Earnings call transcript: Orbit Garant Drilling Q3 2025 sees revenue growth

Orbit Garant Drilling Inc. reported its financial results for the third quarter of 2025, highlighting a 3.9% increase in revenue year-over-year. Despite a minor dip in Canadian revenue, the company’s international operations saw a significant boost. With a market capitalization of $41.41 million and trading near its 52-week high, the stock has delivered an impressive 149% return over the past year. According to InvestingPro analysis, the company appears fairly valued at current levels.

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Key Takeaways

• Revenue increased by 3.9% year-over-year to $50 million.
• International revenue surged by 26.3%, offsetting a decline in Canadian revenue.
• Adjusted EBITDA improved significantly, rising to $6.2 million from $3.9 million.
• The company exited the West African market, focusing on Canada and South America.
• Strong demand for underground drilling services amid rising gold and copper prices.

Company Performance

Orbit Garant Drilling’s performance in Q3 2025 demonstrated resilience, with a notable increase in international revenue compensating for a decline in its Canadian operations. The company continues to capitalize on rising commodity prices, particularly in gold and copper, which are driving demand for its drilling services. This strategic focus on well-financed senior and intermediate customers has been pivotal in sustaining growth.

Financial Highlights

• Revenue: $50 million, up 3.9% from the previous year.
• Canadian Revenue: $36.1 million, down from $37.2 million.
• International Revenue: $13.9 million, up 26.3%.
• Gross Profit: $5.9 million, representing 11.9% of revenue.
• Net Earnings: $2.7 million, or $0.08 per share.
• Adjusted EBITDA: $6.2 million, up from $3.9 million.

Outlook & Guidance

Orbit Garant Drilling anticipates improved demand for surface drilling throughout the calendar year. The company is prioritizing maintenance capital expenditures and debt reduction while maintaining flexibility to engage selectively with junior mining companies. With a strategic focus on senior mining companies and a stable outlook for metal prices, Orbit Garant is well-positioned for continued growth. InvestingPro data shows the company maintains a GREAT financial health score of 3.39, supporting its growth strategy.

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Executive Commentary

Daniel Mahu, CEO, emphasized the company’s consistent performance, stating, "We have now generated year-over-year increases in net earnings for five consecutive quarters." He also highlighted the motivation among gold miners to expand reserves, adding, "Gold miners are highly motivated to increase their minimal reserve and resource." Mahu reiterated the company’s commitment to its strategic plan, noting, "Our strategic plan is working, and we are going to stick to it."

Risks and Challenges

• Slower surface drilling demand in Canada could impact future revenue.
• Economic uncertainties may affect commodity prices and, consequently, drilling demand.
• Potential operational challenges in expanding international markets.
• Dependence on commodity prices for gold and copper may introduce volatility.
• Competition from other drilling service providers in key markets.

Orbit Garant Drilling’s Q3 2025 results underscore its ability to navigate market challenges while capitalizing on opportunities in the international arena. The company’s strategic focus on well-financed customers and flexible operations positions it well for future growth, despite potential risks. InvestingPro analysis indicates net income is expected to grow this year, with analysts projecting EPS of $0.11 for FY2025.

Full transcript - Orbit Garant Drilling Inc. (OGD) Q3 2025:

Conference Operator: Good morning ladies and gentlemen and welcome to Orbit Garat Drilling’s Fiscal twenty twenty five Third Quarter Results Conference Call. At this time, all lines are in listen only mode. Following management’s remarks, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press 0 for the operator. Please be aware that certain information discussed today may be forward looking and that actual results could differ materially.

Certain non IFRS financial measures will also be discussed. Please refer to the company’s SEDAR filings for additional information on both risk factors and non IFRS measures. This call is being recorded on Thursday, 05/08/2025. I would now like to turn the conference over to Mr. Daniel Mahu, President and CEO of Orbit Garant.

Please go ahead, sir.

Daniel Mahu, President and CEO, Orbit Garant Drilling: Thank you, operator, and good morning, ladies and gentlemen. With me on the call is Pierre Luc Kaplan, Chief Financial Officer. Following my opening remarks, Pierre Luc will review our financial results in greater detail, and I will conclude with comments on our outlook. We will then welcome questions. We generate revenue growth of 3.9% in the quarter compared to Q3 last year.

This increase was driven by increased drilling activity in South America, which more than offset our slower activity in Canada. Our adjusted EBITDA and net earnings also increased compared to Q3 a year ago, reflecting improved profitability in our South American operation as well as a foreign exchange gain. Our fiscal third quarter is typically the slowest period of the year for our Canadian operation. January is a relatively slow month and there is a gradual ramp up of drilling activities each year after a shutdown during the holiday season. Challenging winter weather also affect our operation during Q3.

This year, we also experienced lower demand for surface drilling project in the quarter compared to Q3 last year, which impact our margins. However, customer demand for underground drilling services remains strong, and we expect demand for surface drilling from senior and well financed intermediate company to pick up throughout this calendar year. On a year to date basis, our revenue and profitability have both improved in fiscal twenty twenty five. Our revenue is up 4.5% compared to the first nine months of fiscal twenty twenty four and our adjusted gross margin for the period is at 19.3%, up from 15.3% last year. This performance reflects strong operating results in both Canada and South America.

