Major Drilling Announces Third Quarter 2025 Results

MONCTON, New Brunswick, March 06, 2025 (GLOBE NEWSWIRE) -- Major Drilling Group International Inc. (“Major Drilling” or the “Company”) (TSX: MDI), a leading provider of specialized drilling services to the mining sector, today reported results for the third quarter of fiscal 2025, ended January 31, 2025. 

Quarterly Highlights:

• Revenue of $160.7 million, up 21.0% from the $132.8 million recorded in the same quarter last year.
• Adjusted gross margin⁽¹⁾ of 19.5% as the Company completed maintenance & repair programs, as is typical during the seasonally weaker quarter, in preparation for increased activity levels through calendar 2025.
• Completed the acquisition of Explomin, increasing the Company’s exposure to a top-tier copper jurisdiction and further expanding its list of senior customers. 
• Ended the quarter with $11.4 million in net cash⁽¹⁾ despite closing the largest acquisition in Company history.
• Achieved the best quarterly safety record in Company history with a TRIFR of 0.38. 
  

“Through the third quarter, which is traditionally the weakest of our fiscal year as customers pause operations for the holiday season, the Company successfully completed the acquisition of Explomin Perforaciones and subsidiaries ( "Explomin ") while maintaining relatively stable revenue from existing operations. As we move through the budgeting season, there have been several positive indications with respect to exploration spending, most notably from the larger exploration budgets outlined by several of our senior customers in conjunction with their year-end results. This is further supported by an increase in the number of junior financings completed over the first two months of the year,” said Denis Larocque, President and CEO of Major Drilling.

“The completion of the Explomin acquisition marks another transformational event in the Company 's history, expanding our senior customer base in a region that has been on our radar for a number of years. Explomin’s long-term contracts with both surface and underground operations, provide diversity and stability to our revenue mix, while at slightly lower margins. Its strong brand and reputation throughout the countries in which it operates matches many of the qualities and attributes that Major Drilling has become known for,” Mr. Larocque continued.

“While we prepare for what is expected to be a busier calendar year, we also remain proud of our industry-leading safety record, as we achieved the lowest quarterly TRIFR ( "Total Recordable Injury Frequency Rate ") in Company history, coming in at 0.38 at the end of the quarter. This continued focus on safety was further demonstrated by our recent receipt of the ‘Safe Day Everyday Gold Award’ from the AME-BC, together with the PDAC and the CDDA in January,” continued Mr. Larocque. 

“The Company generated $160.7 million in revenue in the quarter, a 21.0% increase when compared to the same period in the prior year. Excluding the acquisition of Explomin, which was completed at the beginning of the quarter, revenue totaled $127.9 million, representing a decrease of 3.7% when compared to the same period last year. The Company’s balance sheet remains extremely strong with net cash of $11.4 million, despite the $84 million cash outlay, and $21 million contingent consideration recognized on closing the largest acquisition in the Company’s history during the quarter. We continue to invest in our industry-leading fleet and support gear, spending $12.6 million on capital expenditures during the quarter, including 4 new drills, while disposing of 1 older, less efficient drill, bringing the total fleet size to 705 rigs after including 92 rigs acquired through the Explomin transaction,” said Ian Ross, CFO of Major Drilling.

“While the positive indicators related to global exploration spending point to a more optimistic outlook for calendar 2025, the year started off at a slower pace relative to the prior year’s ramp-up as a result of mobilization delays due to a variety of reasons, including permitting delays, inclement weather, and slower start-ups at various projects. While these delays are expected to impact activity levels at the start of fiscal Q4, we expect the ramp-up to continue, matching last year’s activity levels in the latter part of March and into April. In preparation for this anticipated ramp-up, the retention of experienced crews remains a key strategic focus, which is expected to have an impact on margins early in the quarter,” concluded Mr. Larocque.

