Foraco International reports Q4 2009 and year end results

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES NOR FOR DISSEMINATION IN THE UNITED STATES/

Continued strong operational performance and Corporate growth through acquisitions

TORONTO, and MARSEILLE, France March 9 /CNW/ - Foraco International SA (the "Company" or "Foraco"), a leading global provider of diversified drilling services, today reported unaudited financial results for its fiscal 2009 fourth quarter and year ended December 31, 2009. All figures are reported in Euros ((euro)), unless otherwise indicated.

Q4 2009 Highlights:

    
    -   Total revenue for Q4 2009 ((euro)18.4 million) attained an almost
        equal level as in Q4 2008 ((euro)18.8 million).

    -   Gross profit including depreciation expense amounted to (euro)4.6
        million for Q4 2009 compared to (euro)5.4 million for Q4 2008.

    -   Cash flow from operations before changes in working capital rose to
        (euro)4.6 million in Q4 2009 from (euro)4.5 million in Q4 2008.

    -   Net profit Income (euro)1.6 million (or (euro)0.04 per share) for Q4
        2009 compared to (euro)2.0 million (or (euro)0.03 per share) in Q4
        2008.

    -   On January 20, 2010, the Company announced it has entered into a
        binding agreement to acquire a 50% controlling interest in LLC
        Eastern Drilling Company ("EDC"), a Russian company. The Company
        expects EDC to generate approximately 10 million USD revenue in 2010
        through EDC's existing customer contracts.
    

Fiscal year 2009 Highlights:

Revenue in FY 2009 totaled (euro)86.1 million almost equaling revenue of FY 2008 ((euro) 86.6 million), that was a record high year for the Company.

    
    -   Gross profit including depreciation expense remained stable in FY
        2009 at (euro)25.6 million compared to (euro)26.0 million in FY 2008.

    -   Cash flow from operations before changes in working capital increased
        to (euro)24.1 million in FY 2009 from (euro)21.8 million in FY 2008.

    -   Net profit totaled (euro)10.0 million, or (euro)0.17 per share in FY
        2009 compared to (euro)10.4 million or (euro)0.18 per share in FY
        2008.

    -   Cash and cash equivalents net of borrowings remained constant at year
        end 2009 at (euro)9.4 million compared to (euro)9.3 million at year
        end 2008. During the same period the Company completed the
        acquisition and fully consolidated the Australian company, Mosslake.

    -   The Board of Directors held on March 8, 2010 has agreed to propose to
        the next shareholders Meeting a 0,028 (euro) per share dividend.
    

"We are pleased to report that we succeeded to maintain a similar level of revenue and profitability during 2009 compared to 2008, confirming the relevance of our strategy in this challenging economic environment," said Daniel Simoncini Chairman and Chief Executive Officer of Foraco. "Over the last years, we have been consistently focused on delivering good financial results that allowed us to put our long term growth strategy into action via organic development and profitable acquisitions. The recent downturn was equally a good time for us on that respect, and we continued our expansion into Australia and Russia, through the acquisition of Mosslake and the recent acquisition of a controlling interest in Eastern Drilling Company. The transaction is expected to close this month. Furthermore, we signed yesterday a binding agreement to purchase 100% of Adviser S.A in Chile which is fully disclosed in another press release this morning as well."

"During the fourth quarter of 2009 we continued to uphold our operating performance compared to the same quarter last year. Our operations have generated a high level of cash flows which have allowed us to complete the acquisition of Mosslake and fulfill our capital expenditure program while maintaining our net cash position. This improvement was achieved thanks to the excellent execution of our contracts in both our Mining and Water segments," said Jean-Pierre Charmensat, Vice-CEO and Chief Financial Officer of Foraco. "We have increased our fleet's capacity firstly via the acquisition of Mosslake's 8 drill rigs and secondly through the acquisition of an additional 5 drill rigs during the fourth quarter, dedicated to our operations in Africa , with all of them being currently assigned to contracts. Moreover, the integration of EDC will further add another 5 new drill rigs to our operating fleet. We remain attentive to the monitoring of our operations and to opportunities to further pursue our growth strategy."

