Q4 2026 Orbit Garant Drilling Inc Earnings Call

September 25, 2026

Speaker #1: Good morning, ladies and gentlemen, and welcome to Orbit Garant Drilling's fiscal 2026 fourth quarter and year-end results conference call and webcast. At this time, all lines are in listen-only mode following management's remarks.

Operator: Good morning, ladies and gentlemen, and welcome to this Orbit Garant Drilling's fiscal 2026 Q4 and year-end 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 non-IFRS financial measures.

Speaker #1: 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 SEDAR Plus.

Speaker #1: Management may also refer to 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 today, Friday, 25 September 2026. It is now my pleasure to turn the floor over to President and CEO of Orbit Garant Drilling, Mr. Daniel Maheu. Welcome, 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 today, Friday, September 25, 2026. It is now my pleasure to turn the floor over to the President and CEO of Orbit Garant Drilling, Mr. Daniel Mahu.

Speaker #1: Welcome, sir.

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

Daniel Maheu: Thank you, Jim, and good morning, ladies and gentlemen. With me on the call today is Pier-Luc Laplante, Chief Financial Officer. Following my opening remark, Pierre-Luc will review our financial results in greater detail, and I will conclude with comment on our outlook. We will then record quarterly revenue in our Q4 this year and record annual revenue in fiscal 2026, reflecting the strong demand for our drilling services in both Canada and South America. We also reached 70% drill rig utilization in the quarter, which represent our highest level since fiscal 2012. Reaching this threshold was a key objective for us at the start of the year. Our profitability for the quarter was negatively impacted by lower drilling efficiency in Canada due to the higher drilling rig utilization rate, which result in an increase of number of trainee drillers.

Speaker #2: And I will conclude with comments on our outlook. We will then record quarterly revenue in our fourth quarter this year, and record annual revenue in fiscal 2026, reflecting the strong demand for our drilling services in both Canada and South America.

Speaker #2: We also reached 70% drill rig utilization in the quarter, which represents our highest level since fiscal 2012. Reaching this threshold was a key objective for us at the start of the year.

Speaker #2: Our profitability for the quarter was negatively impacted by lower drilling efficiency in Canada, due to the higher drilling rig utilization rate, which resulted in an increase in the number of trainee drillers.

Speaker #2: Also, lower revenue per meter on certain legacy drilling contracts in Canada that were signed in the first half of the year, inflation in production costs and drilling consumables, and investment in workforce training and development.

Daniel Maheu: Also, lower revenue per meter on certain legacy drilling contracts in Canada that were signed in the H1 of the year, and inflation in production cost and drilling consumables and investment in workforce training and development. We have recently been able to revise contract pricing to offset our cost inflation, and this includes the implementation of price increases on most of the lower price contracts that we were awarded during the H1 of the year. While there has been a temporary lag between this cost inflation and price adjustment, these pricing adjustments should progressively be reflected in our profitability during fiscal 2027. Our new large specialized drilling contract in Northern Canada that we secured during the quarter, which we expect to generate in excess of CAD 100 million over its initial five-year term, has required us capital expenditures and required substantial inventory.

Speaker #2: We have recently been able to revise contract pricing to offset our cost inflation, and this includes the implementation of price increases on most of the lower-priced contracts that we were awarded during the first half of the year.

Speaker #2: While there has been a temporary lag between this cost inflation and the actual price adjustment, these pricing adjustments should progressively be reflected in our profitability during fiscal 2027.

Speaker #2: Our new, large specialized drilling contract in Norton, Canada, which we secured during the quarter and expect to generate in excess of $100 million over its initial five-year term, has required us to increase capital expenditures and maintain substantial inventory.

Daniel Maheu: This cost was partially funded through draw on our credit facilities and a new term loan. This resulted in increase of debt at fiscal year-end. Our focus on debt reduction over prior years provided us with the financial flexibility to our focus on debt reduction when this project is running at full capacity. This new specialized drilling contract further strengthened our position as an industry leader in Northern Canada and is in line with our strategy of focusing on senior and well-financed intermediate mining customers. I will now turn the call over to Pier-Luc to review our financial results.

Speaker #2: These costs were partially funded through a draw on our credit facilities and a new term loan. This resulted in an increase in debt at fiscal year-end.

