Hunting PLC · LSE:HTG
Hunting — H1 2016 Earnings Presentation
23 slides from Hunting's earnings presentation, 2016
Slide 1: Maintaining Capability to Deliver - Half Year Report 2016
MAINTAINING CAPABILITY HUNTING TO DELIVER HALF YEAR REPORT 2016
Slide 2: Financial Summary
Financial Summary Results reflect the prevailing adverse global trading environment Focus remains on reducing the cost base but maintaining capability Headcount at end of July 2016, 2,145 representing a 46% reduction since December 2014 Balance sheet in good order Slowing capital spend R
Slide 3: 2016 Half Year Results Summary
2016 Half Year Results Summary1 H1) H1) 2016 Margin 2015 Margin $m % $m % Revenue 228.4) 463.6) Gross profit 23.8) 10 116.9) 25 EBITDA2 (loss) profit (29.5) -13 44.1) 10 (Loss) profit from operations (50.8) 20.4) Finance expense (0.6) (2.7) (Loss) profit before tax (51.5) 17.7) Effective tax rate 15
Slide 4: Segmental Results
Segmental Results1 H1 H1 2016 2015 Results from Results from Revenue Operations Revenue Operations $m $m $m $m Hunting Energy Services Well Construction 51.3 (10.8) 125.5 2.8) Well Completion 149.1 (28.5) 277.8 15.5) Well Intervention 26.7 (9.9) 58.2 4.2) 227.1 (49.2) 461.5 22.5) Exploration & Produ
Slide 5: Geographical Results
Geographical Results1 H1 H1 2016 2015 Results from Results from Revenue Operations Revenue Operations $m $m $m $m Hunting Energy Services USA 144.3 (20.5) 295.8 24.5) Canada 18.6 (3.0) 30.5 (3.4) Europe 40.5 (13.5) 73.0 (0.1) Asia Pacific 18.3 (7.5) 52.9 2.0) Middle East, Africa and Other 5.4 (4.7)
Slide 6: Amortisation & Exceptional Items
Amortisation & Exceptional Items H1 H1 2016 2015 $m $m Amortisation of acquired intangible assets 17.4 19.4 Restructuring costs 3.9 - European drill tools rental business impairment 2.9 - UK Pension Scheme closure 2.0 - Goodwill impairment - 35.2 Plant, property and equipment impairment - 28.9 Conti
Slide 7: Balance Sheet
Balance Sheet June December 2016 2015 $m $m Property, plant and equipment 441.9) 460.8) Goodwill 230.2) 230.6) Other intangible assets 163.9) 180.4) Working capital1 337.4) 365.8) Taxation (2.7) 10.7) Provisions (17.2) (18.0) Dividend payable (paid 6 July 2016) (5.9) -) Other 40.7) 48.3) Net debt (8
Slide 8: Capital Investment
Capital Investment H1 2016 $m Facilities - Dearborn – Fryeburg, Maine 3.5 - Premium Threading and Testing – AmeriPort, Texas 3.1 - Other facility spend 0.7 Machinery and Equipment - EMEA 2.7 - North America 2.4 - Asia Pacific 0.3 12.7 Exploration and Production 0.4 13.1 RESULTS FOR THE SIX MONTHS TO
Slide 9: Cash Flow
Cash Flow H1 H1 2016 2015 $m $m Underlying EBITDA (29.5) 44.1) Working capital 26.7) 14.7) Interest and bank fees (1.8) (2.6) Tax received (paid) 29.2) (7.7) Restructuring costs (3.9) -) Replacement capital investment (1.8) (15.3) Other 7.6) 1.9) Free cash inflow 26.5) 35.1) Expansion capital invest
Slide 10: Rig Count Correlation to Hunting Results
Rig Count Correlation to Hunting Results Rig Count (thousands) and Facility Sq. Feet (millions) $1,600 4.0 $1,400 3.5 $1,200 3.0 $1,000 2.5 USD Millions $800 2.0 $600 1.5 $400 1.0 $241 $244 $270 $160 $200 $95 0.5 $241 $244 $270 $62 $- $95 $160 0.0 $62 2010 2011 2012 2013 2014 2015 2016 Global Footpr
Slide 11: Hunting's Principal Focus
Resilient One of the most severe global industry downturns Lowest US rig count since official tracking began in 1949. Over 170 E&P and Oilfield Service Company bankruptcies with debt in excess of $80 billion Hunting’s Principal Focus Preserve the Focus on quality Manage cost Conserve cash busine
Slide 12: Mediocrity is Gone: Oilfield Service Companies
Mediocrity is Gone Oilfield Service Companies Oilfield service companies have been a casualty of the industry downturn Current Statistics The market will not tolerate: 83 Bankrupt Less than best in class (2015 -2016) Lack of proprietary products Defaulting on $13.5 Poor quality billion of debt
