Good morning, ladies and gentlemen, and welcome to Orbit Garant Drilling Fiscal 2023 Fourth Quarter and Year-End Results Conference Call and Webcast. At this time, all lines are in listen-only mode. Following management 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 risks and non-IFRS measures. This call is being recorded on Wednesday, September 20, 2023.
I would now like to turn the conference over to Mr. Pierre Alexandre, President and CEO of Orbit Garant. Please go ahead, sir.
Thank you, Joel, and good morning, ladies and gentlemen. With me on the call is Daniel Maheu, CFO. Following my opening remarks, Daniel will review our financial results in greater detail, and I will conclude with comments on our outlook. We will then welcome questions. We generate improved financial performance during the fiscal 2023, as strong customer demand in Canada drove increased specialized drilling activity and improved pricing on contract relative to the prior year. Revenue for fiscal 2023 was a record of CAD 201 million, an increase of 2.8% compared to fiscal 2022. Adjusted gross margin increased to 16.2%, up from 12.2% last year. Adjusted EBITDA nearly doubled to CAD 19.1 million, compared to EBITDA of CAD 10 million last year.
However, the positive momentum that we carried through most of the year was impacted in our fourth quarter by a temporary reduction of drilling activity in Canada. The decline is partly attributable to forest fire in Quebec. We had to suspend drilling activities on all of our surface and underground drilling projects in Quebec, as well as one surface project in Ontario for various periods, beginning on May 29th and continuing into July. This result in a revenue reduction in Q4 of approximately CAD 3 million. In addition, certain customers decide to temporarily suspend or reduce drilling activity on other projects. These decisions were company-specific and had nothing to do with our performance. However, they impact revenue in Q4. Fortunately, we began ramping up the projects that were suspended due to forest fires in early July. By July 26th, all of these projects were fully resumed.
We expect to resume operation on all our projects in which drilling activity was temporarily suspended and reduced due to customer decision by January 2024. One of these projects, which is a major customer, already resumed in the middle of last month. Our fourth quarter results were also impacted by a one-time non-cash restructuring charge of CAD 4.2 million related to our decision to wind down drilling activities in Burkina Faso and exit the country. We expect to complete our drilling program in Burkina Faso during the second quarter of fiscal 2024. This decision to exit Burkina Faso is based on our assessment of the significant additional investment required to generate an acceptable return on our investment in this market, as well as the increased and ongoing security concerns within the country.
I will now turn the call over to Daniel to review our fiscal fourth quarter and full year's results in more detail. Daniel?
Thank you, Pierre, and good morning, everyone. Our fiscal 2023 fourth quarter revenue totaled CAD 46.8 million compared to CAD 53.8 million in Q4 last year. Canada revenue totaled CAD 32.6 million, a decline of 22.6% from Q4 last year. As Pierre noted, the decline reflects the reduction of drilling activity in Canada due to forest fire in Quebec and customer decision to temporarily suspend or reduce activity on certain other projects. International revenue increased to CAD 14.2 million compared to CAD 11.8 million in Q4 last year, primarily reflecting increased drilling activities in Chile. Our drilling utilization rate in Q4 was approximately 54%. That was lower compared to the recent quarter due to the impact of forest fire and customer decision to temporarily suspend or reduce activity on certain other projects.
The CAD 4.2 million one-time non-cash restructuring charge relating to our decision to exit Burkina Faso reflects a write-down of inventory to the net realizable value. Gross profit for the quarter was CAD 0.7 million, compared to CAD 6.9 million in Q4 last year. The decrease was primarily due to the restructuring charge and the reduced activity in Canada. Adjusted gross margin, excluding depreciation expense and the write-down of inventory from restructuring, was 15.9%, compared to 17.2% a year ago, reflecting lower revenue due to reduced drilling activity in Canada. G&A expenses were 10.9% of revenue in the quarter, compared to 7% of revenue in Q4 last year.
Adjusted EBITDA for the quarter was CAD 1.8 million, compared to EBITDA of CAD 5.7 million in Q4 last year, reflecting the reduced drilling activity in Canada. Net loss was CAD 4.1 million, or CAD 0.11 per share, compared to net earnings of CAD 0.5 million, or CAD 0.01 per share, in Q4 a year ago. The net loss in Q4 this year was primarily attributable to the restructuring charge and reduced drilling activity in Canada. Now, turning to the results for the fiscal year-end, June thirtieth. Revenue for fiscal 2023 was a record CAD 201 million, an increase of 2.8% compared to fiscal 2022.
Canada revenue totaled CAD 152.1 million, an increase of 4.8% compared to last year, reflecting increased specialized drilling activities and improved pricing, partially offset by the reduction of drilling activity in Canada during the fourth quarter. International revenue was CAD 48.9 million, a slight reduction from CAD 50.3 million last year, reflecting a reduced drilling activity in Burkina Faso, partially offset by increased activity in Chile and Guinea. Gross profit for fiscal 2023 increased to CAD 18.3 million from CAD 13.7 million in fiscal 2022. The increase was primarily attributable to increased specialized drilling activity, improved pricing, and cost control in Canada, partially offset by the CAD 4.2 million restructuring charge and the reduction of drilling activity in Canada during Q4.