Speaker #2: Our focus on debt reduction over prior years provides us with the financial flexibility to maintain our focus on debt reduction when this project is running at full capacity.

Speaker #2: This new specialized drilling contract further strengthens our position as an industry leader in Norton, Canada, and is in line with our strategy of focusing on senior, well-financed, and long-term mining customers.

Speaker #2: I will now turn the call over to Pierre-Luc to review our financial results.

Speaker #3: Thank you, Daniel. And good morning, everyone. Revenue for the quarter totaled $57.2 million, an increase of 21.3% compared to Q4 last year. Canada revenue was $39.4 million in the quarter, an increase of 16.8% compared to Q4 last year.

Pier-Luc Laplante: Thank you, Daniel, and good morning, everyone. Revenue for the quarter totaled CAD 57.2 million, an increase of 21.3% compared to Q4 last year. Canada revenue was CAD 39.4 million in the quarter, an increase of 16.8% compared to Q4 last year. This increase was attributable to offset by lower average revenue per meter drilled on certain legacy contracts that were signed during the H1 of fiscal 2026. International revenue totaled CAD 17.8 million, an increase of 32.7% compared to Q4 a year ago, reflecting increased drilling activity in both Chile and Guyana. Gross profit was CAD 4.6 million, or 8.2% of revenue, compared to CAD 7.6 million, or 16.4% of revenue in Q4 last year. Adjusted gross margin, excluding depreciation expenses and a gain on disposal of property, plant, and equipment, was 13.6% in the quarter, compared to 20.2% in Q4 last year.

Speaker #3: This increase was attributable to the offset by lower average revenue per meter drilled on certain legacy contracts that were signed during the first half of fiscal 2026.

Speaker #3: International revenue totaled $17.8 million, an increase of 32.7% compared to Q4 a year ago, reflecting increased drilling activity in both Chile and Guyana. Gross profit was $4.6 million, or 8.2% of revenue, compared to $7.6 million, or 16.0% of revenue in Q4 last year.

Speaker #3: Adjusted gross margin, excluding depreciation expenses and gain on disposal of property, plant, and equipment, was 13.6% in the quarter, compared to 20.2% in Q4 last year.

Speaker #3: The decrease in gross profit, gross margin, and adjusted gross margin was attributable to lower drilling efficiency in Canada due to a higher number of trainee drillers, lower revenue per meter on certain legacy drilling contracts in Canada, inflation in production costs and drilling consumables, and investments in workforce training and development.

Pier-Luc Laplante: The decrease in gross profit, gross margin, and adjusted gross margin was attributable to lower drilling efficiency in Canada due to higher number of trainee drillers, lower revenue per meter on certain legacy drilling contracts in Canada, and inflation in production costs and drilling consumables and investments in workforce training and development. Our increased depreciation expenses of CAD 0.7 million due to increased CapEx incurred in fiscal 2026 and fiscal 2025 in Canada and South America negatively impacted gross profit and margin. Adjusted EBITDA totaled CAD 3.6 million compared to CAD 5.5 million in Q4 last year. The decrease was primarily attributable to the factors already discussed, partially offset by a favorable foreign exchange variation of CAD 0.7 million in the quarter.

Speaker #3: Our increased depreciation expenses of $0.7 million, due to increased capital expenditures incurred in fiscal 2026 and fiscal 2025 in Canada and South America, negatively impacted gross profit and margin.

Speaker #3: Adjusted EBITDA totaled $3.6 million, compared to $5.5 million in Q4 last year. The decrease was primarily attributable to the factors already discussed, partially offset by a favorable foreign exchange variation of $0.7 million in the quarter.

Speaker #3: Our net loss for the quarter was $1.9 million, or $0.05 per share, diluted, compared to net earnings of $2.2 million, or $0.06 per share, diluted, in Q4 last year.

Pier-Luc Laplante: Our net loss for the quarter was CAD 1.9 million, or CAD 0.05 per share diluted, compared to net earnings of CAD 2.2 million, or CAD 0.06 per share diluted in Q4 last year. Our net loss reflects the factors already discussed, as well as a CAD 1.4 million expected credit loss, net of interest revenue on the long-term receivable related to the sale of our assets in West Africa, partially offset by the favorable variation in foreign exchange. For fiscal 2026, we generated record annual revenue of CAD 203.2 million, an increase of 7.5% compared to fiscal 2025. Canada revenue totaled CAD 143.2 million, an increase of 5.3% compared to fiscal 2025, reflecting slightly higher revenue per meter drilled and increased drilling activity, partially offset by client-initiated project delays and project completions during Q1.

