Hunting PLC · LSE:HTG
Hunting — H1 2022 Earnings Presentation
35 slides from Hunting's earnings presentation, 2022
Slide 1: Results presentation for the 2022 Half Year
Hunting PLC Results presentation for the 2022 Half Year www.huntingplc.com
Slide 2: The Macro Picture
The Macro Picture • Macro-economic and geopolitical developments have changed the landscape and sentiment towards oil and gas in the first half of the year. • Energy supply and security – as well as cost to the consumer – is driving a new agenda. • Stakeholders are re-assessing the value of a ‘weste
Slide 3: Highlights
Highlights • Strengthening financial performance across the Group. • Sales order books now at levels well over 2019. • Proactive measures to address inflationary pressures including price increases and cost reductions are continuing. • Diversification of revenue gaining traction. • Close management
Slide 4: Adjusted Group Income Statement
Adjusted Group Income Statement* H1 2021) Margin H2 2021) Margin H1 2022) Margin $m % $m % $m) % Revenue 244.4) 277.2) 336.1) Gross profit 44.1) 18 56.5) 20 75.8) 23 EBITDA (3.6) (1) 6.7) 2 20.6) 6 (Loss) profit from operations (23.0) (9) (12.1) (4) 1.7) 1 Share of associates’ losses (1.1) (2.4) (1.
Slide 5: EBITDA
EBITDA • EBITDA of $20.6m reported for H1 2022 30 28.4 (H1 2021 – $(3.6)m; H2 2021 – $6.7m). 25 • EBITDA margin improving to 6% 20.6 (H1 2021 – (1)%; H2 2021 – 2%). 20 • Further strengthening anticipated for the full year driven by improving economic outlook 15 and higher facility utilisation. $m 10
Slide 6: Adjusted Segmental Results
Adjusted Segmental Results H1 2021 H2 2021 H1 2022 Results Results Results from from from Revenue operations Margin Revenue operations Margin Revenue operations Margin $m $m % $m $m % $m $m % Hunting Titan 88.7) (1.6) (2) 100.6) 0.7) 1 127.2) 4.3) 4 North America 122.2) (10.4) (9) 132.4) (5.7) (4) 1
Slide 7: Revenue by Product Grouping
Revenue by Product Grouping Revenue by Product ($m) 121.6 109.6 95.9 95.7 85.8 76.8 34 35.3 29.1 30.5 29.6 29.2 16.9 18.7 12.1 13.7 11 12.2 Perforating Systems OCTG Advanced Manufacturing Subsea Intervention Tools Other H1 2021 H2 2021 H1 2022 H1 2021 H2 2021 H1 2022 Oil and gas 226.9 257.1 312.0 No
Slide 8: Group Balance Sheet
Group Balance Sheet 31 December 30 June 2021 2022 $m $m Property, plant and equipment 274.4) 260.5) Right-of-use assets 24.7) 20.1) Goodwill and other intangible assets 200.3) 196.6) Associates and joint ventures 19.4) 20.0) Working capital 278.0) 299.7) Taxation 1.4) 0.8) Provisions (8.1) (6.8) Oth
Slide 9: Working capital
Working capital 31 December 30 June 2021 2022 $m $m Inventories - Hunting Titan 95.4) 98.9) - North America 114.3) 126.1) - Other segments 54.2) 47.5) Gross inventories 263.9) 272.5) Provision for inventories (59.5) (52.3) Net inventories 204.4) 220.2) Receivables 157.2) 188.2) Payables (83.6) (108.
Slide 10: Group Cash Flow
Group Cash Flow H1 2021 H2 2021 H1 2022 $m $m $m EBITDA (3.6) 6.7) ) Add: Share-based payments 5.1) 4.1) ) 1.5) 10.8) ) Working capital 24.0) (1.2) Net interest and bank fees received (paid) 0.7 (1.1) Net tax received (paid) 1.1) (0.5) Proceeds from business and asset disposals 4.4) 31.5) ) Gains on
Slide 11: Fundamentals For A Sustained Upcycle
Fundamentals For A Sustained Upcycle • Reduced investment in E&P capex and increasing global hydrocarbon demand has set the stage for a long-term upcycle for the oil and gas industry. E&P Capex Demand • Responding to various economic or shareholder • While investment trended down, global demand pres
Slide 12: Market Overview
Market Overview • Underlying core markets continue to strengthen with drilling capex likely to be robust through to 2025. • Rig counts continue to increase with a period-on-period increase of 58% in the US onshore. • DUC counts are declining as completions outpace new wells. • New urgency for LNG an
Slide 13: World Natural Gas Market
World Natural Gas Market • Global natural gas production is expected to grow by 72 TCF (61%) by 2050. • Short term demand for natural gas has dramatically increased. World natural gas production (TCF) US LNG Export pricing USD/TCF 200 14 180 12 160 140 10 120 8 100 6 80 60 4 40 2 20 0 0 2010 2015 20
Slide 14: Outlook for Offshore Activity
Outlook for Offshore Activity H1 2022 Forecasted Awards 2022–2026 3X 71% increase in awards vs H1 2021 Increase vs prior five year average • Years of lower commodity prices and the impacts of COVID19, the industry scaled back on offshore EPC spending by either cancelling many projects due to current
Slide 15: Group – Key Performance Themes
Group – Key Performance Themes • Hunting Titan continues to have a leading market share in North America onshore completions driven by strong technology and agile manufacturing footprint. • North America is seeing broad-based increases in order books across whole product range with strong progress i
Slide 16: Hunting Titan – US Market Backdrop
Hunting Titan – US Market Backdrop • Frac Spread growth from 234 (31/12/2021) to 289 (24/6/2022). • DUC counts reducing, as completions outpace new drilling, but rig efficiencies also continue to improve. • Uptick in recompletions being seen in the onshore US. • Continued efficiencies in stages per
Slide 17: Hunting Titan – International
Hunting Titan – International • International sales also seeing traction in the period, particularly in China, Middle East and South America. Sales of unconventional technologies have doubled since 2021. • China market seeing good recovery despite ongoing impact of pandemic. • Substantial increase i
