̶ Improved
profitability supported by increased specialized drilling activity
in Canada –
VAL-D'OR, QC, May 10, 2023
/CNW/ - Orbit Garant Drilling Inc. (TSX: OGD) ("Orbit Garant" or
the "Company") today announced its financial results for the
three-month ("Q3 2023") and nine-month periods ended March 31, 2023. All dollar amounts are in
Canadian dollars unless otherwise stated.
Financial Highlights
($ amounts in
millions,
except per share
amounts)
|
Three months
ended
March 31, 2023
|
Three months
ended
March 31, 2022
|
Nine months
ended
March 31, 2023
|
Nine months
ended
March 31, 2022
|
Revenue
|
$49.3
|
$45.2
|
$154.2
|
$141.6
|
Gross Profit
|
$4.6
|
$0.3
|
$17.7
|
$6.8
|
Gross Margin
(%)
|
9.4
|
0.7
|
11.5
|
4.8
|
Adjusted Gross Margin
(%)¹
|
14.4
|
6.7
|
16.3
|
10.3
|
EBITDA2
|
$4.5
|
$(0.5)
|
$17.3
|
$4.3
|
Net earnings
(loss)
|
$0.2
|
$(4.1)
|
$3.4
|
$(7.1)
|
Net earnings (loss) per
share
|
|
|
|
|
- Basic and
diluted
|
$0.01
|
$(0.11)
|
$0.09
|
$(0.19)
|
1 Adjusted Gross Margin is
a non-IFRS financial measure and is defined as Gross Profit
excluding depreciation expenses. See "Reconciliation of Non-IFRS
financial measures".
|
2
EBITDA is a non-IFRS financial measure and is
defined as earnings before interest, taxes, depreciation, and
amortization. See "Reconciliation of Non-IFRS financial
measures".
|
"We generated record third quarter revenue and our adjusted gross
margin, EBITDA and net earnings all improved significantly compared
to the third quarter last year. While the fiscal third quarter is
typically our weakest period of the year from a seasonal
standpoint, we continue to benefit from strong customer demand and
increased specialized drilling activity in Canada," said Pierre
Alexandre, President and CEO of Orbit Garant. "Looking
ahead, we intend to primarily focus on our Canadian gold drilling
operations, prioritizing longer-term, specialized drilling
contracts with major and intermediate customers. We will
selectively pursue international drilling opportunities in
South America and West Africa when we have a high degree of cost
and margin certainty. Our primary objective is to maximize
profitability on a sustainable basis."
Third Quarter Results
Revenue for Q3 2023 totalled $49.3
million, an increase of 9.2% compared to $45.2 million for the three-month period ended
March 31, 2022 ("Q3 2022").
Canada revenue totalled
$38.5 million in Q3 2023, an increase
of 18.5% compared to $32.5 million in
Q3 2022, reflecting increased specialized drilling activity and
improved pricing. International revenue declined to $10.8 million in Q3 2023 from $12.7 million in Q3 2022, reflecting a reduction
of drilling activity in Burkina
Faso, partially offset by increased drilling activity in
Chile and Guinea.
Gross profit for Q3 2023 was $4.6
million, or 9.4% of revenue, compared to $0.3 million, or 0.7% of revenue, in
Q3 2022. Depreciation expenses totalling $2.5 million are included in the cost of contract
revenue for Q3 2023, compared to $2.7
million in Q3 2022. Adjusted gross margin, excluding
depreciation expenses, was 14.4% in Q3 2023, compared to adjusted
gross margin of 6.7% in Q3 2022. The increases in gross
profit, gross margin, adjusted gross profit and adjusted gross
margin were primarily attributable to increased specialized
drilling activity, improved pricing and cost controls. Prior year
margins were impacted by project ramp-up costs in Canada, mobilization costs for new, long-term
projects in Guinea and
Chile, and temporary work
disruptions in Canada and
Chile related to the outbreak of
the Omicron variant.
