Foraco International reports Q2 2024
Company pivots its business towards more stable jurisdictions. Temporary revenue contraction while maintaining good profitability. Best quarter ever in
Q2 2024 Highlights:
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Revenue amounted to
US$ 77.9 million , compared to a recordUS$ 100.1 million in Q2 2023.- Two key regions marked their best quarter ever:
North America saw an increase of 3%, reachingUS$ 32.1 million .Asia-Pacific (Australia ) experienced a 38% increase, reachingUS$ 22.2 million .
- In the EMEA region, revenue decreased
US$ 7.8 million following the Company's strategic decision to exit unstable jurisdictions (Russia and some countries inWest Africa ). - Revenue in
South America decreased byUS$ 20.7 million from last year's record quarter (US$ 39.0 million ), due to a lack of financing in the junior mining sector and an early winter season on high-altitude projects.
- Two key regions marked their best quarter ever:
-
Gross Margin, including depreciation within the cost of sales, was a solid
US$ 17.9 million (23.0% of revenue) compared toUS$ 25.9 million (25.9% of revenue) in Q2 2023. Most projects generated solid operating performance, which partially offset the under-absorption of fixed costs. -
EBITDA amounted to 21.0% of revenue (
US$ 16.4 million ) compared to 23.8% of revenue (US$ 23.8 million ) for the same quarter last year.
Income Statement
(In thousands of US$) |
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Three-month period
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Six-month period
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2024 |
2023 |
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2024 |
2023 |
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Revenue |
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77,884 |
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100,066 |
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154,973 |
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188,444 |
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Gross profit (1) |
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17,916 |
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25,964 |
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34,728 |
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47,082 |
As a percentage of sales |
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23.0 % |
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25.9 % |
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22.4 % |
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25.0 % |
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EBITDA |
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16,391 |
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23,812 |
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33,964 |
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42,943 |
As a percentage of sales |
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21.0 % |
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23.8 % |
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21.9 % |
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22.8 % |
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Operating profit |
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12,116 |
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18,857 |
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24,740 |
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33,071 |
As a percentage of sales |
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15.6 % |
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18.8 % |
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16.0 % |
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17.5 % |
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Net profit for the period |
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7,809 |
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11,054 |
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16,273 |
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19,055 |
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Attributable to: |
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Equity holders of the Company |
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7,760 |
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8,814 |
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16,606 |
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15,449 |
Non-controlling interests |
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49 |
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2,240 |
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(333) |
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3,606 |
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EPS (in US cents) |
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Basic |
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7.87 |
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8.92 |
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16.84 |
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15.61 |
Diluted |
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7.70 |
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8.73 |
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16.48 |
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15.29 |
(1) This line item includes amortization and depreciation expenses related to operations |
Highlights – Q2 2024
Revenue
- Q2 2024 revenue amounted to
US$ 77.9 million , compared to a recordUS$ 100.1 million in Q2 2023. - Two key regions achieved new record performance for the quarter:
North America increased by 3% atUS$ 32.1 million Asia-Pacific (Australia ) increased by 33% atUS$ 22.2 million
- In the EMEA region, revenue decreased
US$ 7.8 million following the Company's strategic decision to exit unstable jurisdictions (Russia and some countries inWest Africa ). - Revenue in
South America decreased byUS$ 20.7 million from last year's record quarter (US$ 39.0 million ), due to a lack of financing in the junior mining sector and an early winter season on high-altitude projects.
Profitability
- Q2 2024 gross margin including depreciation within cost of sales was a solid
US$ 17.9 million (or 23.0% of revenue) compared toUS$ 25.9 million (or 25.9% of revenue) in Q2 2023. Most projects generated solid operating performance which partially offset the under-absorption of fixed costs. - During the quarter, EBITDA amounted to
US$ 16.4 million (or 21.0% of revenue) compared toUS$ 23.8 million (or 23.8% of revenue) for the same quarter last year.
Highlights – H1 2024
Revenue
- For the six-month period ending
June 30, 2024 (H1 2024), revenue amounted toUS$ 155.0 million compared toUS$ 188.4 million in H1 2023.
Profitability
- In H1 2024, the gross margin, inclusive of depreciation within cost of sales, was
US$ 34.7 million (or 22.4% of revenue), compared toUS$ 47.1 million (or 25.0% of revenue) in H1 2023. - During H1, EBITDA amounted to
US$ 34.0 million (or 21.9% of revenue), compared toUS$ 42.9 million (or 22.8% of revenue) for the same period last year. - The Free Cash Flow for the period was
US$ (9.7) million , mainly attributed to working capital requirements to support the development inNorth America andAsia Pacific .
Financial results
Revenue
(In thousands of US$) - (unaudited) |
Q2 2024 |
% change |
Q2 2023 |
H1 2024 |
% change |
H1 2023 |
Reporting segment |
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Mining................................................................................. |
69,316 |
-21 % |
87,933 |
138,363 |
-15 % |
162,452 |
Water.................................................................................. |
8,568 |
-29 % |
12,133 |
16,610 |
-36 % |
25,992 |
Total revenue ..................................................................... |
77,884 |
-22 % |
100,066 |
154,973 |
-18 % |
188,444 |
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Geographic region |
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32,129 |
3 % |
31,176 |
59,151 |
-3 % |
60,902 |
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22,190 |
33 % |
16,731 |
36,861 |
13 % |
32,738 |
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18,255 |
-53 % |
39,016 |
43,830 |
-38 % |
70,158 |
|
5,310 |
-60 % |
13,143 |
15,130 |
-39 % |
24,645 |
Total revenue ..................................................................... |
77,884 |
-22 % |
100,066 |
154,973 |
-18 % |
188,444 |
Q2 2024
Revenue for the quarter decreased by
Activity in
In
Revenue in
In the EMEA region, revenue for the quarter was
Overall, rig utilization rate in Q2 2024 was 40% compared to 59% in Q2 2023.
