Okay. Well, good morning, everyone. Thanks for coming out today. As you see, we got a new location we're at, so wanna thank CMS for this place that we can be at today. Kind of new, kind of new with Hunting as well. So I'm happy today to come and talk to you about our results for the year. It was a very, very good performance, we think, from our side. We'll go into some more details on that. Before I get too far into the details, none of these great results could have happened without the team that I'm fortunate to work with. So I always wanna make sure that I recognize and thank the Hunting team out there. There's a big push right now. You'll see us on LinkedIn. We are Hunting, but it's a company with, I think, a great culture.
Coming up to the 150-year anniversary of the company, I think that says a lot about how the company has been adaptive to change over the years and been able to flourish. Excuse me. Starting off with the numbers, great increase in revenue year-over-year, up 28%. EBITDA number improved dramatically, nearly doubling. The nice thing is we have a very, very strong order book. We continue to see that as a good indicator of what our performance will be through '2024, but also now taking us into 2025. Second half of the year, comments there, and Bruce will talk more about it. A nice period of cash generation, showing we were able to harvest the results from the work done earlier in the year as we build up our revenue number.
The margin improvement, 11% for the year. It's important, I think, to note that it was actually 12% in the second half of the year, so the 11% average, and we continue to push that number higher. And then also, non-oil and gas revenue up 59%, thanks to continued strength from our Dearborn and Electronics business. Just going through the areas where we talk about delivering the 2030 strategy. One of the things as I went through this, and you'll see on this slide and the next slide, every point on this, you can talk about how we've diversified, and that was really the key that drove our results this year. We talked in the past that there was so much more to Hunting than a company based on the U.S. onshore.
And while we love that market, we had a market last year in which the rig count declined 21%, yet we were able to outperform that as a company and in many of our product lines, like in OCTG, even outperform that from an activity level perspective. But going through OCTG, we picked up some great relationships to build our supply chain, to strengthen our opportunities in the future. Perforating systems, we continue to be very strong there, focusing on our IP, developing new products for our clients, and accelerating the drive for more international activity, which we actually had a record performance on last year. Subsea, a very, very key part of our business that has grown significantly over the last three years or so since we made a couple acquisitions to get more mass to that product line, that product grouping.
The next slide here on Advanced Manufacturing, as I talked about a little earlier, again, we like that business. You all know what is going on as far as defense spending goes on the aerospace side of the business. We're actively involved in that. We see further upside as the years progress. We're counting on that being a bigger part of the company's business, and again, adding more diversification to our revenue and profit stream. Energy transition, we've put in place now a couple partners that we think will give us the basis to build a good platform going forward. We have been recently successful on the geothermal side. Some of the other areas, it still is lagging activity levels because of government regulations and permitting issues and the like.
And then on the cost management side, we did not take our eye off the ball of looking at our costs, and we list there some closures that we did, some consolidation of business that we did. We're looking at our new facility being done in Dubai, which will put us closer to some of our clients as well for certain product lines. And then lastly on that, we disposed of E&P assets. The real important part of that was it was a non-core business, but it also eliminated potential plug and abandonment costs that we were gonna be facing down the road over the next couple of years. So again, kind of a cleaning up of the business. On the ESG point of view, internal reject rate, all these numbers came out much improved year-over-year.
You look at our Scope 1 and Scope 2 emissions, the numbers are up, but far less than what our revenue increase was year-over-year. So as you do more, they're gonna increase, but we've done a good job of reducing the intensity of those tonnage, those tons in our business. And then I always wanna put a special note out to Greg Farmer and our team globally on HSE and quality, but we had a great number for recordable incidents in the year. It's especially impressive given the ramp-up that we did in our employee headcount, because typically, I'm being an old manufacturing guy, every time you have a ramp-up and bring new people in, one of your challenges is to make sure they're trained right, the safety's right, and all those type of things.
Going into a little bit more detail, product OCTG-wise, you'll see again, what I like to say is, going from the lower left to the upper right, so the charts are all going in the right direction. We hope that that'll continue through the implementation of our Hunting Strategy 2030. But you see, you saw strong momentum last year in OCTG, a lot of it driven by the increases with the international marketplace coming back to life. So we've seen businesses in China, the Indian orders. The thing is, today, we're seeing the scope of these orders much larger than what they used to be. So where, let's say, prior to COVID, typical order would be in the $10 million-$15 million range, now you're seeing these $80 million-$90 million orders.
