Q3 2026 Orbit Garant Drilling Inc Earnings Call

May 14, 2026

Operator: Good morning, ladies and gentlemen, and welcome to Orbit Garant Drilling's find Excuse me, fiscal 2026 Q3 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 MD&A and annual information form, which are available on SEDAR+. Management may also refer to certain non-IFRS financial measures.

Operator: Good morning, ladies and gentlemen, and welcome to Orbit Garant Drilling's find, excuse me, fiscal 2026 Q3 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 MD&A and annual information form, which are available on SEDAR+. Management may also refer to certain non-IFRS financial measures.

Speaker #1: 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.

Speaker #1: 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.

Speaker #1: 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 Stator Plus.

Speaker #1: 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.

Operator: 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 MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on Thursday, 14 May 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.

Speaker #1: Please refer to the company's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on Thursday, May 14th, 2026. It is now my pleasure to turn the conference over to Mr. Daniel Mahu, President and CEO of Orbit Garant Drilling.

Speaker #1: Please go ahead, sir.

Speaker #2: Thank you, Jim, and good morning, ladies and gentlemen. With me on the call today is Pierre-Luc Laplan, Chief Financial Officer. Following my opening remark, Pierre-Luc will review our financial result and greater detail.

Daniel Maheu: Thank you, Jim. Good morning, ladies and gentlemen. With me on the call today is Pier-Luc Laplante, Chief Financial Officer. Following my opening remark, Pier-Luc will review our financial result in greater detail, and I will conclude with comment on our outlook. We will welcome question. 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 Q3 revenue in the company history. Our fiscal Q3 is typically our weakest quarter due to the gradual ramp-up of operation after the shutdown of mining and exploration activities over the holiday season and more difficult winter weather condition in Canada. Our continued utilization gain are a positive sign.

Daniel Maheu: Thank you, Jim. Good morning, ladies and gentlemen. With me on the call today is Pier-Luc Laplante, Chief Financial Officer. Following my opening remark, Pier-Luc will review our financial result in greater detail and I will conclude with comment on our outlook. We will welcome question. 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 Q3 revenue in the company history. Our fiscal Q3 is typically our weakest quarter due to the gradual ramp-up of operation after the shutdown of mining and exploration activities over the holiday season and more difficult winter weather condition in Canada. Our continued utilization gain are a positive sign.

Speaker #2: 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 reached our highest drilling utilization rate in more than 10 years, at 67%, and recorded our highest third-quarter revenue in the company history.

Speaker #2: Our fiscal third quarter is typically our weakness quarter due to the gradual ramp-up of operation after the shutdown of mining and exploration activities over the holiday season and more difficult winter weather conditions in Canada, so our continued utilization gain is a positive sign.

Speaker #2: This quarter, we experienced more severe winter weather in Canada than usual, which added a negative impact on productivity on surface drilling operations. Our profitability for the quarter was also negatively impacted by the ramp-up of drilling rigs under new long-term contract in Canada, related, as we increased our drilling utilization rate.

Daniel Maheu: This quarter, we experienced more severe winter weather in Canada than usual, which had a negative impact on productivity on surface drilling operation. Our profitability for the quarter was also negatively impacted by the ramp-up of drilling rig under new long-term contract in Canada related as we increase our drilling utilization rate, the legacy pricing on contract from previous quarters, and continuous modification to a drilling program in South America. We had to 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 Q3 and into April and May.

Speaker #2: The legacy pricing on contract from previous quarter and continues 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 rocking away from certain bids, so we added it eased our pricing strategy discipline on certain important new contracts and renewal during this period.

Speaker #2: 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 expected increases to our input costs with further contract and renewal supported by an important pricing environment.

Daniel Maheu: 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. We will continue to work with customers to accommodate these expected increases to our input costs with future contracts and renewals, supported by an improving pricing environment. We also expect to continue to benefit from the continuous advancement of our ramp-up activities on newer projects in Canada. In summary, while we continue to experience highly favorable industry fundamentals and customer demand, we have had some challenges over our first 3 fiscal quarters this year, many of which were out of our control. We believe our operational headwinds are behind us now, and we are well-positioned to achieve further increases in our drilling utilization rate, improve operating performance, and more profitable financial results in our Q4.

