Odyssey Marine Exploration, Inc. press release
Foraco International Reports Q4 2012
NASDAQ - Nasdaq Stock Market · Phosphate · Gold · Copper · Silver · Zinc · Cobalt · Manganese · Nickel · Rare Earth Elements · United States
FY 2012: Revenue up 22% at US$ 368 million, Net earnings up 7% at US$ 32.6 million, EPS up 3% at US$ 35.18 cents
Q4: Revenue down 7% at US$ 69.5 million, Net Earnings down 29% at US$ 5.1 million, EPS down 29% at US$ 6.23 cents
TORONTO, ON and MARSEILLE, France, March 5, 2013 /CNW/ - Foraco International SA (TSX:FAR) (the "Company" or "Foraco"), a leading global provider of mineral drilling services, today reported unaudited financial results for its fourth quarter 2012. All figures are reported in US Dollars (US$), unless otherwise indicated.
"As mentioned last quarter, the market has continued to contract during Q4 as project cutbacks, capital expenditure deferrals and cost cutting exercises have spread. Many customers stopped or reduced their operations much earlier than last year, leading to a utilization rate of 43% for the quarter, the lowest since we report. This level of activity, despite the overall satisfactory performance of our contracts, did not allow the fixed running costs to be covered, and our troubled two contracts in Chile both ending in June have continued to negatively impact the gross profit," said Daniel Simoncini, Chairman and co-CEO of Foraco. "We completed the acquisition of JND in Australia in November, and have subsequently observed that the conditions to meet the earn-out clause were not matched. Consequently, the overall actual price will be set at a 4.6 EBITDA. Our order book at year end stands at US$ 342 million compared with US$ 418 million at the end of 2011. We expect lower utilization rates in the first half of 2013 compared to the same time period in 2012, however, industry sentiment has seemingly improved since last November, and we hope this sentiment will materialize in the second half of this year.
"In this environment, the Company's quarterly gross profit was nil, including a negative impact of US$ 4 million on the Chilean contracts, and after the incorporation of the one off profit corresponding to the change in estimate of the Servitec acquisition price, the EBITDA as a percentage of sales was 20.2% and the net profit was US $5.1 million, or a 6.23 US cents EPS (diluted). For FY2012, we report a 22% increase in our revenue, at US$ 368 million, a net profit of US$ 32.6 million, an EBITDA of US$ 83.1 million or 22.6% of revenue and a yearly EPS of 35.18 US cents (diluted). Our cash position is strong at US$35.9 million and our net debt at December 31st was US$ 137.5 million including US$ 44.4 million corresponding to our commitment to acquire the remaining 49% of Servitec. This represents a debt to equity ratio of 0.66 and a net debt / FY2012 EBITDA ratio of 1.65" commented Jean-Pierre Charmensat, co-CEO and Chief Financial Officer. "Given the current market conditions, we have taken additional steps to lower our costs, and have reached a US$10 million fixed costs reduction pro forma year over year at the end of the quarter. Our total FY 2012 CAPEX was US$41 million. For FY 2013 we have set our CAPEX budget at a significantly lower level and expect to decrease our net debt position substantially. Meanwhile we will continue to focus on the integration of recent acquisitions and on operational profitability. In addition, the Board of Directors proposed a dividend of Cdn 5.5 cents per share for the Shareholders meeting to be held on May 22, 2013."
Three months Q4 2012 Highlights
Revenue
Q4 2012 revenue amounted to US$ 69.5 million compared to US$ 75.1 million in Q4 2011, a decrease of 7%. Excluding the impact of acquisitions performed during fiscal year 2012, revenue decreased by 33% due to the sharp fall of the exploration budgets of mining companies recorded in all regions which significantly impacted the activity of Q4 2012.
Profitability
Q4 2012 gross profit including depreciation within cost of sales was nil compared to US$ 16.9 million (22.5% of revenue) in Q4 2011.
All contracts performed well as expected excluding certain contracts in Chile which strongly impacted the gross margin. The level of activity did not allow the equipment cost and other fixed operating expenses to be covered.
Despite the corrective actions taken by the Company, two key contracts in Chile incurred losses during the quarter. The Q4 2012 gross profit was negatively affected by US$ 4 million. Negotiations are in progress to recognize contractual compensations and better conditions for the renewal of these long term contracts.
