FORACO INTERNATIONAL REPORTS Q3 2010

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES NOR FOR DISSEMINATION IN THE UNITED STATES/

80% Increase in Revenue; Improving Market Conditions; 2010 Acquisitions Fully Consolidated in Q3

TORONTO and MARSEILLE, France, Nov. 15 /CNW/ - Foraco International SA (TSX:FAR) (the "Company" or "Foraco"), a leading global provider of diversified drilling services, today reported unaudited financial results for its third quarter of 2010. All figures are reported in US Dollar (US$), unless otherwise indicated.

"Q3 has been a very busy quarter for us, since we initiated the integration of Adviser and EDC, while the mining market, which represents today 87% of our revenue, showed an increasing activity in most of our regions. Meanwhile our more traditional water segment continues to be soft," said Daniel Simoncini, Chairman and Chief Executive Officer of Foraco. "Our main focus is to smoothly integrate our new acquisitions, optimize synergies between areas and to grow the profitability of the Company. We are pleased with the activity levels and prospects in our recently opened markets of Australia, Russia and Latin America."

"Our Q3 2010 performance is a combination of increased revenue with stable high margins on Foraco's historical areas of operations and the improving contribution of Adviser, though we do consider that there is room to improve contract gross margins there. Thanks to our increased market reach, we are already discussing with major clients the possibility of larger regional contracts," said Jean-Pierre Charmensat, Vice-CEO and Chief Financial Officer of Foraco. "We have already implemented a program of investment in new equipment in order to deal with new developments already confirmed or identified for 2011. We will continue with this capital expenditure program, which is made possible by our strong financial structure."

Three Months Q3 2010 Highlights:

Impact of recent acquisitions

• On May 26, 2010, the Company completed the acquisition of Adviser Drilling SA ("Adviser"). Q3 2010 is the first full accounting period into which Adviser has been fully consolidated.
• On May 27, 2010, the Company completed the acquisition of a 50% controlling interest in LLC Eastern Drilling Company ("EDC"). Q3 2010 is the first full accounting period into which EDC has been fully consolidated.
• During the third quarter, the Company acquired the remaining 49% minority interest in Mosslake for a fixed cash consideration of AUD 3.5 million.

Revenue

• Q3 2010 revenue amounted to US$52.0 million, an increase of US$23.2 million or 80% compared to Q3 2009.
• Revenue in the Mining segment increased by US$26.5 million during the quarter, partially offset by a US$3.3 million decrease in the Water segment.
• Adviser contributed revenue of US$19.3 million during the quarter.
• In Q3 2010, excluding Adviser, the net revenue of the Company increased by US$3.9 million or 13% compared to Q3 2009.

Other

• Q3 2010 gross profit (including depreciation within cost of sales) amounted to US$11.7 million, an increase of US$2.5 million or 28% compared to Q3 2009.
• Q3 2010 selling, general and administrative expenses represented US$5.2 million or 10.1% of revenue compared to US$4.2 million or 14.7% of revenue in Q3 2009.
• In Q3 2010, the Company generated a net profit after tax amounting to US$4.3 million compared to US$3.4 million in Q3 2009, representing a 26% increase.

9 months YTD Q3 2010 Highlights:

• YTD Q3 2010 revenue amounted to US$112.4 million, an increase of US$19.3 million or 21% compared to YTD Q3 2009.
• In spite of the improved performance reported in Q3 2010:
• YTD Q3 2010 gross profit (including depreciation within cost of sales) is still lower than that of YTD Q3 2009 by US$3.0 million or 10%, at US$25.9 million.
• YTD Q3 2010 net income amounted to US$8.0 million compared to US$11.5 million for YTD Q3 2009.
• YTD Q3 2010 cash generated from operations before changes in operating assets and liabilities amounted to US$26.0 million compared to US$26.8 million for YTD Q3 2009.
• Cash and cash equivalents as at September 30, 2010 were US$13.7 million with financial debts and equivalents amounting to US$47.8 million, resulting in a net debt of US$34.1 million.
• The net debt to equity ratio at the end of the period remains low at 0.24 compared to 0.28 as at June 30, 2010.

Financial Results

Foraco's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"), rather than Canadian Generally Accepted Accounting Principles ("Canadian GAAP"), and as such may not be directly comparable to the financial statements of other Canadian issuers.

