Release Date: December 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Major Drilling Group International Inc (MJDLF, Financial) achieved over 1.1 million hours without a lost time injury, earning the Safe Day Everyday Gold Award.
- The company maintained its revenue run rate despite challenging market conditions, with strong performances in Chile and Australia.
- Adjusted gross margin increased over the prior quarter, reflecting disciplined pricing and strong demand for specialized drilling services.
- The acquisition of Explomin is expected to enhance the company's presence in South America, particularly in Peru, a key copper-producing region.
- The company ended the quarter with a strong net cash balance of $100.4 million, positioning it well for future investments and growth opportunities.
Negative Points
- Revenue for the quarter was $189.3 million, down 8.6% from the same period last year, reflecting challenges in North America due to reduced exploration spending by juniors.
- Net earnings decreased to $18.2 million or $0.22 per share, compared to $23.7 million or $0.29 per share in the prior year quarter.
- General and administrative costs increased by $800,000 compared to the same quarter last year, driven by inflationary wage adjustments.
- The company's revenue from conventional drilling, primarily driven by juniors, remained low at 11% for the quarter.
- The income tax provision for the quarter was $6.5 million, reflecting a decrease in profitability compared to the prior-year period.
Q & A Highlights
Q: Denis, as you go forward, where do you think the Junior Exploration business settles out at? It seems to me that with this recent acquisition, they're going to become less and less of a swing factor and results going forward. Is that a reasonable expectation?
A: Denis Larocque, President and CEO: Yes and no. The acquisition strengthens our base, providing a higher floor for revenue stability, especially with increased underground operations. However, juniors still bring significant activity, and we are seeing some pickup in junior financing. Historically, juniors have contributed significantly to our revenue during peak times.
Q: Congratulations on getting the Explomin transaction completed. What learnings do you see from their team operationally, and what best practices can Major Drilling leverage?
A: Denis Larocque, President and CEO: Explomin fits well with our culture and operational standards. They are already operating with high safety and procedural standards, similar to Major Drilling. This alignment makes the integration smoother, and their focus on specialized drilling aligns with our strategy.
Q: Following the US election, what implications could the incoming administration's focus on rolling back regulation have for minerals and metals extraction in North America?
A: Denis Larocque, President and CEO: Streamlining regulations could positively impact exploration. For example, Argentina is seeing increased activity due to regulatory improvements. In the US, permitting has been an issue, so any regulatory easing would be welcomed. Canada could benefit from similar regulatory streamlining to boost mining activity.
Q: Could you provide any color regarding the utilization rates of Explomin's fleet? Are they around the 40% mark that you guys are currently holding, or are they a little bit higher?
A: Denis Larocque, President and CEO: Explomin's utilization rates are higher, around 70%, driven by a higher percentage of underground work, which typically operates year-round, providing steady revenue despite lower rates.
Q: Regarding South America, with Chile operations remaining strong, how does the addition of Peru help offset slowdowns in other regions?
A: Denis Larocque, President and CEO: South America typically experiences seasonal slowdowns around Christmas. However, Chile is pushing for shorter breaks, which may offset slowdowns in North America. Peru, including Explomin, will follow the usual seasonal patterns, with operations pausing for a few weeks during the holiday season.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
