In a Q3 update, Hunting has narrowed FY25 EBITDA guidance towards the lower end of the existing U$135m-145m range, noting that this remains slightly above our existing FY25 estimate. This broadly-based group has performed substantially in line with management expectations although EMEA re-structuring has perhaps been a modest drag. Underlying cash flow/year-end net cash looks to be slightly better than we anticipated.
Hunting has generated c. U$100m EBITDA with a c.13% margin in YTD trading (compared to c. U$87m and 12% in the first nine months of FY24). Themes consistent with those reported in H1 prevailed during Q3, with revenue and EBITDA margins at similar levels to Q2 we believe. Notably, profitability at North America businesses most exposed to US onshore drilling (especially Titan and OCTG) have remained robust while the Subsea Technologies and Asia Pacific divisions also performed in line with management expectations.
The group ended Q3 with a c. U$47m net cash position. The net movement (from end H1 U$75m) chiefly reflects working capital investment and share buyback activity. Year-end guidance is now U$40m-45m, after an additional U$15m share buyback outflow that we had not included (taking the total to U$30m for the year). Plenty of headroom exists under existing funding facilities, with further bolt-on acquisitions under consideration.
With unchanged estimates our 400p/share fair value, which was raised at the interim stage, is also maintained.