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As of the seco nd quarter ended June 30, 2010, and in accordance with IFRS, the Company has elected to report its consolidated financial statements using US Dollars as its presentation currency. Previously, the Company reported in Euros. All figures previously reported in Euros have been converted at historical, average or closing currency exchange rate, as appropriate and in accordance with generally accepted accounting principles .

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Revenue

(In thousands of US$)	Q3 2010		% change		Q3 2009		YTD Q3 2010		% change		YTD Q3 2009
(unaudited)
Reporting segment
Mining	49,810		113%		23,336		97,998		44%		68,247
Water	2,182		-60%		5,487		14,432		-42%		24,836
Total revenue	51,992		80%		28,823		112,431		21%		93,082
Geographic region
Africa	8,819		-16%		10,444		35,177		-23%		45,635
Europe	8,009		31%		6,093		11,129		-11%		12,468
Asia Pacific	6,423		35%		4,741		17,392		60%		10,886
North America	9,397		25%		7,545		22,147		-8%		24,093
South America	19,344		-		-		26,586		-		-
Total revenue	51,992		80%		28,823		112,431		21%		93,082

As a result of the acquisition of Adviser, the Company now benefits from a significant presence in South America. In previous periods, the Company had only one geographic region for America which is now split between North and South America for internal reporting purposes. For the purpose of the segment reporting, South America includes Mexico.

Q3 2010 Revenue

Q3 2010 revenue increased by US$23.2 million or 80% to US$52.0 million compared to Q3 2009, mainly as a result of:

• A US$26.5 million increase in the Mining segment, partially offset by a US$3.3 million decrease in the Water segment due to the continued weak activity in this sector in Africa and Europe.
• The activity of Adviser in South America which generated revenue of US$19.3 million for the period. Q3 2010 was the first full quarter into which Adviser was fully consolidated.
• The increased level of revenue generated by the Company's historical areas of operations, which represented US$3.9 million, a 13% increase compared to Q3 2009.

Reporting segment

The Q3 2010 increase in revenue in the Mining segment amounted to US$26.5 million or 113% compared to Q3 2009. This increase is mainly due to the US$19.3 million revenue generated by Adviser during the quarter, but also to a US$7.2 million increase in the Company's historical areas of operations.

The Q3 2010 decrease in revenue in the Water segment compared to Q3 2009 amounted to US$3.3 million or 60%. This decrease is due to the continued weak activity in this sector in Africa and Europe.

Geographic region

In Africa, the Q3 2010 revenue decreased by US$1.6 million compared to Q3 2009. In most of the African countries in which the Company operates, international institutions reduced, postponed or halted their contributions which affected the activity in the Water segment. In the Mining segment, the activity increased by US$0.9 million in Q3 2010 compared to Q3 2009.

The revenue in Europe increased by US$1.9 million in Q3 2010 compared to Q3 2009 mainly due to the strong performance of contracts in Russia.

In Asia-Pacific, the Q3 2010 revenue increase of 35% from US$4.7 million to US$6.4 million was mainly attributable to the recovery of mining activity in Australia compared to the same quarter last year. The Company believes it is well positioned to further this development and has decided to anticipate the purchase of the 49% minority interest in its Australian subsidiary and to invest in new rigs to be delivered in 2011.

As a result of the improvement of market conditions in Canada, revenue in North America increased by 25% from US$7.5 million in Q3 2009 to US$9.4 million in Q3 2010.

The integration of Adviser into the Company has generated US$19.3 million revenue in South America for three full months of Q3 2010 (nil in Q3 2009), dominated by Chile via long-term contracts with major companies, as well as activity in Argentina and Mexico.

YTD Q3 2010

YTD Q3 2010 nine months revenue amounted to US$112.4 million, compared to US$93.1 million in YTD Q3 2009 which represents a 21% increase. YTD Q3 2009 was a record high year for the Company before Adviser and EDC were acquired.

In the nine month period of 2010, revenue in the Mining segment increased by US$29.8 million or 44%, mainly due to the acquisition of Adviser which accounted for US$26.6 million. In the Water segment, revenue decreased by 42%, from US$24.8 million during YTD Q3 2009 to US$14.4 million in YTD Q3 2010.

