Q2 2026 Foraco International SA Earnings Call

July 31, 2026

Operator 2: Good morning, welcome to Foraco International's Q2 2026 results conference call. All participants will remain in listen-only mode until the question and answer session. I will now turn the call over to Tim Bremner, Chief Executive Officer. Please go ahead.

Operator: Good morning, welcome to Foraco International's Q2 2026 results conference call. All participants will remain in listen-only mode until the question and answer session. I will now turn the call over to Tim Bremner, Chief Executive Officer. Please go ahead.

Speaker #1: Good morning, and welcome to Foraco International's second quarter 2026 results conference call. All participants will remain in listen-only mode until the question-and-answer session. I will now turn the call over to Tim Bremner, Chief Executive Officer.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Joanna. And good morning, everyone. Thank you for joining us today to discuss Foraco International's results for the second quarter ending June 30, 2026.

Tim Bremner: Thank you, Joanna, good morning, everyone. Thank you for joining us today to discuss Foraco International's results for the Q2 ending 30 June 2026. Joining me on the call is Fabien Sevestre, our Chief Financial Officer, who will review the financial results and the key drivers of our performance. Before we begin, please note that our remarks and presentation may include forward-looking information, which is subject to known and unknown risks and uncertainties. The market backdrop entering the H2 2026 remains constructive. Global non-ferrous exploration budgets reached approximately $12.4 billion in 2025, recovering from multi-year lows, drilling activity has continued to build momentum in 2026. Gold prices near record levels are supporting a significant increase in exploration spending, with gold representing approximately half of global exploration budgets.

Speaker #2: Joining me on the call is Fabian Sevest, our Chief Financial Officer, who will review the financial results and the key drivers of our performance.

Speaker #2: Before we begin, please note that our remarks and presentation may include forward-looking information, which is subject to known and unknown risks and uncertainties.

Speaker #2: The market backdrop entering the second half of 2026 remains constructive. Global non-ferrous exploration budgets reached approximately $12.4 billion in 2025, recovering from multi-year lows, and drilling activity has continued to build momentum in 2026.

Tim Bremner: Global non-ferrous exploration budgets reached approximately $12.4 billion in 2025, recovering from multi-year lows, drilling activity has continued to build momentum in 2026. Gold prices near record levels are supporting a significant increase in exploration spending, with gold representing approximately half of global exploration budgets.

Speaker #2: Gold prices near record levels are supporting a significant increase in exploration spending, with gold representing approximately half of global exploration budgets. At the same time, customers remain focused on near-mine and brownfield programs, which now account for a record share of exploration investment.

Tim Bremner: At the same time, customers remain focused on near mine and brownfield programs, which now account for a record share of exploration investment. These programs generally offer lower geological risk, shorter development timelines, and strong demand for technically capable drilling service providers. Longer term fundamentals also remain supportive. Structural support constraints in copper, cobalt, and silver, together with demand associated with electrification, energy infrastructure, and artificial intelligence, are encouraging customers to invest in resource expansion. Improving access to capital for junior and intermediate mining companies is also contributing to a broader recovery in drilling activity. Foraco is well-positioned in this environment through a diversified portfolio of Tier 1 and junior customers, exposure to attractive commodities, and a broad range of mining and water drilling applications. Turning to the quarter, Foraco delivered strong year-over-year growth. Revenue increased 22% to $84.5 million, compared to $69.1 million in the Q2 2025.

Speaker #2: These programs generally offer lower geological risk, shorter development timelines, and strong demand for technically capable drilling services providers. Longer-term fundamentals also remain supportive. Structural supply constraints in copper, cobalt, and silver, together with demand associated with electrification, energy infrastructure, and artificial intelligence, are encouraging customers to invest in resource expansion.

Speaker #2: Improving access to capital for junior and intermediate mining companies is also contributing to a broader recovery in drilling activity. Foraco is well-positioned in this environment through a diversified portfolio of tier-one and junior customers, exposure to attractive commodities, and a broad range of mining and water drilling applications.

Tim Bremner: Foraco is well-positioned in this environment through a diversified portfolio of Tier 1 and junior customers, exposure to attractive commodities, and a broad range of mining and water drilling applications. Turning to the quarter, Foraco delivered strong year-over-year growth. Revenue increased 22% to $84.5 million, compared to $69.1 million in the Q2 2025.

Speaker #2: Turning to the quarter, Foraco delivered strong year-over-year growth. Revenue increased 22% to $84.5 million, compared to $69.1 million in the second quarter of 2025.

Speaker #2: The increase was driven by higher activity in Canada, the United States, and South America. EBITDA increased 7% to $15 million, reflecting the significantly higher level of activity across the group.

Tim Bremner: The increase was driven by higher activity in Canada, the United States, and South America. EBITDA increased 7% to $15 million, reflecting the significantly higher level of activity across the group. Rig utilization increased to 51%, compared with 35% in prior year quarter, demonstrating strength of the recovery and the operating leverage available in the business. With that brief overview, I will now turn the call over to Fabien for the financial review. Fabien?

Tim Bremner: The increase was driven by higher activity in Canada, the United States, and South America. EBITDA increased seven percent to $15 million, reflecting the significantly higher level of activity across the group. Rig utilization increased to 51%, compared with 35% in prior year quarter, demonstrating strength of the recovery and the operating leverage available in the business. With that brief overview, I will now turn the call over to Fabien for the financial review. Fabien?

Speaker #2: Rig utilization increased to $51%, compared with $35% in prior year quarter. Demonstrating strength of the recovery and the operating leverage available in the business.

Speaker #2: With that brief overview, I'll now turn the call over to Fabian for the financial review. Fabian?

Speaker #3: Thank you, Tim, and good morning, everyone. As a reminder, Foraco reports under IFRS, and all financial figures are presented in US dollars. Revenue for the second quarter reached $84.5 million, compared with $69.1 million in the prior year period.

Fabien Sevestre: Thank you, Tim, and good morning, everyone. As a reminder, Foraco reports under IFRS, and all financial figures are presented in US dollars. Revenue for Q2 reached $84.5 million, compared with $69.1 million in the prior year period. This represents the strongest quarterly revenue since Q2 2023. Gross margin was 15.5%, compared with 20.5% in Q2 2025. The year-over-year reduction primarily reflects higher labor and consumable costs, mobilization expense, and lower operating efficiency during the early stage of several significant contract startups. EBITDA was $15 million or 17.8% of revenue, compared with $14 million or 20.3% of revenue in Q2 2025. Our record backlog provides strong revenue visibility through H2 2026 and beyond. Profitability remains our key focus and margin recovery is underway while quarterly trends show accelerating momentum.

Speaker #3: This represents the strongest quarterly revenue since the second quarter of 2023. Gross margin was $15.5%, compared with $20.5% in Q2 2025. The year-over-year reduction primarily reflects higher labor and consumable costs, mobilization expense, and lower operating efficiency during the early stage of several significant contracts startups.

