Revenue up 24% - EBITDA up 67%
TORONTO and MARSEILLE, France, May
3, 2022 /CNW/ - Foraco International SA (TSX: FAR) (the
"Company" or "Foraco"), a leading global provider of mineral
drilling services, today released its unaudited financial results
for the first quarter 2022. All figures are expressed in US Dollars
(US$) unless otherwise indicated.
"The first quarter of 2022 was another successful step for
Foraco and we are pleased to report that our revenue for the
period was US$67.7 million, up 24%
compared to the same quarter last year. South America (+116%), Asia Pacific (+37%) and North America (+16%) are leading this
increase. This performance is remarkable given the outbreak of
highly contagious Covid Omicron strain which hit a lot of regions
in the quarter and disrupted many operations worldwide. The rigs
utilization rate reached an average of 53% in Q1 2022 compared to
48% in Q1 2021, a satisfactory level for a first quarter that is
generally seasonally lower". said Daniel
Simoncini, Chairman and Co-CEO. "In the present context of
favourable market conditions fueled by energy transition,
infrastructure plans and increasing water scarcity, we continue to
see sustained demand for our high added value services as customers
turn to bigger or more challenging programs. Equally, we have
identified significant organic opportunities including development
of water related services in all regions, expansion into
neighbouring countries, production drilling in targeted areas and
gradual implementation of autonomous smart rigs and advanced
digital applications."
"During the quarter we improved our profitability, thanks to the
strong performance of our operations. We also achieved to pass the
increased labour and operational costs onto selling prices during
the renegotiation of most of our long-term contracts. Our
operational performance translates into the continuing improvement
of our key profitability indicators. Q1 2022 EBITDA reached
US$ 8.5 million (12.6 % of revenue),
a 67% increase compared to Q1 2021 (US$ 5.1
million or 9.4% of revenue) and a profit after tax of
US$ 0.8 million was recorded during
the quarter". said Jean-Pierre Charmensat, Co-CEO and CFO. "During
the quarter, Capex amounted to US$ 5.6
million compared to US$ 4.4
million in Q1 2021 mainly linked to rigs and ancillary
equipment for new contracts to start in 2022. As anticipated, the
working capital requirement related to the activity also increased
to US$ 12.6 million. We have the
capacity to finance our Capex and development program while we
remain focus on continuing to take advantage of our solid financial
performances to deleverage our balance sheet and to protect the
interest of our shareholders."
Highlight – Q1 2022
Revenue
- Revenue for Q1 2022 amounted to US$ 67.7
million compared to US$ 54.6
million in Q1 2021, an increase of 24%.
- Rig utilization rate was 53% in Q1 2022 compared to 48% in Q1
2021.
Profitability
- Q1 2022 gross margin including depreciation within cost of
sales was US$ 9.6 million (or 14.1%
of revenue) compared to US$ 6.1
million (or 11.1% of revenue) in Q1 2021, an increase of
58%.
- Ongoing contracts reported solid performances. Increased costs
were passed on most of the new selling prices upon the renewal and
the renegotiation of long term contracts.
- During the quarter, EBITDA amounted to US$ 8.6 million (or 12.6% of revenue), compared
to US$ 5.1 million (or 9.4% of
revenue) for the same quarter last year, an increase of 67 %.
Selected financial data
Income Statement
(In thousands of
US$)
(unaudited)
|
|
Three-month
period ended
March 31,
|
|
|
|
2022
|
|
2021
|
|
|
|
|
|
|
Revenue
|
|
|
67,740
|
|
54,551
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit /
(loss) (1)
|
|
|
9,560
|
|
6,061
|
As a percentage of
sales
|
|
|
14.1%
|
|
11.1%
|
|
|
|
|
|
|
EBITDA
|
|
|
8,527
|
|
5,114
|
As a percentage of
sales
|
|
|
12.6%
|
|
9.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit /
(loss)
|
|
|
3,609
|
|
803
|
As a percentage of
sales
|
|
|
5.3%
|
|
1.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit / (loss) for
the period
|
|
|
778
|
|
(965)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
Equity holders of the
Company
|
|
|
428
|
|
(995)
|
Non-controlling
interests
|
|
|
350
|
|
30
|
|
|
|
|
|
|
EPS (in US
cents)
|
|
|
|
|
|
Basic
|
|
|
0.43
|
|
(1.11)
|
Diluted
|
|
|
0.42
|
|
(1.11)
|
(1)
|
includes amortization
and depreciation expenses related to operations.
