Hunting : Half Year Results

Hunting PLC (LSE:HTG), the international energy services group, today announces its results for the six months to 30 June 2020.

Financial Summary* / **

• Revenue $377.7m (H1 2019 - $508.9m)
• Underlying EBITDA $28.4m (H1 2019 - $77.4m) **
• Underlying profit from operations $5.7m (H1 2019 - $55.6m profit)
• Exceptional impairments to assets charged totalling $174.9m (H1 2019 - $nil)
• Reported loss from operations of $183.6m (H1 2019 - $41.1m profit)
• Underlying diluted earnings per share 1.0 cent (H1 2019 - 23.6 cents)
• Reported diluted (loss) earnings per share (125.7) cents (H1 2019 - 17.3 cents)
• Second interim dividend declared for H1 2020 of 2.0 cents (H1 2019 - 5.0 cents)
• Total cash and bank of $48.8m (31 December 2019 - $127.0m)
• $160m revolving credit facility remains undrawn at 30 June 2020

*Underlying results are non-GAAP measures and are before amortisation of acquired intangible assets and exceptional items. Reported results are based on the statutory results as reported under International Financial Reporting Standards.
**EBITDA is a non-GAAP measure. Please refer to pages 32 and 33 of the Half Year 2020 report for further information.

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

'Hunting has responded well to the challenging market conditions seen in H1 2020 and, not only reports a positive underlying EBITDA, but has continued to trade at or near to break-even at the EBITDA level since March 2020. Further, with a strong balance sheet and cash position, along with an undrawn borrowing facility, the Group will be able to respond rapidly to any improvements in activity and any market opportunities, as and when they arise going forward. Our ability to quickly resize the Group clearly demonstrates our flexibility and resilience against market volatility and the dividend declared today reflects the Board's and management's confidence in our chosen markets and business lines.

Further, the strategic actions completed, which includes our offshore-focused acquisitions completed in the last year comprising Enpro Subsea and RTI Energy Systems, have assisted in rebalancing our product offering to areas of the market that are less sensitive to movements in commodity prices. In the period, RTI has won a number of major offshore orders, while Enpro has made good order book progress, and our existing subsea business reports good period-on-period organic sales growth.

Hunting's performance for Q1 2020 was in line with management's expectations. The impact of COVID-19 and the actions of the OPEC+ group in late Q1 2020 led to the material decline in the global oil price, which has devastated the industry, firstly within the US onshore market, but followed by the weakening of US offshore and international markets. The asset impairments reported, while significant, reflect similar adjustments reported elsewhere in the energy industry. We continue to manage those business inputs that are in our control, which include tight controls over our cost-base, cash flows and inventories, all of which continue to move in the right direction.

The outlook for the remainder of the year remains uncertain, as COVID-19 prevention measures continue to change daily. However, enquiry levels have improved with the increasing average oil price and areas of the US onshore market indicate that the mid-point of the year could have been the bottom of the cycle, with cautious steps being taken by our clients to incrementally restart operations. Management anticipates an improving Q4 2020, subject to the impact of the pandemic remaining materially unchanged from the current position.'

Operational Highlights

Significant cost reduction programme implemented in reporting period, to align with industry outlook:

• Two manufacturing facilities at Oklahoma City and Ramsey Road, Houston commenced winding down for moth-balling and closure in H1 2020.
• Closure of Canada manufacturing facility announced on 10 August 2020, given regional market outlook.
• Plans in place for amalgamation of Singapore facilities, shortly to be commenced.
• Four distribution centres closed across North America, including Lloydminster in Canada and Broussard, Hobbs and Woodward in the US.
• Headcount reduced by 624 in H1 2020 to 2,332 as at 30 June 2020 (31 December 2019 - 2,956)
• Annualised cost savings resulting from these initiatives c.$62m.

Acquisition of Enpro Subsea Limited ('Enpro') on 21 February 2020:

• Further complementary bolt-on acquisition of subsea-focused business. The business has performed well since acquisition, making good progress on a number of projects.