Fabien Sevestre: The year-over-year reduction primarily reflects higher labor and consumable costs, mobilization expense, and lower operating efficiency during the early stage of several significant contract startups. EBITDA was $15 million or 17.8% of revenue, compared with $14 million or 20.3% of revenue in Q2 2025. Our record backlog provides strong revenue visibility through H2 2026 and beyond. Profitability remains our key focus and margin recovery is underway while quarterly trends show accelerating momentum.

Speaker #3: EBITDA was $15 million, or $17.8% of revenue, compared with $14 million, or $20.3% of revenue in the second quarter of 2025. Our record backlog provides strong revenue visibility through the second half of 2026 and beyond.

Speaker #3: Profitability remains our key focus, and margin recovery is underway while quarterly trends show accelerating momentum. Mining revenue increased 23% year-over-year to $70.5 million, while water revenue increased 21% to $14 million.

Fabien Sevestre: Mining revenue increased 23% year over year to $70.5 million, while water revenue increased 21% to $14 million. The reporting segment mix remained stable, with mining representing 83% of revenue and water representing 17%. By geography, North America generated revenue of $32 million, an increase of 28% compared with the prior year period. The improvement reflects strong activity and the ramp-up of new contracts in both Canada and the United States. South America increased 94% to $22 million. This performance was supported by the successful mobilization of several projects across the region. The overall geographic mix remained well-diversified with 38% of revenue generated in North America, 27% in Asia Pacific, 26% in South America, and 9% in EMEA. Our commodity exposure was also diversified. Precious metal represented 34% of revenue, copper 18%, iron ore 12%, nickel 9%, coking coal 8%, other commodity 2%, and water 17%.

Speaker #3: The reporting segment mix remained stable, with mining representing 83% of revenue and water representing 17%. By geography, North America generated revenue of $32 million, an increase of $28%, compared with the prior year period.

Speaker #3: The improvement reflects strong activity and the ramp-up of new contracts in both Canada and the United States. South America increased 94% to $22 million, with performance supported by the successful mobilization of several projects across the region.

Speaker #3: The overall geography mix remained well diversified, with 38% of revenue generated in North America, 27% in Asia-Pacific, 26% in South America, and 9% in EMEA.

Fabien Sevestre: The overall geographic mix remained well-diversified with 38% of revenue generated in North America, 27% in Asia Pacific, 26% in South America, and nine percent in EMEA. Our commodity exposure was also diversified. Precious metal represented 34% of revenue, copper 18%, iron ore 12%, nickel nine percent, coking coal eight percent, other commodity two percent, and water 17%.

Speaker #3: Our commodity exposure was also diversified. Precious metals represented 34% of revenue, copper 18%, iron ore 12%, nickel 9%, steel, coal 8%, and other commodities 2%, and water 17%.

Fabien Sevestre: Tier 1 customer represented 82% of revenue and juniors 18%. Looking at H1 of the year, revenue reached $151 million, compared with $124 million in H1 2025, representing growth of 22%. For the six-month period, gross margin was 13%, compared with 18% in H1 2025, reflecting the same temporary factor discussed earlier. Year-to-date, EBIT was $10 million, compared with $12 million in H1 last year, while EBITDA represented 15% of revenue, compared with 17% a year ago. Turning now to cash flow and the balance sheet. Working capital increased to $15 million, reflecting the higher level of activity, the ramp-up of new contracts, and the associated timing of receivables and project mobilization. This increase is consistent with the significant growth of the business during the period.

Speaker #3: Tier-one customers represented 82% of revenue, and junior 18%. Looking at the first six months of the year, revenue reached $151 million, compared with $124 million in the first half of 2025, representing growth of 22%.

Speaker #3: For the six-month period, gross margin was 13%, compared with 18% in the first half of 2025, reflecting the same temporary factor discussed earlier. Year-to-date EBIT was $10 million, compared with $12 million in the first half of last year, while EBITDA represented 15% of revenue, compared with 17% a year ago.

Speaker #3: Turning now to cash flow and the balance sheet. Working capital increased to $15 million, reflecting the higher level of activity, the ramp-up of new contracts, and the associated timing of receivables and project mobilization.

Fabien Sevestre: Working capital increased to $15 million, reflecting the higher level of activity, the ramp-up of new contracts, and the associated timing of receivables and project mobilization. This increase is consistent with the significant growth of the business during the period.

Speaker #3: This increase is consistent with the significant growth of the business during the period. Capital expenditures were $16 million during the first half, related to the addition of six new drilling rigs and the supporting equipment required to execute our record 404 million order book announced at the beginning of the year.

Fabien Sevestre: Capital expenditures was $16 million during the H1, related to the addition of six new drilling rigs and the supporting equipment required to execute our record $404 million order book announced at the beginning of the year. These investments are fully aligned with our long-term growth strategy and position the company to deliver its extending backlog efficiently. As expected, net debt increased to $85.7 million, reflecting both the temporary working capital investment associated with our growth and our capital expenditure program. Importantly, our financial position remains strong, supported by $22 million of undrawn committed credit lines, providing ample financial flexibility to support future growth. With that, I would turn the call back to Tim. Tim?

Speaker #3: This investment is fully aligned with our long-term growth strategy and positions the company to deliver its expanding backlog efficiently. As expected, net debt increased to $85.7 million, reflecting both the temporary working capital investment associated with our growth and our capital expenditure program.

Fabien Sevestre: Importantly, our financial position remains strong, supported by $22 million of undrawn committed credit lines, providing ample financial flexibility to support future growth. With that, I would turn the call back to Tim. Tim?

Speaker #3: Importantly, our financial position remains strong, supported by $22 million of undrawn, committed credit lines, providing ample financial flexibility to support future growth. With that, I would turn the call back to Tim.

Speaker #3: Tim?

Speaker #2: Thank you, Fabian. Foraco delivered strong second-quarter revenue growth, reflecting a broad-based recovery across both our mining and water segments. The increase in rig utilization from 35% to 51% confirms that demand is translating into substantially higher activity across the group.

Tim Bremner: Thank you, Fabian. Foraco delivered strong Q2 revenue growth, reflecting a broad-based recovery across both our mining and water segments. The increase in rig utilization from 35% to 51% confirms that demand is translating into substantially higher activity across the group. Our record backlog provides strong visibility through the H2 of 2026 and beyond. Importantly, this growth is diversified across commodities, customers, geographies, and drilling applications, with 82% of the revenue coming from our Tier 1 customers. Our immediate priority is margin improvement. Pricing adjustments are progressively catching up with higher labor, consumable, fuel, and transportation costs. At the same time, recently mobilized projects are moving through their startup phases and should become more efficient as they mature. The operating leverage in the business remains intact. At 51% rig utilization, we retain meaningful capacity to support additional growth with a relatively limited incremental fixed cost.