Speaker #2: We also expect to continue to benefit from the continuous advancement of our ramp-up activities on newer projects in Canada. In summary, while continuing to experience highly favorable industry fundamentals and customer demand, we have had some challenges over our first three fiscal quarters this year.

Speaker #2: Many of which were out of our control. We believe our operational headwinds are behind us now, and we are well positioned to achieve further increases in our drilling utilization rate, improve operating performance, and more profitable financial results in our fourth quarter.

Speaker #2: I will now turn the call over to Pierre-Luc to review our financial result in greater detail. Pierre-Luc?

Daniel Maheu: I will now turn the call over to Pier-Luc to review our financial result in greater detail. Pier-Luc?

Speaker #3: Thank you, Daniel. And good morning, everyone. Revenue for the quarter totaled $51.4 million and increased 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.

Pier-Luc Laplante: Thank you, Daniel, and good morning, everyone. Revenue for the quarter totaled CAD 51.4 million, an increase of 2.7% compared to Q3 last year. Canada revenue was CAD 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. International revenue totaled CAD 15.1 million, an increase of 8.2% compared to Q3 a year ago.

Speaker #3: 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.

Speaker #3: International revenue totaled $15.1 million and increased by 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.

Pier-Luc Laplante: 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 CAD 2.9 million, or 5.7% of revenue, compared to CAD 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.

Speaker #3: 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 the gain on disposal of property, plant, and equipment, was 10.3% in the quarter, compared to 16.5% in Q3 last year.

Speaker #3: 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 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.

Pier-Luc Laplante: 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 program and a decline in certain specialized drilling activities in South America also negatively impacted profitability. Adjusted EBITDA totaled CAD 1.4 million compared to CAD 5.4 million in Q3 last year. The decrease was primarily attributable to the factors already discussed and also reflects a negligible foreign exchange gain in the quarter compared to a CAD 1.2 million gain in Q3 last year.

Speaker #3: The continued modifications to a drilling 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.

Speaker #3: The decrease was primarily attributable to the factors already discussed and also reflects a negligible foreign exchange gain in the quarter, compared to $1.2 million gain in Q3 last year.

Speaker #3: Our net loss for the quarter was $1.2 million or 3 cents per share diluted compared to net earnings of $1.9 million or 5 cents per share diluted in Q3 last year reflecting the same factors discussed previously.

Pier-Luc Laplante: Our net loss for the quarter was CAD 1.2 million or CAD 0.03 per share diluted compared to net earnings of CAD 1.9 million or CAD 0.05 per share diluted in Q3 last year, reflecting the same factor discussed previously. Turning to our balance sheet. We withdrew a net amount of CAD 4.8 million on our credit facility in the quarter, compared to a drawdown of CAD 0.8 million in Q3 a year ago. The increase was primarily due to CAD 3.6 million in capital expenditures. Our long-term debt under the credit facility, including the current portion, was CAD 20.8 million at quarter end, compared to CAD 14.0 million at our fiscal 2025 year end.

Speaker #3: Turning to our balance sheet, we withdrew a net amount of $4.8 million on our credit facility in the quarter, compared to a drawdown of 0.8 million in Q3 a year ago.

Speaker #3: The increase was primarily due to $3.6 million in capital expenditures. Our long-term debt under the credit facility including the current portion was $20.8 million at quarter end, compared to $14.0 million as at our fiscal 2025 year end.

Speaker #3: During the quarter, pursuant to our normal course issuer bid, we repurchased and canceled $20,450 shares at an average weighted price of $1.83 per share.

Pier-Luc Laplante: During the quarter, pursuant to our Normal Course Issuer Bid, we repurchased and canceled 20,450 shares at an average weighted price of CAD 1.83 per share. We continue to view the NCIB as a useful tool to enhance shareholder value when the underlying value of Orbit Garant is not reflected in our share price. Our working capital was CAD 52.7 million at quarter end, compared to CAD 50.4 million at the end of fiscal 2025. I will now turn the call back to Daniel for closing comments. Daniel?