Tenders now over $100 million each, and so, it's just a different, little bit different business now. And then other parts that are key to us, we think, going forward, is the Jindal relationship we have with our joint venture in India. Bruce and I were there in September, an amazingly efficient facility. It's up and running right now, and we're excited about the opportunities in India, but also the potential for export with that facility to areas like the Middle East. And then lastly, the TEC-LOCK business was a huge driver of our profitability in Canada and in the U.S. onshore. We had growth exceeding what was going on in the rig count, and we think, there's continued upside in that business, and we've also seen a bit of a recovery in the Gulf of Mexico. So overall, a good business for OCTG.
It also benefited from the strong completion work in South America. So for Bill Price and his team in running that side, working with some of our OEM clients, it's been a— It was a great year, and we see continued upside there. On the perforating gun side, the Titan business, considering the decline in the rig count, the business performed, we think, very well. The international business opportunities continue to expand, and first and foremost, we continue to focus on technology, because you gotta continue to look ahead and what can you do to increase the efficiency of our client base out there. Things like the introduction of the H-4 gun, which is a gun that allows orientation to be more accurately controlled downhole.
Just talking with Jason Mai a couple of days ago, we had some pretty great results in January, so we see that continuing to accelerate as time goes on. But overall, some strategic partnerships in place. The one with StimStixx, one of the areas that we think that will enhance our business, is in the area of the refrac market. If that takes off and grows, it is growing, and then also for some offshore applications for the Titan business. Advanced Manufacturing, I talked about a little bit earlier, good result there for the year. One of those businesses that really did get hampered by supply chain issues over COVID. On the electronic side, it was a chip issue, and you guys have heard me say this many, many times before, but those things have now pretty much gone away.
On the Dearborn side, it was material issues, almost the same thing. It wasn't chips, it was different kinds of steel, but it was also the fact that our clients, when, and when you're talking about products of this complexity, you typically have clients in your shop all the time, or they have to sign off on things since you're making parts for rockets and for jet engines and the like, but everything just slowed down dramatically. Well, those things, again, they've, they've, are being in the back now and gone, and again, you'll see the charts, lower left, upper right. We like that and like that trend. Subsea, an area that we have a lot of excitement in, one that we have built from one platform to three. The key driver for this business last year was really the business in Guyana.
That continues to be a positive. We see that growing for many, many years to come. Brazil, also a strong market, landed our first business in the Black Sea. Fortunately, it was the Turkish side of the Black Sea, so nobody needs to freak out about, you know, any other parts of the Black Sea. But all going in the right direction there. The momentum, we think, will continue because we, as again, with the Titanium Stress Joint business, we took a product that was basically in hibernation, and now it's been reintroduced, and this is a very cost-effective, high-quality solution for our clients.
Other manufacturing, smaller part of the business there, and I think the key was I talked about the selling of our E&P assets, but we have seen the well intervention business improve as capital expenditures increase from some of our core OEM clients, and we've also seen our well testing business pick up as well. We think that'll accelerate more with the move of our Dutch facility to Dubai later this year. Energy transition is one where we're getting prepared, I would say, for what we think will be a very good market coming down the road. I remind everybody that we've been in, we were in energy transition when people didn't talk energy transition. So 25, 30 years ago, we were supplying product in the geothermal markets. We've seen that come back some this year. We've had early, early business this year in the Philippines.
I was just told that we've got a little bit of business in California recently booked. There are opportunities there. I think that the drivers we're gonna see on that are gonna be more in the international markets, in places like Indonesia, the Philippines, even Iceland is an area where we've played in the past. Don't have any tenders there right now, but those type of areas, I think, will give us opportunities. But because in the U.S., some projects we've recently tendered, really, there has to be a reality because the costs, I think, are in some cases, out of whack compared to the realities some operators are looking at. So it's an area we're prepared to play in.
We have done a lot of cryogenic testing now for the carbon capture side of the business, but that's also one in which government regulations, pipeline issues, and the like, have not led that to actually stellar growth. And with that, I'm gonna pass it on to Bruce for a while.
Thanks, Jim. Morning, everyone. I'm pleased to present a strong set of financial statements here. Following on from what Jim was saying, our revenues are looking good in terms of 2023, up 28% year-on-year. That has been fueled by the growth we saw in international offshore subsea markets. You know, areas like Guyana, I think our sales went from $13 million in 2022 up to $33 million in 2023, so some real good growth there as well. 44% of our business is now offshore, so that points to what Jim was talking about. We're no longer just that U.S. onshore play there as well. So some really good growth in those areas. The order book gives us a lot of comfort.