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                      Q4                         Full year
    -------------------------------------------------------------------------
                      Three-            Three-
                       month             month
                      period            period        Year              Year
    (in thousands      ended             ended       ended             ended
     of (euro))     December       %  December    December       %  December
    (unaudited)     31, 2009  Change  31, 2008    31, 2009  Change  31, 2008
    -------------------------------------------------------------------------
    Reporting Segment
    Mining & Energy   12,911     -5%    13,600      62,393     -6%    66,298
    Water,
     Environmental &
     Infrastructure    5,535      6%     5,209      23,659     17%    20,256
    Total Revenue     18,446     -2%    18,809      86,052     -1%    86,554

    Geographical
     Region
    Africa             8,935    -24%    11,781      42,217     -6%    44,757
    Europe             2,315    243%       676      11,290     75%     6,453
    Asia Pacific       3,065     26%     2,425      10,913     42%     7,662
    Americas           4,131      5%     3,928      21,632    -22%    27,683
    Total Revenue     18,446     -2%    18,809      86,052     -1%    86,554
    -------------------------------------------------------------------------
    

For the three-month period ended December 31, 2009, revenue totaled (euro)18.4 million compared to (euro)18.8 million for the three-month period ended December 31, 2008. The Company's 5% revenue decrease in the Mining & Energy ("Mining") segment is a consequence of the phasing of certain projects in West Africa. In the Water, Environmental & Infrastructure ("Water") segment, revenue increased by 6% to (euro)5.5 million, compared to (euro)5.2 million in last year's fourth quarter, as a result of the relocation of some equipment from the mining segment to water projects in Africa. Revenue in Asia Pacific increased to (euro)3.1 million for the three-month period ended December 31, 2009, up from (euro)2.4 million for the three months ended December 31, 2008, driven by the Company's acquisition of Mosslake in April 2009, which contributed (euro)1.6 million in revenue during the quarter. Revenue in the Americas increased by 5% from (euro)3.9 million for the three month period ended December 31, 2008 to (euro)4.1 million for the three month period ended December 31, 2009. In Africa revenue decreased by 24% due to the aforementioned phasing of projects in West African countries. Revenue in Europe increased from (euro)0.7 million to (euro)2.3 million as a result of the Company's activity in northwestern Russia.

In spite of the difficult economic environment which fully impacted most of the year 2009, revenue was stable at (euro)86.1 million in 2009 compared to (euro)86.6 million for year ended December 31, 2008. The Company's 6% revenue decrease in the Mining segment is a result of the weak activity in the industry. In the Water segment, revenue increased by 17% to (euro)23.7 million as a result of new water projects in Africa. The Company also benefited from its ability to relocate certain drilling equipment between the Mining and the Water segments as it adapted to the changing market demand. Revenue in the Americas decreased by 22% due to reduced activity in the mining industry. Increased revenue in Europe was driven primarily by the Company's activity in northwestern Russia. Revenue in Africa decreased by 6% during the period mainly due to certain phasing of projects in some West African countries during the last quarter. Revenue in Asia Pacific increased by 42% during the period following the integration of Mosslake's activity.

    
    -------------------------------------------------------------------------
    Gross Profit                 Q4                         Full year
    -------------------------------------------------------------------------
                      Three-            Three-
                       month             month
                      period            period        Year              Year
    (in thousands      ended             ended       ended             ended
     of (euro))     December       %  December    December       %  December
    (unaudited)     31, 2009     Chg  31, 2008    31, 2009     Chg  31, 2008
    -------------------------------------------------------------------------
    Reporting Segment
    Mining & Energy    2,945    -28%     4,116      18,820     -7%    20,179
    Water,
     Environmental &
     Infrastructure    1,704     34%     1,272       6,825     18%     5,797
    Total gross
     profit            4,649    -14%     5,387      25,645     -1%    25,977
    Gross profit
     margin            25.2%             28.6%       29.8%             30.0%
    -------------------------------------------------------------------------
    

