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For
Immediate Release
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14 January
2025
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Hunting PLC
("Hunting" or "the Company" or "the Group")
2024 Year-end Trading
Update
Hunting PLC (LSE: HTG), the
precision engineering group, today issues a year-end trading update ahead of announcing its
2024 Final Results on Thursday 6 March 2025.
All financial data noted below
remains subject to audit.
Highlights
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Solid strategic progress in respect
of the Hunting 2030 Strategy, with key milestones delivered within
OCTG and Subsea product groups.
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2024 trading and financial outturn
in line with previous guidance and market expectations, with EBITDA
in the range of $123-$126m. Group revenue is expected to be in the
range of $1,040-$1,050m.
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EBITDA margin of c.12% is likely to
be reported for the year, up from 11% in 2023, as
anticipated.
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Strong cash generation delivered in
Q4 2024, with total cash and bank / (borrowings)1 at the
year-end expected to be $100-$105m, ahead of the guidance provided
in October 2024.
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Following a record order book
performance in H1 2024, Hunting's sales order book closed the year
at c.$500m following the conversion of large orders into revenue
throughout H2 2024. This order book will be completed through 2025
and into 2026 and supports the Group's anticipated continued EBITDA
growth.
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Market conditions, while volatile
through Q4 2024, appear more stable in the US with the Henry Hub
natural gas price nearing $4 per mmBtu at the close of the year,
further underpinned by likely improvements to industry support with
the newly elected US administration.
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Continued growth in 2025 with EBITDA
expectations being in the range of c.$135-$145m, driven by the
Group's strong order book, and a material cost savings programme,
with the higher end of range coming from the expected more positive
market conditions in North America.
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2025 guidance does not include any
earnings accretive acquisitions, for which we are in active
discussions, nor does it reflect an active tender pipeline, which
may contribute further to full year 2025 performance.
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Jim Johnson, Chief Executive of
Hunting, commented:
"I
would like to thank the Hunting team for delivering another year of
strong growth, with firm progress towards a number of the key 2030
strategic objectives that we identified at our Capital Markets Day,
namely positive growth of revenue, EBITDA, margins, cash and bank
and continued diversification of our service offering and revenue
streams.
"This growth has been delivered against a challenging industry
backdrop through 2024, particularly in North America, which saw
lower than expected activity due to depressed gas prices.
Pleasingly, these challenges are beginning to subside with the
natural gas price in the US ending the year strongly, which will
likely lead to more drilling in the US and Canada, which will be
further supported by the new US administration.
"2025 should, therefore, deliver a further year of growth and
with strong acquisition opportunities, a healthy balance sheet, and
a robust cost cutting programme that includes the consolidation of
our EMEA operations, our profits and returns should continue to
advance in the year ahead."
2024 Full Year Trading Summary
Trading in Q4 2024 remained in line
with management's expectations and with the guidance issued in
October 2024, with EBITDA anticipated to be in the range of
$123-$126m for the full year. EBITDA margin is likely to be
c.12%.
Working capital has reduced since Q3
2024, to close the year at c.$360m driven by lower inventory and
improved receivables collections. Capital investment will total
c.$32m for the full year.
EBITDA to Free Cash Flow conversion
is likely to be c.110% for 2024, with year-end total cash and bank
/ (borrowings)1 now anticipated to be above the previous
guidance at $100-$105m, supported by the accelerated receivables
programmes and discounted letters of credit used during H2
2024.
As noted in October 2024, the
carrying values of the Hunting Titan operating segment are being
assessed for impairment, with management expecting to book a
reduction in carrying value as an adjusting item.
Delivery of Hunting 2030 Strategic
Milestones
Hunting has delivered a number of
strategic milestones during the year, with a strong operational
performance from the Group's OCTG and Subsea product groups, and
further growth from the Advanced Manufacturing and Other
Manufacturing product groups. As noted in the Q3 2024 Trading
Update, the operating performance of the Perforating Systems
product group has been below 2023 during the year due to the lower
US onshore rig count and average price for natural gas.
Management notes that the OCTG and
Subsea product groups have delivered EBITDA margins well in excess
of the target of 15% published at the Company's Capital Markets Day
("CMD") in September 2023. The Advanced Manufacturing product group
has reported further progress in margin during 2024, while the
Perforating Systems product group will likely report low-single
digit margin.
Free Cash Flow has improved
significantly in the year, with a c.110% conversion to EBITDA. The
working capital to revenue ratio is also likely to be c.30%, which
is better than the CMD target.
Capital Allocation
The Group has considerable balance
sheet strength, and we continue to pursue value accretive
opportunities to grow and diversify our portfolio in line with the
strategic goals outlined at Hunting's CMD.
When assessing any opportunity, the
Group has a disciplined capital allocation policy. In line with
this policy, the Group also regularly considers if additional
shareholder returns are appropriate.
The Group's dividend distribution
ambitions remain on track.
EMEA Restructuring and Cost Savings
As announced separately today, the
Directors have taken the decision to restructure the Group's EMEA
operating segment, given the low levels of future drilling activity
anticipated in the North Sea.
The Directors reiterate the strong
outlook for the global oil and gas industry; and recognise that its
operating footprint needs to align with future activity, which will
likely focus on North and South America, the Middle East, Africa
and Asia Pacific out to 2030.
A review of sales, general and
administration costs is also underway.
In total, management plans to
eliminate up to c.$10m of costs in the year, the majority of which
being from the restructuring of the EMEA operating segment, noted
above.
Further information on this
initiative will be reported at the Company's 2024 Final Results, on
Thursday 6 March 2025.
2025 Full Year Trading Guidance
Following a record order book in H1
2024, the Group's sales order book continued to be strong with a
year-end position of c.$500m following the conversion of large
orders into revenue in H2 2024. Tendering activity continues to be
positive across our key regions of operation with opportunities in
North and South America, the Middle East, and Asia
Pacific.
Management continues to pursue
earnings accretive bolt-on acquisitions that are focused on subsea
opportunities, which remains a robust end-market to the end of the
decade. Active discussions are underway with a number of targets,
in line with the Hunting 2030 Strategic ambitions. Following the
securing of the new banking facilities, as detailed in the October
2024 update, the Company has total liquidity2 of
c.$400m, as of today's date, available to pursue this focused
growth initiative.
As noted above, in addition to the
organic growth in the business, a programme of cost savings and
restructuring is underway underpinning the EBITDA guidance for the
full year 2025 of $135-$145m.
Free Cash Flow conversion continues
to be an area of focus for the Group, with management anticipating
an EBITDA to free cash flow conversion of c.50%. Year-end total
cash and bank / (borrowings)1 are targeted to be
$135-$145m.
Investor Presentation via Investor Meet
Company
The Company will be giving an
investor presentation hosted by Investor Meet Company covering its
Trading Update for the financial year ended 31 December
2024.
The online event will take place at
10:00 a.m. GMT today with Jim Johnson (Chief Executive) and Bruce
Ferguson (Finance Director) presenting from the Company.
Investors can sign up to Investor
Meet Company for free and add to meet Hunting via:
https://www.investormeetcompany.com/hunting-plc/register-investor
Investors who already follow Hunting
on the Investor Meet Company platform will automatically be
invited.
For further information please
contact:
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Hunting PLC
Jim Johnson, Chief
Executive
Bruce Ferguson, Finance
Director
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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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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.
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.
Note 2 - Total liquidity comprises
secured committed facilities (the RCF and term loan) and unsecured
uncommitted facilities, including the four facilities available to
our Chinese subsidiary, combined with our year end cash and bank /
(borrowings).