Odyssey Marine Exploration, Inc. press release

Foraco International reports Q1 2014

2014-05-06

NASDAQ - Nasdaq Stock Market · Phosphate · Gold · Copper · Silver · Zinc · Cobalt · Manganese · Nickel · Rare Earth Elements · United States

Positive gross profit despite of slow start

TORONTOand MARSEILLE, FRANCE, May 6, 2014/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 first quarter 2014. All figures are reported in US Dollars (US$), unless otherwise indicated.

Three months Q1 2014 Highlights

Revenue

Q1 2014 revenue amounted to US$ 45.4 millioncompared to US$ 59.8 millionin Q1 2013, a decrease of 24%. The Company's drill utilization rate was 30% in Q1 2014 compared to 37% in Q1 2013.

Profitability

Q1 2014 gross profit including depreciation within cost of sales was US$ 2.6 million(6% of revenue) compared to US$ (8.7) millionin Q1 2013 (-15% of revenue). Although the revenue decreased, there were no one-off costs, all regions generated positive contract gross margins, and the Company fully benefited from the positive effect of the fixed operational costs reduction, which has been ongoing since Q4 2012. SG&A costs decreased by 27% between Q1 2013 and Q1 2014, mainly as a result of the continued implementation of the company-wide cost cutting action plans. EBIT was US$ (3.9) millionin Q1 2014 compared to US$ (8.5) millionin Q1 2013, or US$ (17.7) millionexcluding the impact corresponding to the remeasurement in Q1 2013 of the contribution payable for Servitec, in accordance with IFRS. The adjusted EBITDA1, excluding the impact of Servitec, improved by US$ 11.5 millionfrom US$ (7.1)in Q1 2013 to US$ 4.4 millionin Q1 2014. Capital expenditures were US$ 1.5 millionin Q1 2014 compared to US$ 3.5 millionin Q1 2013.

Net debt

The net debt as at March 31, 2014was US$ 119.6 millionvs. US$ 121.9 millionas at December 31, 2013, a reduction of US$ 2.3 million:

| _1The Q1 2013 adjusted EBIT excludes the gain amounting to US$ 9.2 million resulting from the remeasurement of the contribution payable for Servitec in accordance with IFRS_ |

"Q1 is traditionally negatively impacted by seasonality and the utilization rate was low as expected, at 30%. In spite of this, we achieved a reasonable level of profitability with a positive gross profit after depreciation of US$ 2.6 millioncompared to US$ (8.7) millionduring the same period last year. All regions generated positive contract gross margins, and the Company fully benefited from the effect of the fixed operational costs reduction, which has been ongoing since Q4 2012," said Daniel Simoncini, Chairman and co-CEO of Foraco. "Although overall market conditions remain uncertain, we successfully secured major contracts that we had expected to win in Q1 2014. We are using this quiet period to continue to improve our operating efficiencies, reduce our costs and reinforce our customer's relationship."

"In spite of the relatively low absorption of fixed operational costs, the EBIT for the quarter came to a negative amount of US$3.9 million, an improvement of US$ 13.4 millioncompared to the adjusted EBIT2in Q1 2013. Positive cash flow from operating activities was US$4.5 millionin the first quarter of 2014, an increase of US$11.5compared to the same quarter last year," commented Jean-Pierre Charmensat, co-CEO and Chief Financial Officer. "Capital expenditures were limited to US$ 1.5 millionduring the quarter. As expected, working capital requirements were US$ (12.8) millionin Q1 2014, mainly due to the resumption of activity following the year-end seasonal slowdown. The net debt as at March 31, 2014was US$ 119.6 millionvs. US$ 121.9 millionas at December 31, 2013, a reduction of US$ 2.3 million."

| 2_The Q1 2013 adjusted EBIT excludes the gain amounting to US$ 9.2 million resulting from the remeasurement of the contribution payable for Servitec in accordance with IFRS_ |