|
Financial results
Revenue
(In thousands of US$) -
(unaudited)
|
Q1
2022
|
%
change
|
Q1
2021
|
Reporting
segment
|
|
|
|
Mining...............................................
|
59,350
|
32%
|
45,102
|
Water................................................
|
8,390
|
-11%
|
9,449
|
Total
revenue.....................................
|
67,740
|
24%
|
54,551
|
|
|
|
|
Geographic
region
|
|
|
|
North
America......................................
|
21,600
|
16%
|
18,635
|
Europe, Middle East and
Africa...................
|
15,168
|
-19%
|
18,828
|
South
America......................................
|
20,698
|
116%
|
9,580
|
Asia
Pacific..........................................
|
10,274
|
37%
|
7,508
|
Total
revenue.....................................
|
67,740
|
24%
|
54,551
|
|
|
|
|
Revenue for the quarter increased from US$ 54.6 million in Q1 2021 to US$ 67.7 million in Q1 2022 (+ 24%).
The increase in revenue in the Mining segment is the result of
the favorable market dynamics with long-term rolling contracts
started in 2021 and the capacity of the Company to deliver. The
water activity decreased by 11% mainly due to the phasing of
contracts compared to last year.
Activity in North America
increased 16% with revenue at US$ 21.6
million in Q1 2022 compared to US$
18.6 million in Q1 2021. This increase is mainly linked to
the rolling of long-term contracts.
In EMEA, revenue for the quarter was US$
15.2 million compared to US$ 18.8
million in Q1 2021, a decrease of 18%. In Africa, activity decreased by 41% compared to
Q1 2021 mainly due to the phasing of contracts. The activity was
stable in the other regions (Europe and CIS).
Revenue in South America
increased by 116% to US$ 20.7 million
in Q1 2022 (US$ 9.6 million in Q1
2021). This increase is mainly linked to new contracts mobilized
during the first quarter and the lower impact of the pandemic which
disrupted the region during the same period last year.
In Asia Pacific, Q1 2022
revenue amounted to US$ 10.3 million,
an increase of 37% reflecting quarter over quarter the ongoing
improvement of the activity.
Gross Profit
(In thousands of US$) -
(unaudited)
|
Q1
2022
|
%
change
|
Q1
2021
|
|
Reporting
segment
|
|
|
|
|
Mining...............................................
|
7,715
|
62%
|
4,752
|
|
Water................................................
|
1,845
|
43%
|
1,289
|
|
Total gross
profit ................................
|
9,560
|
58%
|
6,061
|
|
The Q1 2022 gross margin including depreciation within cost of
sales was US$ 9.6 million (or 14.1%
of revenue) compared to US$ 6.1
million (or 11.1% of revenue) in Q1 2021. Ongoing contracts
reported expected performances. All regions operated in a tight
labor market generating inflation on costs and impacting project
gross margins. Some of these cost increases were not yet
compensated in our selling prices.
Selling, General and Administrative Expenses
(In thousands of US$) -
(unaudited)
|
Q1
2022
|
%
change
|
Q1
2021
|
|
|
Selling, general and
administrative expenses
|
5,951
|
14%
|
5,238
|
SG&A increased compared to the same quarter last year mainly
due to the level of activity. As a percentage of revenue, SG&A
decreased from 9.6% in Q1 2021 to 8.8% in Q1 2022.