Speaker #2: Our record backlog provides strong visibility through the second half of '26 and beyond. Importantly, this growth is diversified across commodities, customers, geographies, and drilling applications, with 82% of the revenue coming from our tier-one customers.

Speaker #2: Our immediate priority is margin improvement. Pricing adjustments are progressively catching up with higher labor, consumable, fuel, and transportation costs. At the same time, recently mobilized projects are moving through their startup phases and should become more efficient as they mature.

Speaker #2: The operating leverage in the business remains intact. At 51% rig utilization, we have retained meaningful capacity to support additional growth, with a relatively limited incremental fixed cost.

Speaker #2: Further utilization gains, combined with better pricing and stronger project execution, should support progressive EBITDA margin recovery toward the levels achieved in 2023 and 2024.

Tim Bremner: Further utilization gains, combined with better pricing and stronger project execution, should support progressive EBITDA margin recovery towards the levels achieved in 2023 and 2024. The market outlook remains supportive. Gold prices are near record levels. Structural support deficits in copper and cobalt, increasing near mine investment, and improving financial conditions for junior and intermediate companies are all supporting sustained drilling demand. Water-related drilling also remains strong and continues to provide an important diversification. We will remain disciplined in how we pursue this opportunity. Our focus is on operational execution, pricing, margin improvement, capital allocation, and cash generation while continuing to invest selectively in our fleet and our people to meet the long-term customer demand. In summary, Foraco enters the H2 of 2026 with strong revenue momentum, record backlog visibility, significant operating leverage, and a clear path towards margin recovery.

Speaker #2: The market outlook remains supportive. Gold prices are near record levels, structural support deficits in copper and cobalt, increasing near-mine investment, and improving financial conditions for junior and intermediate companies are all supporting sustained drilling demand.

Speaker #2: Water-related drilling also remains strong, and continues to provide an important diversification. We will remain disciplined in how we pursue this opportunity. Our focus is on operational execution, pricing, margin improvement, capital allocation, and cash generation, while continuing to invest selectively in our fleet, our people, to meet the long-term customer demand.

Speaker #2: In summary, Foraco enters the second half of 2026 in strong with strong revenue momentum, record backlog visibility, significant operating leverage, and a clear path towards margin recovery.

Speaker #2: We believe these factors position the company to deliver substantial earnings and cash flow growth, and create long-term value for our shareholders. Operator, we can now open the call for questions.

Tim Bremner: We believe these factors position the company to deliver substantial earning and cash flow growth and create long-term value for our shareholders. Operator, we can now open the call for questions.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the 1 on your touchtone phone.

Operator 2: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please put the handset before pressing any keys. First question is from Don Volpe at Beacon Securities. Please go ahead.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please put the handset before pressing any keys. First question is from Donangelo Volpe at Beacon Securities. Please go ahead.

Speaker #1: You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the 2.

Speaker #1: And if you are using a speakerphone, please lift the handset before pressing any keys. The first question is from Don Angelo Volpe at Beacon Securities.

Speaker #1: Please go ahead.

Don Volpe: Hey, good morning, guys.

Donangelo Volpe: Hey, good morning, guys.

Speaker #4: Hey, good morning, guys.

Tim Bremner: Morning, Don.

Speaker #2: Morning, Don Angelo.

Speaker #4: Yeah, good to hear from you guys. Congratulations on the results. I just wanted to hone in on the margins a little. So when we're looking at the year-over-year compression, I'm just wondering if it's possible to quantify how much is coming from labor and consumables inflation versus kind of lower initial productivity on new projects.

Don Volpe: Yeah, good to hear from you guys. Congratulations on the results. I just wanted to hone in on the margins a little. When we're looking at the year-over-year compression, I am just wondering if it is possible to quantify how much is coming from labor and consumables inflation versus lower initial productivity on new projects. I am just trying to get a better perspective on how to look at the margin ramp-up through the remainder of the year and into 2027.

Donangelo Volpe: Yeah, good to hear from you guys. Congratulations on the results. I just wanted to hone in on the margins a little. When we're looking at the year-over-year compression, I am just wondering if it is possible to quantify how much is coming from labor and consumables inflation versus lower initial productivity on new projects. I am just trying to get a better perspective on how to look at the margin ramp-up through the remainder of the year and into 2027.

Speaker #4: I'm just trying to get a better perspective on how to look at the margin ramp-up through the remainder of the year and into 2027.

Tim Bremner: It's a mix of both, Don Volpe, depending on the geography. It's also a factor that the growth has not kicked in in Australia yet, which is traditionally one of our higher margin regions. That was more or less flat year-over-year. It's a combination of the ramp-up of new projects in all regions, North America, particularly in the US, some in Canada, and some in Latin America. Throughout the H1, there's been serious inflection in pricing that's really outpaced cost increases for bits and other consumables and some labor that has really outpaced inflation. We're seeing the drag on effects of that. As I mentioned earlier, we're in the midst of adjusting pricing on some existing projects and certainly pricing new projects at the appropriate level to accommodate these new increases. The gap between now and last year was about 5%.

Speaker #2: It's a mix of both, Don Angelo, depending on the geography. And it's also a factor that the growth has not kicked in in Australia yet.

Speaker #2: Which is traditionally one of our higher margin regions that was more or less flat year over year. But it's a combination of the ramp-up of new projects in all regions: North America, particularly in the US, some in Canada, and some in Latin America.

Speaker #2: But throughout the first half, there's been serious inflection in pricing that's really outpaced cost increases for bits and other consumables, and some labor that has really outpaced inflation.

Speaker #2: And we're seeing the drag-on effects of that. And as I mentioned earlier, we're in the midst of adjusting pricing on some existing projects. And certainly, pricing new projects at the appropriate level to accommodate these new increases.

Speaker #2: So the gap between now and last year was about 5%. And as I said, it's a combination of both. And as we work through the ramp-up on all the projects, particularly in South America, which we're through, that causal effect would be eliminated and we're catching up on pricing.

Tim Bremner: As I said, it's a combination of both. As we work through the ramp-up on all the projects, particularly in South America, which we're through, that cause and effect would be eliminated, and we're catching up on pricing. As I said, we're focusing on margin improvement, and we expect that to improve for the H2.

Speaker #2: So you can we as I said, we're focusing on margin improvement. And we expect that to improve for the second half.

Speaker #3: Let's reset there.

Don Volpe: Okay. Thank you. I appreciate the color there. I guess just pivoting over a little bit to the outlook. We've been tracking kind of a stronger mining equity markets, which kind of began at the end of last year. I'm just wondering if you're starting to see increased tendering from juniors and intermediates at this moment, and which commodities or regions are you seeing the greatest improvement?

