ORBIT GARANT REPORTS FISCAL 2026 THIRD QUARTER FINANCIAL RESULTS

The fiscal 2026 third‑quarter release (2026‑05‑13) reports a net loss of $1.2 million despite the highest drill utilization in ten years (67%) and record third‑quarter revenue of $51.4 million. Gross margin collapsed to 10.3% from 16.5% a year earlier, and adjusted EBITDA dropped to $1.4 million. The quarter was marred by severe Canadian winter weather, legacy fixed‑price contracts, and the start‑up costs of new long‑term contracts.

Simultaneously, the company announced a five‑year specialised drilling contract with a major Canadian mining company, projected to generate more than $100 million in revenue over the initial term (over $20 million/year). The contract has a two‑year client extension option. Mobilisation has already begun. To support the contract, Orbit Garant plans $20 million in capital expenditures for drill‑rig modifications/manufacturing and related inventory, to be funded by internal cash flows, increased credit borrowings, and a new term loan.

The Q2 2026 release (2026‑02‑11) had shown revenue growth (+10.5% year‑over‑year) and a small profit of $1.3 million, helped by favourable FX. That came with management’s comment that “with record gold prices and historically high copper prices supporting strong customer demand … we are confident in our business outlook.” The Q1 release (2025‑11‑12) had already shown a drop in net earnings to $0.3 million and a draw on the credit facility, with management stating “demand for drilling services … is increasing.” The Q1 miss was attributed to lower gross profit and higher G&A.
Thus the Q3 loss represents a clear deterioration despite the volume milestone, and the new contract is a material forward‑looking event that was not previously disclosed.

The new five‑year contract is a genuinely new, unexpected positive — it was not flagged in prior earnings releases. At more than $100 million over five years, it adds roughly $20 million annual revenue, an increase of about 10% on the trailing nine‑month revenue of $146 million. That growth, if executed, can meaningfully transform the company’s scale.
However, the simultaneous disclosure of a $1.2 million loss in Q3 (compared to a $1.9 million profit a year earlier) reveals deep operational problems: legacy pricing drags profitability, severe weather disrupted operations, and the early stages of new contracts incur elevated costs. The sharp decline in gross margin and adjusted EBITDA suggests a fragile cost structure, and the planned $20 million capex will increase debt at a time when the credit facility already rose from $14.0 million to $20.8 million.
The contract win is unquestionably positive and likely to be seen as a validation of the company’s market position during a commodity upcycle. However, the weak Q3 performance tempers the enthusiasm because the company must now execute the contract profitably without repeating the margin erosion seen in Q3. The market’s immediate reaction is unknown (release after close), but the prior run‑up from $1.77 (Feb‑11) to $2.44 (Feb‑26) had already priced in high expectations after the Q2 call. The stock had retraced to $1.80 before the news, so the contract can act as a fresh catalyst. The balance of information is positive enough to deserve the “Material” tag, but the negative quarter prevents a “Game Changer” rating.

Orbit Garant Drilling Inc. is a mineral drilling services company operating primarily in Canada, with an international segment in South America. It provides both surface and underground drilling to major and intermediate mining companies. The company’s “flagship” activity has historically been its large base of conventional drilling contracts across Canada’s prolific mining regions.
The newly announced five‑year specialised drilling contract in Canada, worth over $100 million in total revenue, effectively becomes the new flagship project. It represents a shift toward larger, longer‑term contracts and will require customisation of rigs. The company expects it to secure a stable revenue base for the next half‑decade.