May Industry leadership through continuous innovation

Transcription

1 May 2017 Industry leadership through continuous innovation

2 Forward-Looking Information Certain statements contained herein constitute forward-looking statements which reflect the current expectations of management regarding the Company s future growth, results of operations, performance, business prospects and opportunities based on information currently available to it. Wherever possible, words such as may, would, could, will, anticipate, believe, plan, expect, intend, estimate, aim, endeavor and similar expressions have been used to identify these forward-looking statements. These statements reflect management s current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, without limitation, those listed in the Risk Factors section of the company s public filings. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements. These factors should be considered carefully and prospective investors should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained herein are based upon what management currently believes to be reasonable assumptions, there can be no assurance that actual results, performance or achievements will be consistent with the forwardlooking statements. Forward-looking statements are made as of the date hereof and Orbit Garant may not, and does not assume any obligation to, update or revise these forward-looking statements other than as specifically required by applicable law. 2

3 Capital Market Profile Analyst Coverage: Recent close (May 11, 2017): $ week high / low: $2.21 / $1.10 Market Cap: ~$68 million Shares Outstanding: 36,093,419 Fully Diluted: 38,431,419 Institutional / retail: ~25% / 75% Insiders own approximately 30% of shares outstanding 3

4 Company Highlights Long-established, leading Canadian-based mineral driller Focused on continuous innovation Expertise in specialized drilling / senior management field experience Vertically-integrated manufacturing subsidiary Strong health & safety / driller training programs Long-standing customer relationships Expanding international market presence Sound balance sheet Positioned to outperform as market conditions improve 4

5 Overview 1,000 employees / 221 drill rigs Head office: Val-d Or, QC Regional offices: Sudbury, ON, Moncton, NB, Chile, Ghana, Kazakhstan, Peru & Guyana Field operations: Canada, Burkina Faso, Chile, Guyana, Ghana & Kazakhstan Val-d Or LEGEND Head Office Regional Offices Field Operations 5

6 Market Position (by % of revenue*) Drilling Activity Customers Regions 57% 43% Underground Surface 79% 21% Juniors Majors & Intermediates 78% 22% International Canada Resource Exposure Drilling Services 73% 27% Base Metals / Other Gold 47% 53% Specialized Conventional *For the nine months ended March 31,

7 Core Strengths Specialized Drilling Drilling team expertise Continuous Innovation Health & Safety Vertical Integration Extensive Driller Training 7

8 Drilling Services & Expertise Surface Underground Specialized Drilling Standard diamond coring / core rod Standard / reverse circulation (deep hole) AWL - PWL calibre Geotechnical drilling Directional core drilling Standard rod / core rod AWL - HWL calibre Geotechnical drilling Directional core drilling Drilling projects that are in remote locations or, because of the scope, complexity or technical nature of the work, cannot be undertaken by smaller conventional drilling companies. Expertise in specialized drilling 8

9 Vertical Integration Ability to design and rapidly manufacture custom drill rigs at competitive cost Drill rig maintenance supports optimum utilization rates Health and Safety / Driller Training Focus on consistency, quality control, high performance and safety Ongoing training for new technologies, techniques and environmental standards 9

10 Continuous Innovation Computerized Monitoring and Control Technology Performance Highlights Greater accuracy Improved productivity (+30%) Fewer consumables Rig components last longer Easier to train personnel Additional Feature Benefits for Customers Real-time, remote monitoring of drilling progress Ability to view core samples remotely Competitive differentiation through innovation 10

11 Continuous Innovation Responding to customer needs Computerized underground drill rigs o YU 615 (first generation) o YU 1800 (second generation) o YU 1000 (next generation) YU 1800 custom designed and manufactured for specialized drilling project with Anglo American in Chile o YU 1800 can drill deeper, with larger diameters and perform up holes YU 1000 includes next generation mobile handling system YU 1000 Specialized drilling contracts are typically higher margin and for longer terms Competitive differentiation through innovation 11

12 Strong Customer Relationships Core strengths support long-term customer relationships 12

13 TSX / TSX-V Mining Financings Y/Y Number of Financings in the Mining Sector 2,500 2,000 1,500 1, ,567 2,110 1,803 1,450 1,207 1, , Q TSX TSXV Source: TMX Group Ltd. Demand for drilling services is rising after a significant increase in financing activity in 2016 and early

14 Improving Industry Conditions S&P/TSX Global Mining Index, trailing 12-month performance 14

15 Historical Metres Drilled and Utilization Rates (in thousands of metres and average quarterly utilization percentage) 69% 43% 35% 40% 45% 56% 1 1, , * 818 YTD Q1 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 YTD ) The utilization rate in Q3 FY2017 was 61%. 15