Slide 18: Hunting Titan – Strategic Initiatives
Hunting Titan – Strategic Initiatives • Clients migrating to higher efficiency technologies, such as the H-3 perforating system. • Pre-loaded gun offering seeing strong increases in sales during period. • Detonation cord increasing market penetration in US to >30%. • Perforating system capacity ramp
Slide 19: Hunting Titan – New Products Roadmap
Hunting Titan – New Products Roadmap 18 Hunting PLC 2022 Half Year Results Presentation
Slide 20: North America – Overview
North America – Overview • Strong increases in order books within the Premium Connections, Accessories Manufacturing, Subsea Technologies and Advanced Manufacturing product groups. • Premium Connections business seeing stronger demand, with Canada delivering good profits, following change to busines
Slide 21: North America – Connection Technologies
North America – Connection Technologies • TEC-LOCK sales continue to be robust within US onshore market. • SEAL-LOCK and WEDGE-LOCK volumes also increasing as offshore demand slowly returns to growth. • TKC 4040 connection seeing good year-on-year increases, as Canada markets remain strong. TEC-LOCK
Slide 22: North America – Advanced Manufacturing Group
North America – Advanced Manufacturing Group • Dearborn is increasing its non-oil and gas order books, with good progress made within the aviation sector. Dearborn has been ITAR accredited since 2017. • Strong growth in the Oilfield Service Companies order books. • Electronics also recording strong
Slide 23: North America – Subsea Stafford
North America – Subsea Stafford • Offshore markets continue to grow given the wider geopolitical and commodity price backdrop. • Good co-ordination between three subsea businesses is leading to increased opportunities, given the Group’s broader product offering. • Developing new non-metal seal solut
Slide 24: North America – Subsea Spring
North America – Subsea Spring • $85.5m of awarded work since acquisition in September 2019. • Awarded projects include Jack St Malo, King’s Quay, Anchor and Shenandoah. • Growth in direct pull through guide tubes for Guyana and Brazil. • Sales profile now strong into 2023 and 2024. 23 Hunting PLC 20
Slide 25: North America – FPSO Market Potential
North America – FPSO Market Potential • The ExxonMobil Yellowtail development is an exciting development for Subsea Spring. Application of stress joints to FPSOs allows for more oil to be removed from the facility, thus increasing the returns to the operator. 24 24 Hunting PLC 2022 Half Year Results
Slide 26: North America – Enpro Subsea
North America – Enpro Subsea • Sales order book increased in Q2 2022, equalling total sales in 2021. • Good progress for Fluid Intervention Services and Flow Access Module products. • Decommissioning product offering also seeing strong interest in North Sea applications. • Building out US business t
Slide 27: North America – Other Businesses
North America – Other Businesses USM / Specialty Supply Trenchless OCTG - Canada • Significant increase in backlog. • Strong order book H1 2022 and H2 • Market conditions have markedly 2022. improved since 2020, with well • Offshore GOM business counts and investments projected increasing. • Expecta
Slide 28: EMEA – Overview
EMEA – Overview • UK OCTG restructuring and cost saving initiatives positions business for future profitable growth. • Well Testing performance improved driven by Middle East and South America. • Increase in Well Intervention business throughout the region. • Saudi Arabia facility reporting a step u
Slide 29: EMEA – OCTG: UK / Netherlands
EMEA – OCTG: UK / Netherlands • UK OCTG restructuring delivered $27.7m (net) to Hunting in December 2021. • Preferred manufacturer agreement in place with Marubeni Itochu. Good inspection and storage revenue secured in the period. • Outlook for the North Sea positive due to energy security concerns.
Slide 30: Asia Pacific – Overview
Asia Pacific – Overview • Challenging H1 2022 due to closure of Shanghai port, H2 2022 and beyond looking very positive. CNOOC order supports visibility well into 2023. • OSC’s turnkey manufacturing increasing significantly. • Facility consolidation in Singapore and inventory reduction to mitigate c
Slide 31: Summary
Summary • Hunting well placed for the ongoing recovery in activity. • Sales order books likely to increase further due to commodity price environment. • Margins likely to strengthen as utilisation levels increase, pricing improves and efficiency gains are captured. • Continued focus on streamlining
Slide 32: Financial Appendices
Financial Appendices Hunting PLC Results presentation for the 2022 Half Year www.huntingplc.com
Slide 33: Statutory Group Income Statement
Statutory Group Income Statement H1 2021) Margin H2 2021) Margin H1 2022) Margin $m % $m % $m) % Revenue 244.4) 277.2) 331.6) Gross profit 44.0) 18 20.9) 8 75.8) 23 (Loss) profit from operations (26.5) (11) (53.2) (19) 1.7) 1 Share of associates’ losses (1.1) (2.7) (1.3) Loss before tax (28.6) (56.9
Slide 34: Adjusting Items
Adjusting Items H1 2021 H2 2021 H1 2022 $m $m $m Amortisation of acquired intangible assets (4.3) (2.7) - Impairments: - Net inventory 0.8 (26.7) - - Property, plant and equipment -) (8.6) - Restructuring costs (1.2) (0.8) - Loss on disposal of business -) (0.9) - Rival settlement -) (1.7) - Gain on
Slide 35: Hunting PLC Results presentation for the 2022 Half Year
Hunting PLC Results presentation for the 2022 Half Year 34 Hunting PLC 2022 Half Year Results Presentation