You know, that's now at record levels at $565 million, and that gives us some really good visibility for 2024 and beyond. Roughly 80% of that order book will be delivered in 2024, so that gives us good coverage. That doesn't include our Titan business, so if you add that on there, that gives us almost 70% of our 2024 sales covered by that order book. If you go back a little bit to 2018 and 2019, which was sort of normalized trading, order book back then was around $225 million-$250 million, just for a bit of context, so a definite step up in terms of that order book. Unsurprisingly, the improved revenues has improved our earnings per share. Nice to see that up at $0.203.
EBITDA, as Jim was talking around, was now doubled, up to $103 million. Some other facts there. We do have that increase now of 59% on our non-oil and gas revenue. That's probably double what it was two years ago, so making some nice progress there as well. EBITDA margins, we did signal in the capital markets today we want to get that back to 15%. Second half of the year, that was at 12%, so we're, we're bridging that gap quite nicely at the same time. That's a mixture of our high utilization. We are landing some sales price increases as well, efficiencies, the fixed costs we took out. So all that blended margin, we're getting that up to towards the 12% as we exit 2022. I just put a statistic there in terms of EBITDA per employee.
I think that's saying we're doing more with less people. You know, we're doing similar amount of revenue that we did back in 2019, with 20% less people, so there's efficiencies in there. We have disposed of some of the commoditized businesses as well, and that is helping that per employee figure. Dividend, we want to increase that dividend, and again, that's up 10% to $0.10. We've got a technical point there. We're recognizing the $83 million of deferred tax assets. That really, t he way to think about that is that's really confidence in our forecast for the next few years. It's not really going to make a difference to our cash tax going forward. It was derecognized back in 2020.
It's now back on the balance sheet because of we have confidence in the next trading period over the next medium term. Good to see a return on capital going up to 6% as we try and march that back up towards 15% by 2025. Just a little bit more on our revenue per product line. We're now trying to give a lot more information in terms of product line by regions as well, just to show the breadth of the Hunting business. Really, what this does, it shows where that growth is coming from. We've got the 53% increase in our OCTG business. Flat, flat, flat growth in terms of our Titan. Not surprising, given that the market was down 20% in the U.S., but we have that shelter of the international business with Titan.
We've grown that 34% over the period into markets such as Argentina, into Mexico, and also the Middle East as well. We're also reporting really good growth in terms of our Subsea and Advanced Manufacturing of north of 40%. If we just have a quick look through the income statement, we've covered a few of these items here, but again, we're just showing the 929 of revenue. Our gross profit has improved by 1 point to 25%, so that's nice to see that increase there. The doubling of the EBITDA to $103 million. That all falls through to the profit after tax of $36 million. We've now got our earnings per share of up to $0.20, and that allows us to declare that dividend of $0.10. A little bit more on the order book.
You know, that's now as we sort of decouple from the, you know, our previous market indicator, which was the U.S. land, we're now looking at order book to give us, sort of visibility on how the business is looking over the next, next couple of years and beyond. So there's the order book by, by product group. Again, as I mentioned, that is a lot higher, the 565, compared to what we had back in 2018, 2019, which was down at 225. We do have a tender pipeline behind this, which is around north of $1 billion. So we are seeing a lot of good tender activity in terms of the, the subsea product line, in terms of the Middle East as well, and all those offshore plays that we're seeing out there.
So that gives us confidence not just in 2024, but also in 2025 going forward as well. Nice to see that, you know, 16% of our order book is non-oil and gas, so that helps us march towards that 25% non-oil and gas figure as well. Again, quite a busy slide, this one. We're, again, trying to give more visibility in terms of along the rows there, in terms of the product lines. In terms of the columns, we've got our segments. We're doing this by sales and by EBITDA and by EBIT margin, EBITDA margin. So we're seeing in North America there, you know, that was a 33% increase in terms of their sales, up to $339 million. The subsea column, that was a 43% increase, up to almost $100 million.
So that subsea expansion, really important to us as well. In terms of the largest EBITDA margins, we're looking at subsea at 14%. That's all listed down there. The only one that's not positive operating profit is EMEA. That has improved. We had a $6 million operating loss last year. That's now at $2.3 million. We believe that there's no new technology coming through EMEA. There's more international work coming through there as well at better pricing, and the cost reductions we've looked at will help us get that back to a profitable figure in 2024. Moving on to the balance sheet. We're happy with our balance sheet. We see our net assets $957 million. That's our addition of the deferred tax assets of $83 million.
