Orbit Garant Drilling Q4 2026 Earnings Report

Orbit Garant Drilling EPS Results

• Actual EPS: -C$0.05
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Orbit Garant Drilling Revenue Results

• Actual Revenue: $57.17 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Orbit Garant Drilling Announcement Details

• Quarter: Q4 2026
• Date: 9/25/2026
• Time: After Market Closes
• Conference Call Date: Friday, September 25, 2026
• Conference Call Time: 10:00AM ET

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 180 drill rigs and approximately 1,300 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.

Orbit Garant Drilling Q4 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Fiscal 2026 revenue reached a record CAD 203.2 million, up 7.5% year over year, while fourth-quarter revenue rose 21.3% to CAD 57.2 million. Rig utilization reached 70%, the highest level since fiscal 2012, supported by strong demand in Canada and South America.
• Negative Sentiment: Profitability deteriorated despite the revenue growth: fiscal 2026 adjusted EBITDA fell to CAD 13.7 million from CAD 21.7 million, and the company posted a CAD 1.5 million net loss versus CAD 7.5 million of earnings last year. Lower drilling efficiency, contract pricing pressure, inflation, training costs, project delays and ramp-up expenses weighed on margins.
• Positive Sentiment: Management expects profitability to return in fiscal 2027 as recently negotiated price increases flow through, ramp-up costs decline, productivity improves and new drilling tools contribute. The company is targeting a recovery in adjusted gross margin from 14.7% toward its prior 20% level, although it provided no formal guidance.
• Positive Sentiment: Orbit Garant secured a specialized Northern Canada contract expected to generate more than CAD 100 million over its initial term, with two rigs operating now and six additional rigs expected to be added by around June 2027. Management said the contract should become more profitable after its initial 10–12 month ramp-up period.
• Negative Sentiment: Funding the new contract and other growth initiatives increased leverage, with year-end credit-facility debt rising to CAD 23.7 million from CAD 14.0 million. Fiscal 2027 capital expenditures are expected to be about CAD 19.3 million, including CAD 6.3 million for the new contract, while working capital could consume roughly CAD 10 million.

Presentation

[Operator]

Morning, ladies and gentlemen, and welcome to this Orbit Garant Drilling's fiscal 2026 fourth quarter and year-end results conference call and webcast. At this time, all lines are in a listen-only mode. Following management's remarks, we will conduct a question and answer session. Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the company's current views with respect to future events. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking information. For more information on the risks, uncertainties, and assumptions relating to forward-looking information, please refer to the company's latest MD&A and annual information form, which are available on SEDAR+. Management may also refer to non-IFRS financial measures.

[Operator]

Although Orbit Garant believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the company's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded today, Friday, September 25th, 2026. It is now my pleasure to turn the floor over to President and CEO of Orbit Garant Drilling, Mr. Daniel Maheu. Welcome, sir.

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

Thank you, Jim, and good morning, ladies and gentlemen. With me on the call today is Pier-Luc Laplante, Chief Financial Officer. Following my opening remarks, Pier-Luc will review our financial results in greater detail, and I will conclude with comments on our outlook. We recorded quarterly revenue in our fourth quarter this year and record annual revenue in fiscal 2026, reflecting the strong demand for our drilling services in both Canada and South America. We also reached 70% drill rig utilization in the quarter, which represents our highest level since fiscal 2012. Reaching this threshold was a key objective for us at the start of the year. Our profitability for the quarter was negatively impacted by lower drilling efficiency in Canada due to the higher drilling rig utilization rate, which resulted in an increase of number of trainee drillers.

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

Also, lower revenue per meter on certain legacy drilling contracts in Canada that were signed in the first half of the year, and inflation in production cost and drilling consumable and investment in workforce training and development. We have recently been able to revise contract pricing to offset our cost inflation, and this includes the implementation of price increases on most of the lower price contract that we were awarded during the first half of the year. While there has been a temporary lag between this cost inflation and price adjustment, these pricing adjustments should progressively be reflected in our profitability during fiscal 2027. Our new large specialized drilling contract in Northern Canada that we secured during the quarter, which we expect to generate in excess of CAD 100 million over its initial term, has required us capital expenditures and required substantial inventory.