Commissioning of new detonation cord manufacturing line by Hunting Titan in July 2020:

• Located at the Group's Milford facility, Hunting now has an expanded product offering with the capability of producing c.3 million feet of detonation cord annually. The product lines will be used in Hunting's proprietary perforating systems, as well as being sold as a stand-alone product for the wider market.

New products launched in the period to provide lower-cost and safer technology to clients:

• Hunting Titan has launched new variants of the H-1, H-2 and E-SUB perforating systems and a new generation ControlFire® firing switch during Q2 2020, which has the capability of detecting the firing detonator, providing additional safety for the operator. The segment has also commenced the manufacture of pre-loaded perforating guns for customers.
• Within the US operating segment, the Group's subsea business has launched a new high pressure hydraulic coupling and the Drilling Tools business has launched a new range of mud motors, with lower operating costs achieved through a re-design of its main product lines.
• The EMEA operating segment has continued to trial an organic oil recovery well treatment technology, which improves production of end-of-life wells. During the first half of 2020, a number of laboratory tests were completed on behalf of customers, with positive well treatment results being observed. Further field trials are planned as lockdown measures are lifted.

Non-oil and gas products continue to diversify revenue. Progress has been made particularly within the Group's Advanced Manufacturing Group within the US segment.

Response to COVID-19 has included a broad range of measures to maintain employee safety, including staggered shift patterns, reduced utilisation levels, issuing of PPE to all relevant staff, working-from-home initiatives and regular employee monitoring.

Financial Highlights

• Total cash and bank reported at 30 June 2020 of $48.8m (30 June 2019 - $84.4m; 31 December 2019 - $127.0m).

• Second interim dividend of 2.0 cents declared in respect of H1 2020 (H1 2019 - 5.0 cents), absorbing cash of approximately $3.3m (H1 2019 - $8.3m), payable to shareholders on 23 October 2020, with a record date of 2 October 2020. The Board is declaring this interim dividend given the Group's strong balance sheet and healthy cash position. An interim dividend of 3.0 cents per share was paid on 15 May 2020, which replaced the 2019 Final Dividend.

• Net assets as at 30 June 2020 of $996.9m (31 December 2019 - $1,223.8m), following the impairments noted below.

• Following the severe economic downturn, impairments totalling $174.9m charged as exceptional in the period (H1 2019 - $nil), including goodwill ($79.8m), other intangible assets ($39.2m), inventory ($33.3m), PPE ($19.3m), right-of-use assets ($2.1m), and receivables ($1.2m). Amortisation charge for acquired intangible assets of $12.3m recorded in period (H1 2019 - $14.5m).
• Financial performance adversely impacted by COVID-19 and the consequent decline in the WTI oil price, which has led to operating restrictions and reduced activity in the period.

Half Year Management Report

For access to the Half Year Management Report narrative for the six months to 30 June 2020 please click on the following link.

Half Year Management Report

Financial Statements and Notes to the Accounts

For access to the Condensed Consolidated Financial Statements and Notes for the six months to 30 June 2020 please click on the following link.

Financial Statements and Notes to the Accounts

The attached documents provide complete access to the Group's 2020 Half Year Report. The Report can also be accessed at www.huntingplc.com.

Analyst Webcast

Hunting PLC will host an analyst webcast on Thursday 27 August 2020 commencing at 12:00p.m. BST.

The live webcast can be accessed via the following link:

https://webcasting.buchanan.uk.com/broadcast/5f2415b165023062edd7d779

Analysts wishing to participate in a Q&A session following the webcast must contact Buchanan at [e-mail] to receive the dial-in details.

For further information please contact:

Hunting PLC
Jim Johnson, Chief Executive
Bruce Ferguson, Finance Director
Tarryn Riley, Investor Relations
Tel: [phone]

Buchanan
Ben Romney
Chris Judd
Hannah Ratcliff
Tel: [phone]

Notes to Editors:

About Hunting PLC

Hunting PLC is an international energy services provider to the world's leading upstream oil and gas companies. 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 Canada, 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; US; Canada; Europe, Middle East and Africa ('EMEA'); and Asia Pacific.

Hunting PLC's Legal Entity Identifier is 2138008S5FL78ITZRN66.

Full statement in PDF