Foraco International Reports Q2 2017

TORONTO and MARSEILLE, France, Aug. 1, 2017

"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 new-contracts. 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