Hunting : Full Year Results

Hunting PLC (LSE:HTG), the international energy services group, today announces its results for the year ended 31 December 2019.

Financial Summary* / **

• Revenue $960.0m (2018 - $911.4m)
• Underlying EBITDA $139.7m (2018 - $142.3m)
• Reported EBITDA $139.7m (2018 - $141.3m)
• Underlying profit from operations of $94.3m (2018 - $104.7m)
• Reported profit from operations of $46.8m (2018 - $75.4m)
• Underlying diluted earnings per share 43.9 cents (2018 - 49.6 cents)
• Reported diluted earnings per share 23.5 cents (2018 - 52.3 cents)
• Impairment of Drilling Tools fleet of $19.0m (2018 - $nil)
• ROCE 8% (2018 - 9%)
• Net cash, before lease liabilities, of $123.1m (31 December 2018 - $61.3m)
• Final dividend of 6.0 cents per share proposed (2018 - 5.0 cents) and payable on 15 May 2020 to shareholders on the register on 17 April 2020, subject to approval at the Company's AGM
• Initiating share buyback programme of 2 million shares, with an approximate cost of $8 million, commencing on 27 February 2020

*Underlying results are based on reported results before amortisation of intangible assets recognised as part of a business combination and exceptional items. Reported results are based on the statutory results as reported under International Financial Reporting Standards as adopted by the EU.
**2019 financial information includes the adoption of IFRS 16 Leases. 2018 data has not been re-stated.

Operational and Corporate Highlights

Solid financial platform

• Very strong cash generation in the year, with free cash flow of $149.4m, ending the year with net cash, before lease liabilities, of $123.1m.
• Capital discipline, with a focus on internal efficiencies, remain in place and with net assets of $1.2bn, the Group is well positioned to take advantage of further investment opportunities.

Good growth within US, EMEA and Asia Pacific operating segments as offshore and international market activity improved.

• Premium connections, accessories and advanced manufacturing and subsea product groups all report year-on-year growth within the US segment.
• European OCTG businesses report good growth as North Sea activity improved in the year.
• Improved performance year-over-year in Asia Pacific due to increased activity levels and new customer wins.

Hunting Titan reports lower results in the year as the US onshore market slowed. New products launched in the year, partially offsetting the decline in sales.

• Performance adversely impacted by lower US onshore completion expenditure.
• Proactive actions taken to address excess inventory levels and convert to cash have impacted margins.
• New perforating and energetics products and setting tools commercialised in the year, with good customer adoption.
• Higher efficiency, lower cost automated manufacturing cells commissioned at Milford and Pampa facilities.
  

Following our stated strategic goals of investing in offshore technologies, two acquisitions completed which broaden and diversify our offshore portfolio offering:

Acquisition of RTI Energy Systems Inc. ('RTI') completed in August 2019.

• RTI manufactures titanium and stainless steel stress joints used in offshore developments.
• $12.5m consideration paid for the business and assets.
• Integration of business progressing well, with new orders won since year-end.

Acquisition of Enpro Subsea Limited ('Enpro') completed in February 2020.

• Enpro is a leader in subsea production technology, offering low cost, flexible field development solutions, including well production and intervention modules to enhance recovery from oil and gas wells.
• $33.0m cash consideration paid for the business, with an additional maximum earn-out of $3.0m agreed, subject to key financial milestones being met.

Board changes

• As announced on 23 January 2020, Peter Rose will retire as Finance Director at the Company's Annual General Meeting ('AGM') on 15 April 2020.
• Bruce Ferguson proposed as successor, with appointment submitted to shareholders for approval at the AGM.

Commenting on the results Jim Johnson, Chief Executive, said:

'Our results announced today reflect the Group's commitment to capital discipline, retaining a strong balance sheet while delivering a solid performance in difficult market conditions. The oil and gas industry is evolving at an ever-faster pace and Hunting's portfolio of products and services, as well as new technology introduced in the year, continue to meet this changing market.

'Our cash generation and year-end net cash position provides operational and financial flexibility, which enables us to consider further acquisitions, as well as increase shareholder distributions. RTI and Enpro were acquired for cash and reflect our ability to move quickly to secure bolt-on businesses.

'For the first time in the history of the Company we are initiating a share buyback programme, as the Board considers the current share price highly undervalues the Group.

'The impact of the coronavirus continues to be assessed by our Asia Pacific businesses, given the continuing restrictions in place in China.

'The outlook for 2020 remains uncertain, as over half of all operators have yet to publish budget spend guidance due to continued uncertainty over commodity prices. Despite this backdrop, Hunting remains in an excellent position to deliver shareholder value with its balanced portfolio of products, experienced management team and workforce and strong financial footing.'

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