ORBIT GARANT DRILLING INC. ANNOUNCES FINANCIAL RESULTS FOR Q3 FISCAL 2011
- Q3 revenue of $33.4 million increased 16% from the comparable quarter in fiscal 2010
- Completed 368,144 meters of drilling, up from 352,602 last year
- Expanded fleet to 176 drill rigs, including 8 new drills in the third quarter
- Working capital of $39.9 million as of March 31, 2011
- Invested $6.4 million in capital initiatives to sustain growth
Val-d’Or, Quebec, May 10, 2011 – Orbit Garant Drilling Inc. (TSX:OGD) (Orbit Garant or the “Company”) today announced its financial results for the third quarter ended March 31, 2011. 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 release.
Financial Highlights
| 3 months ended March 31, 2011 | 3 months ended March 31, 2010 | 9 months ended March 31, 2011 | 9 months ended March 31, 2010 | |
| $ amounts in millions except earnings per share | ||||
| Revenue | $33.4 | $28.8 | $86.7 | $76.9 |
| Gross Profit | $8.6 | $8.9 | $23.3 | $24.5 |
| Gross Margin % | 25.7 | 31.0 | 26.8 | 31.9 |
| EBITDA | $6.1 | $7.9 | $17.1 | $20.1 |
| Net Earnings | $2.4 | $3.7 | $7.4 | $8.6 |
| Net earnings per common share | ||||
| Basic | $0.07 | $0.11 | $0.22 | $0.26 |
| Diluted | $0.07 | $0.11 | $0.22 | $0.26 |
| Total Metres Drilled | 368,144 | 352,602 | 986,807 | 919,437 |
“Management is pleased with the Company’s strong revenue performance in the third quarter, which reflected both a 4.4% increase in meters drilled and a 7.6% increase in revenue per meter,” said Eric Alexandre, President and Chief Executive Officer of Orbit Garant. “Our margins in the quarter were impacted by two factors. First, we incurred incremental expenses associated with growth; including start-up costs for new projects and the hiring of new, less experienced drillers, which affected our productivity in the short term and second, we incurred some one-time costs in the period, including as a result of delays due to extreme weather conditions”. “In the short-run, we expect revenue growth to remain solid, with margins continuing to be affected by the hiring, training and mobilization of new drilling crews,’ added Mr. Alexandre. “However, as the new crews continue to develop, profit margins should begin to return to historical levels.”
Third Quarter Results
In the three months ended March 31, 2011, Orbit Garant added eight new drilling rigs to its fleet; all produced by the Company’s manufacturing division, Soudure Royale. The fleet drilled a total of 368,144 meters, compared with 352,602 meters in the comparable period last year, and increased Orbit Garant’s market share. The Company recorded Q3/F2011 contract revenue of $33.4 million, compared to $28.8 million in the prior fiscal year, representing an increase of 16%, attributable to the addition of new drilling contracts, the deployment of new drilling rigs and an improvement in prices.
Domestic surface drilling revenue increased to $15.3 million in the third quarter of fiscal 2011 from $14.9 million in the comparable 2010 period, an increase of 2.4%. Underground drilling contract revenue was $11.5 million in the three months ended March 31, 2011, a 3.8% decrease from $11.9 million from the previous fiscal year, reflecting competitive pricing in this business segment. International drilling revenue was $5.6 million in the third quarter of fiscal 2011, up substantially from $2.0 million in the comparable period of fiscal 2010.
The Manufacturing division generated $1.0 million of revenue in the third quarter of fiscal 2011, compared to nominal revenue in the comparable period last year. Soudure Royale and Orbit Garant Ontario manufactured equipment, supplies and maintenance services for the Company and third parties.
Total gross profit for the third quarter of fiscal 2011 was $8.6 million compared to $8.9 million in the comparable period of fiscal 2010. The gross margin for the third quarter of fiscal 2011 was 25.7% compared to 31.0% in the prior fiscal year. The year-over-year decline reflected incremental expenses related to growth including start-up costs for new projects and the hiring of new, less-experienced drillers which affected productivity in the short term, as well as some one-time costs including those related to delays due to extreme weather conditions and a fire on one drill site.
General and administrative (“G&A”) expenses were $2.7 million for the three months ended March 31, 2011 compared to $1.7 million in the comparable period. The increase reflected the Company’s effort to build up its team to facilitate future growth, including its expanded Northern Ontario presence in Sudbury.
EBITDA for the third quarter of fiscal 2011 was $6.1 million, representing 18.2% of sales. This compares with $7.9 million in Q3/F2010, representing 27.4% of sales. The year-over-year decrease reflects the decline in gross margins and increased G&A expenses referenced above.
Net earnings for the third quarter of fiscal 2011 totaled $2.4 million or $0.07 per common share ($0.07 per share diluted), compared to $3.7 million in the 2010 period or $0.11 per common share ($0.11 per share diluted).
Nine Months Results
In the nine months ended March 31, 2011, revenues totalled $86.7 million, an increase of $9.8 million, or 12.8%, from $76.9 million in the comparable period in fiscal 2010.
Overall gross profit for the first nine months of fiscal 2011 was $23.3 million, a decrease of $1.2 million from $24.5 million in the comparable period of 2010, or 5.0%.
Gross margin for the nine month period of fiscal 2011 was 26.8% compared to 31.9% for the corresponding period last year. The decrease reflected competitive pricing in the first half of the year as well as the incremental expenses incurred in the third quarter as referenced above.
Net earnings in the first nine months of fiscal 2011 were $7.4 million or $0.22 per share ($0.22 per diluted share), compared with $8.6 million or $0.26 per share ($0.26 per diluted share) in the corresponding period last year.
EBITDA for the first nine months of fiscal 2011 was $17.1 million, representing 19.8% of sales. This compares with $20.1 million in the same period of the prior fiscal year, representing 26.2% of sales.
Conference Call
A conference call for analysts and interested listeners will be held Wednesday, May 11 at 10:00 a.m. (ET). The call-in numbers for participants are 647-427-7450 and 888-231-8191. A live audio feed of the call will also be available on the Internet at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3509660
A replay of the call will be available on Wednesday, May 11 until Wednesday, May 18, 2011. To access the replay, call 800-642-1687 or 416-849-0833 enter pass code number 63527475, and then press the pound (#) 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 through its 176 drills and more than 700 employees. Orbit Garant provides services to major, intermediate and junior mining companies, through each stage of mining exploration, development and production.
Forward-looking information
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:
| Eric Alexandre President and Chief Executive Officer (819) 824-2707 Ext. 233 | Philip Koven Investor Relations (416) 447-4740 Ext. 235 |