Donangelo Volpe: Okay. Thank you. I appreciate the color there. I guess just pivoting over a little bit to the outlook. We've been tracking kind of a stronger mining equity markets, which kind of began at the end of last year. I'm just wondering if you're starting to see increased tendering from juniors and intermediates at this moment, and which commodities or regions are you seeing the greatest improvement?

Speaker #4: Okay, thank you. I appreciate the color there. And then I guess just pivoting over a little bit to the outlook. So we've been tracking kind of a stronger mining equity markets, which kind of began at the end of last year.

Speaker #4: Just wondering if you're starting to see increased tendering from juniors and intermediates at this moment. And in which commodities or regions are you seeing the greatest improvement?

Tim Bremner: The tender pipeline, it's actually overflowing in some areas. It's very robust across all commodities, all customer profiles, juniors, intermediates, seniors. It's a pretty frothy market.

Speaker #2: The tender pipeline is still very it's actually overflowing in some areas. It's very robust across all commodities. All customer profiles, juniors, intermediates, seniors, it's a pretty frothy market.

Speaker #4: Okay, thank you. Congratulations once again, and I'll hop back in the queue.

Don Volpe: Okay. Thank you. Congratulations once again, I'll hop back in the queue.

Donangelo Volpe: Okay. Thank you. Congratulations once again, I'll hop back in the queue.

Speaker #2: Thank you.

Tim Bremner: Thank you.

Speaker #1: Thank you. And as a reminder, if you have any questions, please press star 1. Frederick Tremblay from Desjardins, please go ahead.

Operator 2: Thank you. As a reminder, if you have any questions, please press star one. Frederick Tremblay from Desjardins, please go ahead.

Operator: Thank you. As a reminder, if you have any questions, please press star one. Frederick Tremblay from Desjardins, please go ahead.

Speaker #5: Thank you. Good morning.

Frederick Tremblay: Thank you. Good morning.

Speaker #2: Good morning, Fred.

Tim Bremner: Morning, Fred.

Speaker #5: I just wanted to ask first on the just the pricing dynamics. Can you comment on the magnitude of the price escalation that you're targeting?

Frederick Tremblay: Just wanted to ask first on the pricing dynamics. Can you comment on the magnitude of the price escalation that you're targeting, and if you believe that that will fully cover your inflation pressures that you're seeing?

Speaker #5: And if you believe that, that will fully cover your inflation pressures that you're seeing?

Speaker #2: Well, Fred, I can't comment on any specific ones because those are confidential. But what I can say is that some of the cost inputs that we're seeing and the inflation that we're experiencing in this sector—labor is up over 10–15% in some regions.

Tim Bremner: Well, Fred, I can't comment on any specific ones because those ones are confidential. What I can say is some of the cost inputs that we're seeing and the inflation that we're seeing in the sector, labor is up over 10% to 15% in some regions. The biggest price increases we've seen in drilling consumables is coming from our cutting tools, drill bits, whether it's core bits or destructive drilling tools. Silver, tungsten are the biggest drivers of that. In order to offset that, we have to look at increases that are going to cover that. They're going to be double digit. Depending on the project, the region, the geology that we're going through, there's some variance in that. What I can state is that none of those cost increases have been recognized in H1, so they're yet to come.

Speaker #2: The biggest price increases we've seen in drilling consumables are coming from our cutting tools and drill bits, whether it's core bits or destructive drilling tools.

Speaker #2: Silver, tungsten, are the biggest drivers of offset that, we have to look at increases. That are going to cover that, they're going to be double-digit.

Speaker #2: And depending on the project, the region, the geology that we're going through, there's some variance in that. What I can state is that none of those cost increases have been recognized in the first half.

Speaker #2: So they're yet to come.

Speaker #5: Okay, yeah, that's super helpful. And just in terms of, I guess, your expectations for timing—you say nothing was recognized in the first half.

Frederick Tremblay: Okay. Yeah, that's super helpful. Just in terms of, I guess, your expectations for timing, you say nothing was recognized in H1. How should we think about the price increases playing out in H2 and into 2027?

Speaker #5: How should we think about the price increases playing out in the second half and into 2027?

Speaker #2: So those discussions with our customers, who are certainly understanding of our situation as they are of the entire industry, they're getting it from other suppliers as well.

Tim Bremner: Those discussions with our customers, who are certainly understanding of our situation as they are of the entire industry. They're getting it from other suppliers as well. Those discussions are ongoing, and with some earnest, because they want to make certain that they can get their work done. That means for us to be able to supply the people, and to be able to deliver the work safely and efficiently. They certainly understand that dynamic of our business and are working with us very collaboratively.

Speaker #2: So those discussions are ongoing. And with some earnest, because they want to make certain that they can get their work done. And that means being able for that means for us to be able to supply the people and to be able to deliver the work safely and efficiently.

Speaker #2: And they certainly understand the dynamic of our business and are working with us very collaboratively.

Speaker #5: Okay. And the last one, if I may, just on the cash flow dynamics—can you speak to working cap trends as we head into the second half, as well as CapEx needs to support the growth?

Frederick Tremblay: Okay. The last one, if I may, just on the cash flow dynamics, can you speak to working cap trends as we head into H2, as well as CapEx needs to support the growth and implications for free cash flow generation moving forward? Thank you.

Speaker #5: And implications for free cash flow generation moving forward? Thank you.

Speaker #2: So the free cash flow for the second quarter was $7 million. We're still running, since the beginning of the year, with a negative $13 million in free cash flow.

Fabien Sevestre: The free cash flow for Q2 was $7 million. We're still running since the beginning of the year with -$13 million in free cash flow, but with a huge investment, because the investment was $16 million, of which $8 million is related to contract to perform on H2. In addition, we have our $14 million working capital linked to the increase of the level of activity. The working capital, as is seasonal working capital, will be reversed in H2. The investment will be also lower for H2. All of that will recover all the investment before year end.

Speaker #2: But with a huge investment, because the investment was $16 million, of which $8 million is related to contracts to perform in the second part of the year.

Speaker #2: And in addition, we have our 14 million working capital linked to the increase available of activity. So the working capital, as is seasonal, working capital will be reversed on the second part of the year.

Speaker #2: And the investment will also be lower for the second half of the year. So all of that will recover all these investments during, before year-end.

Speaker #5: Okay, great. Thank you, and congratulations on a great quarter.

Frederick Tremblay: Okay, great. Thank you, and congrats on a great quarter.

Speaker #2: Thanks, Fred.

Tim Bremner: Thanks, Fred.

Speaker #5: Thanks.

Frederick Tremblay: Thanks.

Speaker #1: Thank you, Stephen Green, with the ordinance. Please go ahead.

Operator 2: Thank you. Steven Green with Ordinance, please go ahead.

Operator: Thank you. Steven Green with Ordinance, please go ahead.

Speaker #2: All right, Stephen.

Tim Bremner: Morning, Steven.