As Jim mentioned, we had a very good cash collection in the last quarter four, which got us back to -0.8, slight negative in terms of the cash figure, but good to see that cash generation coming through. In terms of our PPE, up there at $254, majority of that is our land and buildings with some plant and equipment as well. Again, down to that figure there, we're seeing that improvement on returning capital back to, back to 6%. Working capital has increased over the period. That not surprisingly, given the level of increase in our business, but it's an area we've got a lot of focus on. Two main areas in terms of what increased that working capital, one was on inventories.
As we saw the lead times increasing, we did buy longer in terms of our Titan products, our electronics. As the market got softer, a timing issue, more stock on the ground, that will unwind throughout 2024. Same with the electronics as well. You know, the parts that will take over 12 months to order. So again, to make sure we've got the sufficient parts to meet the customer demand, we bought longer on that side as well. So again, that will be a real focus going into 2024. We believe we can hold the working capital at the current levels as our revenues grow 10% or more, which will effectively improve those working capital metrics there as well. We've also been working on a number of things in terms of our advances from customers.
You can see that's increasing now from $8 million up to $31 million, and reducing the amount of payment on accounts to our suppliers, whose effect on the steel mills. So instead of us having to put deposits down, we've now got bank acceptance bills in place, which reduces our outflows as well. So a real key focus and more to do in 2024 on our working capital. In terms of our cash flow, just to take you through the main points there, we can see the doubling in terms of the EBITDA and also the share-based payments up to $116 million. The working capital comes off. The two key components there are the working capital movements, -$55 million. And then what we're doing now, we're including the CapEx and intangible assets.
So that is now within that free cash flow figure, and that was $35 million, and that flows through down to negative net outflow of $0.5 million. We then take the dividend payments we have there in terms of the $15 million. We've and some payments for treasury shares to support the Hunting share scheme. We've now got an outflow of $25.2 million. We start the year at $20 million, just over $24 million, so that gives us a $0.8 million negative cash in the bank. But a good performance in terms of the cash inflow over the last quarter. If I can just conclude by looking a little bit ahead to 2024, given the strength of the market, the order book, we're reiterating our guidance for EBITDA to $125 million-$135 million. Again, we're seeing that EBITDA margin.
We're giving that a range of 12%-13%. Okay, that's stepping up to that 15%, but we are seeing the product mix, we're seeing that order book, good visibility. We're comfortable with that 12%-13%. In terms of the tax rate, just to guide that, help the modeling there, 25%-28%, the deferred tax asset on the balance sheet will help normalize that as well. CapEx and intangible assets, that's up a little bit. You know, we're seeing a lot of usage in terms of machinery, so that tends to be more in terms of CNC lathes. We've got the Dubai facility of $5 million in there as well, but still, just slightly higher than the depreciation, annual depreciation rates.
In terms of free cash flow, again, a big focus for us on that one, and we're looking at 50%, and that's post our CapEx figure as well. Okay, Jim, your turn.
Okay, now I can talk with my crystal ball a little bit and go through some market overviews and tell you what we're seeing out there. Right now, you know, we still are remaining very positive. We know that this oil and gas business, it's never a straight line one way or the other. And so there's gonna be areas where it's going to be a bit choppy, but one this year that's not going to be, is gonna be in the international spend and in deep water globally. So we see that as driving a lot of the increase in global drilling spend over the year. On the U.S. right now, oil prices are in a level that make good returns for clients, so we've got that high $70 number.
The real issue there has been what happens with natural gas, and it's going to—appears it's gonna be weak through the first half of the year. We've seen a number of operators led by Chesapeake in the last just week or two, when they came out with their announcements, talking about curtailing production and cutting rigs. I wish they weren't cutting rigs, but at the end of the day, it's gonna make for a stronger gas price. And with LNG capacity coming online, in a bigger way in, in the fourth quarter, I just think that we're gonna see, improvement in natural gas prices, and I think we're at, at the bottom. Of course, a lot of it depends on weather. We're still not done with winter, a hot summer, so those are kind of the wild cards that you throw into that.
In some of our end markets, kind of touching on the U.S. and Canada, which I pretty much talked about with the commodity side, we see further growth in the TEC-LOCK product line. As I mentioned earlier, we outperformed the rig count activity, and that is primarily an onshore North America product line. So great results, great effort by our team in Houston and Calgary, working on those products and keeping our customers happy with that. The Titan side of the business, we continue to roll out the new products. I mentioned about good results on the new H-4 gun. H-3 results have been strong and improving. But a good thing there is, too, we wanna make sure the pricing stays stable or starts getting higher.
