Canada NewsWire
TORONTO and MARSEILLE, France , July 30, 2021 /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 second quarter 2021. All figures are expressed in US Dollars (US$) unless otherwise indicated.
"Q2 2021 was one of the best ever quarters for Foraco in terms of activity. The Company benefited from favourable market dynamics and a lower impact of Covid-19 on the quarter operations compared to last year, to achieve a revenue of US$ 75.6 m for the quarter, up 60% compared YoY. The rig utilization rate reached an average of 60% in Q2 compared to 47% in Q2 2020." said Daniel Simoncini , Chairman and Co-CEO. "All geographical areas once again ended the quarter with like–for–like growth. There were remarkable performances in Canada , Russia and Africa while South America and Australia were still somewhat affected by the impact of Covid-19 restrictions and tighter labour markets. In this overall dynamic background, there is still room for increasing the utilization rate, but we are currently facing a tightening labor market and upward pressure on procurement and supply chains which may temporarily hinder our growth. We are confident our business model will continue to show its resilience during the rest of the COVID pandemic and that we have ample capacity to pursue profitable growth."
"Q2 2021 confirmed the continuing improvement of our financial measures with an EBITDA for the quarter of US$ 14.7 m versus US$ 10.2 m in Q2 2020, an increase of 45%. Our TTM revenue amounts to US$ 244 m and our TTM EBITDA reached US$ 39.3 m ." Commented Jean-Pierre Charmensat, Co-CEO and CFO "Through the implementation of the financial reorganization which we finalized on July 7 , we have drastically reshaped and de-leveraged the Company's balance sheet with a transaction significantly accretive for our shareholders. Our net debt including the impact of the financial reorganization is now US$ 89.1 million , the equivalent of 2.3 x our TTM EBITDA and our debt-to-equity ratio is reduced to 1.3 x. In addition, as previously mentioned, the Company's debt profile has been significantly improved, exposure to exchange rates fluctuations reduced, financial constraints including covenants eased and debt maturities extended through the end of 2025. For our final point, we are proud to note that our share price has already started to integrate our operational performance and our financial reorganization and this to the benefit of the shareholders and stakeholders who have continued to retain confidence in the Company".
Simplified Balance Sheet
The table below presents, in the proforma column, the assets, equity and liabilities of the Company assuming that the financial reorganization completed on July 7, 2021 was effective as at June 30 , 2021.
|
in thousands of US$ |
June 30, 2021 |
June 30, 2021 |
December 31, 2020 |
|
Proforma |
|||
|
Non-current assets |
131,390 |
140,467 |
136,324 |
|
Current assets |
88,376 |
88,376 |
70,481 |
|
Cash and cash equivalents |
19,978 |
20,084 |
20,960 |
|
Total assets |
239,741 |
248,927 |
227,765 |
|
|
|
|
|
|
Total equity |
69,725 |
26,858 |
17,802 |
|
Borrowings |
109,053 |
160,488 |
162,612 |
|
Non-current liabilities |
3,317 |
3,428 |
4,087 |
|
Current liabilities |
57,647 |
58,153 |
43,265 |
|
Total equity and liabilities |
239,741 |
248,927 |
227,765 |
|
|
|
|
|
|
Net Debt |
89,069 |
140,404 |
141,652 |
Income Statement
|
(In thousands of US$)
|
Three-month period ended June 30, |
|
Six-month period ended June 30, |
||||||||
|
|
|
2021 proforma |
2021 |
|
2020 |
|
2021 proforma |
2021 |
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
75,668 |
75,668 |
|
47,351 |
|
130,219 |
130,219 |
|
97,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit / (loss) (1) |
|
15,809 |
15,809 |
|
11,164 |
|
21,850 |
21,850 |
|
16,427 |
|
|
As a percentage of sales |
|
20.9% |
20.9% |
|
23.6% |
|
16.8% |
16.8% |
|
16.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
14,705 |
14,705 |
|
10,161 |
|
19,819 |
19,819 |
|
14,626 |
|
|
As a percentage of sales |
|
19.4% |
19.4% |
|
21.5% |
|
15.2% |
15.2% |
|
15.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit / (loss) |
|
10,049 |
10,049 |
|
6,062 |
|
10,852 |
10,852 |
|
6,186 |
|
|
As a percentage of sales |
|
13.3% |
13.3% |
|
12.8% |
|
8.3% |
8.3% |
|
6.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit / (loss) for the period |
|
31,681 |
5,656 |
|
3,277 |
|
30,716 |
4,691 |
|
1,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the Company |
|
29,830 |
3,805 |
|
1,726 |
|
28,834 |
2,809 |
|
(316) |
|
|
Non-controlling interests |
|
1,851 |
1,851 |
|
1,551 |
|
1,882 |
1,882 |
|
1,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS (in US cents) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
30.05 |
4.27 |
|
1.88 |
|
29.05 |
3.15 |
|
(0.35) |
|
|
Diluted |
|
29.83 |
4.15 |
|
1.92 |
|
28.96 |
3.06 |
|
(0.35) |
|
(1) This line item includes amortization and depreciation expenses related to operations
Highlights – Q2 2021
Balance Sheet
-
On
July 7, 2021
, the Company finalized its financial reorganization through the raising of
US$ 100 million
of new bonds and the early redemption of its euro-denominated bonds maturing in
May 2022
.