General and Administrative expenses were $3.6 million, or 7.2% of revenue, in Q3 2023,
compared to $3.8 million, or 8.5% of
revenue, in Q3 2022.
Earnings before interest, taxes, depreciation and amortization
("EBITDA") increased to $4.5 million
in Q3 2023 from negative $(0.5)
million in Q3 2022. Net earnings for Q3 2023 were
$0.2 million, or $0.01 per share, compared to a net loss of
$4.1 million, or $0.11 per share, in Q3 2022. The
positive variances were primarily attributable to increased
specialized drilling activity, improved pricing, cost controls and
a $0.7 million foreign exchange gain.
The Company's increased EBITDA and net earnings in Q3 2023
also reflect decreased project ramp-up costs in Canada, a reduction in mobilization costs for
drilling projects in Guinea
and Chile, and the absence of Omicron-related work
interruptions.
Liquidity and Capital Resources
The Company withdrew a net amount of $2.6
million on its Credit Facility in Q3 2023, compared to a
withdrawal of $2.1 million in Q3
2022. The Company's long-term debt under the Credit Facility,
including US$1.0 million
($1.4 million) drawn from the
US$5.0 million revolving credit
facility and the current portion, was $24.3
million as at March 31, 2023,
compared to $31.5 million as at
June 30, 2022. This reduction
primarily reflects the utilization of a substantial portion of the
$8.47 million loan from the
Business Development Bank of Canada that was secured in the first quarter
of Fiscal 2023.
As at March 31, 2023, the
Company's working capital totalled $55.9
million, compared to $53.4
million as at June 30, 2022,
and 37,372,756 common shares were issued and outstanding. The
Company's working capital requirements are primarily related to the
funding of inventory and the financing of accounts receivable.
Orbit Garant's unaudited interim consolidated financial
statements and management's discussion and analysis for
Q3 2023 are available via the Company's website at
www.orbitgarant.com or SEDAR at www.sedar.com.
Conference Call
Pierre Alexandre, President and
CEO, and Daniel Maheu, CFO, will
host a conference call for analysts and investors on Thursday, May 11, 2023 at 10:00 a.m. (ET). To join the conference call
without operator assistance, you can register and enter your phone
number at https://emportal.ink/3m7GC8l to receive an instant
automated call back. Alternatively, you can dial 416-764-8688
or 1-888-390-0546 to reach a live operator that will join you into
the call.
A live webcast of the call will be available on Orbit Garant's
website at: http://www.orbitgarant.com/en/events. The webcast will
be archived following conclusion of the call.
To access a replay of the conference call dial 416-764-8677 or
1-888-390-0541, passcode: 160218 #. The replay will be available
until May 18, 2023.
RECONCILIATION OF NON - IFRS FINANCIAL MEASURES
Financial data has been prepared in conformity with IFRS.
However, certain measures used in this discussion and analysis do
not have any standardized meaning under IFRS and could be
calculated differently by other companies. The Company believes
that certain non-IFRS financial measures, when presented in
conjunction with comparable IFRS financial measures, are useful to
investors and other readers because the information is an
appropriate measure to evaluate the Company's operating
performance. Internally, the Company uses this non-IFRS financial
information as an indicator of business performance. These measures
are provided for information purposes, in addition to, and not as a
substitute for, measures of financial performance prepared in
accordance with IFRS.
EBITDA:
Earnings (loss) before interest, taxes, depreciation and
amortization.
Adjusted gross profit:
Contract revenue excluding operating expenses. Operating
expenses comprise material and service expenses, personnel
expenses, other operating expenses, excluding depreciation.
EBITDA
Management believes that EBITDA is an important measure when
analyzing its operating profitability, as it removes the impact of
financing costs, certain non-cash items and income taxes. As a
result, Management considers it a useful and comparable benchmark
for evaluating the Company's performance, as companies rarely have
the same capital and financing structure.
