Hunting Plc · LSE:HTG
Hunting — H1 2024 Earnings Presentation
36 slides from Hunting's earnings presentation, August 2024
Slide 1: Precision Engineering from Subsea to Space
PRECISION ENGINEERING FROM SUBSEA TO SPACE Hunting PLC results presentation for the six months ended 30 June 2024
Slide 2: Disclaimer
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation slides, you acknowledge and agree to comply with the following restrictions. This document and the accompanying verbal presentation and webcast (together the “Presentation”) have been prepared by Hunt
Slide 3: Highlights
Highlights • Strong delivery of Hunting 2030 strategic objectives in the period leading to robust financial results. Revenue • Success with Kuwait Oil Company, with $231 million of orders secured in May/June 2024. Order backlog up 32% to $699.5 million reflecting strong outlook into 2025. $ 493.8m +
Slide 4: Strong progress towards the Hunting 2030 Strategic Objectives
Strong progress towards the Hunting 2030 Strategic Objectives Product group Product group OCTG • Record $231 million orders received. ADVANCED • Increased non-oil and gas sales at Dearborn and MANUFACTURING Electronics. • API licence secured at premium threading facility in Nashik, India. • Progress
Slide 5: Kuwait Oil Company ("KOC") orders
Kuwait Oil Company (“KOC”) orders • Orders are a result of six years of effort with KOC to qualify connections and raw materials. • $231 million OCTG orders received in period – comprising different thread sizes for the SEAL-LOCK XD premium connection. • Divided into eight shipments to Kuwait, with
Slide 6: Acceleration of Organic Oil Recovery commercialisation
Acceleration of Organic Oil Recovery commercialisation • $60 million of contracts secured for licenced OOR technology. • Technology to be deployed onto UKCS and internationally. • North Sea operators looking up to five years of field treatments. • Good gross margins attached to technology and revenu
Slide 7: Progress with the Energy Transition strategy
Progress with the Energy Transition strategy • New orders secured in H1 2024 – geothermal markets are increasing in size • $0.3 million investment in CRA Tubulars B.V. and broadening geographic reach to US, Europe and Asia Pacific. • CAL 2 testing shortly to be completed – CAL 4 testing to commence
Slide 8: Strong financial performance from OCTG, Subsea and Advanced Manufacturing
Strong financial performance from OCTG, Subsea and Advanced Manufacturing OCTG SUBSEA ADVANCED MANUFACTURING • Revenue $188.6 million – down 12% • Revenue $78.7 million – up 85% • Revenue $61.7 million – up 16% • EBITDA $32.5 million – up 35% • EBITDA $17.8 million – up 456% • EBITDA $5.5 million –
Slide 9: Strong outlook for India joint venture
Strong outlook for India joint venture • API licence received in May 2024 – positions JV to tender for more work across all activities in India. • Addressable market c.$300-400 million million,per based annum, on management’s based on management’s estimates and estimates early mover and early advant
Slide 10: New technology remains a priority
New technology remains a priority PERFORATING SYSTEMS OCTG SUBSEA • H-4 Tandem Perforating System to be • TEC-LOCKTM variants for well re-fracking • New variants of Riser Hang-off systems (TiPT, launched in 2024. completion procedures. DPT) launched. • New Control Switch to be launched which • Geoth
Slide 11: Hunting Titan restructuring to improve forward performance
Hunting Titan restructuring to improve forward performance Annualised cost savings of Headcount reduction of up to 92 as Wichita Falls operating site closed. c.$6-7 million announced, c.$3 million part of reduction-in-force programme. to be realised in FY24. Two distribution centres closed in Full y
