"Before I comment on the fourth quarter 2016 activity, I am pleased to announce that we reached an agreement with our existing and new lenders. This agreement which is in the process of being formalized allows us to (i) raise new long-term money with new lenders, (ii) postpone installments of most of our long-term financing facilities and (iii) secure new bank guarantee lines with our existing lenders." said Daniel Simoncini, Chairman and co-CEO of Foraco. "During the fourth quarter of 2016, the environment continued to be challenging as our performance was again affected by the postponement of certain contracts. We note, however, a relatively stronger commercial activity, particularly in North America and Brazil, and a significant increase in the duration of the contracts opened for bidding. At year-end, our level of order backlog to be executed in 2017 was slightly above that of last year with a more dynamic phasing of activity in the first part of the year. We believe that we have reached the turning point in terms of pressure on prices and margin. We remain cautious awaiting the expected firming up of the industry global utilization rates."
"Despite the adverse market conditions, the Company maintained a positive EBITDA in the fourth quarter as well as for the whole year of 2016. However, in Q4 2016, our cash flow from operations was penalized by the increased payment terms of certain clients" commented Jean-Pierre Charmensat, co-CEO and Chief Financial Officer. "As Daniel mentioned, we have agreed the main terms of our future financing. This agreement will provide for a new money injection of €23 million (US$ 24 million) in the form of bonds with a 5 years term, including €18 million (US$ 19 million) available at closing, and the postponement of the installment of most of our existing long-term financing also for a period of 5 years. This new debt arrangement includes standard covenants. Under the proposed structure, the cost of our debt will represent an average effective interest rate of approximately 5%. No dilutive instruments will be issued as part of these negotiations. The Company is then funded for the long term, getting ready for the upturn and in a good position to benefit from the recovery in the mining industry."
Three months Q4 2016 HighlightsRevenue
Q4 2016 revenue amounted to US$ 28.7 million compared to US$ 29.5 million in Q4 2015, a decrease of 3%. Mining activity increased by 6%, whereas the water activity decreased by 38%. Some long-terms contracts in the water segment were completed during the last quarter of 2016.
The utilization rate was 35% in Q4 2016 (compared to 30% in Q4 2015). The revenue has not increased proportionally due to a change in geographic mix.
Profitability
The Q4 2016 gross margin including depreciation within cost of sales was US$ 3.1 million compared to US$ 5.0 million in Q4 2015, this reduction can mainly be explained by continued pressure on prices in the current challenging environment and by a change in geographic mix.
SG&A costs were stable at US$ 4.1 million for the quarter.
EBIT amounted to US$ (1.3) million in Q4 2016 compared to US$ 0.9 million in Q4 2015.
During the quarter, EBITDA amounted to US$ 3.5 million compared to US$ 6.2 million for the same quarter last year.
Net Debt
The net debt was US$ 103.3 million as at December 31, 2016 compared to US$ 89.3 million as at December 31, 2015. The positive cash generated by operations was more than offset by the working capital requirements and the Capex.
On February 28, 2017, the Company reached an agreement with its lenders. This agreement will allow to raise new long term money with new lenders, postpone installments of most of the Company's long-term financing facilities and secure new bank guarantee lines with existing lenders.
YTD Q4 2016 HighlightsRevenue
FY 2016 revenue amounted to US$ 115.2 million compared to US$ 137.7 million in FY 2015, a decrease of 16%. This decrease is mainly linked to the reduced activity in the first semester of 2016. During the second semester, the revenue decreased by 3% compared to last year.
Profitability
FY 2016 gross margin including depreciation within cost of sales was US$ 4.5 million compared to US$ 11.6 million in FY 2015, this decrease can mainly be explained by the decrease in activity and continued pressure on prices in the current challenging environment.
SG&A costs reduced by US$ 1.0 million between FY 2015 and FY 2016 as a result of certain additional savings and the reversal of an unused provision for doubtful debt (US$ 0.4 million) recorded during the first quarter 2016.
Capital expenditure was US$ 6.9 million in FY 2016 compared to US$ 9.8 million in FY 2015.
Revenue
(In thousands of US$) - (unaudited) | Q4 2016 | % change | Q4 2015 | FY 2016 | % change | FY 2015 |
Reporting segment | ||||||
Mining ................................... | 25,089 | 6% | 23,708 | 102,910 | -14% | 119,358 |
Water ................................... | 3,633 | -38% | 5,820 | 12,254 | -33% | 18,326 |
Total revenue ........................ | 28,722 | -3% | 29,528 | 115,164 | -16% | 137,684 |
Geographic region | ||||||
Europe, Middle East and Africa .... | 9,152 | -19% | 11,232 | 38,602 | -14% | 44,943 |
South America ......................... | 8,863 | 84% | 4,821 | 30,046 | -4% | 31,376 |
North America ......................... | 5,593 | -3% | 5,757 | 26,115 | -12% | 29,619 |
Asia Pacific............................. | 5,114 | -34% | 7,718 | 20,401 | -36% | 31,746 |
Total revenue ........................ | 28,722 | -3% | 29,528 | 115,164 | -16% | 137,684 |
Q4 2016 revenue amounted to US$ 28.7 million compared to US$ 29.5 million in Q4 2015, a decrease of 3%.
