Major Drilling Group International Q1 2027 Earnings Report

Major Drilling Group International EPS Results

• Actual EPS: C$0.18
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Major Drilling Group International Revenue Results

• Actual Revenue: $277.35 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Major Drilling Group International Announcement Details

• Quarter: Q1 2027
• Date: 9/2/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, September 3, 2026
• Conference Call Time: 8:00AM ET

Major Drilling Group International (TSE:MDI) is the world's largest provider of drilling services in the metals and mining industry. The diverse needs of the Company's global clientele are met through field operations and registered offices that span across North America, South America, Australia, Asia, Africa, and Europe. Established in 1980, the Company has grown to become a global brand in the mining space, known for tackling many of the world's most challenging drilling projects. Supported by a highly skilled workforce, Major Drilling is led by an experienced senior management team that has steered it through various economic and mining cycles, supported by regional managers known for delivering decades of superior project management.

Major Drilling Group International Q1 2027 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record quarterly revenue reached CAD 277.3 million, up 22% year over year, with growth across all regions. Canada and the U.S. led with a 31% increase, while South and Central America rose 18% and Australasia and Africa increased nearly 14%.
• Positive Sentiment: Net earnings climbed 44% to CAD 14.5 million, or CAD 0.18 per share, while EBITDA increased 16% to CAD 37.2 million, indicating operating leverage despite cost pressures.
• Neutral Sentiment: Demand remains strong from senior mining companies and increasingly from juniors, which represented 15% of revenue versus 8% a year earlier. However, experienced driller shortages, training costs and contract ramp-up expenses are constraining productivity and margins.
• Positive Sentiment: Management expects continued rig deployment at incrementally higher prices, with pricing improvements gradually offsetting labor and ramp-up costs. It anticipates margins will improve, though more slowly than revenue.
• Neutral Sentiment: The company ended the quarter with CAD 15.7 million of net cash and approximately CAD 160 million of liquidity, while capital spending supported five new rigs and the disposal of 10 older units. Higher utilization temporarily increased working-capital needs.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Major Drilling First Quarter 2027 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ryan Hanley, Director of Capital Markets. Sir, please go ahead.

[Ryan Hanley, Director of Capital Markets at Major Drilling]

Thank you. Good morning, everyone. As mentioned, we would like to welcome you to Major Drilling's conference call for the first quarter of fiscal 2027. With me on the call today are Denis Larocque, President and CEO, and Ian Ross, CFO. Our results were released yesterday after market hours and can be found on our website at www.majordrilling.com. We also invite you to visit our website for further information. Before we get started, we'd like to caution you that during this conference call, we'll be making forward-looking statements about future events or the future financial performance of the company. These statements are forward-looking in nature, and actual events or results may differ materially from those currently anticipated in such statements. I'll now turn the presentation over to Denis Larocque, President and CEO.

[Denis Larocque, President and CEO at Major Drilling]

Thanks, Ryan, and good morning, everyone, and thank you for joining us today. We had a strong start to our new fiscal year with quarterly revenue of CAD 277.3 million, representing a 22% increase over the prior year period and setting a new quarterly record for the company. This new record was the result of each region delivering meaningful year-over-year revenue growth as we continue to deploy rigs in the field in order to meet the growing needs of our customers. The bulk of the growth continues to be driven by increasing activity levels in Canada and the U.S., where we saw new contract wins and the addition of rigs to existing projects.

[Denis Larocque, President and CEO at Major Drilling]

While seniors continue to execute on their expanded programs, we're seeing juniors becoming increasingly more impactful as they look to deploy larger amounts of capital that flowed through the significant increase in financing activity we saw earlier in the year. As a result, revenue in Canada-U.S. region increased by over 31% when compared to the prior year period. In South and Central America, we saw a strong 18% year-over-year increase led by continued growth in Peru and increasing activity levels in Mexico and Brazil. In the Australasia and Africa region, revenue increased by nearly 14% when compared to the prior year period, driven by new contract wins and project expansions with seniors in Australia.