So right now, with activity levels, pushing prices up in some products is a bit difficult, but we're not seeing any erosion. So I would say on that side, products are stable. And if you look, like I said, TEC-LOCK , you can see the increase in joints that we've done there. But in general, we remain cautiously positive on the U.S. and Canada. Our end markets, Brazil and Guyana, extremely busy, driving OCTG business with the completion work we're doing, driving, obviously, the business out of our Subsea Spring facility, and also even with the Enpro business coming into some of those areas now. So the outlook, it calls for complete increased spending.
One of the notes, if you look at the OCTG well completions, we don't have the actual dollar, because our clients don't really want to break that down, but these are all very, very expensive completions. So all the material, for example, in Guyana, is at the highest end of typical OCTG materials. So it's not necessarily the nickel base that much, but Super Duplex, super high chrome materials going into these completions. And so all the parts that we provide with that are, again, of high value and extremely critical to the performance of those wells. Europe, Middle East, Africa, we talked about that a little bit. It's been one where, thankfully, well intervention business has been picking up. Bruce already hit some of the highlights on that. We think that the Middle East business will continue to grow for us.
We see more opportunities with our well testing business as we, when we accelerate that move to Dubai from Holland. Just, one, it reduces cost, but, two, you're closer to where the client is at. So that kind of gives an overview there. Organic Oil Recovery, one of Bruce's favorites there, is showing some traction. We have landed some customers and contracts with that, recently, one in Pakistan. So I think we're at that point right now where testing has been done, and hopefully, we can add some earnings with that product line. India, one of the most exciting stories that we have in the company for our group. I'll give, again, credit to Daniel Tan, who has spearheaded this from out of our Singapore office. But we're extremely excited about this opportunity here. It's already giving results to us. We're expecting a strong year this year.
We have a backlog of something like 70,000 joints already as of yesterday for our Indian operation, mainly for ONGC, excuse me, and some other operators in India. But we've got a great partner with the Jindal people. I think we're, we're really positioned well to profit in that market, excuse me, as India wants more homegrown energy for their own security and their economic development. And it also, again, as I've mentioned previously, it really gives us another supply source to reduce our dependency on China for our international OCTG business. I kind of touched base on that earlier with the, the Asia business, East Asia business. We've done a lot of hard work in the last year to line up strategic suppliers.
The relationship with Jindal for OCTG is especially important for us as we try to pursue future geothermal and carbon capture opportunities. But overall, we see that market continuing to be strong. We're also seeing a resurgence in drilling activity in places like Thailand. I think that's gonna increase over the year. Malaysia is getting busier. We're seeing new tenders come out in Indonesia. So I think overall, where that business has supplied a lot to the Middle East, I think actually the other parts of Asia are gonna help drive some growth in this year and going forward as well. So in summing things up, I think the company delivered a very good set of results for the year. I'm proud of what the team was able to do and do it safely.
We did a lot of things to fine-tune our portfolio over the last couple of years, and this was the year that really showed the evidence that we have a balanced approach to the market and a balanced portfolio, and we're not just a one-basin play. Improvements in pricing in some of our areas have been pretty significant. We see that in certain areas. Again, it's gonna be a mixed bag because we are diversified. Some they're gonna have more pricing leverage than others, but overall, the trend, I think, is in the right direction. And I think all of these that I've talked about, but it's been, again, a strong year, great performance from our team.
Offshore and international is where the growth is gonna be this year, and we're not taking our eye off the ball on things like improving our ESG metrics or looking at opportunities in energy transition as it relates to our product lines. With that, I think we'll. We got some other things there just as a reference, but I think we're ready for questions and answers. Victoria?
Morning. Thanks very much. Victoria McCulloch from RBC. So first of all, on the JV in India, how should we expect this to be reported, and is this included in the EBITDA guidance for the year? And then secondly, looking at inventories, where should we expect the Titan inventories to normalize in terms of numbers, percentage of sales? Thanks very much.
Okay. Do you want me to take, I'll take the Titan one first. So I think our end inventory levels at Titan were 140, so we would expect that by the end of 2024 to go down to 100, so $40 million off inventory balances. In terms of the joint venture in India, that will come through investment associates, so that will be, we will include our share of India within the EBITDA number, so that will, that will be coming through. And that contribution was on the India slide, Victoria, so that will be coming through there. Yeah.
Thanks.
Okay.
Morning. Alex Smith from Investec. Just a bit on kind of, you mentioned utilization improvements and some pricing coming back. I guess that's for the product mix, but we've also seen across the sector that pricing power is coming back to the energy services sector. So could you give us some commentary on kind of how you're seeing that with your clients, and can you push for a bit of a pricing increase, and is that helping you through 2024 in terms of margin improvement?
