Foraco International S.A.

Revenue was $84.5 million in Q2 2026, up 22% year over year from $69.1 million. EBITDA was $15 million, up from $14 million, while EBITDA margin was 17.8% of revenue versus 20.3% a year ago. Gross margin was 15.5% versus 20.5% in Q2 2025, and for the first half revenue reached $161 million versus $124 million, with gross margin at 13% versus 18% and EBITDA at 15% of revenue versus 17% a year ago. Mining revenue rose 23% to $70.5 million and Water revenue rose 21% to $14 million. Looking ahead, management did not provide numeric quarterly or full-year revenue/EBITDA guidance, but said the record backlog provides visibility through the second half of 2026 and beyond, about $230 million of the $404 million order book was earmarked for 2026, margin recovery is underway, and debt should be reduced before year-end as working capital normalizes and CapEx falls in the second half.

Timothy Bremner framed the quarter as evidence that Foraco is benefiting from a broad drilling recovery, supported by near-record gold prices, strong exploration budgets and growing near-mine/brownfield activity. He emphasized that demand is translating into higher activity, with broad diversification across commodities, customers and regions, and said the company has meaningful operating leverage at 51% utilization. His tone was constructive and confident, repeatedly stressing record backlog, pricing improvement and a “clear path” toward margin recovery.

Fabien Sevestre said Q2 revenue of $84.5 million was the strongest quarterly revenue since Q2 2023. He highlighted the margin bridge: gross margin fell to 15.5% from 20.5% due to higher labor, consumables, mobilization expenses and lower efficiency during contract start-ups; for the first half, gross margin was 13% versus 18% last year and EBITDA margin was 15% versus 17%. On cash and capital allocation, he said working capital increased to $15 million, CapEx was $16 million in the first half tied to six new rigs and supporting equipment, net debt rose to $85.7 million, and the company still had $22 million of undrawn committed credit lines. He also said free cash flow was $7 million in Q2 and negative $13 million year to date, but that working capital should reverse in the second half and investment should be lower.

Analysts focused on margin compression, pricing, cash flow, backlog visibility, and shareholder value. Management said the margin gap versus last year was about 5% and was a mix of inflation and start-up inefficiency, with pricing increases still working through and expected to be double-digit in some cases; Tim said the second half should see improvement. On demand, he said the tender pipeline is “overflowing” in some areas and robust across juniors, intermediates and seniors, while Australia/Asia Pacific is still strong despite phasing effects from contract renewals. On capital allocation and debt, management said debt should be reduced before year-end, the leverage ratio just needs to get to an acceptable level, and debt reduction remains the #1 pillar, though they do not intend to pay debt to zero.