For the three-month period ended December 31, 2009, gross profit decreased to (euro)4.6 million (or 25.2% of revenue) from (euro)5.4 million (or 28.6% of revenue) in the corresponding period in 2008. The decrease in gross profit is primarily due to the higher depreciation expense as a consequence of the 2008 significant capital expenditure program. Depreciation expenses represented (euro)2.2 million (or 12% of revenue) for the three month period ended December 31, 2009 compared to (euro)1.7 million (or 9% of revenue) for the three month period ended December 31, 2008. In addition, during the fourth quarter of 2008, the favorable settlement of a legal claim contributed to a non recurring (euro)0.5 million of Gross Profit.

For the year ended December 31, 2009, gross profit was stable at (euro)25.6 million (or 29.8% of revenue) compared to the Company's record high performance of (euro)26.0 million (or 30.0% of revenue) in the corresponding period in 2008, a record year for the Company, reflecting the overall good performances on Mining and Water contracts. Moreover this stability in gross profit was reached despite of the higher depreciation expense linked to the the Company's 2008 significant capital expenditure program. Depreciation expenses represented (euro)8.8 million (or 10.2% of revenue) for the year ended December 31, 2009 compared to (euro)5.9 million (or 6.8% of revenue) for the year ended December 31, 2008.

    
    -------------------------------------------------------------------------
    Operating
     Expenses
     (excluding
     cost of sales)              Q4                         Full year
    -------------------------------------------------------------------------
                      Three-            Three-
                       month             month
                      period            period        Year              Year
    (in thousands      ended             ended       ended             ended
     of (euro))     December       %  December    December       %  December
    (unaudited)     31, 2009     Chg  31, 2008    31, 2009     Chg  31, 2008
    -------------------------------------------------------------------------

    Selling,
     general and
     administrative    2,723      2%     2,662      11,213     13%     9,898
    Other (income)
     and expense,
     net                 (60)    n/s        --        (224)    n/s       180
    Total operating
     expenses          2,663      0%     2,662      10,989      9%    10,078
    -------------------------------------------------------------------------
    

For the three-month period ended December 31, 2009, operating expenses (excluding cost of sales) were be kept constant at (euro)2.7 million in spite of the integration of Mosslake in 2009.

For the year ended December 31, 2009, operating expenses (excluding cost of sales) increased to (euro)11.0 million from (euro)10.1 million in the corresponding period of 2008. The increase in selling, general and administrative expenses in 2009 is mainly due to the expansion of the geographical coverage in Canada in September 2008 and in Australia in April 2009. The (euro)0.2 million in other income during year ended December 31, 2009, corresponded to grants received by the Company to finance certain of its research and development activities. The Company aims to continue these research and development activities in an attempt to further improve its operating efficiency and safety.

    
    -------------------------------------------------------------------------
    Operating
     Profit                      Q4                         Full year
    -------------------------------------------------------------------------
                      Three-            Three-
                       month             month
                      period            period        Year              Year
    (in thousands      ended             ended       ended             ended
     of (euro))     December       %  December    December       %  December
    (unaudited)     31, 2009     Chg  31, 2008    31, 2009     Chg  31, 2008
    -------------------------------------------------------------------------
    Reporting
     Segment
    Mining & Energy    1,081    -51%     2,191      10,859    -13%    12,494
    Water,
     Environmental &
     Infrastructure      905     69%       535       3,796     12%     3,404
    Total Operating
     Profit            1,986    -27%     2,725      14,656     -8%    15,899
    -------------------------------------------------------------------------
    

Operating profit decreased to (euro)2.0 million for the three months ended December 31, 2009, compared to (euro)2.7 million for the three months ended December 31, 2008. This variation is primarily due to the non recurring favorable settlement of a legal claim which contributed (euro)0.5 million in the Gross profit during the last quarter of 2008 and to the higher depreciation expenses during the fourth quarter of 2009, linked to the 2008 significant capital expenditure program.

