Orbit Garant Reports Recovery

Orbit Garant is a drilling company operating mainly in Canada (in 4Q 2016 as much as 73% of revenue was attributable to Canada). Similarly to Sandvik, a few days ago Orbit reported slight progress. Both drilling prices and meters drilled went up, compared to previous periods:

As the chart shows, since 2014 the company was able to get more drilling work at higher prices. It looks like Canada emerges as sort of eldorado for such a drilling company as Orbit. However, the problem is that Orbit incurs quite high costs of production, mainly "Employee benefits":

Note: Orbit fiscal year starts on June 30

Look at significantly higher costs in 2H 2016. As a result, despite higher drilling prices and more work to do, in 2H 2016 the company's cash margin (defined as revenue less all direct cash costs) was lower than in 2016:

• revenue: C$95.9
• employee expense: C$52.1
• other cash costs: C$40.1
• Cash margin: C$3.7