Foraco Quick Update - $FAR.to

Quick update after Q1 2024

*Disclosure: I own shares in FAR. I am not a professional. Please do your own due diligence.

FAR reports in USD, so I have converted from the Canadian yen to USD.

Price: $2.90 CAD/$2.06 USD

MC: 212.5 USD

EV: 294.3 USD

Yield: 2.8%

1 year performance: +62%

FAR reported yesterday and held a call. Results were behind of my expectations, the tone on the call was fine and the stock was down over 5%.

Quarter Recap

• Revenue of 77 million vs 88.4 million last year.

• EBITDA of 17.6 million vs 19.1 last year.

• Mining revenue was down to 69 million vs 74.5 million.

• Water revenue was down to 8 million vs 13.8 million.

• There was a jump in receivables that is seasonal.

Call Notes

• They noted that the year started off slower than typical. Typically Q1 is down from Q4, but this year was worse than I was anticipating.

• They noted that activity has rebounded and there was no change to the commercial terms.

• They noted that they have two rigs going to work in water before year end.

• They noted that there are some gold producers that they are in discussions with and potentially put rigs to work in Q2 2024.

Closing Thoughts

Though the market didn’t like the results, I wasn’t as bothered. Such is the way of things in this business. I think they will be able to continue to de-lever and working capital will trend to historic ranges. The end market demand seems strong here.

Valuation

We are still less than 4x EV/EBITDA. I have them at around 7x EV/FCF. I think that is too cheap for the business.

Thanks for reading.

Dean

* long FAR.to