Hunting Plc · LSE:HTG
Hunting — FY2011 Earnings Presentation
46 slides from Hunting's earnings presentation, March 2012
Slide 1: Hunting PLC Annual Results 2011
Hunting PLC Annual Results 2011 March 2012
Slide 2: Highlights
Highlights • Four strategic acquisitions totalling to £597.9m • Manufacturing footprint increased by 37% to over 2.5m sq ft • Strong trading performance with improved underlying margins • Diluted earnings per share 38.7p (2010: 22.7p) + 70% * • Final proposed dividend per share 11.0p (2010: 8.3p) +
Slide 3: Financial Summary
Financial Summary EBITDA (£m)* Profit from Operations (£m)* 2011 102.5 2011 81.0 2010 62.6 2010 45.0 2009 42.8 2009 29.1 0 20 40 60 80 100 120 0 20 40 60 80 100 Diluted EPS (p)* Dividend Per Share Declared (p) 2011 38.7 2011 15.0 2010 22.7 2010 12.0 2009 14.1 2009 10.5 0 10 20 30 40 50 0.0 5.0 10.0
Slide 4: Corporate Activity
Corporate Activity Businesses acquired Sources of funding £m Dearborn - August 2011 50.6 13.2m new shares placed August 2011 raising gross proceeds of £85.4m Precision manufacturing £375m 5 year multi currency credit facility August 2011 Doffing - September 2011 14.2 - EBITDA minimum 4 times finance
Slide 5: Results Summary
Results Summary * 2011 Margin 2010 Margin Growth £m % £m % % Revenue 608.8 423.3 +44 EBITDA 102.5 17 62.6 15 +64 Profit from operations 81.0 13 45.0 11 +80 Finance (expense) income (2.2) 1.0 Profit before tax 79.8 13 47.0 11 +70 Effective tax rate 28% 30% Diluted earnings per share 38.7p 22.7p +70 D
Slide 6: Segmental Results
Segmental Results * 2011 2010 Profit Profit from from Revenue Operations Margin Revenue Operations Margin £m £m % £m £m % Hunting Energy Services Well Construction 194.5 28.5 15 111.3 9.5 9 Well Completion 327.2 41.2 13 224.2 23.2 10 Well Intervention 52.9 7.9 15 58.7 10.1 17 Exploration & Productio
Slide 7: Acquisitions Impact
Acquisitions Impact * 2011 2010 £m Margin £m Margin Growth % % % Revenue Like for like 544.0 423.3 +29 Acquisitions 64.8 - 608.8 423.3 +44 EBITDA Like for like 86.1 16 62.6 15 +38 Acquisitions 16.4 25 - 102.5 17 62.6 15 +64 Profit from operations Like for like 65.9 12 45.0 11 +46 Acquisitions 15.1 2
Slide 8: Amortisation & Exceptional Items – Continuing Operations
Amortisation & Exceptional Items – Continuing Operations 2011) £m) Amortisation of intangible assets 12.2) Inventory fair value charge 12.9) Acquisition costs 8.6) Acquisition retention bonuses 1.6) Unamortised loan facility fees 1.0) Acquisition related items 36.3) Property provisions 2.2) Goodwill
Slide 9: Amortisation & Exceptional Items – Discontinued Operations
Amortisation & Exceptional Items – Discontinued Operations 2011) £m) Gain on redemption of Gibson Energy warrant 58.3) Tax indemnity provision and other movements (3.2) Tax charge (5.1) Discontinued operations 50.0) Annual Results 2011 8
Slide 10: Balance Sheet
Balance Sheet 2011) 2010) £m) £m) Property, plant and equipment 231.2) 154.1) Goodwill 316.5) 100.6) Other intangible assets 220.8) 22.6) Available for sale financial assets 0.2) 45.1) Working capital 262.6) 136.5) Provisions (60.5) (56.1) Other (20.4) (20.4) Net (debt) cash (218.4) 212.2) Net asset
Slide 11: Capital Expenditure – by Segment
Capital Expenditure – by Segment 2011 2010 £m £m Hunting Energy Services Well Construction 30.0 20.6 Well Completion 19.6 17.1 Well Intervention 5.9 3.9 Exploration & Production 2.3 7.1 Others 0.2 0.3 58.0 49.0 Split Maintenance 12.8 12.2 New Business 45.2 36.8 58.0 49.0 Annual Results 2011 10
Slide 12: Capital Expenditure – by Project
Capital Expenditure – by Project 2011 £m Well Construction - New Drills tools and spare parts 18.3 - Innova building purchase - US 3.5 - Dearborn equipment - US 2.5 - Other equipment 5.7 Well Completion - Consolidation and expansion of Scotland operations - UK 10.4 - Houma new facility - US 3.1 - Ot
Slide 13: Cash Flow
Cash Flow 2011) 2010) £m) £m) EBITDA 102.5) 62.6) Working capital movements (33.2) (38.9) Interest, fees and tax (23.1) (1.6) Capital expenditure (58.0) (49.0) Acquisitions, including costs (581.1) (83.5) Equity placing 83.5) -) Dividends paid (18.0) (15.6) Gibson Energy 85.3) (25.2) Other 11.5) (1.
