Capital Markets Day

Hunting PLC

13 September 2023

 

For Immediate Release

13 September 2023

Hunting PLC

("Hunting" or "the Company" or "the Group")

Capital Markets Day

Hunting PLC (LSE:HTG), the global engineering group, provides the following update ahead of its Capital Markets Day that will be held today at 2.00pm BST / 8.00am CST at the London Stock Exchange.

The Company's senior management team will set out details of the Hunting 2030 Strategy and how they will drive the evolution of the business, whilst building on the Group's compelling product, technology and manufacturing platform to deliver strong growth and returns over the rest of the decade.

The Hunting 2030 Strategy is expected to deliver against the following targets:

·           c.$1.3 billion sales p.a. by 2025 and c.$2 billion p.a. by the end of the decade

·           EBITDA margins of c.15% by 2025 with further progression by 2030

·           c.$325 million of cumulative free cash flow generated by 2025 and greater than $1 billion by 2030

·           ROCE of c.15% by 2025 and further improvement by 2030

·           Net leverage of less than 1.5x through the period to 2030

·           Increasing dividend policy delivering 10%+ growth per annum with potential for additional share buybacks

Management will provide further details that support the 2030 Strategy, including a focus on driving strong cash generation and an updated capital allocation policy aimed at supporting stronger returns.

The Company's belief in its ability to deliver the Hunting 2030 Strategy is supported by:

·           The Company's compelling portfolio of IP, leading technology and manufacturing expertise

·           The strength of its blue chip customer base across multiple end markets

·           Long-term term resilience through diversification and growth in energy transition

·           Exposure to high-growth markets, including offshore and international

·           HSE, Quality Assurance and Carbon Ownership driving stronger customer relationships

Hunting is also reiterating its forecasts for 2023 and for 2024:

	2023	2024
EBITDA	$96m - $100m	$125m - $135m
EBITDA Margin	10 - 11%	11 - 13%
Free Cash Flow	$30m - $60m	>70% of EBITDA

Jim Johnson, Chief Executive of Hunting, said:

"We are excited to present our focused growth strategy and the ambitious targets associated with it. Hunting's product portfolio of industry leading, IP protected technology and manufacturing expertise, coupled with the strong market dynamics we can see unfolding, give us confidence in our ability to deliver on our ambitions.

"The evolution of the Group's strategy is underpinned by our established position as a global manufacturer of world-class precision engineered, high reliability products, trusted client relationships and the diversity of our product applications across multiple end markets. We see the energy transition as a fantastic opportunity to enhance our existing business and enter into high-margin, high-growth sectors that will allow Hunting to prioritise growth and innovation, and service the long-term energy requirements of a changing world. 

"Over the last few years, Hunting has delivered a consistent recovery, during which it optimised its operating footprint, grew sales and enhanced margins, all of which leaves the Company well placed to deliver strong growth and shareholder returns through the remainder of this decade and beyond."

Capital Markets Day Arrangements

The Capital Markets Day will be held at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS and will also be livestreamed.

To register for the event in person, please email : [e-mail]

or

To view / register for the live broadcast of the event, please follow the link below:

https://www.lsegissuerservices.com/spark/Hunting/events/58e097af-27ca-44bc-8ef4-fb451bf3d499

OCTG

OCTG in North America is seeing robust growth, as demand for premium and semi-premium connections continues to build. The accessories manufacturing business reported exceptionally strong performance in H1 2023 as turnkey manufacturing, premium threading and well completion accessories manufacturing orders increased materially, as well as a notable increase in sales for offshore activity with orders received from the Gulf of Mexico and from Guyana in support of the major drilling projects and developments in those regions.  Hunting's reputation for reliability in connection technology is an essential competitive advantage in this market. In Hunting's Netherland's OCTG facility, the Tubacex contract for South America has led to the facility being at full capacity, with the order now being shared with the Group's Aberdeen facility. The Netherlands OCTG facility also completed a number of orders for geothermal applications as projects accelerate across Europe. The increase in international drilling activity and the growth in energy markets have been the core drivers of revenue growth for H1 2023 for the Asia Pacific businesses, with the Group's China and Singapore facilities working on the large OCTG order from CNOOC. In May 2023, Hunting won a $91m order from Cairn Oil and Gas, Vedanta Limited. This three-year contract will see the Group providing OCTG with Hunting's SEAL-LOCK XD™ premium connection applied, for a programme of up to 100 wells in Rajasthan, India. The commissioning of the Group's new threading facility in Nashik Province, India with Hunting's joint venture partner Jindal SAW was completed in July 2023, with the opening to be held on 19 September 2023. With this facility, the Group now has a leading position in the manufacture and provision of Premium Connections and OCTG in China, India, Indonesia and Singapore, with unique raw material supply channels in place to service the Middle East and Asia Pacific.

