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Good morning, ladies and gentlemen. Thank you for standing by. [Operator Instructions] I would like to remind everyone that this conference call is being recorded on Wednesday, November 12, at 10 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 and operational performance. These statements are considered forward-looking statements. Each forward-looking statement speaks only as of 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 Q3 2020 financial results conference call. I'll begin with an overview of our operations and performance for the quarter; and our CFO, Mr. Borsk, will then give a more detailed review of our third quarter financial results. After which, I'll discuss the outlook for the remainder of 2020 and beyond.While the world has changed, 2020 has shaped up to be a pivotal year in our growth strategy. We believe there are several catalysts that are key to our success. These include improving gold markets, supported by a run of equity financings, and expansion into a new geographical location.Gold continues to rally strongly, providing a positive impact on operating margins of gold producers and exploration budgets for juniors. This has been beneficial to Geodrill, with the majority of our customers being gold producers. Indeed, 90% of our revenue is derived from drilling for gold-based assets. This is providing a highly positive drop back -- backdrop to the demand for our services. We actually anticipated this and in preparing for the imminent uptick that we're now seeing in activity levels, we grew our rig fleet over the last 5 years to position Geodrill to benefit from the current momentum swing in the drilling sector in West Africa.Key accomplishments for the quarter just past are, an increase in EBITDA and earnings per share, reflecting the ongoing strength now in the performance of our operations. During the third quarter, we generated strong cash and maintained a robust balance sheet, demonstrating the success of our operating platform. We continued with long-term multi-rig contracts and secured new contracts with junior and mid-tier exploration companies.We also expanded our geographical footprint into Latin America, securing our first contract with a global mining company in Peru. As you all know, Latin America is a highly attractive and global -- growing global market with the fifth and the largest exploration budget worldwide.We further reduced our debt as we inch closer to clearing our debt completely by April 2021. And finally, we received a prestigious award at Africa Down Under in Perth or the Best Workforce and Industry Development Initiative. Now some of our analysts may have noticed that leverage was emitted from today's report. Kindly note that enforce, we will be focusing on reporting of revenue, utilization and margin. This is consistent with how most of the drillers report, and therefore, we would like to remain consistent with the industry. And so on that score, quarter 3 2020 revenue was down 7%. And this was consistent with a decline in rig utilization of 55% versus 60% a year ago in Q3 '19.Utilization was down 5 basis points, mainly due to COVID. Now when I say COVID, for West Africa, it was actually pretty much business as normal. But Zambia, perhaps out of an abundance of caution, but in any case, our customers took extreme measures of shutting beyond completed, and therefore, 0 utilization resulted into revenue for that region. Now to put this into context, in Q3 2019 a year ago, Zambia contributed $2.2 million to the quarter. So if we normalize that, revenue would have actually been up slightly in this current quarter. But it is what it is. But where we were down in revenue, we actually made up for their margin. Our revenue per shift increased 5%. And so while we were flat dollar-wise on EBITDA on a percentage basis, we actually improved year-over-year by 2 basis points.Average revenue per shift increased due to combination of; one, drilling mix; two, geographical mix; and three, pricing improvement.Quarterly net earnings was the significant improvement of the quarter. Quarterly net earnings were up 140% year-over-year. And this puts us at year-to-date net earnings of USD 0.12 or CAD 0.16, which is actually a slight improvement over where we were at this time last year.And this will improve further as we are currently seeing a strong finish to the year, much stronger than we did last year. So at that point -- at this point, I will turn the call over to Greg to discuss our Q3 2020 financial performance in detail. Thank you, Greg.
Thank you, Dave. The company recorded revenue of $18.9 million for Q3 2020 compared to $20.3 million for Q3 2019, representing a decrease of 7%. The decrease in revenue was due to a change in the mix of meters drilled. The gross profit for Q3 2020 was $4.3 million compared to a gross profit of $4.6 million for Q3 2019, being a decrease of $300,000.Despite the decrease in revenue, we were able to manage our cost of sales such that the gross profit percentage for the second quarter of 2020 was 23%, consistent with 23% for Q3 2019.Our tax expense was only $500,000 in Q3 2020 compared to $1.7 million in Q3 2019, reflecting a move towards direct taxation versus a withholding tax on revenue in certain countries in which we operate. Overall, the Q3 2020 net income more than doubled to $2 million for Q3 2020 or to $0.04 per share compared to $0.02 per share for Q3 2019.We continue to strengthen our balance sheet during Q3 2020, a quarter, which includes wet season and is typically our slowest quarter. We ended the quarter with $9.9 million of cash and decreased debt to $1.6 million, resulting in net cash of $8.3 million.We also increased our equity to [indiscernible] resulting in an industry-leading debt-to-equity ratio of only 2%. We continue to focus and build a strong balance sheet and this will only help Geodrill as we navigate into the future and explore any growth and any other opportunities. At this point, I will turn the call back to Dave.
Thank you, Greg. Before I move to the Q&A portion of the call, I'd like to provide a brief outlook for the remainder of 2020. As I alluded to just before Greg spoke, the outlook for Q4 is extremely busy. It will be a little bit stop-start because of the election period, we're currently having it here in West Africa. Currently, we've just seen elections in Ivory Coast last year -- last week. And in the coming weeks, we will have elections in December. But that aside, it will be a strong finish to an otherwise tumultuous year. And I'm expecting, even with these setbacks, we will have a significant improvement revenue-wise on a year-over-year basis.But the real kick will come in 2021, which is shaping up to be our strongest year ever in the history of the company. We have that to look forward to. So in summary, with the strength of the gold price and the end of the wet season in West Africa, we are experiencing strong activity levels, increased utilization and long overdue improved pricing.So on that note, I'm just going to quote -- end with a quote, I'll leave you with a quote, it's Warren Buffett who says, "Opportunities come infrequently. When it rains gold, put out the pocket, not the thimble." Thank you, Warren Buffett. And we could not agree with you more. We believe our broad scale, operational growth and financial strength positions us well to keep pace with the current momentum in the sector and generate greater returns for our shareholders going forward. Thank you.This concludes our prepared remarks, and thank you for participating in today's call. I'll now hand the call back to the operator to direct anyone who may have a question to ask.
[Operator Instructions] And there are no questions in the queue at this time.
Okay. Well, thanks very much.
Thank you very much.
Have a great day. Bye.
This concludes today's conference call. You may now disconnect.