Speaker #3: We continued to view the NCIB as a useful tool to enhance shareholder value when the underlying value of Orbit Garant is not reflected in our share price.

Speaker #3: Our working capital was $52.7 million at quarter end, compared to $50.4 million at the end of fiscal 2025. I will now turn the call back to Daniel for closing comments.

Speaker #3: Daniel?

Speaker #2: Thank you, Pierre-Luc. Demand for our drilling services in both Canada and South America remains strong, supported by historically high gold and copper prices, and a robust financing environment for mining companies.

Daniel Maheu: Thank you, Pierre-Luc. Demand for our drilling services in both Canada and South America remains strong, supported by historically high gold and copper prices and a robust financing environment for mining companies. In 2025, mining companies listed on the TSX and the TSX Venture completed aggregate equity financing totaling more than CAD 16 billion, a 53% increase compared to 2024. Our bidding activity on new projects remains at a high level. Today, we are pleased to announce that subsequent to the end of the quarter, we commenced mobilizing drill rigs for a new 5-year specialized drilling contract in Northern Canada with a senior mining company, with a client extension option for 2 additional years. We estimate that this project will generate revenue exceeding CAD 100 million over the initial 5-year term.

Speaker #2: In 2025, mining companies listed on the TSX and TSX Venture completed aggregate equity financings totaling more than $16 billion, a 53% increase compared to 2024.

Speaker #2: Our bidding activity on new projects remains at a high level. And today, we are pleased to announce that subsequent to the end of the quarter, we commence mobilizing drill rigs for our new five-year specialized drilling contract in Northern Canada with a senior mining company with a client extension option for two additional years.

Speaker #2: We estimate that this project will generate revenue exceeding $100 million over the initial five-year term. Two drill rigs have already been deployed on this project, and six additional rigs will be mobilized by September this year.

Daniel Maheu: 2 drill rigs have already been deployed on this project, and 6 additional drill rigs will be mobilized by September this year. We expect to finance the CAD 20 million in required capital expenditure for modification or manufacturing of drill rigs and related inventory through internally generate cash flows, an increase in available borrowing on our credit facility, and by securing a new long-term loan. This new long-term contract is an important success for our strategic plan, which remain the same going forward. A strategic focus on senior and well-financed intermediate customer in Canada and South America, our disciplined strategy, and continuous operational improvement program. There are other contract of this kind on the market currently, and we are making every effort to secure this type of long-term contract with leading mining company for specialized drilling.

Speaker #2: We expect to finance the $20 million in required capital expenditure for modification or manufacturing of drill rigs and related inventory crowd internally generate cash flows and increase in available borrowing on our credit facility and by securing a new long-term.

Speaker #2: Loan. This new long-term contract is an important success for our strategic plan, which remains the same going forward. A strategic focus on senior and well-financed intermediate customer in Canada and South America our disciplined strategy and continuous operational improvement program.

Speaker #2: There are other contract of this kind on the market currently, and we are making every effort to secure this type of long-term contract with leading mining company for specialized drilling.

Speaker #2: By focusing on these priorities, we intend to capitalize on opportunities in this period of elevated customer demand to deliver enhanced profitability and value for our shareholders.

Daniel Maheu: By focusing on these priorities, we intend to capitalize on opportunities in this period of elevated customer demand to deliver enhanced profitability and value for our shareholders. Our business outlook is positive. The next step we want to take is to reach a utilization rate of 70% of our drill rigs. Customer demand remains high. Our pricing environment is improving. Barring any unforeseen events, we look forward to strong performance and improved profitability in our Q4 and into next fiscal year end. That concludes our formal remarks this morning. We will now welcome any questions. Jim, please begin the question period.

Speaker #2: Our business outlook is positive, and the next step we want to take is to reach an utilization rate of 70% of our drill rigs.

Speaker #2: Customer demand remains high, and our pricing environment is improving. Bearing any unforeseen events, we look forward to strong performance and improved profitability in our fourth quarter and into next fiscal year end.

Speaker #2: That concludes our formal remarks this morning. We will now welcome any questions. Jim, please begin the question period.

