Hunting Plc · LSE:HTG
Hunting — H1 2013 Earnings Presentation
39 slides from Hunting's earnings presentation, Oct 1, 2013
Slide 1: Hunting PLC Half Year Results 2013
Hunting PLC Half Year Results 2013 Results for the six months ended 30 June 2013 1
Slide 2: Highlights
Highlights Performance* Revenue £424.4m (2012 – £406.9m) +4.3% EBITDA £75.6m (2012 – £77.7m) - 2.7% Profit before tax £59.3m (2012 – £61.6m) - 3.7% Diluted EPS 27.3p (2012 – 28.4p) - 3.9% Continuing internal investment programmes 2013 capital investment £20.1m (2012 – £37.2m) Future
Slide 3: 2013 Half Year Results Summary
2013 Half Year Results Summary* H1) H1) 2013) Margin 2012) Margin Change £m) % £m) % % Revenue 424.4) 406.9) +4 EBITDA 75.6) 18 77.7) 19 -3 Profit from operations 61.2) 14 64.7) 16 -5 Finance expense (2.1) (3.5) Profit before tax 59.3) 14 61.6) 15 -4 Effective tax rate 29% 29% Diluted EPS 27.3p 28.4
Slide 4: Segmental Results
Segmental Results* H1 H1 2013 2012 Profit from Profit from) Revenue Operations Margin Revenue Operations) Margin £m £m % £m £m) % Hunting Energy Services Well Construction 124.4 18.0) 14 135.9 21.7 16 Well Completion 251.2 39.4) 16 225.0 38.2 17 Well Intervention 33.2 3.7) 11 29.5 3.9 13 408.8 61.1)
Slide 5: Amortisation & Exceptional Items – Continuing Operations
Amortisation & Exceptional Items – Continuing Operations H1 2013 £m Amortisation of intangible assets 14.0 Inventory fair value charge 2.1 Oil & Gas reserve impairment and dry hole cost 2.4 Settlement of litigation and associated legal expenses 1.9 Continuing operations 20.4 Results for the six mont
Slide 6: Exceptional Items - Discontinued Operations
Exceptional Items - Discontinued Operations H1) 2013) £m) Release of Gibson Energy tax warranty provisions 7.6) Refund of tax payments 0.6) Loss on disposal of Field Aviation (0.1) Discontinued operations 8.1) Results for the six months ended 30 June 2013 6
Slide 7: Balance Sheet
Balance Sheet June) December) 2013) 2012) £m) £m) Property, plant and equipment 264.5) 248.5) Goodwill 325.3) 304.5) Other intangible assets 184.7) 185.2) Working capital 321.5) 267.7) Provisions (22.2) (29.6) Dividend payable – paid 1 July 2013 (20.2) - Taxation (current and deferred) (35.5) (24.6)
Slide 8: Capital Investment – by Segment
Capital Investment – by Segment H1 H1 2013 2012 £m £m Hunting Energy Services Well Construction 8.2 12.7 Well Completion 7.5 13.1 Well Intervention 2.6 8.4 18.3 34.2 Exploration & Production 1.6 2.8 Others 0.2 0.2 20.1 37.2 Split: Replacement 12.8 12.2 New Business 7.3 25.0 20.1 37.2 Results for the
Slide 9: Capital Investment – by Project
Capital Investment – by Project H1 2013 £m Hunting Energy Services New drill tools and other rental equipment 7.0 Titan expansion – US 1.3 Stafford expansion – US 0.5 Other facility improvements 0.4 Asia Pacific machinery and equipment 2.3 North American machinery and equipment 6.1 Other equipment 0
Slide 10: Cash Flow
Cash Flow H1) H1) 2013) 2012) £m) £m) EBITDA 75.6) 77.7) Working capital (32.8) (0.6) Interest and bank fees (2.0) (3.3) Tax paid (3.4) (13.3) Replacement capital investment (12.8) (12.2) Other (1.2) 1.2) Free cash flow 23.4) 49.5) Expansion capital investment (7.3) (25.0) Purchase / Disposal of sub
Slide 11: Capital Investment Projects
Capital Investment Projects US$m £m Premium Threading Facility – Houston, Texas 43 28 – 40 acre site operational Q4 2014 Test and Certification Facility – Houston, Texas 11 7 – Operational Q2/3 2014 Manufacturing Facility – Houma, Louisiana 36 24 – Final phase of the Houma site operational Q4 2014 S
Slide 12: Hunting Strategy
Hunting Strategy Market share strength Technology and R&D Product offering footprint Pricing Leverage Expanding our global footprint Integrate new business Products and geographies Proprietary products, delivering technology Capturing and innovation portfolio focus Results for the six months ended 3
Slide 13: Global Expansion
Global Expansion • Manufacturing Feeds to Hunting Titan • Hunting Specialty Supply Growth • Hunting Titan Expansion • Hunting Doffing, Dearborn and Electronics (AMG) • Hunting Well Intervention • Africa Results for the six months ended 30 June 2013 13
Slide 14: Operational Capacity Footprint
Operational Capacity Footprint Acquisitions Dearborn Titan W L Doffing Acquisitions Specialty Supply Innova Acquisitions National Coupling Welltonic PT SMB 2.8 Million Sq Ft 1.0 Million Sq Ft Results for the six months ended 30 June 2013 14
Slide 15: Global Footprint
Global Footprint 3M 9D 3M 3M 2D 25M 20D 1M 1M 1M 1M 3M 1M 1D 74 42 32 Locations Globally Manufacturing Distribution Results for the six months ended 30 June 2013 15
Slide 16: Well Construction
Well Construction Results for the six months ended 30 June 2013 16
Slide 17: Well Construction
Well Construction Results for the six months ended 30 June 2013 17
Slide 18: Well Construction
Well Construction Approved construction of US Premium Connections Threading Facility, Testing Facility. Development of a Comprehensive Training Facility investing in our employees. Continued demand for high precision manufacturing. Advanced Manufacturing Group making inroads with OEM’s. St
Slide 19: Well Completion
Well Completion Results for the six months ended 30 June 2013 19