In Africa, the YTD Q3 2010 revenue decreased by US$10.5 million compared to YTD Q3 2009. This decrease is due to the reduced activity in the Water segment as explained above. In the Mining segment, the activity slightly decreased in US$ but was stable in Euros, the functional currency of this region.

In Europe, revenue decreased by US$1.3 million mainly due to the lower level of activity during the first half of the year but was partially offset by the improvement in Q3 activity.

In Asia-Pacific, revenue increased by 60% from US$10.9 million to US$17.4 million, mainly due to the contribution of Australian operations that benefited from the full integration of Mosslake and from the recovery of the mining activity in the area.

In North America, revenue decreased from US$24.1 million to US$22.1 million. Despite the advancements in mining during this quarter, the operations in Canada were affected by the generally weak market conditions for mining during the first half of the year.

The increase in South America reflects the integration of Adviser. Adviser operates predominately in Chile via long-term contracts with major companies, with added activity in Argentina in 2010.

Gross Profit

(In thousands of US$)		Q3 2010		% change		Q3 2009		YTD Q3 2010		% change		YTD Q3 2009
	(unaudited)
	Reporting segment
	Mining	11,275		49%		7,591		22,236		1%		21,960
	Water	466		-71%		1,606		3,658		-47%		6,966
Total gross profit		11,741		28%		9,197		25,894		-10%		28,926

Q3 2010

In Q3 2010, gross profit increased by US$2.5 million, from US$9.2 million or 32% of revenue to US$11.7 million or 23% of revenue.

In the Mining segment, most of the contracts have performed satisfactorily and the decrease in the percentage of margin may be attributed to (i) the continued general pressure on prices in the industry, in spite of signs of recovery in the activity and (ii) the integration of Adviser where certain contracts are performed at a lower level of profitability. Thanks to the development of synergies between areas, management is confident that this level of profitability can be improved over the coming quarters. 

In the Water segment, gross profit margins are lower due to under-absorption of fixed costs compared to Q3 2009.

YTD Q3 2010

The recovery which we have noted during the quarter partially offsets the relatively weak performance reported during the first half of the year. YTD Q3 2010 gross profit is still US$3.0 million lower than equivalent figures for last year. YTD Q3 2010 gross profit is US$25.9 million or 23% of revenue compared to US$28.9 million or 31% of revenue a year ago.

Operating Expense (excluding cost of sales)

(In thousands of US$)	Q3 2010		% change		Q3 2009		YTD Q3 2010		% change		YTD Q3 2009
(unaudited)
Selling, general and administrative (SG&A) expenses	5,247		24%		4,235		14,207		21%		11,724
Other (income) and expense, net	-21		-		-63		-246		9%		-225
Total operating expenses	5,226		25%		4,172		13,961		21%		11,499

In Q3 2010, operating expenses increased by US$1.1 million, mainly due to the integration of Adviser. As a percentage of revenue, operating expenses are now 10% of revenue in Q3 2010 as compared to 14% of revenue in Q3 2009, which is a direct result of the integration of the Company's recent acquisitions.

In YTD Q3 2010, the increase in operating expenses (excluding cost of sales) represents US$2.5 million. This increase is mainly due to the transaction costs related to the acquisitions of Adviser and EDC (US$0.9 million) which were accounted for within general and administrative expenses as required by IFRS 3(R) effective as at January 1, 2010, and the integration of Adviser and EDC over the course of the year.

Operating profit			Q3 2010		% change		Q3 2009		YTD Q3 2010		% change		YTD Q3 2009
	(In thousands of US$)
		(unaudited)
	Reporting segment
	Mining		6,248		48%		4,225		10,293		-24%		13,473
	Water		267		-67%		800		1,640		-59%		3,954
Total operating profit			6,515		30%		5,025		11,933		-32%		17,428

Operating profit increased to US$6.5 million in Q3 2010, compared to US$5.0 million in Q3 2009. This variation is primarily due to the higher level of gross profit, only partially offset by the increase in selling, general and administrative expenses.

In spite of the improvement seen in the third quarter, the operating profit decreased from US$17.4 million in YTD Q3 2009 to US$11.9 million in YTD Q3 2010.