Speaker #3: Gentlemen, thank you for your remarks and to our phone audience joining today, please press star and one on your telephone keypad if you would like to ask a question.

Operator: Gentlemen, thank you for your remarks. To our phone audience joining today, please press star 1 on your telephone keypad if you would like to ask a question. Pressing star 1 will place your line into a queue, and I will open your lines 1 at a time. Once again, ladies and gentlemen, that is star 1 to ask a question. We'll hear first from Kerem Aksoy at Glacier Pass Management.

Speaker #3: Pressing star and one will place your line into a queue, and I will open your lines one at a time. Once again, ladies and gentlemen, that is star and one to ask a question.

Speaker #3: We'll hear first from Karim Axoy at Glacier Pass Management.

Speaker #4: Hi, Daniel.

Kerem Aksoy: Hi, Daniel. Hi, Pierre-Luc.

Speaker #5: Hi, Pierre-Luc. Thanks.

Daniel Maheu: Hi. Good morning.

Speaker #4: Hi, good morning. Good morning. Thanks for the call and taking my questions. It's great to see the utilization rate kind of picking up this quarter.

Kerem Aksoy: Thanks. Good morning. Thanks for the call and taking my questions. It's great to see the utilization rate kind of picking up this quarter to that 67% level. I mean, you talked about a little bit in your opening remarks, but I was just kind of wondering, just over the next quarter or kind of towards year end, where do you think that could go? Do you think it kind of, that 70% you mentioned is kind of where it caps out? Yeah, just a little more color and context of, you know, as you see that over the next couple quarters would be helpful.

Speaker #4: It's at 67% level. I mean, you talked about a little bit in your opening remarks, but I'll just kind of wondering, just over the next quarter or kind of towards year end, where do you think that could go?

Speaker #4: Do you think it kind of that 70% you mentioned is kind of where it caps out, or yeah, just a little more color and context of as you see that over the next couple of quarters would be helpful?

Daniel Maheu: With the current demand, we expect to select contract in the next quarter and till, let's say, the end of calendar 2026, up to 70%, yes. As you could see, we start with the, in Q1 with a 56% of utilization rate. In Q2, we have 62%, now we are at 67%. That mean, we had more than 5 rigs on new contract every quarter since Q1, that momentum is still there. Our big focus is to select good contract in specialized drilling with major and intermediate customer. If we bid on a smaller contract with juniors, we will do that with someone we know well and we know they are well-financed. This is not our priority.

Speaker #2: With the current demand, we expect to select contract in the next quarter and, till—let's say—the end of calendar 2026, up to 70%, yes, because as you could see, we start in Q1 with a 56% utilization rate.

Speaker #2: In Q2, we have 62%. So now we are at 67%. So that means we have more than five rigs on new contract every quarter since Q1, and that's momentum is still there.

Speaker #2: Our big focus is to select good contracts in specialized drilling. With major and intermediate customers, and if we bid on smaller contracts with juniors, we will do that with someone we know well and we know they are well-financed, but this is not our priority.

Speaker #2: Priority is focusing on specialized long-term contract as the one we just mentioned earlier, and that's where we want to go in our strategic plan, and that's exactly the kind of contract we want to get to increase our utilization rate.

Daniel Maheu: Priority is focusing on specialized long-term contract as the one we just mentioned earlier, that's where we want to go in our strategic plan. That's exactly the kind of contract we want to get to increase our utilization rate.

Speaker #5: No, that makes a lot of sense. It'd be great to have some stability. Long-term stability in the top line.

Kerem Aksoy: No, that makes a lot of sense. It'd be great to have some stability, like long-term stability in the top line.

Speaker #2: Correct.

Daniel Maheu: Right.

Speaker #4: Can I maybe add a couple of other questions? If it's okay with you, I'll kind of go through them. There was a little bit of a lag in the revenue line item versus that utilization rate, and maybe that's because things weren't deployed for this whole quarter or whatever.

Kerem Aksoy: I had a couple other questions. Maybe if it's okay with you, I'll kinda go through them. There was a little bit of a lag in the revenue line item versus that utilization rate, and maybe that's 'cause things weren't deployed for the full quarter or whatever. I was wondering if you could provide some commentary on how we should think about the revenue line over the next couple quarters as that utilization rate picks up. You know, for example, how are you thinking about revenues once you get to that 70% utilization for the overall business? Is there something you can help us there?

