Boart Longyear Limited (ASX: BLY), the world’s leading
supplier of drilling services, drilling equipment and performance
tooling to mining and drilling companies, today announced financial
results for the 12 months ending December 31 2012. Despite a record
first half, the Company reported flat revenue and declines in
EBITDA and net profit after tax (NPAT) for the full year, as
slowing global mining conditions in the second half of 2012 led to
a softening of revenues and put pressure on pricing and
margins.
Reported revenue and EBITDA, excluding restructuring and related
impairment charges, were in line with revised guidance issued last
November.
- Record first half revenue / profit
in 2012
- Results affected by global slowdown
in mining activity during second half of 2012
- US$70M in costs removed from company
overheads
- Initial signs of stabilisation in
mining activity in 2013
- US$68M of restructuring and
impairment charges taken
RESULTS SUMMARY
Full-Year 2012 results:
- Revenue of US$2.01B, flat on FY11
- Statutory EBITDA of US$254M, down 29%
on FY11
- Adjusted1 EBITDA of US$322M, down 10%
on FY11
- Statutory NPAT of US$68M, down 58% on
FY11
- Adjusted1 NPAT of US$114M, down 29% on
FY11
- Statutory earnings per share of
US$0.15, down 57% on FY11
- Adjusted1 earnings per share of
US$0.25, down 29% on FY11
- Dividend: 1.0 US cent per share for
second half 2012
US $M
Statutory Statutory Adjusted 1 '12 /
11 2011 1H 2012 2H 2012
2012 1H 2012 2H 2012
2012 % Change 2 Revenue 2,020
1,099 913 2,012 1,099 913
2,012 0%
Gross Margin 564 312
200 512 312 200 512 -9% Gross
Margin % 28% 28% 22% 25% 28% 22% 25%
EBIT / Op Profit
246 148 -21 127 149 46
195 -21%
EBIT / Op Profit Margin %
12% 13% -2% 6% 14% 5% 10%
EBITDA 356
208 46 254 209 113 322
-10% EBITDA Margin % 18% 19% 5% 13% 19% 12% 16%
NPAT
160 98 -30 68 98 16
114 -29% NPAT Margin % 8% 9% -3% 3% 9% 2% 6%
EPS
(cents) 35.1 21.4 -6.4 15.0
21.4 3.6 25.0 -29%
Cash from
Operations 198 24 40 64 24
53 77 -61%
Net Debt 231
373 512 512 373 512 512
122%
Headcount 10,572 11,440
9,162 9,162 11,440 9,162 9,162
-13%
Boart Longyear Chairman and Interim CEO, Mr David McLemore, said
full-year revenue was in line with expectations but the sharp
slowdown in mining activity during the back half of the year posed
significant challenges, particularly in Drilling Services.
“We have since moved aggressively to take cost out of the
business, including reducing headcount by over 2,200 people
globally and consolidating manufacturing to lower-cost centers. In
all, management has removed US$70M from the business, equivalent to
20% of the global overhead, and this will support improved margins
in 2013,” Mr McLemore said.
“The global outlook for mining services remains uncertain.
However, our key indicators of rig utilization and the order
backlog for Drilling Products which includes drilling equipment and
performance tooling have stabilized. The Company’s work to
restructure the cost base means we are very well positioned to
benefit from any pick-up in mining activity this year.”
OPERATIONS
Drilling Services recorded revenue of US$1.52B for full year
2012, up 5% on the previous year and a record revenue performance
for this division.
However, lower rig utilization and a softer pricing environment
in the second half of 2012 contributed to a 2% decline in Drilling
Services EBITDA to US$290M for the full year. This result also
reflects the timing lag between declining Drilling Service revenues
in the second half and the take-out of costs, mainly headcount
reductions, in response. Drilling rig utilization averaged 69% for
2012, compared to 75% in 2011.
Revenue from Drilling Products, including drilling equipment and
performance tooling, was down 13% for the full year to US$495M,
while EBITDA declined 19% to US$107M. Slowing demand in the second
half of 2012 was evident in the higher fixed-cost-per-unit for
products in this period.
