ORBIT GARANT DRILLING INC. REPORTS SECOND QUARTER 2009 FINANCIAL RESULTS
Val-d’Or, Quebec, February 12, 2009 – Orbit Garant Drilling Inc. (TSX: OGD) today announced its financial results for the second quarter of fiscal 2009, ended December 31, 2008. 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
| Fiscal 2009 | Fiscal 2008 | 6 months ended December 31, 2008 | 6 months ended December 31, 2007 | |
| Amounts in C$000 except earnings per share | Q2 | Q2 | ||
| Revenue | $26,106 | $18,053 | $49,222 | $35,432 |
| Gross Profit | 8,648 | 6,316 | 16,171 | 12,564 |
| Gross Margin | 33.1% | 35.0% | 32.9% | 35.5% |
| General & Administrative | 1,888 | 1,058 | 3,519 | 2,114 |
| Amortization | 1,990 | 1,620 | 3,867 | 3,261 |
| Ebitda Normalized | 6,876 | 5,307 | 12,852 | 10,575 |
| Income Tax | 1,520 | 175 | 2,854 | 909 |
| Net Earnings | 3,214 | 2,972 | 5,862 | 5,136 |
| Net earnings per common share | ||||
| – Basic | $0.10 | $0.12 | $0.18 | $0.21 |
| – Diluted | $0.10 | $0.12 | $0.18 | $0.20 |
| Total Metres Drilled | 280,760 | 211,321 | 514,213 | 412,497 |
“We are pleased with our results in the second quarter,” said Eric Alexandre, President and Chief Operating Officer. “Our success in the quarter is attributable to our continuing strategy of focusing on major and intermediate sized mining companies, which are better able to withstand the effects of the current economic weakness, as well as our exposure to the gold business, which has remained comparatively stronger than our work for customers in base metals”.
Second Quarter Results
In the second quarter ended December 31, 2008, Orbit Garant generated total revenues of $26.1 million, an increase of $8.0 million or 44.6% compared to Q2 fiscal 2008.
Drilling Canada revenue was $24.4 million compared to $14.9 million for the Q2 fiscal 2008 period, representing an increase of 63.7%. This strong increase was the result of the new specialized rigs that were built at the beginning of 2008 to service the new contracts with Agnico Eagle and Newmont as well as the acquisition of Forage+.
Drilling International revenue was $1.2 million, down by $1.1 million from the same period in fiscal 2008 due to lower activity.
Manufacturing Canada revenue was $0.4 million, down by $0.4 million from the Q2 fiscal 2008. Third party demand for drills has experienced a slowdown due to the current economic decline. Through its subsidiary Soudure Royale Concept, Orbit Garant maintains the capacity to build new drills, as well as utilizing Soudure Royale to build supplies and support equipment.
The gross margin for the second quarter ended December 31, 2008 decreased to 33.1% from 35% in the corresponding period in the previous year. The decline is mainly a result of lower activity in the Drilling International division.
Total gross profit in Q2 2009 was $8.6 million compared to $6.3 million in the comparable fiscal 2008 period, representing an increase of 36.9%.
General and administrative expenses (G&A) totaled $1.9 million during Q2 fiscal 2009, compared to $1.1 million in Q2 fiscal 2008, an increase attributable to additional administrative expenses incurred to sustain company growth and operating as a public company.
Consolidated normalized EBITDA in Q2 fiscal 2009 was $6.9 million compared to $5.3 million in Q2 fiscal 2008, representing an increase of 29.6%.
Income tax recorded totaled $1.5 million in Q2 fiscal 2009 compared to $0.2 million in the comparable 2008 period as some adjustments took place to include changes to future income tax rates.
Net earnings for the quarter totaled $3.2 million compared to $3.0 million in the comparable period last year, representing $0.10 per common share in the Q2 2009 quarter compared to $0.12 per common share in Q2 fiscal 2008.
Recent Developments
During the quarter, Orbit Garant acquired all issued and outstanding shares of 9129-5632 Quebec Inc. (doing business as Forage +), a specialized drilling company operating seven drilling rigs. As part of the transaction, Orbit Garant acquired a 100,000 metre drilling services contract with Osisko Mining Corporation.
Also, in the quarter, Orbit Garant commenced its specialized drilling services contract with Agnico Eagle Ltd at its Meadowbank project in the Nunavut Territory and is continuing to prepare for the specialized drilling contract for Newmont Mining Corporation’s Hope Bay project, scheduled to begin February 2009.
Six Months ended December 31, 2008
Orbit Garant is reporting record gross revenue and meters drilled for the first six months of its fiscal year.
Revenues totaled $49.2 million for the six month period ended December 31, 2008, an increase of $13.8 million, or 38.9%, from $35.4 million in the comparable period a year earlier.
Gross margin for the first half of the fiscal year was 32.9% compared to 35.5% for the corresponding period last year. This decrease is correlated with the decrease in International Drilling activity, which typically generates high margins.
Overall gross profit for the first 6 months of the fiscal year was $16.2 million, an increase of $3.6 million from $12.6 million in the comparable six-month period last year.
Net earnings for the six month period ended December 31, 2008 were $5.9 million or $0.18 per share ($0.18 per share diluted) compared to $5.1 million or $0.21 per share ($0.20 per share diluted) in the first half of fiscal 2008.
“Despite the current downturn in the economy, the fundamentals of our strategy remain proven and positive. We are working constantly to ensure we maintain our strong balance sheet and leading market position. We continue to align ourselves with well-financed intermediate and major mining companies, 68% of which are gold focused, and continue our focus on maintaining our forward momentum,” added Eric Alexandre.
Orbit Garant completed its Initial Public Offering (IPO) on June 26, 2008. The company was created through the combination of Quebec-based drilling services providers Orbit and Garant on January 31, 2007 and the acquisition of Drift Exploration Drilling Inc. on April 16, 2007. Full Financial Statements and Management’s Discussion and Analysis are available on the Company website at https://www.orbitgarant.com/ and at http://www.sedar.com/ .
Conference Call
A conference call for analysts and interested listeners will be held Thursday, February 12, 2009 at 1:00 p.m. (ET). The call-in numbers for participants are 416-644-3420 and 800-732-9303. A live audio feed of the call will also be available on the Internet at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2534180
A replay of the call will be available from 3:00 p.m. (ET) on Thursday, February 12, 2009 until 11:59 p.m. on Thursday, February 19, 2009. To access the replay, call 416 640 1917 or 877 289 8525 enter pass code number 21296481, 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, operating with 134 drills and more than 500 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 http://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 |