Orbit Garant Drilling Inc.

Good morning, ladies and gentlemen, and welcome to Orbit Gahan Drilling's fiscal 2026 first 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. 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 risk 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 CDAR+. Management may also refer to certain non-IFRS financial measures. Although Orbit Gagarin 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 on Thursday, November 13th, 2025. I would now like to turn the conference over to Mr. Daniel Nair, President, CEO, of Orbit Gagarin Drilling. Please go ahead, sir.

Thank you, Juliane, and good morning, ladies and gentlemen. With me on the call is Pierluc Capdan, Chief Financial Officer. Following my opening remark, Pierluc will review our financial results in greater detail, and I will conclude with comments on our outlook. We will then welcome questions. Our financial results for the fiscal first quarter reflect the impact of a few short-term issues. In Canada, we complete drilling activities on certain projects earlier in the quarter, and we gradually ramp up activity on new projects, which typically yields lower growth margins at this early stage of operations. In addition, customers temporarily delayed certain drilling projects in Canada and South America during the quarter. These were company-specific decisions that had nothing to do with our performance. For instance, one of our projects in Chile was delayed due to an earthquake in the area. Fortunately, no personnel of Orbit Garen was injured, and this project resume after a couple of weeks. Revenue for our first quarter declined by 3.7% compared to Q1 last year, reflecting the short-term impact. Adjusted growth margin was 17% compared to 20.2% in Q1 last year. We expect to benefit from the resumption of the last project in Canada and South America, and the continual advancement of our ramp-up activities on newer projects in Canada in our fiscal second and third quarter. Demand for drilling services in both Canada and South America is increasing, supported by near-record gold prices and elevated copper prices. Our bidding activities on new projects has increased significantly in the recent weeks. In addition, many current customers inform us that they intend to increase drilling activities over the next 12 months. We have the operational capacity to accommodate this higher customer demand with minimal capex. Accordingly, we have an opportunity to expand profitability as demand pickups, despite a highly competitive environment. I will now turn the call over to Pierre-Luc to review our financial results for the first quarter in greater detail. Pierre-Luc?

Thank you, Daniel, and good morning, everyone. Revenue for the quarter totaled $46.7 million compared to $48.4 million in Q1 last year. Canada revenue was $33.7 million in the quarter compared to $35.4 million last year, reflecting lower drilling activity due to drilling project completions, client-initiated project delays, and the gradual ramp-up of new projects. International revenue total, $13.0 million, similar to Q1 a year ago, as higher revenue in Chile was offset by lower revenue in Guyana. Growth in South America was constrained by client decisions to temporarily delay certain projects, as Daniel noted. Gross profit was $5.7 million, or 12.1% of revenue, compared to $7.6 million, or 15.8% of revenue, in Q1 2025. Adjusted gross margin, excluding depreciation expenses, was 17.0% in the quarter, compared to 20.2% in Q1 last year. The decreases in gross profit and adjusted gross margin were primarily attributable to drilling project completions and the gradual ramp-up of new projects in Canada and client-initiated project delays in both Canada and South America. Adjusted EBITDA totaled $3.7 million, down from $6.2 million in Q1 last year. The decrease was primarily attributable to lower operating earnings in North Canada and international segments for the reasons I just noted. Net earnings for the quarter were $0.3 million, or $0.01 per share diluted, compared to $2.9 million, or $0.08 per share diluted, in Q1 last year. The reduction was due to lower operating earnings in both segments, as discussed. Turning to our balance sheet, we withdrew a net amount of $5.3 million on our credit facility in the quarter, compared to a net repayment of $0.5 million in Q1 a year ago. Our long-term debt under the credit facility, including an undrawn $5.0 million U.S. dollar revolving credit facility and the current portion was $19.3 million as of September 30, 2025, compared to $14.0 million as of June 30, 2025, our fiscal 2025 year end. Our increased debt was primarily the result of our yearly shipments of equipment and inventory for our operations in Nunavut and Nunavut. We expect to be active in paying down debt on a net basis throughout the remainder of the year. On October 28th, we announced that the Toronto Stock Exchange approved our renewed normal course issuer bid, which allows us to repurchase up to 500,000 shares over a 12-month period that began on October 31, 2025. Under our previous NCID, which... expired on October 30th of this year, we repurchased and canceled 68,916 of our common shares at a weighted average price of 82 cents per share. We continue to view the NCIB as a useful tool to enhance shareholder value when the underlying value of OrbitGround is not reflected in our share price. Our working capital was $55.1 million as of September 30, 2025. compared to $50.4 million at the end of fiscal 2025. I'll now turn the call back to Daniel for closing comments. Daniel.