Speaker #4: But I was wondering if you could provide some commentary on how we should think about the revenue line over the next couple of quarters as that utilization rate picks up.

Speaker #4: And for example, how are you thinking about revenues once you get to that 70% utilization for the overall business? Is there something you could help us there?

Speaker #2: You are right. We have a lag in the revenue. In Q3, because technically, when you add rigs, you have a kind of ramp-up time.

Daniel Maheu: You are right. We have a lag in the revenue in Q3 because technically, when you add rigs, you have a kind of ramp-up time. You have a learning curve, let's say. Especially in Q3, we are in a very bad situation of weather in Canada. In north of Canada, the weather was very bad. We start, let's say, in the quarter, we add 7 new rigs on new contracts. It's a very poor condition. You're right, we have a lag. Technically, we expect to have more increased revenue in Q4 and Q1 of next fiscal year. You see for the last 12 months, we have a slight increase of revenue.

Speaker #2: You have a learning curve, let's say, and especially in Q3, we are in the very bad situation of weather in Canada and north of Canada.

Speaker #2: The weather was very bad. So we start, let's say, in the quarter; we add seven new rigs on new contracts, and it's a very poor condition.

Speaker #2: So you're right. We have a lag. But technically, we expect to have more increased revenue in Q4 and Q1 of next fiscal year. And you see, for the last 12 months, we have a slight increase of revenue.

Speaker #2: We are at 193 million compared to last year. We have 189 million dollars of revenue. So we have a slight increase, but progressively, with the addition of new rigs and that means we will have more than if we reach 70% utilization rate, that means it's more than 15 rigs added during the year.

Daniel Maheu: We are at CAD 193 million compared to last year, we have CAD 189 million of revenue. We have a slight increase, but progressively with the addition of new rigs and that mean we will have more than If we reach a 70% utilization rate, that mean it's 15 rigs added during the year. That mean the revenue should increase progressively. Not that much, but last year we reached CAD 189 million of income, so we will have that probably around CAD 200 million for fiscal 2026.

Speaker #2: So that means the revenue should increase progressively. Not that much, but last year, we reached $189 million of income. So we will have that probability around $200 million for fiscal 2026.

Speaker #4: That makes sense. If I want to look at the Q3 2026 results, there's about $51 million—a little bit over that—in revenue, which annualizes to roughly $206 million of revenue.

Kerem Aksoy: That makes sense. If I were to look at the Q3 2026 results, you know, there's about CAD 51 million, a little bit over that, of revenue, which annualizes to kind of CAD 206 million of revenue. It's kind of a seasonally weak quarter with rigs being added. I mean, if you were to move to 70% and kind of the business was operating kind of in a normalized rate, what do you think that revenue number could be?

Speaker #4: And that's kind of a seasonally weak quarter with rigs being added. So I mean, if you were to move to 70% and kind of the business was operating kind of in a normalized rate, what do you think that revenue number could be?

Daniel Maheu: We don't provide guidance, but we could say, if we came from 56% utilization rate to a 70%, it will be over CAD 200 million for 2027. That makes sense?

Speaker #2: Well, we don't provide a guidance, but we could say if we have if we came from 56% utilization rate to a 70%, it will be over 200 million dollars for 2027.

Daniel Maheu: We don't provide guidance, but we could say, if we came from 56% utilization rate to a 70%, it will be over CAD 200 million for 2027. That makes sense?

Speaker #2: That makes sense.

Speaker #4: Okay. And then you kind of talked about some legacy issues during the quarter, and then you talked about Q4 kind of normalizing a bit.

Kerem Aksoy: Okay. You know, you kinda talked about some legacy issues, during the quarter, and then you talked about Q4 kind of normalizing a bit. Do you think those issues will be behind you completely by Q4, or you just see a gradual improvement and takes a little more time?

Speaker #4: Do you think those issues will be behind you completely by Q4, or do you just see a gradual improvement and that it will take a little more time?

