Revenue Up 26% - Utilization rate reaches
60%
TORONTO and MARSEILLE, France, Nov.
3, 2021 /CNW/ - Wednesday November 3, 2021. 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 third quarter 2021. All figures
are expressed in US Dollars (US$) unless otherwise indicated.
"We are pleased to report that our revenue for the third quarter
2021 was US$ 70.6 million, up 26%
yoy. The rig utilization rate reached an average of 60% this
quarter compared to 49% for the same quarter in 2020. Our financial
performance for the third quarter 2021 reflected both the strong
market demand and our operational performance. Nonetheless we
were impacted by the general economical context with increasing
supply chain disruptions, labour constraints and inflationary costs
pressures which are expected to continue in the upcoming quarters.
We are working on mitigating the impact of these factors and on
passing additional costs through price increases upon renewal of
our long-term contracts but there is often a lag effect before it
becomes fully effective" said Daniel
Simoncini, Chairman and Co-CEO. "All geographical areas once
again ended the quarter with like-for-like growth despite the
impact of Covid-19 restrictions and tighter labour markets. There
were remarkable performances in Russia, Brazil and Canada. We are confident that our business
model characterized by its long-term focus and balanced business
mix will continue to show its efficiency and its resilience."
"In this context of increased activity, we are pleased to also
report a solid financial performance with an EBITDA for the quarter
at US$ 13.8 million. On a TTM basis,
we post a revenue of US$ 255.0
million and an EBITDA of US$ 41.5
million. We also managed to keep control of our working
capital requirement and financed our Capex with our operating cash
flow. Our capital investment plans remain focused on demand growth
and we will continue to deploy our capital thoughtfully." said
Jean-Pierre Charmensat, Co-CEO and CFO". As previously disclosed,
we completed on July 7 our financial
reorganization which allowed us to drastically reshape and
de-leverage the Company's balance sheet with a significantly
accretive transaction for our shareholders. At the end of the third
quarter our net debt was US$ 86.1
million, our leverage ratio 2.1 and our net debt / equity
ratio 1.3. We are pleased to note that the financial community
Market started to recognize our track record and our capacity to
pursue profitable growth."
Income Statement
(In thousands of
US$)
(unaudited)
|
|
Three-month period ended
September 30,
|
|
Nine-month period ended
September 30,
|
|
|
2021
|
2020
|
|
2021
|
2020
|
|
|
|
|
|
|
|
Revenue
|
|
70,574
|
55,924
|
|
200,793
|
152,945
|
|
|
|
|
|
|
|
Gross profit / (loss)
(1)
|
|
14,858
|
12,836
|
|
36,708
|
29,262
|
As a percentage of
sales
|
|
21.1%
|
23.0%
|
|
18.3%
|
19.1%
|
|
|
|
|
|
|
|
EBITDA
|
|
13,802
|
11,582
|
|
33,621
|
26,208
|
As a percentage of
sales
|
|
19.6%
|
20.7%
|
|
16.7%
|
17.1%
|
|
|
|
|
|
|
|
Operating profit /
(loss)
|
|
8,988
|
7,623
|
|
19,840
|
13,808
|
As a percentage of
sales
|
|
12.7%
|
13.6%
|
|
9.9%
|
9.0%
|
|
|
|
|
|
|
|
Profit / (loss) for
the period
|
|
32,093
|
4,247
|
|
36,785
|
5,459
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
Equity holders of the
Company
|
|
30,408
|
2,949
|
|
33,219
|
2,633
|
Non-controlling
interests
|
|
1,685
|
1,298
|
|
3,566
|
2,827
|
|
|
|
|
|
|
|
EPS (in US
cents)
|
|
|
|
|
|
|
Basic
|
|
30.91
|
3.28
|
|
35.78
|
2.93
|
Diluted
|
|
29.90
|
3.19
|
|
34.60
|
2.86
|
|
(1)
This line item includes amortization and depreciation expenses
related to operations
|
Highlights – Q3 2021
Balance Sheet
- On July 7, 2021, the Company
finalized its financial reorganization through the raising of
US$ 100 million of new bonds and the
early redemption of its euro-denominated bonds maturing in
May 2022.
- The net debt after the impact of the financial reorganization
and of IFRS 16 was US$ 86.1 million
as at September 30, 2021 compared to
US$ 141.7 million as at December 31, 2020.
- Following this reorganization, the net debt to equity ratio is
1.3 and the leverage ratio (Net debt / TTM EBITDA) is 2.1.
