Foraco International (FAR) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $77.9 million, down from $100.1 million in Q2 2023, with EBITDA at $16.4 million (21% margin) versus $23.8 million (23.8% margin) last year.

• North America and Asia Pacific achieved record revenues, up 3% and 33% year-over-year, respectively, with strong gross margins.

• The company pivoted to focus on stable jurisdictions, exiting Russia and reducing West Africa exposure, now prioritizing tier one customers.

• South America and EMEA revenues declined due to early winter, reduced junior mining activity, and strategic exits.

• EV metals, especially copper, remain the dominant commodity at 49% of revenue; water business contributed 11%.

Financial highlights

• Q2 2024 gross margin was $18 million (23%), down from $26 million (26%) in Q2 2023.

• SG&A expenses decreased 18% to $5.8 million, stable at ~7% of revenue.

• Operating income was $12.1 million (16% margin), down from $19 million (19%) in Q2 2023.

• Net income for Q2 2024 was $7.8 million (10% margin), compared to $11 million (11%) last year; EPS (basic) was 7.87 US cents vs. 8.92 US cents.

• H1 2024 revenue was $155 million, down from $188 million in H1 2023; H1 2024 EBITDA margin was 22%.

Outlook and guidance

• Management expects revenue contraction to be temporary, with growth driven by mineral demand and tier-one clients.

• The company expects to ramp up quickly in Latin America as winter ends and projects resume.

• Two new rotary rigs to be deployed in 2024, expected to boost capacity, especially in water.

• Continued focus on debt reduction and strategic investments.

• Management is confident in returning to growth as market conditions normalize and the pivot completes.