Orbit Garant Drilling achieves record net earnings in fiscal 2025, driven by strategic focus and strong customer demand

OPERATOR - (00:01:11)

Good morning ladies and gentlemen and welcome to Orbit Garant Drilling's fiscal 2025 year end and fourth quarter results conference call and webcast. 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 zero 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, September 25, 2025. I would now like to turn the conference over to Mr. Daniel Meh, President and CEO of Orbit Garand Drilling. Please go ahead, sir.

Daniel Meh - (00:02:04)

Thank you Regina and good morning ladies and gentlemen. With me on the call today is Pierre Luc, 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 I'm extremely proud of our financial performance for the fiscal year 2025 as we generate our highest net earnings in more than 10 years. I want to take the opportunity to thank all the employees that contributed to delivering this solid performance. Our performance reflects our continued focus on our strategic plan. We continue to benefit from our focus on senior and well financed intermediate customer in Canada and South America, our disciplined business strategy and continuous operational improvement program as well as our exit from West Africa in Q2 last year. We finished this year with a solid fourth quarter with revenue growth of 3.9% compared to Q4 last year and net earnings of $0.06 per share. This reflects six consecutive quarter of year over year increase in net earningss. Our adjusted growth margin was excess of 20% in the quarter. Achieving adjusted gross margin of 20% or more is one of our primary objectives. Our solid revenue in the quarter reflects higher revenue per meter drilled in Canada and increased drilling activity in South America. Our performance is also supported by a strong customer demand. The price of gold is currently at historically high level and the price of copper also remains strong which provides a strong incentive for mining companies to continue to invest in in mine exploration and development activities. We expect demand to remain positive from senior and intermediate company despite the highly competitive environment. Demand from junior companies has been constrained due to the financing condition, but we are starting to see increased financing activities on the junior side. We have a strong relationship in the junior mining sector and are well positioned to selectively pursue business with juniors when demand picks up again. We still have significant available drilling capacity in Canada with the potential to expand our regional presence, and we can easily mobilize drill rigs with minimal capex as opportunities present themselves. I will now turn the call over Pierre to review how our results for the fourth quarter and fiscal 2025 in greater detail.

Pierre Luc - Chief Financial Officer - (00:05:07)

