FORACO INTERNATIONAL REPORTS Q2 2017 NEWS RELEASE Toronto, Ontario / Marseille, France - Tuesday, August 1, 2017. Foraco International SA (TSX:FAR) (the "Company" or "Foraco"), a leading global provider of mineral drilling services, today reported unaudited financial results for its second quarter 2017. All figures are reported in US Dollars (US$), unless otherwise indicated.

"Our commercial activity in Q2 2017 confirmed the positive trend reported last quarter with revenue increasing 13% compared to the same quarter last year despite continued pressure on prices and the postponement of certain contracts. All geographical areas benefit from this improved activity led by North America with new clients, both majors and juniors, and new6contracts. The utilization rate of our rigs was 39% during the quarter compared to 36% in Q2 2017 and 35% in Q1 2017" said Daniel Simoncini, Chairman and Co-CEO of Foraco. "Based on the backlog secured to date, we are relatively optimistic for the second half of the year, although our clients remain cautious regarding long-term commitments."

"During the quarter, our operations performed as expected. We generated positive EBITDA of US$ 3.6m or 10% of revenue, up 38% compared to the same quarter last year. We continued to keep capex and working capital requirements under control. Following the completion of our financial reorganization on May 11, we have positive cash available amounting to $17.4m as at June 30, 2017 and could limit the reimbursement of our debt to US$3.8m over the next 12 months and less than US$10m over the next 4 years," commented Jean-Pierre Charmensat, Co-CEO and Chief Financial Officer. "From both a commercial and financial standpoint, nothing prevents us from being reasonably positive looking forward. We also believe that our strategy consisting in maintaining our footprint in all our geographical areas during the low cycle of the industry puts us in a good position to benefit from the expected recovery in the market."

Three months Q2 2017 Highlights

Revenue

  • Q2 2017 revenue amounted to US$ 36.6 million compared to US$ 32.3 million in Q2 2016, an increase of 13%.

  • The utilization rate was 39% in Q2 2017 compared to 36% in Q2 2016.

    Profitability

  • The Q2 2017 gross margin including depreciation within cost of sales was US$ 4.1 million compared to US$ 2.1 million in Q2 2016. The increase of activity generated better absorption of fixed operational costs.

  • SG&A costs increased by US$ 0.5 million. As a percentage of revenue, SG&A represented 13% in Q2 2017 compared to 14% during the same period last year.

  • EBIT amounted to US$ (1.1) million in Q2 2017 compared to US$ (2.5) million in Q2 2016, a US$ 1.4 million improvement mainly as a result of increased Gross Margin.

  • During the quarter, EBITDA amounted to US$ 3.6 million compared to US$ 2.6 million for the same quarter last year.

  • Capital expenditure was US$ 2.2 million in Q2 2017 compared to US$ 0.9 million in Q2 2016. This Capex is mainly linked to new contracts to be executed in the next quarters.

    Cash flow and net debt

  • H1 2017 free cash flow was US$ (4.1) million vs. US$ (9.3) million in H1 2016, an improvement mainly attributable to higher cash generated by operations and lower working capital requirements.

  • On May 11, 2017, the Company completed the reorganization of its debt and received net proceeds amounting to US$ 17.3 million.

  • The net debt was US$ 114.1 million as at June 30, 2017 compared to US$ 103.3 million as at December 31, 2016. This increase is mainly due to the negative free cash flow (US$ 4.1 million) and the adverse effect of foreign exchange rates on the debt denominated in Euros (US$ 7.1 million).

    H2 2017 Highlights

    Revenue

  • H1 2017 revenue amounted to US$ 66.9 million compared to US$ 56.4 million in H1 2016, an increase of 19%.

    Profitability

  • The H1 2017 gross margin including depreciation within cost of sales was US$ 5.6 million compared to US$ (0.7) million in H1 2016. The increase of activity generated better absorption of fixed operational costs.

  • SG&A costs increased by US$ 1.2 million. As a percentage of revenue, SG&A remained flat at 15% in H1 2017 compared to the same period last year.

  • EBIT amounted to US$ (4.5) million in H1 2017 compared to US$ (10.5) million in H1 2016, a US$

    6.0 million improvement mainly as a result of increased Gross Margin.

  • During the period, EBITDA amounted to US$ 4.9 million compared to US$ 1.0 million for the same period last year.

