ORBIT GARANT DRILLING REPORTS RECORD THIRD QUARTER REVENUE

 ̶  Improved profitability supported by increased specialized drilling activity in Canada –

VAL-D'OR, QC, May 10, 2023 /CNW/ - Orbit Garant Drilling Inc. (TSX: OGD) ("Orbit Garant" or the "Company") today announced its financial results for the three-month ("Q3 2023") and nine-month periods ended March 31, 2023. All dollar amounts are in Canadian dollars unless otherwise stated.

Financial Highlights

($ amounts in millions, except per share amounts)	Three months ended March 31, 2023	Three months ended March 31, 2022	Nine months ended March 31, 2023	Nine months ended March 31, 2022
Revenue	$49.3	$45.2	$154.2	$141.6
Gross Profit	$4.6	$0.3	$17.7	$6.8
Gross Margin (%)	9.4	0.7	11.5	4.8
Adjusted Gross Margin (%)¹	14.4	6.7	16.3	10.3
EBITDA^2	$4.5	$(0.5)	$17.3	$4.3
Net earnings (loss)	$0.2	$(4.1)	$3.4	$(7.1)
Net earnings (loss) per share
- Basic and diluted	$0.01	$(0.11)	$0.09	$(0.19)

¹ Adjusted Gross Margin is a non-IFRS financial measure and is defined as Gross Profit excluding depreciation expenses. See "Reconciliation of Non-IFRS financial measures".

² EBITDA is a non-IFRS financial measure and is defined as earnings before interest, taxes, depreciation, and amortization. See "Reconciliation of Non-IFRS financial measures".

"We generated record third quarter revenue and our adjusted gross margin, EBITDA and net earnings all improved significantly compared to the third quarter last year. While the fiscal third quarter is typically our weakest period of the year from a seasonal standpoint, we continue to benefit from strong customer demand and increased specialized drilling activity in Canada," said Pierre Alexandre, President and CEO of Orbit Garant. "Looking ahead, we intend to primarily focus on our Canadian gold drilling operations, prioritizing longer-term, specialized drilling contracts with major and intermediate customers. We will selectively pursue international drilling opportunities in South America and West Africa when we have a high degree of cost and margin certainty. Our primary objective is to maximize profitability on a sustainable basis."

Third Quarter Results

Revenue for Q3 2023 totalled $49.3 million, an increase of 9.2% compared to $45.2 million for the three-month period ended March 31, 2022 ("Q3 2022"). Canada revenue totalled $38.5 million in Q3 2023, an increase of 18.5% compared to $32.5 million in Q3 2022, reflecting increased specialized drilling activity and improved pricing. International revenue declined to $10.8 million in Q3 2023 from $12.7 million in Q3 2022, reflecting a reduction of drilling activity in Burkina Faso, partially offset by increased drilling activity in Chile and Guinea.

Gross profit for Q3 2023 was $4.6 million, or 9.4% of revenue, compared to $0.3 million, or 0.7% of revenue, in Q3 2022. Depreciation expenses totalling $2.5 million are included in the cost of contract revenue for Q3 2023, compared to $2.7 million in Q3 2022. Adjusted gross margin, excluding depreciation expenses, was 14.4% in Q3 2023, compared to adjusted gross margin of 6.7% in Q3 2022. The increases in gross profit, gross margin, adjusted gross profit and adjusted gross margin were primarily attributable to increased specialized drilling activity, improved pricing and cost controls. Prior year margins were impacted by project ramp-up costs in Canada, mobilization costs for new, long-term projects in Guinea and Chile, and temporary work disruptions in Canada and Chile related to the outbreak of the Omicron variant. 

General and Administrative expenses were $3.6 million, or 7.2% of revenue, in Q3 2023, compared to $3.8 million, or 8.5% of revenue, in Q3 2022.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased to $4.5 million in Q3 2023 from negative $(0.5) million in Q3 2022. Net earnings for Q3 2023 were $0.2 million, or $0.01 per share, compared to a net loss of $4.1 million, or $0.11 per share, in Q3 2022. The positive variances were primarily attributable to increased specialized drilling activity, improved pricing, cost controls and a $0.7 million foreign exchange gain. The Company's increased EBITDA and net earnings in Q3 2023 also reflect decreased project ramp-up costs in Canada, a reduction in mobilization costs for drilling projects in Guinea and Chile, and the absence of Omicron-related work interruptions.

Liquidity and Capital Resources

The Company withdrew a net amount of $2.6 million on its Credit Facility in Q3 2023, compared to a withdrawal of $2.1 million in Q3 2022. The Company's long-term debt under the Credit Facility, including US$1.0 million ($1.4 million) drawn from the US$5.0 million revolving credit facility and the current portion, was $24.3 million as at March 31, 2023, compared to $31.5 million as at June 30, 2022. This reduction primarily reflects the utilization of a substantial portion of the $8.47 million loan from the Business Development Bank of Canada that was secured in the first quarter of Fiscal 2023.

