VAL-D'OR, QC, Nov. 13,
2023 /CNW/ - Orbit Garant Drilling Inc. (TSX: OGD)
("Orbit Garant" or the "Company") today announced its financial
results for the three-month period ended September 30, 2023 ("Q1 2024"). All dollar
amounts are in Canadian dollars unless otherwise stated.
Financial Highlights
($ amounts in
millions,
except per share
amounts)
|
Three months
ended
September 30, 2023
|
Three months
ended
September 30, 2022
|
Revenue
|
$44.3
|
$53.3
|
Gross Profit
|
$4.1
|
$6.2
|
Gross Margin
(%)
|
9.4
|
11.7
|
Adjusted Gross Margin
(%)¹
|
15.2
|
16.3
|
EBITDA2
|
$3.0
|
$5.8
|
Net earnings
(loss)
|
$(0.4)
|
$1.1
|
Net earnings (loss) per
share
|
|
|
- Basic and
diluted
|
$(0.01)
|
$0.03
|
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".
|
"The decline in revenue and profitability in the quarter reflect
the temporary suspension of drilling projects in Québec during July
due to forest fires, as well as customer decisions to temporarily
suspend or reduce drilling activity on certain other projects in
Canada during the fourth quarter
of last fiscal year. All our projects that were impacted by forest
fires were back at full operation by July
26, and we are gradually resuming operations on projects
that were suspended or reduced due to customer decisions. Two of
these projects have already resumed and we expect to restart
operations on the others by January
2024," said Pierre Alexandre,
President and CEO of Orbit Garant.
"We recently renewed a large, specialized drilling contract in
Canada with a senior gold mining
customer for a three-year term. This contract renewal will result
in the continued operation of 15 to 20 of our surface and
underground drill rigs on the customer's project sites and is in
line with our strategy to focus on projects with senior and
well-financed intermediate gold mining customers in Canada. Customer demand remains strong in
Canada, and we are seeing
increased demand in Chile. Prices
for gold and copper remain favourable to support mineral
exploration and development spending in our markets."
First Quarter Results
Revenue for Q1 2024 totalled $44.3
million, a decrease of 16.8% compared to $53.3 million for the three-month period ended
September 30, 2022 ("Q1 2023").
Canada revenue totalled
$33.0 million in Q1 2024, a decline
of 23.0% compared to $42.8 million in
Q1 2023. Approximately $2.0 million
of the decline is attributable to the suspension of the Company's
drilling projects in Québec during the month of July due to forest
fires. The remaining year-over-year decline in revenue was
primarily attributable to customer decisions to temporarily suspend
or reduce drilling activity on certain projects during the fourth
quarter of Fiscal 2023. The Company restarted operations on all its
drilling projects that were impacted by forest fires by
July 26, and expects to resume full
operations on other projects that were temporarily suspended or
reduced due to customer decisions by January
2024. One of these projects resumed in mid-August and
another resumed in early September. International revenue increased
8.7% to $11.3 million in Q1 2024 from
$10.5 million in Q1 2023,
reflecting increased drilling activity in Chile and Guinea, partially offset by a reduction of
drilling activity in Guyana and
Burkina Faso.
Gross profit for Q1 2024 was $4.1
million, or 9.4% of revenue, compared to $6.2 million, or 11.7% of revenue, in
Q1 2023. Depreciation expenses totalling $2.6 million are included in the cost of
contract revenue for Q1 2024, compared to depreciation
expenses of $2.5 million in
Q1 2023. Adjusted gross margin, excluding depreciation
expenses, was 15.2% in Q1 2024, compared to adjusted gross margin
of 16.3% in Q1 2023. The decline in gross profit, gross
margin, and adjusted gross margin was primarily attributable to the
Company's revenue reduction in Canada due to forest fires and costs incurred
to ramp these projects back up, and temporarily suspended or
reduced drilling activity on certain projects, partially offset by
increased drilling revenue in Chile and Guinea, as described above.
General and Administrative expenses were $4.0 million, or 8.9% of revenue, in Q1 2024,
compared to $3.9 million, or 7.3% of
revenue, in Q1 2023.
