Orbit Garant Drilling Reports Improved Profitability In Fiscal 2024 Third Quarter Results And Renewal Of Significant Contracts In Chile

VAL-D'OR, QC, May 8, 2024 /CNW/ - Orbit Garant Drilling Inc. (TSX: OGD) ("Orbit Garant" or the "Company") today announced its financial results for the three-month ("Q3 2024") and nine-month periods ended March 31, 2024. All dollar amounts are in Canadian dollars unless otherwise stated.

Financial Highlights

"Our profitability improved year-over-year in the third quarter, a seasonally slower period for our business, as our drilling activity in Canada remained relatively stable, our activity in Chile increased and we had no further activity in West Africa," said Pierre Alexandre, President and CEO of Orbit Garant. "In Canada, our operations normalized during the quarter as the projects that were temporarily suspended or reduced due to customer decisions in the first half of Fiscal 2024 were fully resumed by January. Subsequent to quarter end, we secured two large copper contract renewals in Chile with senior mining companies. One of the contract renewals is for a term of three years, with a customer option to extend for two years, and the other, which represents our largest contract in Chile, is for a term of five years.

"With our West African operations now ceased, we expect our margins to improve as we focus on our core Canadian operations and attractive projects in South America, while carefully managing our costs. The price of gold has recently traded at record levels above US$2,400 per ounce and copper prices have increased significantly since the start of January. With these current high metals prices, we expect to see continued strong demand for our services from senior mining companies. However, financing conditions remain challenging for junior exploration companies, and for certain intermediates. Accordingly, we are primarily focusing on senior and well-financed intermediate customers, from which we derived 87% of our revenue in the first nine months of Fiscal 2024."

Third Quarter Results

Revenue for Q3 2024 totalled $48.2 million, a decrease of 2.3% compared to $49.3 million for the three-month period ended March 31, 2023 ("Q3 2023"). Canada revenue totalled $37.2 million in Q3 2024, a decline of 3.5% compared to $38.5 million in Q3 2023. The decline was primarily attributable to reduced drilling activity on certain projects. International revenue increased 1.4% to $11.0 million in Q3 2024 from $10.8 million in Q3 2023, reflecting increased drilling activity in Chile and Guyana, partially offset by the termination of drilling activity in Guinea and Burkina Faso.

Gross profit for Q3 2024 was $6.2 million, or 12.8% of revenue, an increase of 32.7% compared to $4.6 million, or 9.4% of revenue, in Q3 2023. Depreciation expenses totalling $2.2 million are included in the cost of contract revenue for Q3 2024, compared to depreciation expenses of $2.5 million in Q3 2023. Adjusted gross margin, excluding depreciation expenses, was 17.3% in Q3 2024, compared to adjusted gross margin of 14.4% in Q3 2023. The increase in gross profit, gross margin, and adjusted gross margin primarily reflects increased drilling revenue in Chile and the cessation of drilling activity in Burkina Faso, partially offset by reduced drilling activity on certain projects in Canada and certain current costs related to the termination of drilling activities in Guinea.

General and Administrative expenses were $3.5 million, or 7.3% of revenue, in Q3 2024, compared to $3.6 million, or 7.2% of revenue, in Q3 2023.

EBITDA totalled $3.9 million in Q3 2024, compared to $4.5 million in Q3 2023. The decrease primarily reflects a $1.8 million negative foreign exchange variance in the quarter, partially offset by positive operating earnings in the Company's international operations. Net earnings for Q3 2024 increased to $2.0 million, or $0.05 per share, compared to $0.2 million, or $0.01 per share, in Q3 2023. The increase primarily reflects positive operating earnings in the Company's international operations and a $1.3 million income tax recovery in the quarter, partially offset by the $1.8 million negative foreign exchange variance.

Liquidity and Capital Resources

The Company repaid a net amount of $1.3 million on its Credit Facility in Q3 2024, compared to a withdrawal of $2.6 million in Q3 2023. The Company's long-term debt under the Credit Facility, including US$3.0 million ($4.1 million) drawn from the US$5.0 million revolving credit facility and the current portion, was $23.4 million as at March 31, 2024, compared to $22.2 million as at June 30, 2023.

As at March 31, 2024, the Company's working capital totalled $48.8 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 March 31, 2024, 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 Q3 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 Thursday, May 9, 2024 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/4cNlOIO 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: 467540 #. The replay will be available until May 16, 2024.

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

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

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 203 drill rigs and approximately 1,000 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.