⁽¹⁾    See “Non-IFRS Financial Measures”

Third Quarter Ended January 31, 2025

Total revenue for the quarter was $160.7 million, up 21.0% from revenue of $132.8 million recorded in the same quarter last year. Excluding Explomin, revenue for the quarter would have been $127.9 million, down 3.7% from the same quarter last year. The favourable foreign exchange translation impact on revenue, when compared to the effective rates for the previous year, was approximately $3 million, while the impact on net earnings was minimal as expenditures in foreign jurisdictions tend to be in the same currency as revenue.

Revenue for the quarter from Canada - U.S. drilling operations decreased by 31.0% to $43.0 million, compared to the same period last year. The decrease was mainly due to a seasonal shutdown of certain drill programs earlier than in previous years, with fewer program extensions, along with a more competitive environment due to a lack of junior financings.

South and Central American revenue increased by 121.5% to $75.3 million for the quarter, compared to the same quarter last year, driven by the addition of Explomin operations. Excluding Explomin, revenue increased by 25%, compared to the same period last year, driven by elevated levels of activity in Chile, which were partially offset by slowdowns in Argentina due to decreased activity levels.

Australasian and African revenue increased by 15.8% to $42.4 million, compared to the same period last year. Growth in the region was driven by continued strength in Australia where increased activity levels led to shorter holiday shutdowns at some projects when compared to last year, while activity levels in Mongolia also remain robust. 

Gross margin percentage for the quarter was 10.3%, compared to 14.2% for the same period last year. Depreciation expense totaling $14.8 million is included in direct costs for the current quarter, versus $12.3 million in the same quarter last year. Adjusted gross margin, which excludes depreciation expense, was 19.5% for the quarter, compared to 23.4% for the same period last year. The decrease in margins from the prior year was mainly attributable to reduced activity levels in certain regions, increased mobilization costs, retention of experienced crews, and annual preventative maintenance programs, which are completed during the seasonal slowdown while the drills are idle for the holiday season.

General and administrative costs were $22.8 million, an increase of $5.7 million compared to the same quarter last year. The increase from the prior year was driven by the addition of Explomin, annual inflationary wage adjustments and amortization of the intangible asset recognized as part of the Explomin acquisition.

Foreign exchange loss was $1.6 million, compared to a loss of $2.3 million for the same quarter last year. While the Company 's reporting currency is the Canadian dollar, various jurisdictions have net monetary assets or liabilities exposed to various other currencies.

The income tax provision for the quarter was a recovery of $0.8 million, compared to an expense of $0.9 million for the prior year period. The income tax provision was impacted by non-tax affected losses in certain regions.

Net loss was $9.1 million or $0.11 per share ($0.11 per share diluted) for the quarter, compared to net loss of $2.3 million or $0.03 per share ($0.03 per share diluted) for the prior year quarter. 

Non-IFRS Financial Measures

The Company’s financial data has been prepared in accordance with IFRS, with the exception of certain financial measures detailed below. The measures below have been used consistently by the Company’s management team in assessing operational performance on both segmented and consolidated levels, and in assessing the Company’s financial strength. The Company believes these non-IFRS financial measures are key, for both management and investors, in evaluating performance at a consolidated level and are commonly reported and widely used by investors and lending institutions as indicators of a company’s operating performance and ability to incur and service debt, and as a valuation metric. These measures do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS.

EBITDA - earnings before interest, taxes, depreciation, and amortization:

Adjusted gross profit/margin - excludes depreciation expense:

Net cash – cash net of debt, excluding lease liabilities reported under IFRS 16 Leases:

Forward-Looking Statements

This news release includes certain information that may constitute “forward-looking information” under applicable Canadian securities legislation. All statements, other than statements of historical facts, included in this news release that address future events, developments, or performance that the Company expects to occur (including management’s expectations regarding the Company’s objectives, strategies, financial condition, results of operations, cash flows and businesses) are forward-looking statements. Forward-looking statements are typically identified by future or conditional verbs such as “outlook”, “believe”, “anticipate”, “estimate”, “project”, “expect”, “intend”, “plan”, and terms and expressions of similar import. All forward-looking information in this news release is qualified by this cautionary note.

