DJ HMS Group Reports 9m 2020 EBITDA of Rub 3.4 billion
HMS Group (HMSG)
HMS Group Reports 9m 2020 EBITDA of Rub 3.4 billion
11-Dec-2020 / 17:00 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
HMS Group Reports 9m 2020 EBITDA of Rub 3.4 billion
Moscow, Russia - December 11, 2020 - HMS Group Plc (the "Group") (LSE:
HMSG), the leading pump, oil & gas equipment and compressor manufacturer and
provider of flow control solutions and related services in Russia and the
CIS, today announces its financial results for the nine months ended
September 30, 2020.
Financial highlights 9m 2020:
- Revenue: Rub 31.5 bn (-14% yoy)
- EBITDA[1]: Rub 3.4 bn (-1% yoy), EBITDA margin at 10.7%
- Operating profit: Rub 1.2 bn (-23% yoy)
- Loss for the period: Rub 224 mn
- Total debt: Rub 22.8 bn (+8% yoy)
- Net debt: Rub 13.9 bn (-18% yoy)
- Net debt-to-EBITDA LTM ratio: 2.89x
Operational highlights 9m 2020:
- Backlog: Rub 68.2 bn (+65% yoy)
- Order intake: Rub 49.8 bn (+37% yoy)
FY 2020 Guidance:
- Revenue: Rub 50-55 bn
- EBITDA: Rub 4.7-5 bn
- Current operating results don't imply net income for FY2020
- It's unlikely that HMS will pay dividends for FY2020, taking into
account expected annual results and aggregate macroeconomic risks
GROUP PERFORMANCE
9 months 2020 financial Results
in millions of 9m 2020 9m 2019 Change yoy 3Q 2020 2Q Change
Rub 2020 qoq
Orders 49,758 36,227 37% 19,359 7,256 167%
Backlog 68,175 41,395 65% 68,175 55,02 24%
3
Revenue 31,477 36,681 -14% 11,978 10,38 15%
3
EBITDA 3,371 3,392 -1% 1,264 1,030 23%
EBITDA margin 10.7% 9.2% 10.6% 9.9%
(Loss)/Profit (224) 191 na 90 (161) na
for the period
Free cash 884 (2,623) na 2,397 (3,60 na
flow/(outflow) 4)
HMS' orders portfolios demonstrate signs of recovery after a downswing in 2Q
2020, caused by the COVID-19.
Order intake grew to Rub 49.8 billion, by 37% yoy, compared with Rub 36.2
billion for 9 months 2019. Compressor and oil & gas equipment large
contracts contributed almost Rub 23 billion to the order intake portfolio,
compared with Rub 8.2 billion for 9 months 2019.
Backlog extended its record high and reached Rub 68.2 billion, up by 65%
yoy, compared with Rub 41.4 billion last year. The compressors business
segment was the main giver to this growth. In terms of contracts type, both
recurring business and large contracts grew, compared with 9 months 2019.
Revenue declined to Rub 31.5 billion, by 14% yoy, compared with Rub 36.7
billion for 9 months 2019, mainly due to a 34 percent decrease of the
compressors business segment.
EBITDA was down to Rub 3.4 billion, by a minor 1% yoy, also mainly due to
the compressors. EBITDA margin increased to 10.7%, compared with 9.2% for 9
months 2019.
Revenue from recurring business declined by 7% yoy, and revenue from large
projects was down by 30% yoy. EBITDA from recurring business increased by
15% yoy, and, in contrast, EBITDA from large contracts declined by 16% yoy.
Loss for 9 months 2020 was Rub 224 million, compared with profit for the
period at Rub 191 million for 9 months 2019. In comparison with 6 months
2020, loss for 9 months got smaller, down from Rub 314 million loss.
Free cash inflow was Rub 884 million, compared with Rub 2.6 billion outflow
for 9 months 2019, despite lower revenue, compared with 9 months 2019, due
to a cost-optimization program.