Speaker #3: Good morning. Good morning. How are you?

Steven B. Green: Hi, good morning. Good morning, how are you?

Steven Green: Hi, good morning. Good morning, how are you?

Tim Bremner: I'm well, thanks.

Speaker #2: Well, thanks.

Steven B. Green: I won't dwell on I guess everybody's dwelled on the profit, I guess you've explained what's happening. Hopefully, these investments pay off. Can you just talk about, did you get any new contracts or extensions of existing contracts in H1?

Steven Green: I won't dwell on I guess everybody's dwelled on the profit, I guess you've explained what's happening. Hopefully, these investments pay off. Can you just talk about, did you get any new contracts or extensions of existing contracts in H1?

Speaker #3: I won't dwell on—I guess everybody's dwelled on—the profit, and I guess you've explained what's happening. I hope these investments pay off. Can you just talk about, did you get any new contracts or extensions of existing contracts in the first half of the year?

Speaker #2: So, there's been a combination of extensions, renewals, and new projects— all three. And some of those don't meet the threshold for materiality for a press release, Stephen.

Tim Bremner: There's been a combination of extensions, renewals, and new projects, all three. Some of those don't meet the threshold for materiality for a press release, Steven, that's why there hasn't been any. Some have yet to be formalized. We have a letter of intent. We have a letter to proceed, the documents actually have not been signed. For ones that are material, we have not been in a position to put out a press release. What I tried to convey is the fact that our order book continues to grow. We stated an order book of $404 million at 1 January on our first results call for the full year of 2025. Despite burning through $151 million of that order book in H1, we still have a record order book.

Speaker #2: So that's why there hasn't been any. And some have yet to be formalized. We have a letter of intent. We have a letter to proceed, but the documents are actually have not been signed.

Speaker #2: So for ones that are material, we have not been in a position to put out a press release. So what I tried to convey is the fact that our order book continues to grow.

Speaker #2: We stated a order book of 404 million. At January 1 or on our first results call for the full year of 2025. And despite burning through 151 million of that order book in the first half, we still have a record order book.

Speaker #2: So, there has been a significant amount of new business that we've put into the order book, and we continue to receive a lot of tenders.

Tim Bremner: There have been a significant amount of new business that we've put into the order book. We continue to receive a lot of tenders. We can't respond to all of them. In some cases, it's because we don't have the right equipment available in certain regions or they don't fit the profile of the crews that we have available. There's a lot of work that is being tendered that we're not able to respond to. The absence of announcing new projects does not mean that the business of the order book has not increased significantly.

Speaker #2: We can't respond to all of them. In some cases, it's because we don't have the right equipment available in certain regions, or they don't fit the profile of the crews that we have available.

Speaker #2: So there's a lot of work that is being tendered that we're not able to respond to. But the absence of a announcing new projects does not mean that the business of the order book has not increased significantly.

Speaker #3: All right. And then I was going to ask about the debt. The debt went up pretty much significantly this quarter. Is that just borrowing for investment?

Steven B. Green: Right. I was going to ask about the debt. The debt went up pretty much significantly this quarter. Is that just borrowing for investment and we're going to start paying that down again?

Steven Green: Right. I was going to ask about the debt. The debt went up pretty much significantly this quarter. Is that just borrowing for investment and we're going to start paying that down again?

Speaker #3: And we're going to start paying that down again?

Speaker #2: Oh, the debt will be reduced before year-end. We are impacted by our working capital, but we need to finance. So this will automatically reduce the debt and improve the cash flow.

Fabien Sevestre: Of the debt will be reduced before year end. We are impacted by our working capital that we need to finance. This would reduce automatic the debt, improve the cash flow. With the EBITDA that we are generating now, there is a lot of room to decrease our debt as we stated in our financial statement.

Speaker #2: And with the EBITDA that we are generating now, there is a lot of room to decrease our debt, as we stated in our financial statement.

Steven B. Green: Okay. What's your goal? Do you have a goal to get to $50 million, or what's the ideal balance? What's the ideal ratio?

Steven Green: Okay. What's your goal? Do you have a goal to get to $50 million, or what's the ideal balance? What's the ideal ratio?

Speaker #3: Okay. And what's your goal? I mean, do you have a goal to get to 50 million? Or, I mean, what's the ideal balance? What's the ideal ratio?

Speaker #2: We don't have a specific target, Stephen. We want to get the leverage ratio to acceptable lever. We're not going to we're not to looking to repay all the debt.

Tim Bremner: We don't have a specific target, Steven. We want to get the leverage ratio to acceptable level. We're not looking to repay all the debt. The debt today is manageable. We want it to be more manageable, for sure. Debt reduction remains the number one pillar of our capital allocation policy. That doesn't mean we're going to pay the debt down to zero. Absolutely not. We'll get it to a more manageable level before year end and continue growing the business.

Speaker #2: The debt today is manageable. We want it to be more manageable for sure. And debt reduction remains the number one pillar of our capital allocation policy.

Speaker #2: But that doesn't mean we're going to pay the debt down to zero. Absolutely not. So we'll get it to a more manageable level before year-end.

Speaker #2: And continue growing the business.

Speaker #3: All right. And then I think you guys do a great job. I'm going to shareholder for a long time. And I hate to be mundane or pedestrian, but you talked about shareholder value.

Steven B. Green: All right. I think you guys do a great job. I've been a shareholder for a long time, and I hate to be mundane or pedestrian.

Steven Green: All right. I think you guys do a great job. I've been a shareholder for a long time, and I hate to be mundane or pedestrian.

Steven B. Green: you talk about shareholder value. The stock price is lower now than it was in October of 2021, five years ago. I understand that the business has gotten ups and downs and you guys are doing a good job and backlog is going up, but shareholder value means the stock price is going up. That's the only touch point I have to the company. I don't know what to do, obviously, but maybe you guys. Your multiples are so much lower on cash flow, on EBITDA, on everything to major drilling and the other drillers. I know they have a better balance sheet and stuff, but I think you're a better company. Is there ever talk about selling the company or somehow unlocking the value of this company? The stock price hasn't gone up. It's lower than it was in 2021.

Steven Green: you talk about shareholder value. The stock price is lower now than it was in October of 2021, five years ago. I understand that the business has gotten ups and downs and you guys are doing a good job and backlog is going up, but shareholder value means the stock price is going up. That's the only touch point I have to the company. I don't know what to do, obviously, but maybe you guys. Your multiples are so much lower on cash flow, on EBITDA, on everything to major drilling and the other drillers. I know they have a better balance sheet and stuff, but I think you're a better company. Is there ever talk about selling the company or somehow unlocking the value of this company? The stock price hasn't gone up. It's lower than it was in 2021.

Speaker #3: Shareholder the stock price is lower now than it was in October of '21, 2021, five years ago. So I understand that the business has gotten ups and downs, and you guys are doing a good job.