Q4 2012 EBIT amounted to US$ 3.6 million compared to US$10.1 million in Q4 2011. During the quarter, the Company reestimated at US$ 43.7 million the present value of the amount payable related to the second phase of the Servitec acquisition, compared to US$57.0 million at the acquisition date. The adjustment amounting to US$ 13.3 million has been recorded in other operating income and expense within operating profit in accordance with IFRS 3.
Q4 2012 EBITDA amounted to US$ 14.0 million (or 20.2% of revenue) compared to US$ 17.9 million (or 23.9% of revenue) in Q4 2011. Q4 2012 EBITDA includes US$ 1.0 million one-off transaction costs related to JND (nil in Q4 2011).
Q4 2012 net profit after tax amounted to US$ 5.2 million (6.2% of revenue) compared to Q4 2011 which amounted to US$ 7.3 million (9.6% of revenue).
Q4 2012 earnings per share attributable to the equity holders of the Company during the period amounted to 6.31 US cents (basic) and 6.23 US cents (diluted), compared to 8.79 US cents (basic) and 8.72 US cents (diluted) in Q4 2011.
FY 2012 Highlights
Revenue
FY 2012 revenue amounted to US$ 367.5 million compared to US$ 301.1 million in FY 2011, an increase of 22% or US$ 66.4 million including US$ 53.9 million generated by the acquisitions.
Profitability
FY 2012 gross profit, including depreciation within cost of sales, decreased to US$ 67.9 million (18.5% of revenue) compared to US$ 69.4 million (23.1% of revenue) in FY 2011, a decrease of 2%.
FY 2012 EBIT amounted to US$ 45.0 million, a 3.6% increase compared to FY 2011 (US$ 43.4 million). During the quarter, the Company reestimated at US$ 43.7 million the present value of the amount payable related to the second phase of the Servitec acquisition, compared to US$57.0 million at the acquisition date. The adjustment amounting to US$ 13.3 million has been recorded in other operating income and expense within operating profit in accordance with IFRS 3.
FY 2012 EBITDA amounted to US$ 83.1 million (22.6% of revenue) compared to US$ 73.43 million in FY 2011 (24.3% of revenue). FY 2012 EBITDA includes US$ 2.2 million one-off transaction costs related to Servitec and JND (nil in FY 2011).
FY 2012 net profit after tax amounted to US$ 32.6 million (8.9% of revenue), an increase of 7% compared to US$ 30.4 million (10.1% of revenue) in FY 2011.
FY 2012 earnings per share attributable to the equity holders of the Company during the period including the non-controlling interests corresponding to Servitec which the Company is in the process of acquiring amounted to 35.67 US cents (basic) and 35.18 US cents (diluted), compared to 34.51 US cents (basic) and 34.25 US cents (diluted) for FY 2011.
Acquisitions of businesses and non-controlling interests
Servitec
On April 20, 2012, the Company completed the acquisition of a 51% shareholding in WFS Sondagem S.A. ("Servitec"), a Brazilian drilling service provider, for an amount of US$ 44.2 million through a combination of US$ 20.2 million in cash and 4,816,509 Foraco shares at US$ 4.99 each representing US$ 24.0 million. As part of this agreement, the Company has an option to acquire, and the current shareholders of Servitec have an option to sell, the remaining 49% after three years. The corresponding purchase consideration will depend upon a formula based on the average 2012, 2013 and 2014 EBITDA of Servitec and on the net cash as at December 31, 2014. The maximum amount payable for this tranche is capped at US$ 75 million. A first estimate at transaction date of the present value of the amount payable was US$ 57.0 million. As a result of the change in market conditions over the year, the Company has revised this estimate and now considers that the present value of the amount payable should approximate US$ 43.7 million. The adjustment amounting to US$ 13.3 million has been accounted for within other operating income and expense in accordance with IFRS 3.
Servitec has been consolidated into the Foraco International financial statements since April 20, 2012. The financial statements as at December 31, 2012 include eight months of Servitec activity.
