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Orbit Garant Drilling Reports Fiscal 2013 Second Quarter Results



    --  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
        FY2012
    --  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
    amortization expenses.

"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 
expected.

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 
revenue.

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 
gross margin.

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 
FY2013.

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.

Conference call

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 
at: http://www.newswire.ca/en/webcast/detail/1106971/1206393

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.

Forward-looking information
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. 
122

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: 
http://www.newswire.ca/en/releases/archive/February2013/12/c5077.html

CO: Orbit Garant Drilling Inc.
ST: Quebec
NI: MNG ERN CONF 

-0- Feb/12/2013 22:27 GMT

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