Major Drilling Group International Inc T.MDI

Alternate Symbol(s): MJDLF

Metals & Mining Industrial Metals & Minerals

Major Drilling Group International Inc. is a Canada-based drilling services company primarily serving the mining industry. It 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, and a variety of mine services. It maintains field operations and offices in Canada, the United States, Mexico, South America, Asia, Africa, and Australia. The Company has two categories of customers: junior exploration companies and a diversified portfolio of senior/intermediate companies, for which the Company provides greenfield exploration drilling and/or drilling at operating mines. The Company has invested in a fleet of digitized mobile underground drills that allow less dependence on client resources, as well as increased ability for automation and versatility.

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Major Drilling Group International Inc

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Post by retiredcfon Sep 07, 2022 9:44am

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Post# 34946278

TD

Despite their somewhat muted response, they are looking for close to a double ($16.00). GLTA

Major Drilling Group International Inc.

(MDI-T) C$8.67

Q1/F23 First Look: Solid Quarter; Outlook Remains Stable Event

MDI reported Q1/F23 (ending July 31) EBITDA of $43.5mm, in line with TD's $43.3mm estimate (consensus: $42.0mm), reflecting the net impact of stronger- than-expected revenue, offset by slightly weaker gross margins (30.8% vs. TD: 31.4%) and higher corporate costs.
CC: 9:00 a.m. ET (416-340-2217); password: 3755631#

Impact: NEUTRAL

MDI reported in-line Q1/F23 results, with demand for specialized drilling strong and supportive of price increases to offset cost inflation. In terms of the outlook, MDI indicated that demand remains stable, in spite of the recent volatility in metal prices and broader macro uncertainties. However, management did note that the juniors are taking a slightly more cautious approach to drill programs in light of the weak financing markets, but this is being offset by increased demand from senior miners (both base and precious metals) looking to grow reserves, given metal prices remain above levels required to justify exploration. Encouragingly, MDI has already started booking rigs with senior customers for calendar 2023; this is the earliest we have seen, with discussions for next-year drill programs usually not occurring until late November/December. We believe this reflects the shortage of specialized rigs and experienced drill crews across the industry.

Revenue increased 32.3% y/y to $199.8mm, 4.5% above TD's $191.3mm estimate. Demand for complex specialized services in North America remains robust. Results in South America benefited from improved pricing and reduced COVID-19-related impacts in Argentina and Chile, specifically. The McKay acquisition continues to bolster the Australasia/Africa segment.
Gross margins of 30.8% were a touch light versus our 31.4% estimate, but remain healthy overall as MDI continues to do a good job passing through labour, fuel, and supply-chain costs. Additionally, MDI is now seeing productivity benefits from its training schools and the benefits of having previously invested in rig maintenance and inventories. At prior peaks, quarterly margins reached 35-37%.
FCF: $23.5mm pre-w/c ($7.1mm after w/c), above TD's $20.2mm estimate, reflecting lower-than-expected capex. In Q1/F23, MDI spent $13.2mm (TD: $16.3mm), including the acquisition of seven new rigs (10 older rigs disposed). Total rig count: 600.
Net cash (excluding leases): $8.5mm (cash: $61.1mm, debt: $29.7mm, McKay contingent consideration: $23.0mm).