John Nitschke Drilling
On November 19, 2012, the Company acquired a 100% shareholding in John Nitschke Drilling, ("JND"), an Australian drilling service provider, through a combination of AU$ 30 million (US$ 31.2 million) in cash, an earn out amount, and 6,000,000 warrants giving the right to acquire, for no additional consideration, 6,000,000 Foraco International shares, with the possibility to issue up to an additional 1,000,000 warrants depending on certain market conditions. The warrants will be automatically convertible on the occurrence of certain events on or after 9 months from the closing date. The earn out payable was based on the calendar year 2012 EBITDA of JND. As a result of the change in market conditions over the year, the Company has assessed that JND will not achieve the EBITDA threshold which would generate a payment and therefore, no earn out payable is expected.
Order Backlog
As at December 31, 2012, the Company's order backlog for continuing operations was US$ 342 million, of which US$ 221 million is expected to be executed during the 2013 fiscal year. This compares to an order backlog as at December 31, 2011 of US$ 418 million of which US$ 294 million was expected to be executed during the 2012 fiscal year. As mentioned above, certain significant contracts in Chile are in the process of being re-tendered. These contracts are not included in the backlog as at December 31, 2012.
Selected Financial data
| (In thousands of US$) (unaudited) | | Three-month period ended December 31, | | Year ended December, 31 | | | | | | | | | | | | 2012 | | 2011 | | 2012 | | 2011 | | | | | | | | | | | | | | | | | | | | Revenue | | | 69,511 | | | 75,142 | | | 367,519 | | | 301,139 | | | | | | | | | | | | | | | | Gross profit (1) | | | 178 | | | 16,878 | | | 67,933 | | | 69,425 | | As a percentage of sales | | | 0.3% | | | 22.5% | | | 18.5% | | | 23.1% | | | | | | | | | | | | | | | | EBITDA | | | 14,041 | | | 17,924 | | | 83,097 | | | 73,306 | | As a percentage of sales | | | 20.2% | | | 23.9% | | | 22.6% | | | 24.3% | | | | | | | | | | | | | | | | Operating profit | | | 3,576 | | | 10,080 | | | 44,989 | | | 43,419 | | As a percentage of sales | | | 5.1% | | | 13.4% | | | 12.2% | | | 14.4% | | | | | | | | | | | | | | | | Profit for the period | | | 5,159 | | | 7,251 | | | 32,617 | | | 31,414 | | | | | | | | | | | | | | | | EPS (in US cents) | | | | | | | | | | | | | | Basic | | | 6.31 | | | 8.79 | | | 33.15 | | | 34.51 | | Diluted | | | 6.23 | | | 8.72 | | | 32.69 | | | 34.25 | | | | | | | | | | | | | | | | EPS (in US cents) including the impact of the considered acquisition of the non-controlling interest of Servitec | | | | | | | | | | | | | | Basic | | | 6.31 | | | 8.79 | | | 35.67 | | | 34.51 | | Diluted | | | 6.23 | | | 8.72 | | | 35.18 | | | 34.25 | | | | | | | | | | | | | | |
(1) includes amortization and depreciation expenses related to operations
| | | | | | | | | | | | | | | Financial results | | | | | | | | | | | | | | | | | | | | | | | | | | | | (In thousands of US$) (unaudited) | | Q4 2012 | | % change | | Q4 2011 | | FY 2012 | | % change | | FY 2011 | | Reporting segment | | | | | | | | | | | | | | Mining | | 68,232 | | -6% | | 72,381 | | 357,375 | | 25% | | 286,444 | | Water | | 1,279 | | - 54% | | 2,761 | | 10,144 | | -31% | | 14,695 | | Total revenue | | 69,511 | | -8% | | 75,142 | | 367,519 | | 22% | | 301,139 | | | | | | | | | | | | | | | | Geographic region | | | | | | | | | | | | | | South America | | 37,462 | | 19% | | 31,574 | | 180,034 | | 53% | | 117,779 | | Europe, Middle East and Africa | | 12,890 | | -43% | | 22,629 | | 92,228 | | -3% | | 95,135 | | North America | | 9,241 | | -23% | | 12,056 | | 61,568 | | 10% | | 55,754 | | Asia Pacific | | 9,918 | | 12% | | 8,884 | | 33,688 | | 4% | | 32,472 | | Total revenue | | 69,511 | | -8% | | 75,142 | | 367,519 | | 22% | | 301,139 | | | | | | | | | | | | | | |
Q4 2012
Since Q3 2012, Europe, Africa and Middle East have been grouped into one geographic region for management and reporting purposes (EMEA). Previously, Africa and Europe were presented separately.