Selected Financial Data

(In thousands of US$) - (unaudited)		Q3'10		% change		Q3'09		YTD Q3'10		% change		YTD Q3'09
Revenue		51,992		80%		28,823		112,431		21%		93,082
Gross Profit^1		11,741		28%		9,197		25,894		-10%		28,925
Operating Expenses^2		-5,226		25%		-4,172		-13,961		21%		-11,499
Operating Profit		6,515		30%		5,025		11,933		-32%		17,426
Net Earnings		4,319		25%		3,444		7,965		-31%		11,476
Earnings per share
	EPS in US$ (basic)	0.03		-50%		0.06		0.08		-33%		0.12

1 Includes amortization and depreciation expenses
2 Excludes cost of sales

In Q3 10, the Company generated a net profit after tax amounting to US$4.3 million or $0.03 per share compared to US$3.4 in Q3 09 or $0.06 per share.

In YTD Q3 10, the Company generated a net profit after tax amounting to US$8.0 million or $0.08 per share compared to US$11.5 in YTD Q3 09 or $0.12 per share.

Cash and Debt

YTD Q3 2010 cash generated from operations before changes in operating assets and liabilities was almost stable at US$26.0 million compared to US$26.8 million for YTD Q3 2009.

As at September 30, 2010, cash and cash equivalents totaled US$13.7 million compared to US$23.3 million as at September 30, 2009. Cash and cash equivalents are mainly comprised of US$7.3 million in short-term deposits almost entirely denominated in Euros. Cash and cash equivalents are invested within top tier European financial institutions.

As at September 30, 2010, the net debt amounted to US$34.1 million compared to US$36.8 million as at June 30, 2010. The ratio of debt (net of cash) to shareholders' equity is low at 0.24 compared to 0.28 as at June 30, 2010.

Currency and Exchange Rate

The exchange rates for the periods under review are provided in  Management's  Discussion and Analysis for Q3 2010.

Outlook

The Company's business strategy is to continue to grow through the development and optimization of the services it offers across geographical regions and industry segments, as well as through the expansion of its customer base. Foraco expects that it will continue to execute its strategy through a combination of organic growth and development, and acquisitions of complementary businesses in the drilling services industry.

Foraco's unaudited Financial Statements and Management's Discussion & Analysis ("MD&A"), for the three and nine month periods ended September 30, 2010, are available via Foraco's website at www.foraco.com and will be available on www.sedar.com. 

Conference Call and Webcast

On Monday, November 15^th 2010, Management of the Company will conduct a conference call at 10:00 am ET to review the financial results. The call will be hosted by Daniel Simoncini, Chairman and CEO, and Jean-Pierre Charmensat, Vice-CEO and CFO.

You can join the call by dialing 1-888-231-8191 or 647-427-7450. Please call in 15 minutes ahead of time to secure a line. You will be put on hold until the conference call begins. A live audio webcast of the conference call will also be available through http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3306600or at www.foraco.com.

An archived replay of the webcast will be available for 90 days.

About Foraco International SA 

Foraco International SA (TSX: FAR) is a global leading drilling services company that provides turnkey solutions for mining, energy, water and infrastructure projects. Supported by its founding values of integrity, innovation and commitment, Foraco has grown into a global enterprise with operations in 22 countries across five continents. For more information about Foraco, visit www.foraco.com.

To receive Company press releases, please email [email protected] and mention "Foraco News" on the subject line.

"Neither TSX Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Exchange) accepts responsibility for the adequacy or accuracy of this release."

Caution concerning forward-looking statements 
This document may contain "forward-looking statements" and "forward-looking information" within the meaning of applicable securities laws. These statements and information include estimates, forecasts, information and statements as to Management's expectations with respect to, among other things, the future financial or operating performance of the Company and capital and operating expenditures. Often, but not always, forward-looking statements and information can be identified by the use of words such as "may", "will", "should", "plans", "expects", "intends", "anticipates", "believes", "budget", and "scheduled" or the negative thereof or variations thereon or similar terminology. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Readers are cautioned that any such forward-looking statements and information are not guarantees and there can be no assurance that such statements and information will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed under the heading "Risk Factors" in the Company's Annual Information Form dated March 31, 2010, which is filed with Canadian regulators on SEDAR (www.sedar.com). The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements and information whether as a result of new information, future events or otherwise. All written and oral forward-looking statements and information attributable to Foraco or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

%SEDAR: 00025480E

For further information:

please contact CHF Investor Relations at:

Jeanny So, Director of Operations   
Email: [email protected]    
Tel: [phone] x 225