Yeah, I mean, we're, I think the thing is, anything related to North America on land, I would say pricing is stable. So with 600 rigs, you don't, you still don't have enough utilization being used up by our competitors and others for those specific products. The area where you do have some pricing, more, let's say, tailwinds on that, are in areas like Subsea. Excuse me. Some of the international products in Advanced Manufacturing, where you've, again, you've got a long cycle on some of these products from purchase order to completion. So that's kind of what we're seeing right now. So again, pricing has improved, but in some areas, it's just, it's still not in an area where you can go gangbusters with it.
Sorry, just in terms of utilization, you mentioned improvements. Could you put a figure on that, in terms of-
I think the blended figure, to use, Alex, would be 10% improvement year-over-year, up from low 40s up to 45%.
I guess you can't really compare, I guess, history, 'cause the product mix has changed quite a bit, but a 10% improvement is a sign that it's going in the right direction.
It's going in the right direction. Yeah, correct.
Thank you.
Hi there, Dan Slater from Zeus. I was just wondering if you could talk a little bit about your EBITDA margins by division, particularly OCTG, Perforating Systems, and Subsea. Only because intuitively, I'd have thought something with higher IP, like a Subsea, would be doing higher margins and something that's perhaps a bit more commodified, like OCTG, might be doing lower margins. However, this year, actually, of the three, it looks like OCTG has been your best margins.
I'm sure there's a volume element in there, so on and so forth, but it would be nice j ust to get a bit of a feel about how we should be thinking about that and how it might evolve going forward.
Sure.
Not necessarily specific percentage levels, just a bit of a flavor, if you see what I mean.
Yeah, I think the Subsea, I think I commented on that, Dan, that the Subsea EBITDA margin is at 14%, so that is our highest product line. I do agree, the OCTG has actually been t he margins coming through have been at record levels.
We've got some very good pricing. The utilization's helped there as well. I think that's around about 12%, which is quite similar to Perforating. But we are seeing better pricing come through the Subsea as longer projects, as more critical projects as well, and that has given us the ability to land better pricing on it. Utilization is helping on the Subsea side. So I'd say Subsea is slightly ahead, OCTG, Perforating Systems, quite, quite similar, and advanced manufacturing catching up so that you can see that range between the 12%-14% coming through, with Subsea just edging it.
Yeah, I think one of the things that's gonna help this year is we really had a very sort of slow first half of the year in Enpro. So kind of, again, consolidating, looking at the three units that make up Subsea.
So that's really improving, which is gonna help drive that overall number better. And again, OCTG, just to comment on Bruce's, are basically at record levels for the company from what I've ever seen us do from margins on OCTG, you know, combining everything.
Perfect. That's really helpful. Thank you.
Thanks. Morning, Toby Thorrington from Equity Development. A few questions on reporting numbers, if you don't mind. Guidance for the year was EBITDA 96-100, came in at 103, so obviously a good end to the year, final quarter. Just wondering if there was anything in particular, divisionally or product group wise, that you'd point to, that kind of got that over the line for you? And also in the P&L, I think the OpEx performance was pretty good, actually, considering revenue movements and those kind of things. If you haven't covered it in the presentation already, is there anything you'd point to there, for us, please, on a run rate basis?
I think in terms of the, the figure, the slight, improved beat was more, you know, we, we did have slightly higher margins coming through. The, the revenue recognition, one, one of the things that's changing now with the, the longer term contracts in both the Subsea and OCTG, is the recognition of revenue over time, as opposed to, to on time. So again, the truing up of those margins, that came through more favorably as well, higher margins coming through on the, on the Subsea side. So I think that was probably the main a nd just the general year-end truing up coming through there, Toby.
In terms of the, you know, improved margins in general, it really is a blend of the, you know, the pricing, the utilization, et cetera, coming through all the product lines, and also the fact that fixed costs, you know, there was a lot of work done in terms of moving fixed costs back in the COVID years, and that is playing out in terms of the better margins coming through as well.
Thank you. Sorry, Jim, more financial questions.
That's fine.
I think you've covered the inventory movements quite well already. Thank you. On spending the year on intangibles, that was about $11 million.
Yeah
Dollars? That's a spike compared to where it normally is.
Yeah. There's probably about $5 million of that relating to our ERP system, Toby. That's D365. So there's $5 million of that in intangible assets coming onto the balance sheet this year. So that is a spike, and that will be down to $1 million-$2 million in 2024.
So the ERP spend is done now, yeah?
