total cash and bank at 31 December 2023 to be between $nil and $25m as larger projects are completed in H2 2023.
The outlook for 2024 is improving as sales order books increase. Management now anticipates EBITDA to be in the range of $125m-$135m for the year ended 31 December 2024.
Jim Johnson, Chief Executive of Hunting, commented:
"Hunting has delivered a strong performance in H1 2023 as business units across the Group benefit from increased client activity. Management remains focused on delivering on market guidance, which is supported by robust international market momentum including South America, the Middle East and Asia Pacific."
"The North America drilling market is shifting activity to more oil focused targets, which continues to provide opportunities to the Group. Hunting Titan is shortly to launch the H-4 Perforating System™, which will also provide revenue growth to the segment in H2 2023, in addition to its good progress within international markets."
"Hunting's Advanced Manufacturing businesses are also seeing good growth in both energy and non-oil and gas markets."
"The Group has made good progress in its strategy to position itself in the supply chain for energy transition markets. The strategic alliance with Jiuli, announced in June, enables Hunting to deliver key technologies and products to clients in the geothermal and carbon capture sectors, which management believes will lead to strong sales in the short to medium term."
"The outlook for 2023 continues to be strongly positive, with 2024 revenue visibility also improving due to the orders secured during the period."
The monthly revenue run rate in H1 2023 is expected to be $76m-$80m, which compares to $56m in H1 2022 and $65m in H2 2022.
EBITDA in H1 2023 is expected to be in the range of $48m-$50m.
During H1 2023, the Group's working capital balances have peaked in May, with net debt at 30 June 2023 expected to be $51m-$52m, which reflects the investment in inventory as previously guided, due to the new orders secured across the Group. Cash generation has accelerated towards the end of the period and will increase further during the second half of the year as current orders are worked off, with management still anticipating a year-end total cash and bank position of between $nil and $25m, dependent on the timing of receivables.
The North America operating segment has reported very strong results in the period, as demand for premium and semi-premium connections has continued to build. As noted above, the segment's US Manufacturing business has reported a performance ahead of expectations as well as a material increase in completion orders for South America. The Advanced Manufacturing businesses have reported improving results, as both the Dearborn and Electronics businesses secure both energy and non-oil and gas orders, in addition to the further easing of supply chain issues. New equipment has been commissioned at Dearborn, which will lead to higher facility utilisation and order completion in the second half of the year.
Trading within Hunting Titan has been stable, despite volatility within the North America onshore drilling market. The segment is seeing good growth in its international sales profile as US technologies are adopted in key drilling basins in South America, the Middle East and China. Management note that drilling in North America is shifting to oil rather than gas targets given the decline in the natural gas price, which will also support activity in the balance of the year. The segment has continued to commercialise its H-3 Perforating System™ in the period, which has seen good customer acceptance. The segment will shortly launch the self-orientating H-4 Perforating System™, which will contribute to Titan's revenue mix in the second half of the year.
The Subsea Technologies operating segment has reported good revenue growth in the period as sales of hydraulic valves and couplings and continued progress on the orders for titanium stress joints have led to a strengthening financial performance. Further sales opportunities in South America and West Africa are being pursued as international market activity strengthens.
Hunting's EMEA operating segment reports improved revenue as global activity continues to strengthen. The segment has worked on the Tubacex contract for South America, with the order now being shared with the Group's Aberdeen facility, in addition to the Netherlands facility which remains at full capacity. The Organic Oil Recovery technology 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.
The Group's Asia Pacific operating segment has reported a strong improvement in performance in H1 2023 compared to H1 2022 as activity in the Middle East and Asia Pacific recovers from COVID-19. Completion of the CNOOC order secured in Q3 2022 has progressed during the period, which has led to a significant increase in revenue and profitability. Ongoing deliveries of the CNOOC order will continue into Q3 2023, with cash inflows increasing during the second half. The three-year Vedanta order, secured in Q2 2023, will contribute to steady activity through to 2025. During the period, the new threading facility in India has been completed, with final commissioning expected in Q3.
2023 Half Year Results Briefing & Investor Meet Company
An analyst presentation in respect of the 2023 Half Year Results has been arranged for 9:30am (UK) on Thursday 24 August 2023, at Buchanan, 107 Cheapside, London, EC2V 6DN. Please contact Buchanan to register.
After this, Hunting's management will provide a live presentation via the Investor Meet Company platform on 24 August, commencing at 3:30pm (UK). The presentation is open to all existing and potential shareholders. Questions can be submitted prior to this presentation via the Investor Meet Company dashboard up until 9:00am the day before the meeting or at any time during the live presentation. Investors can sign up to Investor Meet Company for free and add to meet Hunting PLC at:
Investors who already follow Hunting on the Investor Meet Company platform will automatically be invited.
Capital Markets Day
The Company is pleased to announce that its Capital Markets Day will be held on Wednesday 13 September 2023, commencing at 2:00pm (UK) / 8:00am (CST). At the event, management will present its Hunting 2030 Strategy. The Hunting 2030 Strategy includes management's strategic ambitions to grow its presence in both traditional energy and energy transition markets, in addition to diversifying the Group's long-term revenue to non-oil and gas markets including power generation, defence and medical sectors.
Management will provide financial analysis which supports the strategy and will include a focus on strong cash generation, along with details of an updated capital allocation policy, aimed at supporting stronger shareholder distributions and returns.
Presentations will be delivered by the Company's executive management, including the Group's product line senior leadership team.
The Capital Markets Day will be held at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS.
To register for the event, please email HTG.2023.CMD@hunting-intl.com.
Get in touch
For further information, please contact:
Jim Johnson, Chief Executive Bruce Ferguson, Finance Director Tel: +44 (0) 20 7321 0123 email@example.com
Ben Romney Barry Archer George Pope Tel: +44 (0) 20 7466 5000
Notes to Editors:
About Hunting PLC
Hunting is a global engineering group that provides precision-manufactured equipment and premium services which adds 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.