Foraco International reports Q3 and nine months results

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

Improved Q3 profit demonstrates strong operational performance

TORONTO and MARSEILLE , France , Nov. 10 /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 third quarter and nine months ended September 30, 2009 . All figures are reported in Euros ((euro)), unless otherwise indicated.

    
    Q3 2009 Highlights:

    -   In spite of the current difficult economic environment, total revenue
        remained steady at (euro)20.2 million compared to (euro)20.5 million
        in Q3 2008.

    -   Gross profit (including depreciation as a cost of sales) increased to
        (euro)6.4 million (31.9% of revenue) from (euro)6.2 million (30% of
        revenue) in Q3 2008.

    -   Net earnings were stable at (euro)2.4 million or (euro)0.04 per
        share, compared to (euro)2.4 million or (euro)0.04 per share in Q3
        2008.

    -   Improved financial structure with a positive cash position net of
        debt amounting to (euro)5.3 million as at September 30, 2009, which
        represents a (euro)5.6 million increase since June 30, 2009.

    Nine Months Highlights:

    -   Stable total revenue of (euro)67.6 million compared to (euro)67.7
        million for the same nine months last year, in spite of the difficult
        economic environment persisting  for the Company's customers,

    -   The integration of Q2's Mosslake acquisition has caused Asia Pacific
        revenue to jump up 50%,

    -   Growth in the Water segment is positive as Foraco aims to better
        balance its customer mix to offset individual industry risk for the
        future,

    -   Year-to-date net earnings were stable at (euro)8.3 million or (euro)
        0.14 per share, compared to (euro)8.4 million or (euro)0.15 a year
        earlier.
    

"We are pleased to report that we generated a solid level of revenue during the third quarter of 2009, confirming our proven operating performance and the relevance of our strategy in this difficult economic environment," said Daniel Simoncini Chairman and Chief Executive Officer of Foraco. "We are satisfied with the development of our new operations in northwestern Russia and in Australia during the quarter, which has added to our global market presence. We actively work to secure new orders for 2010 projects and remain attentive to new development opportunities."

"During the third quarter we continued to improve our operating performance when compared to the same quarter last year. 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 reinforced our financial structure since the second quarter as exhibited by the strong operational cash flow. We finalized the negotiations with our banks to secure short term credit lines and bank guarantees that will facilitate our future developments. In October, we also completed the acquisition of five drill rigs from a competitor for an amount of US$2.1 million. Most of these drill rigs are already committed to new signed contracts in Africa that will be operating in 2010. 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                       Q3                       Nine Months

    -------------------------------------------------------------------------
    (in thousands      Three-            Three-      Nine-             Nine-
     of (euro))         month             month      month             month
    (unaudited)        period            period     period            period
                        ended             ended      ended             ended
                    September     %   September  September     %   September
                     30, 2009  Change  30, 2008   30, 2009  Change  30, 2008
    -------------------------------------------------------------------------
    Reporting Segment
    Mining & Energy    16,331    -11%    18,390     49,483     -6%    52,698
    Water,
     Environmental &
     Infrastructure     3,840     84%     2,090     18,124     20%    15,047
    Total Revenue      20,171     -2%    20,480     67,607      0%    67,745

    Geographical
     Region
    Africa              7,309    -14%     8,468     33,282      1%    32,976
    Europe              4,264    234%     1,276      8,975     55%     5,777
    Asia Pacific        3,318     58%     2,100      7,848     50%     5,237
    Americas            5,280    -39%     8,635     17,502    -26%    23,754
    Total Revenue      20,171     -2%    20,480     67,607      0%    67,745
    -------------------------------------------------------------------------
    

For the three-month period ended September 30, 2009 , revenue totaled (euro)20.2 million compared to (euro)20.5 million for the three-month period ended September 30, 2008 . The Company's 11% revenue decline in the Mining & Energy ("Mining") segment is a consequence of the continued weak activity in both the mining and energy industries. Yet the Water, Environmental & Infrastructure ("Water") segment, revenue increased by 84% to (euro)3.8 million compared to (euro)2.1 million in Q3 2008, as a result of some Water projects performed in 2009 during the unusually dry rainy season in Africa this year.