EBITDA totalled $3.0 million in
Q1 2024, compared to $5.8
million in Q1 2023. Net loss for Q1 2024 was
$0.4 million, or $0.01 per share, compared to net earnings of
$1.1 million, or $0.03 per share, in Q1 2023. The decrease in
EBITDA and net earnings was primarily attributable to the reduction
of drilling activity in Canada due
to forest fires and project suspensions, as discussed above, the
related additional costs incurred to ramp projects back up, and a
reduction in foreign exchange gain, partially offset by increased
drilling activity in Chile and
Guinea, as described above. The
Company's net loss in Q1 2024 also reflects a $0.2 million income tax recovery compared to a
$1.3 million tax expense in Q1 2023.
Liquidity and Capital Resources
On November 2, 2023, Orbit Garant
entered into a fifth amended and restated credit agreement with
National Bank in respect of its Credit Facility. The Company's
Credit Facility consists of a $30.0
million revolving credit facility, and a US$5.0 million revolving credit facility
guaranteed by Export Development Canada. The Credit Facility
expires on November 2, 2026.
The Company borrowed an additional net amount of $2.7 million on its Credit Facility in Q1 2024,
compared to a repayment of $7.0 million in Q1 2023. The Company's
long-term debt under the Credit Facility, including US$2.0 million ($2.7 million) drawn from the US$5.0 million revolving credit facility and the
current portion, was $24.9 million as at September 30, 2023, compared to $22.2 million as at June
30, 2023.
As at September 30, 2023, the
Company's working capital totalled $51.8
million, compared to $50.4
million as at June 30, 2023. Orbit Garant's
working capital requirements are primarily related to the funding
of inventory and the financing of accounts receivable. As at
September 30, 2023, Orbit Garant had
37,372,756 common shares issued and outstanding.
Orbit Garant's unaudited interim consolidated financial
statements and management's discussion and analysis for
Q1 2024 are available via the Company's website at
www.orbitgarant.com or SEDAR+ at www.sedarplus.ca.
Conference Call
Pierre Alexandre, President and
CEO, and Daniel Maheu, CFO, will
host a conference call for analysts and investors on Tuesday,
November 14, 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/46ReV5n 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:
815100 #. The replay will be available until November 21, 2023.
RECONCILIATION OF NON - IFRS FINANCIAL MEASURES
Financial data has been prepared in conformity with
International Financial Reporting Standards ("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 and EBITDA Margin
EBITDA and EBITDA margin: Net earnings (loss)
before interest, taxes, depreciation and amortization.
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 and EBITDA
Margin
(unaudited)
(in millions of
dollars)
|
3 months
ended
September 30,
2023
|
3 months
ended
September 30,
2022
|
Net earnings (loss) for
the period
|
(0.4)
|
1.1
|
Add:
|
|
|
Finance
costs
|
0.9
|
0.7
|
Income tax expense
(recovery)
|
(0.2)
|
1.3
|
Depreciation and
amortization
|
2.7
|
2.7
|
EBITDA
|
3.0
|
5.8
|
Contract
Revenue
|
44.3
|
53.3
|
EBITDA margin (%)
(1)
|
6.8
|
10.9
|
(1) EBITDA, divided by
contract revenue x 100
|
Adjusted Gross Profit and Adjusted Gross Margin
Adjusted gross profit and margin: Contract revenue, less
operating costs. Operating expenses comprise material and service
expenses, personnel expenses, other operating expenses, excluding
depreciation.
Although adjusted gross profit and adjusted gross 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 Adjusted Gross
Margin
(unaudited)
(in millions of
dollars)
|
3 months
ended
September 30,
2023
|
3 months
ended
September 30,
2022
|
Contract
revenue
|
44.3
|
53.3
|
Cost of contract
revenue (including depreciation)
|
40.2
|
47.1
|
Less
depreciation
|
(2.6)
|
(2.5)
|
Direct costs
|
37.6
|
44.6
|
Adjusted gross
profit
|
6.7
|
8.7
|
Adjusted gross margin
(%) (1)
|
15.2
|
16.3
|
(1) Adjusted gross profit, divided by
contract revenue X 100
|
About Orbit Garant
Headquartered in Val-d'Or,
Québec, 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 211 drill rigs and approximately 1,200
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 world economic climate as it relates to the
mining industry; the Canadian economic environment; the Company's
ability to attract and retain customers and to manage its assets
and operating costs; the political situation in certain
jurisdictions in which the Company operates and the operating
environment in the jurisdictions in which the Company operates as
well as the risks and uncertainties are discussed in the Company's
regulatory filings available at www.sedarplus.ca. 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.