Hunting underpinned by Titan business ahead of year-end

The FTSE 250 company said that, as it anticipated in its trading update on 24 October, revenue for the full year was expected to be around the $700m mark, with results strongly weighted to the second half of the year.

EBITDA was likely to be nearer the upper end of market expectations, given the reportedly strong performance of Hunting Titan during the second half of the year.

Management was continuing to anticipate a modest pre-tax profit for the full year, before charges for intangible asset amortisation and any exceptional items.

The board said there were currently no exceptional items recorded in the year-to-date financials.

Cash generation remained strong and a positive net cash position continued to be forecast for the year-end.

Capital investment remained tightly controlled, the board said, with spend in the full year expected to be around $12m.

Trading within Hunting Titan, the group's perforating systems business, strengthened throughout the year with momentum continuing up to the year-end holiday period benefitting from a strong take-up of the business's proprietary H-1 Perforating System.

The board said the H-1 system continued to gain market share due to its reliability, with an increasing number of operators mandating its use in the onshore US shale basins.

Hunting said its US operations, excluding Hunting Titan, were expected to report an overall operating loss for the year, however, good progress had been made with both cost-cutting initiatives and improving sales into the US onshore market as activity increased throughout the year.

The electronics, trenchless, premium connections and specialty businesses, which sell into the US shale regions, were said to all be likely to report operating profits for the year as a whole.

Hunting's offshore focussed businesses, including the US manufacturing and subsea businesses, continued to face challenging market conditions and their performance offset the region's profitable businesses.

The company’s other regional operations, including Canada, Europe, Middle East and Asia Pacific - which primarily focussed on offshore and higher-cost drilling markets - remained loss-making at the operating level.

Its operations in Africa also remained loss making and continued to face “particularly challenging” market conditions.

Given the improved trading results and continued strengthening of the balance sheet, however,, the group said it had started the process of cancelling the suspension period bank covenants over its core borrowing facilities and re-installing the facility's original net debt-to-EBITDA and interest cover covenants.

As a result, its interest cost and facility commitment fee would reduce and any restrictions over capital spend would be removed.

Furthermore, restrictions over dividend payments would also be lifted, which would allow for distributions to resume at an appropriate time.

Hunting said there was currently no intention to propose a dividend for the year to 31 December, however, although the process of reverting to the original covenants was expected to complete by the time the company announces its full year results in March.

“Hunting Titan's performance in the year continued to exceed management expectations, and has underpinned the group's results in 2017,” said chief executive Jim Johnson.

“The group's other businesses now operate at close to break-even at the EBITDA level given the cost cutting initiatives and working capital management implemented in the year.

“As we close 2017, Hunting has retained its operational capabilities and remains well positioned to capitalise on any improvement in global market conditions.”