Slide 12: Natural gas outlook - US power demand expected to grow ~39% by 2040
Natural gas outlook - US power demand is expected to grow ~ 39% by 2040 Henry Hub Natural Gas ($ per mmBtu) Gulf Coast, Permian and Northeast will drive Lower gas supply by 2035 140.0 10 9 120.0 8 Other 100.0 7 Mid-Continent 6 80.0 5 Rockies 60.0 4 Permian 3 40.0 Gulf Coast 2 1 123 9.7 3551 20.0 351
Slide 13: Offshore revenue now overtaking onshore
Offshore revenue now overtaking onshore % of oil and gas revenue 100% 60% 62% 63% 61% 53% 59% 44% • International and offshore tender success shifting 90% the revenue profile of the Group. 80% • Strong contribution from Asia Pacific through 2025 due to KOC orders – all offshore / deep gas 70% drilli
Slide 14: Financial Overview
=e ae FINANCIAL OVERVIEW EO tern
Slide 15: Financial overview
Financial overview Record sales order book of Revenue up by 3% – led by Adjusted diluted earnings per Positive free cash flow of $2.8m. $700m providing visibility for Subsea and AMG across share up 61% from 9.6 cents to 2024-2026. offshore and international 15.5 cents. markets. • EBITDA margin 12% –
Slide 16: Product Group – Revenue and EBITDA
Product Group – Revenue and EBITDA External revenue breakdown by product group - $m EBITDA breakdown by product group - $m 100% 100% 1.3 42.0 45.4 3.6 90% 5.5 90% 53.1 4.5 61.7 80% 80% 3.2 42.5 17.8 70% 78.7 70% 60% 13.7 60% 126.8 3.2 50% 119.4 50% 40% 40% 30% 30% 32.5 213.4 24.1 20% 188.6 20% 10% 1
Slide 17: Strong revenue growth post-pandemic despite reduced US land rig count
Strong revenue growth post-pandemic despite reduced US land rig count Revenue breakdown by product group H1 2022 H1 2023 H1 2024 $m $m $m Oil and gas 312.0 441.7 457.8 213.4 Non-oil and gas 24.1 36.1 36.0 188.6 336.1 477.8 493.8 126.8 121.6 119.4 109.6 78.7 61.7 53.1 42.5 42.0 45.4 35.3 34.0 35.6 OC
Slide 18: Earnings and profitability growth in the year
Earnings and profitability growth in the year H1 2024 H1 2023 H2 2023 Adjusted Group Income Statement* $m Margin $m Margin $m Margin Revenue from oil and gas 457.8) 441.7) 411.5) Revenue from non-oil and gas 36.0) 36.1) 39.8) Steady non-O&G revenue Revenue 493.8) 477.8) 451.3) 3% increase year-on-ye
Slide 19: Strong offshore and international demand continues to drive activity
Strong offshore and international demand continues to drive activity H1 2024 H1 2023 H2 2023 Revenue) EBITDA Revenue) EBITDA* Revenue) EBITDA* Segmental results $m) $m $m) $m $m) $m Hunting Titan 122.9) 2.0) 134.5) 12.1 124.7) 9.8 North America 192.7) 29.0) 191.3) 29.1 183.4) 24.7 Subsea Technologie
Slide 20: Product groups and operating segments H1 2024 performance
Product groups and operating segments H1 2024 performance Hunting) North Subsea) Asia External EBITDA Titan) America Technologies) EMEA Pacific Revenue EBITDA Margin $m) $m $m) $m $m $m $m % OCTG 1.2 98.5 - 14.3 74.6 188.6 32.5 17% Perforating Systems 111.9 - - 7.5 - 119.4 3.2 3% Advanced Manufactur
Slide 21: Strong balance sheet
Strong balance sheet Restated* 30 June 31 December 2024 2023 Group Balance Sheet $m $m Working capital to revenue - % Property, plant and equipment 252.3) 254.5) Asset additions in line with depreciation Right-of-use assets 25.7) 26.2) 50 Goodwill and other intangible assets 193.6) 195.2) Associates
Slide 22: Investment in working capital and assets supporting sales order book
Investment in working capital and assets supporting sales order book H1 2024) H1 2023) Group Cash Flow $m $m) EBITDA 60.3) 49.1) 23% year-on-year increase Add: share based payments 7.0) 7.5) 67.3) 56.6) Working capital movements (39.9) (85.9) Working capital outflows reduced year-on-year Tangible an
Slide 23: Working capital