Operating result
(In thousands of US$) -
(unaudited)
|
Q1
2022
|
%
change
|
Q1 2021
|
Reporting
segment
|
|
|
|
Mining
...................................................................
|
2,501
|
n/a
|
421
|
Water....................................................................
|
1,108
|
n/a
|
382
|
Total operating
profit (loss)
.......................................
|
3,609
|
n/a
|
803
|
|
|
|
|
The operating profit was US$ 3.6
million, resulting in a US$ 2.8
million increase thanks to the increased activity and
the continued control over the operations and costs.
Financial position
The following table provides a summary of the Company's cash
flows for Q1 2022 and Q1 2021:
(In thousands of
US$)
|
Q1
2022
|
Q1
2021
|
|
|
|
|
|
Cash generated by
operations before working capital requirements
|
8,527
|
5,114
|
|
|
|
|
|
Working capital
requirements
|
(12,615)
|
(7,655)
|
|
Income tax
paid
|
(2,586)
|
(1,240)
|
|
Purchase of equipment
in cash
|
(5,235)
|
(4,418)
|
|
|
|
|
|
Free Cash Flow
before debt servicing
|
(11,910)
|
(8,199)
|
|
|
|
|
|
Debt
variance
|
5,422
|
3,906
|
|
Interests
paid
|
(2,365)
|
(534)
|
|
Acquisition of treasury
shares
|
(313)
|
(154)
|
|
Dividends paid to
non-controlling interests
|
-
|
-
|
|
|
|
|
|
Net cash generated /
(used in) financing activities
|
2,745
|
3,218
|
|
|
|
|
|
Net cash
variation
|
(9,165)
|
(4,881)
|
|
|
|
|
|
Foreign exchange
differences
|
232
|
329
|
|
|
|
|
|
Variation in cash
and cash equivalents
|
(8,933)
|
(4,653)
|
|
|
|
|
|
Cash and cash
equivalents at the end of the period
|
14,991
|
16,310
|
|
In Q1 2022, the cash generated from operations before working
capital requirements amounted to US$ 8.5
million compared to US$ 5.1
million in Q1 2021.
In Q1 2022, the working capital requirement was US$12.6 million compared to a US$ 7.7 million in the same period last year.
This is mainly linked to the improved activity requiring higher
inventories and resulting in higher receivables at quarter end
which is only partially offset by the increased amounts payable to
suppliers.
During the period, Capex totaled US$ 5.2
million in cash compared to US$ 4.4
million in Q1 2021. Capex essentially relates to the
acquisition of rigs, major rig overhauls, ancillary equipment and
rods.
As at March 31, 2022, the maturity
of financial debt can be analyzed as presented in the table
below:
|
March 31,
2022
|
|
|
Credit lines
|
7,661
|
Long-term
debt
|
|
Within one year
|
7,437
|
Between 1 and 2 years
|
10,216
|
Between 2 and 3 years
|
9,919
|
Between 3 and 4 years
|
74,464
|
|
|
Total
|
109,696
|
As at March 31, 2022, cash and
cash equivalents totaled US$
15.0 million compared to US$
23.9 million as at December 31,
2021. Cash and cash equivalents are mainly held at or
invested within top tier financial institutions.
As at March 31, 2022, the net debt
including operational lease obligations (IFRS 16) amounted to
US$ 100.8 million (US$ 85.7 million as at December 31, 2021).
Bank guarantees as at March 31,
2022 totaled US$
5.7 million compared to US$
9.0 million as at December 31, 2021. The
Company benefits from a confirmed contract guarantee line of € 6.5
million (US$ 7.1 million).
Covid 19
The Company continues to report improved key profitability
indicators compared to pre-Covid-19 activity in the context of
favourable market conditions. While the Company believes that the
worst of the impacts of Covid-19 on the business have been felt,
there remains a level of uncertainty.
Impairment testing
As at December 31, 2021, the
Company performed impairment tests at the level of each geographic
region using the carrying value of the Company's long-lived assets
based on the expected discounted cash flows method. Based on the
internal forecasts and projections made, the expected discounted
future cash flows exceeded each of the long-lived asset's carrying
amount for each geographic region and accordingly no impairment was
recognized as at December 31,
2021.