Selected financial data

(In thousands of US$)

(unaudited)

Three-month period ended June 30, Six-month period ended June 30, 2017 2016 2017 2016

Revenue

36,567

32,297

66,891

56,425

Gross profit / (loss) (1)

4,050

2,128

5,555

(664)

As a percentage of sales

11.1%

6.6%

8.3%

-1.2%

EBITDA

3,610

2,625

4,912

1,005

As a percentage of sales

9.9%

8.1%

7.3%

1.8%

Operating profit / (loss)

(1,088)

(2,510)

(4,548)

(10,520)

As a percentage of sales

-3.0%

-7.8%

-6.8%

-18.6%

Profit / (loss) for the period

(2,206)

(3,305)

(5,992)

(11,619)

Attributable to:

Equity holders of the Company

(2,068)

(3,828)

(5,448)

(11,905)

Non-controlling interests

(138)

623

(544)

286

EPS (in US cents)

Basic

(2.27)

(4.28)

(6.00)

(13.31)

Diluted

(2.27)

(4.28)

(6.00)

(13.31)

(1) This line item includes amortization and depreciation expenses related to operations

Financial results

Revenue

(In thousands of US$) - (unaudited) Reporting segmentMining..................................................................

Q2 2017

34,097

% change

15%

Q2 2016

29,556

H1 2017

62,105

% change

26%

H1 2016

49,340

Water....................................................................

2,470

-10%

2,741

4,796

-32%

7,085

Total revenue.......................................................

36,567

13%

32,297

66,891

19%

56,425

Geographic region

Europe, Middle East and Africa ..........................

13,615

5%

12,920

24,976

12%

22,279

North America .....................................................

9,661

51%

6,416

18,129

40%

12,913

South America .....................................................

8,071

4%

7,788

15,475

25%

12,388

Asia Pacific ..........................................................

5,220

1%

5,173

8,311

-6%

8,845

Total revenue.......................................................

36,567

13%

32,297

66,891

19%

56,425

Q2 2017

Q2 2017 revenue amounted to US$ 36.6 million compared to US$ 32.3 million in Q2 2016, an increase of 13%.

In EMEA, revenue increased by 5% from US$ 12.9 million in Q2 2016 to US$ 13.6 million in Q2 2017. The increased activity in the mining segment in Africa and Europe has more than offset the lower activity in the water segment in Africa.

Revenue in North America increased by 51% from US$ 6.4 million in Q2 2016 to US$ 9.7 million in Q2 2017. Compared to last year, the Company benefited from new contracts with Juniors and increased activity with Majors.

Revenue in South America increased by 4% from US$ 7.8 million in Q2 2016 to US$ 8.1 million in Q2 2017 but remains stable after elimination of the foreign exchange impact.

In Asia Pacific, revenue remained flat at US$ 5.2 million due to the combination of lower activity in Australia partially compensated by an increase of activity in New Caledonia.

H1 2017

H1 2017 revenue amounted to US$ 66.9 million compared to US$ 56.4 million in H1 2016, an increase of 19%.

In EMEA, revenue increased by 12% from US$ 22.3 million in H1 2016 to US$ 25.0 million in H1 2017. The increased activity in the mining segment in Africa and Europe has more than offset the lower activity in the water segment in Africa.

Revenue in North America increased by 40% from US$ 12.9 million in H1 2016 to US$ 18.1 million in H1 2017. Compared to last year, the Company benefited from new contracts with Juniors and increased activity with Majors. Some rigs were transferred from other areas to North America.

Revenue in South America increased by 25% from US$ 12.4 million in H1 2016 to US$ 15.5 million in H1 2017. The increase is mainly attributable to the earlier start of projects in Brazil (+27%) and Chile (+12%).

In Asia Pacific, revenue decreased from US$ 8.8 million to US$ 8.3 million, a decrease of 6% due to lower activity in Q1 2017. The decrease of activity in Australia was partially compensated by an increase of activity in New Caledonia.

Gross profit

(In thousands of US$) - (unaudited) Reporting segment

Q2 2017

% change

Q2 2016

H2 2017

% change

H1 2016

Mining...........................................................

3,928

88%

2,093

5,388

n/a

(721)

Water.............................................................

122

249%

35

167

n/a

57

Total gross profit / (loss) .............................

4,050

90%

2,128

5,555

n/a

(664)

Q2 2017

Q2 2017 gross margin including depreciation within cost of sales was US$ 4.1 million compared to US$

2.1 million in Q2 2016. The increase of activity allowed a better absorption of fixed operational costs.

Foraco International SA published this content on 01 August 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 01 August 2017 12:06:05 UTC.

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