Geodrill Limited (GEO), a leading drilling service provider, reported its financial results for the first quarter of 2024. Despite a slow start in January, the company returned to profitability with a net income of $2.1 million, or $0.04 per share. Revenue for the quarter was $34.7 million, down 8% from the $37.6 million reported in the same period last year.
The company attributes the decrease in revenue to a slower January, as some clients delayed resuming drilling activities after the holiday season. Gross profit for the quarter was $7.4 million, which is 21% of revenue, and EBITDA stood at $6.7 million, or 19% of revenue. Additionally, Geodrill expanded its total rig count to 89 drills, reflecting a rise in demand for its services, and secured new multi-year contracts worth $150 million with Tier 1 mining companies.
Key Takeaways
- Geodrill's Q1 2024 net income was $2.1 million, or $0.04 per share.
- Revenue decreased by 8% to $34.7 million compared to Q1 2023.
- Gross profit was $7.4 million, 21% of revenue; EBITDA was $6.7 million, 19% of revenue.
- The company increased its rig count to 89 drills due to growing demand.
- New contracts worth $150 million with Tier 1 mining companies were secured.
Company Outlook
- The outlook for 2024 remains strong with a solid order book.
- Key operations in Africa, particularly in Ghana, Cote d'Ivoire, and Egypt, continue to perform well.
- Partnerships with Tier 1 mining companies and robust contracts are expected to drive earnings.
Bearish Highlights
- Revenue and profitability in Q1 2024 have declined compared to Q1 2023.
- A slower January affected the quarter's financial performance due to delayed resumption of drilling activities by some clients.
Bullish Highlights
- Geodrill has returned to profitability after losses in the latter half of 2023.
- The demand for drilling services remains high across all sectors.
- The company achieved a new safety record with 16.2 million hours without a lost time injury.
Misses
- Q1 2024 revenue fell short of Q1 2023 figures by $2.9 million.
- Gross profit and EBITDA percentages were lower in Q1 2024 compared to the previous year.
Q&A Highlights
- No questions were asked during the Q&A session of the call.
In summary, Geodrill's first quarter of 2024 demonstrated a return to profitability and a strategic positioning to capitalize on a strengthening mineral drilling industry. Despite a reduction in revenue compared to the previous year, the company's expansion of its rig fleet and the securing of significant contracts are indicative of positive momentum. Geodrill's financial performance reflects its resilience and adaptability in a fluctuating market, with a forward-looking perspective that anticipates continued growth and success in the coming quarters.
Full transcript - None (GEODF) Q1 2024:
Operator: Good morning ladies and gentlemen. Thank you for standing by for today's call. Phone participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session and instructions will be provided at that time for you. [Operator instructions]. I would like to remind everyone that this conference call is being recorded on Monday, May 13 at 10:30 a.m., Eastern 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 day 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 detail from time to time in the company's SEDAR filings. I will now turn the call over to president and CEO of Geodrill Limited, Mr Dave Harper.
Dave Harper: Thank you operator good morning and welcome to Geodrill's Q1 2024 financial results call. I'll begin with an overview of our operations and performance for the quarter, after which Greg Borsk, chief financial officer, will present a comprehensive overview of our financial performance for the Q1 period. I will then share an outlook for the remainder of Q2. In Q1, Q2 returned to a profitable status, marking a turnaround from the losses incurred in the third and fourth quarters of 2023. The slight -- a slow January, we ended Q1 with impressive growth both in terms of revenue and profitability. Also noteworthy is that we ended the quarter with an upsized total rig count of 89 drills, after adding six drills to meet a recent increase in demand for our services. We also reached a new safety record, achieving 16.2 million hour without a lost time injury. Our drilling services continue to be in high demand across all sectors and this is evidenced by the securing of new multi rig, multi-year contracts worth $150 million. Significantly, included among these are two substantial long term agreements with Tier 1 mining companies. Our operations in Ghana, Cote d'Ivoire and Egypt continue to excel, backed by long term standing contracts with Tier 1 mining companies and multi-year contracts. The robust gold and copper markets continue to bolster demand with an up -- upward trend in demand. We remain optimistic about the enduring strength of the mineral drilling industry. Our strategic initiatives are aligned to capitalize on these market conditions, ensuring sustained growth and success and consistent with our business strategy of reinforcing market leadership while broadening our geographical footprint and diversifying across a range of commodities and resources. I'll now turn the call to Greg Borsk, our Chief Financial Officer, to review the financial results in detail. Thank you. Thank you, Greg.
Greg Borsk: Thank you, Dave. The company generated revenue of $34.7 million for Q1 2024, a decrease of $2.9 million or 8% when compared to $37.6 million for Q1 2023. The decrease in revenue is a result of a slower January in Q1 2024 compared to Q1 2023 as certain clients took longer to resume drilling activities following the holiday season. The gross profit for Q1 2024 was $7.4 million, being 21% of revenue compared to a gross profit of $12.2 million, being 32% of revenue for Q1 2023. EBITDA for Q1 2024 was $6.7 million or 19% of revenue compared to $10.5 million or 28% of revenue for Q1 2023. The net income for Q1 2024 was $2.1 million or $0.04 per share compared to net income of $6.1 million, or $0.13 per share for Q1 2023. We ended the quarter with net debt of $2.7 million as we were able to draw down on our new medium term facility to support rig purchases and other ancillary equipment for a new underground contract. We are well positioned to meet the demand of numerous multi rig, multi-year contracts with Tier 1 miners, which will drive revenue and profits over the next few years. Echoing Dave's comments, with gold prices approximating 2400 during Q1 2024, global exploration spending continues to be strong and provides strong fundamentals for Geodrill going forward. At this point, I will turn the call back to Dave.
Dave Harper: Thank you, Greg. Before we move to the Q&A segment of the call, allow me to share an outlook and highlight key growth opportunities for the remainder of Q2 2024 and beyond. Looking ahead, the outlook for 2024 is strong. With a solid order book in our key markets that will be key drivers for our earnings, we have commenced 2024 on a positive trajectory. Our key operations in Africa continue to excel, bolstered by partnerships with Tier 1 mining companies and robust multi rig, multi-year contracts. As we move forward, we are confident that the difficulties of the past quarters are behind us. Our strategic realignments have set us on an upward path. Our ongoing success is fueled by decades of industry expertise and operational excellence, and our corporate philosophy is to remain adaptable to the ever changing business landscape, all while steadfastly upholding our foundational principles and dedication to our shareholders. This concludes our prepared remarks. I'll now hand the call back to the operator. Thank you very much.
Operator: Thank you ladies and gentlemen, we will now begin the question-and-answer session. [Operator instructions]. One moment, please, for your first question. There are no questions at this time. Ladies and gentlemen, this concludes our conference call for today. We thank you for participating and ask that you please disconnect your lines.
Unidentified Analyst:
Unidentified Company Representative:
Dave Harper: Thank you.
Greg Borsk: Thank you.
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