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

This cost was partially funded through draw on our credit facilities and a new term loan. This result in increase of debt at fiscal year-end. Our focus on debt reduction over prior years provide us with the financial flexibility to our focus on debt reduction when this project is running at full capacity. This new specialized drilling contract further strength our position as an industry leader in Northern Canada and is in line with our strategy of focusing on senior and well-financed intermediate mining customers. I will now turn the call over to Pier-Luc to review our financial results.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

Thank you, Daniel, and good morning, everyone. Revenue for the quarter totaled CAD 57.2 million, an increase of 21.3% compared to Q4 last year. Canada revenue was CAD 39.4 million in the quarter, an increase of 16.8% compared to Q4 last year. Increase offset by lower average revenue per meter drilled on certain legacy contracts that were signed during the first half of fiscal 2026. International revenue totaled CAD 17.8 million, an increase of 32.7% compared to Q4 a year ago, reflecting increased drilling activity in both Chile and Guyana. Gross profit was CAD 4.6 million, or 8.2% of revenue, compared to CAD 7.6 million or 16.4% of revenue in Q4 last year. Adjusted gross margin, excluding depreciation expenses and a gain on disposal of property, plant, and equipment was 13.6% in the quarter compared to 20.2% in Q4 last year.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

The decrease in gross profit, gross margin and adjusted gross margin was attributable to lower drilling efficiency in Canada due to higher number of trainee drillers, lower revenue per meter on certain legacy drilling contracts in Canada, and inflation in production costs and drilling consumables and investments in workforce training and development. Our increased depreciation expenses of CAD 0.7 million due to increased capital expenditures incurred in fiscal 2026 and fiscal 2025 in Canada and South America negatively impacted gross profit and margin.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

Adjusted EBITDA totaled CAD 3.6 million compared to CAD 5.5 million in Q4 last year. The decrease was primarily attributable to the factors already discussed, partially offset by a favorable foreign exchange variation of CAD 0.7 million in the quarter. Our net loss for the quarter was CAD 1.9 million, or CAD 0.05 per share diluted, compared to net earnings of CAD 2.2 million or CAD 0.06 per share diluted in Q4 last year.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

Our net loss reflects the factors already discussed, as well as a CAD 1.4 million expected credit loss, net of interest revenue on the long-term receivable related to the sale of our assets in West Africa, partially offset by the favorable variation in foreign exchange. For fiscal 2026, we generated record annual revenue of CAD 203.2 million, an increase of 7.5% compared to fiscal 2025. Canada revenue totaled CAD 143.2 million, an increase of 5.3% compared to fiscal 2025, reflecting slightly higher revenue per meter drilled and increased drilling activity, partially offset by client-initiated project delays and project completions during Q1. The ramp-up of new drilling projects in both Q1 and Q3, and the negative impact of more severe winter weather conditions in Q3 this year.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

International revenue for fiscal 2026 totaled CAD 60.0 million, an increase of 13.2% compared to fiscal 2025, reflecting increased drilling activity in both Chile and Guyana, partially offset by modifications to a certain drilling program in Chile during the first nine months of fiscal 2026, and customer decisions to temporarily delay certain drilling programs during the first half of fiscal 2026. Gross profit for fiscal 2026 was CAD 19.7 million, or 9.7% of revenue, compared to CAD 28.3 million, or 15.0% of revenue in fiscal 2025.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

Adjusted gross margin, excluding depreciation expenses and again, on disposal of property, plant, and equipment, was 14.7% in fiscal 2026 compared to 19.5% in fiscal 2025. The decline in gross profit, gross margin and adjusted gross margin reflects the mobilization of several major long-term drilling contracts during fiscal 2026. These contracts typically generate lower margins during their initial ramp-up phase before reaching normalized productivity levels.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