Selected financial data

| (In thousands of US$) (unaudited) | | Three-month period ended March 31, | | | | | | | | 2014 | | 2013 | | | | | | | | | Revenue | | | 45,445 | | 59,795 | | | | | | | | | | | | | | | | Gross profit (1) | | | 2,630 | | (8,741) | | As a percentage of sales | | | 5.8% | | -14.6% | | | | | | | | | EBITDA | | | 4,434 | | 2,134 | | As a percentage of sales | | | 9.8% | | 3.6% | | | | | | | | | Operating profit / (loss) | | | (3,888) | | (8,483) | | As a percentage of sales | | | -8.6% | | -14.2% | | | | | | | | | | | | | | | | Profit / (loss) for the period | | | (3,998) | | (4,170) | | | | | | | | | | | | | | | | Attributable to: | | | | | | | Equity holders of the Company | | | (3,802) | | (3,222) | | Non-controlling interests | | | (196) | | (948) | | | | | | | | | EPS (in US cents) | | | | | | | Basic | | | (4.30) | | (3.66) | | Diluted | | | (4.30) | | (3.66) |

| (1) | includes amortization and depreciation expenses related to operations |

Financial results

Revenue

| (In thousands of US$) - (unaudited) | | | | Q1 2014 | | | | % change | | | | Q1 2013 | | Reporting segment | | | | | | | | | | | | | | Mining........................................................... | | | | 39,857 | | | | -31% | | | | 57,559 | | Water............................................................ | | | | 5,588 | | | | 150% | | | | 2,236 | | Total revenue.............................................. | | | | 45,445 | | | | -24% | | | | 59,795 | | | | | | | | | | | | | | | | Geographic region | | | | | | | | | | | | | | South America.............................................. | | | | 14,997 | | | | -39% | | | | 24,451 | | Europe, Middle East and Africa.................. | | | | 11,270 | | | | -15% | | | | 13,279 | | North America............................................... | | | | 9,617 | | | | -14% | | | | 11,135 | | Asia Pacific................................................... | | | | 9,561 | | | | -13% | | | | 10,930 | | Total revenue.............................................. | | | | 45,445 | | | | -24% | | | | 59,795 |

Q1 2014 revenue amounted to US$ 45.4 millioncompared to US$ 59.8 millionin Q1 2013, a decrease of 24%. Compared to Q1 2013, there were significant fluctuations in local currency exchange rates against the US$ in certain countries where the Company operates. Assuming no change in exchange rates between Q1 2013 and Q1 2014, Q1 2014 revenue would have decreased by 16%.

Revenue in South Americaamounted to US$ 15.0 millionin Q1 2014 (US$ 24.5 millionin Q1 2013), a decrease of 39%. The decrease in Chilewas 38% mainly linked to the end of the two troubled contracts. No activity was recorded in Argentinain Q1 14. In Brazil, the decrease was 30%, of which 16% was linked to the exchange rate effect.

In EMEA, revenue decreased by 15%, from US$ 13.3 millionin Q1 2013 to US$ 11.3 millionin Q1 2014. This is mainly due to the reduced activity in the mining segment across West Africapartly offset by the increased activity in the water segment.

Revenue in North Americadecreased by 14% in US$ but was stable in Canadian dollars.

In Asia Pacific, Q1 2014 revenue amounted to US$ 9.6 million, a decrease of 13%. Revenue decreased by 20% in Australiabut only by 6% excluding the exchange rate effect.

Gross profit

Q1 2014 gross profit including depreciation within cost of sales was US$ 2.6 million(or 6% of revenue) compared to US$ (8.7) millionin Q1 2013 (or -15% of revenue). Although the revenue decreased, generating some under absorption of fixed costs, there were no one-off costs, none of the Company's major contracts generated losses and the Company fully benefited from the positive effect of the fixed operational costs reduction, which has been ongoing since Q4 2012.