Speaker #3: And backlog is going up, but shareholder value means the stock price going up. That's the only touchpoint I have to the company, so I don't know what to do, obviously.

Speaker #3: But maybe you guys I mean, your multiples of your multiples are so much lower on cash flow on EBITDA and everything to major drilling and the other drillers.

Speaker #3: I know they have a better balance sheet and stuff, but I think you're a better company. But maybe it's I mean, is there ever talk about selling the company or getting somehow unlocking the value of this company?

Speaker #3: Because the stock price hasn't gone up. We did the same; it's lower than it was in 2021. So, five years later, we did all these great things, and we're actually lower than we were in 2021.

Steven B. Green: Five years later, we did all those great things and we're actually lower than we were in 2021. We don't get any recognition from the market.

Steven Green: Five years later, we did all those great things and we're actually lower than we were in 2021. We don't get any recognition from the market.

Speaker #3: And we still haven't—we don't get any recognition from the market.

Speaker #2: No, I certainly hear you, Stephen. And you know what? Until a couple of months ago, the stock was performing quite well. And I think just in recent weeks, Foraco has been significant.

Tim Bremner: No, I certainly hear you, Steven. Up until a couple of months ago, the stock was performing quite well. I think just in recent weeks, Foraco has been significantly impacted by the broader market environment. Everything is down. If you look at the S&P/TSX Capped Materials Index, it's down 3%. Foraco's down 4%. In the downdraft environment like that, unfortunately, micro caps take it harder than others. The stock has been volatile over the last while. What I can tell you is there is a lot of interest in Foraco. In the last 12 months, we turned over 56%, 53 million shares traded. That's the best liquidity that we've had. We've got the best shareholders structure that I can recall that we've had. The market is going in the right direction. Our multiple is way lower than it should be.

Speaker #2: The impact by the broader market environment. Everything is down. And if you look at the TSX material index, it's down 3%. Foraco is down 4.

Speaker #2: And in a downdraft environment like that, unfortunately, micro caps take it harder than others. The stock has been volatile over the last while.

Speaker #2: What I can tell you is there is a lot of interest in Foraco. In the last 12 months, we turned over 56%, 53 million shares traded.

Speaker #2: That's the best liquidity that we've had. We've got the best shareholder structure that I can recall that we've had. The market is going in the right direction.

Speaker #2: Our multiple is way lower than it should be. The financials are going the right way. And I understand your frustration and certainly appreciate that you've been a shareholder for as long as you have.

Tim Bremner: The financials are going the right way. I understand your frustration and certainly appreciate that you've been a shareholder for as long as you have. For that, we thank you. I would just say that today would be the absolutely wrong time to jump ship. I can't see a better environment, notwithstanding what happens with the greater market, because nobody knows. Nobody knows, and we're at the mercy of that, and you know that, too. I think we're in the best position, Steven, that we've ever been in. Ever.

Speaker #2: And for that, we thank you. I would just say that it would today would be the absolute wrong time to jump ship. I can't see a better environment, notwithstanding what happens with the greater market.

Speaker #2: Because nobody knows. Nobody knows. And we're at the mercy of that. And you know that too. But I think we're in the better the best position, Stephen, that we've ever been in.

Speaker #2: Ever.

Steven B. Green: I understand that there are a lot of things out of your control, but there are some things that are like the appreciation from the market is something that could be in your control. I guess, you could do more outreach or whatever. That's somewhat in your control, unless if the whole market goes down. Relative to the other companies in there, which I find you're a much better company, much higher quality and everything, and you're doing water segments and you specialize in things that no one else can do, and you have huge value. I just don't get that you're not being appreciated. Even if the market goes up or down, your relative strength should be higher.

Steven Green: I understand that there are a lot of things out of your control, but there are some things that are like the appreciation from the market is something that could be in your control. I guess, you could do more outreach or whatever. That's somewhat in your control, unless if the whole market goes down. Relative to the other companies in there, which I find you're a much better company, much higher quality and everything, and you're doing water segments and you specialize in things that no one else can do, and you have huge value. I just don't get that you're not being appreciated. Even if the market goes up or down, your relative strength should be higher.

Speaker #3: I understand that there are a lot of things out of your control, but there are some there are some things that are the appreciations for the market from the market is something that could be in your control.

Speaker #3: I guess you could do more outreach or whatever, but that's somewhat in your control. I understand when the whole market goes down, but relative to the other companies in there, I find you're a much better company.

Speaker #3: Much higher quality and everything. And you're doing water segments, and you specialize in things that no one else can do. And you have a huge value.

Speaker #3: And I just don't get that you're not being appreciated. Even if the market goes up or down, you're relative strength should be higher. And that's something you can control.

Tim Bremner: Yes.

Steven B. Green: That's something you can control.

Steven Green: That's something you can control.

Speaker #3: So I just want to express a little bit of my frustration because, looking at the stock price in 2021, I look back and it's like the same or even lower than that.

Steven B. Green: I just want to express a little bit of my frustration because the stock price, 2021.

Steven Green: I just want to express a little bit of my frustration because the stock price, 2021.

Tim Bremner: Yeah

Steven B. Green: It's like the same. It's lower than that. I know you've done a lot of improvements and the company is stronger and utilization rate's going up, and you're in all the right metals and you have all the profitability and you're growing your book, and you'll probably do $400 million with the business next year at 20% margins. You'll have $80 million in cash flow next year, and your stock price, you're selling at two times cash flow, and you're growing. It's something I can't understand. I can't understand why no one else appreciates this company.

Steven Green: It's like the same. It's lower than that. I know you've done a lot of improvements and the company is stronger and utilization rate's going up, and you're in all the right metals and you have all the profitability and you're growing your book, and you'll probably do $400 million with the business next year at 20% margins. You'll have $80 million in cash flow next year, and your stock price, you're selling at two times cash flow, and you're growing. It's something I can't understand. I can't understand why no one else appreciates this company.

Speaker #3: And I know you've done a lot of improvements in the company. It's stronger, and your utilization rate's going up. And you're in all the right metals.

Speaker #3: And you have all the profitability, and you're growing your book. And you probably do 400 million dollars worth of business next year. At 20% margins, 80 million dollars, you'll have 80 million dollars in cash flow next year.

Speaker #3: And your stock price is—you're selling at two times cash flow. And you're growing. It's something I can't understand; I can't understand why no one else appreciates this company.

Speaker #2: Well, again, again, we've got a significant new shareholding in the last 12 months. So I think there's a lot of pretty savvy investors that have taken significant position in Foraco.

Tim Bremner: Well, again, we've got a significant new shareholding in the last 12 months. I think there's a lot of pretty savvy investors that have taken significant position in Foraco, and that is giving me collective confidence that they believe in us and that the stock will perform the way that it should. I get what you're saying. I truly do. I'm happy to chat with you at any time during the quarter. Maybe we should have another conversation that we can extend it out to a little bit more of that if you'd like. I'm happy to do that.