Speaker #3: Our net loss reflects the factors already discussed, as well as a $1.4 million expected credit loss, net of interest revenue, on the long-term receivable related to the sale of our assets in West Africa, partially offset by the favorable variation in foreign exchange.

Speaker #3: For fiscal 2026, we generated record annual revenue of $203.2 million, an increase of 7.5% compared to fiscal 2025. Canada revenue totaled $143.2 million, an increase of 5.3% compared to fiscal 2025.

Speaker #3: Reflecting slightly higher revenue per meter drilled and increased drilling activity, partially offset by client-initiated project delays and project completions during Q1, a ramp-up of new drilling projects in both Q1 and Q3, and a negative impact of more severe winter weather conditions in Q3 this year.

Pier-Luc Laplante: The ramp-up of new drilling projects in both Q1 and Q3, and the negative impact of more severe winter weather conditions in Q3 this year. International revenue for fiscal 2026 totaled CAD 60.0 million, an increase of 13.2% compared to fiscal 2025, reflecting increased drilling activity in both Chile and Guyana, partially offset by modifications to a certain drilling program in Chile during the first nine months of fiscal 2026, and customer decisions to temporarily delay certain drilling programs during the H1 of fiscal 2026. Gross profit for fiscal 2026 was CAD 19.7 million, or 9.7% of revenue, compared to CAD 28.3 million or 15.0% of revenue in fiscal 2025. Adjusted gross margin, excluding depreciation expenses and a gain on disposal of property, plant, and equipment, was 14.7% in fiscal 2026, compared to 19.5% in fiscal 2025.

Speaker #3: International revenue for fiscal 2026 totaled $60.0 million, an increase of 13.2% compared to fiscal 2025, reflecting increased drilling activity in both Chile and Guyana, partially offset by modifications to a certain drilling program in Chile during the first nine months of fiscal 2026.

Speaker #3: And customer decisions to temporarily delay certain drilling programs during the first half of fiscal 2026. Gross profit for fiscal 2026 was $19.7 million, or 9.7% of revenue, compared to $28.3 million, or 15.0% of revenue in fiscal 2025.

Speaker #3: Adjusted gross margin, excluding depreciation expenses and gain on disposal of property, plant, and equipment, was 14.7% in fiscal 2026, compared to 19.5% in fiscal 2025.

Speaker #3: The decline in gross profit, gross margin, and adjusted gross margin reflects the mobilization of several major long-term drilling contracts during fiscal 2026. These contracts typically generate lower margins during their initial ramp-up phase, before reaching normalized productivity levels.

Pier-Luc Laplante: The decline in gross profit, gross margin and adjusted gross margin reflects the mobilization of several major long-term drilling contracts during fiscal 2026. These contracts typically generate lower margins during their initial ramp-up phase before reaching normalized productivity levels. Inflation in production costs and investments in workforce training and development also impacted gross profit and margins. The more severe winter weather conditions in Canada during Q3 this year also negatively impacted productivity on surface drilling projects. Continuing modifications to a drilling program and a decline in certain specialized drilling activities in South America also negatively impacted profitability. Additionally, increased depreciation expenses of CAD 1.4 million due to increased CapEx incurred in fiscal 2026 and fiscal 2025 negatively impacted gross profit and margins. Adjusted EBITDA totaled CAD 13.7 million in fiscal 2026 compared to CAD 21.7 million in fiscal 2025.

Speaker #3: Inflation in production costs, drilling consumables, and investments in workforce training and development also impacted gross profit and margins. The more severe winter weather conditions in Canada during Q3 this year also negatively impacted productivity on surface drilling projects.

Speaker #3: Continued modifications to a drilling program and a decline in certain specialized drilling activities in South America also negatively impacted profitability. Additionally, increased depreciation expenses of $1.4 million, due to increased capital expenditures incurred in fiscal 2026 and fiscal 2025, negatively impacted gross profit and margins.

Speaker #3: Adjusted EBITDA totaled $13.7 million in fiscal 2026, compared to $21.7 million in fiscal 2025. The decline was attributable to the factors already discussed, partially offset by a $0.5 million favorable foreign exchange gain.