There'll be a slight tail on that through 2024, $1 million-$2 million.
It's never done.
That'll be done.
Yeah, okay.
Yeah.
Understood.
Thanks, Toby.
And if you could just help me with, obviously, you know, balance sheet is in funds. I'm expecting that that will improve further in FY 2024.
And if you'd like to help us with a sort of expected year-end net cash number. But I'm also interested in the sort of the variation, the swings in borrowings during the year, if you can help with that as well, please.
Yeah. Well, we'll start off with swings and the borrowings. We're down currently about, you know, $13 million in debt at the moment. So there hasn't been a massive swing outflow in the first couple of months. We're looking at, in terms of cash in bank at the end of 2024, around about $30 million. So once you take off the IFRS 16, that's effectively a neutral net debt position.
Yep. Okay. Thank you.
Okay.
I have a couple questions through the webcast from Richard Dawson of Berenberg. One for you, Bruce. Cash, cash generation was very strong in the second half. Can we expect a similar run rate across 2024?
I wish. We're looking at, you know, a free cash flow conversion of 50%. So we will see benefits coming through. You know, as I mentioned there, we are a little bit long inventory. We've got some receivables to go after, so our optimization of working capital will improve. But over the course of the year, we are looking at, you know, free cash flow of $60 million.
Okay, thank you. And one for you, Jim. Do you expect a higher exit rate for U.S. rig counts at the end of 2024 than current levels, or do you expect them to remain broadly stable?
I expect them. Again, it's a guess. I mean, I look at what Spears said. They've been wrong time over time, but I anticipate it's gonna be higher in the fourth quarter than what it is now.
Okay, thank you.
Hi, it's Alex Brooks at Canaccord. Obviously, last year, you saw a number of major project awards come in. Are you looking—you mentioned $1 billion of pipeline ahead. Are there any similarly large contracts out there as you look through this year that might give us some excitement?
There are some right now. We're in the process of tendering in the Middle East. There's a couple, couple countries there. It's not Saudi Arabia. I'll narrow it for you, but there are some there that we're seeing, and a few, not at the nine-figure amount, but we are seeing some nice contract opportunities in Southeast Asia. And again, that can, you know, the nature of the business, that could change tomorrow. Anything else? Y'all are quiet. Oh, go ahead, Victoria.
Thanks. Just a quick follow-up on Titan. Within your guidance, what are your expectations for the year, and how does that split in terms of U.S. domestic growth or flat or international?
In terms of we're fairly flat, where we are in, in total, but we do see that international aspect growing. You know, I think it was up 34% year-on-year. I think what's gonna help us there is the tariffs in Argentina. I think, Jason Mai was down in Argentina a couple of weeks ago, so there's opportunities that certainly in specific markets like Argentina, and Mexico and Middle East, Middle East as well. So we probably see the percentage of that business going up in the international realm as opposed to U.S. domestic. In terms of the top line, your small amounts of growth holding pretty flat for Titan 2024 is our expectations.
We do have some anticipation that some of the things we've done on the IP side. Like I said, I've been very encouraged with the early sales on the H-4 gun. We think that's gonna be a big driver for the year. Hopefully, we'll beat our budget because of things like that.
Yeah.
We have the new relationship with StimStixx, which we think will help out again on recompletions in some of the offshore, which will enhance our products being offered with theirs in the marketplace. So I think we're trying to look at all kinds of opportunities to continue to grow the business in a more profitable manner, but there are some good opportunities there. I think, and I think Canada is gonna be a much better year this year than last year. 'Cause you looked at our business, and we have it broken down by basins. In North America, I mean, we really got impacted by those plays in the natural gas side because we were very, very strong in there. So the Haynesville, the plays in Appalachia, we saw significant fall down in activity there, and we're hoping by the fourth quarter, that recovers a bit, too.
Another one just from me on CapEx. You know, you mentioned that, you know, some, you know, spending is required. Over the last probably five or plus years, we've seen really low levels of CapEx.
Is there a point coming in the future that we're gonna see material increased CapEx due to higher utilization?
I'll take that one first, Victoria. I think that 35-45 feels about right. We don't see the spikes. We don't anticipate new buildings, new skyline being required, roofline being required in order to meet the targets we're talking around. So it really is machinery. We've got the new facility in Dubai. That's $5 million of the figure we talked around. We don't see any sort of step up in terms of that CapEx figure.
Yeah, I agree.
