Good morning, ladies and gentlemen. Thank you for standing by. For today's call, phone participants are in listen-only mode. Following the presentation, we will conduct a question and answer session, and instructions will be provided at that time for you. If anyone has any difficulties during the call, please press star followed by zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded on Monday, May 9th, at 10:30 A.M. Eastern Standard Time, and is being broadcast live via the Internet. During today's call, management will make statements regarding management's expectations for the company's future financial operational performance. These statements are considered forward-looking statements.
Each forward-looking statement speaks only as the date of this call, and actual results may differ materially from management expectations for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed from time to time in the company's SEDAR filings. I will now turn the call over to the President and CEO of Geodrill Limited, Mr. Dave Harper.
Thank you, operator. Good morning, and welcome to Geodrill's Q1 2022 quarterly financial results conference call. I'll begin with an overview of our operations and performance for the quarter. Our CFO, Greg Borsk, will then give a more detailed review of our first quarter financial results. After which I'll discuss our outlook for the remainder of 2022. The first quarter of 2022 was the best we've ever had in the company's 25-year history. Our record quarterly performance not only delivered on key financial metrics but also demonstrated steady value generation. We generated record revenue representing a year-over-year increase of 9%. Please recall that for the corresponding quarter a year ago, we achieved a 70% year-over-year improvement, which was an exceptional result. Therefore, any increase on this is in itself also considered exceptional.
We also achieved record EBITDA 31% of revenue. We delivered record net income of $6 million or $0.13 per share. Total equity improved by a record $5.2 million or 6% on the previous quarter to $92.7 million. That is up year over year by $13.8 million or 18%, generating for our shareholders a return on equity of 16%. We also achieved a return on capital employed of 21%, and we ended the quarter with net cash $5.6 million. We also paid a cash dividend during the quarter of CAD 0.03 per share. The bottom line is that rig for rig, Geodrill continues to outperform, generating record profitability and demonstrating that our model works. I'll now turn the call over to Greg Borsk to discuss the details. Thank you. Thank you, Greg.
Thank you, Dave. As a reminder, all figures reported are in US dollars. The company generated record revenue of $33.4 million in Q1 2022, an increase of $2.7 million or 9% when compared to $30.7 million in Q1 2021. The increase in revenue was a result of the increase in demand for the company's drilling services. With gold price averaging at approximately $1,900 an ounce during the first quarter of 2022, global exploration spending continues to be strong. The gross profit for Q1 2022 was $9.8 million, being 29% of revenue compared to a gross profit of $9.6 million for Q1 2021. The gross profit increase is a result of the increase in revenue.
Overall, the company realized record EBITDA for Q1 2022 of $10.4 million being 31% of revenue compared to $10 million for Q1 2021. The company also realized record net income for Q1 2022 of $6 million or $0.13 per share, compared to $5.7 million for Q1 2021 or $0.13 per share. As Dave mentioned, we ended the quarter strong with net cash of $5.6 million. At this point, I will turn the call back to Dave.
Thank you, Greg. It is clear our financial performance is a testament to the strength of our business and the demand for our drilling services. Before I go to the Q&A portion of the call, I would like to provide a brief outlook and key growth opportunities for the remainder of 2022. As mentioned, we're benefiting from strong gold and commodity prices and global tailwinds that continue to drive demand for our services. With increased exploration budgets pushing utilization higher, we're now also seeing increased pricing for our services. Our sharp focus on executing on our capital markets objectives has put us in a strong position to continue to benefit from the robust exploration environment.
Against this backdrop, and with more than $130 million in contracts, in new drilling contracts, all with top-tier gold producers and commodity producers and an expanded geographical footprint, we expect to keep executing at a solid pace, delivering steady revenue growth and profitability, ultimately making Geodrill more attractive than ever as an investment. This concludes our prepared remarks on our financial results. Thank you for participating in today's call. I'll now be pleased to hand the call back to the operator for anyone who has a question. Thank you.
Thank you, sir. Ladies and gentlemen, we're now in the question and answer session. If you'd like to ask a question, press star, then the number one on your telephone keypad. If you'd like to withdraw your question, press star two. If you're using a speaker phone, please lift the handset before pressing any keys. One moment please, for your first question. Your first question comes from Daryl Young with TD Securities. Please go ahead.
Hey, good morning, guys, and congrats on a good start to the year.
Good morning, Daryl. Thank you.
Just looking at the commentary you made in the release about effectively activity levels continuing from current. Does that imply that there really won't be much seasonality this year and you're effectively running full steam at current kind of revenues and EBITDA levels? Or should we expect some traditional seasonality with increases in Q2?
Well, the seasonality generally kicks in to Q3 now. We do expect seasonality. You know we've expanded our geographical footprint into jurisdictions where we don't suffer from that seasonality. I'm expecting that we will see seasonality, but it will probably have less of effect than it's had in on a percentage basis in previous years. The other thing I would just add is that while it was a strong quarter, the majority of the work that came from the quarter was as we pretty much exited March. The real story is here, it's not the strong Q1. We think it was a great result. You know, around January, we're actually a bit cheapish.
That was because basically we'd, I mentioned we'd signed $130 million in contracts, so we're very busy getting ready to start those contracts. Revenue is of course the lag out to any contract. Bottom line is that throughout the quarter, the real story was the very, very solid back half of March. What this does is this augurs particularly well for quarter two. Yeah, basically, if you like quarter one, I think you're gonna like quarter two.
Okay, perfect. Just in terms of the rigs that are being manufactured and as well, the rented rigs. I don't think I've ever seen you report that before with rented rigs. Is that a reflection of just huge demand and maybe some backlog in getting new rigs in the door? Or just a little color there would be great.