Speaker #2: And that is giving me collective confidence that they believe in us. And that the stock will perform the way that it should. So I get what you're saying.

Speaker #2: I truly do. And I'm happy to chat with you at any time during the quarter. So if maybe we should maybe we should have another conversation that we can extend it out to a little bit more if you'd like.

Speaker #2: I'm happy to do that.

Steven B. Green: No, I appreciate you always talk to me, and I appreciate that. I hate to air any kind of grievances. I mean, that's it. You did have a great quarter, and I understand. I think that other shareholders might be feeling similar, and just frustrated that you have such a great company and you're doing such a great job, and we just seem to be mired in small cap. I don't know what to say. Anyway, I don't want to dwell on it further. I just wanted to air some fresh. I'm not going anywhere. I've been with this company probably for 12 years or more, 14 years. I've seen a lot worse, but I just think this company deserves a better price.

Steven Green: No, I appreciate you always talk to me, and I appreciate that. I hate to air any kind of grievances. I mean, that's it. You did have a great quarter, and I understand. I think that other shareholders might be feeling similar, and just frustrated that you have such a great company and you're doing such a great job, and we just seem to be mired in small cap. I don't know what to say. Anyway, I don't want to dwell on it further. I just wanted to air some fresh. I'm not going anywhere. I've been with this company probably for 12 years or more, 14 years. I've seen a lot worse, but I just think this company deserves a better price.

Speaker #3: No, I always talk to you, and I appreciate that. I thought—I hate to hear any kind of grievances when you had to—you did have a great quarter.

Speaker #3: And I understand. But I think that other shareholders might be feeling similar. And just frustrated that you have such a great company and you're doing such a great job.

Speaker #3: And we just seem to be mired in small cap. I don't know what to say. But anyway, I don't want to dwell on it further.

Speaker #3: I just wanted to air some fresh I'm not going anywhere. I've been in this company probably for 12 years or more. 14 years. I've seen a lot worse.

Speaker #3: But I just think this company deserves a better price.

Speaker #2: We totally agree with you.

Tim Bremner: We totally agree with you.

Steven B. Green: Thanks, Tim. I appreciate it.

Steven Green: Thanks, Tim. I appreciate it.

Speaker #3: Thanks, Tim. I appreciate it.

Tim Bremner: Thanks very much, Steven. Yep.

Speaker #2: Thanks very much, Stephen. Yeah.

Speaker #1: Thank you. A follow-up from Don Angelo Volpe with Beacon. Please go ahead.

Operator 2: Thank you. A follow-up from Don Volpe with Beacon. Please go ahead.

Operator: Thank you. A follow-up from Don Volpe with Beacon. Please go ahead.

Don Volpe: Hey, just one more from me. I'm just wondering if you can provide an updated backlog figure relative to that $404 million order book at the end of last year and just kind of what we should expect in terms of execution on that for the H2 of this year and potentially into 2027.

Donangelo Volpe: Hey, just one more from me. I'm just wondering if you can provide an updated backlog figure relative to that $404 million order book at the end of last year and just kind of what we should expect in terms of execution on that for the H2 of this year and potentially into 2027.

Speaker #4: Hey, just one more from me. I'm just wondering if you can provide an updated backlog figure relative to that 404 million dollar order book at the end of last year.

Speaker #4: And just kind of what we should expect in terms of execution on that for the second half of this year, and potentially in 2027.

Speaker #3: Yeah.

Tim Bremner: Yeah.

Speaker #2: So we only report our order book once a year, Don Angelo. That was for the $404 million. We did, and I think at the same time, we communicated that about $230 million was earmarked for 2026.

Tim Bremner: We only report our order book once a year, Don Angelo, and that was the 404 we did. I think at the same time, we communicated that about $230 million was earmarked for 2026. We can't give that kind of guidance at this time, other than to say that the order book remains at record levels. I think that it's the healthiest it's ever been.

Speaker #2: So we can't give that kind of guidance at this time, other than to say that the order book remains at record levels. And I think that it's the healthiest that's ever been.

Speaker #4: Okay, I appreciate the color. I'll hop back in the queue.

Don Volpe: Okay. I appreciate the color. I'll hop back in the queue.

Donangelo Volpe: Okay. I appreciate the color. I'll hop back in the queue.

Speaker #1: Thank you. Cram Axoy at Leisure Pass. Please go ahead.

Operator 2: Thank you. Khurram Aksoy at Leucadia Path. Please go ahead.

Operator: Thank you. Khurram Aksoy at Leucadia Path. Please go ahead.

Khurram Aksoy: Hi, Tim. Hi, Fabian. Thanks for taking my questions. It's great to see the industry demand continue to trend in the right direction. I've had a couple questions. Maybe just one really specific one to start. In the MD&A, you mentioned that the Asia Pacific revenue is down year over year due to the phasing of contract activity during the period. I was wondering if you could elaborate on that. What drove that and what's going to happen the rest of the year there?

Speaker #5: Hi, Dan. Hi, Fabian. Thanks for taking my questions. It's great to see the industry demand continue to trend in the right direction. I have a couple of questions.

Speaker #5: Maybe just one really specific one to start. In the MD&A, you mentioned that the Asia-Pacific revenue is down year over year. Is that due to phasing or contract activity during the period?

Speaker #5: I was wondering if you could elaborate on that. What drove that? And what's going to happen the rest of the year there?

Speaker #2: So the Asia-Pacific market is extremely strong. It's as robust as any jurisdiction around the world. We had a couple of significant projects that were being renewed this year.

Tim Bremner: The Asia Pacific market is extremely strong. It's as robust as any jurisdiction around the world. We had a couple of significant projects that were being renewed this year and have been renewed. Those customers, when they're going through the tendering stage, pull back on some of their activity. That is the majority of the effect that we saw, particularly in Q1, which is generally very slow in Australia anyway, because it's summer break and whatnot. Two of our main customers, while they were going through this tendering process, pulled back a little bit more than they did in prior year. On top of that, 2025 was also an anomalous year where they were in real demand. We had a particularly strong H1 in Australia in 2025. That's the other reason. Don't worry about the market in Australia.

Speaker #2: And have been renewed. And those customers, when they're going through the tendering stage, pull back on some of their activity. That is the majority of the effect that we saw, particularly in Q1, which is generally very slow in Australia anyway.

Speaker #2: Because it's summer break and whatnot. So two of our main customers, while they were going through this tendering process, pulled back a little bit more than they did in prior year.

Speaker #2: On top of that, 2025 was also an anomalous year, where they were in real demand. So we had a particularly strong first half in Australia in 2025.

Speaker #2: So that's the other reason. But don't worry about the market in Australia—it's as healthy as it ever has been. And those two projects have been renewed for us.

