FORACO INTERNATIONAL SA "Our Q1 was quite weak as our customers took in average one month more than last year to launch their tenders and associated drilling campaigns: this has delayed considerably the 2016 ramp up. This recent trend to compress most of the drilling budget into the last 3 quarters of the year was detected a couple of years ago, and has been amplified this year by the further decrease of metal prices seen in the last quarter of 2015: our customers further revisited their 2016 budgets and had to wait longer the go ahead from headquarters. Since then most of metals prices have enjoyed a significant rebound during the quarter, and this has been welcomed throughout the industry even if the sustainability of these new prices has yet to be proven. As far as our current fiscal year is concerned, we are confident that we will be able to recover the majority of these delays by year- end." said Daniel Simoncini, Chairman and co-CEO of Foraco.
"During the quarter, we have once again seen the benefits of the ongoing cost saving plan which allowed the Company to more than offset the impact of the reduced activity compared to the same period last year. This quarter again, we were able to demonstrate our ability to deliver the expected performance on the majority of the contracts that went ahead. Our G&A costs also continue to significantly decrease." commented Jean-Pierre Charmensat, co-CEO and Chief Financial Officer. "Despite the slowdown of activities which impacted the generation of cash, the increase in net debt is primarily attributable to working capital requirements which are expected to reverse before year end."
Three months Q1 2016 HighlightsRevenue
Q1 2016 revenue amounted to US$ 24.1 million compared to US$ 33.3 million in Q1 2015, a decrease of 28%. Using Q1 2015 exchanges rates, Q1 2016 revenue decreased by 18%, mainly due to the late start of certain projects.
The utilization rate was 25% in Q1 2016 compared to 28% in Q1 2015.
Profitability
The Q1 2016 gross margin including depreciation within cost of sales was US$ (2.8) million compared to US$ (3.2) million in Q1 2015. The reduction in fixed costs compensated the reduction
of activity. Most projects have delivered their expected gross margin.
SG&A costs reduced by US$ 0.8 million (or 16%) between Q1 2016 and Q1 2015 excluding non- recurring items, as a result of the full effect of the cost cutting action plans.
Excluding non-recurring items, EBIT amounted to US$ (7.1) million in Q1 2016 compared to US$ (8.6) million in Q1 2015. The non-recurring cost corresponds to the final settlement of the earn- out clause related to the 2012 acquisition in Australia (US$ 0.9 million).
During the quarter, EBITDA excluding non-recurring items amounted to US$ (1.6) million compared to US$ (1.7) million for the same quarter last year.
Capital expenditure was US$ 1.9 million in Q1 2016 compared to US$ 2.8 million in Q1 2015. This Capex is mainly linked to new contracts.
Cash flow and net debt
Free cash flow was US$ (7.7) million in Q1 2016 compared to US$ (5.3) million in Q1 2015, due to the reduction of the activity and payment delays from customers.
The net debt was US$ 101.0 million as at March 31, 2016 compared to US$ 89.3 million as at December 31, 2015. This increase is due to the Free Cash Flow (US$ -7.7 million) and the effect of foreign exchange rates (mainly Euro) US$ 4 million.
Selected financial data
(In thousands of US$)
(unaudited)
Three-month period ended March 31, Three-month period ended March 31, excluding non-recurring items (2)2016
2015
2016 2015
Revenue | 24,128 | 33,280 | 24,128 | 33,280 |
Gross profit / (loss) (1) | (2,792) | (3,200) | (2,792) | (3,200) |
As a percentage of sales | -11.6% | -9.6% | -11.6% | -9.6% |
EBITDA | (1,620) | (1,252) | (1,620) | (1,749) |
As a percentage of sales | -6.7% | -3.8% | -6.7% | -5.3% |
Operating profit / (loss) | (8,010) | (8,122) | (7,110) | (8,619) |
As a percentage of sales | -33.2% | -24.4% | -29.5% | -25.9% |
Profit / (loss) for the period | (8,314) | (7,891) | (7,414) | (8,224) |
Attributable to: Equity holders of the Company | (7,977) | (7,023) | (7,077) | (7,356) |
Non-controlling interests | (337) | (869) | (337) | (869) |
EPS (in US cents) Basic | (8.92) | (7.85) | ||
Diluted | (8.92) | (7.85) |
includes amortization and depreciation expenses related to operations
The three-month periods presented have been normalized in order to exclude (i) in 2015, a non-recurring non-cash gain of US$497 thousand resulting from the unused reversal of a provision for doubtful debt, and (ii) in 2016, an amount of US$ 900 thousand corresponding to the final settlement of an earn-out clause related to the 2012 acquisition in Australia.