Inflation and investments in workforce training and development also impacted gross profit and margins. The more severe winter weather conditions in Canada during Q3 this year also negatively impacted productivity on surface drilling projects. Continued modifications to a drilling program and a decline in certain specialized drilling activities in South America also negatively impacted profitability. Additionally, increased depreciation expenses of CAD 1.4 million due to increased capital expenditures incurred in fiscal 2026 and fiscal 2025 negatively impacted gross profit and margins. Adjusted EBITDA totaled CAD 13.7 million in fiscal 2026 compared to CAD 21.7 million in fiscal 2025. The decline was attributable to the factors already discussed, partially offset by a CAD 0.5 million favorable foreign exchange gain. Net loss for fiscal 2026 was CAD 1.5 million, or CAD 0.04 per share diluted compared to net earnings of CAD 7.5 million or CAD 0.20 per share diluted in fiscal 2025.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

Our net loss for the year was attributable to the factors already discussed and also reflects an expected credit loss of CAD 1.2 million net of interest revenue on the long-term receivable related to our sale of assets in West Africa, partially offset by an income tax recovery of CAD 0.3 million and a favorable foreign exchange gain of CAD 0.5 million in fiscal 2026. Turning to our balance sheet. We withdrew a net amount of CAD 9.7 million on our credit facility in fiscal 2026, mostly related to net capital expenditures of CAD 17.5 million compared to a repayment of CAD 7.5 million in fiscal 2025. Our long-term debt under the credit facility, including the current portion, was CAD 23.7 million at fiscal year-end, compared to CAD 14.0 million at our fiscal 2025 year-end.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

During the year, pursuant to our Normal Course Issuer Bid, we repurchased and canceled approximately 162,000 shares at an average weighted price of CAD 1.36 per share. Our working capital was CAD 48.7 million at year-end, compared to CAD 50.4 million at the end of fiscal 2025. I will turn the call back to Daniel for closing comments. Daniel?

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

Thank you, Pier-Luc. The demand for our drilling services in both Canada and South America remains strong, supported by historically high gold and copper prices and a robust financing environment for mining companies. In the first eight months of 2026, mining companies listed on the TSX and TSX Venture completed aggregate equity financing totaling more than CAD 11.4 billion, an increase of approximately 78% compared to the same period in 2025. Most of our customers are increasing their spending on mining exploration and development, and this is an industry-wide trend. While we are experiencing favorable industry fundamentals and strong customer demand, we have had several challenges this year, many of which were out of our control, including unusually high levels of project delay due to customer decisions, particularly in the first half of our fiscal year.

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

Severe winter weather in Q3 that impacted productivity on surface drilling in Canada, prolonged customer modifications for a drilling program in Chile, pricing pressure in the first half of our fiscal year, and cost inflation. We were also ramping up operations on several new projects during fiscal 2026. While we expect our profitability to improve more in our fourth quarter, this did not materialize to the extent we expected. We expect credit loss of CAD 1.4 million net of interest revenue in the quarter. However, we believe we are positioned to return to profitability in fiscal 2027 as a result of improving pricing on new and existing contracts, the continued advancement of several projects that were in their ramp-up phase during fiscal 2026, improvement productivity from our new drilling tools and higher demand. That concludes our formal remarks this morning. We will now welcome any questions. Jim—

[Operator]

Gentlemen—

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

—please begin the question period.

[Operator]

Gentlemen, thank you for your remarks today. To our phone audience, that is star and one on your telephone keypad if you would like to ask a question. Pressing star and one will place your line into a queue, and I will open your lines one at a time. Once again, ladies and gentlemen, that is star and one. We will hear first from Kerem Aksoy at Glacier Pass.

