H1 2022 Trading UpdateSource: RNS
For Immediate Release
30 June 2022
("Hunting" or "the Company" or "the Group")
H1 2022 Trading Update
Hunting PLC (LSE:HTG), the international energy services group, today issues a pre-close trading update, ahead of its Half Year Results to be issued on Thursday 25 August 2022.
· H1 2022 trading has been in line with management expectations, with H2 performance continuing to indicate a further strengthening in revenue run-rate and a return to bottom-line profitability for the full-year. Q3/Q4 2022 EBITDA run-rate likely to increase c.20% from the Q2 result.
· Gross margins across most operating segments increasing as activity levels improve.
· Sales order books reporting strong increases throughout the period. Group position as at 31 May 2022 c.$313m compared to c.$215m as at 31 December 2021.
· Hunting Titan operating segment benefiting from increasing US onshore rig count and has maintained a leading market share within the US during the period.
· North America operating segment reporting good increases to revenue run-rate and profitability, particularly from Q2 2022 onwards.
· Balance sheet remains strong with total cash and bank of c.$76m as at 17 June 2022, with working capital increasing to align with forward revenue profile. Total liquidity, including cash and availability under the Asset Based Lending facility, now totalling $196m.
Jim Johnson, Chief Executive of Hunting, commented:
"Results in May 2022 confirm the Group's return to bottom-line profitability, with further improvements anticipated during the remainder of the year. Clients continue to steadily increase drill spend, supported by the strong commodity price environment, indicating a further improvement in trading momentum in H2 2022, despite the macro-economic and supply chain constraints seen for certain components.
"Our strong liquidity position also provides optionality to pursue new growth opportunities in both our traditional and non-oil and gas markets. Hunting's core competencies are increasingly being utilised in new markets, led by our Advanced Manufacturing group.
"As previously indicated, the Group's financial performance continued to strengthen during H1 2022, which is reflected in our sales order books and improving segmental performance. Gross margins across most operating segments also continue to improve as activity levels increase. While Hunting is seeing inflationary pressures on some raw material costs, the Company implemented price increases within a number of product lines, along with pass through costs on an order-by-order basis.
"With energy security and consumer pricing for fuel now at the top of most political agendas, the outlook for the global oil and gas industry is now extremely positive, with many commentators forecasting a strong multi-year upcycle. Given Hunting's unique service offering in facilitating onshore and offshore activity, the Company remains well placed to benefit from this outlook."
Group EBITDA in H1 2022 is expected to be in the range of $16m-$18m, before any adjusting items. EBITDA in Q2 is likely to report an improvement relative to Q1 2022, following the slow start to the year in January and February due to the impact of COVID-19 on operations. In the period, supply chain issues for electronic components and material delivery for high-nickel content alloys impacted the Advanced Manufacturing group and the Hunting Titan business on a more limited basis. The Q3 and Q4 2022 EBITDA run rate is also likely to improve c.20% from the Q2 result, as trading conditions continue to show signs of increased momentum for the remainder of the year.
Hunting retains a strong balance sheet with net assets of c.$855m as at 31 May 2022 and total cash and bank of c.$76m on 17 June 2022. The reduction in the total cash and bank position reflects working capital outflows related to firm sales orders received, in addition to the 2021 Final Dividend, which was paid in May 2022.
Trading within the Hunting Titan operating segment steadily improved throughout the reporting period as the US onshore rig count increased. The business reports a strengthening in gross margin for the period, as activity levels increase, coupled with price increases implemented on certain product lines, in addition to clients adopting new perforating technologies. Reflecting the stronger onshore market environment, Titan is investing in additional production capacity at its Mexico facility to meet demand across North America. Further, the business has introduced a H-3 perforating system to clients, which includes orienting technology, making for a more efficient well completion procedure.
The North America operating segment continues to report improving results, with material increases being reported in the sales order books for the Premium Connections, US Manufacturing and Subsea business units and the Advanced Manufacturing group. Of note is the increase in non-oil and gas orders within the Hunting Dearborn business, which reports that c.85% of its forward orders relate to aviation, defence and space related sales. The Subsea Spring business unit reported a strong run in new orders for its titanium and steel stress joints, and during the period was awarded an order to support the Yellowtail offshore project in Guyana.
Hunting's EMEA operating segment reports stronger activity levels supported by a key OCTG contract for South America, which will see the Group's Netherlands facility at full capacity for the remainder of the year. In addition, the segment's well testing business unit reports a strong order book, supported by clients in the Middle East. The Organic Oil Recovery technology saw good traction with potential customers in the period, with a number of sales orders being received for either full field treatments or new pilot tests.
The Group's Asia Pacific operating segment has reported challenging market conditions for the majority of H1 2022, as the recurring impact of COVID-19 led to supply chain volatility in China, which impacted shipping. Following the partial reopening of the port in Shanghai in May 2022, activity levels should increase during H2 2022, which will lead to stronger trading results. Progress within the joint venture with Jindal SAW in India continued during the period, with the start-up date for the new threading facility remaining on track for H1 2023. During the period, the Group's Singapore facilities were consolidated into a single operating site in the Tuas port region, which will further improve operational efficiencies.
For further information, please contact:
Jim Johnson, Chief Executive
Bruce Ferguson, Finance Director
Tel: +44 (0) 20 7321 0123
Tel: +44 (0) 20 7466 5000
Notes to Editors:
About Hunting PLC
Hunting PLC is an international energy services provider to the world's leading upstream oil and gas companies. 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 four operating segments: Hunting Titan; North America; Europe, Middle East and Africa ("EMEA") and Asia Pacific.
Hunting PLC's Legal Entity Identifier is 2138008S5FL78ITZRN66.