Pier-Luc Laplante: The decline was attributable to the factors already discussed, partially offset by a CAD 0.5 million favorable foreign exchange gain. Net loss for fiscal 2026 was CAD 1.5 million, or CAD 0.04 per share diluted, compared to net earnings of CAD 7.5 million, or CAD 0.20 per share diluted in fiscal 2025. Our net loss for the year was attributable to the factors already discussed and also reflects an expected credit loss of CAD 1.2 million net of interest revenue on the long-term receivable related to our sale of assets in West Africa, partially offset by an income tax recovery of CAD 0.3 million and a favorable foreign exchange gain of CAD 0.5 million in fiscal 2026. Turning to our balance sheet. We withdrew a net amount of CAD 9.7 million on our credit facility in fiscal 2026, mostly related to net CapEx of CAD 17.5 million compared to a repayment of CAD 7.5 million in fiscal 2025.

Speaker #3: Net loss for fiscal 2026 was $1.5 million, or $0.04 per share, diluted, compared to net earnings of $7.5 million, or $0.20 per share, diluted, in fiscal 2025.

Speaker #3: Our net loss for the year was attributable to the factors already discussed, and also reflects an expected credit loss of $1.2 million, net of interest revenue, on the long-term receivable related to our sale of assets in West Africa, partially offset by an income tax recovery of $0.3 million and a favorable foreign exchange gain of $0.5 million in fiscal 2026.

Speaker #3: Turning to our balance sheet, we withdrew a net amount of $9.7 million on our credit facility in fiscal 2026, mostly related to net capital expenditures of $17.5 million, compared to a repayment of $7.5 million in fiscal 2025.

Pier-Luc Laplante: Turning to our balance sheet. We withdrew a net amount of CAD 9.7 million on our credit facility in fiscal 2026, mostly related to net CapEx of CAD 17.5 million compared to a repayment of CAD 7.5 million in fiscal 2025. Our long-term debt under the credit facility, including the current portion, was CAD 23.7 million at fiscal year-end, compared to CAD 14.0 million at our fiscal 2025 year-end. During the year, pursuant to our Normal Course Issuer Bid, we repurchased and canceled approximately 162,000 shares at an average weighted price of CAD 1.36 per share. Our working capital was CAD 48.7 million at year-end, compared to CAD 50.4 million at

Speaker #3: Our long-term debt under the credit facility, including the current portion, was $23.7 million at fiscal year-end, compared to $14.0 million at our fiscal 2025 year-end.

Pier-Luc Laplante: Our long-term debt under the credit facility, including the current portion, was CAD 23.7 million at fiscal year-end, compared to CAD 14.0 million at our fiscal 2025 year-end. During the year, pursuant to our Normal Course Issuer Bid, we repurchased and canceled approximately 162,000 shares at an average weighted price of CAD 1.36 per share. Our working capital was CAD 48.7 million at year-end, compared to CAD 50.4 million at

Speaker #3: During the year, pursuant to our normal course issuer bid, we repurchased and canceled approximately 162,000 shares at a weighted average price of $1.36 per share.

Speaker #3: Our working capital was $48.7 million at year-end, compared to $50.4 million at the end of fiscal 2025. I'll turn the call back to Daniel for closing comments.

Operator: I call back to Daniel for closing comments. Daniel?

Speaker #3: Daniel?

Speaker #2: Thank you, Pierre. The 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. The 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 the first eight months of 2026, mining companies listed on the TSX and TSX Venture completed aggregate equity financing totaling more than CAD 11.4 billion, an increase of approximately 78% compared to the same period in 2025. Most of our customers are increasing their spending on mining exploration and development, and this is an industry-wide trend. While we are experiencing favorable industry fundamentals and strong customer demand, we had our challenges this year, many of which were out of our control, including unusually high level of project delay due to the customer decision, particularly in the first half of our fiscal year.

Speaker #2: In the first eight months of 2026, mining companies listed on the TSX and TSX equity financing totaled more than $11.4 billion, an increase of approximately 78% compared to the same period in 2025.

Speaker #2: Most of our customers are increasing their spending on mining exploration and development, and this is an industry-wide trend. While we are experiencing favorable industry fundamentals and strong customer demand, we have had more challenges this year, many of which were due to unusually high levels of project delay as a result of customer decisions, particularly in the first half of our fiscal year.

