Foraco has released its unaudited financial results for the third quarter of 2017. All figures are expressed in US Dollars (US$) unless otherwise indicated.
"The positive trend in commercial activity reported over the last two quarters was confirmed in Q3 2017. The key mining companies seem to widely recognize that reserves are being depleted at such a level that new exploration programs need to be launched. We noted a recovery in North America in the last few quarters and this trend now appears to be spreading to regions where the business environment is considered less risky" commented Daniel Simoncini, Chairman and Co-CEO of Foraco. "Thanks to our presence in these key countries, we expect to fully benefit from these positive trends. Our Q3 revenue was up 13% compared to the same quarter last year and although there has not been a recovery in selling prices yet, our profit margins have improved, driven by increased activity and a satisfactory operating performance."
"Our profit margin including depreciation in the cost of sales is improving quarter-by-quarter and represented 12.5% of revenue in Q3 2017, bringing our YTD margin to 9.7% of revenue. This is a significant improvement compared to the same period last year. EBITDA came to US$ 3.3 millionin the third quarter and US$ 8.2 million over the first nine months of the year. During the quarter, we invested US$ 3 million in CAPEX to serve newly acquired contracts. Our financial ratios are improving and we met our covenants as at September 30, 2017" added Jean-Pierre Charmensat, Co-CEO and Chief Financial Officer. "Notwithstanding positive market trends, we will continue to focus on cost control, strategic CAPEX and cash management. At this turning point, we are also aware that our future success will depend on our capacity to select, train and retain our dedicated workforce."
Three months Q3 2017 Highlights
Revenue
- Q3 2017 revenue was US$ 33.9 million compared to US$ 30.0 millionin Q3 2016, an increase of 13%.
- The utilization rate was 35% in Q3 2017, same as in Q3 2016.
Profitability
- Q3 2017 gross margin including depreciation within cost of sales was US$ 4.2 million (or 12.5% of revenue) compared to US$ 2.1 million in Q3 2016 (or 7.0% of revenue). This improvement is a combination of increased performance on contracts and higher activity allowing a better absorption of fixed operational costs.
- Q3 2017 EBIT was US$ (1.3) million compared to US$ (2.5) million in Q3 2016, a US$ 1.2 million improvement mainly attributable to an improved gross margin.
- Q3 2017 EBITDA was US$ 3.3 million compared to US$ 2.5 million in Q3 2016.
- Capital expenditure was US$ 3.0 million in Q3 2017 compared to US$ 1.3 million in Q3 2016. This Capex is mainly linked to new contracts to be executed in the next quarters.
YTD Q3 2017 Highlights
Revenue
- YTD Q3 2017 revenue amounted to US$ 100.8 million compared to US$ 86.4 million in YTD Q3 2016, an increase of 17%.
Profitability
- The YTD Q3 2017 gross margin including depreciation within cost of sales was US$ 9.8 million compared to US$ 1.4 million in YTD Q3 2016. The increased activity allowed a better absorption of fixed operational costs.
- YTD Q3 2017 EBIT was US$ (5.8) million compared to US$ (13.0) million in YTD Q3 2016, a US$ 7.2 million improvement mainly attributable to an improved gross margin.
- YTD Q3 2017 EBITDA was US$ 8.2 million compared to US$ 3.5 million for the same period last year.
Cash flow and net debt
- YTD Q3 2017 cash flow from operations before working capital was positive US$ 8.2 million vs. US$ 2.5 million YTD Q3 2016, an improvement mainly attributable to increased activity and profitability.
- CAPEX for the period amounted to US$ 6.6 million compared to US$ 4.1 million. This CAPEX program is mainly linked to new contracts.
- After working capital, interest, tax and CAPEX, YTD Q3 2017 free cash flow was US$ (6.0) million vs. US$ (10.2) million in YTD Q3 2016.
- On May 11, 2017, the Company completed the reorganization of its debt and obtained a new financing of € 18.0 million (US$ 19.8 millionat transaction date).
- The net debt was US$ 122.0 million as at September 30, 2017compared to US$ 103.3 million as at December 31, 2016. This increase is mainly due to the negative free cash flow (US$ 6.0 million) and the adverse effect of foreign exchange rates on the debt denominated in Euros (US$ 12.6 million).