Expenses and Operating profit
in millions of 9m 9m 2019 Change Share of Share of
Rub 2020 yoy 9m 2020 9m 2019
revenue revenue
Cost of sales 25,166 29,626 -15% 80.0% 80.8%
Materials and 16,940 20,582 -18% 53.8% 56.1%
components
Labour costs incl 5,094 5,238 -3% 16.2% 14.3%
Social taxes
Depreciation and 1,586 1,444 10% 5.0% 3.9%
amortization
Construction and 1,378 1,561 -12% 4.4% 4.3%
design [2]
Others 168 803 -79% 0.5% 2.2%
Cost of sales was down to Rub 25.2 billion by 15% yoy, compared with Rub
29.6 billion for 9 months 2019, due to materials and components (-18% yoy)
and change in work in progress and finished goods. Materials and components
declined because of both lower HMS' revenue and lower share of large
contracts under execution in the reporting period.
Gross profit was down to Rub 4.3 billion, by 11% yoy, compared with Rub 7.1
billion for 9 months 2019.
in millions of 9m 9m 2019 Change yoy Share of Share of 9m
Rub 2020 9m 2020 2019
revenue revenue
Gross profit 6,311 7,055 -11% 20.0% 19.2%
Distribution 1,344 1,402 -4% 4.3% 3.8%
and
transportation
General and 3,597 3,981 -10% 11.4% 10.9%
administrative
SG&A expenses 4,941 5,382 -8% 15.7% 14.7%
Other operating 154 90 72% 0.5% 0.2%
expenses
Operating 5,095 5,472 -7% 16.2% 14.9%
expenses ex.
Cost of sales
Operating 1,215 1,583 -23% 3.9% 4.3%
profit
Finance costs 1,438 1,292 11% 4.6% 3.5%
Distribution and transportation expenses were down by 4% yoy, mainly due to
reduced marketing expenses. As a share of revenue, distribution and
transportation expenses was up to 4.3%, compared with 3.8% last year.
General and administrative expenses were down by 10% yoy to Rub 3.6 billion,
compared with Rub 4.0 billion last year, mainly due to a 10 percent decrease
in labor costs and related social taxes. As a share of revenue, general and
administrative expenses were up to 11.4% from 10.9% for 9 months 2019.
As a result, SG&A expenses[3] declined by 8% yoy, but as a share of revenue
they were up to 15.7%, compared with 14.7% for 9 months 2019.
Operating profit was Rub 1.2 billion, compared with Rub 1.6 billion for 9
months 2019, down by 23%.
in millions of Rub 9m 2020 9m 2019 Change yoy
Finance costs 1,438 1,292 11%
Interest expenses 1,398 1,279 9%
Interest rate, average 8.13% 8.72%
Interest rate Rub, average 8.26% 8.89%
Finance costs increased to Rub 1.4 billion, compared with Rub 1.3 billion
for 9 months 2019. The reason was a 9 percent increase in interest expenses
due to a higher level of total debt (+8% yoy).
Average interest rates decreased to 8.13% p.a., compared with 8.72% p.a.
last year.
BUSINESS SEGMENTS PERFORMANCE
Industrial pumps[i]
in 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
millions
of Rub
Orders 13,343 16,423 -19% 5,329 3,499 52%
Backlog 19,749 18,834 5% 19,749 19,685 0%
Revenue 13,945 13,904 0% 5,657 4,594 23%
EBITDA 1,816 1,871 -3% 797 545 46%
EBITDA 13.0% 13.5% 14.1% 11.9%
margin
Industrial pumps' order intake declined by 19% yoy to Rub 13.3 billion,
compared with Rub 16.4 billion for 9 months 2019. The main reason was that
there wasn't any large contract signed in the reporting period. Nine months'
order intake was fully made of the regular business.
Backlog grew by 5% yoy to Rub 19.8 billion, compared with Rub 18.8 billion
for 9 months 2019.
Revenue stood almost unchanged at Rub 13.9 billion, based on the recurring
business. EBITDA declined to Rub 1.8 billion, by 3% yoy, compared with Rub
1.9 billion for 9 months 2019, due to a larger share of the recurring
business in the reporting period that has a lower profitability. EBITDA
margin was 13.0%, compared with 13.5% for 9 months 2019.
3Q 2020 financial results demonstrated signs of recovery. Revenue grew by
23% qoq and EBITDA was up 46% qoq that resulted in EBITDA margin of 14.1%,
compared with 11.9% in 2Q 2020.
