Geodrill Q4 Earnings Call Highlights

Geodrill (TSE:GEO) management said fiscal 2025 featured “solid execution and real momentum,” pointing to strong customer demand in West Africa, continued expansion in South America, and additional multi-year contract wins that the company said improved revenue visibility. President and CEO Dave Harper, speaking alongside CFO Greg Borsk, also discussed a tax-related settlement process in Côte d’Ivoire and outlined expectations for activity and margins as 2026 progresses.

Operational update: West Africa anchor markets and South America expansion

Harper said Geodrill maintained a strong operating presence in West Africa, calling Ghana, Côte d’Ivoire, and Senegal the company’s “anchor jurisdictions.” He added that customer relationships remained robust and that Geodrill’s services continue to align with what he described as a solid regional pipeline of exploration and development activity.

Management also emphasized progress on longer-term contracting. Harper said the company secured additional multi-year contracts during the year, describing them as supportive of revenue stability in 2026 and beyond and reflective of customer confidence in Geodrill’s performance.

In South America, Harper said the company increased its regional fleet to 18 rigs with a particular focus on Chile, which he described as an important and fast-growing market. Geodrill ended fiscal 2025 with a total fleet of 100 rigs, which management said provides scale and flexibility to meet current work and anticipated demand.

Fiscal 2025 financial results: record revenue, margin pressure, and net loss

Borsk reported record annual revenue of $185 million for fiscal 2025, up from $143 million in 2024, representing a 29% year-over-year increase.

Gross profit declined to $33.4 million, or 18% of revenue, compared with $34.7 million, or 24% of revenue, in 2024. Borsk attributed the year-over-year gross margin decline to several factors discussed on the call:

• Currency impact in Ghana: Borsk said the Ghanaian cedi appreciated by approximately 43% during the year, increasing operating costs because the company has significant cedi-denominated expenses such as payroll.
• South America ramp-up costs: The company incurred costs associated with scaling up in a new region ahead of full deployment and optimal utilization.
• Drilling mix shift: Management said the mix shifted in a way that pressured margins.
• Inflation and labor cost increases: Borsk said Geodrill, like many drilling operators, faced inflationary and labor-related cost increases across its regions.

Despite the margin compression, Borsk said EBITDA totaled $35.1 million, representing 19% of revenue.

Net income swung to a net loss of $1.9 million in fiscal 2025 versus net income of $9.1 million in 2024. Borsk said the net loss reflected the lower gross margin and an additional tax expense in Côte d’Ivoire relating to prior years.

He also noted several items that favorably impacted EBITDA and the net loss, including a $450,000 lifetime expected credit loss, a $1.2 million foreign exchange gain, and a $3.3 million gain on equity investments.

Geodrill ended the year with net cash of $7.8 million (excluding right-of-use liabilities) and shareholders’ equity of $117 million, which Borsk said highlighted balance sheet strength.

Côte d’Ivoire tax matter and payment plan

Harper said that in early 2026, Geodrill entered into a memorandum of understanding (MoU) with Côte d’Ivoire tax authorities related to a previously disclosed tax recovery notice, following what he described as restrictive measures initiated in December 2025. Harper said management determined a settlement was the prudent course of action to ensure uninterrupted operations, while also stating the company is pursuing reimbursement from what he described as the registered tax agency it believes is responsible.

In the Q&A session, Beacon Securities analyst Donangelo Volpe asked about the company’s payment schedule related to $8.4 million paid to tax authorities in Côte d’Ivoire and whether Geodrill would pay more than the minimum installment of $900,000 per month. Management said it negotiated monthly payments and indicated there was no incentive or plan to pay the amount off early. Management added it had made payments in January and February, with another in early March, and that after three or four payments, the company planned to sit down with the authorities to revisit the settlement under more controlled conditions.

South America: Chile focus, utilization, and margin expectations

Volpe also asked when South America could produce positive gross profit, and management provided detail on the ramp-up dynamics. Harper said the South America rig fleet grew from eight rigs a year earlier to 18 rigs by year-end, describing it as a doubling driven by increasing demand. He said that kind of growth required “pre-financing” costs to get rigs into the field, creating a lag where costs come first, then revenue, and then margin.

Borsk added that in 2025 Geodrill made a strategic decision to focus on Chile rather than operating across both Chile and Peru. He said there were costs tied to winding down Peru operations, moving rigs to Chile, and personnel changes, framing the move as an investment in concentrating on one country.

Management said utilization in Chile was effectively full, with 18 rigs “spoken for” across five accounts. Borsk said the company had won a new contract that it was mobilizing, and that some rigs recently completed in the workshop were being mobilized. He said Chile was expected to be extremely busy in Q1 and through Q2, while noting a seasonal slowdown can occur in Q3 due to high-altitude drilling at one account.

Capital allocation: share buybacks and 2026 fleet plans

Harper said Geodrill repurchased 91,700 shares during fiscal 2025 and an additional 58,800 shares after year-end, describing the activity as part of a disciplined approach to capital allocation.

On capital expenditures and fleet growth, Harper said the company does not add rigs “on spec” and that fleet additions are tied to client needs and contracts. He said the company ended fiscal 2025 with 100 rigs and had budgeted to add between 5 and 10 rigs by the end of fiscal 2026.

Borsk provided a cash flow comparison to illustrate the model, stating that in 2025 the company generated about $24 million in cash flow from operations and added about $18 million in rigs, with the intention of continuing to reinvest operating cash flow into property, plant, and equipment as appropriate.

Looking ahead, Harper said the drilling market is strengthening, utilization is high, and customers are committing to extensions and new programs. He added that as pricing improves and South America reaches “full stride,” the company expects margins to improve.

About Geodrill (TSE:GEO)

Geodrill Ltd is an exploration drilling company. It mainly operates a fleet of multi-purpose, core, air-core, and grade control drill rigs. The company provides reverse circulation, diamond core, air-core, grade control, geo-tech, and water bore drilling services to major, intermediate, and junior mining companies.