- Q3 2023 Financial Metrics:
- Revenue:
US$ 95.1 million (+4% YoY) - EBITDA:
US$ 25.0 million (+9% YoY) - EBITDA as % of Revenue: 26.3% (up from 25.2% in Q3 2022)
- Revenue:
- Trailing Twelve Months (TTM) Indicators:
- Revenue:
US$ 368 million (+17% YoY) - EBITDA:
US$ 85.1 million (+45% YoY) - Net Profit:
US$ 38.0 million (10.3% of Revenue, +79% YoY)
- Revenue:
The Company continued to build on its momentum from the previous quarters, maintaining a trajectory of profitable growth driven by sustained demand in battery metals, gold, and water. The Rig Utilization Rate remained steady at 58%.
Income Statement
(In thousands of US$) | Three-month period | Nine-month period | ||||||||
2023 | 2022 | 2023 | 2022 | |||||||
Revenue | 95,060 | 91,414 | 283,503 | 245,652 | ||||||
Gross profit (1) | 26,863 | 24,446 | 73,944 | 52,793 | ||||||
As a percentage of sales | 28.3 % | 26.7 % | 26.1 % | 21.5 % | ||||||
EBITDA | 25,002 | 23,024 | 67,945 | 49,417 | ||||||
As a percentage of sales | 26.3 % | 25.2 % | 24.0 % | 20.1 % | ||||||
Operating profit | 20,169 | 18,156 | 53,239 | 34,382 | ||||||
As a percentage of sales | 21.2 % | 19.9 % | 18.8 % | 14.0 % | ||||||
Net profit for the period | 12,366 | 11,151 | 31,421 | 19,093 | ||||||
Attributable to: | ||||||||||
Equity holders of the Company | 10,848 | 8,351 | 26,298 | 13,238 | ||||||
Non-controlling interests | 1,518 | 2,800 | 5,123 | 5,855 | ||||||
EPS (in US cents) | ||||||||||
Basic | 11.00 | 8.46 | 26.61 | 13.41 | ||||||
Diluted | 10.77 | 8.25 | 26.05 | 13.07 |
(1) This line item includes amortization and depreciation expenses related to operations |
Highlights – Q3 2023
Revenue
- In Q3 2023,
Foraco's revenue wasUS$ 95.1 million compared toUS$ 91.4 million generated in Q3 2022, a 4% increase.
Profitability
- Q3 2023 gross margin, including depreciation within cost of sales, reached
US$ 26.9 million (representing 28.3% of revenue), compared toUS$ 24.4 million (or 26.7% of revenue) recorded in Q3 2022. The uplift was driven by the satisfactory performance of contracts and an increase contribution of value-added drilling services. - For the quarter, EBITDA totaled
US$ 25.0 million (or 26.3% of revenue), from theUS$ 23.0 million (or 25.2% of revenue) for the corresponding quarter of the previous year.
Highlights – YTD Q3 2023
Revenue
- For the nine-month period ending
September 30, 2023 (YTD Q3 2023), the revenue amounted toUS$ 283.5 million , representing a 15% increase over theUS$245.7 million recorded in YTD Q3 2022. This surge in revenue is due to the solid performance of main contracts and the delivery of more-added drilling services.
Profitability
- In YTD 2023, the gross margin, inclusive of depreciation within cost of sales, was
US$ 73.9 million (or 26.1% of revenue), a significant 40% increase fromUS$ 52.8 million (or 21.5% of revenue) in YTD Q3 2022. This increase resulted from good contract performance, improved selling prices, and the delivery of more value-added drilling services. - During YTD Q3 2023, EBITDA amounted to
US$ 67.9 million (or 24.0% of revenue), a 37% increase fromUS$ 49.4 million (or 20.1% of revenue) for the same period last year. - For the trailing twelve months (TTM) ending
September 30, 2023 , the net profit wasUS$ 38 million , resulting in an EPS ofC$ 0.44 , a 109% increase from the previous year.
Financial results
Revenue
(In thousands of US$) - (unaudited) | Q3 2023 | % change | Q3 2022 | YTD Q3 | % change | YTD Q3 |
Reporting segment | ||||||
Mining................................................................................. | 83,369 | 5 % | 79,027 | 245,820 | 16 % | 211,831 |
Water.................................................................................. | 11,691 | -6 % | 12,387 | 37,683 | 11 % | 33,822 |
Total revenue..................................................................... | 95,060 | 4 % | 91,414 | 283,503 | 15 % | 245,652 |
Geographic region | ||||||
32,164 | 15 % | 27,870 | 100,088 | 33 % | 75,097 | |
29,930 | 2 % | 29,398 | 93,066 | 22 % | 76,068 | |
19,440 | 28 % | 15,158 | 52,178 | 33 % | 39,342 | |
13,526 | -29 % | 18,988 | 38,171 | -31 % | 55,145 | |
Total revenue..................................................................... | 95,060 | 4 % | 91,414 | 283,503 | 15 % | 245,652 |
Q3 2023
The increase in revenue was driven by the solid performance of main contracts and the provision of more value-added drilling services which more than compensated for the decline in activity in certain regions due to political and economic instability. The rig utilization rate for Q3 2023 held steady at 58%, marginally up from 57% in Q3 2022, with underlying disparities across regions, CIS reporting lower rates, and other regions witnessing higher utilization.