[Denis Larocque, President and CEO at Major Drilling]

With the strong revenue increase in each region and ongoing efforts to manage cost pressures, the company generated EBITDA of CAD 37.2 million in the quarter, a 16% increase over the prior year period, while net earnings increased by nearly 44%, further demonstrating our operational leverage. I will discuss more of the outlook after Ian walks us through the quarter's financials. Ian?

[Ian Ross, CFO at Major Drilling]

Thanks, Denis. Revenue for the quarter was CAD 277.3 million, up 22.4% from the CAD 226.6 million recorded for the same period last year, driven by strength in each region led by Canada and the U.S. The favorable foreign exchange translation impact on revenue when compared to the effective rates for the same period last year was approximately CAD 8 million, while the impact on net earnings was minimal. The overall adjusted gross margin percentage, excluding depreciation, was 24% for the quarter, compared to 25.2% for the same period last year. While margins improved from the 22% realized in the last quarter, reflecting ongoing pricing improvements, this was partially offset by ramp-up costs associated with new contracts, as well as higher labor and consumable costs and investments in workforce training and development. G&A costs was CAD 23.8 million, an increase of CAD 2.4 million compared to the same quarter last year.

[Ian Ross, CFO at Major Drilling]

The increase was attributable to annual wage adjustments and additional costs to address rapid growth in our busiest regions. Other expenses were CAD 6 million, up from CAD 3.3 million in the same quarter last year, due to increased incentive compensation resulting from improved profitability and higher stock-based compensation costs tied to the company's share price performance. The income tax provision for the quarter was an expense of CAD 4.6 million, compared to an expense of CAD 3.9 million in the prior year period. The increase reflects the overall improvement in profitability, while the lower effective rate is attributable to the utilization of previously unrecognized losses. The company generated EBITDA of CAD 37.2 million in the quarter, an increase of 15.9% from the CAD 32.1 million recorded for the prior year period.

[Ian Ross, CFO at Major Drilling]

Net earnings of CAD 14.5 million or CAD 0.18 per share increased from CAD 10.1 million or CAD 0.12 per share in the same period last year, demonstrating our operational leverage. The company ended the quarter with CAD 15.7 million in net cash, a decrease from the CAD 20.6 million at the end of the prior quarter, as higher rig utilization resulted in a temporary increase in working capital requirements. With total available liquidity of approximately CAD 160 million and cash flow projected to increase, the company remains very well positioned as we move through the new fiscal year. In line with our ongoing fleet optimization initiatives

[Ian Ross, CFO at Major Drilling]

The company spent CAD 13.5 million on capital expenditures in the quarter, adding five new drill rigs and support equipment while disposing of 10 older, less efficient rigs, bringing the total rig count at quarter end to 683. Effective this quarter, we are consolidating fleet utilization into two categories, surface and underground, with the surface component combining what was previously split into specialized and conventional categories. This adjustment was made as it better reflects how management views the business and better aligns with our internal reporting and forecasting standards. As a reminder, specialized work is defined by job characteristics, including technical complexity, remote site access, and/or elevated safety requirements, and not by rig type, as in many cases, a conventional rig is fully capable of performing specialized work. Therefore, the new breakdown of our utilization in the quarter is as follows.

[Ian Ross, CFO at Major Drilling]

455 surface rigs at 57% utilization, 228 underground drills at 59% utilization, for a total of 683 drills at 58% utilization. In the first quarter, specialized work accounted for 59% of our total revenue. We continue to see high levels of demand for our specialized services and expect this trend to continue as deposits become increasingly more challenging to find, with discoveries continuing to be made in remote locations. Conventional drilling, which is mostly driven by juniors, contributed 17% of revenue, while underground drilling accounted for 24% of total revenue as the company continues to look for diversity in its revenue streams. Seniors continue to account for the bulk of our revenue, representing 85% of activity in the quarter as they continue their efforts to address depleting reserves, while juniors are beginning to have a more meaningful impact.