Slide 20: Well Completion
Well Completion Results for the six months ended 30 June 2013 20
Slide 21: Well Completion
Well Completion Approval for Phase II of the Houma, Louisiana base in support of continued expansion in the Gulf of Mexico. Pass critical testing of the “Control Fire” Perforating System providing a “State of the Art” Multi- Stage Perforating Solution. Hunting’s global footprint providing a fo
Slide 22: Well Intervention
Well Intervention Results for the six months ended 30 June 2013 22
Slide 23: Well Intervention
Well Intervention Results for the six months ended 30 June 2013 23
Slide 24: Well Intervention
Well Intervention Shale drilling in the US is increasing Well Intervention opportunities. Continued expansion of “Thru Tubing” Technologies globally, opening service centres in Canada and US. As drilling technologies advance, Well Intervention technology remains in step with OEM product requir
Slide 25: Land Based Revenue Opportunities
Land Based Revenue Opportunities Drilling Costs Per Well: US$6m to $9m Equipment Supplied: 21% Realised Revenue: US$1.3m to $1.9m Trend of multi-pad wells is creating more revenue opportunity per rig. This configuration requires less physical space and offers new cost saving efficiencies.
Slide 26: Offshore Revenue Opportunities
Offshore Revenue Opportunities Drilling Costs Per Well: US$112m Gulf Coast Threading Operations, Baytown, Equipment Supplied: 27% Texas (New for 2014) Realised Revenue: US$30m North Sea Hunting global footprint to support offshore Aberdeen, Scotland Asia Pacific Gulf of Mexico Wu
Slide 27: Lean Manufacturing Update
Lean Manufacturing Update Throughout the first half of 2013, Hunting has continued the success of the lean manufacturing initiative. • Achieving unprecedented levels of perforating gun production at Titan Pampa. • 47% decrease in job cycle time, with an 88% increase in gun production per employee.
Slide 28: Flexible Manufacturing
Flexible Manufacturing 8% of our manufacturing equipment is product specific. The other 92% can be re-tooled or reconfigured to consistently manufacture the full spectrum of products. Results for the six months ended 30 June 2013 28
Slide 29: Fundamental Business Drivers
Fundamental Business Drivers Results for the six months ended 30 June 2013 29
Slide 30: Global Rig Count and Spend Trends – 2013 Update
Global Rig Count and Spend Trends – 2013 Update Global View For 2013, E&P spending is projected to reach a new record of $678 billion globally. 10% increase above 2012’s previous record of $617 billion, fourth consecutive year of double digit growth. North America Expect rig count to decline 6
Slide 31: US Pad Drilling and Effect on Rig Count and Wells Drilled
US Pad Drilling and Effect on Rig Count and Wells Drilled Rig Count Decreasing While Wells Drilled Steadily Increases Greater Equipment Volume per Well Drilled Results for the six months ended 30 June 2013 31
Slide 32: Global Rig Count and Spend Trends – A Quarterly Industry View
Global Rig Count and Spend Trends – A Quarterly Industry View As drilling has shifted to predominately horizontal / directional drilling and multi-pad wells are gaining favour, rig count alone represents only one aspect of the economic picture. Other factors, such as footage drilled, also drive ec
Slide 33: Global Rig Count and Spend Trends – A Quarterly Industry View
Global Rig Count and Spend Trends – A Quarterly Industry View Quarterly representation of rig count and footage drilled for 2013 compared to the overall 2012 quarterly average. Results for the six months ended 30 June 2013 33 Source: Spears Drilling and Production Outlook
Slide 34: Increase in the Offshore Market
Increase in the Offshore Market Global offshore rig count and projected footage continues to increase above 2012 levels. Global rig count up 10% above 2012’s count. Projected footage up 13% over 2012’s footage. Spending is expected to increase 10% globally. 10% Global Offshore Spending Trend
Slide 35: Increase in the Offshore Market (continued)
Increase in the Offshore Market (continued) Offshore spending is a major component of the overall E&P spending profile, requiring more technology, extreme focus on safety and quality of products. Globally, deepwater has become the dominant source for new oil and gas discoveries. Accounts for o
Slide 36: Wells Drilled Oil vs Gas (US)
Wells Drilled Oil vs Gas (US) Results for the six months ended 30 June 2013 36 Source: Spears and Associates (2013 projected), IEA
Slide 37: Land Footage Drilled Horizontal vs Vertical US (million)
Land Footage Drilled Horizontal vs Vertical US (million) Results for the six months ended 30 June 2013 37 Source: Spears and Associates (2013 Projected)
Slide 38: Global Offshore Footage Drilled and Well Count
Global Offshore Footage Drilled and Well Count Results for the six months ended 30 June 2013 38 Source: Spears and Associates (2013 Projected)
Slide 39: Africa
Africa Central Manufacturing Cape Town SA, additional in Mozambique and Tanzania Provide new product and repair services for East and West Africa Supporting NOC’s, IOC’s, OSC’s presence Warehouse leased for product storage $1.44m 13 3/8” L80 APEX $0.45m 20” X56 Line Pipe $0.21m 7” 26# N80