For the year ended December 31, 2009 operating profit decreased by 8% to (euro)14.7 million compared to (euro)15.9 million in 2008, reflecting higher selling, general and administrative expenses following the integration of the Company's acquisitions in Canada in September 2008 and in Australia in April 2009.

    
    -------------------------------------------------------------------------
    Income                       Q4                         Full year
    -------------------------------------------------------------------------
                      Three-            Three-
                       month             month
                      period            period        Year              Year
    (in thousands      ended             ended       ended             ended
     of (euro))     December       %  December    December       %  December
    (unaudited)     31, 2009     Chg  31, 2008    31, 2009     Chg  31, 2008
    -------------------------------------------------------------------------

    Revenue           18,446     -2%    18,809      86,052     -1%    86,554
    Gross Profit(1)    4,649    -14%     5,387      25,645     -1%    25,977
    Operating
     Expenses(2)       2,663      0%     2,662      10,989      9%    10,078
    Operating Profit   1,986    -27%     2,725      14,656     -8%    15,899
    Net Earnings       1,635    -17%     1,984       9,975     -4%    10,415
    EPS before
     minority
     interests in
     (euro) (basic
     and diluted) (euro)0.03        (euro)0.03  (euro)0.17        (euro)0.18

    -------------------------------------------------------------------------
    (1) Includes amortization and depreciation expenses
    (2) Excludes cost of sales
    

Net earnings totaled (euro)1.6 million or (euro)0.03 per share for the three-month period ended December 31, 2009, compared to (euro)2.0 million in the corresponding period in 2008.

The year 2009 showed net earnings totaling (euro)10.0 million or (euro)0.17 per share, compared to (euro)10.4 million or (euro)0.18 per share in 2008.

Balance Sheet

As at December 31, 2009, the positive cash position net of debt amounted to (euro)9.4 million compared to (euro)9.3 million as at December 31, 2008. Cash and cash equivalents are mainly comprised of (euro)10.1 million of short-term deposits held at top-tier European financial institutions. The Company had drawn (euro)0.5 million from a total of (euro)22.6 million in available short-term credit facilities compared to larger short-term loans of (euro)2.9 million as at June 30, 2009, and (euro)2.2 million as at December 31, 2008.

Currency and Exchange Rate

The average exchange rate between (euro) and C$ in Q4 2009 was C$1.56 to (euro)1.00. The closing rate at the end of December 31, 2009, was C$1.51 to (euro)1.00. In 2008, the average exchange rate recorded for the year was C$1.56 ti (euro)1.00.

Outlook

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

As at December 31, 2009, the Company's order backlog for continuing operations was (euro)55.7 million, of which (euro)48.8 million is expected to be executed during the 2010 fiscal year. This compared to an order backlog as at December 31, 2008 of (euro)56.8 million of which (euro)48.0 million was expected to be executed during the 2009 fiscal year.

With the finalization of the EDC acquisition, (euro)6.9 million (or US$10.0 million) will be added to the (euro)55.7 million backlog as at December 31, 2009.

The Company's order backlog consists of sales orders. Sales orders are subject to modification by mutual consent and in certain instances orders may be revised by the customers. As a result, order backlog as of any particular date may not be indicative of actual operating results for any succeeding period.

Foraco's unaudited Financial Statements and Management's Discussion & Analysis ("MD&A"), for the three month periods and year ended December 31, 2009, are available via Foraco's website at www.foraco.com and will be available on www.sedar.com.

Conference Call and Webcast

On Wednesday, March 10th 2010 at 10:00 am EDT, Management of the Company will host a conference call to review these 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. Please call in 15 minutes prior to the call to secure a line. 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=2984080 or at www.foraco.com.

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 19 countries across five continents. For more information about Foraco, visit www.foraco.com.

To receive Company press releases, please email jeanny@chfir.com and mention "Foraco News" on the subject line.

"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, 2009, 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.

%SEDAR: 00025480E

SOURCE Foraco International SA

For further information: For further information: please contact CHF Investor Relations at: Jeanny So, Director of Operations, Email: jeanny@chfir.com, Tel: (416) 868-1079 x 225


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890