As at March 31, 2023, the Company's working capital totalled $55.9 million, compared to $53.4 million as at June 30, 2022, and 37,372,756 common shares were issued and outstanding. The Company's working capital requirements are primarily related to the funding of inventory and the financing of accounts receivable.

Orbit Garant's unaudited interim consolidated financial statements and management's discussion and analysis for Q3 2023 are available via the Company's website at www.orbitgarant.com or SEDAR at www.sedar.com.

Conference Call

Pierre Alexandre, President and CEO, and Daniel Maheu, CFO, will host a conference call for analysts and investors on Thursday, May 11, 2023 at 10:00 a.m. (ET). To join the conference call without operator assistance, you can register and enter your phone number at https://emportal.ink/3m7GC8l to receive an instant automated call back. Alternatively, you can dial 416-764-8688 or 1-888-390-0546 to reach a live operator that will join you into the call.

A live webcast of the call will be available on Orbit Garant's website at: http://www.orbitgarant.com/en/events. The webcast will be archived following conclusion of the call.

To access a replay of the conference call dial 416-764-8677 or 1-888-390-0541, passcode: 160218 #. The replay will be available until May 18, 2023.

RECONCILIATION OF NON - IFRS FINANCIAL MEASURES

Financial data has been prepared in conformity with IFRS. However, certain measures used in this discussion and analysis do not have any standardized meaning under IFRS and could be calculated differently by other companies. The Company believes that certain non-IFRS financial measures, when presented in conjunction with comparable IFRS financial measures, are useful to investors and other readers because the information is an appropriate measure to evaluate the Company's operating performance. Internally, the Company uses this non-IFRS financial information as an indicator of business performance. These measures are provided for information purposes, in addition to, and not as a substitute for, measures of financial performance prepared in accordance with IFRS.

EBITDA:
Earnings (loss) before interest, taxes, depreciation and amortization.

Adjusted gross profit:
Contract revenue excluding operating expenses. Operating expenses comprise material and service expenses, personnel expenses, other operating expenses, excluding depreciation.

EBITDA

Management believes that EBITDA is an important measure when analyzing its operating profitability, as it removes the impact of financing costs, certain non-cash items and income taxes. As a result, Management considers it a useful and comparable benchmark for evaluating the Company's performance, as companies rarely have the same capital and financing structure.

Reconciliation of EBITDA

(unaudited) (in millions of dollars)	3 months ended March 31, 2023	3 months ended March 31, 2022	9 months ended March 31, 2023	9 months ended March 31, 2022
Net earnings (loss) for the period	0.2	(4.1)	3.4	(7.1)
Add:
Finance costs	0.9	0.5	2.4	1.5
Income tax expense	0.7	0.2	3.2	1.3
Depreciation and amortization	2.7	2.9	8.3	8.6
EBITDA	4.5	(0.5)	17.3	4.3

Adjusted Gross Profit and Margin

Although adjusted gross profit and margin are not recognized financial measures defined by IFRS, Management considers them to be important measures as they represent the Company's core profitability, without the impact of depreciation expense. As a result, Management believes they provide a useful and comparable benchmark for evaluating the Company's performance.

Reconciliation of Adjusted Gross Profit and Margin 

(unaudited) (in millions of dollars)	3 months ended March 31, 2023	3 months ended March 31, 2022	9 months ended March 31, 2023	9 months ended March 31, 2022
Contract revenue	49.3	45.2	154.2	141.6
Cost of contract revenue (including depreciation)	44.7	44.9	136.5	134.8
Less depreciation	(2.5)	(2.7)	(7.5)	(7.7)
Direct costs	42.2	42.2	129.0	127.1
Adjusted gross profit	7.1	3.0	25.2	14.5
Adjusted gross margin (%) ^(1)	14.4	6.7	16.3	10.3

 ⁽¹⁾ Adjusted gross profit, divided by contract revenue X 100

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 212 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.

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. Risks and uncertainties that could cause actual results, performance or achievements to differ materially include the ability of the jurisdictions in which the Company operates to manage and cope with the implications of COVID-19, the impact of measures taken by such jurisdictions to control the spread of COVID-19 on the Company's operations, the economic and financial implications of COVID-19 to the Company, including its impact on cash flows, liquidity and the Company's compliance with its obligations under its borrowing agreements as well as the 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 except as required by applicable securities laws.

SOURCE Orbit Garant Drilling Inc.

Daniel Maheu, Chief Financial Officer, [phone] ext. 124; Bruce Wigle, Investor Relations, [phone]