Slide 14: Global Footprint
Global Footprint Annual Results 2011 13
Slide 15: Our Strategy: Realising significant potential
Our Strategy PROPRIETARY PRODUCTS, DELIVERING TECHNOLOGY MARKET SHARE STRENGTH Realising + INNOVATION significant Integrate new business Technology and R&D potential Pricing Leverage Product offering Products, services footprint and customers EXPANDING OUR CAPTURING SYNERGIES, GLOBAL FOOTPRINT ADDIN
Slide 16: Manufacturing Facilities Expansion / Consolidation
Manufacturing Facilities Expansion / Consolidation • Badentoy / Fordoun • Expansion of Stafford, Texas facility • Deepwater Facility Houma, LA • Grand opening Wuxi, China facility Annual Results 2011 15
Slide 17: Acquisition Review
Acquisition Review Perforating Systems, Energetics, Wireline Logging Tools, MWD/LWD equipment. Titan MWD/LWD Precision Machining, Power Generation, Aerospace. Dearborn MWD/LWD Precision Machining, High Alloy Material Machining, Doffing Critical Tolerance Manufacturing. MWD Component Manufacturer Sup
Slide 18: Hunting Titan: 544 Employees
Hunting Titan 27 STRATEGICALLY Located Facilities 6 Manufacturing 20 Distribution HEADQUARTERED 1 HQ In Pampa, Texas Manufactured over 14 MILLION parts in 2011 544 Employees Annual Results 2011 17
Slide 19: Hunting Titan Capabilities
Hunting Titan Capabilities Description Products Overview • Manufactures highly-engineered perforating gun • Wireline guns systems and associated perforating hardware • Tubing conveyed perforating gun systems • Leading US market share • Perforating hardware • Wireline hardware & accessories • Select
Slide 20: Hunting Titan Capabilities
Hunting Titan Capabilities Description Products Overview • Manufactures comprehensive line on shaped charges • Shaped charges and related explosives • Jet cutters (Spectra (R)) • Leading market share • Distributors of power charges, detcord, detonators, initiators and boosters Annual Results 2011 19
Slide 21: Hunting Titan Capabilities
Hunting Titan Capabilities Description • Manufactures electronic well logging tools • Applications include cased hole logging, open hole logging, MWD/LWD and production logging Products Overview • Cased hole logging tools • Perforating electronic products • Rugged gamma detectors • Production loggin
Slide 22: Summary Comparison Of Plug-and-Perf Versus Sliding Sleeve
Summary Comparison Of Plug-and-Perf Versus Sliding Sleeve Plug-and-Perf Sliding Sleeve Key Advantages • Well known technology/process • Significant time saving during completion • Easy to overcome downhole problems process • Well established supply chain • Reliable results Disadvantages • Adds time
Slide 23: Hunting Dearborn: 248 Employees
Hunting Dearborn 1 LOCATION HEADQUARTERED in Fryeburg, Maine Manufactured over 6,700 parts in 2011 248 Employees Annual Results 2011 22
Slide 24: Hunting Dearborn Capabilities
Hunting Dearborn Capabilities • Deep Hole Drilling, Trepanning and Boring of Solid Bars of High Alloy Materials to Lengths of 32 feet holding extremely close tolerances • CNC Turning of Materials up to 40 inches to lengths of 30 feet • Spline and Gear Shaping, Hobbing and Grinding Centre-less Grindi
Slide 25: Hunting Doffing: 69 Employees
Hunting Doffing 1 LOCATION HEADQUARTERED in Houston, Texas Manufactured 12,000 parts in 2011 69 Employees Annual Results 2011 24
Slide 26: Hunting Doffing Capabilities
Hunting Doffing Capabilities • Precision Machining of Exotic Materials • Drilling, Boring and Trepanning up to 52 inches • Plunge and Wire Electrical Discharge Machining • Custom Tool Grinding Annual Results 2011 25
Slide 27: Hunting Specialty: 64 Employees
Hunting Specialty 2 LOCATIONS HEADQUARTERED in Houston, Texas Manufactured 87,860 parts in 2011 64 Employees Annual Results 2011 26
Slide 28: Hunting Specialty Capabilities
Hunting Specialty Capabilities • Directional Drillers Source for “In Stock” MWD Components • Design and Manufacturer of MWD Components • Provider of Screens to Customer Specs or Special Design Annual Results 2011 27
Slide 29: Horizontal Drilling and MWD Opportunity
Horizontal Drilling and MWD Opportunity Annual Results 2011 28
Slide 30: Advanced Manufacturing Group
