Good morning, ladies and gentlemen, and welcome to the Foraco International SA Q4 2022 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, February 16th, 2023. I would now like to turn the conference over to Daniel Simoncini. Please go ahead.
Thank you. Thank you all for joining us on our Q4 2022 results conference. I'm Daniel Simoncini, Chairman and Co-CEO of Foraco, and with me today is Vice CEO and CFO, Jean-Pierre Charmensat. The news release of the results was issued this morning prior to the opening of the TSX through CNW Group. If you did not receive a copy of the release, please visit our website, www.foraco.com. We are pleased to report a remarkable quarter with revenue up 23% compared to the same quarter last year at $84.9 million, which allow us to reach new high for the full year with revenue of $330 million, up 23% equally year-on-year.
We're also pleased to report an excellent global performance of our operation, and our utilization rate stands at 58% this quarter, up 2% year-on-year, which resulted in a $6.7 million net profit, up 3 times year-on-year. We would like obviously to stress that none of these performances would have been possible without the dedication and competence of our team, who we warmly thank for their contribution. During the quarter, the macro environment has been somewhat less chaotic than previous quarters. As recession fears eased, Central Bank's policy got a clearer path forward, and the IMF metal index gained 12% from its yearly low in last October. Despite the record high order book we posted a year ago when we signed a lot of multi-year contracts, and as most of them have 1 year or less to go now.
We have been able to maintain our running year order book at historic highs with $216 million in hand to be delivered in 2023 as of December 31, 2022. This is 6% higher than last year. I will now pass the conference to Jean-Pierre who will walk us through the financials in more details. Jean-Pierre?
Thank you, Daniel. Good morning, everyone. Revenue for the Q1 of 2022 amounted to $84.9 million compared to $68.9 million for the same quarter last year, a 23% increase. This increase is the result of the favorable market dynamics with long-term rolling contracts, which were renegotiated and extended since 2021, coupled to our capacity to deliver. By reporting segment, the mining represented 87% of Q2 2022 revenue and water, 13%. Increasing the mining segment amounts to 22% and is a combination of the resilient gold market and the continuing and growing demand for battery metals leading to energy transition. By geographic regions, North America and South America were the most active regions.
In North America, revenue amounted to $28.3 million in Q4 2022, a 24% increase compared to $22.8 million in Q4 2021. This increase is linked to long-term contracts renewed during 2021 and 2022 and continued activity throughout the quarter. Revenue in South America increased by 81% at $29.4 million compared to $16.3 million in Q4 2021. All countries, Brazil, Chile and Argentina, increased their level of activity, mainly thanks to new long-term contracts with majors. In Asia Pacific, revenue amounted to $14 million, a 28% increase compared to the same quarter last year, reflecting quarter-over-quarter increased demand and gain of market share. Revenue in EMEA for the quarter was $13.1 million compared to $18.9 million in Q4 2021, a 30% decrease.
The activity in this region is affected by the political and economic uncertainties in Russia, minus 49%, and Africa, minus 50%, and by extreme weather condition in CIS. These decreases were partially offset by increased activity in Western Europe, plus 42%, and Kazakhstan, plus 99%. In Q4 2022, the geographical activity split was South America, 35%, North America, 33%, Asia Pacific, 16%, EMEA, 16%. During this quarter, the gross margin, including depreciation within cost of sales as per IFRS rules, was a profit of $18.5 million or 21.8% of revenue, versus $10.1 million or 14.7% of revenue for the same quarter last year, an 83% increase. This reflects the combination of solid operating performances on ongoing contracts and better productivity.
SG&A increased 11% compared to the same quarter last year, mainly due to the level of activity. As a percentage of revenue, SG&A may decrease from 8.5% in Q4 '21 to 7.6% in Q4 '22. The EBIT or operating result amounted to $12 million profits versus $4.3 million in Q4 '21, a 180% increase. The EBITA amounted to $17.1 million or 20.2% of revenue, an 82% increase compared to $9.4 million, or 13.7% of revenue in Q4 '21. I remind that we do not report adjusted EBITA or any other adjustment to the IFRS figures.
On a full year basis, revenue amounted to a record of $330.6 million, compared to $269.7 million in 2021, a 22.6% increase. This is the result of a combination of a steady stream of demand for battery metals and water services, and the capacity of the company to deliver despite logistics and staffing issues. In 2022, commodities mix was battery metals 42%. A strong increase compared to 30% in 2021. Gold, 28% versus 38% in 2021. Water-related drinking services, 13% versus 14% in 2021. Iron ore, stable, 10% compared to 2021. Other, 7% stable also. In the fiscal year 2022, the geographical activity split was North America 32%, South America 32%, EMEA 21%, and Asia-Pacific 16%.