Reconciliation of EBITDA
(unaudited)
(in millions of
dollars)
|
3 months
ended
March 31,
2023
|
3 months
ended
March 31,
2022
|
9 months
ended
March 31,
2023
|
9 months
ended
March 31,
2022
|
Net earnings (loss) for
the period
|
0.2
|
(4.1)
|
3.4
|
(7.1)
|
Add:
|
|
|
|
|
Finance
costs
|
0.9
|
0.5
|
2.4
|
1.5
|
Income tax
expense
|
0.7
|
0.2
|
3.2
|
1.3
|
Depreciation and
amortization
|
2.7
|
2.9
|
8.3
|
8.6
|
EBITDA
|
4.5
|
(0.5)
|
17.3
|
4.3
|
Adjusted Gross Profit and Margin
Although adjusted gross profit and margin are not recognized
financial measures defined by IFRS, Management considers them to be
important measures as they represent the Company's core
profitability, without the impact of depreciation expense. As a
result, Management believes they provide a useful and comparable
benchmark for evaluating the Company's performance.
Reconciliation of Adjusted Gross Profit and
Margin
(unaudited)
(in millions of
dollars)
|
3 months
ended
March 31,
2023
|
3 months
ended
March 31,
2022
|
9 months
ended
March 31,
2023
|
9 months
ended
March 31,
2022
|
Contract
revenue
|
49.3
|
45.2
|
154.2
|
141.6
|
Cost of contract
revenue (including depreciation)
|
44.7
|
44.9
|
136.5
|
134.8
|
Less
depreciation
|
(2.5)
|
(2.7)
|
(7.5)
|
(7.7)
|
Direct costs
|
42.2
|
42.2
|
129.0
|
127.1
|
Adjusted gross
profit
|
7.1
|
3.0
|
25.2
|
14.5
|
Adjusted gross margin
(%) (1)
|
14.4
|
6.7
|
16.3
|
10.3
|
(1) Adjusted gross
profit, divided by contract revenue X 100
|
About Orbit Garant
Headquartered in Val-d'Or,
Quebec, Orbit Garant is one of the largest Canadian-based
mineral drilling companies, providing both underground and surface
drilling services in Canada and
internationally through its 212 drill rigs and approximately 1,300
employees. Orbit Garant provides services to major, intermediate
and junior mining companies, through each stage of mining
exploration, development and production. The Company also provides
geotechnical drilling services to mining or mineral exploration
companies, engineering and environmental consultant firms, and
government agencies. For more information, please visit the
Company's website at www.orbitgarant.com.
Forward-looking information
This news release may contain forward-looking statements
(within the meaning of applicable securities laws) relating to
business of Orbit Garant Drilling Inc. (the "Company") and the
environment in which it operates. Forward-looking statements are
identified by words such as "believe", "anticipate", "expect",
"intend", "plan", "will", "may" and other similar expressions.
These statements are based on the Company's expectations,
estimates, forecasts and projections. They are not guarantees of
future performance and involve risks and uncertainties that are
difficult to control or predict. Risks and uncertainties that could
cause actual results, performance or achievements to differ
materially include the ability of the jurisdictions in which the
Company operates to manage and cope with the implications of
COVID-19, the impact of measures taken by such jurisdictions to
control the spread of COVID-19 on the Company's operations, the
economic and financial implications of COVID-19 to the Company,
including its impact on cash flows, liquidity and the Company's
compliance with its obligations under its borrowing agreements as
well as the risks and uncertainties are discussed in the Company's
regulatory filings available at www.sedar.com. There can be no
assurance that forward-looking statements will prove to be accurate
as actual outcomes and results may differ materially from those
expressed in these forward-looking statements. Readers, therefore,
should not place undue reliance on any such forward-looking
statements. Further, a forward-looking statement speaks only as of
the date on which such statement is made. The Company undertakes no
obligation to publicly update any such statement or to reflect new
information or the occurrence of future events or circumstances
except as required by applicable securities laws.
SOURCE Orbit Garant Drilling Inc.