Forward-looking information is necessarily based upon various estimates and assumptions including, without limitation, the expectations and beliefs of management related to the factors set forth below. While these factors and assumptions are considered reasonable by the Company as at the date of this document in light of management’s experience and perception of current conditions and expected developments, these statements are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information.

Such forward-looking statements are subject to a number of risks and uncertainties that include, but are not limited to: the level of activity in the mining industry and the demand for the Company’s services; competitive pressures; global and local political and economic environments and conditions; measures affecting trade relations between countries, including the imposition of tariffs and countermeasures, as well as the possible impacts on the Company 's clients, operations and, more generally, the economy; the integration of business acquisitions and the realization of the intended benefits of such acquisitions; the level of funding for the Company’s clients (particularly for junior mining companies); exposure to currency movements (which can affect the Company’s revenue in Canadian dollars); currency restrictions; the Company’s dependence on key customers; efficient management of the Company’s growth; safety of the Company’s workforce; risks and uncertainties relating to climate change and natural disaster; the geographic distribution of the Company’s operations; the impact of operational changes; changes in jurisdictions in which the Company operates (including changes in regulation); failure by counterparties to fulfill contractual obligations; disease outbreak; as well as other risk factors described under “General Risks and Uncertainties” in the Company’s MD&A for the year ended April 30, 2024, available on the SEDAR+ website at www.sedarplus.ca. Should one or more risk, uncertainty, contingency, or other factor materialize or should any factor or assumption prove incorrect, actual results could vary materially from those expressed or implied in the forward-looking information.

Forward-looking statements made in this document are made as of the date of this document and the Company disclaims any intention and assumes no obligation to update any forward-looking statement, even if new information becomes available, as a result of future events, or for any other reasons, except as required by applicable securities laws.

About Major Drilling

Major Drilling Group International Inc. is the world’s leading provider of specialized drilling services primarily serving the mining industry. Established in 1980, Major Drilling has over 1,000 years of combined experience and expertise within its management team. The Company maintains field operations and offices in North America, South America, Australia, Asia and Africa. Major Drilling provides a complete suite of drilling services including surface and underground coring, directional, reverse circulation, sonic, geotechnical, environmental, water-well, coal-bed methane, shallow gas, underground percussive/longhole drilling, surface drill and blast, a variety of mine services, and ongoing development of data-driven, high-tech drillside solutions.

Webcast/Conference Call

Major Drilling Group International Inc. will provide a simultaneous webcast and conference call to discuss its quarterly results on Friday, March 7, 2025 at 8:00 AM (EST). To access the webcast, which includes a slide presentation, please go to the investors/webcasts section of Major Drilling’s website at www.majordrilling.com and click on the link. Please note that this is listen-only mode.

To participate in the conference call, please dial 416-340-2217, participant passcode 3731712# and ask for Major Drilling’s Third Quarter Results Conference Call. To ensure your participation, please call in approximately five minutes prior to the scheduled start of the call.

For those unable to participate, a taped rebroadcast will be available approximately one hour after the completion of the call until Monday, March 31, 2025. To access the rebroadcast, dial 905-694-9451 and enter the passcode 2116538#. The webcast will also be archived for one year and can be accessed on the Major Drilling website at www.majordrilling.com.

For further information:
Ryan Hanley
Director, Corporate Development & Investor Relations
Tel: (506) 857-8636
Fax: (506) 857-9211
ir@majordrilling.com

MAJOR DRILLING GROUP INTERNATIONAL INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2025 AND 2024 (UNAUDITED)
(in thousands of Canadian dollars, except per share information)

1.  NATURE OF ACTIVITIES

Major Drilling Group International Inc. (the “Company”) is incorporated under the Canada Business Corporations Act and has its head office at 111 St. George Street, Moncton, NB, Canada. The Company’s common shares are listed on the Toronto Stock Exchange (“TSX”). The principal source of revenue consists of contract drilling for companies primarily involved in mining and mineral exploration. The Company has operations in North America, South America, Australia, Asia, and Africa.