Daniel Maheu: Severe winter weather in Q3 that impacted productivity on surface drilling in Canada, prolonged customer modification to a drilling program in Chile, pricing pressure in the first half of our fiscal year, and cost inflation. We were also ramping up operations on several new projects during fiscal 2026. While we expect our profitability to improve more in our Q4, this did not materialize to the extent we expected. We expect credit loss of CAD 1.4 million net of interest revenue in the quarter. However, we believe we are positioned to return to profitability in fiscal 2027 as a result of improving pricing on new and existing contracts, the continued advancement of several projects that were in their ramped-up phase during fiscal 2026, improvement productivity from our new drilling tools and customer demand. That concludes our formal remarks this morning. We will now welcome any questions. Jim.

Speaker #2: Severe winter weather in Q3 that impacted productivity on surface drilling in Canada, prolonged customer modification to a drilling program in Chile, pricing pressure in the first half of our fiscal year, and cost inflation.

Speaker #2: We were also ramping up operations on several new projects during fiscal 2026. While we expect our profitability to improve more in our fourth quarter, this did not materialize to the extent we expected.

Speaker #2: We expect a critical loss of $1.4 million, net of interest revenue, in the quarter. However, we believe we are positioned to return to profitability in fiscal 2027 as a result of improving pricing on new and existing contracts, the continued advancement of several projects that were in their ramp-up phase during fiscal 2026, improved productivity from our new drilling tools, and increased customer demand.

Speaker #2: That concludes our formal remarks this morning. We will now welcome any questions. Jim?

Speaker #4: Gentlemen.

Operator: Gentlemen-

Daniel Maheu: Please begin the question period.

Speaker #2: Begin the question period.

Speaker #4: Gentlemen, thank you for your remarks today. And to our phone audience, please press *1 on your telephone keypad if you would like to ask a question.

Operator: Gentlemen, thank you for your remarks today, and to our phone audience, that is star and one on your telephone keypad if you would like to ask a question. 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. We will hear first from Kerem Aksoy at Glacier Pass.

Speaker #4: 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.

Speaker #4: We will hear first from Karim Aksoy at Leisure Pass.

Speaker #5: Hi, guys. Thanks for hosting the call today and for the results. I definitely appreciate it. I had a couple questions, if that's okay. So Daniel, in the release you mentioned that you'd renegotiated your contracts during the first half of the calendar year.

Kerem Aksoy: Hi, guys. Thanks for hosting the call today and the results. Definitely appreciate it. I had a couple questions, if it's okay. Daniel, in the release, you mentioned that you renegotiated your contracts during the H1 of the calendar year. I was wondering, what is the timing of that flowing through to the business? Do you expect to see benefits in the H2 of calendar year 2026, or do you think it could maybe take a little longer?

Speaker #5: I was wondering, what's the timing of that flowing through to the business? Do you expect to see benefits in the second half of calendar year '26, or do you think it could maybe take a little longer?

Speaker #2: Hi, Karim. Yes, we reconciled some of these contracts, and that's progressively coming in Q1 and Q2 of fiscal 2027, yes. By the end of December, almost all contracts will be at the new price for each of them.

Daniel Maheu: Hi, Kerem. Yes, we renegotiated some of these contracts, and that progressively came in Q1 and Q2 of fiscal 2027, yes. By the end of December, almost half contract will be with the new price, each of them.

Speaker #5: Okay, that makes sense. That's great. And then, sequentially, in fiscal year '27, do you expect adjusted gross margins to increase in aggregate?

Kerem Aksoy: Okay. No, that makes sense. That is great. Sequentially in fiscal year 2027, do you expect the adjusted gross margins to increase in aggregate?

Speaker #2: We don't provide guidance like that, but for sure our target is to, with these new contract renewals and price adjustments, we expect to have an increase of our margin if we compare this year with 2025, where the margin is around 19% of adjusted gross margin.

Daniel Maheu: We do not provide guidance like that, but for sure our target is to, with these new contract renewal and price adjustment, we expect to have an increase of our margin. If we compare this year with 2025, which the margin are down 19% of adjusted gross margin, we think this year with 15%, we have place to increase for sure. But we cannot provide any guidance about that.

Speaker #2: We think this year, with 15%, we have room to increase for sure, but we can't provide any guidance about that.