-
The proforma net debt including the impact of the financial reorganization and of IFRS 16 was
US$ 89.1 million
as at
June 30, 2021
compared to
US$ 141.7 million
as at
December 31, 2020
.
- Following this reorganization, the proforma net debt to equity ratio is 1.3 and the proforma leverage ratio (Net debt / TTM EBITDA) is 2.3.
Revenue
-
Revenue of the period amounted to
US$ 75.7 million
compared to
US$ 47.4 million
in Q2 2020, an increase of 60%. The Company benefited from favourable market dynamics and the lower impact of Covid-19 on the 2021 operations compared to 2020,
- This trend is confirmed by the rig utilization rate which increased to 60% in Q2 2021 compared to 48% in Q1 2021 and 47% in Q2 2020.
Profitability
-
The Q2 2021 gross margin including depreciation within cost of sales was
US$ 15.8 million
(or 20.9% of revenue) compared to
US$ 11.2 million
(or 23.6% of revenue) in Q2 2020. Ongoing contracts reported solid performances while some new contracts in mobilization phase generated a lower percentage of gross margin.
- During the quarter, EBITDA amounted to US$ 14.7 million (or 19.4% of revenue), a 45% increase compared to US$ 10.2 million (or 21.5% of revenue) for the same quarter last year.
Highlights – H1 2021
Revenue
- H1 2021 revenue amounted to US$ 130.2 million compared to US$ 97.0 million in H1 2020 an increase of 34%.
Profitability
-
H1 2021 gross margin including depreciation within cost of sales was
US$ 21.9 million
(or 16.8% of revenue) compared to
US$ 16.4 million
(or 16.9% of revenue) in H1 2020.
- During the semester, EBITDA amounted to US$ 19.9 million (or 15.2% of revenue), compared to US$ 14.6 million (or 15.1% of revenue) for the same period last year.
Financial results
Revenue
|
(In thousands of US$) - (unaudited) |
Q2 2021 |
% change |
Q2 2020 |
H1 2021 |
% change |
H1 2020 |
|
Reporting segment |
|
|
|
|
|
|
|
Mining............................................................ |
64,737 |
61% |
40,129 |
109,839 |
36% |
80,509 |
|
Water............................................................. |
10,931 |
51% |
7,222 |
20,380 |
23% |
16,513 |
|
Total revenue ................................................ |
75,668 |
60% |
47,351 |
130,219 |
34% |
97,022 |
|
|
|
|
|
|
|
|
|
Geographic region |
|
|
|
|
|
|
|
North America................................................. |
25,723 |
122% |
11,570 |
44,358 |
49% |
29,846 |
|
Europe, Middle East and Africa........................... |
24,474 |
38% |
17,758 |
43,302 |
31% |
32,863 |
|
South America................................................. |
12,819 |
91% |
6,718 |
22,399 |
42% |
15,804 |
|
Asia Pacific...................................................... |
12,652 |
12% |
11,305 |
20,160 |
9% |
18,509 |
|
Total revenue ................................................ |
75,668 |
60% |
47,351 |
130,219 |
34% |
97,022 |
Q2 2021
Revenue of the quarter increased from US$ 47.4 million in Q2 2020 to US$ 75.7 million in Q2 2021 (60%).
The significant increase in revenue for both reporting segments is the result of the combination of favourable market dynamics and the lower impact of Covid-19 on the Q2 2021 operations.