Financial results
Revenue
(In thousands of US$) - (unaudited) | Q1 2016 | % change | Q1 2015 |
Reporting segment | |||
Mining ................................................................ | 19,784 | -31% | 28,747 |
Water .................................................................. | 4,343 | -4% | 4,533 |
Total revenue ..................................................... | 24,128 | -28% | 33,280 |
Geographic region | |||
Europe, Middle East and Africa......................... | 9,359 | -10% | 10,439 |
South America.................................................... | 4,600 | -48% | 8,927 |
North America.................................................... | 6,497 | -15% | 7,629 |
Asia Pacific......................................................... | 3,671 | -42% | 6,285 |
Total revenue ..................................................... | 24,128 | -28% | 33,280 |
Q1 2016 revenue amounted to US$ 24.1 million compared to US$ 33.3 million in Q1 2015, a decrease of 28%. Using Q1 2015 exchanges rates, Q1 2016 revenue decreased by 18%.
In EMEA, revenue decreased by 10% (3% excluding the foreign exchange impact), from US$ 10.4 million in Q1 2015 to US$ 9.4 million in Q1 2016.
Revenue in South America amounted to US$ 4.6 million in Q1 2016 (US$ 8.9 million in Q1 2015), a decrease of 48% or 33% excluding the foreign exchange impact. This can mainly be explained by the reduced activity in Chile and Brazil and lack of activity in Argentina.
Revenue in North America decreased by 15% or 6% excluding the impact of exchange rates, due to the late start of new contracts.
In Asia Pacific, Q1 2016 revenue amounted to US$ 3.7 million, a decrease of 42%, or 37% excluding the impact of exchange rates, mainly due to the delays in the start of new contracts in Australia and no start of activity in New Caledonia.
Gross profit
(In thousands of US$) - (unaudited) | Q1 2016 | % change | Q1 2015 |
Reporting segment | |||
Mining ................................................................. | (2,814) | -9% | (3,080) |
Water ................................................................... | 22 | -118% | (120) |
Total gross profit / (loss) ................................... | (2,792) | -13% | (3,200) |
Q1 2016 gross margin including depreciation within cost of sales was US$ (2.8) million compared to US$ (3.2) million in Q1 2015. The reduction in fixed costs compensated the reduction of activity. Most projects have delivered their expected gross margin.
Selling, General and Administrative Expenses
(In thousands of US$) - (unaudited) | Q1 2016 | % change | Q1 2015 |
Selling, general and administrative expenses | 4,179 | -7% | 4,505 |
SG&A costs reduced by US$ 0.8 million (or 16%) between Q1 2016 and Q1 2015 excluding non-recurring items, as a result of the full effect of the cost cutting action plans.
Operating result
(In thousands of US$) - (unaudited) | Q1 2016 | % change | Q1 2015 |
Reporting segment | |||
Mining .......................................................................................................... | (7,280) | -1% | (7,321) |
Water ............................................................................................................. | (730) | -9% | (801) |
Total operating profit / (loss) ...................................................................... | (8,010) | -1% | (8,122) |
Total operating profit / (loss) excluding non-recurring items .................. | (7,110) | -18% | (8,619) |
Operating profit was US$ 8.0 million, a US$ 1.5 million improvement excluding non-recurring items compared to Q1 2015.
Financial position
The following table provides a summary of the Company's cash flows for Q1 2016 and Q1 2015:
(In thousands of US$) | Q1 2016 | Q1 2015 |
Cash generated by/(used in) operations before working capital requirements | (2,500) | (1,754) |
Working capital requirements | (3,094) | 590 |
Interest and tax | (1,125) | (1,839) |
Net cash flow generated by / (used in) operating activities | (6,719) | (3,003) |
Purchase of equipment in cash | (1,020) | (2,344) |
Free cash flow | (7,739) | (5,347) |
Debt variance | 4,523 | (2,245) |
Dividends paid to minority shareholders in affiliates | (500) | - |
Acquisition of treasury shares | (62) | - |
Net cash generated / (used in) financing activities | 3,961 | (2,245) |
Net cash variation | (3,778) | (7,592) |
Foreign exchange differences | 262 | (1,064) |
Variation in cash and cash equivalents | (3,516) | (8,656) |
In Q1 2016, the net cash flow used from operating activities amounted to US$ 6.7 million compared to US$ 3.0 million during Q1 2015.
Foraco International SA issued this content on 03 May 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 03 May 2016 09:18:09 UTC. Original document available at http://www.foraco.com/wp/wp-content/uploads/2016/05/Foraco-Q1-2016-press-release-Vdef1.pdf |