Based on the current activity trend, the Company considers that
there is no triggering event which would justify an impairment
testing as at March 31, 2022.
Currency exchange
rates
The exchange rates for the periods under review are provided in
the Management's Discussion and Analysis of Q1 2022
Non-IFRS measures
EBITDA represents Net income before interest expense, income
taxes, depreciation, amortization and non-cash share based
compensation expenses. EBITDA is a non-IFRS quantitative measure
used to assist in the assessment of the Company's ability to
generate cash from its operations. The Company believes that the
presentation of EBITDA is useful to investors as this is frequently
used by securities analysts, investors and other interested parties
in the evaluation of companies in the drilling industry. EBITDA is
not defined in IFRS and should not be considered as an alternative
to Profit for the period or Operating profit or any other financial
metric required by such accounting principles.
Net debt corresponds to the current and non-current portions of
borrowings and the consideration of payables related to
acquisitions, net of cash and cash equivalents. The lease
obligations are included in the net debt calculation.
Reconciliation of EBITDA is as follows:
(In thousands of
US$)
(unaudited)
|
Q1
2022
|
Q1
2021
|
|
|
|
|
|
|
Operating profit /
(loss)..............................................
|
3,609
|
803
|
|
|
|
|
|
|
Depreciation expense
................................................
|
4,848
|
4,261
|
|
|
|
|
|
|
Non-cash employee
share-based compensation....................
|
70
|
50
|
|
|
|
|
|
|
EBITDA
...............................................................
|
8,527
|
5,114
|
|
|
|
|
|
|
Conference call and
webcast
On May 3, 2022, Company Management
will conduct a conference call at 10:00 am
ET to review the financial results. The call will be hosted
by Daniel Simoncini, Chairman and
co-CEO, and Jean-Pierre Charmensat, co-CEO and CFO.
You can join the call by dialing 1-888-231-8191 or
1-647-427-7450. You will be put on hold until the conference call
begins. A live audio webcast of the Conference Call will also be
available through:
https://produceredition.webcasts.com/starthere.jsp?ei=1546527&tp_key=9d35dbb788
An archived replay of the webcast will be available for 90
days.
About Foraco International
SA
Foraco International SA (TSX: FAR) is a leading global mineral
drilling services company that provides a comprehensive and
reliable service offering in mining and water projects. Supported
by its founding values of integrity, innovation and involvement,
Foraco has grown into the third largest global drilling enterprise
with a presence in 22 countries across five continents. For more
information about Foraco, visit www.foraco.com.
"Neither TSX Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Exchange) accepts
responsibility for the adequacy or accuracy of this release."
Caution concerning
forward-looking statements
This document may contain "forward-looking statements" and
"forward-looking information" within the meaning of applicable
securities laws. These statements and information include
estimates, forecasts, information and statements as to Management's
expectations with respect to, among other things, the future
financial or operating performance of the Company and capital and
operating expenditures. Often, but not always, forward-looking
statements and information can be identified by the use of words
such as "may", "will", "should", "plans", "expects", "intends",
"anticipates", "believes", "budget", and "scheduled" or the
negative thereof or variations thereon or similar terminology.
Forward-looking statements and information are necessarily based
upon a number of estimates and assumptions that, while considered
reasonable by Management, are inherently subject to significant
business, economic and competitive uncertainties and contingencies.
Readers are cautioned that any such forward-looking statements and
information are not guarantees and there can be no assurance that
such statements and information will prove to be accurate and
actual results and future events could differ materially from those
anticipated in such statements. Important factors that could cause
actual results to differ materially from the Company's expectations
are disclosed under the heading "Risk Factors" in the Company's
Annual Information Form dated March 30,
2022, which is filed with Canadian regulators on SEDAR
(www.sedar.com). The Company expressly disclaims any intention or
obligation to update or revise any forward-looking statements and
information whether as a result of new information, future events
or otherwise. All written and oral forward-looking statements and
information attributable to Foraco or persons acting on our behalf
are expressly qualified in their entirety by the foregoing
cautionary statements.
SOURCE Foraco International SA