2.  BASIS OF PRESENTATION

Statement of compliance

These Interim Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board (“IASB”) and using the accounting policies as outlined in the Company’s annual Consolidated Financial Statements for the year ended April 30, 2024.

On March 6, 2025, the Board of Directors authorized the financial statements for issue.

Basis of consolidation
These Interim Condensed Consolidated Financial Statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved when the Company is exposed or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

The results of subsidiaries acquired or disposed of during the period are included in the Consolidated Statements of Operations from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Intercompany transactions, balances, income and expenses are eliminated on consolidation, where appropriate.

Basis of preparation
These Interim Condensed Consolidated Financial Statements have been prepared based on the historical cost basis, except for certain financial instruments that are measured at fair value, using the same accounting policies and methods of computation, with the exception of those detailed in note 4 below, as presented in the Company’s annual Consolidated Financial Statements for the year ended April 30, 2024.

3.  APPLICATION OF NEW AND REVISED IFRS^® ACCOUNTING STANDARDS

The Company has not applied the following IASB amendment and standard that have been issued, but are not yet effective:

• IAS 21 (as amended in 2023) - The Effect of Changes in Foreign Exchange Rates - effective for periods beginning on or after January 1, 2025, with earlier application permitted. The amendments contain guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not.
• IFRS 18 (as issued in 2024) - Presentation and Disclosure of Financial Statements - effective for periods beginning on or after January 1, 2027, with earlier application permitted. The standard replaces IAS 1, Presentation of Financial Statements, and includes requirements for the presentation and disclosure of information in financial statements, such as the presentation of subtotals within the statement of operations and the disclosure of management-defined performance measures within the financial statements.

The Company is currently in the process of assessing the impact the adoption of the above amendment and standard will have on the Consolidated Financial Statements.

4.  MATERIAL ACCOUNTING POLICIES

With the exception of the policy detailed below, all accounting policies and methods of computation remain the same as those presented in the Company 's annual Consolidation Financial Statements for the year ended April 30, 2024.

Investments
Investments are accounted for using the equity method and are initially recognized at cost, inclusive of transaction costs. The Interim Condensed Consolidated Financial Statements include the Company 's share of the income or loss and equity movement of equity accounted investments. The Company does not recognize losses exceeding the carrying value of its interest in investments.

5.  KEY SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING JUDGMENTS

The preparation of financial statements, in conformity with IFRS Accounting Standards, requires management to make judgments, estimates and assumptions that are not readily apparent from other sources, which affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. Significant areas requiring the use of management estimates relate to the useful lives of property, plant and equipment for depreciation purposes, inventory valuation, determination of income and other taxes, recoverability of deferred income tax assets, assumptions used in compilation of share-based payments, fair value of assets acquired and liabilities assumed in business acquisitions, provisions, contingent considerations, impairment testing of goodwill and intangible assets and long-lived assets.

The Company applied judgment in determining the functional currency of the Company and its subsidiaries, the determination of cash-generating units (“CGUs”), the degree of componentization of property, plant and equipment, the recognition of provisions, and the determination of the probability that deferred income tax assets will be realized from future taxable earnings.

6.  SEASONALITY OF OPERATIONS

The third quarter (November to January) is normally the Company’s weakest quarter due to the slowdown of mining and exploration activities, often for extended periods over the holiday season.

7.  PROPERTY, PLANT AND EQUIPMENT

Capital expenditures for the three and nine months ended January 31, 2025 were $12,590 (2024 - $21,356) and $53,914 (2024 - $55,073), respectively. The Company did not obtain direct financing for the three and nine months ended January 31, 2025 or 2024.