Q4 2012 revenue amounted to US$ 69.5 million compared to US$ 75.1 million in Q4 2012, a decrease of 7%. Excluding the impact of acquisitions performed during fiscal year 2012, revenue decreased by 33% due to the sharp fall of the exploration budgets of mining companies recorded in all regions which significantly impacted the activity of Q4 2012.
Revenue in South America amounted to US$ 37.5 million in Q4 2012 (US$ 31.5 million in Q4 2011), an increase of 19%. This growth is mainly generated by the addition of Brazilian operations enabled by the Servitec acquisition in Q2 2012. Excluding this acquisition, revenue decreased by 29%.
In EMEA, revenue decreased by 43%, from US$ 22.6 in Q4 2011 to US$ 12.9 million in Q4 2012. This is mainly due to reduced activity levels in Africa while Russia remained stable.
Revenue in North America decreased by 23%, from US$ 12.1 million in Q4 2011 to US$ 9.2 million in Q4 2012. This decrease was mainly due to earlier than expected year end suspensions of long term contracts, as well as reallocation of assets in the region to mobilize new contracts.
In Asia-Pacific, Q4 2012 revenue amounted to US$ 9.9 million, an increase of US$ 1.0 million compared to Q4 2011 as a result of integration of JND activity since November 19, 2012. Excluding this acquisition, revenue decreased by 35% compared to Q4 2011.
FY 2012
FY 2012 revenue amounted to US$ 367.5 million, an increase of 22% compared to FY 2011 (US$ 301.1 million). Excluding the impact of acquisitions performed during fiscal year 2012, revenue increased by 4% as a result of a strong activity during the first half of 2012 followed by the reduction of activity due to the sharp fall of the exploration budgets of mining companies in the last quarter of 2012.
Revenue in South America amounted to US$ 180.0 million in FY 2012 (US$ 117.8 million in FY 2011), an increase of 53%. This growth is mainly generated by the addition of Brazilian operations enabled by the Servitec acquisition in Q2 2012. Excluding this acquisition, revenue increased by 11%.
In EMEA, revenue decreased by 3%, from US$ 95.1 in FY 2011 to US$ 92.2 million in FY 2012. This is mainly due to reduced activity levels in Africa during the last quarter which has only partially been offset by a 7% increased activity in Russia.
Revenue in North America increased by 10%, from US$ 55.8 million in FY 2011 to US$ 61.6 million in FY 2012.
This increase has been realized through increased activity in long term contracts with major companies.
In Asia-Pacific, FY 2012 revenue amounted to US$ 33.7 million, an increase of 4% compared to FY 2011, including the integration of JND activity since November 19, 2012. Excluding this acquisition, revenue decreased by 9% compared to FY 2011.
| | | | | | | | | | | | | | | Gross Profit | | | | | | | | | | | | | | | | | | | | | | | | | | | | (In thousands of US$) (unaudited) | | Q4 2012 | | % change | | Q4 2011 | | FY 2012 | | % change | | FY 2011 | | Gross profit | | | | | | | | | | | | | | Reporting segment | | | | | | | | | | | | | | Mining | | (136) | | -101% | | 16,299 | | 65,145 | | -2% | | 66,165 | | Water | | 314 | | -46% | | 579 | | 2,788 | | -14% | | 3,260 | | Total gross profit | | 178 | | -99% | | 16,878 | | 67,933 | | -2% | | 69,425 | | | | | | | | | | | | | | |
Q4 2012
Overall, Q4 2012 gross profit amounted to US$ 0.2 million compared to US$ 16.3 million in Q4 2011.
All contracts performed well as expected excluding certain contracts in Chile which strongly impacted the gross margin. The level of activity (-33% on a comparable basis) did not allow the equipment cost and other fixed operating expenses to be covered, despite the cost cutting actions taken to better align fixed costs to the reduced activity.
Despite the corrective actions taken by the Company, two key contracts in Chile incurred losses during the quarter. The Q4 2012 gross profit was negatively affected by US$ 4 million. Negotiations are in progress to recognize contractual compensations and better conditions for the renewal of these long term contracts.
