Hunting Plc · LSE:HTG
Hunting — FY2012 Earnings Presentation
39 slides from Hunting's earnings presentation, March 2013
Slide 1: Hunting PLC Annual Report 2012
Hunting PLC Annual Report 2012 Results for the year ended 31 December 2012 1
Slide 2: Highlights
Highlights Record Performance* • EBITDA £154.3m (2011 - £102.5m) +51% • Improved EBITDA margin 19% (2011 - 17%) • Profit from operations £128.8m (2011 - £81.0m) +59% • Diluted EPS 57.5p (2011 - 38.7p) +49% Continuing internal investment programmes throughout the Group • 2012 capital expenditure
Slide 3: 2012 Results Summary
2012 Results Summary* 2012) Margin 2011) Margin Change £m) % £m) % % Revenue 825.8) 608.8) +36 EBITDA 154.3) 19 102.5) 17 +51 Profit from operations 128.8) 16 81.0) 13 +59 Finance expense (6.2) (2.2) Profit before tax 123.6) 15 79.8) 13 +55 Effective tax rate 28% 28% Diluted EPS 57.5p 38.7p +49 Divi
Slide 4: Underlying profit from operations – 2011 to 2012
Underlying profit from operations – 2011 to 2012 140.0 32.9 (1.0) (1.3) 128.8 130.0 120.0 110.0 100.0 17.2 £m 90.0 81.0 80.0 70.0 60.0 50.0 2011 Well Construction Well Completion Well Intervention Others Other 2012 Results for the year ended 31 December 2012 4
Slide 5: Segmental Results
Segmental Results* 2012 2011 Profit from Profit from) Revenue Operations Margin Revenue Operations) Margin £m £m % £m £m) % Hunting Energy Services Well Construction 279.3 45.7 16 194.5 28.5 15 Well Completion 457.4 74.1 16 327.2 41.2 13 Well Intervention 56.7 6.9 12 52.9 7.9 15 793.4 126.7 16 574.6
Slide 6: Amortisation & Exceptional Items – Continuing Operations
Amortisation & Exceptional Items – Continuing Operations 2012) £m) Amortisation of intangible assets 28.1) Inventory fair value charge 7.6) Retention bonuses on acquired businesses 1.1) Oil & Gas reserve impairment 5.2) Dry hole costs 2.0) Release of contingent consideration (1.1) Continuing operati
Slide 7: Exceptional Items - Discontinued Operations
Exceptional Items - Discontinued Operations 2012) £m) Resolution of Gibson Energy legacy tax dispute 56.9 Gain on disposal of Field Aviation 1.2 58.1 Tax credits 11.1 Discontinued Operations 69.2 Results for the year ended 31 December 2012 7
Slide 8: Balance Sheet
Balance Sheet ) 2012) 2011 £m) £m Property, plant and equipment 248.5) 231.2) Goodwill 304.5) 317.9) Other intangible assets 185.2) 220.8) Working capital 271.8) 261.2) Provisions (29.6) (60.5) Taxation (current and deferred) (22.8) (33.7) Other 20.0) 13.5) Net debt (163.8) (218.4) Net assets 813.8)
Slide 9: Capital Expenditure – by Segment
Capital Expenditure – by Segment 2012 2011 £m £m Hunting Energy Services Well Construction 24.1 30.0 Well Completion 10.3 19.6 Well Intervention 21.5 5.9 55.9 55.5 Exploration & Production 5.5 2.3 Others 0.2 0.2 61.6 58.0 Split: Replacement 27.0 12.8 New Business 34.6 45.2 61.6 58.0 Results for the
Slide 10: Capital Expenditure – by Project
Capital Expenditure – by Project 2012 £m Hunting Energy Services New drill tools and other rental equipment 17.0 New Houma facility – US 9.2 Stafford expansion – US 6.5 Other Facility improvements 3.7 Asia Pacific machinery and equipment 3.7 North American machinery and equipment 9.0 Other equipment
Slide 11: Cash Flow
Cash Flow )) ) 2012)) 2011) £m)) £m) EBITDA 154.3) 102.5) Working capital (18.6) (33.2) Interest and tax (20.3) (23.1) Replacement capital expenditure (27.0) (12.8) Other (1.9) 5.5) Free cash flow 86.5) 38.9) Expansion capital expenditure (34.6) (45.2) Equity placing - 83.5) Dividends paid (24.1) (1
Slide 12: Well Integration
Well Integration Results for the year ended 31 December 2012 12
Slide 13: Global Footprint
Global Footprint Canada (3 Mfg / 2 Dist) Europe (4 Mfg / 1 Dist) USA (27 Mfg / 22 Dist) Mexico (1 Mfg) Middle East (1 Mfg) Asia Pacific (5 Mfg) Results for the year ended 31 December 2012 13
Slide 14: Corporate Activity
Corporate Activity Acquisitions: Acquisitions: £710m / Investments: £130m / Disposals: £620m Dearborn Titan W L Doffing Specialty Supply Acquisitions: Disposals: Innova Field Aviation Acquisitions: Disposals: NCC Hunting France Welltonic PT SMB Disposals: Gibson Energy 2.7 M 2.5 M Sq. Ft. Sq. Ft. 2M
Slide 15: Hunting Strategy
Hunting Strategy Results for the year ended 31 December 2012 15
Slide 16: Global Expansion
Global Expansion Results for the year ended 31 December 2012 16
Slide 17: Africa
Africa • Shale and Offshore: South Africa • World Class Offshore Discoveries: Mozambique, Tanzania • NOC’s, IOC’s, OSC’s establishing strong presence Results for the year ended 31 December 2012 17
Slide 18: Projected Wells Drilled Globally
Projected Wells Drilled Globally US China Canada Central, South America Russia 2012 Far East 2013 Projected Middle East Africa Central Asia Europe 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 Source: Spears and Associates Results for the year ended 31 December 2012 18
Slide 19: Global Rig Count and Spend Trends
