Boart Longyear Announces First Quarter 2017 Results

Announced Date :  May 15, 2017


Boart Longyear Limited (Boart Longyear) the world’s leading supplier of drilling services, equipment and tooling for mining and drilling companies, has announced results for the first quarter ended 31 March 2017.
Jeff Olsen, Boart Longyear’s CEO, commented on the Company’s results, stating, “In the first quarter, we continued our trend of improved results. Compared to the first quarter of 2016, our revenues were up $22 million (15%), EBITDA was up $8 million (64%) and cash from operating activities was up $11 million (21%). Adjusted EBITDA, which excludes restructuring costs, was up $15 million. The better results were a result of improved market conditions, increased productivity in Drilling Services and strong cost control.”

Mr. Olsen continued, “Looking forward, we started to see signs of improvement in our markets during the second half of 2016, and this trend has continued in the first quarter of 2017. Our Products business has historically been a leading indicator of activity in our Drilling Services business, so we see it as a positive sign that revenues in our Products business are up significantly vs. a year ago. This trend is supported by improved commodity prices, increased exploration spend and strong equity raisings by junior mining companies. As mentioned in our full-year 2016 results, our goal is to be cash positive in 2017 (net of restructuring costs) through continued improvements in our operating performance combined with better volumes from an improving market.”

The recapitalisation announced in April 2017 remains ongoing, with an Annual General Meeting and shareholder vote expected in June 2017. The details of the process can be found in the Notice of Meeting that was lodged with the ASX on 12 May 2017. This comprehensive recapitalisation is expected to create a sustainable capital structure by reducing our debt, increasing our liquidity and extending the maturities on our debt.

KEY METRICS AS OF 31 MARCH 2017 (compared to 31 March 2016)

• REVENUE – Up $22M (15%) driven by higher volume

• PRICING – Down 1% - 2% driven by initiatives to reduce excess inventory

• ADJUSTED EBITDA – Up $15M on improved volume, productivity and efficiency

• CASH FROM OPERATING ACTIVITIES – $39M used in Q1 2017, an $11M (21%) improvement

• COGS – Significant improvement as percentage of sales

• SG&A – Relatively flat

• OPERATING MARGIN – Up $15M (63%)

• NET PROFIT AFTER TAX – Up $14M (23%)

• NET DEBT – Up $86M (14%) 

RESULTS COMMENTARY

Revenues for the first quarter ended 31 March 2017 were up 15% compared to the corresponding period in 2016, driven by higher volume both in the Drilling Services and Products divisions. The improvement in volume was partially offset by the negative impact of price of 1% - 2%, driven by a Company initiative to reduce excess inventory.

Significant items for the quarter totalled $13 million, compared to $6 million recorded in the corresponding period in 2016. These items primarily related to restructuring charges for operational improvements and the recapitalisation.

Cash used in operating activities was $39 million in the first quarter of 2017, compared to $50 million used in the corresponding period in 2016. The $11 million improvement demonstrates the positive impact of the Company’s ongoing focus on operating improvement and efficiency, including the ongoing productivity initiative started in the Drilling Services division in the second half of 2015. Due to the seasonal nature of the business, the Company typically uses cash during the first half of the year and generates cash during the second half.

Net working capital increased from 31 December 2016 levels, primarily due to higher receivables related to increasing revenues. The Company typically sees a net working capital build-up during the first half of the year followed by a release during the second half. Liquidity at 31 March 2017 was $42 million, comprised of cash balances totalling $37 million and a further $5 million of availability under the Company’s asset-based loan facility.

STRATEGIC PRIORITIES

Technology and product innovation remain strategic priorities for the Company’s future growth, supported by disciplined and prudent control over capital expenditures. New product development efforts largely remain focused on incremental product changes that increase productivity so customers are willing to pay for them regardless of the business environment. The Company launched TruCoreTM in Canada following the successful rollout of the tool in both Australia and Latin America in 2016. TruCoreTM provides accurate core orientation measurements and is the first in a broad range of down-hole instrumentation tools to be rolled out soon. This represents the first step in implementing the Company’s strategy to be the global technology leader in providing subsurface resource information to mining companies through its Geological Data Services business.

With our industry-leading safety record, unparalleled operating performance and the latest in drilling technology, coupled with the improvements we have made in our cost structure and productivity, Boart Longyear remains uniquely positioned to realise significant operational leverage as the market recovers.

You can receive free Monthly news and insights from ResearchViews delivered straight to your inbox – sign up below:

* Indicates Mandatory
*Name:  
*Company:  
*Email:    
*Country:  
*Phone Number:          
Comments:
  captcha refresh
Enter Captcha Code:    

Send to friend

*Your EmailID:    
Message:
*Friend's EmailID:    
  captcha refresh
Enter Captcha Code: