-- Revenue was $24.2 million in the second quarter of fiscal 2013
("Q2 FY2013"), compared to $32.4 million in the second quarter
of fiscal 2012 ("Q2 FY2012")
-- 240,553 metres drilled, compared to 323,760 metres in Q2 FY2012
-- Long-term debt reduced by $3.1 million during Q2 FY2013
-- Adjusted gross margin (excluding amortization expense) was
22.2%, compared to 28.3% in Q2 FY2012
-- EBITDA totaled $3.1 million, compared to $5.8 million in Q2
-- Net loss of $0.3 million, or $0.01 per share (basic and
diluted) in Q2 FY2013, compared to net earnings of $1.9
million, or $0.06 per share (basic) and $0.05 per share
(diluted), in Q2 FY2012
VAL D'OR, QC, Feb. 12, 2013 /CNW/ - Orbit Garant Drilling Inc. (TSX: OGD)
("Orbit Garant" or the "Company") today announced its financial results for
the three and six month periods ended December 31, 2012. All dollar amounts
are in Canadian currency unless otherwise stated. Percentage calculations are
based on numbers in the financial statements and may not correspond to rounded
figures presented in this news release.
Q2 FY2013 Summary
|($ amounts in| | | | |
| millions, | 3 months | 3 months | 6 months | 6 months |
| except | ended | ended | ended | ended |
|earnings per |December 31, |December 31, |December 31, |December 31, |
| share) | 2012 | 2011 | 2012 | 2011 |
|Revenue | $24.2 | $32.4 | $59.1 | $69.5 |
|Gross Profit¹| $2.9 | $7.1 | $9.8 | $16.0 |
|Gross Margin | | | | |
|(%)¹ | 11.9 | 21.7 | 16.6 | 23.0 |
|Adjusted | | | | |
|Gross Margin | | | | |
|(%)¹ | 22.2 | 28.3 | 24.9 | 28.9 |
|EBITDA | $3.1 | $5.8 | $9.4 | $14.1 |
|Net (loss) | | | | |
|earnings | $(0.3) | $1.9 | $1.7 | $5.5 |
|Net (loss) | | | | |
|earnings per | | | | |
|common share | | | | |
| - Basic | $(0.01) | $0.06 | $0.05 | $0.17 |
| - Diluted | $(0.01) | $0.05 | $0.05 | $0.16 |
|Total metres | | | | |
|drilled | 240,553 | 323,760 | 545,386 | 691,007 |
¹ In accordance with IFRS, reported gross profit and margin include
certain amortization expenses. For comparative
purposes, adjusted gross margin is also shown excluding these
"Our fiscal 2013 second quarter results reflect a decline in both domestic and
international contract revenue, as many of our junior mining company customers
have scaled back or suspended drilling activities. Most of our senior and
intermediate customers remain committed to their existing projects, but we
have not seen increased demand from these customers heading into the new
calendar year and some have delayed or scaled back their projects," said Eric
Alexandre, President and CEO of Orbit Garant. "Our net loss for the quarter
resulted from the double impact of the continued decline in our higher-margin
international drilling activity and decreased drilling activity from our
junior customers, on a higher fixed cost base, following a sustained period of
investment in expanding our operations and capacity."
"Looking ahead, we expect continued pricing pressure going forward due to the
current oversupply of drilling services capacity in the market, which will
continue to affect our utilization rates and gross margins in the near term.
However, as our fiscal second quarter is usually our slowest period in terms
of business activity, we expect our utilization rates to gradually improve in
the second half of fiscal 2013," added Mr. Alexandre. "We will continue to
monitor market conditions closely and manage our staff and inventory levels,
capital expenditures and balance sheet accordingly. Given the current weakened
market conditions, we have scaled back the implementation of our computerized
monitoring and control technology rollout, and now expect to have
approximately 20 drill rigs featuring this technology by the end of fiscal
2013, down from our prior target of approximately 30."
"Despite the challenges of current business conditions, we remain committed to
our long-term strategy of technology innovation, increasing driller
productivity, pursuing value-enhancing growth opportunities, and building
long-term customer relationships. We believe we have made significant progress
in these areas and that we are better positioned today than at any time in our
past to build value for our stakeholders as market conditions improve."
Second Quarter Results
The Company's Q2 FY2013 revenue decreased 25.5% to $24.2 million, from $32.4
million in Q2 FY2012. Decreased revenue resulted primarily from a decline in
metres drilled as some of the Company's mining company customers suspended or
scaled back drilling activities. The decrease was partially offset by higher
average revenue per metre drilled domestically during the quarter. Further,
the Company experienced a decline in iron ore drilling activity in both Canada
and Western Africa. The Company's fleet drilled a total of 240,553 metres in
Q2 FY2013, compared to 323,760 metres in Q2 FY2012. Average revenue per metre
drilled was $98.54 in Q2 FY2013, compared to $95.92 in Q2 FY2012.
Orbit Garant's domestic drilling revenue decreased 21.8% to $21.6 million in
Q2 FY2013, compared to $27.6 million in Q2 FY2012, reflecting a decline in
metres drilled. International drilling revenue declined to $2.6 million in Q2
FY2013, compared to $4.8 million in Q2 FY2012, primarily due to lower demand
for drilling services.