Revenue
- Revenue of the period amounted to US$
70.6 million compared to US$ 55.9
million in Q3 2020, an increase of 26%. The Company
benefited from favourable market dynamics compared to 2020,
- This trend is confirmed by the rig utilization rate which was
60% in Q3 2021 compared to 49% in Q3 2020.
Profitability
- The Q3 2021 gross margin including depreciation within cost of
sales was US$ 14.9 million (or 21.1%
of revenue) compared to US$ 12.8
million (or 23.0% of revenue) in Q3 2020. Ongoing contracts
reported solid performances while some costs increased are not yet
compensated in the selling prices.
- During the quarter, EBITDA amounted to US$ 13.8 million (or 19.6% of revenue), a 19%
increase compared to US$ 11.6 million
(or 20.7% of revenue) for the same quarter last year.
Highlights – YTD Q3 2021
Revenue
- YTD Q3 2021 revenue amounted to US$
200.8 million compared to US$ 152.9
million in YTD Q3 2020 an increase of 31%.
Profitability
- YTD Q3 2021 gross margin including depreciation within cost of
sales was US$ 36.7 million (or 18.3%
of revenue) compared to US$ 29.3
million (or 19.1% of revenue) in YTD Q3 2020.
- During the period, EBITDA amounted to US$ 33.6 million (or 16.7% of revenue), compared
to US$ 26.2 million (or 17.1% of
revenue) for the same period last year.
Financial results
Revenue
(In thousands of US$)
- (unaudited)
|
Q3
2021
|
%
change
|
Q3
2020
|
YTD Q3
2021
|
%
change
|
YTD Q3
2020
|
Reporting
segment
|
|
|
|
|
|
|
Mining............................................................
|
61,793
|
41%
|
43,790
|
171,632
|
38%
|
124,298
|
Water.............................................................
|
8,781
|
-28%
|
12,134
|
29,161
|
2%
|
28,647
|
Total
revenue................................................
|
70,574
|
26%
|
55,924
|
200,793
|
31%
|
152,945
|
|
|
|
|
|
|
|
Geographic
region
|
|
|
|
|
|
|
North
America.................................................
|
25,131
|
23%
|
20,423
|
69,489
|
38%
|
50,269
|
Europe, Middle East
and Africa...........................
|
19,684
|
15%
|
17,118
|
62,985
|
26%
|
49,981
|
South
America.................................................
|
14,057
|
71%
|
8,228
|
36,456
|
52%
|
24,031
|
Asia
Pacific......................................................
|
11,702
|
12%
|
10,155
|
31,863
|
11%
|
28,664
|
Total
revenue................................................
|
70,574
|
26%
|
55,924
|
200,793
|
31%
|
152,945
|
Q3 2021
Revenue of the quarter increased from US$
55.9 million in Q3 2020 to US$ 70.6
million in Q3 2021 (26%).
The increase in revenue in Mining segment is the result of the
favorable market dynamics. The water activity decreased by 28%
mainly due to phasing of contracts compared to last year which is
not indicative of the business trend.
Activity in North America
increased 23% with revenue at US$ 25.1
million in Q3 2021 compared to US$
20.4 million in Q3 2020. This increase is mainly linked to
new long term rolling contracts.
In EMEA revenue for the quarter was US$
19.7 million compared to US$ 17.1
million in Q3 2020, an increase of 15%. In Africa, activity decreased by 16% compared to
Q3 2020 mainly due to phasing of contracts. In Russia, activity increased by 45% thanks to
new significant contracts secured during Q1 2021.
Revenue in South America
increased by 71% at US$ 14.1 million
in Q3 2021 (US$ 8.2 million in Q3
2020). The activity in the region was particularly impacted in Q3
2020 by the effect of the pandemic which disrupted the commercial
and operational activities.
In Asia Pacific, Q3 2021
revenue amounted to US$ 11.7 million,
an increase of 12%. Contracts mobilized during the first semester
continue and will go through the end of 2022.
YTD Q3 2021
YTD Q3 2021 revenue amounted to US$ 200.8
million compared to US$ 152.9
million in YTD Q3 2020, an increase of 31%.
The increase in revenue is the result of the combination of
favorable market dynamics and the lower impact of Covid-19 on the
2021 operations.
Revenue in North America
increased by 38% to US$ 69.5 million
in YTD Q3 2021 from US$ 50.3 million
in YTD Q3 2020, a growth driven by long term contracts This
increase is also due to the fact that Q2 2020 was particularly
affected by the Covid-19 pandemic.
In EMEA, revenue increased by 26%, to US$
63.0 million in YTD Q3 2021 from US$
50.0 million in YTD Q3 2020. Both Russia and Africa areas showed sustained activity.