Oil and Gas equipment & projects (OGEP)[ii]
in 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
millions
of Rub
Orders 10,237 11,096 -8% 3,514 1,789 96%
Backlog 9,916 9,374 6% 9,916 8,282 20%
Revenue 8,394 8,599 -2% 3,241 2,078 56%
EBITDA 290 (171) na 47 (111) na
EBITDA 3.5% -2.0% 1.4% -5.3%
margin
Order intake declined to Rub 10.2 billion, by 8% yoy, compared with Rub 11.1
billion for 9 months 2019, due to substantially less contracts signed in 2Q
2020. In 3Q 2020, order intake grew almost twofold, compared with 2Q 2020,
based on the grown recurring orders portfolio and a large contract signed.
Backlog was up by 6% yoy to Rub 9.9 billion, compared with Rub 9.4 billion
for 9 months 2019.
Revenue declined to Rub 8.4 billion, by 2% yoy, compared with Rub 8.6
billion for 9 months 2019. EBITDA was up to Rub 290 million, compared with
Rub (171) million, and EBITDA margin was 3.5% vs. (2.0)% for 9 months 2019,
thanks to the recovery of recurring business after the deterioration in 2Q
2020.
Compressors[iii]
in 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
millions
of Rub
Orders 25,963 8,578 203% 10,512 1,961 436%
Backlog 36,859 11,931 209% 36,859 26,366 40%
Revenue 8,868 13,326 -33% 3,075 3,599 -15%
EBITDA 1,142 1,266 -10% 489 432 13%
EBITDA 12.9% 9.5% 15.9% 12.0%
margin
(MORE TO FOLLOW) Dow Jones Newswires
December 11, 2020 09:00 ET (14:00 GMT)
DJ HMS Group Reports 9m 2020 EBITDA of Rub 3.4 -2-
Order intake grew threefold to Rub 26.0 billion, compared with Rub 8.6
billion. Backlog increased also threefold to Rub 36.9 billion, compared with
Rub 11.9 billion last year. The growth of orders portfolios was based on
both the recurring business and large contracts.
Revenue was down by 33% yoy to Rub 8.9 billion, compared with Rub 13.3
billion. EBITDA declined by 10% yoy to Rub 1.1 billion, compared with Rub
1.3 billion for 9 months 2019. EBITDA margin was up to 12.9%, compared with
9.5% for 9 months 2019.
In the first three quarters of 2019 there was a drop in order intake that
led to lower financial results for 9 months 2020. The situation has
recovered, based on the current order portfolio.
Construction[iv]
in 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
millions
of Rub
Orders 215 129 66% 5 7 -26%
Backlog 1,652 1,256 32% 1,652 690 139%
Revenue 580 1,098 -47% 174 169 3%
EBITDA (20) 49 na (59) 17 na
EBITDA -3.4% 4.5% -34.0% 9.8%
margin
Order intake equaled Rub 215 million. Backlog was up to Rub 1.7 billion.
Revenue was down to Rub 580 million, compared with Rub 1.1 billion for 9
months 2019. EBITDA was Rub (20) million, compared with Rub 49 million last
year.
Working capital and Capital expenditures
in millions 9m 2020 9m 2019 Change 3Q 2020 2Q 2020 Change
of Rub yoy qoq
Working 8,715 11,522 -24% 8,715 10,486 -17%
capital
Working 18.9% 20.1% 18.9% 22.1%
capital /
Revenue LTM
Capex 1,141 1,203 -5% 399 408 -2%
Acquisition 0 670 - -
Working capital declined to Rub 8.7 billion, by 24% yoy, compared with Rub
11.5 billion for 9 months 2019, due to a quarterly volatility, related to
execution of large contracts. As a share of revenue, working capital was
down to 18.9%, compared with 20.1% for 9 months 2019.
HMS continued reducing its maintenance capital expenditures. They were
decreased to Rub 1.1 billion, by 5% yoy, compared with Rub 1.2 billion last
year.
DEBT POSITION
in 9m 2020 9m 2019 Change yoy 3Q 2020 2Q 2020 Change qoq
millions
of Rub
Total debt 22,832 21,115 8% 22,832 22,752 0%
Net debt 13,897 16,960 -18% 13,897 16,177 -14%
Net debt / 2.89 2.98 2.89 3.25
EBITDA LTM
Total debt increased to Rub 22.8 billion, by 8% yoy, compared with Rub 21.1
billion for 9 months 2019. Net debt, in contrast, was down to Rub 13.9
billion, by 18% yoy, compared with Rub 17.0 billion for 9 months 2019.