Daniel Maheu: A very good question, that's exactly the situation. We, we have You know, we decide to sign long-term contract with a senior customer here in Canada and Chile, we fix some price, let's say in between July and December 2025, which the market was under pressure. The price are under pressure. Now the market changed. We still have these contract, we will be respect price for these contract. Now, progressively, we see better price. For example, in the new contract we sign in northern Canada for 5 years. That will be progressively, that's exactly what we want to do. We want to build a strong long-term base of contract. We have to respect, you know, the market.

Speaker #2: Very good question. And that's exactly the situation. We have we decide to sign long-term contract with senior customer here in Canada, in Chile, and we fix some price let's say in between July and December 2025, which the market is under pressure.

Speaker #2: The prices are under pressure, and now the market changed. So we still have these contracts, and we will be respecting the price for these contracts.

Speaker #2: But now, progressively, we see better price, for example, in the new contract we sign in Northern Canada for five years. So that will be progressively.

Speaker #2: And that's exactly what we want to do. We want to build a strong long-term base of contract, and we have to respect the we know the market.

Speaker #2: And now the market is good for all the industry, and we are following that and focusing on long-term contract and we build for a long-term profitability.

Daniel Maheu: Now market is good for all the industry, and we are following that and focusing on long-term contract. We build for a long-term profitability.

Speaker #3: I would add to that that to answer your question also, we expect this to be progressive as we have some contracts with legacy pricing.

Pier-Luc Laplante: I would add to that, to answer your question also, we expect this to be progressive as we have some contracts with legacy pricing that are stopping or being completed. Were being completed in April, some in May, and some in June. We expect that to be progressive while we mobilize those rigs on new contracts with better, more favorable pricing.

Speaker #3: That are stopping or being completed we're being completed in April, some in May, and some in June. So we expect that to be progressive while we mobilize those rigs on new contracts with better, more favorable prices.

Speaker #4: That makes sense. So it sounds like these legacy contracts, they're not multi-year contracts. They'll kind of end over the next kind of three, six months, and then kind of move to market.

Kerem Aksoy: That makes sense. It sounds like these legacy contracts, they're not multi-year contracts. They'll kind of end, you know, over the next kind of 3, 6 months and then kind of move to market. Is that what I'm hearing?

Speaker #4: Is that what I'm hearing?

Daniel Maheu: Yes, that's correct. Yes, that's correct.

Speaker #2: Yeah, that's correct. Yes, that's correct.

Speaker #4: Okay, so then maybe as you look at fiscal year 2027, do you think the 15% EBITDA target is a realistic target?

Kerem Aksoy: Okay. Maybe as you look at fiscal year 2027, do you think the 15% EBITDA targeted is a realistic target?

Speaker #2: We don't provide a guidance on that, but as we are already said, we target a 12% EBITDA on revenue as a target. But as you could see right now, our last 12-month percentage is 7%.

Daniel Maheu: We don't provide guidance on that, as we already said, we target a 12% EBITDA on revenue as a target. As you could see right now, our last 12-month percentage is 7%. I can't say it will be 15 for 2027. We are focused to increase our profitability and we expect that the 7% will increase progressively.

Speaker #2: I can say it will be 15 for 2027. But we are focused to increase our profitability and we expect that the 7% will increase progressively.

Speaker #4: Okay. Thanks. Maybe just I had one more question. So the new contract you announced, you mentioned there's two rigs deployed and six more coming.

Kerem Aksoy: Okay, thanks. Maybe just I had one more question. The new contract you announced, you mentioned there's 2 rigs deployed and 6 more coming. Are those all new rigs, or are those existing rigs that you're, or some mix of that you're putting to work?

Speaker #4: Are those all new rigs or are those existing rigs that you're kind of or some mix of that that you're putting to work?

Daniel Maheu: We refurbish half of the rig, and that mean on 8 rigs, half of them will be refurbished rigs. The 2 fly rigs already on the site is refurbished, and we will build 4 new rigs for this contract. If in the future this contract needs more drill, we will build this these drill here in Val-d'Or because we have the facility to build all the rig we need. Let's say half of them will be built new rigs and half of them are existing rig, we will refurbish.

