Revenue increased 21.2% to $154.8 million in fiscal 2012, compared to
$127.7 million in fiscal 2011
Record metres drilled at 1.5 million metres, up from 1.4 million metres
in fiscal 2011
Adjusted gross margin (excluding amortization expense) of 27.3%,
compared to 27.6% in fiscal 2011
EBITDA increased to $27.9 million from $26.0 million in fiscal 2011
Earnings per share of $0.31 ($0.30 per share diluted), compared to $0.35
($0.34 per share diluted) in fiscal 2011
Acquisition of New Brunswick-based Lantech Drilling Services Inc.
Drill fleet expanded to 224 drill rigs, up from 180 drill rigs at the
end of fiscal 2011
Capital expenditures of $18.4 million to support increased business
VAL-D'OR, QC, Sept. 20, 2012 /CNW/ - Orbit Garant Drilling Inc. (TSX:
OGD) ("Orbit Garant" or the "Company") today announced its financial
results for the fourth quarter and fiscal year ended June 30, 2012.
These results reflect the Company's transition from Canadian Generally
Accepted Accounting Principles (Canadian "GAAP") to International
Financial Reporting Standards ("IFRS"), effective July 1, 2011. The
Company's fiscal 2011 fourth quarter ("Q4 FY2011") and year-end
financial results have been restated accordingly. All dollar amounts
are in Canadian currency unless otherwise stated. Percentage
calculations are based on numbers in the financial statements and may
not correspond to rounded figures presented in this news release.
($ amounts in millions, except
earnings per share)
3 months ended
June 30, 2012
3 months ended
June 30, 2011
June 30, 2012
June 30, 2011
Gross Margin (%)¹
Adjusted Gross Margin (%)¹
Net earnings per common share
Total Metres 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 a new high for number of metres drilled in fiscal 2012 and
generated record revenue and EBITDA of $154.8 million and $27.9
million, respectively. We experienced a slight decrease in gross
margins for the year and a decrease in net earnings to $10.4 million,
from $11.4 million a year ago, primarily as a result of a decline in
our drill utilization rates in the second half of fiscal 2012," said
Eric Alexandre, President and CEO of Orbit Garant. "Our second half
utilization rates were impacted by a number of factors, including:
unseasonably warm temperatures in March, which resulted in an early ice
break-up season and premature suspension of drilling activities at certain project sites in Quebec and Ontario in our third quarter and
a decline in our junior mining company customers' drilling activity in
our fourth quarter."
"While we currently generate approximately 74% of our revenue from senior and intermediate mining companies, our
junior mining company customers remain an important part of our
business mix," continued Mr. Alexandre. "The second half of our fiscal
2012 year proved to be a difficult environment for juniors to access
capital, and we are currently experiencing the negative impact of this
development, as some of our junior mining company customers have
suspended or postponed their exploration programs in whole or in part.
This development, which has also affected the broader market for our
services, has carried over into our fiscal 2013 first quarter and may
continue throughout the first half of our fiscal 2013 year."
"Looking ahead, we will remain focused on the aspects of our business
that are in our control, including continuing to improve productivity,
enhancing value for our customers and pursuing growth opportunities
both in Canada and internationally," added Mr. Alexandre. "We believe
our computerized drilling control and monitoring solutions will be an
important contributor to reducing both the labour and consumable
component costs of our mineral drilling operations going forward, and
to enhancing productivity. We expect to have at least 30 drill rigs
featuring our computerized monitoring and control technology by the end
of fiscal 2013. The Board of Directors has approved a capital budget of
$11.0 million for fiscal 2013, which will largely be used for this
"Despite the current global economic uncertainties stemming from the
European debt crisis, slowing growth in China, and the upcoming US
election, we believe the longer term fundamentals of our business
remain strong. Global mineral exploration spending was at an all-time
high in 2011, including within Canada, and most of our senior and
intermediate customers remain committed to advancing their exploration
and mine development programs. Further, gold remains at historically
high price levels, and the industry is currently faced with the
challenge of replenishing reserves to maintain production levels going
forward. We currently derive approximately 75% of our revenues from
gold related projects," continued Mr. Alexandre. "We have invested
significantly in our growth platform over the past 24 months, enhancing
our capacity, our services and geographic market presence and we are
well positioned to exploit market opportunities as they arise."
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 drilling
services for mining companies and engineering and environmental
consulting firms. The Company's results for the fiscal year ended June
30, 2012 include results of operations from Lantech Drilling from
December 16, 2011.
Fourth Quarter Results
Orbit Garant added four drill rigs to its fleet in fourth quarter of
fiscal 2012 ("Q4 FY2012") and sold six, bringing its fleet count to 224 drills at June 30, 2012. The Company's
fleet drilled a total of 402,126 metres in Q4 FY2012, compared to 426,525 metres in the fourth quarter of fiscal 2011 ("Q4 FY2011"). The average
revenue per metre drilled was $105.83 in Q4 FY2012, compared to $94.12 in Q4 FY2011.
The Company's Q4 FY2012 revenue increased 5.9% to $43.6 million compared
to $41.0 million in Q4 FY2011. Domestic surface drilling revenue
increased 14.7% to $38.9 million in Q4 FY2012 compared to $33.8 million
in Q4 FY2011, reflecting higher revenue per metre drilled and the
contribution from Lantech Drilling. International drilling revenue
decreased by $2.6 million in Q4 FY2012 to $4.7 million from $7.7
million in Q4 FY2011, due to lower demand for drilling services.