In an encouraging sign for near-term market conditions in
Drilling Products, the sharp decline in the order backlog that
commenced in the second quarter of 2012 stabilized by year end and
is trending favorably.
The Company’s review of strategic options for the primarily
US-centred environmental and infrastructure end market is nearing
completion, with an announcement on this business expected in the
near future.
Drilling Services
US $M 2011 1H
2012 2H 2012 2012
% change Revenue 1,448
817 699 1,516 5%
EBITDA 296 177 113
290 -2% EBITDA Margin % 20% 22%
16% 19%
Products
US
$M 2011 1H 2012
2H 2012 2012
% change Revenue 572 282
213 495 -13%
EBITDA 132 68 39
107 -19% EBITDA Margin % 23% 24%
18% 22%
Investment in product R&D continued at a healthy pace
despite the slowdown, with Boart Longyear applying for 177 patents
during 2012 (compared to 210 in 2011).
Boart Longyear’s continued focus on safety delivered significant
improvements on key measures during the year. Injuries and reported
incidents were down, while all prevention indicators recorded sharp
increases.
Adjusted cash from operations was US$77M for the year, down from
US$198M in FY11 and reflecting the year-on-year change in net
working capital following the subdued conditions in the second half
of 2012.
Net debt increased to US$512M at year end from US$231M the
previous year, attributed mainly to capital expenditure commitments
and the working capital change. Leverage remains less than 2.0x
EBITDA.
DIVIDEND
Earnings per share were 25.0 US cents per share on an adjusted
basis, down from 35.1 US cents per share in FY11. Directors
determined a dividend of 1.0 US cent per share for the second half
of 2012, payable on 12 April 2013 to shareholders of record on 15
March 2013. This represents a total dividend for the year of 7.4 US
cents.
OUTLOOK and COMMENTARY
Mr McLemore said the Company would be focused in the coming year
on consolidating efficiencies gained toward the end of 2012, while
improving profitability and cash flow.
“The prospects for the global mining sector over the medium to
long-term remain very strong. Boart Longyear’s strong
diversification by region, commodity, product and service leaves us
well leveraged to the long-term trends in this industry.
“Looking to 2013 all indications show that conditions across our
key market segments have stabilized and the revenue run-rate over
2013 will largely mirror the second half of FY12. We remain alert
to an uptick in activity and with a leaner cost base, the Company
is positioned to respond rapidly and profitably to meet new demand
as and when it emerges,” he said.
“At the same time, our work to position Boart Longyear for more
consistent performance through the mining and commodity cycle is
ongoing. A key focus over the near term will be reviewing processes
across the business leading to a cost and debt structure that is
more resilient to down cycles.
“Capital expenditure is at a modest US$50 million in 2013,
subject to a review mid-year. We expect to extract more costs from
the business in the current half of 2013. There will be a renewed
emphasis on cash discipline, managing working capital and driving
cash flow to pay down debt,” he said.
About Boart Longyear
With over 120 years of expertise, Boart Longyear is the world’s
leading provider of drilling services, drilling equipment, and
performance tooling for mining and drilling companies globally. It
also has a substantial presence in energy, mine de-watering, oil
sands exploration, and production drilling.
Boart Longyear is a global company headquartered in Salt Lake
City, Utah, USA, and is listed on the Australian Securities
Exchange in Sydney, Australia. Sales in 2012 were over US$2
billion, and the company employs approximately 8,500 employees
worldwide. Contract drilling services are conducted in over 40
countries, and drilling products are manufactured in six global
factories and sold to our customers in the 100+ countries where
they operate.
More information about Boart Longyear can be found on the
Internet at www.boartlongyear.com. To get Boart Longyear news
direct, visit http://www.boartlongyear.com/rssfeed.
1 Adjusted EBITDA and NPAT are non-IFRS measures and are used
internally by management to assess the performance of the business
and have been derived from the Company’s audited financial
statements. The adjusted measure excludes the impact of $68M ($46M
net of tax) of restructuring and related impairment charges, of
which $13M was paid in cash in 2012.
2 Change compares 2012 Adjusted and 2011 Statutory
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