Pierre Luc thank you, Daniel, and good morning everyone. Revenue for our fiscal fourth quarter totaled $47.2 million, up from 45.3 million in Q4 last year. Canada revenue was 33.8 million in the quarter, an increase of 2.7% from 32.8 million in Q4 a year ago, reflecting. Higher revenue per meter drill. International revenue totaled 13.4 million, an increase. Of 7.0% from 12.5 million in Q4 a year ago, reflecting increased drilling activity in South America. Gross profit was 7.6 million, or 16.0%. Of revenue, compared to 7.5 million, or 16.6% of revenue in Q4 2024. Adjusted gross margin excluding depreciation expenses and a gain on disposal of property, plant. And equipment was 20.2% in the quarter. Compared to 17.8% in Q4 2024. The increases in gross profit and adjusted. Gross margin were primarily attributable to higher. Revenue per meter drilled in Canada, increased drilling activity in South America, and the. Cessation of drilling activities in West Africa during Q2 2024, which were unprofitable. Adjusted EBITDA totaled $5.5 million, down from 6.7 million in Q4 last year. The decrease was primarily attributable to an unfavorable foreign exchange variance and startup costs for a new project in South America, partially offset by increased operating earnings in Canada. Net earnings for the quarter were $2.2. Million, or $0.06 per share diluted compared. To a net loss of 2.3 million. Or $0.06per share diluted in Q4 last year. Our net earnings in Q4 this year. Were primarily attributable to the effect of the substantial modification of a receivable and expected credit loss, and the reclassification of cumulative translation adjustments in Q4 a year ago. Ago related to our exit from West. Africa, partially offset by slight reduction in consolidated operating earnings, a reduced income tax recovery, and an unfavorable foreign exchange movement. For fiscal 2025, we generated revenue of. $189 million, an increase of 4.3% compared to fiscal 2024. Canada revenue totaled 136.1 million for fiscal. 2025, an increase of 2.6% compared to fiscal 2024, reflecting higher revenue per meter drilled. International revenue for fiscal 2025 totaled $53.0. Million, an increase of 9.0% compared to. Fiscal 2024 reflecting increased drilling activity in South America. Gross profit for fiscal 2025 was $28.3. Million, or 15.0% of revenue, compared to. 21.2 million, or 11.7% of revenue in fiscal 2024. Adjusted gross margin excluding depreciation expense and a gain on disposal of property, plant. And equipment was 19.5% in fiscal 2025. Compared to 15.9% in fiscal 2024. The increases in gross profit and adjusted gross margin were primarily attributable to higher. Revenue per meter drilled in Canada, increased. Drilling activity in South America, and the cessation of our drilling activities in West Africa during Q2 2024. Adjusted EBITDA totaled 21.7 million in fiscal. 2025 compared to 14.7 million in fiscal 2024. The increase reflects higher operating earnings in. Both Canada and South America and a favorable foreign exchange variation. Net earnings for fiscal 2025 were $7.5. Million, or $0.20 per share diluted compared. To a net loss of 2.4 million, or $0.06 per share diluted in fiscal 2024. Our net earnings in fiscal 2025 were primarily attributable to increased operating earnings in both Canada and South America. Primarily due to the effect of a substantial modification of. Our receivable and expected credit loss and the reclassification of cumulative translation adjustments in. Q4 2024 interest revenue on the long. Term receivable related to the sale of. Our assets in West Africa and a. Favorable foreign exchange variation partially offset by increased income tax expense. Turning to our balance sheet, we repaid. A net amount of $7.5 million on. Our credit facility in fiscal 2025 compared. To a net repayment of $0.7 million in fiscal 2024. Our long term debt under the credit facility, including an undrawn 5.0 million US dollar revolving credit facility and the current. Portion was $14.0 million at year end. Compared to $21.5 million at year end. Fiscal 2024 pursuant to our normal course. Issuer bid, we repurchased and canceled 68,916. Of our common shares at a weighted. Average price of $0.82 per share during fiscal 2025. Our issuer bids formally terminates on October 30th this year. We believe that our capital allocation initiatives in paying down debt and buying back shares during fiscal 2025 will help drive further value creation for shareholders. Our working capital at year end totaled $50.4 million compared to 48.6 million at the end of fiscal 2024. I will now turn the call back. To Daniel for closing comments.

Daniel Meh - (00:11:19)

Daniel thank you Gareth. Let me close by reiterating that we embark on on an important strategic shift a few years ago and I'm extremely pleased with how the company has responded to this plan and we are seeing the result of these efforts. 2025 marked our best financial performance over the last 10 years and highlight the dedication of the entire Orbit Garant Drilling. Our strategic focus on Canada and South America, disciplined business strategy and continuous operational improvement program are working well for us and we are going to stick to it as we continue to work hard to strengthen our market position and profitability. Metal prices are also trending positively for us with gold price spiking to record levels this year. Gold miners are highly motivated to increase their mineral reserve and resources; however, they need to spend money on drilling to prove them up. We generate more than 60% of our revenue from gold drilling operation in fiscal 2025 and we are therefore well positioned to benefit from gold exploration and development spending. Copper prices have also been strong this year, even with economic concern related to tariffs. We believe this reflects the strong demand outlook for copper, a mineral that is necessary for the ongoing electrification of the global economy. We are well positioned to benefit from increased exploration and development spending related to copper with our presence in Chile, the largest copper producing country in the world. With the right strategic focus and supportive industry fundamentals, we believe that we are well positioned to drive enhanced profitability in a substantial basis and build long term value for our shareholders. That concludes our formal remark for today. We will now welcome any questions. Virginia Please begin the question period.

Virginia - (00:13:46)

We will now begin the question and answer period. In order to ask a question, simply press STAR followed by the number one on your telephone keypad. Again, for any questions please press Star one. We'll pause for just a moment to compile the Q and A roster and as a reminder to ask a question, that is STAR followed by the number one on your telephone keypad. We have no questions at this time. Daniel, are there any closing remarks?

Daniel Meh - (00:14:25)

Yes. Thank you Regina. Thank you everyone for participating today. We look forward to speaking with you again. Bye bye.

OPERATOR - (00:14:35)

This concludes our call today. Thank you all for joining. You may now disconnect.