Perforating Systems

Trading within Hunting Titan has been resilient, despite the decline in the North America onshore rig count this year. The segment is seeing strong growth in its international sales as horizontal drilling and completion technologies that have been developed in the US are adopted in key drilling basins in South America, the Middle East and China. Hunting Titan has a comprehensive product offering supported by strong intellectual property and is a market leader in components and systems technology. The H-3 Perforating System™ has continued to be commercialised in 2023, and has seen good customer acceptance. The self-orientating H-4 Perforating System™ is due to be launched shortly, and will contribute to Titan's revenue mix in the second half of the year.

Subsea

Subsea has a diverse product offering and an extensive library of intellectual property that underpin its position as a market leader. Subsea reported incremental revenue growth during H1 2023 as sales of hydraulic valves and couplings increased in line with the continued growth of offshore markets, and orders continued to be completed for titanium stress joints for clients in the Gulf of Mexico and South America. This has led to a strengthening financial performance and an improvement in margins. Further sales opportunities in South America and West Africa are being pursued as international market activity strengthens.  We expect revenues and margins to ramp with growing activity from this sector.

Advanced Manufacturing

The Advanced Manufacturing businesses have reported improving results, as both the Dearborn and Electronics businesses have seen supply chain constraints ease. The Electronics business has seen an increase in traditional oil and gas orders and both the Electronics and Dearborn businesses have secured non-oil and gas orders as defence, power generation, aviation and commercial space market activity increases. New equipment has been commissioned at Dearborn, which will lead to higher facility utilisation and order completion in the second half of the year.

Energy Transition

The Energy Transition markets of carbon capture and geothermal provide Hunting with immediate opportunities for its current product portfolio, as Hunting already has a strong technology base and critical supply chain channels in place to capitalise on these high growth markets. The geothermal energy market outlook is supported by numerous projects across North America, Europe and Asia Pacific and is a 'wells-driven' market with rapidly growing demand for higher grade material and advanced performance premium connection OCTG. The Strategic Alliance with Jiuli provides Hunting with a partner who will provide corrosion resistant alloys including high nickel and chrome OCTG, which is required in challenging operating conditions. Carbon capture is widely considered by global authorities to be a vital part of their Net Zero strategies and is the primary route for decarbonising the energy industry. There are strong, global legislative drivers underpinning CCUS investment in North America, Europe and Asia Pacific.

New Technology

Hunting's TEK-HUB facilitates entry into new sectors and product lines, and enables Hunting to access and accelerate the commercialisation of new technology developed by third parties, such as titanium composite tubing used in CCUS, the Helios micro-hydro and Organic Oil Recovery that materially enhances production in brownfield wells. The Organic Oil Recovery technology is rapidly establishing itself as a high value product and continues to see strong interest from a range of major international energy companies, with pilot and field trials either underway or being planned for the UK, Europe and the Middle East in the second half the year.

For further information please contact:

Hunting PLC Jim Johnson, Chief Executive Bruce Ferguson, Finance Director [e-mail]	Tel: [phone]
Buchanan Ben Romney Barry Archer George Pope	Tel: [phone]

Notes to Editors:

About Hunting PLC

Hunting is a global engineering group that provides precision-engineered equipment and premium services, which add value for our customers. Established in 1874, it is a premium listed public company traded on the London Stock Exchange. The Company maintains a corporate office in Houston and is headquartered in London. As well as the United Kingdom, the Company has operations in China, Indonesia, Mexico, Netherlands, Norway, Saudi Arabia, Singapore, United Arab Emirates and the United States of America.

The Group reports in US dollars across five operating segments: Hunting Titan; North America; Subsea Technologies; Europe, Middle East and Africa ("EMEA") and Asia Pacific.

Hunting PLC's Legal Entity Identifier is 2138008S5FL78ITZRN66.

 

END