Gross profit for Q2 FY2013 decreased to $2.9 million from $7.1 million in Q2
FY2012. Gross margin was 11.9% in Q2 FY2013, down from 21.7% in Q2 FY2012. In
accordance with IFRS, amortization expenses totalling $2.5 million are
included in cost of contract revenue for Q2 FY2013, compared to $2.1 million
in amortization expenses in Q2 FY2012. Adjusted gross margin, excluding
amortization expenses, was 22.2% in Q2 FY2013 compared to 28.3% in Q2
FY2012. Decreased gross profit and gross margin in Q2 FY2013 is attributable
to reduced metres drilled for both domestic and higher-margin international
projects, as well as to labor and equipment relocation costs related to
completed contracts which were not renewed or replaced as had previously been
General and administrative (G&A) expenses were $3.0 million (12.3% of revenue)
in Q2 FY2013 compared to $3.8 million (11.8% of revenue) in Q2 FY2012. In
accordance with IFRS, amortization expenses of $0.7 million are included in
G&A expenses for Q2 FY2013, compared to $0.5 million for Q2 FY2012.
Adjusted G&A expenses, excluding amortization expenses, totalled $2.2 million
(9.3% of revenue) for Q2 FY2013, compared to $3.3 million (10.2% of revenue)
for Q2 FY2012. The decline in G&A expenses is attributable to a gain of $0.8
million from the reversal of a portion of an earn-out consideration associated
with the acquisition of Advantage Control Technologies (1085820 Ontario
Limited) in November 2010.
Earnings before interest, taxes, depreciation, and amortization ("EBITDA")²
totalled $3.1 million in Q2 FY2013, compared to EBITDA of $5.8 million in Q2
FY2012. EBITDA margin in Q2 FY2013 was 12.8% compared to 17.8% in Q2 FY2012.
The decline is primarily attributable to decreased domestic and international
Net loss for Q2 FY2013 totaled $0.3 million, or $0.01 per common share (basic
and diluted) compared to net earnings of $1.9 million, or $0.06 per common
share (basic) and $0.05 per share (diluted) in Q2 FY2012. The Company's net
loss in the quarter resulted from the impact of a decreased revenue and lower
Six Month Results
For the six months ended December 31, 2012, Orbit Garant generated revenue of
$59.1 million, a decrease of $10.4 million, or 15.0%, from $69.5 million in
the first six months of fiscal 2012. The decline in revenue resulted primarily
from decreased business activity in the second quarter.
Gross profit for the first half of fiscal 2013 was $9.8 million, compared to
$16.0 million in the comparable period a year ago. Gross margin for the first
half of FY2013 was 16.6%, compared to 23.0% in the first half of FY2012.
Adjusted gross margin, excluding amortization expense, in the first half of
FY2013 decreased to 24.9% from 28.9% in the comparable period a year ago. The
decrease in gross profit and gross margin is primarily attributable to a
decline in higher margin international business activity mostly from the
Company's junior mining company customers as well as to labor and equipment
relocation costs related to completed contracts which were not renewed or
replaced as had previously been expected.
Net earnings for the first half of fiscal 2013 totalled $1.7 million, or $0.05
per common share (basic and diluted) compared to $5.5 million, or $0.17 per
share (basic) and $0.16 per share (diluted) for the comparable period last
fiscal year. Decreased net earnings resulted primarily from the Company's
decline in higher margin international business activity mostly from junior
mining company customers throughout the first six months of fiscal 2013. The
decrease also resulted from the decline in domestic business activity in Q2
EBITDA for the first six months of FY2013 decreased 33.3% to $9.4 million from
$14.1 million in the same period a year ago. EBITDA margin for the first six
months of FY2013 was 15.9%, compared to 20.2% in the first half of FY2012.
As at December 31, 2012, the Company had working capital of $51.8 million and
33,276,519 common shares issued and outstanding.
Eric Alexandre, President and CEO, and Alain Laplante, Vice President and CFO,
will host a conference call for analysts and investors on Wednesday, February
13, 2013 at 10:00 am (ET). The dial-in numbers for conference call are
647-427-7450 or 1-888-231-8191. A live audio feed of the call will be webcast
To access a replay of the conference call dial 416-849-0833 or 1-855-859-2056,
pass code: 95980650. The replay will be available until February 20, 2013. The
replay can also be accessed via the Internet at the above URL address.
About Orbit Garant
Headquartered in Val-d'Or, Quebec, Orbit Garant is one of the largest
Canadian-based mineral drilling companies, providing both underground and
surface drilling services in Canada and internationally through its 224 drills
and more than 800 employees. Orbit Garant provides services to major,
intermediate and junior mining companies, through each stage of mining
exploration, development and production. The Company also provides
geotechnical drilling services to mining or mineral exploration companies,
engineering and environmental consultant firms, and government agencies. For
more information please visit the Company's website at www.orbitgarant.com.
(2) Management believes that EBITDA is a useful supplemental measure of
operating performance prior to debt service, capital expenditures and income
taxes. However, EBITDA is not a recognized earnings measure under IFRS and
does not have a standardized meaning prescribed by IFRS. Therefore, EBITDA may
not be comparable to similar measures presented by other issuers. Investors
are cautioned that EBITDA should not be construed as an alternative to net
income or loss (which is determined in accordance with IFRS) as an indicator
of the performance of the Company or as a measure of liquidity and cash flows.
The Company's method of calculating EBITDA may differ materially from the
methods used by other public companies and, accordingly, may not be comparable
to similarly named measures used by other public companies.
This news 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.
Alain Laplante Vice-President and Chief Financial Officer (819) 824-2707 ext.
Bruce Wigle Investor Relations (416) 447-4740 ext. 232
SOURCE: Orbit Garant Drilling Inc.
To view this news release in HTML formatting, please use the following URL:
CO: Orbit Garant Drilling Inc.
NI: MNG ERN CONF
-0- Feb/12/2013 22:27 GMT
Press spacebar to pause and continue. Press esc to stop.