Revenue in South America
increased by 52% at US$ 36.5 million
in YTD Q3 2021 (US$ 24.0 million in
YTD Q3 2020). The activity in the region was particularly impacted
by the effect of the Covid-19 pandemic in YTD Q3 2020.
In Asia Pacific, YTD Q3 2021
revenue amounted to US$ 31.9 million,
an increase of 11%.
Gross profit
(In thousands of US$)
- (unaudited)
|
Q3 2021
|
%
change
|
Q3
2020
|
YTD Q3
2021
|
%
change
|
YTD Q3
2020
|
Reporting
segment
|
|
|
|
|
|
|
Mining............................................................
|
13,076
|
34%
|
9,773
|
30,698
|
40%
|
21,941
|
Water.............................................................
|
1,782
|
-42%
|
3,063
|
6,010
|
-18%
|
7,321
|
Total gross
profit / (loss) ...............................
|
14,858
|
16%
|
12,836
|
36,708
|
25%
|
29,262
|
Q3 2021
The Q3 2021 gross margin including depreciation within cost of
sales was US$ 14.9 million (or 21.1%
of revenue) compared to US$ 12.8
million (or 23.0% of revenue) in Q3 2020. Ongoing contracts
reported solid performances while some costs increased were not
compensated in our selling prices. All regions face ongoing
pressures on supply chains and procurement and operate in a tight
labor market which generates inflation on costs and impact the
project gross margins.
YTD Q3 2021
The YTD Q3 2021 gross margin including depreciation within cost
of sales was US$ 36.8 million
compared to US$ 29.3 million in YTD
Q3 2020. Ongoing contracts reported solid performances while some
new contracts in mobilization phase generated a lower percentage of
gross margin. All regions face ongoing inflationary pressures on
operating costs. There is generally a time lag before these costs
increases can be passed on through selling prices.
Selling, General and Administrative Expenses
(In thousands of US$)
- (unaudited)
|
Q3
2021
|
%
change
|
Q3
2020
|
YTD Q3
2021
|
%
change
|
YTD Q3
2020
|
Selling, general and
administrative
expenses
|
5,870
|
13%
|
5,213
|
16,868
|
9%
|
15,454
|
Q3 2021
SG&A increased compared to the same quarter last year mainly
due to the level of activity with some increased costs linked to
inflationary pressure. As a percentage of revenue, SG&A
decreased from 9.3% in Q3 2020 to 8.3% in Q3 2021.
YTD Q3 2021
SG&A increased by 9% compared to the same period last year.
As a percentage of revenue, SG&A decreased from 10.1% to 8.4%
of revenue.
Operating result
(In thousands of US$)
- (unaudited)
|
Q3
2021
|
%
change
|
Q3
2020
|
YTD Q3
2021
|
%
change
|
YTD Q3
2020
|
Reporting
segment
|
|
|
|
|
|
|
Mining
................................................................................
|
7,936
|
39%
|
5,691
|
16,299
|
74%
|
9,357
|
Water.................................................................................
|
1,052
|
-46%
|
1,932
|
3,541
|
-20%
|
4,451
|
Total operating
profit / (loss)
..............................................
|
8,988
|
18%
|
7,623
|
19,840
|
44%
|
13,808
|
Q3 2021
The operating profit was US$ 9.0
million, a US$ 1.4 million
increase as a result of the increase in activity and the continued
control over the operations and SG&A expenses.
YTD Q3 2021
The operating profit was US$ 19.8
million in YTD Q3 2021, a US$ 6.0
million improvement compared to YTD Q3 2020 as a result of
the increase in activity and the continued control over the
operations and SG&A expenses.
Financial position
The following table provides a summary of the Company's cash
flows for YTD Q3 2021 and YTD Q3 2020:
(In thousands of
US$)
|
YTD Q3
2021
|
YTD Q3
2020
|
|
|
|
Cash generated by
operations before working capital requirements
|
33,621
|
26,208
|
|
|
|
Working capital
requirements
|
(5,643)
|
(1,648)
|
Income tax
paid
|
(4,670)
|
(1,664)
|
Purchase of equipment
in cash
|
(14,677)
|
(7,313)
|
|
|
|
Free Cash Flow
before debt servicing
|
8,631
|
15,582
|
|
|
|
Proceeds from
issuance of bonds, net of issuance costs
|
95,564
|
-
|
Repayments of Bonds
including costs paid
|
(96,125)
|
-
|
Repayments of
borrowings and others
|
(4,600)
|
(7,598)
|
Interests
paid
|
(839)
|
(2,237)
|
Acquisition of
treasury shares
|
(263)
|
(27)
|
Dividends paid to
non-controlling interests
|
(1,217)
|
(1,978)
|
|
|
|
Net cash generated
/ (used in) financing activities
|
(7,480)
|
(11,840)
|
|
|
|
Net cash
variation
|
1,151
|
4,576
|
|
|
|
Foreign exchange
differences
|
207
|
(698)
|
|
|
|
Variation in cash
and cash equivalents
|
1,359
|
3,878
|
|
|
|
Cash and cash
equivalents at the end of the period
|
22,319
|
19,931
|
In YTD Q3 2021, the cash generated from operations before
working capital requirements amounted to US$
33.6 million compared to US$ 26.2
million in YTD Q3 2020.