Speaker #5: Got you. But then, I mean, do you think it's realistic to get back to fiscal year 2025's 20% gross margins? Or is there some reason you wouldn't be able to get back to those numbers?

Kerem Aksoy: Gotcha. Do you think it is realistic to get back to fiscal year 2025's 20% gross margins, or is there some reason you would not be able to get back to those numbers?

Speaker #2: That's exactly where we want to go, and we focus on first on the price adjustment to cover the cost inflation, but also we will focus on control of our cost and definitely the target is to increase our margin and we expect the actual market with the demand we have and also don't forget we renew we have a new contract in Northern Canada which is progressively start we have two rigs there right now working and eventually until let's say June 2027 these two rig we will add six extra rig on this contract and that should help us to increase our gross margin for sure.

Daniel Maheu: That is exactly where we want to go, and we focus first on the price adjustment to cover the cost inflation. Also, we will focus on control of our costs, and definitely, the target is to increase our margin, and we expect the actual market with the demand we have. Also, do not forget, we have a new contract in Northern Canada, which is progressively start. We have two rigs there right now working, and eventually, until, let us say June 2027, these two rigs, we will add six extra rigs on this contract, and that should help us to increase our gross margin for sure.

Speaker #5: Yeah, that makes sense. And maybe just a question on that contract. I think you mentioned that maybe there's a lot of ramp-up costs and startup costs associated with it.

Kerem Aksoy: No, that makes sense. Then maybe just a question on that contract. I think you mentioned that maybe there is a lot of ramp-up costs and startup costs associated with it. In the next 12 months, do you think that will be loss-making the first year? I was wondering if you can quantify what the impact of that might be in the next fiscal year, or how we should think about that contract and the profitability of it over time.

Speaker #5: In the next 12 months, do you think there'll be loss-making in the first year? I was wondering if you can kind of quantify what the impact of that might be in the next fiscal year.

Speaker #5: Or how we should think about that contract and the profitability of it over time.

Daniel Maheu: It is hard to quantify, but that is clear that in fiscal 2026, we have a lot of ramp-up, maybe five, six large contracts. We still have one big contract in Northern Canada to ramp up progressively until Q3 of 2027. But it is clear we have less cost of ramp-up, and that is why we think the actual contract we get in 2026 would be more profitable in 2027 because all these costs are now behind us.

Speaker #2: Our two quantified, but that's clear that in fiscal 2026, we have a lot of ramp-up, maybe five or six large contracts, and we still have one big contract in Northern Canada to ramp up progressively until Q3 of '27. But it's clear we have less cost of ramp-up, and that's why we think the actual contracts we get in 2026 would be more profitable in 2027 because all these costs are now behind us.

Speaker #5: Got you. So, in this year, there's some cost. The first half of next fiscal year, there'll be some cost, and then maybe Q3—it sounds like those costs will be behind you, the ramp-up costs?

Kerem Aksoy: Got you. So in this year, there are some costs. The first half of next fiscal year, there will be some cost, and then maybe Q3, it sounds like those costs will be behind you, the ramp-up costs?

Speaker #2: Yeah. Yeah, exactly.

Daniel Maheu: Yeah. Exactly.

Speaker #5: Is there any way you could maybe help us think about that, or quantify it at all, just so we can better understand the impact on the business?

Kerem Aksoy: Is there any way you could maybe help us think about that or quantify it at all, just so we can think about the impact on the business?

Speaker #3: It's like Daniel said, it's difficult to evaluate the entirety of the impact, and because there's a lot that's going on with these contracts, it makes the assessment even more challenging.

Pier-Luc Laplante: Like Daniel said, it is difficult to evaluate the entirety of the impact, because there is a lot going on with these contracts. It is a specialized drilling contract in remote locations. That means a lot of investment, and that means a lot of hiring as well, because staffing eight additional drills is a challenge in and of itself. The timing of how everything is going to work out is difficult to figure out. But we know, we expect typically that the first, I don't know, 10 to 12 months of the contract is going to generate lower margins than anticipated, or that is typical of a specialized drilling contract.

Speaker #3: It's a specialized drilling contract in remote locations, so that means a lot of investment. That also means a lot of hiring as well, because staffing eight drills is a challenge in and of itself.