We continue to benefit from our strategic focus on senior and well financed intermediate customer and our exit from West Africa in Q2 last year. Gold prices have increased dramatically this calendar year reaching a record high of approximately US3500 dollars announced in April. Copper prices also up on the year. These prices are highly supportive for our operation in both Canada and South America. I will now turn the call back over Luc to review our financial results for the quarter in greater detail.

Pierre Luc?

Pierre Luc Kaplan, Chief Financial Officer, Orbit Garant Drilling: Thank you, Daniel, and good morning, everyone. Our revenue totaled $50,000,000 in the quarter, an increase of 3.9% from $48,200,000 in Q3 last year. Canada revenue was $36,100,000 compared to $37,200,000 in Q3 last year, reflecting slower drilling activity. International revenue increased 26.3% year over year to $13,900,000 from $11,000,000 in Q3 a year ago due to increased drilling activity in South America. Gross profit was $5,900,000 for the quarter or 11.9% of revenue compared to $6,400,000 or 13.2% of revenue in Q3 last year.

Our adjusted gross margin, excluding depreciation expenses, was 16.5% in the quarter compared to 17.6% in Q3 last year. The decreases in gross profit, gross margin and adjusted gross margin were primarily attributable to slower drilling activity in Canada during the quarter, partially offset by increased drilling activity in South America. Consolidated earnings from operations for the quarter were $2,400,000 compared to $3,300,000 in Q3 last year. Drilling Canada’s operating earnings totaled $1,100,000 compared to $3,100,000 in Q3 last year. And our international operating earnings increased to $1,300,000 from $200,000 a year ago.

Adjusted EBITDA increased to $6,200,000 up from $3,900,000 in Q3 last year. Net earnings were $2700000.0.00 $8 per share compared to $2,000,000 or $05 per share last year. Increases in our adjusted EBITDA and net earnings were primarily attributable to the improved operating earnings in South America and a favorable foreign exchange gain of $2,000,000 partially offset by the reduced operating earnings in Canada. In addition, net earnings in Q3 this year were impacted by income tax expense of $600,000 compared to a recovery of $1,300,000 last year. Turning to our balance sheet.

We withdrew a net amount of $800,000 on our credit facility in the third quarter compared to a repayment of $1,300,000 in Q3 last year. Our long term debt under the credit facility, including an undrawn $5,000,000 revolving credit facility and the current portion was $19,400,000 at quarter end compared to $21,500,000 as at 06/30/2024, our fiscal twenty twenty four year end. Our working capital totaled $52,900,000 as at March 31, compared to $48,600,000 at the end of fiscal twenty twenty four. I’ll provide a quick update on our normal course issuer bid. During the third quarter, we repurchased and canceled 24,628 common shares at a weighted average price of $0.83 per share.

That is significantly below the current share price. To date, we have purchased and canceled nearly 70,000 shares under the

Daniel Mahu, President and CEO, Orbit Garant Drilling: NCIB. We will continue to monitor our share price for potential opportunities to repurchase shares if and when we believe it is an appropriate use of our capital, but debt reduction is a higher priority. I’ll now turn the call back to Daniel for closing comments. Daniel? Thank you, Pierre Luc.

We have now generated year over year increase in net earnings in five consecutive quarter. While slower demand for surface drilling in Canada impact our margin in Q3, we believe that our overall performance to date in fiscal twenty twenty five demonstrate that we have the right strategic plan in place to build value for shareholders. This strategic took shape two years ago when we implement a five point plan to improve our operating performance over a fifteen month period. While that period has passed, we continue to focus on key elements of the plan, including primarily focusing on our operation in Canada and South America and prioritizing long term specialized training contract with senior and intermediate customer. Our two capital allocation priorities are maintenance capital expenditure and debt reduction.

Our strategic plan is working and we are going to stick on it as we work hard to strengthen our profitability. Metal prices are also trending positively for us with gold prices spiking to record levels this year. Gold miners are highly motivated to increase their minimal reserve and resource, but they need to spend money on drilling to prove them up. We generate more than 60% of our revenue from gold drilling operation in the first nine months of fiscal twenty twenty five and are therefore well positioned to benefit from gold exploration and development spending. Copper prices have also increased this year even with the heightened economic concern related to tariff.

We believe this reflects the strong demand outlook for copper, a mineral that is necessary for the ongoing electrification of the global economy. We anticipate continued solid demand for senior and well financed intermediate company in this environment. Demand from junior company remain constrained due to the financial condition, but we believe investor appetite for junior company will eventually recover. We have strong relationship in the junior mining sector and are well positioned to selectively pursue business with junior if and when activity pick up again. We have available drill capacity in Canada and can easily mobilize drilled rigs with minimal CapEx as opportunity presents themselves.

With the right strategic focus and supportive industry fundamental, we believe that we are well positioned to drive enhanced profitability on a substantive basis and build value for our shareholders. That concludes our formal remarks this morning. We will now welcome any questions. Operator, please begin the question period.

Conference Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any key.

One moment, please, for your first question. We don’t have any questions. Concludes our question and answer session. You to Okay.

Daniel Mahu, President and CEO, Orbit Garant Drilling: So thank you to everyone for participating today. We look forward to speak with you again after we report our fiscal fourth quarter and year end result in September.

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