Major Drilling Posts Strong Q3, Revenue Up 38%, EBITDA Up 110%

Equities Staff  |

Image source: Major Drilling

Major Drilling Group International (Toronto: MDI) reported C$138.8 million (US$109.9 million) in revenue on Thursday for its fiscal third quarter ended Jan. 31, 2022, a 38% increase over the same period last year.

The New Brunswick-based specialized driller posted C$18.4 million (US$14.4 million) in EBITDA for Q3, up 110% over the same period last year.

Net earnings came in at C$5.7 million (US$4.5 million) or $0.07 per share, up from a loss of $1.5 million or $0.02 per share in Q3 2021.

Major Drilling is one of the world’s largest drilling services companies primarily serving the mining industry.

“We continued to see increased demand for our specialized services as customers turn to more challenging drill programs as the upcycle progresses," said President and CEO Denis Larocque.

"Our strategy of holding rigs and inventory ready for immediate deployment to customers also continues to deliver results, as the industry deals with supply chain disruptions.”

Investment thesis

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Major Drilling stock has recovered well from the market swoon at the end of calendar 2021, and continues to be highly correlated to the performance of gold and copper, with 72% of revenue derived from those activities.

This small cap mining services company has shown strong operational performance in a challenging supply chain environment.

  • The company's specialized drilling services present a high barrier to entry for competition.
  • 76% of Major Drilling's customers are senior and intermediate mining companies, including Barrick, Freeport-McMoran, Nemont, Vale and Rio Tinto.
  • Low gold reserves and inflation will continue to support gold prices.
  • Copper will continue to have strong global demand amid accelerated decarbonization efforts.
  • The demand for electric vehicle batteries will continue to drive nickel prices.

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Source: Equities News

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