Hunting PLC has released its H1 2024 trading update, revealing a robust sales order book of approximately $700 million, a significant increase from $565 million at the end of 2023. The company attributes this growth to orders totaling $231 million from Kuwait Oil Company (KOC). H1 2024 trading exceeded management's expectations, driven by strong performance in the Group's OCTG, Subsea, and Advanced Manufacturing product groups. However, the Perforating Systems reported headwinds, leading to the implementation of a cost reduction program projected to save approximately $6-7 million annually.
The company has made good progress with its Energy Transition strategy, securing geothermal orders in Asia Pacific, Europe, and North America. The EBITDA for the first half of 2024 is expected to be in the range of $59-61 million, ahead of management's expectations and showing a 22% increase from H1 2023 and a 13% increase from H2 2023. The EBITDA margin for the period is approximately 12%, on track to achieve 12-13% for the full year. The balance sheet remains robust, with total cash and bank/(borrowings) expected to be $(11)m-$(9)m at 30 June 2024, and a cash inflow of approximately $23 million in Q2.
Looking ahead, the outlook for the full year 2024 and 2025 is positive, supported by the KOC orders secured, which will be recognized beginning in Q4 2024 through H1 2025. The Group's performance for H2 2024 is projected to be ahead of H1, and as a result, management is increasing EBITDA guidance for the 2024 full-year to approximately $134-138 million. The company anticipates EBITDA to Free Cash Flow conversion to be around 50% for the full year and targets total cash and bank/(borrowings) at 31 December 2024 to be between $30-40 million.
Based on the sales order book extending into 2026, management anticipates EBITDA to be in the range of $160-175 million for the year ended 31 December 2025. The capital expenditure for the full year 2024 is anticipated to be around $40-45 million. Jim Johnson, Chief Executive of Hunting, expressed confidence in the company's performance, stating, "At c.$700m, our sales order book nears the highest in the Company's history, which supports strong revenue and earnings visibility well into 2025."
The company also provided an outlook for the remainder of 2024, projecting a reduction in working capital, driving an EBITDA to Free Cash Flow conversion for 2024 of 50% or greater. Year-end total cash and bank/(borrowings) are targeted at approximately $30-40 million. The outlook for the Group remains positive, with the strength of international and offshore markets driving momentum within Hunting's product groups. Natural gas prices are expected to improve in the second half of the year across North America and into 2025, supporting the outlook for gas-focused drilling.