H1 2024
H1 2024 revenue amounted to
Revenue in
In
Revenue in
In EMEA, revenue decreased by 39% (from
Gross profit
(In thousands of US$) - (unaudited) |
Q2 2024 |
% change |
Q2 2023 |
H1 2023 |
% change |
H1 2022 |
Reporting segment |
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Mining................................................................................. |
15,396 |
-33 % |
22,846 |
40,490 |
74 % |
23,226 |
Water.................................................................................. |
2,520 |
-19 % |
3,118 |
6,592 |
29 % |
5,121 |
Total gross profit / (loss) .................................................. |
17,916 |
-31 % |
25,964 |
47,082 |
66 % |
28,347 |
Q2 2024
The Q2 2024 gross margin including depreciation within cost of sales was a solid
H1 2024
The H1 2024 gross margin including depreciation within cost of sales was
Selling, General and Administrative Expenses
(In thousands of US$) - (unaudited) |
Q2 2024 |
% change |
Q2 2023 |
H1 2024 |
% change |
H1 2023 |
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Selling, general and administrative expenses |
5,800 |
-18 % |
7,107 |
12,099 |
-14 % |
14,011 |
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Q2 2024
SG&A decreased 18% compared to the same quarter last year. As a percentage of revenue, SG&A remained stable around 7.0% of the revenue.
H1 2024
SG&A decreased by 14% compared to the same period last year. As a percentage of revenue, SG&A was stable.
Operating result
(In thousands of US$) - (unaudited) |
Q2 2024 |
% change |
Q2 2023 |
H1 2024 |
% change |
H1 2023 |
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Reporting segment |
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Mining ........................................................................................................... |
10,234 |
-38 % |
16,601 |
22,149 |
-22 % |
28,424 |
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Water............................................................................................................. |
1,882 |
-17 % |
2,256 |
2,591 |
-44 % |
4,647 |
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Total operating profit / (loss) ....................................................................... |
12,116 |
-36 % |
18,857 |
24,740 |
-25 % |
33,071 |
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Q2 2024
The operating profit was
H1 2024
The operating profit was
Financial position
The following table provides a summary of the Company's cash flows for H1 2024 and H1 2023:
(In thousands of US$) |
H1 2024 |
H1 2023 |
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Cash generated by operations before working capital requirements |
33,964 |
42,943 |
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Working capital requirements |
(23,497) |
(14,264) |
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Income tax paid |
(6,264) |
(5,636) |
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Purchase of equipment in cash |
(9,978) |
(14,162) |
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Free Cash Flow before debt servicing |
(5,775) |
8,881 |
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Proceeds from / (repayment of) debt |
1,796 |
5,328 |
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Interests paid |
(3,931) |
(6,824) |
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Acquisition of treasury shares |
(556) |
(609) |
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Deconsolidation of EDC Russia Dividends paid to non-controlling interests |
(2,076) (330) |
- (699) |
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Net cash generated / (used in) financing activities |
(5,097) |
(2,804) |
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Net cash variation |
(10,872) |
6,077 |
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Foreign exchange differences |
(1,458) |
(595) |
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Variation in cash and cash equivalents |
(12,330) |
5,482 |
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Cash and cash equivalents at the end of the period |
21,959 |
34,890 |
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In H1 2024, the cash generated from operations before working capital requirements amounted to
During the same period, the working capital requirements reached
During the period, Capex totaled
Strategy
The Company's strategy is to assist its customers in exploring or managing their deposits throughout the entire cycle, with a special focus on the life of mine activity. The Company intends to continue developing and growing its services across the world with a focus on stable jurisdictions, high tech drilling services, optimal commodities mix including battery metals and gold - with a significant presence in water related drilling services - and a gradual implementation of remote-controlled rigs and other advanced digital applications. The Company expects to execute its strategy primarily through organic growth and targeted acquisitions.
The Company addressed the environmental, social and governance (ESG) requirements, and implements a pragmatic and measurable approach to ESG with quantitative KPIs to maximize improvement and efficiencies.
Currency exchange rates.
The exchange rates for the periods under review are provided in the Management's Discussion and Analysis of Q2 2024.
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 2024 |
Q2 2023 |
H1 2024 |
H1 2023 |
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Operating profit / (loss)................................................................................... |
12,116 |
18,857 |
24,740 |
33,071 |
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Depreciation expense ...................................................................................... |
4,173 |
4,866 |
9,020 |
9,692 |
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Non-cash employee share-based compensation............................................. |
102 |
90 |
204 |
180 |
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EBITDA ............................................................................................................. |
16,391 |
23,812 |
33,964 |
42,943 |
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Conference call and webcast
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About
"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
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