ORBIT GARANT DRILLING INC. ANNOUNCES STRONG FINANCIAL RESULTS FOR FISCAL 2010
- 1,298,124 metres drilled
- Record revenues of $110 million despite difficult market
- Earnings of $12.6 million match 2009 record level
Val-d’Or, Quebec, September 23, 2010 – 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, 2010. 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.
Highlights
| 3 months ended June 30, 2010 | 3 months ended June 30, 2009 | 12 months ended June 30, 2010 | 12 months ended June 30, 2009 | |
| $ amounts in millions except earnings per share | ||||
| Revenue | $33.1 | $28.3 | $110.0 | $105.2 |
| Gross Profit | $9.1 | $10.7 | $33.6 | $36.1 |
| Gross Margin % | 27.6 | 37.9 | 30.6 | 34.3 |
| EBITDA | $7.8 | $7.8 | $27.9 | $28.0 |
| Net Earnings | $4.0 | $3.6 | $12.6 | $12.6 |
| Net earnings per common share | ||||
| – Basic | $0.12 | $0.11 | $0.38 | $0.39 |
| – Diluted | $0.12 | $0.10 | $0.38 | $0.38 |
| Total Metres Drilled | 378,687 | 296,778 | 1,298,124 | 1,109,332 |
“We are pleased with our success this year and our continued growth as an organization,” said Eric Alexandre, President and Chief Operating Officer of Orbit Garant. “Our ability to maintain strong revenue growth in challenging market conditions speaks to the success of our corporate strategy, which is designed to produce consistent results throughout the economic cycle. Our commitment to improving operational efficiencies and controlling costs, coupled with our strong customer relationships, helped to offset the pricing pressure felt across the industry and will improve our gross margin in the near term. Our continued growth throughout the market downturn underlines our solid business model and demonstrates our excellent market position as we continue to increase our share of the market.”
For the year ended June 30, 2010, Orbit Garant generated total revenues of $110 million, representing $46.6 million in underground drilling, $52.6 million in Canadian surface drilling and $10.2 million in International drilling. Revenue from the manufacturing division was nominal. Of the total revenue, approximately 60% is derived from the Company’s focus on higher margin specialized drilling projects.
In fiscal 2010, Orbit Garant drilled a total of 1,298,124 metres, compared to 1,109,332 metres in 2009. This represented a record for the company and was largely attributable to new contracts that took effect during the year. During fiscal 2010, the Company added a total of 19 drilling rigs, 18 of which were supplied by the manufacturing division, Soudure Royale.
Three Months Results
For the quarter ended June 30, 2010, the company generated total revenue of $33.1 million, an increase of $4.8 million or 17.1% from the comparable quarter the previous year. This increase is a result of a 27.6% increase in metres drilled to 378,687 metres
Drilling International revenue generated 4.1 million in Q4 fiscal 2010 compared to 1.1 million in the same period during the previous year, an increase of 284.3%.
The gross margin for Q4 2010 was 27.6% compared to 37.9% for the corresponding period in fiscal 2009. Total gross profit in Q4 2010 was $9.1 million compared to $10.7 million last year, representing a decrease of 14.7% primarily attributable to competitive pricing across the industry and costs of initiating new contracts.
General and administrative expenses (G&A) were $1.5 million in Q4 2010, a decrease of $1.3 million over the comparable period in fiscal 2009. A reflection of financial market conditions, the company recorded 1.1 million of bad deb expenses in the Q4 of fiscal 2009. As a percent of sales, G&A was 4.5% during Q4 2010 compared to 9.9% in Q4 2009.
EBITDA in Q4 2010 was even with the comparable period last year, totaling $7.8 million.
Net earnings for Q4 2010 totaled $4.0 million or $0.12 per common share, compared to $3.6 million or $0.11 per common share in Q4 2009.
Twelve Month Results
During the fiscal year ended June 30, 2010, the Company recorded contract revenue of $110 million, compared to $105.2 million in fiscal 2009, representing an increase of 4.6%. The increase is attributable to the addition of new drilling contracts and the deployment of 19 new drilling rigs in the period.
Domestic surface drilling revenue decreased to $52.6 million in fiscal 2010 from $54.9 million in 2009. This represents a decrease of 4.2% and is largely attributable to the competitive pricing environment.
Underground drilling contract revenue increased to $46.6 million in fiscal 2010, compared to $45.8 million in fiscal 2009, an increase of 1.6% primarily due to additional meters drilled.
International drilling revenue was $10.2 million in fiscal 2010, compared to $3.8 million in the 12 months of 2009, a direct reflection of new contracts initiated in the period.
Revenue recorded from the sale of drills to unrelated third parties was nominal during the 2010; however the company sold 2 new drill rigs to third parties in the last quarter of fiscal 2010.
Total gross profit for fiscal 2010 was $33.6 million compared to $36.1 million in the 12 months of 2009, a decrease of 6.8%. The gross margin for the 2010 fiscal year was 30.6% compared to 34.3% last year. Gross margin was affected by the pricing pressure across the industry; however, much of the negative impact on gross margin was offset by the Company’s focus and success in increasing productivity and operating efficiency.
General and administrative expenses were $6.6 million for fiscal year 2010 compared to $8.0 million in the comparable period, which included a bad debt expense of $1.6 million. In fiscal 2010, the Company continued to add strength to its administration personnel to sustain company growth.
EBITDA for fiscal 2010 was $27.9 million, compared to $28 million last year, representing 25.4% of sales, compared to 26.6% for fiscal 2009.
Net earnings for fiscal 2010 totaled $12.6 million or $0.38 per common share ($0.38 per share diluted), compared to $12.6 million in the 2009 or $0.39 per common share ($0.38 per share diluted), representing a decrease of 2.6% year to year.
Conference Call
A conference call for analysts and interested listeners will be held the same day, Thursday, September 23 at 11:00 a.m. (ET). The call-in numbers for participants are 647-427-7450 and 888-231-8191 and the conference ID required is 99668161. A live audio feed of the call will also be available on the Internet at:
A replay of the call will be available from 2:00 p.m. (ET) on Thursday, September 23 until 11:59 p.m. on Thursday, September 30, 2010. To access the replay, call 416-849-0833 or 800-642-1687 enter pass code number 99668161, and then press the pound (#) key. The replay can also be accessed over the Internet at the above address.
Orbit Garant will be holding its third annual meeting of shareholders on Wednesday, November 10, 2010, at 10:00 a.m. (ET) at Marriott Chateau Champlain, 1 Place du Canada, Montreal, QC Canada H3B 4C9, Room Maisonneuve E.
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 155 drills and more than 600 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 Operating Officer (819) 824-2707 Ext. 233 | Derek Henderson Investor Relations (416) 447-4740 Ext. 232 |