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Good morning. My name is Adam, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Orbit Garant Drilling Third Quarter Results Conference Call. [Operator Instructions]Eric Alexandre, President and CEO, you may begin your conference.
Thank you, Adam, and good morning, ladies and gentlemen. With me on the call today is Alain Laplante, CFO. Following my opening remarks, Alain will review our third quarter financial results, and I will conclude with comments on our outlook and growth strategy. We will then welcome questions.This call is being recorded, and a replay will be available shortly. Instructions for accessing the replay can be found in our news release.Please be aware that certain information discussed today may be forward-looking, and that actual results could differ materially. We will also be discussing certain non-IFRS measures. Please refer to our SEDAR filings for additional information on both our risk factors and non-IFRS measures.Customer demand for our drilling services both in Canada and our international operations remained strong as reflected by our 21% increase in meter drilled during the quarter compared to Q3 last year and a 26% increase year-to-date. We are also seeing growing demand for specialized drilling services, and we are realizing increased pricing on new contracts. These factors have resulted in us achieving our highest revenue total for our first 9-month fiscal period in company history. We have exceeded $40 million in revenue in each quarter this year, with our historically strongest fourth quarter to come. We did not reach $40 million in revenue in the quarter last year.Our expanded international operations continue to make a major contribution to our growth, demonstrating the success of our international expansion strategy. Our international operations have contributed 30% of our consolidated revenue in both our fiscal 2018 third quarter and year-to-date period. The increased demand we are experiencing reflects industry-wide trends.According to research published by S&P Global Market Intelligence, global exploration spending for nonferrous metals increased approximately 15% when estimated to USD 8.4 billion in 2017 compared to USD 7.3 billion in 2016. This represents the first annual increase in global exploration spending since 2012. S&P forecasts that global exploration spending for nonferrous metals for 2018 will increase by a further 15% to 20% year-over-year. Closer to home, Natural Resources Canada's latest national survey on mineral exploration and deposit appraisal expenditures indicates that mining companies in Canada spent $2.1 billion on these activities in 2017, an increase of nearly 30% from 2016. They have also forecast that spending in 2018 will increase from 2017 levels.With the sustained growth in demand for our services both in Canada and internationally as we continue to build market share, we have to invest in scaling up our operation, training new employees and mobilizing equipment and crews for new project. These factors are reflected in our gross margins, particularly in our third quarter this year.Our margins in the quarter were also impacted by higher fuel and maintenance costs, partially due to adverse weather conditions in Canada and the temporary suspension of a major contract in Chile.We expect our margins to improve going forward as our drilling crews gain more experience and higher fuel costs are mitigated by warmer weather in Canada and improved contract pricing.Now I'd like to turn the call over to Alain Laplante to review our financial results in more detail. Alain?
Thank you, Eric, and good morning, everyone. The size of our fleet was 220 drilled rigs at the end of the second quarter. We manufactured 4 new drilled rigs in the quarter, while 4 conventional drilled rigs were dismantled. We currently have 33 drilled rigs outfitted with our computerized monitoring and control technology. We are now starting to roll out computerized surface drills for customer projects.Our drill utilization rate in Q3 was 64%, marking the fifth straight quarter we have exceeded 60%. The last time we achieved 5 straight quarters with utilization over 60% was in fiscal 2011 and 2012. Our utilization rate was 61% in Q3 last year.Our fleet drilled approximately 379,000 meters in the quarter, up 21% from Q3 last year.Average revenue per meter drilled was approximately $114 in the quarter, up from $95 in Q3 last year.Our consolidated revenue in the quarter was $43.1 million, up 44% from Q3 a year ago. We have now achieved 13 consecutive quarters of year-over-year revenue growth.Drilling Canada revenue was up 29% from Q3 last year, reflecting higher average revenue per meter, increased meter drilled and specialized drilling activity.Drilling international revenue was $12.9 million, nearly double the $6.5 million we reported in Q3 last year. This includes $10.3 million of revenue from Chile compared to $5.3 million in the same quarter a year ago. The remaining increase in international revenue was attributable to increased drilling activity in Guyana and Burkina Faso.Gross profit for the quarter was $2.2 million, up from $1.2 million last year. Our adjusted gross margin, excluding depreciation expenses, was 9.8% compared to 10.7% in Q3 a year ago.As I acknowledged earlier, our lower adjusted gross margin was attributable to a decline in productivity and the temporary suspension of a major contract in Chile. The decline in productivity was due to a higher portion of less experienced drillers on projects in Canada and Chile. We also experienced significantly higher fuel and maintenance costs in Canada compared to Q3 last year due to increased fuel prices and more adverse weather conditions in Canada.G&A expenses for the quarter were $3.9 million or 9.2% of revenue compared to $3.8 million or 12.6% of revenue in Q3 a year ago.EBITDA was $0.9 million compared to a negative $0.5 million in Q3 last year. We had a net loss of $1.3 million or $0.04 per share in the quarter compared to a net loss of $2.2 million or $0.06 per share in Q3 a year ago.For the year-to-date period, we are earnings positive at $1.2 million or $0.02 per share compared to a net loss of $4.3 million or $0.12 per share in the comparable period a year ago.Turning now to our balance sheet. At quarter-end, we had $18.8 million drawn from our credit facility compared to $13.6 million as of June 30, 2017. Our working capital was $51.4 million compared to $30.8 million at year-end fiscal 2017.The substantial increase in working capital was due to the signing of a new credit agreement on November 2, 2017. As a result of this agreement, the outstanding amount under the credit facility was reclassified from current debt to noncurrent debt.Our strong balance sheet provides us with significant financial flexibility to support our growth plans.I'll now turn the call back to Eric for closing comments. Eric?
Thanks, Alain. We are pleased with our strong business momentum both in Canada and internationally. We believe the outlook for mineral drilling industry is very positive at this time, and our view is supported by the industry data I discussed in my opening remarks.Looking ahead, we will continue to pursue growth opportunities in both Canada and our target international markets. We will also remain focused on achieving productivity improvements to drive margin growth and improve profitability.That concludes our formal remarks. Alain and I will now be pleased to answer any questions. Adam, please begin the question period.
[Operator Instructions] And we have no phone questions at this time. I will turn the call back over to the presenters.
Well, thank you, Adam. So we'll terminate the call. Thank you, everyone, for listening and see you next quarter. Have a great summer.
Thank you very much, everyone. Have a nice day.
And this does conclude today's conference call. You may now disconnect.