Activity in North America increased 122% with revenue at US$ 25.7 million in Q2 2021 compared to US$ 11.6 million in Q2 2020. This increase is mainly due to new significant contracts secured during Q4 2020 and less disruptions linked to the Covid 19 pandemic.
In EMEA revenue for the quarter was US$ 24.5 million compared to US$ 17.8 million in Q2 2020, an increase of 38%. Each area showed improved activity. In Africa , new contracts mobilized in Q1 2021 continued in Q2 2021 and will continue through 2021. In Russia , activity increased by 24% thanks to new significant contracts secured during Q1 2021.
Revenue in South America increased by 91% at US$ 12.9 million in Q2 2021 ( US$ 6.7 million in Q2 2020). The activity in the region was particularly impacted in Q2 2020 by the effect of the pandemic which disrupted the commercial and operational activities.
In Asia Pacific , Q2 2021 revenue amounted to US$ 12.7 million , an increase of 12%. New contracts were mobilized during the quarter and will continue through 2021.
H1 2021
H1 2021 revenue amounted to US$ 130.2 million compared to US$ 97.0 million in H1 2020, an increase of 34%.
The increase in revenue is the result of the combination of favourable market dynamics and the lower impact of Covid-19 on the 2021 operations.
Revenue in North America increased by 49% to US$ 44.4 million in H1 2021 from US$ 29.8 million in H1 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 31%, to US$ 43.3 million in H1 2021 from US$ 32.9 million in H1 2020. Both CEI and Africa areas showed sustained activity.
Revenue in South America increased by 42% at US$ 22.4 million in H1 2021 ( US$ 15.8 million in H1 2020). The activity in the region was particularly impacted by the effect of the Covid-19 pandemic in H1 2020.
In Asia Pacific , H1 2021 revenue amounted to US$ 20.2 million , an increase of 9%.
Gross profit
|
(In thousands of US$) - (unaudited) |
Q2 2021 |
% change |
Q2 2020 |
H1 2021 |
% change |
H1 2020 |
|
Reporting segment |
|
|
|
|
|
|
|
Mining............................................................ |
12,870 |
49% |
8,650 |
17,622 |
45% |
12,169 |
|
Water............................................................. |
2,939 |
17% |
2,514 |
4,228 |
0% |
4,258 |
|
Total gross profit / (loss) ............................... |
15,809 |
42% |
11,164 |
21,850 |
33% |
16,427 |
Q2 2021
The Q2 2021 gross margin including depreciation within cost of sales was US$ 15.8 million (or 20.9% of revenue) compared to US$ 11.2 million (or 23.6% of revenue) in Q2 2020. Ongoing contracts reported solid performances while some new contracts in mobilization phase generated a lower percentage of gross margin. 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. There is generally a time lag before these costs increases can be passed through selling prices.
H1 2021
The H1 2021 gross margin including depreciation within cost of sales was US$ 21.9 million compared to US$ 16.4 million in H1 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$) - (unaudited) |
Q2 2021 |
% change |
Q2 2020 |
H1 2021 |
% change |
H1 2020 |
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
5,760 |
13% |
5,102 |
10,988 |
7% |
10,241 |
Q2 2021
SG&A increased compared to the same quarter last year mainly due to one off costs related to the early redeemed loans. As a percentage of revenue, SG&A decreased from 10.8% in Q2 2020 to 7.6% in Q2 2021.
H1 2021
SG&A expenses decreased by 1% compared to the same period last year.
Operating result
|
(In thousands of US$) - (unaudited) |
Q2 2021 |
% change |
Q2 2020 |
H1 2021 |
% change |
H1 2020 |
|
|
Reporting segment |
|
|
|
|
|
|
|
|
Mining ........................................ |
|
7,942 |
84% |
4,326 |
8,363 |
128% |
3,667 |
|
Water.......................................... |
|
2,107 |
21% |
1,736 |
2,489 |
-1% |
2,519 |
|
Total operating profit / (loss) .. |
|
10,049 |
66% |
6,062 |
10,852 |
75% |
6,186 |
Q2 2021
The operating profit was US$ 10.1 million , a US$ 4.0 million increase as a result of the increase in activity and the continued control over the operations and SG&A expenses.