Global Rig Count and Spend Trends Average global rig count changed only slightly in total, with land based rigs increasing by 2.1% and offshore counts increasing by 3.3% in 2012 versus 2011 2013 current projections indicates the land based rig count to remain flat, with a 6.5% increase in offsho
Slide 20: Land Based Rigs Influence on Global Spending Patterns
Land Based Rigs Influence on Global Spending Patterns Increasing percentage from vertical to horizontal / directional increases service intensity Land based rigs have continued to shift from vertical to horizontal / directional increasing the service intensity which increases revenue 2012 = 71% op
Slide 21: Offshore Rigs Influence on Global Spending Patterns
Offshore Rigs Influence on Global Spending Patterns Increases in offshore activity 450 trend continues Global Offshore Rig Count 425 Global offshore rig count increased by only 3% from 2011 to 2012, however offshore 400 spend increased 23% Current projections forecast a 375 6.5% increase in 20
Slide 22: Onshore vs. Offshore Revenue Opportunities
Onshore vs. Offshore Revenue Opportunities Drilling Costs: US$6 m Drilling Costs: US$100 m Equipment Supplied: 21% Equipment Supplied: 23% Realised Revenue: US$1.26 m Realised Revenue: US$23 m Results for the year ended 31 December 2012 22
Slide 23: Hunting Global Throughput
Hunting Global Throughput In 2012, Hunting produced over 20 million components Over 14.4 million parts manufactured 15 2012 Parts Manufactured (Millions) 10 5 2011 0 Results for the year ended 31 December 2012 23
Slide 24: Hunting Global Operating Footprint and Operating Leverage
Hunting Global Operating Footprint and Operating Leverage In previous years, Hunting’s operating footprint expanded rapidly via major construction projects Increasing and acquisition Operational Sq. Feet without Bricks and Mortar 2012’s focus was the integration of the acquired Smart Smaller bat
Slide 25: Operational Leverage and Financial Return
Operational Leverage and Financial Return The gains in operational leverage also translate into a healthy financial return When comparing 2012 to 2011, sales revenues increased by 36%, while EBITDA contribution per employee increased 9% Hunting follows simple principles that 10% have large con
Slide 26: Results for the year ended 31 December 2012
Results for the year ended 31 December 2012 26
Slide 27: Results for the year ended 31 December 2012
Results for the year ended 31 December 2012 27
Slide 28: Results for the year ended 31 December 2012
Results for the year ended 31 December 2012 28
Slide 29: Advanced Manufacturing Group
Advanced Manufacturing Group Manufacture Assembly Inspection Results for the year ended 31 December 2012 29
Slide 30: Well Construction
Well Construction Development of products to enhance our offshore and onshore portfolio Capacities expansion to meet offshore growth Steady backlog for products associated with MWD, LWD Continued integration of products and services into the Hunting global footprint Results for the year ende
Slide 31: Well Completion
Well Completion Integration of the acquisitions Continued product expansion globally Manufacturing demand remains high Robust work for GOM and global offshore Continued cost reduction development Excellent demand for perforating systems and energetics Results for the year ended 31 Decemb
Slide 32: Well Intervention
Well Intervention Increase in Drilling = Increase in Work Overs Wells are typically re-entered multiple times over their lifespan Newer Drilling Technologies Require Enhanced Well Intervention Techniques Growth of our Thru Tubing into Canada and US and Asia Pacific markets Advanced technol
Slide 33: Fundamental Business Drivers
Fundamental Business Drivers Results for the year ended 31 December 2012 33
Slide 34: Global Offshore Wells Drilled
Global Offshore Wells Drilled Source: Spears and Associates 2013 projected Results for the year ended 31 December 2012 34
Slide 35: Wells Drilled Oil vs. Gas (US)
Wells Drilled Oil vs. Gas (US) 35000 30000 25000 20000 Oil 15000 Gas 10000 5000 0 2009 2010 2011 2012 2013 Source: Spears and Associates (2013 projected) Results for the year ended 31 December 2012 35
Slide 36: Land Footage Drilled Horizontal vs. Vertical US (Million)
Land Footage Drilled Horizontal vs. Vertical US (Million) 250 200 150 Horizontal Vertical 100 50 0 2009 2010 2011 2012 2013 Source: Spears and Associates (2013 to 2014 Projected) Results for the year ended 31 December 2012 36
Slide 37: Global Offshore Footage Drilled (Million)
Global Offshore Footage Drilled (Million) 39 38 37 36 35 34 33 32 31 30 2009 2010 2011 2012 2013 Source: Spears and Associates (2013 Projected) Results for the year ended 31 December 2012 37
Slide 38: Global Subsea Capex
Global Subsea Capex US$67.2bn $20,000 $18,000 100% Increase $16,000 $14,000 Growth in future driven by Brazil, Africa and Asia. $12,000 US$33.6bn $MM $10,000 $8,000 $6,000 $4,000 $2,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e 2016e 2017e Startup Year Source: Quest Offshore
Slide 39: Looking Forward
Looking Forward Results for the year ended 31 December 2012 39