Advanced Manufacturing Group • Synergetic means of providing MWD components / assemblies • Multi-Platform High Technology Expertise • Single Source for Advanced Manufacturing Engineering and Delivery Annual Results 2011 29
Slide 31: Business Platforms
Business Platforms Annual Results 2011 30
Slide 32: Well Construction
Well Construction • Continued Momentum from Shale activities and Global Offshore Growth • Redeveloped Revenue Streams from Increases in Deepwater Activities GOM • Synergies Development with Acquired Companies • High Demand for Manufacturing Capacities Annual Results 2011 31
Slide 33: Well Completion
Well Completion • Continued Growth from Extended Reach and Multi Stage Completions • Order Book Increases with Return to GOM • Global Demand for Manufacturing Capacities • Synergies Development with Acquired Companies Annual Results 2011 32
Slide 34: Well Intervention
Well Intervention • Substantial Work Over/Rework Activity Associated with Increases in Commodity Pricing • Unconventional Drilling Provides more Opportunities for Thru Tubing work • Global Demand for Manufacturing Capacities • Synergies Development with Acquired Companies Annual Results 2011 33
Slide 35: Fundamental Business Drivers
Fundamental Business Drivers Annual Results 2011 34
Slide 36: Global Wells Drilled
Global Wells Drilled Worldwide Wells Drilled Per Year 140,000 120,000 100,000 Wells Drilled per year 80,000 Russia International 60,000 China Canada 40,000 US Wells Drilled 20,000 - Source: Spears & Associates Annual Results 2011 35
Slide 37: Strong US Recovery
Strong US Recovery Source: Baker Hughes Spears & Associates Annual Results 2011 36
Slide 38: Horizontal Rig Count
Horizontal Rig Count Percentage of Rigs Drilling Vertical, Directional, & Horizontal Wells 80.0% 70.0% 60.0% 50.0% 40.0% % Horizontal % Vertical % Directional 30.0% 20.0% 10.0% Source: Baker Hughes 0.0% Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Annual
Slide 39: US Horizontal Footage Drilled
US Horizontal Footage Drilled - million US Horizontal Footage Drilled Annual US Horizontal Footage Drilled (million) Annual Results 2011 38
Slide 40: International Offshore Monthly Rig Count
International Offshore Monthly Rig Count International Offshore Monthly Rig Count 350 300 250 US Monthly Rigs Drilling 200 150 Non-US 100 50 Source: Baker Hughes 0 4/01 9/02 1/04 5/05 10/06 2/08 7/09 11/10 4/12 8/13 Annual Results 2011 39
Slide 41: Workover Rig Count – Driver for Well Intervention
Workover Rig Count – Driver for Well Intervention US & Canadian Workover Rig Count 3,000 2,500 2,000 Active Well Service/Workover Rigs 1,500 US Workover Rigs Canada Workover Rigs 1,000 500 Source: Cameron GUIBERSON/AESC 0 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Annual Results
Slide 42: Coiled Tubing Rigs – Driver for Well Intervention
Coiled Tubing Rigs – Driver for Well Intervention Coiled Tubing Rig Counts 2,000 1,800 1,600 1,400 1,200 Active CT Units Total World Count 1,000 International United States Canada 800 600 400 200 Source: by Les Tomlin, Trican 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Annual
Slide 43: Subsea Tree and Manifold Projects Awarded
Subsea Tree and Manifold Projects Awarded 1,200 1,000 Number of Project Awards 800 600 # Manifolds # SS Tree & Control Systems 400 200 Source: Quest Offshore Resources, Inc. 0 05A 06A 07A 08A 09A 10A 11E 12E 13E 14E 15E Annual Results 2011 42
Slide 44: Global Subsea Capex
Global Subsea Capex $25,000 $20,000 Global capex Spending $MM $15,000 $10,000 $5,000 $0 2004 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E 2016E Source: Quest Offshore Resources. Annual Results 2011 43
Slide 45: Looking Forward
Looking Forward • 2012 – Increase: – Product development – Manufacturing capacities – Geography – expanding marketplace – Leverage off international business units activities Annual Results 2011 44
Slide 46: Disclaimer
Disclaimer This presentation contains (or may contain) certain forward-looking regulatory authorities, changes in legislation, the further development statements with respect to certain of Hunting's plans and its current of standards and interpretations under International Financial goals and expect