Acquisition of New-Brunswick-based Lantech Drilling Services Inc.,
adding 141 employees and 32 drills
Revenue increased 25.4% to $32.4 million from $25.9 million in Q2 FY2011
Record second quarter meters drilled at 323,760, up from 297,704 meters
in Q2 last year
Adjusted gross margin (excluding amortization expense) declined slightly
to 28.3% from 29.1% in Q2 FY2011
EBITDA increased 6.0% to $5.8 million, compared to $5.4 million in Q2
Earnings per share totaled $0.06 (basic), compared to $0.07 (basic) in
Expanded drill fleet to 222 drill rigs, up from 180 drill rigs at the
end of fiscal 2011
Capital expenditures of $5.0 million to sustain growing business
VAL-D'OR, QC, Feb. 13, 2012 /CNW/ - Orbit Garant Drilling Inc. (TSX:
OGD) ("Orbit Garant" or the "Company") today announced its financial
results for the three and six-month periods ended December 31, 2011.
Orbit Garant's fiscal 2012 second quarter ("Q2 FY2012") and first
six-month financial results reflect the Company's transition from
Canadian Generally Accepted Accounting Principles (Canadian "GAAP") to
International Financial Reporting Standards ("IFRS"), effective July 1,
2011. The Company's fiscal 2011 second quarter ("Q2 FY2011") and first
six-month financial results have been restated accordingly. All dollar
amounts are in Canadian currency unless otherwise stated. Percentage
calculations are based on numbers in the financial statements and may
not correspond to rounded figures presented in this news release.
($ amounts in millions, except earnings per share)
3 months ended
Dec. 31, 2011
3 months ended
Dec. 31, 2010
6 months ended
Dec. 31, 2011
6 months ended
Dec. 31, 2010
Gross Margin (%)¹
Adjusted Gross Margin (%)¹
Net earnings per common share
Total Meters Drilled
¹ In accordance with IFRS, reported gross profit and margin include
certain amortization expenses. For comparative purposes, adjusted gross
margin is also shown excluding these amortization expenses.
"We achieved solid revenue growth in our second quarter, driven by a
record number of meters drilled for the quarter and higher realized
prices. As expected, our adjusted gross margins over the last two
quarters have been near level with our fiscal 2011 fourth quarter
adjusted gross margins, as we continue to strive to improve the
productivity levels of our less experienced drillers, while managing a
higher volume of business. We continue to expect margin improvement in
the second half of fiscal 2012, through improved productivity rates and
new or renewed contracts that reflect higher pricing," said Eric
Alexandre, President and CEO.
"We made strong progress with our growth strategy in the quarter. The
acquisition of Lantech Drilling establishes a new strategic hub for
Orbit Garant in Eastern Canada, adds 141 employees and 32 drill rigs to
our fleet and new expertise in iron ore drilling and geotechnical
services. Lantech Drilling also provides us with an entry point to the
higher margin mineral drilling market in West Africa," added Mr.
Alexandre. "We look forward to leveraging the combined operations and
expertise of Orbit Garant and Lantech Drilling to further strengthen
our existing customer relationships, and pursue new business
opportunities both in Canada and internationally."
On December 16, 2011, Orbit Garant acquired all issued and outstanding
shares of New Brunswick-based Lantech Drilling Services Inc. ("Lantech
Drilling"), which specializes in exploration and geotechnical services
to mining or mineral exploration companies, and engineering and
environmental consultant firms. Orbit Garant's fiscal 2012 second
quarter and six-month results include results of operations from
Lantech Drilling for the two-week period ended December 31, 2011.
Second Quarter Results
Orbit Garant added 35 drill rigs to its fleet in the second quarter of
fiscal 2012, including 32 drills rigs through the acquisition of
Lantech Drilling, and the manufacture of three new drill rigs, bringing
its fleet count to 222 drills at quarter end. The Company's fleet
drilled a total of 323,760 meters in Q2 FY2012, compared to 297,704 meters in Q2 FY2011. The
average revenue per meter drilled increased to $95.92 in Q2 FY2012, up
from $83.69 in Q2 FY2011.
The Company's fiscal 2012 second quarter revenue increased 25.4% to
$32.4 million from $25.9 million in the second quarter a year ago.
Domestic surface drilling revenue increased 58.8% to $16.2 million in Q2
FY2012 from $10.2 million in Q2 FY2011, primarily as a result of new
contracts. Underground drilling revenue decreased 9.4% to $10.0 million
in Q2 FY2012, compared to $11.1 million in the comparable period a year
ago, reflecting decreased meters drilled. International drilling
revenue increased to $4.8 million in Q2 FY2012 from $3.6 million in the
second quarter a year ago, primarily as a result of new contracts and
The Manufacturing division (Soudure Royale) generated revenue of $1.4
million in Q2 FY2012, compared to $1.0 million in Q2 FY2011. Soudure
Royale manufactured drills, equipment, and performed maintenance
services for the Company during the second quarter of 2012.
