Bullboard - Stock Discussion Forum 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... see more

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TSX:MDI - Post Discussion

Major Drilling Group International Inc > TD

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Post by retiredcf on Jun 08, 2022 7:49am

TD

This is a flash report so there's certainly potential for them to raise their current target of $14.00. GLTA

Major Drilling Group International Inc.

(MDI-T) C$10.58

Q4/F22 First Look: Exceptional Quarter and Strong F2023 Outlook Event

MDI reported Q4/F22 (ending April 30) EBITDA of $40.7mm, 27.7% above TD's $31.9mm estimate (consensus: $30.5mm), reflecting stronger-than-expected revenue and gross margins (31.0% vs. TD: 28.0%).
CC: 8:00 a.m. ET (416-340-2217); password: 5953589#

Impact: POSITIVE

Q4/F22 results were very impressive, with MDI successfully passing through labour costs/inflationary pressure. Demand for complex specialized drilling services has remained strong and led to new contract wins and renewal of existing contracts with improved pricing/terms. Additionally, MDI's margins are improving as recently hired drill crews become more efficient and with initial rig mobilization costs subsiding. Looking forward, management indicated that the outlook remains "extremely positive", with F2023 seeing increasing inquiries from all categories of customers and given strong fundamentals for both base (energy transition and EVs) and precious metals (several years of underinvestment driving reserve shortfall and few easy deposits remaining). The labour market remains tight, but MDI continues to make headway, developing and training new drillers.

Revenue increased 48.3% y/y to $190.0mm and was 13.7% above TD's estimate of $167.1mm. North America continued to show solid growth, driven by strong demand and with MDI having ready-to-go rigs/crews, given its upfront investments to prepare for this cycle. Results in Argentina and Chile recovered significantly alongside the removal of COVID-19 restrictions.
Gross margins of 31.0% were above TD's 28.0% forecast, reflecting strong pass-through of 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 to have equipment ready to deploy. During previous drilling up-cycles, quarterly gross margins reached 35-37%.
FCF: $22.8mm pre-w/c (-$10.4mm after w/c), above TD's $15.2mm estimate, reflecting the EBITDA beat, slightly offset by higher-than-expected capex. In Q4/ FY22, MDI spent $14.9mm (TD: $12.5mm), including the acquisition of seven new rigs (four older rigs disposed). Total rig count: 603.
Net debt (excluding leases): $1.6mm (cash: $71.3mm, debt: $50.0mm, McKay contingent consideration: $22.9mm).
F2023 capex guidance: $65mm (TD: $45mm), reflecting the need to add more specialized and underground drills in select markets. At the previous 2012 cycle peak, MDI spent $81mm in capex.