Foraco International Reports Q3 2011

Q3 Revenue up 59% at US$ 82.4 million, Net Earnings up 100% at US$ 8.7 million,
EPS up 178% at US$ 9.45 cents

TORONTO, Ontario / MARSEILLE, France, Nov. 8, 2011 /CNW/ - Foraco International SA (TSX: FAR) (the "Company" or "Foraco"), a leading global provider of diversified drilling services, today reported unaudited financial results for its third quarter 2011. All figures are reported in US Dollars (US$), unless otherwise indicated.

"We are pleased to report an excellent quarter with a record high activity and a growing profitability throughout all our segments and regions. We have now successfully completed the integration of all of our operations and have improved our EBIT by more than 610 base points over the last four quarters, reaching 15.7% in Q3 2011" said Daniel Simoncini, Chairman and CEO of Foraco. "Despite the financial markets current volatility and the softening of some metal prices during the summer, our commercial activity has been intense over the quarter. Our customers are maintaining their plans going forward and continue to demand more drilling services."

"The Company has continued a significant capital expenditure programme during the quarter. At the end of September it was operating 188 drill rigs, with seven new additions in Q3 and the retirement of five. It is the Company policy to maintain a modern fleet of rigs in order to keep up in terms of safety and performance, and half of our fleet is under 5 years old," continued Jean-Pierre Charmensat, co-CEO and CFO of Foraco. "Despite this significant CAPEX programme, our cash position has actually improved as a result of the Company's strong financial performance and control. The net debt has been decreased to US$ 31.5 million, or 47% of our TTM EBITDA. Going forward we are cautiously optimistic and are gearing up to sustain solid activity in the coming quarters."

Three Months Q3 2011 Highlights

Increased Revenue

  • Q3 2011 revenue increased by 59% to US$ 82.4 million from US$ 52.0 million in Q3 2010, representing US$ 30.4 million in organic growth.

Increased Profitability

  • Q3 2011 gross profit including depreciation within cost of sales amounted to US$ 19.7 million, an increase of US$ 8.0 million or 68% on Q3 2010.

  • Q3 2011 EBITDA amounted to US$ 20.7 million (25.1% of revenue) compared to US$ 12.4 million in Q3 2010 (23.9% of revenue).

  • Q3 2011 net profit after tax amounted to US$ 8.7 million, an increase of US$ 4.3 million or double the Q3 2010 equivalent.

  • Q3 2011 earnings per share amounted to 9.45 US$ cents (basic) and 9.38 US$ cents (diluted), compared to 3.39 US$ cents (basic) and 3.35 US$ cents (diluted) as reported in Q3 2010.

Nine months YTD Q3 2011 Highlights

Increased Revenue

  • YTD Q3 2011 revenue amounted to US$ 226.0 million compared to US$ 112.4 million in YTD Q3 2010, an increase of 101% or US$ 113.6 million.

  • The US$ 113.6 million increase is primarily the result of:
    • US$ 67.9 million in organic growth,
    • US$ 45.7 million in revenue from South America for the five-month period ended May 31, 2011 (US$ 29.4 million for the same period in 2010 before acquisition).

Increased Profitability

  • YTD Q3 2011 gross profit including depreciation within cost of sales amounted to US$ 52.5 million, an increase of US$ 26.7 million or 103% on YTD Q3 2010.

  • YTD Q3 2011 EBITDA amounted to US$ 55.4 million (24.5% of revenue) compared to US$ 26.1 million in YTD Q3 2010 (23.2% of revenue).

  • YTD Q3 2011 net profit after tax amounted to US$ 23.2 million, an increase of US$ 15.2 million or 100% on YTD Q3 2010.

  • YTD Q3 2011 earnings per share amounted to 25.75 US$ cents (basic) and 25.57 US$ cents (diluted), compared to 8.08 US$ cents (basic) and 7.96 US$ cents (diluted) as reported in YTD Q3 2010.

Selected Financial Data

(In thousands of US$)
(unaudited)
  Three-month period ended
September 30,
  Nine-month period ended
September 30,
 
    2011   2010   2011   2010  
                       
Revenue     82,408   51,992     225,997   112,431  
                       
                       
Gross profit (1)     19,705   11,741     52,547   25,894  
As a percentage of sales     23.9%   22.6%     23.3%   23.0%  
                       
EBITDA     20,698   12,401     55,381   26,126  
As a percentage of sales     25.1%   23.9%     24.5%   23.2%  
                       
Operating profit     12,938   6,515     33,339   11,933  
As a percentage of sales     15.7%   12.5%     14.8%   10.6%  
                       
Profit for the period     8,652   4,319     23,163   7,965  
                       
EPS (in US$ cents)                      
Basic     9.45   3.39     25.75   8.08  
Diluted     9.38   3.35     25.57   7.96  

(1)     includes amortization and depreciation expenses

Financial Results

Foraco's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"), rather than Canadian Generally Accepted Accounting Principles ("Canadian GAAP"), and as such may not be directly comparable to the financial statements of other Canadian issuers.