I mean, we're doing some things like one of the efficiency projects we're on right now, we're replacing one of our lines in electronics. That's a couple million dollars expenditure. It's gonna drive down our cost basis in some of the processes that we do there, but it's really gonna be. We look at our fleet like people look at a fleet of airplanes or, you know, cars. It's a mileage thing as well as time. It's, with us, it's hours and, and as well as years, and we also wanna be up on the latest technology. Machine tools today are much, much faster than what they were 10 years ago. So I think it's a pretty organized, structured approach we take to reviewing our CapEx.
Just the last one from me, I promise. On M&A, we've not really talked about M&A this morning.
Right.
You know, what are the opportunity set do you see in the market? Is it continuing to look at sort of non-oil and gas opportunities? And would you do anything, you know, larger scale if that crossed your desk?
Everything, we would weigh out all kinds of opportunities put in front of us. I don't think you're gonna see us do a massive non-oil and gas deal. It's just, I think we have to look at what is the expertise of the company, what, you know, our heritage, what do we do best? We're trying to look for some diversification on the M&A side in there, but it's the same with oil and gas. It's just been difficult to find anything that makes sense. We would love to add on to our Subsea business and build that platform even larger. We've looked at a couple of things to enhance the Titan business. Again, some bolt-ons that would make that product more soup to nuts to a client as they're operating their wells or completing their wells.
We'd like to play more in the aerospace defense side, if we can find a deal with somebody. We've talked to a couple, but it's one of those type of things, even if I was doing something, I couldn't tell you. But it's one of those things we do look at, you know, very, very hard all the time.
Andy Edmond, Equity Development. Can you get your crystal ball back out, Jim?
Okay.
Just in terms of domestic politics, we've got elections coming up, America, Canada, quite soon in the U.K. Is your view that the drivers, security of energy supply, clean energy, that you're riding successfully at the moment, might be affected, either for better or for worse, by governmental change in those markets?
Well, I mean, I don't wanna make any political calls supporting one or the other, but I will say, if you look at the U.S., our current administration, I don't think they can be viewed as very hydrocarbon friendly, and yet we've got record oil production in the U.S. On the flip side, I think the days of sitting thinking another administration is gonna come in and it's drill, baby, drill, I don't think those exist either, because it's gonna be o ur clients are much more disciplined today than what they have ever been. So it's cash flow, it's paying dividends, it's, you know, and right now, consolidation happening. So I just don't put a whole lot of thought process into either party as far as who wins.
In the U.K., I think, these are my personal opinion, I just think that there's a tremendous resource that's being squandered by the government tax issues and the like for the North Sea and for energy security and economic development in this country. I'm just, I'm just shocked.
Yeah. Thank you.
Hi, Alex Brooks. Last week, you had a $25 million-$35 million increment in EBITDA for this year. Today, it's $20 million-$30 million, so that's a little easier. How do we break that down? Because there's been a lot of self-help work through this year. You've got a partial close out of Velsen-Noord . You've been moving around Oklahoma City. So how do I think about how much of that delta is kinda baked into your own cost changes versus what's going on in the very strong demand environment you're working in?
Yeah. In terms, I think the way to look at that is we are looking at, you know, the growth and revenue will add to the bottom line, so if that's a 10% on our top-line figure. So it's a combination of the revenue increase. It's also gonna be an improvement, Alex, on the EBITDA margins. And I guess the third element, as you talked around there, there is that efficiency that is coming through. And, you know, we're gonna continue to do that. We've taken out perhaps another $3 million-$5 million in costs this year. We'll continue to look at taking costs out where we can. It's sensible to do so next year as well.
But the main drivers will be top-line improvement, the EBITDA margins going up to 12%-13%, and then just, you know, self-help in terms of the cost side, efficiencies, et cetera. I think that's the best way to look at it.
Got another question through the webcast. This is from Thomas Streeter of Streeter Research. Can you talk about the risks and opportunities for gas pipelines being upgraded to manage hydrogen flows, given the different material needs that requires?
I think you're asking about the upside for us on the pipeline side with hydrogen?
Yeah.
Yeah, it's really-
That's great.
We're not in the pipeline business, so there's really nothing there that is going to affect us. You know, hydrogen right now really isn't on our radar screen in any aspect of that.
Thank you. There's no more questions over the webcast or in the room. So, Jim, if you'd just like to-
Great.
Any closing comments?
Well, I thank you all for being here. Again, thank you to everybody listening, to our customers around the world. None of us would be here without them, and we have a very blue chip customer base that we're very proud of. We're looking forward to this year continuing in the right direction for us. We think we've got some great upside, good set of results. So again, thank you for your time. I wanna thank my team again for everything they do, and I guess I'll see you in mid-year.