- Record 872,392 metres drilled
- Normalized EBITDA increases to $23.6 million
- Financial flexibility enhanced; long-term debt reduced to
$5.8 million from $24.5 million at the IPO
VAL-D'OR, QC, Sept. 25 /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, 2008. The company completed its
Initial Public Offering (IPO) on June 26, 2008, resulting in a five-day stub
period prior to fiscal year-end on June 30, 2008. Accordingly, to enable
investors to get a better understanding of the company's financial and
operating results, Orbit Garant reported results for the full 2008 fiscal
year. In addition, to facilitate a comparison with the previous year, the
company provided comparable 12 month 2007 results. Full Financial Statements
and Management's Discussion and Analysis are available on the Company website
"The successful completion of our IPO has provided Orbit Garant with the
enhanced financial flexibility to continue the strong growth we have delivered
in recent years," said Eric Alexandre, President and Chief Operating Officer.
"We expect to continue to grow with our major and intermediate mining company
customers in Canada, the United States, Mexico, and other stable mining
jurisdictions, where our operations are protected from operating and currency
"As a result of our leading market position, low-cost operations, focus
on specialized drilling services and vertical integration, our shareholders
can expect to see solid momentum in both revenues and earnings," added Mr.
"The Abitibi mining region remains the focus of Orbit Garant's
operations. Over the years, this region has produced millions of ounces of
gold in addition to base metals. Today, this region is seeing a renaissance,
as mining companies explore and develop around previous deposits and drill
established ore bodies to deeper depths. This area is also the only gateway to
prospective mining regions further north, towards James Bay and northeast,
towards Chibougamau," said Mr. Alexandre.
Orbit Garant is also pleased to note that, despite the recent turbulence
in capital markets and general illiquidity, the Company has not been
materially impacted by any delay, cancellation or cut back by clients in their
For the year ended June 30, 2008, Orbit Garant generated total revenues
of $82.1 million, representing $43.4 million in Canadian underground drilling,
$24.3 million in Canadian surface drilling, $8.4 million in International
drilling and $6.1 million from manufacturing of drills for third party
customers. Of the total generated revenue, approximately 60% is derived from
the Company's focus on higher margin specialized drilling projects.
Since the company was created by the combination of Quebec-based drilling
services providers Orbit and Garant on January 31, 2007 and the acquisition of
Drift Exploration Drilling Inc. (comprising U.S. and Mexican operations) on
April 16, 2007, the financial results for fiscal 2008 are not directly
comparable to those of fiscal 2007. To enable shareholders to assess the
current results against those of previous periods, Orbit Garant provided
financial information by adding the nine months of combined operations in 2007
to the three months ended September 30, 2006 of Garant. The increase in
profitability reported and discussed below is attributable to those
acquisitions and an increase in demand for the company's drilling services
resulting from robust activity in the mining industry.
In fiscal 2008, Orbit Garant drilled a total of 872,392 metres, compared
to 597,443 metres in 12 months 2007. This was a record for the company and
attributable to the combination of the companies and acquisition of Drift,
described above, as well as the introduction of 13 new drilling rigs,
including 8 in Q3 and 3 in Q4.
Three Months Ended June 30, 2008
For the quarter ended June 30, 2008, the company generated total revenue
of $24.6 million, compared to $17.9 million for Q4 in fiscal 2007, an increase
of 38%, This increase can be attributed primarily to an increase in number of
drills, the increase in metres drilled, and the realized benefit from price
increases previously negotiated.
The gross margin for Q4 in fiscal year 2008 was 35.4% compared to 30.1%
for the Q4 period in fiscal 2007. Total gross profit in Q4 fiscal 2008 was
$8.7 million compared to $5.4 million in Q4 fiscal 2007, representing an
increase of 62%.
General and administrative expenses (G&A) were $2.3 million during the Q4
period in fiscal 2008, an increase of $1.3 million over the comparable in
fiscal 2007, due primarily to the hiring of new employees. As a percent of
sales, G&A was 9.3% during Q4 fiscal 2008 and 5.3% during Q4 fiscal 2007.
Consolidated normalized EBITDA in Q4 fiscal 2008 was $6.6 million
compared to $4.6 million in Q4 fiscal 2007 and representing an increase of
43%. This is attributable to the efficiencies that were realized as the
Company integrated Orbit, Garant, and Drift, as well as price increases, a
record number of metres drilled, and the company's continued focus on higher
margin specialized drilling.
Net earnings for Q4 fiscal 2008 totalled $1.4 million or $0.07 per common
share, compared to $1.2 million or $0.06 per common share in Q4 fiscal 2007,
an increase of 14%. The average tax rate for the Company in 2008 Q4 fiscal
period was 32% as compared to 34% in Q4 fiscal 2007.
