Good morning, ladies and gentlemen, and welcome to Orbit Garant Drilling's fiscal 2026 first quarter results conference call and webcast. At this time, all lines are in 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 certain 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. Please refer to the company's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on Thursday, November 13th, 2025. I would now like to turn the conference over to Mr. Daniel Maheu, President and CEO of Orbit Garant Drilling. Please go ahead, sir.
Thank you, Julian, and good morning, ladies and gentlemen. With me on the call is Pier-Luc Laplante, Chief Financial Officer. Following my opening remark, Pier-Luc will review our financial result in greater detail, and I will conclude with comments on our outlook. We will then welcome questions. Our financial result for the fiscal first quarter reflects the impact of a few short-term issues. In Canada, we complete drilling activities on certain projects earlier in the quarter, and we gradually ramp up activity on new projects, which typically yields lower gross margins at this early stage of operation. In addition, customers temporarily delay certain drilling projects in Canada and South America during the quarter. These were company-specific decisions that had nothing to do with our performance. For instance, one of our projects in Chile was delayed due to an earthquake in the area.
Fortunately, no personnel of Orbit Garant was injured, and this project resumed after a couple of weeks. Revenue for our first quarter declined by 3.7% compared to Q1 last year, reflecting the short-term impact. Adjusted gross margin was 17% compared to 20.2% in Q1 last year. We expect to benefit from the resumption of delayed projects in Canada and South America, and the continued advancement of our ramp-up activities on newer projects in Canada in our fiscal second and third quarter. Demand for drilling services in both Canada and South America is increasing, supported by near-record gold prices and elevated copper prices. Our building activities on new projects have increased significantly in the recent weeks. In addition, many current customers are informed of us that they intend to increase drilling activities over the next 12 months. We have the operational capacity to accommodate this higher customer demand with minimal CapEx.
Accordingly, we have an opportunity to expand profitability as demand picks up despite a highly competitive environment. I will now turn the call over to Pier-Luc to review our financial result for the first quarter in greater detail. Pier-Luc?
Thank you, Daniel, and good morning, everyone. Revenue for the quarter totaled CAD 46.7 million compared to CAD 48.4 million in Q1 last year. Canada revenue was CAD 33.7 million in the quarter compared to CAD 35.4 million last year, reflecting lower drilling activity due to drilling project completions, client-initiated project delays, and the gradual ramp-up of new projects. International revenue totaled CAD 13.0 million, similar to Q1 a year ago, as higher revenue in Chile was offset by lower revenue in Guyana. Growth in South America was constrained by client decisions to temporarily delay certain projects, as Daniel noted. Gross profit was CAD 5.7 million, or 12.1% of revenue, compared to CAD 7.6 million, or 15.8% of revenue in Q1 2025. Adjusted gross margin, excluding depreciation expenses, was 17.0% in the quarter compared to 20.2% in Q1 last year.
The decreases in gross profit and adjusted gross margin were primarily attributable to drilling project completions and the gradual ramp-up of new projects in Canada and client-initiated project delays in both Canada and South America. Adjusted EBITDA totaled CAD 3.7 million, down from CAD 6.2 million in Q1 last year. The decrease was primarily attributable to lower operating earnings in Canada and international segments for the reasons I just noted. Net earnings for the quarter were CAD 0.3 million, or CAD 0.01 per share, diluted, compared to CAD 2.9 million, or CAD 0.08 per share, diluted, in Q1 last year. The reduction was due to lower operating earnings in both segments, as discussed. Turning to our balance sheet, we withdrew a net amount of CAD 5.3 million on our credit facility in the quarter compared to a net repayment of CAD 0.5 million in Q1 a year ago.
Our long-term debt under the credit facility, including an undrawn $5.0 million US dollar revolving credit facility and the current portion, was CAD 19.3 million as of September 30, 2025, compared to CAD 14.0 million as of June 30, 2025, our fiscal 2025 year-end. Our increased debt was primarily the result of our yearly shipments of equipment and inventory for our operations in Nunavut. We expect to be active in paying down debt on a net basis throughout the remainder of the year. On October 28, we announced that the Toronto Stock Exchange approved our renewed normal course issuer bid, which allows us to repurchase up to 500,000 shares over a 12-month period that began on October 31, 2025. Under our previous NCIB, which expired on October 30 of this year, we repurchased and canceled 68,916 of our common shares at a weighted average price of CAD 0.82 per share.
We continue to view the NCIB as a useful tool to enhance shareholder value when the underlying value of Orbit Garant Drilling is not reflected in our share price. Our working capital was CAD 55.1 million as of September 30, 2025, compared to CAD 50.4 million at the end of fiscal 2025. I'll now turn the call back to Daniel for closing comments. Daniel.