Thank you, Pierre-Louis. We are confident in our business outlook for the remainder of fiscal 2026. The temporary issues that impact our first quarter results are rapidly being resolved. As delay projects resume and newer project continue to ramp up. We are getting back on track and we are well positioned to accommodate increasing customer demand. The current middle price environment provides strong support for the demand. Gold prices reached all time highs last month above 4,300 US dollar an ounce. The gold mining industry is generating very attractive margin and current prices which remain above $4,000. Miners have a strong motivation to spend more on exploration and development to expand their reserve as much of their low-grade material has now become profitable to extract. Copper prices also hit record levels earlier this year and are currently above $5 U.S. per pound. The supply demand outlook for copper is favorable and support elevated prices going forward, which is positive for our Chilean operations. Demand for both senior and intermediate mining customers is increasing, as we are encouraged by the recent increase in financing activities in the junior mining sector. is as not immediately result in higher demand for our drilling services, we are optimistic that juniors will eventually deploy more capital on exploration. We plan to selectively pursue more businesses with juniors as demand rise. Our priority going forward remain the same. First, a strategic focus on seniors and well-financed intermediate customers in Canada and South America. Second, our disciplined business strategy, and finally, our continuous operational improvement program. By focusing on these three priorities, we intend to capitalize on opportunities in this period of elevated customer demand to deliver enhanced profitability on a sustainable basis and stronger returns for our shareholders. That concludes our formal remarks this morning. We will now welcome any questions. JoLien, please begin the question period.

Thank you. As a reminder, to ask a question, please press star followed by the number 1 on your telephone keypad. To withdraw any questions, press star 1 again. We'll pause for just a moment to compile the Q&A roster. Once again, to ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from Kerem Aksoy from Glacier Pass. Please go ahead. Your line is open.

Hi, thanks for hosting the call today and for all the commentary. I was wondering if you could just follow up a little bit on some of the prepared remarks you had in terms of the overall market outlook. You talked about bidding activity increasing and your clients looking to increase their activity. Maybe I'd just be interested, you know, versus the first half of the year, how many tender opportunities are you seeing now? And then it would also be great to get some color on, you know, what your existing customers are saying. In the beginning of the year, there were estimates that expiration budgets could be increased by up to 20% year over year. That obviously kind of has not come to fruition, but do you think we might see that with the delay? So, yeah, I'd appreciate any thoughts. And I had two other questions afterwards as well.

Okay, thank you for the question. Actually, what we saw, our customers are in processing of doing their exploration budget for calendar 2026. So there are requests directly for increasing on some contract that we have with major and intermediate customer here in Canada to increase by one, two drill in 2026 calendar. Is that possible for us? And we, for sure, we have a great opportunity because we have a rate of activity of roughly 56% of our drills. So for sure we have, it's easy for us to increase our activity with these actual customer. For your second question, yes, we saw since a few, let's say in the last six, eight weeks, more requests for bid from customers major customer in Chile, in Canada, and also intermediate customer. And recently in the last few weeks, smaller junior requests for bids. So that's something positive for us.

Okay. Thank you for that. I appreciate that. And then maybe just two more technical questions. During the quarter, you talked about the negative change in working capital for moving equipment. Just for the full year, I was curious, do you expect that working capital to be a source or a use of cash?

Well, for the year, yes, we expect. But we think that for us, one of the main course that we have about that is in summer, we have to send equipment to our northern projects, equipment and inventory projects. And that's because the barges have to leave and come back before the ice warms. So we have to send most of the equipment needs for the next year and most of the inventory needs for the next fiscal, well, this fiscal year, fiscal year 2026. I appreciate that. It should stabilize in the next coming months and the rest of the quarters, yes. So for a full year, working capital will be kind of flat?

Yes. That's helpful. And then just kind of a last question, just looking at Q2, you mentioned that you were seeing the benefit of a ramp-up in new activity. I was just wondering, do you think the issues of Q1, like have they fully played out, or do you think they might, you know, leak into Q2 as well? Or should Q2 be more of a normalized quarter?

We expect some of them to remain in Q2, and we anticipate that some of them will have resolved. We think that some of the client delays, most of them have resolved right now, but some of them will resume in January of 2026. Okay.

Thank you for that, Kalec. I appreciate it. That was it.

Thank you for your question.

We have no further questions. I would like to turn the call back over to Daniel Maher for any closing remarks.

Thank you to everyone for participating today. We look forward to speaking with you again soon.

This concludes today's conference call. You may now disconnect.