Net debt to EBITDA LTM ratio decreased to 2.89x compared with 2.98x for 9
months 2019.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE & FINANCIAL MANAGEMENT
FINANCIAL MANAGEMENT
After the reporting date, HMS Group shifted a number of debt repayments from
2022 to 2023.
HMS' debt repayment schedule, Rub mn 2020 2021 2022 2,023
Debt to be repaid 167 1,229 13,187 7,233
LARGE CONTRACTS
After the reporting date, in November 2020, HMS announced the signature of a
compressor contract worth Rub 3.2 billion to manufacture gas transportation
units to be installed at a client's oil & gas condensate field.
Also, in December 2020, the company announced the signature of a Rub 1.3
billion contract to engineer and manufacture pumping stations to be
installed at a client's gas condensate field.
***
HMS GROUP WILL NOT HOLD THE WEBCAST DUE TO THE COVID-2019 SITUATION AND
WORKING IN THE REMOTE MODE.
Contacts: ir@hms.ru [1]
***
HMS Group is the leading pump and compressor manufacturer, as well as
provider of flow control solutions and related services to the oil and gas,
nuclear and thermal power generation and water utilities sectors in Russia
and the CIS. HMS Group's products are mission-critical elements of projects
across a diverse range of industries. It has participated in a number of
large-scale infrastructure projects in Russia, including providing pumps and
modular equipment to the Vankor oil field and pumping stations on recent
trunk pipelines projects linking Russia's core oil producing areas to export
ports on the Pacific Ocean and Baltic Sea. HMS Group's global depositary
receipts ("GDRs") are listed under the symbol "HMSG" on the London Stock
Exchange.
Press Release Information Accuracy Disclaimer
Information published in press releases was accurate at the time of
publication but may be superseded by subsequent releases or other
information.
LEI: 254900DDFETNLASV8M53
=---------------------------------------------------------------------------
[1] EBITDA is defined as operating profit/(loss) adjusted for other
operating income/expenses, depreciation and amortisation, amortisation of
government grants, impairment of assets, excess of fair value of net assets
acquired over the cost of acquisition, defined benefits scheme expense and
provisions (including provision for obsolete inventory, ECL allowance and
provision for impairment of trade and other receivables and other financial
assets, unused vacation allowance, warranty provision, provision for legal
claims, tax provision and other provisions). This measurement basis,
therefore, excludes the effects of a number of non-recurring income and
expenses on the results of the operating segments.
[2] Construction and design and engineering services of subcontractors
[3] SG&A expenses - Selling, General and Administrative Expenses, compiled
of distribution & transportation expenses plus general & administrative ones
=---------------------------------------------------------------------------
[i] The industrial pumps business segment designs, engineers, manufactures
and supplies a diverse range of pumps and pump-based integrated solutions to
customers in the oil and gas, power generation and water utilities sectors
in Russia, the CIS and internationally. The business segment's principal
products include customized pumps and integrated solutions as well as pumps
built to standard specifications; it also provides aftermarket maintenance
and repair services and other support for its products.
[ii] The oil and gas equipment and projects business segment manufactures,
installs and commissions modular pumping stations, automated metering
equipment, oil, gas and water processing and preparation units and other
equipment and systems for use primarily in oil extraction and
transportation. The segment's core products are equipment packages and
systems installed inside a self-contained, free-standing structure which can
be transported on trailers and delivered to and installed on the customer's
site as a modular but fully integrated part of the customer's technological
process.
[iii] The compressors business segment designs, engineers, manufactures and
supplies a diverse range of compressors and compressor-based solutions,
including compressor units and compressor stations, to customers in the oil
and gas, metals and mining and other basic industries in Russia. The
business segment's principal products include customized compressors,
series-produced compressors built to standard specifications, and
compressor-based integrated solutions.
[iv] The construction provides construction works for projects for customers
in the oil upstream and midstream, gas upstream.
ISIN: US40425X4079
Category Code: QRT
TIDM: HMSG
LEI Code: 254900DDFETNLASV8M53
OAM Categories: 1.3. Payments to governments
2.2. Inside information
2.3. Major shareholding notifications
Sequence No.: 89560
EQS News ID: 1154665
End of Announcement EQS News Service
1: mailto:ir@hms.ru'subject=Re%20conf%20call
(END) Dow Jones Newswires
December 11, 2020 09:00 ET (14:00 GMT)