Working capital 30 June 31 December) 2024 2023) Working Capital $m $m) Inventories - Hunting Titan 129.2) 140.5) - North America 125.7) 107.8) - Other segments 75.1) 80.1) Net inventories 330.0) 328.4) Receivables 266.2) 251.5) Payables (141.6) (164.0) Total 454.6) 415.9) Working capital to annualis
Slide 24: H1 2024 - record order book of $699.5m
H1 2024 - record order book of $699.5m providing visibility well into 2025 Order book by product group - $m Order book by operational activity - $m 10.9 76.2 116.4 Oil and gas 623.3 Non-oil and gas 145.8 411.1 H1 2024 Oil & Gas 623.3 OCTG Aviation 61.5 Energy Transition / Geothermal 5.1 Perforating
Slide 25: 2024 guidance
2024 guidance EBITDA EBITDA margin Effective tax rate $134-138m 12-13% 25-28% Capex Free cash flow conversion (post capex) Total cash and bank / (borrowings) $ 30-35m 50% $ 30-40m 25
Slide 26: Geographical Reach
_ GEOGRAPHICAL REACH
Slide 27: Outlook - Americas
Outlook - Americas • Stable activity across most product lines projected USA for balance of year. • Premium Connections and OCTG outlook robust. • AMG activities will continue to deliver growth. • Activity remaining strong, supported by new pipeline to West Coast. CANADA • Adoption of TEC-LOCKTM Wed
Slide 28: Outlook - EMEA
Outlook - EMEA • OOR momentum likely to build as enhanced recovery solutions are accelerated on UKCS. UK NORWAY • Geothermal projects being pursued in Germany and the Netherlands. & NETHERLANDS UAE • Opening of Dubai facility in Q1 2025, with new well & testing and well intervention capabilities pla
Slide 29: Outlook – Asia Pacific
Outlook – Asia Pacific • Continuation of KOC contracts into Q2 2025. CHINA • New facility expansion planned for H1 2025. SINGAPORE • Continuation of Cairn Oil and Gas contract for & Rajasthan and support for KOC. BATAM • Strong outlook, with building order book - $13 million INDIA order book reflect
Slide 30: Key market indicators – industry capex, rig count and capacity build out
Key market indicators – industry capex, rig count and capacity build out Drilling capital investment Projected global geothermal capacity - MW Global onshore capital investment Global offshore capital investment $bn $bn 2024e 135.9 2024e 72.9 2025e 144.5 2025e 76.6 2026e 154.2 2026e 81.7 Source: Spe
Slide 31: ESG & Sustainability
ESG & Sustainability Internal manufacturing reject rate Training hours per employee (at the half year) 0.31% (FY 2023 – 0.20%) 16.5 (FY 2023 – 30.0) Total recordable incident rate Employee voluntary turnover rate 1.39 (FY 2023 – 0.91) 10.5 % (FY 2023 – 13.5%) 31
Slide 32: Summary
Summary Strong period of delivery across Improvements to operating efficiencies Offshore/international markets to Hunting’s diversified energy portfolio. driving higher margins. continue to deliver growth. Improved FCF generation in H2. Energy Transition sales increasing Guidance on performance unch
Slide 33: Appendices
PRECISION ENGINEERING FROM SUBSEA TO SPACE APPENDICES
Slide 34: Statutory Group Income Statement
Statutory Group Income Statement* H1 2024 H1 2023 H2 2023 $m Margin $m Margin $m Margin Revenue 493.8) 477.8) 451.3) Gross profit 135.2) 27% 114.2) 24% 113.5) 25% Operating profit** 40.1) 8% 19.2) 4% 32.3) 7% Profit before tax 36.2) 15.7) 25.4) Tax (charge)/credit (9.6) (4.0) 75.1) Profit after tax
Slide 35: Product groups and operating segments H1 2023 performance
Product groups and operating segments H1 2023 performance Hunting) North Subsea) Asia External EBITDA Titan) America Technologies) EMEA Pacific Revenue EBITDA Margin $m) $m $m) $m $m $m $m % OCTG 2.4 101.2 - 25.5 84.3 213.4 24.1 11% Perforating Systems 123.7 - - 3.1 - 126.8 13.7 11% Advanced Manufac
Slide 36: www.huntingplc.com
www.huntingplc.com https://www.linkedin.com/company/hunting-energy-services/ https://www.youtube.com/channel/UC_BhC9w00pV-OxAhinOooYA