Prior year margin were also impacted by higher project ramp-up costs in Canada, mobilization costs for new long-term projects in Guinea and Chile, and Omicron-related work interruption that began in November 2021. Adjusted gross margin, excluding depreciation, expense, and write-down of inventories from restructuring, was 16.2% in fiscal 2023, compared to 12.2% a year ago. The increase was primarily attributable to increased specialized drilling activity, improved pricing and cost control in Canada, partially offset by the reduction of drilling activity during Q4. G&A expense were 8.2% of revenue in fiscal 2023, compared to 7.4% of revenue in the prior year. Adjusted EBITDA for fiscal 2023 increased to CAD 19.1 million compared to EBITDA of CAD 10 million last year.
Net loss for fiscal 2023 was CAD 0.7 million, or CAD 0.02 per share, compared to a net loss of CAD 6.6 million, or CAD 0.18 per share, in fiscal 2022. Our growth in adjusted EBITDA and our reduced net loss for fiscal 2023 was primarily due to a higher proportion of specialized drilling activity, improved pricing and cost controls in Canada, and a foreign exchange gain of CAD 1.9 million, partially offset by write-down of inventory from restructuring and the reduction of the drilling activity in Canada during Q4. Our net loss for fiscal 2023 also reflect a CAD 1.1 million dollar increase of interest expenses. EBITDA and our net loss in fiscal 2022 also reflect higher ramp-up costs and mobilization costs and Omicron-related work interruption.
Now, turning to our balance sheet. During fiscal 2023, we repay a net amount of CAD 4.4 million of long-term debt and lease liabilities. In fiscal 2022, we generate a cash flow of CAD 2.7 million from financing activity. We repay a net amount of CAD 9.3 million on our credit facility during fiscal 2023, compared to a withdrawal of CAD 7.3 million last year.
Our long-term debt under the credit facility, including $2 million draw from our $5 million revolving facility, and the current portion, was CAD 22.2 million as at fiscal year-end, compared to CAD 31.5 million as at June a year ago. The reduction primarily reflects the utilization of a substantial portion of the CAD 8.5 million loan from the Business Development Bank of Canada that was secured in the first quarter of fiscal 2023. As at June 30, 2023, our working capital position was CAD 50.4 million, compared to CAD 53.4 million at our fiscal 2022 year-end.
I will now turn the call back to Pierre for closing comments. Pierre?
Thanks, Daniel. We are pleased with our overall performance for fiscal 2023. Unfortunately, our results for the year were negatively impacted by the suspension of drilling activities in Canada late in the fourth quarter, as discussed previously. These project suspension will negatively impact our fiscal 2024 first quarter results and, to a lesser extent, our second quarter results. Despite this temporary challenge, we remain positive on our longer-term outlook. Customer demand, particularly in Canada, remains strong, although we have experienced a softening in demand from our junior customers. We are experiencing growth, sorry, in our drilling activity in Chile and Guinea. Our pending exit from Burkina Faso will allow us to focus more on these markets and customers. The underlying fundamentals driving our business are solid. Gold price remain at historically strong level, above $1,900 an ounce.
Gold producers are generating very strong margins at this price, while struggling to replace their reserves. We are confident that continued high level of exploration and development spending will be maintained in this industry for the foreseeable future. We continue to generate approximately 2/3 of our revenue from gold drilling, so we have high exposure to this sector. Copper prices have also remained at elevated levels over the past 12 months, despite rising interest rates and economic uncertainty. Copper is needed for the ongoing electrification of the global economy, which is expected to drive strong demand for the rare metal for many years to come. A healthy copper market is positive for our Chilean operations.
Looking ahead, we remain focused on our 5-point plan, which consists of primarily focusing on Canadian gold drilling operation, prioritizing long-term specialized drilling contract with major and intermediate customer, pursuing international contract that offer attractive return and high degree of cost and margin certainty, continue investment in driller training and computerized drilling technology, and building a team-oriented leadership structure that fosters collaboration and personal accountability. By continuing to execute on this plan, we believe we can drive growth and build value for our shareholders.
That conclude our formal remark this morning. We will now welcome any question. Operator, please begin the question period.
Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch tone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from the polling process, please press 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 Gordon Lawson with Paradigm Capital. Please go ahead.
Hello, good morning, and thanks for taking my question. Your international segment had an excellent year-over-year gain. Can you provide more insight into the Chilean contribution? And, if you can further break that down, how much of that comes from senior and intermediate copper companies?
Yes, in Chile, most of our CAD 30 million revenue came from major company in Chile, Anglo American, and also these kind of companies. So, the level of CAD 30 million increased from the CAD 27 million last year. So from CAD 27 million , we came to CAD 30 million this year, and we expect to increase this level of income because we are actually in the process of being with the major customer for new contract in Chile. At least one or two major contracts are in discussion, actually, in Chile.