Speaker #3: So the timing of how everything is going to work out is difficult to figure out, but we know we expect, typically, that the first, I don't know, 10 to 12 months of the contract are going to generate lower margins than anticipated, or that is typical of a specialized drilling contract.

Speaker #5: Okay, I appreciate the color. No, that's helpful. And then, maybe just one last question. As you look at the next fiscal year, I know that in Q4, CapEx is elevated.

Kerem Aksoy: Okay. I appreciate the color. No, that is helpful. Then maybe just one last question. As you look at the next fiscal year, I know that in Q4, CapEx is elevated. What are you guys expecting for total CapEx in fiscal year 2027? Maybe total CapEx and then working capital as well, source or use.

Speaker #5: What are you guys expecting for total CapEx in fiscal year '27? Maybe total CapEx, and then working capital as well—source or use.

Speaker #3: The amount that was in our AIF was around $19.3 million in CapEx, with about $6.3 million expected to be dedicated to the new long-term contract.

Pier-Luc Laplante: The amount that was in our AIF was around CAD 19.3 million CapEx with an expected CAD 6.3 million dedicated to the new long-term contract.

Speaker #5: I mean, I'm sorry I missed that. So, in the next year, in 2027—fiscal year 27—CapEx will be $19 million?

Kerem Aksoy: I'm sorry, I missed that. So in the next year, fiscal year 2027, CapEx will be CAD 19 million?

Speaker #3: Correct, with $6.3 million dedicated to the new long-term contract.

Pier-Luc Laplante: Correct. With CAD 6.3 million dedicated to the new long-term contract.

Speaker #5: Okay. So total CapEx in fiscal year 2027 will be $19 million, and $6.3 million of that is related to the contract. Sorry for asking that.

Kerem Aksoy: Okay. So total CapEx in fiscal year 2027 will be CAD 19 million, and CAD 6.3 million of that is related to the contract. Sorry for asking that.

Pier-Luc Laplante: That's correct.

Speaker #3: That's correct.

Speaker #5: Okay, and then do you expect working capital to be positive or negative?

Kerem Aksoy: Okay. Do you expect working capital, though, to be positive or negative?

Speaker #3: We expect working capital to go up with the amount of inventory that we're going to need to service all of our projects.

Pier-Luc Laplante: We expect working capital to go up with the amount of inventory that we are going to need to service all of our projects, including that one.

Speaker #3: Including that one.

Speaker #5: And then, is there any kind of early thought you're having about what that might look like for the whole year, in terms of cash use and working capital?

Kerem Aksoy: Is there any early thought you have on what that might look like for the whole year in terms of the cash use in working capital?

Pier-Luc Laplante: We expect to use, if I think about it, probably another CAD 10 million on that or something along those lines.

Speaker #3: We expect to use, if I think about it, probably another $10 million on that, or something along those lines.

Speaker #5: Okay, that makes sense. Yeah, with the contract, that answers my questions. Thanks for taking them—I really appreciate it, guys. Wishing you the best of luck as you start the new year.

Kerem Aksoy: Okay. No, that makes sense. Yeah, with a contract that large. Those are my questions. Thanks for taking them. I really appreciate it, guys, and wishing the best of luck in the start of the new year.

Speaker #2: Thank you very much.

Daniel Maheu: Thank you very much.

Speaker #3: Thank you.

Pier-Luc Laplante: Thank you.

Speaker #1: And ladies and gentlemen, we'll pause for another moment to give our audience an opportunity to press star one if you have a question or comment at this time.

Operator: Ladies and gentlemen, we will pause for another moment to give our audience an opportunity to press star and one if you have a question or comment at this time. We will move next to the line of Paul Dohenich, private investor.

Speaker #1: And we'll move next to the line of Paul Dohanic, private investor.

Speaker #4: Oh, hey, good morning. I just have a question about, yeah, about your South American contracts that sort of needed some delay or some sort of technical modifications.

Paul Dohenich: Oh, hi. Good morning. I just have a question about-

Daniel Maheu: Good morning.

Paul Dohenich: Yeah, about your South American contracts that were sort of needed some delay or some sort of technical modifications. Has the company already worked through that? Is that now on-stream, sort of coming through?

Speaker #4: Has the company already worked through that? Is that now sort of on stream, sort of coming through?

