Revenue was $16.8 million in the second quarter of fiscal 2014 ("Q2
FY2014"), compared to $24.2 million in the second quarter of fiscal
2013 ("Q2 FY2013")
Adjusted gross margin (excluding depreciation expense) was 20.5%,
compared to 22.2% in Q2 FY2013
EBITDA of $0.9 million compared to $3.1 million in Q2 FY2013
Net loss of $1.5 million, or $(0.05) per share (diluted) in Q2 FY2014,
compared to a net loss of $0.3 million, or $(0.01) per share (diluted)
in Q2 FY2013
184,040 metres drilled in Q2 FY2014, down from 240,553 metres in Q2
Debt reduction of $2.1 million in Q2 FY2014
VAL-D'OR, QC, Feb. 11, 2014 /CNW/ - Orbit Garant Drilling Inc. (TSX:
OGD) ("Orbit Garant" or the "Company") today announced its financial
results for the three and six month periods ended December 31, 2013.
All dollar amounts are in Canadian currency unless otherwise stated.
Percentage calculations are based on numbers in the financial
statements and may not correspond to rounded figures presented in this
Q2 FY2014 Summary
($ amounts in millions,
except earnings per share)
3 months ended
Dec. 31, 2013
3 months ended
Dec. 31, 2012
6 months ended
Dec. 31, 2013
6 months ended
Dec. 31, 2012
Gross Margin (%)
Adjusted Gross Margin (%)¹
Net (loss) earnings
Net (loss) earnings per common share
Total metres drilled
¹ In accordance with IFRS, reported gross profit and margin include
certain depreciation expenses. For comparative purposes, adjusted gross
margin is also shown excluding these depreciation expenses
2 EBITDA = Earnings before interest, taxes, depreciation and amortization
"The mineral drilling industry continues to be impacted by challenging
market conditions globally, as many senior and intermediate mining
companies have scaled back or delayed their drilling programs to
control costs, and junior exploration companies have had difficulty
advancing early stage exploration activities due to a lack of capital.
Our financial results to date in fiscal 2014 reflect these broad market
conditions," said Eric Alexandre, President and CEO of Orbit Garant.
"In response to these challenging market conditions, we are managing
our operations to support operating margins and maintain financial
flexibility, while also retaining our key personnel. We have lowered
our adjusted G&A expenses, reduced our long-term debt and cut our
capital expenditure budget for 2014. Our total workforce is now at
approximately 550 employees, down from 800 employees at this time a
year ago. Through continued disciplined expense management, we expect
to remain cash flow positive in fiscal 2014."
"We remain focused on supporting our core strengths and pursuing market
opportunities," continued Mr. Alexandre. "We added one computerized
drill rig to our fleet in the quarter, bringing our total number of
computerized drill rigs to 19. All of our computerized drill rigs are
currently deployed on customer projects and we continue to demonstrate
improved productivity compared to conventional rigs. We are exploring
opportunities to further diversify our market presence and have
recently initiated business development activities in Chile, one of the
world's largest mineral drilling markets."
Second Quarter Results
For the three months ended December 31, 2013 ("Q2 FY2014") revenue
decreased 30.4% to $16.8 million, from $24.2 million in the three-month
period ended December 31, 2012 ("Q2 FY2013"). Domestic drilling revenue
decreased to $15.3 million in Q2 FY2014, from $21.6 million in Q2
FY2013. International drilling revenue was $1.5 million in Q2 FY2014,
compared to $2.6 million in Q2 FY2013. Decreased revenue resulted
primarily from a decline in metres drilled and lower average revenue
per metre drilled. The Company's fleet drilled a total of 184,040
metres in Q2 FY2014, down from 240,553 metres in Q2 FY2013. Average revenue per metre drilled was $90.61 in Q2 FY2014, compared to $98.54 in Q2 FY2013. The Company's decline in
drilling activity and lower average revenue per metre drilled reflects
current market conditions in the contract mineral drilling industry, as
many senior and intermediate mining companies have scaled back their
drilling programs, and junior mining companies have significantly cut
their exploration activities due to a lack of capital.
Gross profit for Q2 FY2014 decreased to $1.1 million from $2.9 million
in Q2 FY2013. Gross margin was 6.8%, down from 11.9% in Q2 FY2013. In
accordance with IFRS, depreciation expenses totalling $2.3 million are
included in cost of contract revenue for Q2 FY2014, compared to $2.5
million in Q2 FY2013. Adjusted gross margin, excluding depreciation
expenses, was 20.5% in Q2 FY2014 compared to 22.2% in Q2 FY2013.
Decreased gross profit and gross margin was attributable to reduced
metres drilled for both domestic and international projects, and lower
average revenue per metre drilled.
General and administrative ("G&A") expenses were $3.1 million in Q2
FY2014 compared to $3.0 million in Q2 FY2013. A reversal of a portion
of a contingent earn-out consideration reduced G&A expenses by $0.8
million in Q2 FY2013. In accordance with IFRS, depreciation and
amortization expenses of $0.4 million are included in G&A expenses for
Q2 FY2014, compared to $0.7 million in Q2 FY2013. Adjusted G&A
expenses, excluding depreciation and amortization expenses, were $2.6
million for Q2 FY2014, compared to adjusted G&A expenses, excluding
depreciation and amortization expenses, and the $0.8 million gain from
a reversal of a portion of a contingent earn-out consideration, were
$3.0 million in Q2 FY2013.
Earnings before interest, taxes, depreciation and amortization.
("EBITDA")² totalled $0.9 million in Q2 FY2014, compared to EBITDA of
$3.1 million in Q2 FY2013, reflecting decreased domestic and
international drilling revenue.
The Company reported a net loss in Q2 FY2014 of $1.5 million, or $(0.05)
per common share (basic and diluted), compared to a net loss of $0.3
million, or $(0.01) per common share (basic and diluted), in Q2 FY2013.
The decline in metres drilled and lower rig utilization due to weakened
demand, and lower average revenue per metre drilled contributed to the
increased net loss.
As at December 31, 2013, the Company's long-term debt, including the
current portion, was $10.4 million, compared to $14.8 million as at
June 30, 2013. The Company had working capital of $47.9 million and
33,276,519 common shares issued and outstanding.
Orbit Garant's interim unaudited financial statements and management's
discussion and analysis for the second quarter and six month period
ended December 31, 2013 are available via the Company's website at www.orbitgarant.com or SEDAR at www.sedar.com.
Eric Alexandre, President and CEO, and Alain Laplante, Vice President
and CFO, will host a conference call for analysts and investors on
Wednesday, February 12, 2014 at 10:00 a.m. (ET). The dial-in numbers
for the conference call are 647-427-7450 or 1-888-231-8191. The call
will be webcast at: http://www.orbitgarant.com/en/sites/fog/investors.aspx.
To access a replay of the conference call dial 416-849-0833 or
1-855-859-2056, passcode: 41669170. The replay will be available until
February 19, 2014. A webcast archive of the call will also be available
via Orbit Garant's website.
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
214 drill rigs and approximately 550 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 before interest, taxes, depreciation and
amortization. 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