Revenue from Asia Pacific increased to (euro)3.3 million for the third quarter, up from (euro)2.1 million over last year, driven by the Company's acquisition of Mosslake in April 2009 , which contributed (euro)1.8 million in revenue to Q3 2009. Revenue in the Americas and Africa decreased respectively by 39% and 14%, as a result of a dramatic decrease in activity in the mining industry that has been ongoing since the global economic downturn took hold late last year. Meanwhile, revenue in Europe was boosted 234% by the Company's new presence in northwestern Russia from (euro)1.3 million last year to (euro)4.3 million for Q3 2009.

In spite of the difficult economic environment that has presided over the first nine months of 2009 (as opposed to the booming first half of 2008 followed by the global economic downturn), revenue was stable at (euro)67.6 million in 2009 compared to (euro)67.7 million for the nine-month period ended September 30, 2008 . The Company's 6% revenue decrease in the Mining segment is a result of the continued weak activity in the industry. In the Water segment, revenue increased by 20% to (euro)18.1 million as a result of new Water projects in Africa . The Company continues to benefit from its flexibility that enables it to relocate certain drilling equipment between the Mining and the Water segments in response to changing market demands. In the nine months, revenue in the Americas was pulled down by 26% due to the reduced activity in the mining industry there. The 55% increase in European revenue was driven primarily by the Company's new activity in northwestern Russia . Net revenue from Africa increased by 1% as new Water projects compensated for the drop in the African Mining segment. The integration of Mosslake's activity under Foraco was felt sharply by a 50% increase in Asia Pacific revenue.

    
    -------------------------------------------------------------------------
    Gross Profit                  Q3                       Nine Months

    -------------------------------------------------------------------------
    (in thousands      Three-            Three-      Nine-             Nine-
     of (euro))         month             month      month             month
    (unaudited)        period            period     period            period
                        ended             ended      ended             ended
                    September     %   September  September     %   September
                     30, 2009  Change  30, 2008   30, 2009  Change  30, 2008
    -------------------------------------------------------------------------
    Reporting Segment
    Mining & Energy     5,312     -4%     5,561     15,913     -1%    16,068
    Water,
     Environmental &
     Infrastructure     1,124     91%       589      5,083     13%     4,489
    Total gross profit  6,436      5%     6,150     20,996      2%    20,557
    Gross profit
     margin             31.9%             30.0%      31.1%             30.3%
    -------------------------------------------------------------------------
    

For the three-month period ended September 30, 2009 , gross profit increased to (euro)6.4 million (or 31.9% of revenue) from (euro)6.2 million (or 30.0% of revenue) in the corresponding period in 2008. The relative increase in gross profit reflects the Company's good performance of both the Mining and Water segments. This increase was reached despite a higher depreciation expense (from (euro)1.5 million in Q3 2008 to (euro)2.3 million in Q3 2009) linked to Foraco's 2008 capital expenditure program.

Gross profit for the nine months of 2009 increased to (euro)21.0 million (or 31.1% of revenue) from (euro)20.6 million (or 30.3% of revenue) in the corresponding period in 2008. Overall good performance on Mining and Water contracts during the nine months of 2009 and the positive impact of the significant capital expenditure program implemented in 2008 allowed the Company to maintain the level of gross margin despite a higher depreciation expense.

    
    -------------------------------------------------------------------------
    Operating Expenses            Q3                       Nine Months
    (excluding cost
    of sales)
    -------------------------------------------------------------------------
    (in thousands      Three-            Three-      Nine-             Nine-
     of (euro))         month             month      month             month
    (unaudited)        period            period     period            period
                        ended             ended      ended             ended
                    September     %   September  September     %   September
                     30, 2009  Change  30, 2008   30, 2009  Change  30, 2008
    -------------------------------------------------------------------------
    Selling, general
     and
     administrative     2,964     26%     2,351      8,491     17%     7,235
    Other (income)
     and expense, net     (44)    n/s         -       (164)    n/s       148
    Total operating
     expenses           2,920     24%     2,351      8,327     13%     7,383
    -------------------------------------------------------------------------
    

In the quarter ended September 30, 2009 , operating expenses (excluding cost of sales) increased from (euro)2.4 million in 2008 to (euro)2.9 million. The increase in selling, general and administrative expenses was expected as a result of the integration of acquisitions made in Canada in October 2008 and Australia in April 2009 .