In YTD Q3 2021, the working capital requirement was US$5.6 million compared to US$ 1.6 million in the same period last year
exclusively linked to increased activity.
During the period, the Capex was US$ 14.7
million in cash compared to US$ 7.3
million in YTD Q3 2020. The higher 2021 Capex is also driven
by the increased activity. Capex relates to acquisition of rigs,
major rigs overhauls, ancillary equipment and rods.
On July 7, 2021, the Company
finalized its financial reorganization related to the early
redemption of its euro-denominated bonds amounting to US$145,871 thousand as at June 30, 2021 maturing in May 2022 through a cash payment of US$ 96.1 million. The Company raised US$ 96.1 million net of OID and related
transaction fees. The new bonds will mature in December 2025.
As at September 30, 2021, the
maturity of financial debt can be analyzed as presented in the
table below:
|
September
30, 2021
|
|
|
Credit
lines
|
954
|
Long-term
debt
|
|
Within one
year
|
7,574
|
Between 1 and 2
years
|
10,202
|
Between 2 and 3
years
|
9,930
|
Between 3 and 4
years
|
9,626
|
Between 4 and 5
years
|
64,428
|
Total
|
102,714
|
As at September 30, 2021, cash and
cash equivalents totaled US$ 22.3
million compared to US$ 21.0
million as at December 31,
2020. Cash and cash equivalents are mainly held at or
invested within top tier financial institutions.
As at September 30, 2021, the net
debt including operation lease obligation (IFRS 16) implementation
amounted to US$ 86.1 million
(US$ 141.7 million as at December 31, 2020).
Bank guarantees as at September 30,
2021 totaled US$ 9.7 million
compared to US$ 8.1 million as at
December 31, 2020. The Company
benefits from a confirmed contract guarantee line of € 6.5 million
(US$ 7.6 million).
Strategy
The Company's strategy is to secure its position as a leading
actor in the mineral drilling services sector, assisting its
customers to explore or manage their deposits throughout the whole
cycle, with a special focus on life of mines extension activity. As
developed economies focus on "green" recovery, there will be an
increased need for key resources such as copper, nickel, lithium,
and special attention to water management. The Company anticipated
the increased environmental, social and governance (ESG)
requirements. The Company intends to develop and grow its services
offered across the world with a focus on high tech drilling
services, optimal commodities mix with a significant involvement in
water related drilling services and stable jurisdictions. The
Company expects it will execute its strategy primarily through
organic growth in the near future.
Covid 19
Key profitability indicators continue to improve period over
period despite the continuing uncertainties linked to the Covid-19
pandemic. The market for commodities is supported by the global
economic recovery and the increased demand for energy transition
and water management.
Currency exchange rates
The exchange rates for the periods under review are provided in
the Management's Discussion and Analysis of Q3 2021.
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 because it 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 to be 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 payable related to acquisitions,
net of cash and cash equivalents.
Reconciliation of the EBITDA is as follows:
(In thousands of
US$)
(unaudited)
|
Q3
2021
|
Q3
2020
|
YTD Q3
2021
|
YTD Q3
2020
|
|
|
|
|
|
Operating profit /
(loss)....................................................
|
8,988
|
7,623
|
19,840
|
13,808
|
Depreciation expense
.....................................................
|
4,764
|
3,914
|
13,631
|
12,264
|
Non-cash employee
share-based compensation...................
|
50
|
45
|
150
|
135
|
EBITDA
.........................................................................
|
13,802
|
11,582
|
33,621
|
26,208
|
Conference call and webcast
On November 3, 2021, 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 1-888-664-6392 or
1-416-764-8659. You will be put on hold until the conference
call begins. A live audio webcast of the Conference Call will also
be available
https://produceredition.webcasts.com/starthere.jsp?ei=1509957&tp_key=8bf25f684e
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,
2021, 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