Mr. Pierre Alexandre reports

ORBIT GARANT DRILLING REPORTS FISCAL 2024 FIRST QUARTER RESULTS

Orbit Garant Drilling Inc. has released its financial results for the three-month period ended Sept. 30, 2023 (Q1 2024). All dollar amounts are in Canadian dollars unless otherwise stated.

"The decline in revenue and profitability in the quarter reflect the temporary suspension of drilling projects in Quebec during July due to forest fires, as well as customer decisions to temporarily suspend or reduce drilling activity on certain other projects in Canada during the fourth quarter of last fiscal year. All our projects that were impacted by forest fires were back at full operation by July 26 and we are gradually resuming operations on projects that were suspended or reduced due to customer decisions. Two of these projects have already resumed and we expect to restart operations on the others by January, 2024," said Pierre Alexandre, president and chief executive officer of Orbit Garant.

"We recently renewed a large, specialized drilling contract in Canada with a senior gold mining customer for a three-year term. This contract renewal will result in the continued operation of 15 to 20 of our surface and underground drill rigs on the customer's project sites and is in line with our strategy to focus on projects with senior and well-financed intermediate gold mining customers in Canada. Customer demand remains strong in Canada and we are seeing increased demand in Chile. Prices for gold and copper remain favourable to support mineral exploration and development spending in our markets."

First quarter results

Revenue for Q1 2024 totalled $44.3-million, a decrease of 16.8 per cent compared with $53.3-million for the three-month period ended Sept. 30, 2022 (Q1 2023). Canada revenue totalled $33.0-million in Q1 2024, a decline of 23.0 per cent compared with $42.8-million in Q1 2023. Approximately $2.0-million of the decline is attributable to the suspension of the company's drilling projects in Quebec during the month of July due to forest fires. The remaining year-over-year decline in revenue was primarily attributable to customer decisions to temporarily suspend or reduce drilling activity on certain projects during the fourth quarter of fiscal 2023. The company restarted operations on all its drilling projects that were impacted by forest fires by July 26 and expects to resume full operations on other projects that were temporarily suspended or reduced due to customer decisions by January, 2024. One of these projects resumed in mid-August and another resumed in early September. International revenue increased 8.7 per cent to $11.3-million in Q1 2024 from $10.5-million in Q1 2023, reflecting increased drilling activity in Chile and Guinea, partially offset by a reduction of drilling activity in Guyana and Burkina Faso.

Gross profit for Q1 2024 was $4.1-million or 9.4 per cent of revenue, compared with $6.2-million or 11.7 per cent of revenue in Q1 2023. Depreciation expenses totalling $2.6-million are included in the cost of contract revenue for Q1 2024, compared with depreciation expenses of $2.5-million in Q1 2023. Adjusted gross margin, excluding depreciation expenses, was 15.2 per cent in Q1 2024, compared with adjusted gross margin of 16.3 per cent in Q1 2023. The decline in gross profit, gross margin and adjusted gross margin was primarily attributable to the company's revenue reduction in Canada due to forest fires and costs incurred to ramp these projects back up, and temporarily suspended or reduced drilling activity on certain projects, partially offset by increased drilling revenue in Chile and Guinea, as described above.

General and administrative expenses were $4.0-million or 8.9 per cent of revenue in Q1 2024, compared with $3.9-million or 7.3 per cent of revenue in Q1 2023.

EBITDA (earnings before interest, taxes, depreciation and amortization) totalled $3.0-million in Q1 2024, compared with $5.8-million in Q1 2023. Net loss for Q1 2024 was $400,000 or one cent per share, compared with net earnings of $1.1-million or three cents per share in Q1 2023. The decrease in EBITDA and net earnings was primarily attributable to the reduction of drilling activity in Canada due to forest fires and project suspensions, as discussed above, the related additional costs incurred to ramp projects back up, and a reduction in foreign exchange gain, partially offset by increased drilling activity in Chile and Guinea, as described above. The company's net loss in Q1 2024 also reflects a $200,000 income tax recovery, compared with a $1.3-million tax expense in Q1 2023.

Liquidity and capital resources

On Nov. 2, 2023, Orbit Garant entered into a fifth amended and restated credit agreement with National Bank in respect of its credit facility. The company's credit facility consists of a $30.0-million revolving credit facility and a $5.0-million (U.S.) revolving credit facility guaranteed by Export Development Canada. The credit facility expires on Nov. 2, 2026.

The company borrowed an additional net amount of $2.7-million on its credit facility in Q1 2024, compared with a repayment of $7.0-million in Q1 2023. The company's long-term debt under the credit facility, including $2.0-million (U.S.) ($2.7-million) drawn from the $5.0-million (U.S.) revolving credit facility and the current portion, was $24.9-million as at Sept. 30, 2023, compared with $22.2-million as at June 30, 2023.

As at Sept. 30, 2023, the company's working capital totalled $51.8-million, compared with $50.4-million as at June 30, 2023. Orbit Garant's working capital requirements are primarily related to the financing of inventory and the financing of accounts receivable. As at Sept. 30, 2023, Orbit Garant had 37,372,756 common shares issued and outstanding.

Orbit Garant's unaudited interim consolidated financial statements and management's discussion and analysis for Q1 2024 are available via the company's website or SEDAR+.

Conference call

Mr. Alexandre and Daniel Maheu, chief financial officer, will host a conference call for analysts and investors on Tuesday, Nov. 14, 2023, at 10 a.m. ET. To join the conference call without operator assistance, you can register on-line and enter your phone number to receive an instant automated callback. 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. 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 815100 followed by the pound key. The replay will be available until Nov. 21, 2023.

Reconciliation of non-IFRS (international financial reporting standards) financial measures

Financial data have 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 and EBITDA margin (net earnings (loss) before interest, taxes, depreciation and amortization)

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.

Adjusted gross profit and adjusted gross margin (contract revenue, less operating costs)

Operating expenses comprise material and service expenses, personnel expenses, other operating expenses, excluding depreciation.

Although adjusted gross profit and adjusted gross 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.

About Orbit Garant Drilling Inc.

Headquartered in Val d'Or, Que., 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 211 drill rigs and approximately 1,200 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.

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