Compared to 2021, we recorded a 98% growth in South America, 25% in Asia-Pacific, 13% in North America, while EMEA decreased 17%. The activity in this region is affected by the political and economic uncertainty in Russia and Africa. These decreases were partially offset by the increased activity in Kazakhstan. The full year 2022 gross profit was $70.3 million versus $46.8 million for the same period last year. A 52% improvement, mainly due to increased activity, performance on contracts, and tight cost control. All regions faced inflationary pressures on prices and salaries. In 2021, we successfully renegotiated most of our long-term contracts, including inflation protection clauses. The 2022 EBIT was a positive $46.4 million, or 14% of revenue, compared to $24 million, or 9% of revenue in the same period last year.
The full 2022 EBITA was a positive $66.5 million, 20% of revenue, compared to $43 per million for, or 16% of revenue in 2021. An increase of 55% compared to 2021. In 2022, we managed to keep control of our working capital. The working capital requirement was $9.7 million, compared to $4 million in the previous year, and this increase is the result of the activity continuing ramp-up. During 2022, CapEx totaled $20 million in cash, compared to $18.6 million in 2021, driven by the increased activity. CapEx relates essentially to the acquisition of new rigs, major rigs overhauls, ancillary equipment, and rocks. In 2022, we continued to de-leverage our balance sheet and significantly improve our leverage ratio. The net debt, including operational lease obligation, IFRS 16, amounted to $76.2 million.
It was $85.7 million at the end of 2021. The net debt to EBITA ratio on December 31, 2022 was 1.1 versus 2 at year-end 2021, and our net debt to equity ratio was 1. It was 1.24 in 2021. Despite the increase in interest rate, posted a net profit of $25.8 million in 2022, we consider that our profitability and the strong fundamentals of our business give us ground to proactively work on improving our capital structure. We have a clear vision of the opportunities and challenges ahead and continue to systematically address our strategic priorities and make the company stronger. I will now return the call to Daniel for his closing remarks. Daniel?
Thank you, Jean-Pierre Charmensat. This quarter concluded a great year of consolidation for Foraco, as we have clearly benefited from our strategic positioning, mainly in three key markets: battery metals, gold, and water services. Our long-term presence and focus on key mining regions, including North America, Australia, and South America, is also a factor of continued performance seen by us. Our main 2022 ESG KPIs are available now in our investor presentation on our website. We are pleased to report a significant decrease of our global climate footprint. Year-on-year, we reduced our greenhouse gas emission by 6%, our water consumption by 18%, and our energy consumption by 10%. We understand and agree that the initial savings are now the low-hanging fruits, but we keep saving more, and it will become harder going forward.
We have set up an internal team who has been tasked with the preparation of a comprehensive plan. On the safety side, we improved our TRIF at 1.31 for 5.8 million hours reported from 169 last year. Unfortunately, we had to report 2 light LTI when we reported none in 2021. On the governance side, we had no alert from our whistleblowing line. We have not booked any breach of any sort. The demand for our services remained at high levels. We get more and more demands from senior corporation and large intermediate for some of our high-tech services, from water service to deep service hole for underground mine or lithium solution mining boreholes. We're gearing up to address these high added-value segments and others in the near future.
Despite the uneasy international situation, the remaining disruption in supply chain and the tight employment market, we are confident the metal market will continue to grow in the near future. We are bracing for further expansion. Thank you for listening. I will now turn the call to the questions. We'll take. Our operator will take the first one. Thank you.
Thank you. Ladies and gentlemen, we'll now conduct a question and answer session. If at any time you'd like to ask a question, please press star followed by 1 on your touch tone keypad. If you'd like to withdraw your question, please press star followed by 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Okay, your first question comes from Gordon Lawson from Paradigm Capital. Gordon, please go ahead.
Hey, good morning, everyone, and congratulations on another excellent quarter. Can you please elaborate on your contract negotiations in terms of where you're seeing the best regional demand, as well as any changes in duration with the large caps?
We have not performed a large renegotiation for of our main contract, Gordon, because that has been done late 2020 and late 2021 and early 2022. For the moment, we just, we are just managing these long-term contracts and, you know, the price adjustment clauses which cover us for inflations are working very well, and our customers are totally at ease with this. We do not foresee any major negotiation coming. The new contract we sign are usually the spot market ones, although we have two other long-term contracts, you know, in the workings, but I cannot, you know, say much about them now.
All in all, things are running okay, and we are not involved in, I would say lengthy or difficult or, you know, confrontational negotiation with anybody now. That answer your question?
Oh, yes. Yes. That's fantastic. Thank you. You mentioned margins. You've shown some solid increases over the past few years, with your margin growth. Can you talk more about your cost sharing nature within your contracts?
