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Good morning, ladies and gentlemen, and welcome to Orbit Garant Drilling's Fiscal 2023 Third Quarter Results Conference Call and Webcast. [Operator Instructions]
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 Thursday, May 11, 2023.
I would now like to turn the conference over to Alexandre Pierre, President and CEO of Orbit Garant. Please go ahead, sir.
Thank you, Sergio. 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, and we'll conclude with comments on our outlook. We will then welcome questions.
Our positive business momentum continued in the third quarter. We reported the highest fiscal Q3 revenue in Orbit Garant's history. And our adjusted gross margin, EBITDA and net earnings all improved significantly compared to the same period last year, just as they did in the first 2 quarters of fiscal 2023.
Our fiscal third quarter is typically our weakest period of the year from a seasonal standpoint. That is due to a gradual ramp-up operation -- of operation after the shutdown during the holiday season and harsh winter weather condition here in Canada. However, we benefit this year from continued strong customer demand and increased specialized drilling activity in Canada as well as disciplined cost control.
The improvement in our Q3 results this year also reflects project ramp-up costs in Canada and project mobilization costs in Guinea and Chile that we incurred in the Q3 last year. Our performance in Q3 a year ago was also impacted by temporary work disruption in Canada and Chile related to the outbreak of Omicron variant.
Our drill utilization rate in the quarter was approximately 62% and has now exceeded 60% in 6 of the last 8 quarters, reflecting consistent strength in customer demand. We believe that we can continue to increase our capacity utilization to drive higher margin. Our target utilization rate is approximately 75%.
We have committed to a 5-point plan for profitable growth over the next 15 months, primarily focusing on Canadian gold drilling operations, prioritizing longer-term specialized drilling contracts with major and intermediate customer, opportunistically accepting international contracts that present a high degree of cost and margin certainty while gradually reducing exposure to Burkina Faso and continued investment in driller training and computerized drilling technology and building a team-oriented leadership structure that fosters collaboration and personal accountability. We are targeting sustained adjusted gross margin in excess of 20%.
I am determined, along with our Board and my fellow management team members, to fully realize our bigger potential and build shareholder value.
I will now turn the call over to Daniel to review our third quarter results in more detail. Daniel.
Thank you, Pierre, and good morning, everyone. Our fiscal 2023 third quarter revenue totaled $49.3 million, a record high for fiscal third quarter, as Pierre noted, has an increase of 9.2% from Q3 last year.
Canada revenue totaled $38.5 million, up 18.5% from Q3 last year, reflecting increased specialized drilling activity and improved pricing. The increase also reflects temporary work disruption we experienced in Q3 last year due to the Omicron variant.
International revenue was $10.8 million compared to $12.7 million in Q3 last year, reflecting a reduction in drilling activity in Burkina Faso, partially offset by increased activity in Chile and Guinea. We are gradually decreasing our drilling activity in Burkina Faso but remain active on one drilling contract.
Gross profit for the quarter increased to $4.6 million from $0.3 million in Q3 last year.
Adjusted gross margin, excluding depreciation expenses, was 14.4%, up from 6.7% a year ago. Our increased margin in Q3 this year were attributable to increased specialized drilling activity, improved pricing and cost controls. Prior year margins were also impacted by project ramp-up costs in Canada, mobilization costs for long-term projects in Chile and Guinea and work disruption in Canada and Chile related to Omicron variant.
G&A expenses were 7.2% of revenue in the quarter compared to 8.5% of revenue in Q3 last year.
EBITDA for the quarter increased to $4.5 million compared to a negative $0.5 million in Q3 last year.
Net earnings were $0.2 million or $0.01 per share compared to a net loss of $4.1 million or $0.11 per share in Q3 a year ago.
The positive variances in EBITDA and the net earnings were attributable to the factor already discussed as well as a $0.7 million foreign exchange gain in the quarter.
Now turning to our balance sheet. During the quarter, we withdrew a net amount of $2.6 million on our credit facility compared to a withdrawal of $2.1 million in the same period last year. Our long-term debt under the credit facility, including USD 1 million draw from our USD 5 million revolving facility and the current portion, was $24.3 million at quarter end compared to $31.5 million as at fiscal 2022 year-end. This reduction primarily reflects the utilization of a substantial portion of the $8.5 million loan from the Business Development Bank of Canada that was secured in the first quarter this year.
At quarter end, our working capital position was $55.9 million compared to $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 improving financial performance. We have now reported 4 consecutive quarters of significant year-over-year growth in profitability. Our year-to-date adjusted gross margin was 16.3%, up to 10.3% in the first 9 months a year ago. Our year-to-date net earnings are $3.4 million, a significant improvement from a net loss of $7.1 million in the same period last year.
We are committed to maintaining and building our momentum with our 5-point plan supported by continued strong customer demand and the improved pricing environment in Canada. We believe that the outlook for the mineral drilling sector remains strong, particularly in the gold industry.
Oil prices have increased during this calendar year and are currently near record high, above $2,000 an ounce. This provides incentive for gold mining companies to maintain or expand their exploration and development spending.
We generate about 2/3 of our revenue from our gold operation, where we have long-standing customer relationships with leading gold mining companies who recognize our expertise, reliability and strong operating performance. Accordingly, we are well positioned to capitalize on continued strong customer demand from this sector. We believe that by executing on our strategy, we will drive stronger returns for our shareholders during this positive business cycle.
That concludes our formal remarks this morning. We will now welcome any questions. Sergio, please begin the question period.
[Operator Instructions] Mr. Alexandre, it looks like there are no questions.
Thank you to everyone for participating today. We look forward to speaking with you again in the coming quarters.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.