Focus on cash generation to reduce net debt, with initiatives including:
o $42.3m reduction in inventories since 31 December 2015;
o $29.5m tax reclaimed from carry back of losses; and
o capital investment limited to contracted or essential spend.
Cost cutting measures continued during the reporting period and include:
o 46% reduction in headcount to 2,145 since 31 December 2014 position of 4,003; and
o 3 manufacturing facilities and 7 distribution centres closed.
Discussions to revise terms of bank Revolving Credit Facility concluded:
o profits based covenants suspended until the 31 December 2018 test date;
o new asset based covenants of Tangible Net Worth and Asset Cover;
o facility size reduced from $350m to $200m;
o facility secured on trade receivables, inventory and property in the USA, UK and Canada; and
o no dividend payments until the end of the amendment period.
Commenting on the results Dennis Proctor, Chief Executive, said:
"While industry sentiment reached a low point during the early months of the reporting period, the improved US rig count data seen through Q2 indicates that the global energy markets are adjusting to the lower oil price environment. The combination of lower operating costs and production efficiency gains has led to increased enquiry levels as operators focus on those projects which provide the strongest returns. However, given the inherent uncertainty within the industry at this time, the current market estimates for the 2016 full year will remain dependent on an improved trading environment in the latter part of the year.
"While the Group's performance has suffered, we are pleased to have concluded the renegotiation of our bank covenants to enable Hunting to continue with strong, liquid resources to respond to an improving market environment. At the period end our net debt position has been reduced to $87.5m following ongoing cost cutting and the receipt of tax refunds, which indicates the strength of our balance sheet and the resilience of our business model."