Speaker #3: Well, there are two things that occurred in that one. One of them was these projects had resumed by the end of fiscal year 2026. And another one that's a factor that occurs in our industry is that we are at the mercy of the client's drilling program.

Pier-Luc Laplante: Well, there's two things that occurred in that one. One of them was some project delays. These projects had resumed by the end of fiscal year 2026. Another one that's a factor that occurs in our industry is that we are at the mercy of the client's drilling program. If the client decides to change the number of drills or how they want to drill about a certain drilling program, we basically have to follow the drilling program of the client. That resulted in a lower number of drills on a certain program.

Speaker #3: And if the client decides to change the number of drills or how they want to drill a certain drilling program, we basically have to follow the drilling program of the client.

Speaker #3: And that resulted in a lower number of drills on a certain program.

Speaker #4: Okay, thanks for that. And the second question I had—in your last conference call, you mentioned a utilization rate target of above 70%. Can you tell me what the utilization rate for the last quarter was?

Paul Dohenich: Okay, thanks for that. The second question I had, in your last conference call, you mentioned a utilization rate target of above 70%. Can you tell me what the utilization rate for the last quarter was?

Speaker #2: Yes, we achieved that. So actually, we have exactly at 70%. And also in South America. So that's the target we put at the beginning of fiscal 2026.

Daniel Maheu: Yes, we achieved that. We are exactly at 70% here in Canada and also in South America. That is the target we put at the beginning of fiscal 2026 and exactly where we are. At Q1 this year, we had approximately 56%. We came to 62% of drilling utilization at Q2 and 67% at Q3. Now we are at 70%. This is a kind of, let us say, high level of utilization for our rigs, and also we have a lot of challenge with the manpower to fill these, especially in Canada. In South America, it is less a problem, but in Canada, we have to get the manpower for this increase of drill utilization. That is exactly where we are. For fiscal 2027, our main focus will be to keep this rate of utilization and fill up all these contracts.

Speaker #2: And exactly where we are, because at Q1 this year, we had approximately 56%. We came to 62% drilling utilization at Q2, and 67% at Q3.

Speaker #2: So now we are at 70%, and this is a kind of, let's say, high level of utilization for our rigs. Also, we have a lot of challenges with the manpower to fill these, especially in Canada.

Speaker #2: In South America, it's less of a problem, but in Canada, we have to get manpower for this increase in drill utilization. So that's exactly where we are.

Speaker #2: And for fiscal 2027, our main focus will be to keep this rate of utilization and fill up all these contracts, and eventually, if the market is still strong like this, we will look for any other new opportunity.

Daniel Maheu: Eventually, if the market is still strong like this, we will look for any other new opportunity. Technically, we want to focus on this high level of income. With the new contract that we get in Northern Canada for eight new rigs, that will be a great challenge for us, and this is exactly where we want to be.

Speaker #2: But technically, we want to focus on this high level of income, and with the new contract that we got in Northern Canada for eight new rigs, that will be a great challenge for us.

Speaker #2: And this is exactly where we want to be.

Speaker #1: Anything further, Mr. Dohanic?

Operator: Anything further, Mr. Kohanek?

Speaker #4: Yes, just saying that as a longer-term investor, keep on going. Understand you have to spend money to make money. So, great. I hope this year is a great year for you guys.

Paul Dohenich: Yes, just saying that as a longer-term investor, keep on going. I understand you have to spend money to make money. Great. I hope this year is a great year for you guys. Appreciate it.

Speaker #4: Appreciate it.

Speaker #2: Thank you very much. We appreciate that.

Daniel Maheu: Thank you very much. We appreciate that.

Speaker #4: Okay.

Paul Dohenich: Okay.

Speaker #1: And we presently have no further signals from our phone audience. Mr. Mahiu, I will turn it back to you, sir, for any additional or closing remarks that you have.

Operator: We presently have no further signals from our phone audience. Mr. Maheu, I will turn it back to you, sir, for any additional or closing remarks that you have.

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

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

Speaker #1: Ladies and gentlemen, this does conclude today's Orbee Garant Drilling fiscal 2026 fourth quarter and year-end results conference call. We thank you all for your participation and you may now disconnect your lines.

Operator: Ladies and gentlemen, this does conclude today's Orbit Garant Drilling's Fiscal 2026 Q4 and Year-End Results Conference Call. We thank you all for your participation, and you may now disconnect your lines.