Speaker #2: We refurbish half of the rigs, and that means on eight rigs, half of them will be refurbished rigs. The two fly rigs already on the site are refurbished, and we will build four new rigs for this contract.

Speaker #2: And if in the future this contract needs extra drills, we will build these drills here in Val d'Or because we have the facility to build all the rigs we need.

Speaker #2: So, let's say half of them will be built—new rigs—and half of them are existing rigs that we will refurbish.

Speaker #4: Thanks, that's helpful. And then maybe this is a little bit of a tricky question because it sounds like some of it's refurbishment and some is new CapEx, but just on the $20 million you're going to be spending, how are you thinking about the return on that investment?

Kerem Aksoy: Thanks. That's helpful. Maybe this is a little bit of a tricky question because it sounds like some of it's refurbishment and some new CapEx. Just on the CAD 20 million you're gonna be spending, how are you thinking about the return on that investment as you model that out?

Speaker #4: As you model that out?

Pier-Luc Laplante: Just to be more clear, what do you mean by the return over investment? Are we talking about the time or?

Speaker #3: Just to be more clear, what do you mean by the return over investment? Are we talking about the time, or?

Pier-Luc Laplante: Just to be more clear, what do you mean by the return over investment? Are we talking about the time or?

Kerem Aksoy: Maybe just the IRR in terms of, you know, the, you know, you spend CAD 20 million, how much do you expect to make? I mean, I guess maybe, if you don't wanna talk about that contract, just in general as you think about investing going forward, is there a certain return that you target as a team?

Speaker #4: Maybe like the IRR. In terms of—you spend $20 million, how much do you expect to make? I mean, I guess maybe if you want to talk about that contract, just in general, as you think about investing going forward, is there a certain return that you target?

Speaker #3: Well, for that contract, for the investment return on that 20 million, we're expecting somewhere in 10% range. But obviously, this is not I don't want this to be confused with the margin of the project.

Pier-Luc Laplante: Well, for that contract, for the investment return on that CAD 20 million, we're expecting somewhere in 10% range. Obviously, I don't want this to be confused with the margin of the project. This is a specialized drilling project, so it will have good margins. Also, when we check that for that IRR, it considers that the equipment will be there for a long time. We believe that this will be a very good contract for the company and that it will help with our margins and our profitability.

Speaker #3: This is a specialized drilling project, so it will have good margins. Also, when we check that for that IRR, it considers that the equipment will be there for a long time.

Speaker #3: So we believe that this will be a very good contract for the company and that it will help with our margins and our profitability.

Speaker #4: Okay. Thanks. Those were all my questions. I appreciate you guys taking the time today.

Kerem Aksoy: Okay. Thanks. Those were all my questions. I appreciate you guys taking the time today.

Speaker #2: Thank you very much.

Daniel Maheu: Thank you very much.

Speaker #1: And a reminder to our phone audience, we'll pause for another moment to allow Star and One for any questions. We'll hear next from David Stelestra, rather, at BMO.

Operator: A reminder to our phone audience. We'll pause for another moment to allow star and one for any questions. We'll hear next from David Celest-Celestra, rather, at BMO. Please go ahead. Your line is open.

Speaker #1: Please go ahead. Your line is open.

Speaker #5: Yes, good morning and thank you for doing this call. I appreciate it. My question is, we have a number of legacy contracts where obviously the inflation and price increases have sort of caught up to the contract and exceeded such that profitability was hurt.

David Celest-Celestra: Yes, good morning, thank you for doing this call. I appreciate it. My question is, we have a number of legacy contracts where obviously the inflation and price increases have sort of caught up to the contract and exceeded such that profitability was hurt. Is there any escalation clauses in the new contracts which you're doing in the event that prices would go up dramatically? What I'm thinking about is on these long-term contracts, they of course become legacy contracts over time. Is there pricing increases possible should there remain pressures on wages in particular? I noticed that Precision, or, I'm sorry, Major Drilling said that they're having trouble with price increases on labor and getting labor, in fact.