Selling, General and Administrative Expenses

| (In thousands of US$) - (unaudited) | | Q1 2014 | | | | % change | | | | Q1 2013 | | | | | | | | | | | | | | Selling, general and administrative expenses | | 6,518 | | | | -27% | | | | 8,960 |

SG&A costs decreased by US$ 2.4 millionbetween Q1 2013 and Q1 2014. These savings are the result of the continued implementation of the company-wide cost cutting action plans since Q4 2012.

Operating profit

| _(1) In Q1 2013, the Company recognized a gain amounting to US$ 9.2 million resulting from the remeasurement of the contribution payable related to Servitec in accordance with IFRS. Excluding this positive effect, the operating loss would have been US$ 17.7 million in Q1 2013. _ |

Operating profit / loss improved by US$ 13.8 million, going from an adjusted operating loss of US$ 17.7 millionin Q1 2013, excluding the Servitec debt remeasurement, to US$ 3.9 millionin Q1 2014, and can be analyzed as follows:

Financial position

| (In thousands of US$) | | | | | | | Q1 2014 | | | | Q1 2013 | | | | | | | | | | | | | | | Cash generated from operations before working capital requirements | | | | | | | 4,459 | | | | (7,036) | | Working capital requirements, interest and tax | | | | | | | (12,776) | | | | 1,902 | | Net cash flow used in operating activities | | | | | | | (8,317) | | | | (5,134) | | | | | | | | | | | | | | | Purchase of equipment in cash | | | | | | | (1,206) | | | | (3,571) | | Consideration payable related to acquisitions | | | | | | | (500) | | | | - | | Net cash used in investing activities | | | | | | | (1,706) | | | | (3,571) | | | | | | | | | | | | | | | Net financing | | | | | | | 2,274 | | | | 3,785 | | Acquisition of treasury shares | | | | | | | - | | | | (1,005) | | Dividends paid | | | | | | | (809) | | | | - | | Net cash from financing activities | | | | | | | 1,465 | | | | 2,780 | | | | | | | | | | | | | | | Net cash variation | | | | | | | (8,558) | | | | (5,925) | | | | | | | | | | | | | | | Exchange differences | | | | | | | (115) | | | | (880) | | | | | | | | | | | | | | | Variation in cash and cash equivalents | | | | | | | (8,673) | | | | (6,805) |

In Q1 2014, cash generated from operations before changes in operating assets and liabilities amounted to US$ 4.5 millioncompared to US$ (7.0) millionof cash used during the same period a year ago.

The working capital requirements, interest and income tax paid, for the period was US$ 12.8 million, mainly due to the seasonality of the receivables in Chile, Canadaand Australia, where the activity slowed down between November and January and resumed in February.

During the period, the Company acquired operating equipment for US$ 1.2 millionin cash and US$ 0.3 millionthrough capital leases compared to a total of US$ 3.6 millionin cash purchases during Q1 2013.

As at March 31, 2014, cash and cash equivalents totaled US$ 28.9 millioncompared to US$ 37.5 millionas at December 31, 2013. Cash and cash equivalents are held at or invested within top tier financial institutions.

As at March 31, 2014, the net debt amounted to US$ 119.6 million(US$ 121.9 millionas at December 31, 2013). The ratio of debt (net of cash) to shareholders' equity decreased to 0.65 from 0.69 as at December 31, 2013.

On March 31, 2014, financial debts and equivalents amounted to US$ 148.5 million(US$ 159 millionas at December 31, 2013). The financial debt also includes the present value of the consideration payable in 2015 for the acquisition of the remaining shares of Servitec which was reduced to US$ 3.4 millionfollowing the agreement signed with the minority shareholder of Servitec to waive the call and put options previously due to be exercised before the end of 2014 and payable in March 2015.