Well, the rented rigs, it's not really, it relates to kind of a new contract and as we are, we've ordered a couple of new rigs and we'll be ordering additional rigs. To kinda kickstart turnkey, start that contract, we're renting some rigs to get it going. The plan is to eventually, as soon as we can, get our own new rigs in there to do that. In terms of manufacturing, we always have rigs going through.
You always see each year, we kinda do a mix of new rigs from manufacturers that, you know, there is a bit of a time lag on that. Through our workshop, Daryl, you know, we're also able to get rigs out on our own. You'll see, throughout 2022, you'll see a mix of rigs coming out of the workshop being available for use and brand-new rigs that we get and put in operation right away.
Okay, great. Just one last one on the labor environment and margins. Seems like you're doing a pretty good job of passing through costs at this point, but should we expect anything on the horizon in terms of labor cost inflation or any risks there?
It's definitely there, and it's alive and well. We are in a fortunate situation with demand rising. I think it's an even playing field for us and most of our competitors. Our costs are rising, so too are our competitors. We raise our prices, so too do our competitors. I think the trick is what we try to do, if we can, is get a little bit ahead of the curve, so that we've got some dry powder there. We should be, you know, we're doing reasonably well on that. It's certainly far from a supplier's market at this point in time. I think that that's gonna imminently arrive, but we're not there yet.
Okay, great. I'll hop back in the queue and let someone else ask a question. Thanks, guys.
Thanks, Daryl.
Thanks, Daryl.
Thank you. Your next question comes from Ahmad Shaath with Beacon Securities. Please go ahead.
Good morning, guys. Good morning, Dave. Congrats on a solid quarter. I guess I wanna go back just to the margin profile. If we look at on a trailing twelve-month basis, we haven't really seen the operational leverage that we'd normally expect. Maybe help us understand why that is. Is that a function of the longer term contracts that are more stable and tied to mining operations? Just trying to wrap our head around looking ahead, revenue is strong, but trying to wrap our head around where the margins are gonna settle and should we get back into some you know, seeing the benefit of that operational leverage and a little bit of a margin expansion back in the last four quarters trend.
I think. Sorry, Dave. Do you want me to start or just the?
No, no. You're fine.
If you look at the gross margin, you know, that in 2021, very strong in Q1 and Q2, and then it dips in Q3 when we have wet season, and that's because we still keep the workshops functional. We still have the cost of goods sold without as much revenue. Earlier we had a question on seasonality. There's definitely seasonality in the business, but overall, the margins, if you look at, I think for the last three years, we have a gross margin of 25%. The key, whenever you're in an inflationary environment, labor costs are increasing, shipping costs are increasing, everything's increasing. You know, we operate under that scenario, and we try to recover some of that through the revenue line.
I think the point is, we manage the business but try to maintain our gross margin, which isn't always easy. I mean, if you're increasing revenue and you're able to maintain your margins, you know, we look at that as a positive. If you look at Q1, again, and I think in Q1 2021, we had exceptionally high gross margins. 29% this quarter and 31% last quarter. That was a function of being extremely busy. In terms of busy, I mean, having a lot of revenue. A lot of the rigs, most of the rigs, utilization-wise are out drilling. That is characteristic of Q1 and Q2, where you have high gross margins.
Then when we get into Q3 and then Q4, kind of with the holiday season, those margins kinda come in. I guess what I'm trying to communicate is again, you know, there is seasonality. You see extremely high gross margins in the first two quarters, and then they kinda level off in Q3 and Q4. Overall, we manage towards our, you know, 25%-26% gross margin. And through Q1 and when we were able to re-release Q2, you know, we'll be well ahead of that.
Go ahead.
I guess, I just wanna.
I'll just jump in just very quickly. I didn't think the margins were that far off, actually. I thought given you know what happens is when a bunch of contracts are signed, the lag out is always the revenue, and you go through this sort of negative cash generation for a couple of months while everything's getting started. I actually thought the results were exceptional given the start of all this new work we had to get underway. You recall some years ago, we had a very busy amount of startup stuff going on in quarter four, and it reflected in the following quarter that we actually saw the margin growth in the quarter that followed.
I think this is gonna be a similar situation here. Yeah, I didn't see anything. I thought the margins were pretty good under the circumstances. Also you gotta appreciate that, you know, no matter where you go, no matter who you talk to, everyone is complaining about pricing these days. Doesn't matter whether you're going down the supermarket to buy a dozen eggs, a bottle of beer or a gallon of petrol for your car. Costs are rising everywhere you go. It's no different in our business. To maintain these margins in a fast-moving cost environment as we are in, as everyone is in, I think we did pretty well. I was happy with the results.
No, that's great. I mean, I guess my point was on the EBITDA line. I mean, I've seen revenue growth, if I go from Q2 last year until Q1 this year, which is the last twelve months, revenue growth is 47%, 44%, 8% and 9%, while EBITDA is lagging that in growth in 16%, 21%, and 5% this quarter. Typically, I mean, the way we think about it is that in an upcycle, EBITDA growth should outpace revenue growth.
I'm just trying to understand if that's if the trend over the last 12 months is a function of a little bit of a change in the business mix and the contract mix that you guys have taken advantage of this upcycle to get into longer term, more stable contracts. Was there something else in terms of some ramp up that we're yet to see the full benefit of on the profitability line going ahead?
A bit of both.
A bit of both. That's great. That's it. That's my question. Thanks, Dave.
Thanks.
Thanks, Ahmad.
Thank you. No further questions at this time. Mr. Harper, you may proceed.
Okay. Well, if there's just no other questions, we'll end the call there and wish everybody a belated Happy Mother's Day for yesterday. For all the mothers out there in all the countries where it was Mother's Day, Happy Mother's Day. Have a great day.
Thank you, everyone.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.