The uptick in the Mining segment's revenue can be attributed to favorable market dynamics. Long-term rolling contracts, renegotiated and extended last year, coupled with the company's proven delivery capability, played a crucial role. In the water segment, revenue experienced a slight dip due to the phasing of contracts.
North American operations reported a 15% revenue increase (18% without adverse foreign exchange variance), reaching
South American revenue remained stable at
In the
Revenue for the EMEA region saw a 29% decrease, moving down to
YTD Q3 2023
The uptick in revenue for the Mining and Water segments can be attributed to favorable market dynamics, with the Company having renegotiated and extended its long-term rolling contracts since the previous year. Coupled with the Company's proven capacity to deliver, this has generated significant growth.
North American operations saw a 22% surge in activity, with revenues climbing to
In
In the
In the EMEA region, revenue for YTD Q3 2023 was
Gross profit
(In thousands of US$) - (unaudited) | Q3 2023 | % change | Q3 2022 | YTD Q3 | % change | YTD Q3 |
Reporting segment | ||||||
Mining................................................................................. | 23,165 | 13 % | 20,523 | 63,654 | 46 % | 43,749 |
Water.................................................................................. | 3,698 | -6 % | 3,923 | 10,290 | 14 % | 9,044 |
Total gross profit / (loss) .................................................. | 26,863 | 10 % | 24,446 | 73,944 | 40 % | 52,793 |
Q3 2023
For Q3 2023, the gross margin, inclusive of depreciation within cost of sales, reached
YTD Q3 2023
In YTD Q3 2023, the gross margin, inclusive of depreciation within the cost of sales, rose to
Selling, General and Administrative Expenses
(In thousands of US$) - (unaudited) | Q3 2023 | % change | Q3 2022 | YTD Q3 | % change | YTD Q3 | |||
Selling, general and administrative expenses |
6,694 |
6 % |
6,290 |
20,705 |
12 % |
18,411 |
Q3 2023
SG&A increased compared to the same quarter last year mainly due to the level of activity. As a percentage of revenue, SG&A remained stable at 7.0% of the revenue.
YTD Q3 2023
SG&A increased compared to the same quarter last year mainly due to the level of activity. As a percentage of revenue, SG&A decreased from 7.5% in YTD Q3 2022 to 7.3% in YTD Q3 2023.
Operating result
(In thousands of US$) - (unaudited) | Q3 2023 | % change | Q3 2022 | YTD Q3 | % change | YTD Q3 | |
Reporting segment | |||||||
Mining ........................................................................................................... | 17,294 | 15 % | 15,085 | 45,717 | 64 % | 27,858 | |
Water............................................................................................................. | 2,875 | -6 % | 3,071 | 7,522 | 15 % | 6,524 | |
Total operating profit / (loss) ....................................................................... | 20,169 | 11 % | 18,156 | 53,239 | 55 % | 34,382 | |
Q3 2023
The operating profit reached
YTD Q3 2023
The operating profit reached
Financial position
The following table provides a summary of the Company's cash flows for YTD Q3 2023 and YTD Q3 2022:
(In thousands of US$) | YTD Q3 2023 | YTD Q3 2022 | |
Cash generated by operations before working capital requirements | 67,945 | 49,417 | |
Working capital requirements | (23,015) | (18,526) | |
Income tax paid | (9,601) | (5,685) | |
Purchase of equipment in cash | (20,719) | (14,096) | |
Free Cash Flow before debt servicing | 14,610 | 11,109 | |
Debt variance | (4,895) | 2,355 | |
Interests paid | (10,435) | (7,097) | |
Acquisition of treasury shares | (1,097) | (927) | |
Dividends paid to non-controlling interests | (1,098) | (1,098) | |
Net cash generated / (used in) financing activities | (17,525) | (6,767) | |
Net cash variation | (2,915) | 4,342 | |
Foreign exchange differences | (854) | (635) | |
Variation in cash and cash equivalents | (3,769) | 3,708 | |
Cash and cash equivalents at the end of the period | 25,640 | 27,631 |
In YTD Q3 2023, 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
As at
As at
The Net debt to EBITDA ratio as at
Bank guarantees as at
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 mines extension 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 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 Q3 2023.
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) | Q3 2023 | Q3 2022 | YTD Q3 | YTD Q3 | ||||||
Operating profit / (loss)................................................................................... | 20,169 | 18,156 | 53,239 | 34,382 | ||||||
Depreciation expense ...................................................................................... | 4,743 | 4,777 | 14,435 | 14,795 | ||||||
Non-cash employee share-based compensation............................................. | 90 | 90 | 270 | 240 | ||||||
EBITDA ............................................................................................................. | 25,002 | 23,024 | 67,945 | 49,417 |
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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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