As at March 31, 2014, the financial debt is as follows (in thousands of US$):

| Maturity | | | | Roll-over | | | April 1, 2014 and March 31, 2015 | | | April 1, 2015 and March 31, 2016 | | | April 1, 2016 and March 31, 2017 | | | April 1, 2017 and March 31, 2018 | | | April 1, 2018 and March 31, 2019 | | | | Total | | Drawn credit lines rolled over on a yearly basis | | | | 55,248 | | | - | | | - | | | - | | | - | | | - | | | | 55,248 | | | | | | | | | | | | | | | | | | | | | | | | | | | Long term financing related to: | | | | | | | | | | | | | | | | | | | | | | | | | - Drawn credit lines rolled over confirmed for at least 12 months | | | | 4,000 | | | - | | | - | | | - | | | - | | | - | | | | 4,000 | | - Brazil acquisition | | | | | | | 4,662 | | | 4,662 | | | 4,662 | | | 4,662 | | | - | | | | 18,650 | | - Australia acquisition | | | | | | | 6,850 | | | 6,850 | | | 6,850 | | | 6,850 | | | | | | | 27,400 | | - Acquisition of fixed assets | | | | | | | 9,545 | | | 10,109 | | | 8,668 | | | 5,847 | | | 1,557 | | | | 35,726 | | - Acquisition of fixed assets through capital leases | | | | | | | 2,973 | | | 677 | | | 220 | | | 147 | | | - | | | | 4,016 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | 59,248 | | | 24,030 | | | 22,298 | | | 20,400 | | | 17,506 | | | 1,557 | | | | 145,04 |

The Company has used and unused short-term credit facilities amounting to US$ 104.9 millionout of which US$ 59.2 millionwas drawn as of March 31, 2014. These facilities are granted individually by several banks, mainly in France, Chile, Brazil, Australiaand Canada. They are generally granted on a yearly basis and are subject to review at various dates.

Bank guarantees as at March 31, 2014, totaled US$ 28.9 millioncompared to US$ 28.5 millionas at December 31, 2013.

Going concern and impairment testing

Based on internal forecasts and projections which are regularly updated in order to take into account foreseeable changes in the Company's operating performance, the Company believes that it has adequate financial resources to continue in operation and meet its financial commitments (mainly related to debt service obligations) for a period of at least twelve months. In addition, impairment tests based on expected discounted cash flows were performed at the level of each business segment and geographic area as at December 31, 2013and indicated that no impairment was required on the carrying values of the long lived assets for each business segment and geographic area.

Currency exchange rates

The exchange rates for the periods under review are provided in the Management's Discussion and Analysis of Q1 2014.

Outlook

The Company's business strategy is to reinforce its existing platform and to develop and optimize the services it offers across geographical regions and industry segments. Foraco expects to continue to execute its strategy through a combination of organic growth and development and acquisitions of complementary businesses in the drilling services industry.

Conference call and webcast

On May 6, 2014, Company Management will conduct a conference call at 10:00 am ETto review the financial results. The call will be hosted by Daniel Simoncini, Chairman and CEO, and Jean-Pierre Charmensat, Vice-CEO and CFO.

You can join the call by dialing 1- 888-231-8191 or 647-427-7450. You will be put on hold until the conference call begins. A live audio webcast of the conference call will also be available through http://www.newswire.ca/en/webcast/detail/1346271/1488495or on our website.

About Foraco International SA

Foraco International SA (TSX: FAR) is a leading global mineral drilling services company that provides a comprehensive and reliable service offering in mining and water projects. Supported by its founding values of integrity, innovation and involvement, Foraco has grown into the third largest global drilling enterprise with a presence in 23 countries across five continents. For more information about Foraco, visit www.foraco.com.

_"Neither TSX Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this release."_

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 April 2, 2013, which is filed with Canadian regulators on SEDAR (www.sedar.com). The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements and information whether as a result of new information, future events or otherwise. All written and oral forward-looking statements and information attributable to Foraco or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. _

SOURCE Foraco International SA

By Mail :ir@foraco.com

By Tel: (647) 351-5483

Earlier from Odyssey Marine Exploration, Inc.

Foraco announces Q1 2014 results and conference call 2014-04-30
Foraco International Reports Q4 2013 2014-03-04
Foraco announces Q4 2013 results and conference call; Exhibiting at PDAC 2014 2014-02-18