Gross profit for Q4 FY2012 decreased to $7.7 million from $10.1 million
in Q4 FY2011, a decline of 23.9%. Gross margin was 17.7% in Q4 FY2012,
down from 24.7% in Q4 FY2011. In accordance with IFRS, amortization
expenses totalling $2.1 million are included in cost of contract
revenue for Q4 FY2012, compared to $1.9 million in amortization
expenses in Q4 FY2011. Adjusted gross margin, excluding amortization
expenses, was 22.6% in Q4 FY2012 compared to 29.2% in Q4 FY2011.
Decreased gross profit and gross margin in Q4 FY2012 reflects a decline
in higher margin international business activity from the Company's
junior mining company customers.
General and administrative (G&A) expenses increased to $5.1 million
(11.7% of revenue) in Q4 FY2012 from $3.4 million (8.3% of revenue) in
Q4 FY2011. Higher G&A expenses in Q4 FY2012 resulted primarily from
increased personnel, the Company's new branch office in Sudbury,
Ontario, the acquisition of Lantech Drilling, and amortization expenses
related to the Company's new head office in Val-d'Or, Quebec. G&A
expenses, excluding amortization expenses of $0.9 million, totalled
$4.2 million (9.7% of revenue) in Q4 FY2012, compared to $2.8 million
(7.1% of revenue) in Q4 FY2011.
Earnings before interest, taxes, depreciation, and amortization
("EBITDA")² totaled $5.5 million in Q4 FY2012, compared to EBITDA of
$9.3 million in Q4 FY2011. EBITDA margin in Q4 FY2012 was 12.9%
compared to 22.7% in Q4 FY2011.
Net earnings for Q4 FY2012 were $1.3 million, or $0.04 per common share
(basic and diluted) compared to net earnings of $4.6 million, or $0.14
per common share ($0.13 per share diluted) in Q4 FY2011. The decline in
net earnings resulted from lower international activity and higher G&A
expenses in the quarter.
Fiscal 2012 Results
For the twelve months ended June 30, 2012 ("fiscal 2012"), Orbit Garant
generated revenue of $154.8 million, an increase of $27.1 million, or
21.2%, compared to $127.7 million for the twelve months ended June 30,
2011 ("fiscal 2011"). Increased revenue in fiscal 2012 was primarily
attributable to new drilling contracts, higher revenue per metre
drilled and the contribution from Lantech Drilling in the second half
of fiscal 2012.
Gross profit for fiscal 2012 increased 18.2% to $33.7 million, compared
to $28.5 million in fiscal 2011. Increased gross profit was primarily
attributable to price increases and higher overall business volumes,
including increased higher margin international drilling activity in
the first half of the fiscal year. Gross margin for fiscal 2012
declined to 21.8% from 22.3% in fiscal 2011.
Adjusted gross margin, excluding amortization expense, was 27.3% in
fiscal 2012, a slight decline from 27.6% a year ago. The decline in
gross margin and adjusted gross margin is primarily attributable to:
unseasonably warm weather in Quebec and Ontario in March, 2012, which
resulted in an early spring break-up and the premature suspension of
drilling activities on certain project sites and decreased business
activity in the second half of the year from the Company's junior
mining company customers.
General and administrative (G&A) expenses were $17.1 million for fiscal
2012, compared to $11.6 million in fiscal 2011. G&A expenses
represented 11.1% of sales during fiscal 2012, compared to 9.1% in
fiscal 2011. G&A expenses, excluding amortization expenses of $2.9
million and $0.4 million in acquisition costs related to the
acquisition of Lantech Drilling, totalled $13.8 million (9.0% of
revenue) for fiscal 2012, compared to $9.7 million (7.6% of revenue)
for fiscal 2011. Higher G&A expenses resulted primarily from increased
personnel, the Company's acquisition of Advantage Control Technologies
and Morris Drilling Inc. in the second quarter of fiscal 2011, the
acquisition of Lantech Drilling in the second quarter of fiscal 2012,
and the amortization expenses related to the Company's new head office
in Val-d'Or, Quebec.
Net earnings for fiscal 2012 totalled $10.4 million, or $0.31 per common
share ($0.30 per share diluted), compared to $11.4 million, or $0.35
per common share ($0.34 per share diluted) in fiscal 2011. Decreased
net earnings resulted from higher G&A expenses and increased finance
EBITDA for fiscal 2012 increased 7.4% to $27.9 million, compared to
$26.0 million in fiscal 2011. EBITDA margin for fiscal 2012 was 18.0%,
compared to 20.3% in fiscal 2011.
As at June 30, 2012, the Company had working capital of $60.3 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
Friday, September 21, 2012 at 10:00 a.m. (ET). The dial-in numbers for
the conference call are 647-427-7450 or 1-888-231-8191. A live audio
feed of the call will webcast at: http://www.newswire.ca/en/webcast/detail/1034305/1122003
To access a replay of the conference call dial 416-849-0833 or
1-855-859-2056, passcode: 30482000. The replay will be available until
September 28, 2012. The replay can also be accessed via the Internet at
the above URL address.
Orbit Garant will host its annual and special meeting of shareholders on
Thursday, November 8, 2012 in Montreal at The Fairmont Queen Elizabeth,
900 Boulevard Rene-Levesque West - Ramezay Room. The meeting will
commence at 10:00 a.m. (ET).
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
224 drills and approximately 950 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