Tim Bremner: It's as healthy as it ever has been, and those two projects have been renewed for us.

Khurram Aksoy: That's helpful. Okay, thanks for that. Maybe just a big picture question. Earlier you mentioned that the tender pipeline was overflowing. Can you talk about how you expect that to translate to the business' fundamentals over the rest of the year? For example, maybe can you comment on utilization rates today, or where you think that could end the year in terms of what the healthy target or realistic target would be? Just any color and just how you see these fundamentals translating to Foraco would be great.

Speaker #5: That's helpful. Okay, thanks for that. And then maybe just a big-picture question. I mean, earlier you mentioned that the tender pipeline was overflowing.

Speaker #5: Can you talk about how you expect that to translate to the business's fundamentals over the rest of the year? I mean, for example, can you maybe comment on utilization rates today or where you think that could end the year, in terms of what the healthy target or realistic target would be?

Speaker #5: Just any color and just kind of how you see this fundamentals translating to Foraco would be great.

Speaker #2: So when the tender comes in, there are two issues. One, it has to be suited for the equipment that we've got available. And there's got to be enough lead time.

Tim Bremner: Where the tender comes in, there's two issues. One, it has to be suited for the equipment that we've got available, and there's got to be enough lead time. A lot of companies' procurement departments. Let me back up a bit. It's hard for us to get our customers to give the lead time and the visibility that we need, especially when we're in a more active market like we are now. A customer may put out a tender for a number of rigs for a pretty significant scope, maybe 18 months or two years. The project start date is way too ambitious, and there's absolutely no way we can respond. We just cannot get the equipment ready, and their schedule is their schedule, and they need it. A lot of that work we can't accommodate.

Speaker #2: A lot of companies' procurement departments—let me back up a bit. It's hard for us to get our customers to give the lead time and the visibility that we need, especially when we're in a more active market like we are now.

Speaker #2: So a customer may put out a tender for a number of rigs for a pretty significant scope, maybe 18 months or two years. But the project start date is way too ambitious.

Speaker #2: And there's absolutely no way we can respond. We just cannot get the equipment ready. Their schedule is their schedule, and they need it.

Speaker #2: So, a lot of that work we can't accommodate. There's also a lot of tenders that are very short-term and are disconnected with our strategy of securing longer-term projects for tier one customers.

Tim Bremner: There's also a lot of tenders that are very short-term and are disconnected with our strategy of securing longer-term projects for tier 1 customers, because that is easier for us to hire and retain crews on rather than participating in the spot market. Those things are disconnected with our strategy. I think the tender pipeline remains strong. There's lots of opportunities for us to choose from, and we'll continue to build the business by picking the projects that are well suited for us and well suited for the customer.

Speaker #2: Because that is easier for us to hire, retrain, and retain crews on, rather than participating in the spot market. So those things are disconnected from our strategy.

Speaker #2: But I think the tender pipeline remains strong. So there's lots of us, lots of opportunities for us to choose from. And we'll continue to build the business by picking the projects that are well suited for us.

Speaker #2: And well suited for the customer.

Speaker #3: I mean, I guess it

Khurram Aksoy: I guess it seems like a healthy market. I understand there's gives and takes. Should we expect that utilization rate to continue to improve throughout the year?

Speaker #5: Seems like a healthy market. I understand there's give and take. I mean, should we expect that utilization rate to continue to improve throughout the year?

Speaker #5: Or is?

Tim Bremner: If the market is sustained as we expect it would be, yes, you can expect to see the utilization rate to improve. We're going to be ramping up in North America. We're going to be ramping up in Asia Pacific. Offsetting that, it's winter in Latin America, especially in the Andes. Those rigs have come off. There'd be maybe a little bit of flatlining utilization rate. As we get into Q3 and Q4, and we get back into drilling season in the Andes, you'll see it pick up again. That's kind of a little bit of flexibility mixed in with caused by the seasonality.

Speaker #2: If the market is sustained, as we expect it would be, yes, you can expect to see the utilization rate to improve. We're going to be we're going to be ramping up in North America.

Speaker #2: We're going to be ramping up in Asia-Pacific. But then offsetting that, it's winter in Latin America, especially in the Andes. So those rigs have come off.

Speaker #2: So, there'll be maybe a little bit of flatlining in utilization rate. And then, as we get into Q3 and Q4 and we get back into drilling season in the Andes, you'll see it pick up again.

Speaker #2: So it's kind of a little bit of flexibility mixed in, caused by the seasonality.

Khurram Aksoy: That's helpful. Maybe just one other big picture question. To the extent this cycle continues and you begin investing in the business, what kind of returns do you look for on maybe expansionary CapEx? Or what would the unit economics of that look like? Just any color would be appreciated there as you think about the business and what you expect from it.

Speaker #5: That's helpful. And maybe just one other big picture question. I mean, to the extent this cycle continues, you begin investing in the business. What kind of returns do you look for on maybe expansionary capex?

Speaker #5: Or what would the unit economics of that look like? Just any color would be appreciated there as you think about the business and what you expect from it.

Tim Bremner: I'm not sure I 100% understand.

Speaker #2: I'm not sure I 100% understand.

Khurram Aksoy: If you guys were to add new rigs, what kind of returns do you look for for those kind of investments?

Speaker #5: Oh, I mean, if you guys were to add new rigs, what kind of returns do you look for for those kind of investments?

Speaker #2: Oh, oh. Generally, we look for a payback of around—well, certainly less than two years. Ideally, 18 months, something like that.

Tim Bremner: Oh. Generally, we look for a payback of around, well, certainly less than two years. Ideally, 18 months, something like that.

Khurram Aksoy: Okay. That's helpful. Those are my questions. Appreciate all the hard work, and I wish you guys the best.

Speaker #5: Okay. That's helpful. Those are my questions. I appreciate all the hard work. And I wish you guys the best.

Speaker #2: Thank you very much. It's nice to hear from you again.

Tim Bremner: Thanks very much. It's nice to hear from you again.

Speaker #1: Thank you. We have no further questions. I'll turn the call back over to Tim Bremner for closing comments.

Operator 2: Thank you. We have no further questions. I will turn the call back over to Tim Bremner for closing comments.

Operator: Thank you. We have no further questions. I will turn the call back over to Tim Bremner for closing comments.

Speaker #2: Thanks very much, everybody. And we sincerely appreciate your continued interest in our company as we endeavor to work on the tasks that we've outlined here today.

Tim Bremner: Thanks very much, everybody. We sincerely appreciate your continued interest in our company as we endeavor to work on the tasks that we've outlined here today, and look forward to speaking to you all again in Q3 at the end of October.

Speaker #2: And look forward to speaking to you all again at Q3 at the end of October.

Operator 2: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Q2 2026 Foraco International SA Earnings Call

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