Good morning, ladies and gentlemen, and welcome to the Orbit Garant Drilling Inc.'s Fiscal 2022 First Quarter Results conference call and webcast. At this time, all lines are in listen-only mode. Following the management's remarks, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Please be aware that certain information discussed today may be forward-looking and that actual results could differ materially. Certain non-IFRS financial measures will also be discussed. Please refer to the company's SEDAR filings for additional information on both risk factors and non-IFRS measures. This call is being recorded on Friday, November 12, 2021, and I would now like to turn the conference over to Mr. Eric Alexandre, President and CEO of Orbit Garant Drilling Inc. Please go ahead, sir.
Thank you, operator, and good morning, ladies and gentlemen. With me on the call today is Daniel Maheu, CFO. Following my opening remarks, Daniel will review our financial results, and I will conclude with comments on our outlook. We'll then welcome questions. We reported record first-quarter revenue and meters drilled yesterday, reflecting strong customer demand. Revenue totaled CAD 50.6 million, up from CAD 35.6 million in Q1 last year, and we drilled approximately 464,000 meters in the quarter, compared to 351,000 in Q1 2021. The capacity utilization of our drill fleet increased significantly year-over-year as we worked to meet demand.
Our utilization rate was approximately 64% in the quarter, compared to 50% in Q1 last year, when our business was gradually ramping up following project shutdowns and suspension due to COVID-19 related restrictions. This was the third consecutive quarter in which our drill utilization rate was at least 60%. Our drilling activity in Canada and West Africa has surpassed pre-pandemic levels. Our drilling activity in Chile has not yet reached pre-pandemic levels, but began to ramp up. Our margin in the first quarter continued to be impacted by increased driller pre-training, project ramp-up and mobilization costs as we adjusted to this sustained high level of customer demand. We also absorbed increased costs for materials and supplies in Q1 due to supply chain issues which are currently impacting the entire global economy.
We believe our margins will strengthen over the course of the fiscal year as worker productivity improves, the mobilization costs fall away, and we offset other cost pressures through price increases on our contracts. We also expect the supply chain challenges to be largely resolved in early 2022 calendar year. There continues to be a shortage of experienced drillers in Canada, which is impacting worker productivity. As I noted in our last conference call in September, we are well positioned to manage this issue through our driller training program and our computerized drill technology, which accelerates the learning process for less experienced drillers. Looking forward, our focus is on expanding margins as this positive business cycle progresses. I will now turn the call over to Daniel Maheu to review our first quarter financial results in more detail. Daniel Maheu?
Thank you, Eric, and good morning, everyone. Our fiscal 2022 first quarter revenue totaled CAD 50.6 million, a record for the first quarter, and an increase of 41.9% compared to CAD 35.6 million in Q1 a year ago. Canada revenue totaled CAD 37.9 million in the quarter, up 20.7% from CAD 31.4 million in Q1 last year, reflecting strong domestic demand. International revenue was CAD 12.7 million, up from CAD 4.2 million in Q1 last year, attributable to increased drilling activities. Gross profit for the quarter was CAD 3.8 million compared to CAD 8.7 million in Q1 last year. Adjusted gross margin, excluding depreciation expenses, was 12.3% compared to 31.3% in Q1 last year.
Gross profit and margin were impacted by increased driller training and project ramp-up costs in Canada, mobilization costs related to new long-term contract in Guinea and Chile, and higher material costs due to the supply chain disruption in all the regions in which we operate. In addition, the year-over-year decline in gross margins was attributable in part to financial support received in Q1 last year from the Canada Emergency Wage Subsidy, or the CEWS. Our cost of contract revenue was reduced by CAD 2.4 million in Q1 last year due to support from the CEWS program. We were no longer eligible for the program in Q1 this year. G&A expenses were CAD 3.8 million in the quarter or 7.4% of revenue, compared to CAD 3.2 million or 9.1% of revenue in Q1 last year. The increase in G&A expenses reflect greater drilling activity.
G&A expenses in Q1 last year were also reduced by CAD 0.2 million due to the financial support from the CEWS program. As I just noted, we were no longer eligible for the program this fiscal year. EBITDA for the quarter was CAD 2.7 million, compared to CAD 8.4 million in Q1 last year. Net loss was CAD 1.3 million or CAD 0.04 per share, compared to net earnings of CAD 3.5 million or CAD 0.09 per share in Q1 a year ago. The negative variance were principally attributable to increased driller training and project ramp-up costs, new project mobilization costs, and the reduction of financial support from the CEWS program, partially offset by increased drilling activities. Now turning to our balance sheet.
We drew down a net amount of CAD 1.4 million on our credit facilities in the quarter, compared to a repayment of CAD 2.1 million in Q1 a year ago. Our long-term debt under the credit, the credit facility, including the current portion and the CAD 1 million drawn from our CAD 5 million revolving facility, was CAD 25.7 million as of September 30th, 2021, compared to CAD 24.3 million as of June 30th, 2021 or fiscal 2021 year end. The debt was used to support working capital requirements and the acquisition of capital assets, property, plant, and equipment. As of September 30th, 2021, our working capital position was CAD 53.5 million, compared to CAD 54 million at the end of fiscal 2021. I now turn the call back to Eric for closing comments. Eric?
