Orbit Garant Drilling (TSX:OGD) held its third-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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The full earnings call is available at https://app.webinar.net/Vax7BzPREL5
Summary
OGD achieved a record third-quarter revenue of $51.4 million, marking a 2.7% increase year-over-year, despite challenges from severe winter weather and legacy contract pricing.
The company’s drilling utilization rate reached 67%, the highest in over a decade, with a strategic focus on securing long-term contracts with senior and well-financed intermediate customers.
OGD anticipates improved financial performance in Q4 and beyond, supported by favorable market conditions, strong customer demand, and an improving pricing environment.
Profitability was negatively impacted by the mobilization of drill rigs under new contracts and pricing pressures from previous contracts, resulting in a net loss of $1.2 million for the quarter.
OGD is deploying significant capital, including $20 million for a new five-year contract in Northern Canada, expected to generate over $100 million in revenue, with half of the rigs refurbished and half newly built.
Full Transcript
OPERATOR
Good morning ladies and gentlemen and welcome to Orbit Garant Drilling’s Fiscal 2026 third quarter 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 MDA and Annual Information form which are available on SEDAR Plus. Management may also refer to certain non IFRS financial measures. 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 MDA for additional information regarding non IFRS financial measures. This call is being recorded on Thursday, May 14, 2026. It is now my pleasure to turn the conference over to Mr. Daniel Maheu, President and CEO of Orbit Garant Drilling. Please go ahead sir.
Daniel Maheu (President and CEO)
Thank you Jim and good morning ladies and gentlemen. With me on the call today is Pierre Luc Lapin, Chief Financial Officer. Following my opening remark, Pierre Luc will review our financial result in greater detail and I will conclude with comment on our outlook. We will then welcome questions. Our overall level of drilling activity continued to increase in the quarter as we reach our highest drilling utilization rate in more than 10 years at 67% and record our highest third quarter revenue in the company history. Our fiscal third quarter is typically our weakest quarter due to the gradual ramp up of operations after the shutdown of mining and exploration activities over the holiday season and more difficult winter weather conditions in Canada. So our continued utilization gains are a positive sign. This quarter we experienced more severe winter weather in Canada than usual which had a negative impact on productivity on surface drilling operations. Our profitability for the quarter was also negatively impacted by the ramp up of drilling rig under new long term contract in Canada.
Daniel Maheu (President and CEO)
Related as we increase our drilling utilization rate, the legacy pricing on contract from previous quarter and continuous modification to a drilling program in South America. During the first half of our fiscal year we experienced pricing pressure that resulted in us losing or walking away from certain bids. So we added ease our pricing strategy, discipline on certain important new contracts and renewal during this period. Pricing pressure has now disappeared and we saw an improved pricing environment during our third quarter and into April and May due to the sustained high level of demand in our industry and conflicts in the Middle east and Ukraine, we are experiencing cost inflation with respect to supply, material and wages, so we will continue to work with customers to accommodate these. Expect increase to our input cost with future contract and renewal supported by an improving pricing environment. We also expect to continue to benefit from the continuous advancement of our ramp up activities on newer project in Canada. In summary, while continue to experience highly favorable industry fundamental and customer demand, we have had some challenge over our first three fiscal quarter this year, many of which were out of our control.
Daniel Maheu (President and CEO)
We believe our operational headwinds are behind us now and we are well positioned to achieve further increase in our drilling utilization rate, improved operating performance and more profitable financial result in our fourth quarter. I will now turn the call over to Pierre Luc to review our financial result in greater detail.
Pierre Luc Lapin (Chief Financial Officer)
Pierre Luc thank you Daniel and good morning everyone. Revenue for the quarter totaled $51.4 million, an increase of 2.7% compared to Q3 last year. Canada revenue was $36.3 million in the quarter, an increase of 0.5% compared to Q3 last year. The increase was attributable to increased overall drilling activity partially offset by lower average revenue per meter drilled resulting from a decline in meters drilled on certain specialized drilling projects due to more severe winter weather conditions compared to Q3 2025 and legacy pricing on contracts from previous quarters.
Pierre Luc Lapin (Chief Financial Officer)
International revenue totaled $15.1 million, an increase of 8.2% compared to Q3 a year ago. The increase reflects increased drilling activity in both Chile and Guyana, partially offset by continued modifications to an existing drilling program and lower average revenue per meter drilled due to a decline in certain specialized drilling activities. Gross profit was $2.9 million, or 5.7% of revenue compared to 5.9 million or 11.9% of revenue in Q3 2025. Adjusted gross margin excluding depreciation expenses and a gain on disposal of property, plant and equipment was 10.3% in the quarter compared to 16.5% in Q3 last year. The decrease in gross profit, gross margin and adjusted gross margin was attributable to the mobilization of drill rigs under new long term contracts in Canada and the associated ramp up periods, legacy pricing pressure on contracts from previous quarters and more severe winter weather conditions in Canada compared to Q3 last year, which negatively impacted productivity on all surface drilling projects including specialized surface drilling, the continued modifications to a drilling
Pierre Luc Lapin (Chief Financial Officer)
program and a decline in certain specialized drilling activities in South America also negatively impacted profitability. Adjusted EBITDA totaled $1.4 million compared to 5.4 million in Q3 last year. The decrease was primarily attributable to the that fact factors already discussed and also reflects a negligible foreign exchange gain in the quarter compared to $1.2 million gain in Q3 last year. Our net loss for …
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