[Kerem Aksoy, Analyst at Glacier Pass]

Hi, guys. Thanks for hosting the call today and the results. Definitely appreciate it. I had a couple questions, if it's okay. Daniel, in the release, you mentioned that you renegotiated your contracts during the first half of the calendar year. I was wondering, what's the timing of that flowing through to the business? Do you expect to see benefits in the second half of calendar year 2026, or do you think it could maybe take a little longer?

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

Hi, Kerem. Yes, we renegotiated some of these contracts and that progressively came in Q1 and Q2 of fiscal 2027, yes. By the end of December, almost half contract will be with the new price, each of them.

[Kerem Aksoy, Analyst at Glacier Pass]

Okay. No, that makes sense. That's great. Then sequentially in fiscal year 2027, do you expect the adjusted gross margins to increase in aggregate?

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

We don't provide guidance like that, but for sure our target is to, with these new contract renewal and price adjustment, we expect to have an increase of our margin. If we compare this year with 2025, which the margin are down 19% of adjusted gross margin. We think this year with 15%, we have place to increase for sure, but we can't provide any guidance about that.

[Kerem Aksoy, Analyst at Glacier Pass]

Do you think it's realistic to get back to fiscal year 2025's 20% gross margins, or is there some reason you wouldn't be able to get back to those numbers?

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

That's exactly where we want to go, and we focus first on the price adjustment to cover the cost inflation. We will focus on control of our costs, and definitively, the target is to increase our margin, and we expect the actual market with the demand we have. Also, don't forget, we have a new contract in Northern Canada, which is progressively start. We have two rigs there right now working, and eventually, until, let's say, June 2027, these two rigs, we will add six extra rigs on this contract, and that should help us to increase our gross margin for sure.

[Kerem Aksoy, Analyst at Glacier Pass]

No, that makes sense. Maybe just a question on that contract. I think you mentioned that maybe there's a lot of ramp-up costs and start-up costs associated with it. In the next 12 months, do you think that'll be loss-making the first year? I was wondering if you can quantify what the impact of that might be in the next fiscal year, or how we should think about that contract and the profitability of it over time.

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

It's hard to quantify, but that's clear that in fiscal 2026, we have a lot of ramp-up, maybe five, six large contracts. We still have one big contract in Northern Canada to ramp up progressively until Q3 of 2027. It's clear we have less cost of ramp-up, and that's why we think the actual contract we get in 2026 would be more profitable in 2027 because all these costs are now behind us.

[Kerem Aksoy, Analyst at Glacier Pass]

Got you. So in this year, there's some costs. The first half of next fiscal year, there'll be some cost. Then maybe Q3, it sounds like those costs will be behind you, the ramp-up costs?

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

Yeah. Exactly.

[Kerem Aksoy, Analyst at Glacier Pass]

Is there any way you could maybe help us think about that or quantify it at all, just so we can think about the impact on the business?

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

Like Daniel said, it's difficult to evaluate the entirety of the impact, because there's a lot going on with these contracts. It's a specialized drilling contract in remote locations. So, that means a lot of investment, and that means a lot of hiring as well, because staffing eight additional drills is a challenge in and of itself. So the timing of how everything is going to work out is difficult to figure out. But we know, we expect typically that the first, I don't know, 10-12 months of the contract is going to generate lower margins than anticipated, or that is typical of a specialized drilling contract.

[Kerem Aksoy, Analyst at Glacier Pass]

Okay. I appreciate the color. No, that's helpful. Maybe just one last question. As you look at the next fiscal year, I know that in Q4, CapEx is elevated. What are you guys expecting for total CapEx in fiscal year 2027? Maybe total CapEx and then working capital as well, source or use.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

The amount that was in our AIF was around CAD 19.3 million CapEx, with an expected CAD 6.3 million dedicated to the new long-term contract.

[Kerem Aksoy, Analyst at Glacier Pass]

I'm sorry, I missed that. So in the next year, fiscal year 2027, CapEx will be CAD 19 million?

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

Correct. With CAD 6.3 million dedicated to the new long-term contract.