8.  INVESTMENTS

On July 22, 2024, the Company purchased shares in DGI Geoscience Inc. (“DGI”) for $15,000 in cash consideration, a 39.8% equity interest (that provides the Company with 42.3% of the voting rights). DGI and its subsidiaries are privately held entities, headquartered in Canada, focused on downhole survey and imaging services as well as using artificial intelligence for logging scanned rock samples.

In addition to the equity interest, Major Drilling has representation on the DGI Board of Directors and has special approval rights (protective in nature) granted to the Company as part of the investment. As a result, the Company concluded that the equity method of accounting is appropriate for its investment in DGI.

During the first quarter, the Company incurred costs of $205 for its investments, relating to external legal fees and due diligence costs. These amounts have been recorded as part of the cost of the investment in the Interim Condensed Consolidated Balance Sheets.

9.  LONG-TERM DEBT

During the quarter, the Company drew US$20,000 (CAD$28,954) on its existing revolving-term facility to partially fund the acquisition of Explomin Perforaciones and subsidiaries ( "Explomin ").

10.  SHARE BUYBACK

During the prior year, for the three and nine months ended January 31, 2024, the Company repurchased 317,400 and 1,337,968 common shares, respectively, at an average price of $8.45 and $8.41, respectively, under its Normal Course Issuer Bid.

11.  EXPENSES BY NATURE

Direct costs by nature are as follows:

General and administrative expenses by nature are as follows:

12.  INCOME TAXES

The income tax provision for the periods can be reconciled to accounting earnings before income tax as follows:

The Company periodically assesses its liabilities and contingencies for all tax years open to audit based upon the latest information available. For those matters where it is probable that an adjustment will be made, the Company records its best estimate of these tax liabilities, including related interest charges. Inherent uncertainties exist in estimates of tax contingencies due to changes in tax laws. While management believes they have adequately provided for the probable outcome of these matters, future results may include favourable or unfavourable adjustments to these estimated tax liabilities in the period the assessments are made, or resolved, or when the statutes of limitations lapse.

13.  EARNINGS (LOSS) PER SHARE

All of the Company’s earnings are attributable to common shares, therefore, net earnings are used in determining earnings per share.

The calculation of diluted earnings per share for the three and nine months ended January 31, 2025 excludes the effect of 200,000 options for both periods (2024 - 297,000 and 205,000, respectively) as they were not in-the-money.

The total number of shares outstanding on January 31, 2025 was 81,844,586 (2024 - 81,780,486).

14.  SEGMENTED INFORMATION

The Company’s operations are divided into the following three geographic segments, corresponding to its management structure: Canada - U.S.; South and Central America; and Australasia and Africa. The services provided in each of the reportable segments are essentially the same. The accounting policies of the segments are the same as those described in the Company’s annual Consolidated Financial Statements for the year ended April 30, 2024, and as those described in note 4 herein. Management evaluates performance based on earnings from operations in these three geographic segments before finance costs, general corporate expenses and income taxes. Data relating to each of the Company’s reportable segments is presented as follows:

*Canada - U.S. includes revenue of $17,678 and $22,937 for Canadian operations for the three months ended January 31, 2025 and 2024, respectively and $75,221 and $93,699 for the nine months ended January 31, 2025 and 2024, respectively.

**General and corporate expenses include expenses for corporate offices and stock-based compensation.

*Canada - U.S. includes property, plant and equipment as at January 31, 2025 of $61,503 (April 30, 2024 - $62,991) for Canadian operations.

15.  BUSINESS ACQUISITION

McKay Drilling PTY Limited

During the previous quarter, the Company paid the final contingent payment of $9.1 million in regards to the 2021 McKay Drilling PTY Ltd. acquisition as they successfully met all of the EBITDA milestones in their earnout period.

Explomin Perforaciones

Effective November 5, 2024, the Company acquired all of the issued and outstanding shares of Explomin, a leading specialty drilling contractor based in Lima, Peru.

