– Margins increased in fourth quarter, following exit from West Africa and continued demand for drilling services from senior and intermediate mining customers –
VAL-D'OR, QC, Sept. 19, 2024 /CNW/ - Orbit Garant Drilling Inc. (TSX:OGD) ("Orbit Garant" or the "Company") today announced its financial results for the three-month period ("Q4 2024") and fiscal year ended June 30, 2024. All dollar amounts are in Canadian dollars unless otherwise stated.
Financial Highlights
($ amounts in millions,
except per share amounts)
Three months endedJune 30, 2024
Three months endedJune 30, 2023
Fiscal year ended June 30, 2024
Fiscal year ended June 30, 2023
Revenue
45.3
46.8
181.2
201.0
Gross Profit
7.3
0.7
20.4
18.3
Gross Margin (%)
16.1
1.4
11.2
9.1
Adjusted Gross Margin (%)¹
21.7
15.9
16.7
16.2
Adjusted EBITDA¹
6.4
1.8
14.4
19.1
Net earnings (loss)
(1.2)
(4.1)
(1.3)
(0.7)
Net earnings (loss) per share
- Basic and diluted ($)
(0.04)
(0.11)
(0.04)
(0.02)
(1) This is a non-IFRS measure and is not a standardized financial measure. The Company's method of calculating such financial measures may differ from the methods used by other issuers and, accordingly, the definition of these non-IFRS financial measures may not be comparable to similar measures presented by other issuers. Refer to "Reconciliation of Non-IFRS financial measures" on page 4 of this news release for more information about each non-IFRS measure and for the reconciliations to the most directly comparable IFRS financial measures.
"We generated solid margins in our fiscal fourth quarter, reflecting continued steady demand from our senior and intermediate mining customers in Canada and Chile, and our cessation of operations in West Africa earlier this year. Our year-over-year decline in revenue for the quarter reflects our exit from West Africa and the current low levels of junior exploration activity in Canada, which is attributable to their continued restrained access to capital," said Pierre Alexandre, President and CEO of Orbit Garant. "During fiscal year 2024, we entered into an agreement to sell our remaining assets in West Africa and recorded a long-term account receivable totalling $7.5 million as compensation. During the quarter, we recorded a non-cash substantial modification of a receivable and expected credit loss totalling $5.2 million. Excluding this modification, our net income would have been $4.0 million, or $0.11 per share for the quarter."
"While financing conditions remain challenging for junior exploration and certain intermediates companies in Canada, we expect to maintain our improved margins based on our expertise in drilling contracts with senior and well-financed intermediate mining companies, which represented 87% of our revenue for fiscal 2024. Record-high gold prices and strong copper pricing are providing incentive for producing mining companies to continue investing in mine development activities."
Fourth Quarter Results
Revenue for Q4 2024 totalled $45.3 million, a decrease of 3.0% compared to $46.8 million for the three-month period ended June 30, 2023 ("Q4 2023"). Canada revenue totalled $32.8 million in Q4 2024, an increase of 0.9% compared to $32.6 million in Q4 2023. Canada revenue was negatively affected by financing difficulties for junior and intermediate mining companies during Q4 2024, resulting in lower drilling activity than previous years, whereas revenue in Q4 2023 was negatively impacted by project suspensions due to forest fires. International revenue totalled $12.5 million in Q4 2024 compared to $14.2 million in Q4 2023. The year-over-year decline in international drilling revenue reflects the Company's cessation of drilling activity in Burkina Faso and Guinea during its Fiscal 2024 second quarter ("Q2 2024"), partially offset by increased drilling activity in Chile.
The Company recorded a one-time, non-cash $4.2 million restructuring charge in Q4 2023 relating to its decision to exit Burkina Faso and complete its drilling program in the country during Q2 2024. The restructuring charge reflects a write-down of inventory to its net realizable value. Orbit Garant subsequently made the decision to not renew its drilling contract in Guinea, which was completed at the end of Q2 2024, as the Company determined that it was no longer financially viable to maintain drilling activities in West Africa considering its exit from Burkina Faso.
The Company had entered into an agreement to sell its inventories, for an amount of $1.2 million, and property, plant and equipment, for an amount of $6.3 million, located in West Africa and recorded a short-term receivable as compensation, for an amount of $7.5 million. As at June 30, 2024, the Company recorded the derecognition of the short-term receivable and the recognition of a new long-term receivable of $3.9 million following a significant change in contractual payment terms of the receivable. The effect of this substantial modification of the receivable is a loss of $3.5 million included in the expenses of the Consolidated Statements of Loss. The Company also recognized an expected credit loss on this receivable for an amount of $1.7 million in the Consolidated Statements of Loss.
Gross profit for Q4 2024 was $7.3 million, or 16.1% of revenue, compared to $0.7 million, or 1.4% of revenue, in Q4 2023. The increase in gross profit and gross margin ...