In EMEA, revenue decreased by 19%, from US$ 11.2 million in Q4 2015 to US$ 9.2 million in Q4 2016, as a result of the decreased activity in Russia and in the Water segment in Africa, partially compensated by a higher level of activity in the Mining segment in Africa and in France.
Revenue in South America amounted to US$ 8.9 million in Q4 2016 (US$ 4.8 million in Q4 2015), an increase of 84%. Both Brazil and Chile contributed to this increase.
Revenue in North America was almost stable at -3%.
In Asia Pacific, Q4 2016 revenue amounted to US$ 5.1 million, a decrease of 34% mainly due to certain reductions of drilling programs in Australia and some weather issues in New Caledonia.
FY 2016FY 2016 revenue amounted to US$ 115.2 million compared to US$ 137.7 million in FY 2015.
In EMEA, revenue decreased by 14% (from US$ 44.9 million in FY 2015 to US$ 38.6 million in FY 2016) as a result of the decreased activity in Russia and in the Water segment in Africa, partially compensated by a higher level of activity in the Mining segment in Africa and in France.
Revenue in South America amounted to US$ 30.0 million in FY 2016 (US$ 31.4 million in FY 2015), a decrease of 4%. The increased activity in Brazil (+12% in local currency) was more than offset by the reduced activity in Chile and lack of activity in Argentina.
Revenue in North America was US$ 26.1 million compared to US$ 29.6 million, a decrease of 12% mainly due to the reduction of volumes and the postponement of certain ongoing contracts.
In Asia Pacific, FY 2016 revenue amounted to US$ 20.4 million, a decrease of 36% mainly due to the reduction of drilling programs in Australia and in New Caledonia.
Gross margin
(In thousands of US$) - (unaudited) | Q4 2016 | % change | Q4 2015 | FY 2016 | % change | FY 2015 |
Reporting segment | ||||||
Mining ..................................... | 2,699 | -33% | 4,033 | 4,201 | -61% | 10,792 |
Water ...................................... | 376 | -61% | 957 | 309 | -62% | 809 |
Total gross profit / (loss) ........... | 3,075 | -38% | 4,990 | 4,510 | -61% | 11,601 |
The Q4 2016 gross margin including depreciation within cost of sales was US$ 3.1 million compared to US$ 5.0 million in Q4 2015, this reduction can mainly be explained by continued pressure on prices in the current challenging environment and by a change in geographic mix.
FY 2016FY 2016 gross margin including depreciation within cost of sales was US$ 4.5 million compared to US$ 11.6 million in FY 2015, this decrease can mainly be explained by the decrease in activity and continued pressure on prices in the current challenging environment.
Selling, General and Administrative Expenses
(In thousands of US$) - (unaudited) | Q4 2016 | % change | Q4 2015 | FY 2016 | % change | FY 2015 |
Selling, general and administrative expenses | 4,050 | 0% | 4,078 | 16,767 | -6% | 17,754 |
SG&A costs were stable compared to Q4 2015.
FY 2016SG&A costs reduced by US$ 1.0 million between FY 2015 and FY 2016 as a result of certain additional savings and the reversal of an unused provision for doubtful debt (US$ 0.4 million) recorded during the first quarter 2016.
Operating result
(In thousands of US$) - (unaudited) | Q4 2016 | % change | Q4 2015 | FY 2016 | % change | FY 2015 |
Reporting segment | ||||||
Mining .......................................... | (1,186) | n/a | 723 | (12,723) | n/a | (5,036) |
Water............................................. | (136) | n/a | 153 | (1,642) | n/a | (1,639) |
Total operating profit / (loss) ..... | (1,322) | n/a | 876 | (14,365) | n/a | (6,675) |
The operating loss was US$ (1.3) million, compared to a profit amounting to US$ 0.9 million in Q4 2015 for the same reasons as stated above.
FY 2016The operating loss was US$ (14.4) million, compared to US$ (6.7) million in FY 2015 for the same reasons as stated above. The FY 2016 operating loss includes a US$ 0.9 million one-off cost linked to the settlement of the earn-out relating to the acquisition of JND in Australia.
Foraco International SA published this content on 02 March 2017 and is solely responsible for the information contained herein.
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