[Kerem Aksoy, Analyst at Glacier Pass]

Okay. Total CapEx in FY 2027 will be CAD 19 million, and CAD 6.3 million of that is related to the contract. Sorry for asking that.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

That's correct.

[Kerem Aksoy, Analyst at Glacier Pass]

Okay. Do you expect working capital, though, to be positive or negative?

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

We expect working capital to go up with the amount of inventory that we're going to need to service all of our projects, including that one.

[Kerem Aksoy, Analyst at Glacier Pass]

Is there any early thought you have on what that might look like for the whole year in terms of the cash use and working capital?

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

We expect to use, let me think about it, probably another CAD 10 million on that or something along those lines.

[Kerem Aksoy, Analyst at Glacier Pass]

Okay. No, that makes sense. Yeah, with a contract that large. Those are my questions. Thanks for taking them. I really appreciate it, guys. Wishing you the best of luck in the start of the new year.

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

Thank you very much.

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

Thank you.

[Operator]

Ladies and gentlemen, we'll pause for another moment to give our audience an opportunity to press star and one if you have a question or comment at this time. We'll move next to the line of [Paul Dohenich], private investor.

[Paul Dohenich, Shareholder at Private Investor]

Oh, hi. Good morning. I just have a question about—yeah. About your South American contracts that needed some delay or some sort of technical modifications. Has the company already worked through that? Is that now onstream, coming through?

[Pier-Luc Laplante, CFO at Orbit Garant Drilling]

Well, there's two things that are turning that one. One of them was the project had resumed by the end of fiscal year 2026. Another one that's a factor that occurs in our industry is that we are at the mercy of the client's drilling program. If the client decides to change the number of drills or how they want to drill about a certain drilling program, we basically have to follow the drilling program of the client, and that resulted in a lower number of drills on a certain program.

[Paul Dohenich, Shareholder at Private Investor]

Okay, thanks for that. The second question I had, in your last conference call, you mentioned a utilization rate target of above 70%. Can you tell me what the utilization rate for the last quarter was?

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

Yes, we achieved that. So actually, we have exactly at 70% here in Canada and also in South America. So that's the target we put at the beginning of fiscal 2026 and exactly where we are. Because at Q1 this year, we are at approximately 56%. We came to 62% of drilling utilization at Q2 and 67% at Q3. So now we are at 70%. This is a kind of, let's say, high level of utilization for our rigs. Also we have a lot of challenge with the manpower to fill these, especially in Canada. In South America, it's less a problem. But in Canada, we have to get the manpower for this increase of drill utilization.

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

So that's exactly where we are. For fiscal 2027, our main focus will be to keep this rate of utilization and fill up all these contracts. Eventually, if the market's still strong like this, we will look for any other new opportunity. But technically, we want to focus on this high level of income. With the new contract that we get in Northern Canada for eight new rigs, that will be a great challenge for us. This is exactly where we want to be.

[Operator]

Anything further, Mr. [Dohenich]?

[Paul Dohenich, Shareholder at Private Investor]

Yes, just saying that, as a longer-term investor, keep on going. I understand you have to spend money to make money. So, great. I hope this year is a great year for you guys. Appreciate it.

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

Thank you very much. We appreciate that.

[Paul Dohenich, Shareholder at Private Investor]

Okay.

[Operator]

And we presently have no further signals from our phone audience. Mr. Maheu, I will turn it back to you, sir, for any additional or closing remarks that you have.

[Daniel Maheu, President and CEO at Orbit Garant Drilling]

Thank you, Jim. Thank you to everyone for participating today. We look forward to speak with you again soon. Thank you.

[Operator]

Ladies and gentlemen, this does conclude today's Orbit Garant Drilling fiscal 2026 fourth quarter and year-end results conference call. We thank you all for your participation, and you may now disconnect your lines.

Participants

Executives

• Daniel Maheu, President and CEO
• Pier-Luc Laplante, CFO

Analysts

• Kerem Aksoy, Analyst at Glacier Pass
• Paul Dohenich, Shareholder at Private Investor