FY 2012
Overall, FY 2012 gross profit amounted to US$ 67.9 million compared to US$ 69.4 million in FY 2011.
All contracts performed well as expected excluding certain contracts in Chile which strongly impacted the gross margin in Q3 and Q4 2012.
In Chile two key contracts had a negative impact on gross profit estimated at US$ 6.7 million in FY 2012, caused by the combination of a significant number of rigs being shut down at the client's request, preexisting unfavorable contract conditions aggravated by the significant downsizing of the allocated fleet, and lower production rates during the winter season. These two contracts are due to expire in mid 2013 and are being re tendered. Negotiations are in progress to recognize contractual compensations and better conditions for the renewal of these long term contracts.
The Company remains focused to adapting its structure and fixed costs to the market conditions, to the integration of newly acquired businesses, and to risk management.
Selling, General and Administrative Expenses
| | | | | | | | | | | | | | | (In thousands of US$) (unaudited) | | Q4 2012 | | % change | | Q4 2011 | | FY 2012 | | % change | | FY 2011 | | | | | | | | | | | | | | | | Selling, general and administrative expenses | | 9,905 | | 46% | | 6,798 | | 36,247 | | 40% | | 25,983 | | | | | | | | | | | | | | |
Q4 2012
During the quarter, SG&A expenses included US$ 2.8 million for (i) the one-off costs associated with the acquisition of JND and (ii) the integration of Servitec and JND. In addition, the Company reinforced its corporate structure.
FY 2012
During the period, SG&A expenses included US$ 2.6 million for the one-off costs associated with the business acquisitions in Brazil and Australia. The integration of Servitec and JND contributed US$ 1.4 million to the SG&A expenses. In addition SG&A expenses included costs associated with the relocation and reinforcement of the corporate structure.
Operating profit
| | | | | | | | | | | | | | | | (In thousands of US$) (unaudited) | | | Q4 2012 | | % change | | Q4 2011 | | FY 2012 | | % change | | FY 2011 | | Operating profit | | | | | | | | | | | | | | | Reporting segment | | | | | | | | | | | | | | | Mining | | | 3,444 | | -65% | | 9,751 | | 43,161 | | 4% | | 41,441 | | Water | | | 132 | | -60% | | 329 | | 1,828 | | -8% | | 1,978 | | Total operating profit | | | 3,576 | | -65% | | 10,080 | | 44,989 | | 4 | | 43,419 | | | | | | | | | | | | | | | |
Q4 2012
Operating profit decreased to US$ 3.6 million in Q4 2012 compared to US$ 10.1 million in Q4 2011. During the quarter, the Company reestimated at US$ 43.7 million the present value of the amount payable related to the second phase of the Servitec acquisition, compared to US$57.0 million at the acquisition date. The adjustment amounting to US$ 13.3 million has been recorded in other operating income and expense within operating profit in accordance with IFRS 3.
FY 2012
Operating profit increased to US$ 45.0 million in FY 2012 compared to US$ 43.4 million in FY 2011.
| | | | | | | | | Financial Position | | | | | | | | | | | | | | | | The following table provides a summary of the Company's cash flows for FY 2012 and FY 2011: | | | | | | | | | | | | | | | | (In thousands of US$) | | FY 2012 | | | | FY 2011 | | | | | | | | | | Cash generated from operations before working capital requirements | | 70,119 | | | | 74,088 | | Working capital requirements, interest and tax | | (28,326) | | | | (6,320) | | | | | | | | | | Net cash flow from operating activities | | 41,973 | | | | 67,768 | | | | | | | | | | Purchase of equipment in cash | | (39,512) | | | | (35,702) | | Consideration payable related to acquisitions | | (49,435) | | | | (7,600) | | | | | | | | | | Net cash used in investing activities | | (88,947) | | | | (43,302) | | | | | | | | | | Proceeds from credit facilities, net | | 68,835 | | | | (7,981) | | Acquisition of treasury shares | | (3,667) | | | | (3,272) | | Dividends paid | | (7,068) | | | | (2,957) | | | | | | | | | | Net cash from financing activities | | 58,100 | | | | (14,210) | | | | | | | | | | Exchange differences | | 458 | | | | (863) | | | | | | | | | | Variation in cash and cash equivalents | | 11,584 | | | | 9,393 | | | | | | | | |