16 Historical Pricing Revenue per metre drilled ($/m)* * Q Q Q Q Q Q Q2 Q Q1 Q Q Q Q Q Q Q Q * Figures are rounded to the nearest dollar. 16

17 Positive Business Momentum Revenue Growth Momentum ($millions) (% calculations based on numbers in financial statements) * F2014 F2015 F2015 F2016 F2015 F2016 F2015 F2016 F2015 F2016 F2016 F2017 F2016 F2017 F2016 F2017 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Nine consecutive quarters of year-over-year revenue growth 17

18 Q3 FY2017 Financial Review Revenue ($ millions) EBITDA ($ millions) 14.9% Adjusted Gross Margin 19.7% 17.8% 13.6% % (0.5) Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 FY2017 G&A Expense: $3.8 million (12.6% of revenue) Q3 FY2017 Net loss per share: ($0.06) Q3 FY2016 G&A Expense: $3.9 million (13.9% of revenue) Q3 FY2016 Net loss per share: ($0.07) 1) Orbit Garant recognized a one-time gain of $5.0 million in Q4 FY2016 resulting from negative goodwill associated with the Captagua acquisition. Margins and EBITDA in Fiscal 2017 reflect higher employee training and project mobilization costs as demand improves 18

19 YTD FY2017 Financial Review Nine months ended March 31, 2017 Nine months ended March 31, 2016 Revenue ($millions) Gross Profit ($millions) EBITDA ($millions) Adjusted Gross Margin 14.1% 17.5% G&A Expenses ($millions) Net earnings ($millions) (4.3) (4.6) Net earnings per share ($) (0.12) (0.13) Total metres drilled 917, ,595 19

20 Sound Balance Sheet ($ millions) As at March 31, 2017 As at June 30, 2016 Cash Total current assets Total assets Total current liabilities Long-term debt 1, Total shareholder equity Working capital ) As at March 31, 2017, Orbit Garant had drawn $14.8 million under a credit facility with National Bank of Canada inc. Drawdowns from this facility have been re-classified from long-term debt to current debt as the facility matures on December 19, Accordingly, working capital has declined in Fiscal The company is in discussions with National Bank,to renew and extend the credit facility, at which point the debt would again be classified as long-term. 2) Long-term debt as at March 31, 2017 includes finance leases assumed in the Captagua acquisition. 20

21 Disciplined Financial Management Debt reduced to $18.4 million 1 from $29.8 million at end of Q3 FY2012 FY2017 capex budget of $6.5 million Positive cash flow from operations on annualized basis 29.8 Debt ($ millions) 18.4 Q3 FY2012 Q3 FY2017 Maintaining financial flexibility 1) As at March 31, Includes finance leases assumed in the Captagua acquisition. 21

22 Strategic Direction Supporting and improving competitive position Focus on conventional, specialized and geotechnical drilling services Leverage vertical integration by manufacturing custom drill rigs and equipment to meet each customer s needs Maintain commitment to R&D, continuous innovation and advanced drilling technologies Foster continuous improvement in skills & productivity and high standards of health & safety / environmental protection Strengthen Canadian leadership position, while continuing to grow international business Current market environment presents attractive tuck-in acquisition opportunities Protect and build market share 22

23 International Growth Platform Chile Largest producer of copper in the world and 5 th largest producer of non-ferrous metals Commenced first project in Q2 FY2015 (copper, underground and surface drilling). Initiated two new projects in Q2 FY2017 Acquisition of Captagua strengthens growth platform West Africa Active in Ghana and Burkina Faso (2 nd and 4 th largest producers of gold in Africa) Regional hubs to pursue further business throughout West Africa New projects commenced in Q3 FY2016 in Ghana / Q3 FY2017 in Burkina Faso Kazakhstan Promising emerging market for natural resources 4 th largest producer of copper in the world and 9 th largest proven gold reserves in the world New project with industry major commenced in Q2 FY2016 Strengthened international growth platform 23

24 Investment Highlights Industry leader in innovation and specialized drilling Solid foundation in Canada high exposure to gold-related projects Nearing full utilization of surface drill rigs in Quebec and Ontario Contract prices rising in Canada due to increasing demand and utilization rates Positive cash flow from operations on annualized basis throughout industry downturn Nine consecutive quarters of year-over-year revenue growth Recent expansion into key jurisdictions Chile, Ghana, Kazakhstan, Burkina Faso, Peru and Guyana Sound balance sheet Positioned to outperform as market conditions improve 24