At June 30, 2008, Orbit Garant's long-term debt was $5.8 million,
compared to $24.5 million at the date of the IPO, and $27.3 million at
June 30, 2007. As anticipated in the final prospectus, the company applied
approximately $21.9 million of its $25.1 million in net proceeds to the
repayment of amounts outstanding under its credit agreement.
Fiscal Year Ended June 30, 2008
For the fiscal year ended June 30, 2008 Orbit Garant had contract revenue
of $82.1 million compared to $43.2 million in 12 months 2007, representing an
increase of 123%.
The increase is attributable to the acquisition of Orbit and Drift during
2007, the addition of drilling equipment, and improved pricing.
Underground drilling revenue in Canada increased to $43.4 million in
fiscal 2008 from $30.1 million in the 12 months 2007, an increase of 44%. This
increase is due primarily to the combination of Orbit's underground division
with the Company's underground division.
Domestic Surface drilling contract revenue increased to $24.3 million in
fiscal 2008 from $7.7 million in the 12 months 2007. Before February 1, 2007
the company did not have a surface drilling division and so the increase is a
direct result of the acquisition of Orbit in addition to the price increase
and the added drills.
International drilling contract revenue increased to $8.4 million in
fiscal 2008, compared to $4.1 million in the 12 months 2007. Before
February 1, 2007 the Company did not have an international surface drilling
division and so the increase is a direct result of the acquisition of Orbit
Revenue attributable to the sale of drills to unrelated third parties was
$6.1 million during the 2008 fiscal year, compared to $1.4 million in the
previous year. The company's manufacturing capability, Soudure Royale, was
acquired as part of the Orbit transaction and, as a result, all of this
revenue is incremental to the company when compared to the same period in the
prior fiscal year. In December 2007, Soudure Royale acquired assets to
increase its production capacity from 20 drills annually to 50 on a
single-shift-per-day basis, to enable Orbit Garant's further growth.
The gross margin for the 2008 fiscal year was 35.1% compared to 28.9% for
fiscal 2007. Total gross profit for fiscal 2008 was $28.8 million compared to
$12.5 million in the 12 months 2007, an increase of 130%. The increase in
gross profit results from the combined effects of: lower-margin underground
contracts being replaced with several higher-margin contracts; the
implementation of contractual price increases in all segments; and, the
inclusion of Orbit's Drift USA and Drift Mexico to the underground drilling
divisions of the Company's financial results.
The Company experienced increases in certain costs during the fiscal
2008, specifically labor and consumables, which partially offset revenue
G&A was $5.8 million in fiscal 2008, compared to $2.4 million in the
12 months 2007. The increase is a consequence of the overhead of Orbit and
Drift being included in fiscal 2008 and additions to the management team to
accommodate growth. As a percent of sales, G&A was 7.1% during fiscal 2008 and
5.6% in the 12 months 2007.
Consolidated Normalized EBITDA for fiscal 2008 was $23.6 million,
compared to $10.6 million in the 12 months 2007, an increase of 124%. This
increase is attributable to the acquisitions of Orbit, Drift USA and Drift
Mexico, as well as organic growth. The normalized EBITDA for fiscal 2008
represents 28.7% of sales, compared to 24.7% in fiscal 2007.
Net earnings for fiscal 2008 totaled $9.4 million, compared to
$2.7 million in the 12 months 2007, representing a 246% increase. This
increase relates primarily to the acquisition of Orbit and the addition of
13 new drills. The average tax rate for the Company in 2008 fiscal period was
32%, compared to 34.4% in fiscal 2007.
A conference call for analysts and interested listeners will be held
Friday, September 26 at 10:00 a.m. (ET). The call-in numbers for participants
are 416-644-3415 and 800-733-7560. A live audio feed of the call will also be
available on the Internet at:
A replay of the call will be available from 12:00 p.m. (ET) on Friday,
September 26 until 11:59 p.m. on Friday, October 3, 2008. To access the
replay, call 416 640 1917 or 877 289 8525 enter pass code number 21284147, and
then press the pound No. key. The replay can also be accessed over the
Internet at the above address.
About Orbit Garant
Orbit Garant is one of the largest Canadian-based drilling companies,
providing both underground and surface drilling services in Canada and
internationally, operating with 119 drills and approximately 500 employees.
Orbit Garant provides services to major, intermediate and junior mining
companies, through each stage of mining exploration, development and
This press 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.
For further information:
For further information: Eric Alexandre, President and Chief Operating
Officer, (819) 824-2707 Ext. 233; Philip Koven, Investor Relations, (416)
447-4740 Ext. 235