H1 2021
The operating profit was US$ 10.9 million in H1 2021, a US$ 4.7 million improvement compared to H1 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 H1 2021 and H1 2020:
|
(In thousands of US$) |
H1 2021 |
H1 2020 |
|
|
|
|
|
Cash generated by operations before working capital requirements |
19,819 |
14,626 |
|
|
|
|
|
Working capital requirements |
(3,011) |
(2,177) |
|
Income tax paid (received) |
(3,126) |
(928) |
|
Purchase of equipment in cash |
(10,463) |
(4,147) |
|
|
|
|
|
Free Cash Flow before debt servicing |
3,219 |
7,375 |
|
|
|
|
|
Debt variance |
(3,132) |
(4,183) |
|
Interests paid |
(775) |
(1,451) |
|
Acquisition of treasury shares |
- |
- |
|
Dividends paid to non-controlling interests |
(225) |
(676) |
|
|
|
|
|
Net cash generated / (used in) financing activities |
(4,132) |
(6,310) |
|
|
|
|
|
Net cash variation |
(913) |
1,065 |
|
|
|
|
|
Foreign exchange differences |
37 |
(694) |
|
|
|
|
|
Variation in cash and cash equivalents |
(876) |
370 |
In H1 2021, the cash generated from operations before working capital requirements amounted to US$ 19.8 million compared to US$ 14.6 million in H1 2020.
In H1 2021, the working capital requirement was US$3.0 million compared to US$ 2.2 million in the same period last year.
During the period, the Capex was US$ 10.5 million in cash compared to US$ 4.1 million in H1 2020. The higher 2021 Capex is driven by the increased activity. Capex relates to acquisition of rigs, major rigs overhauls, ancillary equipment and rods.
As at June 30, 2021 , cash and cash equivalents totaled US$ 20.1 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 June 30, 2021 , the proforma net debt including operation lease obligation (IFRS 16) implementation amounted to US$ 89.1 million ( US$ 141.7 million as at December 31, 2020 ).
Bank guarantees as at June 30, 2021 totaled US$ 6.3 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$ 7.7 million ).
Financial reorganization
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 early redemption of these bonds amounting to US$ 146.8 million has been completed by way of a repayment of US$ 91.0 million in cash using the June 30, 2021 exchange rate resulting in a US$ 55.8 million debt reduction and the issuance of 9.3 million ordinary shares in favour of the former bondholders.
This financial reorganisation also includes the early repayment or rescheduling of certain other loans, the renegotiation of the corporate guarantee lines and some amendments to the Corporate Governance of the Company in favour of the new shareholders. As part of the financial reorganization, the Company deleveraged its balance sheet, extended its debt maturity through the end of 2025 and eased its financial constraints and covenants.
As at June 30, 2021 , the debt maturity before and after the financial reorganization is as follows:
|
|
New debt
|
Former debt
|
|
|
|
|
|
Credit lines |
1,747 |
1,747 |
|
Long-term debt |
|
|
|
Within one year |
1,228 |
151,971 |
|
Between 1 and 2 years |
5,424 |
404 |
|
Between 2 and 3 years |
10,223 |
205 |
|
Between 3 and 4 years |
10,032 |
12 |
|
Between 4 and 5 years |
74,250 |
- |
|
Total |
102,904 |
154,339 |
The accounting profit of the transaction before tax can be analysed as follows:
|
Book value of the bonds as at June 30, 2021 per accounting |
145,871 |
|
|
Fair value of the 9,300,000 shares issued to the benefit of the former bond holders |
-16,938 |
|
|
Cash payable to the former bond holders |
-90,997 |
|
|
Profit before transaction costs |
37,936 |
|
|
Costs other than financial related to the new financing |
-2,518 |
|
|
Gain on refinancing |
35,418 |
|
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 Q2 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) |
Q2 2021 |
Q2 2020 |
H1 2021 |
H1 2020 |
|
|
|
|
|
|
|
Operating profit / (loss)................................................... |
10,049 |
6,062 |
10,852 |
6,186 |
|
Depreciation expense .................................................... |
4,606 |
4,054 |
8,867 |
8,350 |
|
Non-cash employee share-based compensation........... |
50 |
45 |
100 |
90 |
|
EBITDA ......................................................................... |
14,705 |
10,161 |
19,819 |
14,626 |
Conference call and webcast
On July 30, 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=1484374&tp_key=afb4c24d95
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
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