Gross profit for the second quarter of fiscal 2012 increased 18.9% to
$7.1 million from $5.9 million in Q2 FY2011. Gross margin for Q2 FY2012
decreased to 21.7% from 22.9% in the second quarter a year ago. In
accordance with IFRS, amortization expenses totalling $2.1 million are
included in cost of contract revenue. Adjusted gross margin, excluding
amortization expenses, declined slightly to 28.3% in Q2 FY2012 compared
to 29.1% in Q2 FY2011. Increased gross profit in Q2 FY2012 reflects
higher volumes of business and increasing revenue per meter drilled.
The decline in gross margin is attributable to higher training, wage
and supplies costs.
General and administrative (G&A) expenses increased to $3.8 million
(11.8% of revenue) in Q2 FY2012 from $2.5 million (9.5% of revenue) in
Q2 FY2011. Higher G&A expenses in Q2 FY2012 resulted primarily from
increased personnel, the Company's new branch office in Sudbury,
Ontario, the acquisition of Lantech Drilling, and the amortization of
the Company's new head office and base of operations in Val-d'Or,
G&A expenses, excluding amortization expenses of $0.5 million and
professional fees for Lantech Drilling of $0.2 million, totalled $3.1
million (9.4% of revenue) in Q2 FY2012, compared to $2.2 million (8.4%
of revenue) in Q2 FY2011.
Earnings before interest, taxes, depreciation, and amortization
("EBITDA")² for Q2 FY2012 increased 6.0% to $5.8 million, compared to
EBITDA of $5.4 million in Q2 FY2011. EBITDA margin in Q2 FY2012 was
17.8% compared to 21.0% in the second quarter of fiscal 2011.
Net earnings for Q2 FY2012 totaled $1.9 million, or $0.06 per common
share ($0.05 per share diluted), compared to net earnings of $2.3
million, or $0.07 per common share (basic and diluted) in Q2 FY2011.
Six Month Results
For the six months ended December 31, 2011, Orbit Garant generated
revenue of $69.5 million, an increase of $16.2 million, or 30.6%, from
$53.3 million in the first six months of fiscal 2011.
Gross profit for the first half of fiscal 2012 was $16.0 million,
compared to $11.5 million in the comparable period a year ago. Gross
margin for the first half of FY2012 was 23.0%, compared to 21.7% in the
first half of FY2011. Adjusted gross margin, excluding amortization
expense, in the first half of FY2012 increased to 28.9% from 27.6% in
the comparable period a year ago. The increase in gross profit and
gross margin is attributable to international drilling activity.
Net earnings for the first half of fiscal 2012 totalled $5.5 million, or
$0.17 per common share ($0.16 per share diluted), compared to $4.5
million, or $0.14 per common share ($0.13 per share diluted) in the
first six months of fiscal 2011. Increased net earnings resulted
primarily from greater business activity and higher revenue per meter
EBITDA for the first six months of FY2012 increased 31.8% to $14.1
million from $10.7 million in the same period a year ago. EBITDA margin
for the first six months of FY2012 was 20.2%, compared to 20.0% in the
first half of FY2011.
As at December 31, 2011, the Company had working capital of $58.0
million and 33,276,519 common shares issued and outstanding.
Eric Alexandre, President and CEO, and Alain Laplante, Vice President
and CFO, will host a conference call for analysts and investors on
Monday, February 13, 2012 at 10:00 a.m. (ET). The dial-in numbers for
the conference call are 888-231-8191 or 647-427-7450. A live audio feed
of the call will webcast at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3827560
To access a replay of the conference call dial 416-849-0833 or
1-855-859-2056, passcode: 48093077. The replay will be available until
February 20, 2012. The replay can also be accessed via the Internet at
the above URL address.
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
222 drills and more than 1,100 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.
(2) Management believes that EBITDA is a useful supplemental measure of
operating performance prior to debt service, capital expenditures and
income taxes. However, EBITDA is not a recognized earnings measure
under IFRS and does not have a standardized meaning prescribed by IFRS.
Therefore, EBITDA may not be comparable to similar measures presented
by other issuers. Investors are cautioned that EBITDA should not be
construed as an alternative to net income or loss (which is determined
in accordance with IFRS) as an indicator of the performance of the
Company or as a measure of liquidity and cash flows. The Company's
method of calculating EBITDA may differ materially from the methods
used by other public companies and, accordingly, may not be comparable
to similarly named measures used by other public companies.
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. These 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.
SOURCE Orbit Garant Drilling Inc.
For further information:
Vice President and Chief Financial Officer
(819) 824-2707 Ext. 122
(416) 447-4740 Ext. 232