Revenue

(In thousands of US$)
(unaudited)
Q3 2011   % change   Q3 2010   YTD Q3
2011
  % change   YTD
Q3 2010
                       
Revenue                      
                       
Reporting segment                      
Mining  79,994   61%   49,810   214,063   118%   97,998
Water  2,414   11%   2,182   11,934   -17%   14,432
Total revenue  82,408   59%   51,992   225,997   101%   112,430
                       
Geographic region                      
South America  29,834   54%       19,344   86,204   224%       26,586
Africa  15,709   78%   8,819   51,047   45%   35,177
North America  16,522   76%   9,397   43,698   97%   22,147
Asia Pacific  10,021   56%   6,423   23,588   36%   17,392
Europe  10,322   29%   8,009   21,461   93%   11,129
Total revenue  82,408   59%   51,992   225,997   101%   112,430
                       

Q3 2011

Q3 2011 revenue amounted to US$ 82.4 million, an increase of US$ 30.4 million or 59% compared to Q3 2010. This quarter is the first comparable period since the integration of the South American and Russian operations at the end of May 2010.

The Mining segment, up US$ 30.2 million, was driven by the contribution of all geographic areas benefiting from a strong worldwide demand.

The Water segment was stable at US$ 2.2 million in Q3 2011 compared to US$ 2.4 million in Q3 2010. Activities in this segment are principally carried out in Africa.

Revenue in South America amounted to US$ 29.8 million in Q3 2011 (US$ 19.3 million in Q3 2010) an increase of 54%. This was mainly generated by (i) a better utilization rate of equipment linked to strong demand (ii) a relocation of certain rigs within the region and (iii) 9 additional drills on long-term contracts with major companies in Chile.

In Africa, the Q3 2011 revenue increased by US$ 6.9 million or 78% compared to Q3 2010. This is mainly due to the development of mining operations in West Africa. The Water segment was stable during the quarter.

As a result of the strong market conditions in Canada, revenue in North America increased by 76% to US$ 16.5 million in Q3 2011 from US$ 9.4 million in Q3 2010. This increase is mainly due to the execution of contracts with major companies.

In Asia-Pacific, Q3 2011 revenue amounted to US$ 10.0 million, an increase of US$ 3.6 million or 56% compared to Q3 2010. Both Australia and New Caledonia contributed to this increase. In Australia, as a result of its capital expenditure program, the Company started operations with 2 new drills for Reverse Circulation contracts.

Revenue in Europe increased by US$ 2.3 million in Q3 2011 compared to Q3 2010, or 29% due to strong demand and an additional drill compared to Q3 2010. Here again, the activity is significantly higher than last year.

Nine months YTD Q3 2011

YTD Q3 2011 revenue amounted to US$ 226.0 million, an increase of 101% compared to YTD Q3 2010 (US$ 112.4 million).

The Mining segment, up US$ 116.0 million or 118%, is driven by the contribution of operations in South America (US$ 86.2 million in YTD Q3 2011 compared to US$ 26.6 million in YTD Q3 2010) and a generally strong demand from which all operations benefited worldwide (US$ 56.4 million increase in revenue).

Water segment revenue decreased by 17% from US$ 14.4 million to US$ 11.9 million in YTD Q3 2011. Activities in this segment are principally carried out in Africa.

Revenue in South America amounted to US$ 86.2 million in YTD Q3 2011 compared to US$ 26.6 million in YTD Q3 2010 which represented only four month's activity. Revenue is high when compared to South America on an equivalent pro forma nine-month basis for YTD Q3 2010 (US$ 56.0 million). It is generated by long-term contracts with major companies in Chile.

In Africa, the YTD Q3 2011 revenue increased by US$ 15.9 million or 45% compared to YTD Q3 2010. This is mainly the result of the Company's strategy to develop its mining operations in West Africa. The Water segment, decreased by US$ 2.5 million or 17% during the period due to the political turmoil in Ivory Coast in the first part of the year where the Company had to stop its operations, and in other countries some contracts ended during Q2 2011. New developments in the water segment are expected, in relation to the needs of the mining clients.

As a result of the continuing improvements in market conditions in Canada during the year, revenue in North America increased by 97% to US$ 43.7 million in YTD Q3 2011 from US$ 22.1 million in YTD Q3 2010. Greater demand from the oil sands activity in central Canada and the development of long-term contracts with major companies in Western Canada and Ontario contributed to this increase.

In Asia-Pacific, YTD Q3 2011 revenue amounted to US$ 23.6 million, an increase of US$ 6.2 million or 36% compared to YTD Q3 2010. Both Australia and New Caledonia contributed to this increase.

Revenue in Europe amounted to US$ 21.5 million in YTD Q3 2011, an increase of US$ 10.3 million (or 93%) compared to YTD Q3 2010 due to the early restart of operations in Russia where all rigs were in operation during the second and third quarter. Revenue is high when compared to EDC on an equivalent pro forma nine-month basis for YTD Q3 2010 (US$ 13.8 million).

