Orbit Garant Drilling (TSE:OGD) reported record quarterly and annual revenue for fiscal 2026 as drilling activity increased in Canada, Chile and Guyana, though higher operating costs, lower efficiency and ramp-up expenses on new contracts pressured profitability.
Fourth-quarter revenue rose 21.3% year over year to C$57.2 million, while full-year revenue increased 7.5% to a record C$203.2 million. The company reached drill-rig utilization of 70% in the fourth quarter, its highest level since fiscal 2012 and a target management had set at the start of the year.
Revenue Growth Across Markets
Canadian fourth-quarter revenue increased 16.8% from the prior-year period to C$39.4 million. International revenue climbed 32.7% to C$17.8 million, supported by increased drilling activity in Chile and Guyana.
For the full year, Canadian revenue rose 5.3% to C$143.2 million, reflecting increased drilling activity and slightly higher revenue per meter drilled. The result was partly offset by client-initiated project delays and project completions early in the year, the ramp-up of new projects, and more severe winter weather in Canada during the third quarter.
International revenue for fiscal 2026 grew 13.2% to C$60.0 million. The increase reflected higher drilling activity in Chile and Guyana, partially offset by modifications to a drilling program in Chile and customer decisions to temporarily delay some programs during the first half of the fiscal year.
Maheu said mining companies listed on the TSX and TSX Venture exchanges completed more than C$11.4 billion in aggregate equity financings during the first eight months of 2026, up about 78% from the comparable period in 2025. He said most of Orbit Garant’s customers are increasing spending on exploration and mine development.
Margins and Earnings Decline
Despite higher revenue, fourth-quarter gross profit declined to C$4.6 million, or 8.2% of revenue, from C$7.6 million, or 16.4% of revenue, a year earlier. Adjusted gross margin, excluding depreciation and a gain on disposal of property, plant and equipment, fell to 13.6% from 20.2%.
Adjusted EBITDA decreased to C$3.6 million from C$5.5 million in the prior-year quarter. The company posted a net loss of C$1.9 million, or C$0.05 per diluted share, compared with net earnings of C$2.2 million, or C$0.06 per diluted share, in the fourth quarter of fiscal 2025.
For the year, gross profit was C$19.7 million, or 9.7% of revenue, compared with C$28.3 million, or 15.0% of revenue, in fiscal 2025. Adjusted EBITDA fell to C$13.7 million from C$21.7 million, and Orbit Garant recorded a net loss of C$1.5 million, or C$0.04 per diluted share, versus net earnings of C$7.5 million, or C$0.20 per diluted share, a year earlier.
Chief Financial Officer Pier-Luc Laplante said margins were affected by lower drilling efficiency in Canada as the company increased its use of trainee drillers to support higher utilization. Other factors included lower revenue per meter on certain legacy Canadian contracts, inflation in production costs and drilling consumables, workforce training investments, and higher depreciation related to capital expenditures.
The full-year results also reflected the mobilization and ramp-up of several major long-term drilling contracts, which management said generally produce lower margins before reaching normalized productivity. A C$1.2 million expected credit loss, net of interest revenue, related to a long-term receivable from the sale of West African assets also affected annual earnings.
Pricing Changes and Northern Canada Contract
Management said it has revised pricing on new and existing contracts to address cost inflation, including price increases on most lower-priced contracts awarded during the first half of fiscal 2026. Maheu said the benefits will progressively begin to flow through during the first and second quarters of fiscal 2027, with nearly half of the affected contracts expected to have new pricing by the end of December.
The company also secured a specialized drilling contract in Northern Canada expected to generate more than C$100 million over its initial term. Two rigs are currently operating under the contract, and Orbit Garant expects to add six more rigs by about June 2027.
Management cautioned that the contract will carry ramp-up costs, including investment, inventory requirements and hiring needs. Laplante said specialized contracts in remote locations typically generate lower margins during their first 10 to 12 months.
Orbit Garant expects fiscal 2027 capital expenditures of about C$19.3 million, including C$6.3 million for the new long-term contract. The company also expects working capital to rise due to inventory needs, with Laplante estimating an additional use of roughly C$10 million.
Debt and Fiscal 2027 Focus
Net borrowings under the company’s credit facility increased by C$9.7 million during fiscal 2026, primarily tied to net capital expenditures of C$17.5 million. Long-term debt under the credit facility, including the current portion, stood at C$23.7 million at fiscal year-end, compared with C$14.0 million a year earlier. Working capital was C$48.7 million, down from C$50.4 million.
Maheu said the company’s fiscal 2027 priorities include maintaining its 70% utilization level, staffing its expanding fleet, improving pricing and controlling costs. He said Orbit Garant expects profitability to improve as recently adjusted contract pricing takes effect, projects move beyond ramp-up stages, productivity improves through new drilling tools, and demand remains elevated.
About Orbit Garant Drilling (TSE:OGD)
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.