Thank you, Pierre-Luc. We are confident in our business outlook for the remainder of fiscal 2026. The temporary issues that impact our first quarter result are rapidly being resolved. As delayed projects resume and newer projects continue to ramp up, we are getting back on track, and we are well-positioned to accommodate increasing customer demand. The current mineral price environment provides strong support for the demand. Gold prices reached all-time highs last month, above CAD 4,300 an ounce. The gold mining industry is generating very attractive margins and current prices, which remain above CAD 4,000. Miners have a strong motivation to spend more on exploration and development to expand their reserves as much of their low-grade material as now becomes profitable to extract. Copper prices also hit record levels earlier this year and are currently above CAD 5 per pound.
The supply-demand outlook for copper is favorable and supports elevated prices going forward, which is positive for our Chilean operations. Demand for both senior and intermediate mining customers is increasing, as we are encouraged by the recent increase in financing activities in the junior mining sector. While it has not immediately resulted in higher demand for our drilling services, we are optimistic that juniors will eventually deploy more capital on exploration. We plan to selectively pursue more businesses with juniors as demand rises. Our priorities going forward remain the same. First, a strategic focus on senior and well-financed intermediate customers in Canada and South America. Second, our disciplined business strategy, and finally, our continuous operational improvement program. By focusing on these three priorities, we intend to capitalize on opportunities in this period of elevated customer demand to deliver enhanced profitability on a sustainable basis and stronger returns for our shareholders.
That concludes our formal remarks this morning. We will now welcome any questions. Julian, please begin the question period.
Thank you. As a reminder to ask a question, please press star, followed by the number one on your telephone keypad. To withdraw any questions, press star one again. We'll pause for just a moment to compile the Q&A roster. Once again, to ask a question, please press star, followed by the number one on your telephone keypad. Our first question comes from Kerem Aksoy from Glacier Pass. Please go ahead. Your line is open.
Hi. Thanks for hosting the call today and for all the commentary. I was wondering if you could just follow up a little bit on some of the prepared remarks you had in terms of the overall market outlook. You talked about bidding activity increasing and your clients looking to increase their activity. Maybe I'd just be interested, versus the first half of the year, how many tender opportunities are you seeing now? It'd also be great to get some color on what your existing customers are saying. In the beginning of the year, there were estimates that exploration budgets could be increased by up to 20% year -over -year. That obviously kind of has not come to fruition, but do you think we might see that with a delay? Yeah, I'd appreciate any thoughts. I had two other questions afterwards as well.
Okay. Thank you for the question. Actually, what we saw, our customers are in the processing of doing their exploration budget for calendar 2026. There are requests directly for increasing on some contracts that we have with major and intermediate customers here in Canada to increase by one, two drills in the 2026 calendar. Is that possible for us? For sure, we have a great opportunity because we have a rate of activity of roughly 56% of our drills. For sure, it is easy for us to increase our activity with these actual customers. For your second question, yes, we saw since, let's say, in the last six-eight weeks, more requests for bids from major customers in Chile, in Canada, and also intermediate customers. Recently, in the last few weeks, smaller junior requests for bids. That is something positive for us.
Okay. Thank you for that. I appreciate that. Maybe just two more technical questions. During the quarter, you talked about the negative change in working capital for moving equipment. Just for the full year, I was curious, do you expect that working capital to be a source or a use of cash?
For the year, yes, we expect, but we think that for us, one of the main calls that we have about that is in summer, we have to send equipment to our northern projects, equipment and inventory. That is because the barges have to leave before and come back before the ice forms. We have to send most of the equipment needs for the next year and most of the inventory needs for the next fiscal, well, this fiscal year, fiscal year 2026.
I appreciate that.
It should stabilize in the next coming months and the rest of the quarters, yes.
Gotcha. For full year, working capital will be kind of flat?
Yes.
That's helpful. Just kind of a last question. Just looking at Q2, you mentioned that you were seeing the benefit of a ramp-up of new activity. I was just wondering, do you think the issues of Q1, have they fully played out, or do you think they might leak into Q2 as well, or should Q2 be more of a normalized quarter?
We expect some of them to remain in Q2, and we anticipate that some of them will have resolved. We think that some of the client delays, most of them have resolved right now, but some of them will resume in January of 2026.
Okay. Thank you for that, Kerem. I appreciate it. That was it.
Thank you for your question.
We have no further questions. I would like to turn the call back over to Daniel Maheu for any closing remarks.
Thank you to everyone for participating today. We look forward to speaking with you again soon.
This concludes today's conference call. You may now disconnect.