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Boart Longyear Announces 2012 Full-Year Financial Results

  Boart Longyear Announces 2012 Full-Year Financial Results

Business Wire

SALT LAKE CITY -- February 17, 2013

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
  *Adjusted^1 EBITDA of US$322M, down 10% on FY11
  *Statutory NPAT of US$68M, down 58% on FY11
  *Adjusted^1 NPAT of US$114M, down 29% on FY11
  *Statutory earnings per share of US$0.15, down 57% on FY11
  *Adjusted^1 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
                             1H       2H                1H       2H                %
              2011          2012    2012   2012      2012    2012   2012      Change
                                                                                   ^2
Revenue        2,020         1,099    913     2,012     1,099    913     2,012     0%
                                                                                   
Gross          564           312      200     512       312      200     512       -9%
Margin
Gross          28%           28%      22%     25%       28%      22%     25%
Margin %
                                                                                   
EBIT / Op      246           148      -21     127       149      46      195       -21%
Profit
EBIT /
Op Profit      12%           13%      -2%     6%        14%      5%      10%
Margin %
                                                                                   
EBITDA         356           208      46      254       209      113     322       -10%
EBITDA         18%           19%      5%      13%       19%      12%     16%
Margin %
                                                                                   
NPAT           160           98       -30     68        98       16      114       -29%
NPAT           8%            9%       -3%     3%        9%       2%      6%
Margin %
                                                                                   
EPS            35.1          21.4     -6.4    15.0      21.4     3.6     25.0      -29%
(cents)
                                                                                   
Cash from      198           24       40      64        24       53      77        -61%
Operations
                                                                                   
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

Contact:

Boart Longyear Limited
Monika Portman, +1 801-972-8451
Director, Corporate Communications
monika.portman@boartlongyear.com
 
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