We don't do cost sharing, Gordon. We have, I would say price adjustment formulas, which are usually based on a kind of a polynomial system with three main components. One is the wages components, the second one is the CPI component, and the third one, if applicable, is usually the energy component. This usually is made for covering, I would say the quasi-totality of our cost increases. The only cost we would, you know, definitely share or pass to the customers outside this kind of, clause are the fuel when it is provided by the customer directly to our rigs. Okay?
I see. Okay. Yes. That's very helpful. Thank you very much.
Ladies and gentlemen, as a reminder, should you have a question, please press star followed by one. Your next question comes from Steven Green from Ordinance Capital. Steven, please go ahead.
Hi, Daniel. I don't know where to start. This was really showing the leverage of this model. It's awesome. One question I had, the debt repayments that you did, I guess, was around $9 million in debt. Was that a bond or is that part of a schedule that debt repayment is on?
Yeah. Hi, Steven. I will let Jean-Pierre answer, okay?
In 2022, we reimbursed partly the first installment of the Marathon debt and other debts. The main bonds reimbursement was $5 million this year. It will be $10 million in 2023, $10 million, et cetera, in 2024, and then.
Okay. That's a schedule you have. You're not paying any extra.
No.
Depending on our generation of cash flow, we might consider to repay earlier because the interest rate is.
We consider it high, but we have not done that in 2022 because we had the non-COVID period anyway.
All right. Yeah, because it's exciting that you're paying down the debt because in the last cycle, we had a lot of debt. We didn't really control our own destiny. Now it's exciting because when you control your debt, you control your destiny, which is very exciting for this company. Just wanna talk about the valuation a little bit. You're selling basically a 1/3 of your revenues. You're selling 2x EBITDA. I was curious, like, how are we gonna get the liquidity and people to recognize this story? Because you're still growing. You grew your EBITDA to 67% and, you know, have a multiple of 2x EBITDA with 60% growth.
I mean, I'm sure it's not gonna continue like that, but to have a strong growth profile going forward and to have such a low valuation, I don't. Is there any plans to increase the public relations or to somehow to get the liquidity up? I know you don't wanna do a listing in the United States, which I would love you to do. I know it's hard and it requires a lot of effort and money, how are we gonna get the liquidity of this stock up?
Steven, we do believe that if the company is keeping on to delivering the good result that we do, the market cap of the company will eventually exceed CAD 200 million, which seem to be a kind of a magic number on the TSX in Canada. As soon as the stock is above CAD 2, CAD 2.20, then we kick in into the large portfolios and the trading. We do believe that. There are some stock for sales, as you know. The reserve of stock, I mean, available is there. It will just unlock when the valuation will hit a certain threshold.
We do believe that we are not that far from this threshold. Okay? We don't intend to do any capital, you know, raising or, you know, to dilute the existing shareholders or, of any sort. As we mentioned earlier, the plan is to deleverage as quick as possible the balance sheet and reduce the debt to a very, very soft level. We do believe the stock market will eventually realize that we are undervalued and put the stock back where it should be. Okay? This is in view, in sight, I think.
It's greatly undervalued. Just one last question, a general question. In the market, say, when you go out, when you go out to bid projects, is Foraco considered to be the best operator of the big three in the market?
Well, it would be a kind of pretending to say so, but I would say that everywhere we've gone or in the last 2 years, when we won a substantial, let's say, contract in Canada, Australia, Brazil, whatnot, when we won a contract, we usually don't displace the incumbent, if there is one, with pricing. As you know, Foraco is a fair price company. It's not a low price, low tech company. Every time we have been displacing, you know, our colleagues on the ground of quality and reliability of performances.
The fact that most of our customers are keeping us, retaining the contract and transforming the contract into long term, is another sign of, they like us and they think we are, you know, a good partner.
That's great. I know you've had. I know that you know, you treat your crews great and they've been with you for a long time. I just think that I think you're probably the best operator out there. Thank you, Daniel. I think it's been an amazing quarter and it looks like it's not gonna stop. I think you have capacity.
No.
to increase margins and increase revenue. Doesn't look like it's gonna stop. Congratulations. I've had this thing since 2012, so it's nice to see it.
Thank you.
Yeah.
Thank you for your patience. Well, as you. We too. Okay. Thank you, Steven. Talk to you soon.
Thank you. Well, I'm glad to hear somebody else on the call too.
Okay. Thanks.
Oh, sorry. There are no further questions at this time. I'll turn it back to you.
Okay. Thanks. Thanks, everybody, to be with us today and talk to you for the next quarter. I hope it will be as much as exciting as this one was. Thank you. Have a good day. Bye-bye.
Thank you. Bye.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.