Slide 13: Solid Foundation
Solid Foundation USD Millions $800 Core assets $700 Gross - 40 Operating facilities - Over 1,200 machines Tangible - Over $790 million gross tangible net worth $600 Net Worth - While carrying $87.5 million in net debt $500 $400 $300 $200 $100 $- Net Debt $(100) Gross tangible net worth is net asse
Slide 14: Hunting - an Industry Partner
Hunting - an Industry Partner Hunting enables the manufacturing of technology. Whether it is our range of proprietary technology (over 400 patents), or in our capacity as a trusted provider of our customers’ technology. Jointly Developed Technology Hunting Customers’ Proprietary Proprietary Techno
Slide 15: Industry Partnerships in Action
Industry Partnerships in Action H1 Perforating Gun System Hunting - Step change technology increasing safety and reliability, while Proprietary lowering cost and decreasing perforating job time Technology ExxonMobil and Hunting Autonomous Tools Jointly - Creating perforating and pipe cutting too
Slide 16: Industry Trends and Hunting
Industry Trends and Hunting Cannibalisation Manufacturing agility and full Supply chain dictates “use up the inventory on hand first and Wellbore product make it work.” Creates demand for quick turn solutions to solve lines inventory problems Service Intensity Acceleration We have large distributi
Slide 17: Investments in Manufacturing Technology
Investments in Manufacturing Technology As we build or update equipment, Hunting has also equipped our facilities with the most efficient, proven manufacturing technology Single operator lean manufacturing cells allowing one machinist to man multiple machines We are benefiting from reduced cycle
Slide 18: Positioned in Key Markets
Positioned in Key Markets Geographic Revenue Profile With the severity of the downturn limiting spending, the return to drilling and US completion will spur the need for more International product and restocking opportunities 36% 64% - The US will be an early recovery market beginning with “DUCs”
Slide 19: We are a Global Supplier, Manufacturer and Distributor
We are a Global Supplier, Manufacturer and Distributor Manufacturing • Subsea Equipment • HDD Equipment • Perforating Systems • Premium Connections • Downhole Accessories • Ultra Precision Machining Distribution • Perforating Systems • MWD Tools • OCTG / Premium Connections • Drilling Tools • Cased
Slide 20: Wellbore Technologies
Wellbore Technologies 2016: Estimated over 53,700 wells drilled globally with footage of over 469 million feet Premium Connections Mud Motors OCTG LWD Precision Manufacturing MWD Detectors Source: Spears RESULTS FOR THE SIX MONTHS TO 30 JUNE 2016 20
Slide 21: Completion Technologies
Completion Technologies Over 3,900 DUCs in the U.S. to be completed Premium Connections Shaped Charges H1 Perforating System Control Fire Selective Assembly And Testing Firing System of Printed Control Boards Source: Spears, Rystad RESULTS FOR THE SIX MONTHS TO 30 JUNE 2016 21
Slide 22: Intervention Technologies
Intervention Technologies 2016: Over 1.8 million active wells globally will require well intervention at some point in their lifecycle Thru Tubing Tools Well Testing Pressure Control Subsea Slickline Wireline Source: Spears and IHS RESULTS FOR THE SIX MONTHS TO 30 JUNE 2016 22
Slide 23: Long Term Market Vision
Long Term Market Vision Year 2020 Demand Current Demand 100 95 Million Barrels MBPD Per Day (MBPD) When factoring in oil Average oil field decline rates field decline rates have increased to 5%. Without and demand growth, to supply the market, investment, expected to increase 10 million barrels per