The business combination was accounted for using the acquisition method. The Company acquired 92 drill rigs, support equipment, inventory, existing contracts and receivables, in addition to retaining the operation’s management team and other employees, including experienced drillers. 

The purchase price for the acquisition is valued at an amount up to US$85,000 (subject to working capital adjustments), consisting of a cash payment of US$63,000 (net of cash acquired) funded from the Company 's cash and existing debt facilities; and an additional contingent consideration of US$15,180 (discounted) tied to performance. The maximum amount of the contingent consideration is US$22,000, with an earnout period extending over three years from the effective date of November 5, 2024, contingent upon Explomin reaching average annual EBITDA of approximately US$21,000 over the earnout period.

As the acquisition occurred early in the current quarter, the Company is in the process of finalizing the valuation of assets and purchase price allocation. As at January 31, 2025, the values allocated to net tangible and intangible assets are preliminary and are subject to adjustments as additional information is obtained.

Goodwill arising from this acquisition was equal to the excess of the total consideration paid over the fair value of the net assets acquired and represents the benefit of revenue growth, an experienced labour force, market expertise and operational knowledge in a unique market with substantial barriers to entry.

The estimated net assets acquired at fair value at acquisition were as follows:

Subsequent to the date of acquisition, the trade and other receivables included in the above net assets acquired have been fully collected. Intangible assets acquired, made up of customer relationships and contracts, are amortized over five years.

The contingent consideration of $21,102 (discounted) is a non-cash investing activity therefore is not reflected in the Interim Condensed Consolidated Statements of Cash Flows.

The Company incurred acquisition-related costs of $669 relating to external legal fees and due diligence costs. These acquisition costs have been included in the other expenses line of the Interim Condensed Consolidated Statements of Operations.

The results of operations of Explomin are included in the Interim Condensed Consolidated Statements of Operations from November 5, 2024. Since the date of acquisition, revenue attributable to the Explomin operations was $33,000 with net earnings of $21. Due to the complexities of restating results using harmonized accounting policies, it is impracticable to reliably estimate the revenue and net earnings of the combined entities for the year as if the acquisition date had been May 1, 2024.

16.  FINANCIAL INSTRUMENTS

Fair value
The carrying values of cash, trade and other receivables, demand credit facilities and trade and other payables approximate their fair value due to the relatively short period to maturity of the instruments. The carrying value of contingent consideration and long-term debt approximates their fair value as the interest applicable is reflective of fair market rates.

Financial assets and liabilities measured at fair value are classified and disclosed in one of the following categories:

• Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 - inputs other than quoted prices included in level 1 that are observable for the assets or liabilities, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
• Level 3 - inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
  

The Company enters into certain derivative financial instruments to manage its exposure to market risks, comprised of share-price forward contracts with a combined notional amount of $8,654, maturing at varying dates through June 2027.

The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.

The Company’s derivatives, with fair values as follows, are classified as level 2 financial instruments and recorded in trade and other receivables (payables) in the Interim Condensed Consolidated Balance Sheets. There were no transfers of amounts between level 1, level 2 and level 3 financial instruments for the three and nine months ended January 31, 2025.

Credit risk
As at January 31, 2025, 94.7% (April 30, 2024 - 95.9%) of the Company’s trade receivables were aged as current and 3.8% (April 30, 2024 - 3.5%) of the trade receivables were impaired.

The movements in the allowance for impairment of trade receivables during the periods were as follows:

Foreign currency risk
As at January 31, 2025, the most significant carrying amounts of net monetary assets and/or liabilities (which may include intercompany balances with other subsidiaries) that: (i) are denominated in currencies other than the functional currency of the respective Company subsidiary; and (ii) cause foreign exchange rate exposure, including the impact on earnings before income taxes (“EBIT”), if the corresponding rate changes by 10%, are as follows (in $000s CAD):

Liquidity risk
The following table details contractual maturities for the Company’s financial liabilities:

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