Okay, great. Thank you. Also, your margins had an excellent improvement from last year. Aside from the ramp-up costs you mentioned earlier, can you help us get a better understanding of that increase in terms of which segments and commodities are providing the boost?
Essentially, the ramp-up cost is related to a copper contract with essentially a major customer in Chile, and-- Actually, these contracts are going well, and they are extend for 2024 as well. So, these costs are non-recurring, and we expect margin in Chile to be stable or increase in the next fiscal year. And we see very good opportunity actually in Chile.
How much of that would you say is specialized versus simply having an excellent relationship with the majors?
Well, I would say that the type of service that we offer over there. We do dewatering and other service that we offer. That's one of the reasons why our margin are better, you know, with these customer, these client.
Great. Thank you very much.
Thank you.
Next question comes from Terry Lima with-- He's a private investor.
In the fourth quarter, the adjusted EBITDA had a CAD 1.8 million income tax hit. I'm sorry, a CAD 2.1 million income tax hit. Did I see the table correctly there? So the actual, you had a net loss in the quarter, yet the company paid CAD 2.1 million in taxes. And so, the Adjusted EBITDA, adjusted for the income tax expense, would actually be the CAD 1.8 million, plus the CAD 2.1 million added back that you paid in taxes, so it would be CAD 3.9 million.
You're right. In Q4, we made an adjustment for income tax because essentially in Chile, in the last two, three years, we are negative, so we don't record any income tax expenses or, let's say, tax loss was not accounted as an asset, so a future asset, income tax. So with the result we have in Chile in the last year, so we are, let's say, more poor. We -- That's reduced a lot our income tax expense for the year, and we take this provision in Q4. So essentially, as we indicated-
Okay.
So it's a kind of adjustment for the Chilean tax, which affect our global tax expenses, and we do this adjustment in Q4.
Also, the CAD 3 million revenue loss to fires reduced your adjusted EBITDA roughly how much in Q4? I'm assuming you had to pay crews despite no revenues, so maybe a CAD 2 million-CAD 2.5 million EBITDA was affected there.
You see, we have an adjusted, we have an adjusted percentage as a percentage of roughly 10%. I don't think it's CAD 2 million, but it's probably more around CAD 1 million EBITDA adjustment negatively for the quarter in Q4. Yes.
Okay. When I see your adjusted gross profit margin in the high teens and I compare it to your market peers, the adjusted gross profit percent is below your market peers, who are in the low to mid-20%. What is the reason for that? Is that from Burkina Faso losses, possibly, or is there something else?
No, you're, you're right. This is related to our international operation. We are experiencing very hard results in Burkina Faso, and that's why we want to exit this country. And also, Chilean operation is going well now, but in the last few, let's say, in calendar year 2022, Chilean operation was not so good. So, we are not, we are now, since January 2023, in a better position in Chilean operation. But if we look only our Canadian operation, the, the margin are near the 20%. But, you're right, the international operation in fiscal 2023 affect us a lot.
And we expect to have a better contribution with the international operation in the 2024 and 2025 fiscal year, essentially based on the exit of Burkina Faso and the growth of the gross margin in Chilean operation. And as I mentioned before, we are looking for major contract in Chile, for 2024, 2025, and if that's, it's conclude, that will be a good contribution to our growth margin in the next fiscal year.
Okay. In the last 12 months, what was the amount of losses for Burkina Faso?
Well, it's too much. First, I would like to say that it's too much, and that's why we go through. You see, we take a CAD 4.2 million write down, essentially based on the inventory. The last, let's say, EBITDA is, if we look only at Burkina Faso, the EBITDA was negative for roughly CAD 2 million.
That was for the last 12 months, yes?
Yes.
Okay. Last question. In the quarter, on the Q4, with the CAD 3 million sales from the revenue from fires lost and the CAD 6 million temporarily suspended being pushed out into future quarters. So without those two things happening, your sales would have been about CAD 56 million in the Q4 versus CAD 53 million year-over-year. Is that about right?
It would be the sales in the Q4 should be around CAD 8 million- CAD 10 million better if we don't have the suspension and fire. Let's say between CAD 8 million- CAD 10 million .
Okay.
Of revenue.
Okay, the CAD 8 million- CAD 10 million sales have not been lost, they've been pushed out to future quarters. Is that correct?
We are affect with the fire till the end of July. In Q1, it will be around CAD 1 million less revenue. Between CAD 1 million-CAD 2 million less revenue in Q1, and the suspension will be less than six. It will be around four, let's say. We saw some customer start operation, but we saw in the market actually with large major and intermediate customer a reduction of budget for exploration. We-- They want to restart later in the calendar year of 2023.
So, Q1 will be affected for sure if, with fire for a month and for the suspension of operation or reduction, because on contract, we have four drills, and now we run only one or two drills. So this is, we saw this trend with a lot of, let's say, five, six large customers in Canada.
Okay. Thank you for taking my questions. Those were all of my questions. Thank you.
Thank you very much.
Thank you. Have a good day.