For the nine-month period, operating expenses (excluding cost of sales) increased to (euro)8.3 million from (euro)7.4 million in the corresponding period of 2008, again, resulted from increased costs this year associated with expanding Foraco's geographical coverage within Canada as well as Australia .

    
    -------------------------------------------------------------------------
    Operating Profit              Q3                       Nine Months

    -------------------------------------------------------------------------
    (in thousands      Three-            Three-      Nine-             Nine-
     of (euro))         month             month      month             month
    (unaudited)        period            period     period            period
                        ended             ended      ended             ended
                    September     %   September  September     %   September
                     30, 2009  Change  30, 2008   30, 2009  Change  30, 2008
    -------------------------------------------------------------------------
    Reporting Segment
    Mining & Energy     2,956    -14%     3,449      9,778     -5%    10,303
    Water,
     Environmental &
     Infrastructure       560     60%       349      2,891      1%     2,870
    Total Operating
     Profit             3,516     -7%     3,799     12,669     -4%    13,174
    -------------------------------------------------------------------------
    

Operating profit decreased to (euro)3.5 million for the three months ended September 30, 2009 , compared to (euro)3.8 million for the same three months of 2008. This decrease is primarily the result of higher selling, general and administrative expenses that were offset by the effect of Company's good operating performance and gross profit.

For the nine-month period, operating profit decreased by 4% to (euro)12.7 million compared to (euro)13.2 million in last year's corresponding period, and reflected by higher selling, general and administrative expenses from the acquisitions in Canada and Australia but was also partially offset by the Company's improved performance.

    
    -------------------------------------------------------------------------
    Income                        Q3                       Nine Months

    -------------------------------------------------------------------------
    (in thousands      Three-            Three-      Nine-             Nine-
     of (euro))         month             month      month             month
    (unaudited)        period            period     period            period
                        ended             ended      ended             ended
                    September     %   September  September     %   September
                     30, 2009  Change  30, 2008   30, 2009  Change  30, 2008
    -------------------------------------------------------------------------
    Revenue            20,171     -2%    20,480     67,607      0%    67,745
    Gross Profit(1)     6,436      5%     6,150     20,996      2%    20,557
    Operating
     Expenses(2)        2,920     24%     2,351      8,327     13%     7,383
    Operating Profit    3,516     -7%     3,799     12,669     -4%    13,174
    Net Earnings        2,410             2,404      8,339     -1%     8,431
    Earnings per
     share EPS in
     (euro)
     (basic)       (euro)0.04        (euro)0.04 (euro)0.14        (euro)0.15
    -------------------------------------------------------------------------
    (1) Includes amortization and depreciation expenses
    (2) Excludes cost of sales
    

Net earnings totaled (euro)2.4 million or (euro)0.04 per share for the three-month period ended September 30, 2009 , which is the same amount earned in the corresponding period in 2008.

The first nine months of 2009 had net earnings totaling (euro)8.3 million or (euro)0.14 per share, compared to (euro)8.4 million or (euro)0.15 per share in the same nine-month period a year earlier.

Balance Sheet

As at September 30, 2009 , the positive cash position net of debt amounted to (euro)5.3 million compared to (euro)(0.3) million as at June 30, 2008 . Cash and cash equivalents are mainly comprised of (euro)9.6 million of short-term deposits held at top-tier European financial institutions. The Company had drawn (euro)0.6 million from a total of (euro)22.5 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 Q3 2009 was C$1.57 to (euro)1.00. The closing rate at the end of September 30, 2009 , was C$1.58 to (euro)1.00.

Foraco's unaudited Financial Statements and Management's Discussion & Analysis ("MD&A"), for the three and nine-month periods ended September 30, 2009 , are available via Foraco's website at www.foraco.com and will be available on www.sedar.com.

Conference Call and Webcast

At 10:00 am EDT today, 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 1-800-587-1893 or 416-644-3430. 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=2876060 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 [email protected] 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

For further information: please contact CHF Investor Relations at: Jeanny So, Director of Operations, Email: [email protected], Tel: [phone] x 225; Lindsay Carpenter, Account Manager, Email: [email protected], Tel: [phone] x 239