Foraco International Q3 2024 Update - FAR.to
Quick update after Q3 2024
*Disclosure: I own shares in FAR. I am not a professional. Please do your own due diligence.
Price: $2.29 CAD/$1.65 USD
MC: 166 million USD
EV: 241 million USD
1 year performance:
FAR reported this morning and held a call . Results were in line with of my (weaker than last year) expectations and the stock closed down 0.43%.
*all numbers in USD unless stated otherwise
Quarter Recap
Weak q as expected.
They guided for a lower quarter.
Revenue of 77.7 million vs 95.1 USD.
North America up 11%.
Asia Pacific up 27%.
Reduced revenue from juniors of 14.3 and Russia exit of 5 million.
Revenue from tier 1 clients was up 2%.
South America revenue down to 13.1 million from 29.9 million.
EMEA revenue was 4.1 million.
EBITDA of 16.1 million vs 26.9 million.
20.8% margin vs 26.3%.
Water revenue of 10.9 million vs 11.7million.
Call Notes
Won an award for the Australian Drilling Industry Association Innovation of the year for the NGBF rig.
Feel that SG&A at 7% of revenue is a reasonable expectation.
1 new rig deployed in Australia, a 2nd is being readied for work and the 3rd should ship by end of year.
Still positive on Latin America.
Tender pipeline is solid.
North America looks strong.
Valuation
Now at 3.6 EV/ttm EBITDA.
Closing Thoughts
I’m hoping that this quarter or Q4 2024 is the bottom in the transition away from juniors. Looking ahead I see FAR still trading at quite a cheap valuation. They have plenty of exposure to copper and other base metals so that is something to keep an eye on. There isn’t a ton of love for drillers these days, particularly microcap ones.
It can be hard to judge a company from the outside at times. I think the new CEO of FAR is doing well. He came on and prioritized North America and it has performed well since.
I continue to hold my position and will add on weakness.
Thanks for reading.
Dean
* long FAR.to