Thanks, Daniel. We are very encouraged by the current high level of customer demand for our services and believe it will continue to be very strong in the months ahead. Mining companies will be finalizing their budgets for the 2022 calendar year in the coming weeks. Everything we hear from our customers suggests that they will be maintaining high levels of exploration and development spending. Gold and copper prices continue to trade at historically high levels, which is supporting strong profitability for the producers and favorable access to capital across the sector. Declining reserves also continue to be a challenge for many mining companies, which incentivize exploration spending. In short, it would be a very busy year for Orbit Garant and the mineral drilling industry as a whole. We are continuing to monitor the spread of COVID-19 carefully in all of our markets.
We are pleased that cases in Canada have been lower than many experts feared so far this fall, but we are not letting our guard down. We are taking every necessary measure to minimize the spread of the virus while maintaining the flexibility to adapt to any potential increase in business restrictions related to COVID-19. As I noted in my opening remarks, our margin had been negatively impacted by short-term cost pressures as we adjust to the current high level of demand. With our skilled team, strong balance sheet, state-of-the-art technology, and presence in leading copper and gold mining markets, we are well-positioned to enhance profitability during the strong market cycle while capitalizing on further opportunities to expand market share and build shareholder value. That concludes our formal remarks. Daniel and I will now be pleased to answer any question. Operator, please begin the question period.
Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch tone phone. You will then hear a three-tone prompt acknowledging your request, and your questions will be pooled in the order that they are received. Should you wish to decline from the pooling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from David Strauch from BMO. Please go ahead.
Yes. Good morning, Eric.
Good morning.
Good morning, Daniel.
Hi.
I was just wondering if we could get a little wee bit of clarity on the contracts, and you've mentioned that there's been some cost pressures and so on. Is there any ability to pass on any of that, or are you on fixed rate contracts?
Yes. Yes, there is. You have to take into account, David, that there's always a gap between the time you adjust to the cost and you renegotiate those price increases there. There's always an offset out there. This is happening right now. While our costs have been impacted hard from the supply as well with the cost of manpower, now we are increasing the price per meter drilled there on the new contracts as well as on the actual contract that we adjust to the reality of what is happening right now. We have a good listening from our client as well. It's well received from them. They understand.
Yes. Thank you. Further to the same sort of question is, would the mobilization costs not be amortized over the length of the contract, or are you expensing them all?
Well, it's the way we do in the past. You know, we don't think we're gonna change it right now. You know, we will keep just take the cost and put it there and then. Because then, you know, you start to play with this on the long term, whatever. We prefer just to get it down and move on, you know?
Yes. Would it be a fair assumption then, because those costs are absorbed upfront and they won't be there then in the longer term. But I'm sure they were factored into the original pricing. Is that fair to say?
It's fair to say. You're right.
Yes.
You know, we do.
Thank you very much, gentlemen.
Okay, good.
Thank you.
Thank you. Your next question comes from Terry Beelman, Investor. Please go ahead.
Yes. Hi.
Hi.
If the company had the crews, how many of the rigs could be utilized if you had no issues with hiring? If you had unlimited crews, how many of the rigs could be utilized?
Well, actually, certainly the industry is probably working at capacity right now. There is more demand than supply, which helped the drilling companies to increase their prices right now. All the drilling companies don't have enough people to run, you know, all the machines out there. It is how it is. You know, our response to that is we are one of the only company that owns its own driller training internally, which is a key differentiator, as well as we combine this with the computerized technology, which accelerate our capacity to train drillers down the road.
Right now, you know, we're running in Canada at capacity with the number of people we have, and we are training like fast track to bring more people to our operation, which impact our costs actually. But we do expect that this will pay back, you know, in the quarter to come. In Burkina Faso, it's not the same. We have access to people. It's not a challenge. We can take more, but right now we are running close to full capacity in terms of number of machines. In Chile, we're still ramping up right now, so we don't see this challenge of manpower right now. Mainly this challenge now is from the Canadian operations.
In Canada, because of such high demand, are the contracts that are being signed for a longer timeframe? For example, maybe six months to a year instead of something shorter timeframe?
This is something that is really interesting. While prices are going up, some clients wants to commit for more long term. That's fair enough. Us and our strategy is to commit on reasonable prices on the timeframe. There is a mix of short term and long term. We do not like to commit on low prices right now for a long term period. We know that the market is favorable for price increase, so we stay careful. We look as well to the long term stability. You're right to say that right now some clients wants to secure for more long term.
You know, our intent is to take the good contracts and strategically position ourselves on long term profitable contract.
Okay. Lastly, as a shareholder, I'd like to say how pleased I am with how well the company is positioned for this cycle. I see where today you have roughly 220 rigs, and the stock is around CAD 1. In 2010, the company had around 150 rigs, and the stock was CAD 4-CAD 5. There are almost 50% more rigs, and the stock is at CAD 1 versus CAD 4-CAD 5 in 2010. Management has been able to add all those rigs with only a small amount of dilution to the share count. I have here about 15% was the dilution in the share count. It's right around 37 now, and it used to be around 33 million in the share count. That is remarkable.
I think management should be congratulated. Congratulations on being so well positioned for this cycle because if management believes as I do, this is just the start of the cycle and there's only 15% more shares than the last cycle, and you have 50%, roughly, more rigs.
Yeah.
I'm very pleased as a shareholder, and I wanted to let you know that. That was my last comment.
Thank you for the positive comment. We also believe that, you know, we are starting this new chapter as a good momentum right now to take advantage of our, you know, strategic position we made. Thank you very much. I really appreciate it.
Those were my questions. You're welcome. That was my questions. Thank you.
Thank you. Have a nice day.
Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. There are no further questions at this time. You may please proceed.
Okay. Thank you very much. If there is no other question, we will thank everybody right now for participation today and look forward to next quarter.
Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you very much for participating and ask that you please disconnect your lines.