Gross Profit

(In thousands of US$)
(unaudited)
  Q3 2011   % change   Q3 2010   YTD Q3 2011   % change   YTD Q3 2010
Gross profit                        
Reporting segment                        
Mining    19,171   70%   11,275   49,866   124%   22,236
Water    534   15%   466   2,681   -27%   3,658
Total gross  profit   19,705   68%   11,741   52,547   103%   25,894

Q3 2011

Overall, Q3 2011 gross profit amounted to US$ 19.7 million (or 24% of revenue), an increase of US$ 8.0 million or 68% compared to Q3 2010 (US$ 11.7 million or 23% of revenue).

In the mining segment, gross profit as a percentage of revenue is improving in all regions.

In the Water segment, gross profit margins were stable.

Overall, the Group is still focused on risk management when entering new contracts, on optimizing the use of its production equipment through long-term contracts, and on the proper execution of contracts.

9 months YTD Q3 2011

For the nine-month period ended September 30, 2011, gross profit amounted to US$ 52.5 million (or 23.3% of revenue), an increase of US$ 26.7 million or 103% compared to YTD Q3 2010 (US$ 25.9 million or 23.0% of revenue).

In general, contracts performed well worldwide in the Mining segment.

In the Water segment, gross profit margins decreased by 27% mainly due to the low level of activity during Q2 2011 which reduced the Company's capacity to absorb fixed costs.

Selling, general and administrative expenses (SG&A)

(In thousands of US$)
(unaudited)
Q3 2011   % change   Q3 2010   YTD Q3 2011   % change   YTD Q3 2010
                       
Selling, general and administrative  expenses       6,744   29%   5,247   19,185   35%   14,207
As a percentage of revenue  8%       10%   8%       13%

Q3 2011

Q3 2011 SG&A amounted to US$ 6.7 million, an increase of US$ 1.5 million or 29% compared to Q3 2010. As a percentage of revenue, SG&A are now 8% of revenue in Q3 2011 as compared to 10% of revenue in Q3 2010. As anticipated, SG&A as a percentage of revenue decreased as a result of the profitable growth strategy implemented by the Company.

9 months YTD Q3 2011

For the nine-month period ended September 30, 2011, SG&A amounted to US$ 19.2 million, an increase of US$ 5.0 million or 35% compared to the same period a year ago. As a percentage of revenue, SG&A are now 8% of revenue in YTD Q3 2011 as compared to 13% of revenue in YTD Q3 2010. As anticipated, SG&A as a percentage of revenue decreased as a result of the profitable growth strategy implemented by the Company.

Operating profit

(In thousands of US$)
(unaudited)
Q3 2011   % change   Q3 2010   YTD Q3
2011
  % change   YTD Q3
2010
Operating profit                      
Reporting segment                      
Mining   12,602   102%   6,248   31,690   208%   10,293
Water  336   26%   267   1,649   -   1,640
Total operating profit   12,938   99%   6,515   33,339   179%   11,933

Q3 2011

Operating profit increased to US$ 12.9 million (or 15.7% of revenue) in Q3 2011 compared to US$ 6.5 million (or 12.5% of revenue) in Q3 2010. This variation is primarily due to the satisfying level of gross margin, together with the reduction of SG&A as a percentage of revenue.

9 months YTD Q3 2011

Operating profit increased to US$ 33.3 million in YTD Q3 2011 compared to US$ 11.9 million in YTD Q3 2010. This variation is primarily due to the satisfying level of gross margin, together with the reduction of SG&A as a percentage of revenue.

Currency and Exchange Rates

The exchange rates for the periods under review are provided in the Management's Discussion and Analysis of Q3 2011.

Outlook

The Company's business strategy is to continue to deliver profitable growth through the development and optimization of the services it offers across geographical regions and industry segments, as well through the expansion of its customer base. Foraco expects to continue to execute its strategy through a combination of organic growth and development and acquisitions of complementary businesses in the drilling services industry.

Foraco's unaudited Financial Statements and Management's Discussion & Analysis ("MD&A") for the three month period ended March 31, 2011 are available via Foraco's website at www.foraco.com and will be available on www.sedar.com.

Conference Call and Webcast

On November 8, 2011, 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 CEO, and Jean-Pierre Charmensat, Vice-CEO and CFO.

You can join the call by dialing 1-888-231-8191 or 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 http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3715800 or on our website.

Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to hear the webcast. An archived replay of the webcast will be available for 90 days.

About Foraco International SA 
Foraco International SA (TSX: FAR) is a global leading drilling services company that provides turnkey solutions for mining, energy, water and infrastructure projects. Supported by its founding values of integrity, innovation and involvement, Foraco has grown into a global enterprise with operations 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 31, 2011, 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 S.A

For further information:

Sonia Tercas, Manager, Investor Relations
Email:tercas@foraco.com
Tel: (647) 351-5483

Profil de l'entreprise

Foraco International S.A

Renseignements sur cet organisme


FORFAITS PERSONNALISÉS

Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .

ADHÉSION À CNW

Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.

RENSEIGNEZ-VOUS SUR LES SERVICES DE CNW

Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.