David Stelpstra: Yes, good morning, thank you for doing this call. I appreciate it. My question is, we have a number of legacy contracts where obviously the inflation and price increases have sort of caught up to the contract and exceeded such that profitability was hurt. Is there any escalation clauses in the new contracts which you're doing in the event that prices would go up dramatically? What I'm thinking about is on these long-term contracts, they of course become legacy contracts over time. Is there pricing increases possible should there remain pressures on wages in particular? I noticed that Precision, or, I'm sorry, Major Drilling said that they're having trouble with price increases on labor and getting labor, in fact.

Speaker #5: Is there any escalation clauses in the new contracts which you're doing in the event that prices would go up dramatically? What I'm thinking about is on these long-term contracts, they, of course, become legacy contracts over time.

Speaker #5: And is there pricing increases possible should there remain pressures on wages in particular? I noticed that Precision I'm sorry, Major Drilling said that they're having trouble with price increases on labor and getting labor, in fact.

David Celest-Celestra: With oil prices the way they are, is there a way of passing that back on to the customer in these new contracts? Thank you.

Speaker #5: And also, with oil prices the way they are, is there a way of passing that back onto the customer in these new contracts? Thank you.

David Stelpstra: With oil prices the way they are, is there a way of passing that back on to the customer in these new contracts? Thank you.

Speaker #2: Thank you for the question. And yes, we introduce adjustment, let's say, every 12 months. We have a standard clause about, let's say, something like at least 2% or price index.

Daniel Maheu: Thank you for the question. Yes, we introduce adjustment, let's say every 12 months. We have a standard clause about, let's say something like at least 2% or price index.

Pier-Luc Laplante: There's a yearly price index typically baked into most long-term contracts. Some of them have indeed clauses about rises in costs of labor or fuel typically, yes.

Speaker #3: There's a yearly price index typically baked into most long-term contracts. Some of them have indeed clauses about rises in costs of labor or fuel typically, yes.

Pier-Luc Laplante: There's a yearly price index typically baked into most long-term contracts. Some of them have indeed clauses about rises in costs of labor or fuel typically, yes.

Speaker #2: Yes. On the contract for surface contracts where we have to provide fuel, we have a clause: if the fuel exceeds 15% of the actual price when we started the contract, we have an adjustment when it's over 15% of that price.

Daniel Maheu: Yes. On the contract, on surface contract where we have to provide the fuels, we have a clause. If the fuel exceed 15% of the actual price when we made the contract, we have an adjustment when it's over 15% of that price. Essentially, yes, we have adjustment clause, but we have to understand, for example, in the fuel situation, all the underground drilling, it's almost by electricity, so we don't have fuel there. On certain remote specialized marine contract, the fuel is provided by the client. Essentially, the adjustment clause is to cover the supply and the wages increase.

Speaker #2: So essentially, yes, we have adjustment clause, but we have to understand, for example, in the fuel situation, all the underground drilling, it's almost by electricity.

Speaker #2: So we don't have fuel there. And on certain remote, specialized drilling contracts, the fuel is provided by the client. So, essentially, the adjustment clause is to cover the supplies and the wages increase.

Speaker #2: But it's always a discussion with the customer because in some specific situation, customer will be will understand the situation. And we will have an adjustment.

Daniel Maheu: It's always a discussion with the customer because in some specific situation, customer will understand the situation, and we will have an adjustment. Technically, in most of the case, every year we have a clause of at least 2% or CPI.

Speaker #2: But technically, in most of the case, it's every year we have a clause of at least 2% or IPC.

Speaker #5: Thank you.

David Celest-Celestra: Thank you.

David Stelpstra: Thank you.

Speaker #1: And at this time, we have no further questions from our audience. Mr. Mahu, I will turn it back to you, sir, for any additional or closing remarks.

Operator: At this time, we have no further questions from our audience. Mr. Maheu, I will turn it back to you, sir, for any additional or closing remarks.

Speaker #2: Thank you, Jim. And thank you to everyone for participating today. We look forward to speaking with you again soon.

Daniel Maheu: Thank you, Jim, and thank you to everyone for participating today. We look forward to speak with you again soon.

Operator: Ladies and gentlemen, this does conclude today's conference. We thank you all for your participation. You may now disconnect your lines.