[Ian Ross, CFO at Major Drilling]

Following the acceleration of junior financing activity over the last year, this segment grew to represent 15% of revenue in the quarter, compared to 13% in the prior quarter and 8% in the same period last year. In terms of commodities, gold represented 46% of revenue in the quarter, driven by continued strength in gold price and related junior financing activity. Copper accounted for 28% of revenue, with activity levels at copper mines and projects expected to grow as we move through the year. Iron ore continues to make a meaningful contribution at 9%, driven by continued strength for our Australian operations and demonstrating the diversity in the commodities for which we drill for around the world. With that overview of our financial results, I'll now turn this presentation back to Denis to discuss the outlook.

[Denis Larocque, President and CEO at Major Drilling]

Thanks, Ian. Looking ahead to the next quarter, rigs are expected to continue to gradually be deployed into the field at incrementally higher prices as we strive to meet the demands of our senior customers, who continue to expand their exploration programs while juniors continue to deploy the capital that they've raised over the past year. Demand remains strong and the primary constraint across the industry continues to be the availability of experienced drillers. We remain focused on recruitment and retention while also expanding our pipeline of future talent by increasing the number of training drillers in the field. As expected, there is a learning curve associated with bringing new people into the workforce, which has a temporary impact on productivity, but it's positioned us well to support future growth. As we noted last quarter, margin expansion typically trails revenue growth during periods of rapid activity growth.

[Denis Larocque, President and CEO at Major Drilling]

We're still absorbing labor training and ramp-up costs, but price increases are taking hold and progressively offsetting those pressures. As a result, we expect margins to continue improving, albeit at a slower pace than revenue growth. In closing, we're optimistic. Gold is holding up, which keeps senior budgets and junior financing going. Copper just hit an all-time high, and everyone is talking about critical minerals. We've got the global experience, the expertise, and the best balance sheet in the industry, and we intend to stay the driller people call and the company drillers want to work for in every country where we operate. Finally, please don't forget to join us for our AGM, which will be held in person and virtually today at 3:30 P.M. Eastern Time. All of the details related to the AGM can be found on our website.

[Denis Larocque, President and CEO at Major Drilling]

With that, we can open the call to questions. Operator?

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question is going to come from the line of James Vail with Arcadia Advisors. Your line is open. Please go ahead.

[James Vail, Analyst at Arcadia Advisors]

Well, thank you very much. Not much to say, guys. Great quarter. One thing got my attention, that the gain on disposal of property of CAD 573,000, I guess, versus last year suggests you're selling those older rigs at a pretty nice price. I've never seen anything like that before. Is that just an indication of how strong the market is?

[Ian Ross, CFO at Major Drilling]

No. We don't look to sell rigs in the market. That's not our business. The odd time, we'll get rid of some old gear to help fund new purchases. A lot of it's not selling rigs to the market, that's for sure.

[James Vail, Analyst at Arcadia Advisors]

Oh, okay.

[Denis Larocque, President and CEO at Major Drilling]

The rig that we announced at dispose, usually we cut them up and they're retired. They're at the end of their life, and we don't put them back in the market.

[James Vail, Analyst at Arcadia Advisors]

Oh, okay. Because I was wondering if someone could buy them and undercut you in very simple drilling projects and kind of make things a little difficult, but okay. Other than that, this is great how things are coming together.

[Ian Ross, CFO at Major Drilling]

Well, thank you.

[Operator]

Thank you. Again, as a reminder, to ask a question, please press star one one on your telephone. I am showing no further questions at this time, and I would like to hand the conference back over to Denis Larocque, CEO, for closing remarks.

[Denis Larocque, President and CEO at Major Drilling]

Well, thank you. Pretty slow on the questions, but I guess right before a long weekend, hopefully people are going to listen to the call at a later date. It is our AGM, so if you are around or online, please join us today. Again, we remain very optimistic on the future. Thank you for listening.

[Operator]

This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Participants

Analysts

• Ryan Hanley, Director of Capital Markets at Major Drilling
• Denis Larocque, President and CEO at Major Drilling
• Ian Ross, CFO at Major Drilling
• James Vail, Analyst at Arcadia Advisors