Major Drilling Group International Inc. (TSX: MDI) today reported
results for the year and fourth quarter of fiscal year 2020, ended
April 30, 2020.
Note: the presentation of certain items,
including gross margin, have been modified. Please refer to
“Non-IFRS Financial Measures” for more details.
Highlights
In millions of Canadian dollars(except (loss) earnings per
share) |
Q4 2020 |
Q4 2019 |
YTD 2020 |
YTD 2019 |
Revenue |
$88.8 |
$100.4 |
$409.1 |
$384.8 |
Gross margin |
|
10.6% |
|
13.3% |
|
14.8% |
|
13.3% |
Adjusted gross margin(1) |
|
21.5% |
|
23.0% |
|
24.0% |
|
23.6% |
EBITDA(2) As percentage of revenue |
|
7.38.2% |
|
10.710.6% |
|
48.411.8% |
|
39.210.2% |
Net loss Per share |
|
(74.3)(0.92) |
|
(3.0)(0.04) |
|
(71.0)(0.88) |
|
(18.1)(0.23) |
Adjusted net (loss) earnings(3) Per share |
|
(3.1)(0.04) |
|
(1.6)(0.02) |
|
3.90.05 |
|
(8.6)(0.11) |
- Adjusted gross margin excludes depreciation expenses.
- Earnings before interest, taxes, depreciation and amortization,
excluding restructuring charge and goodwill impairment (see
“Non-IFRS Financial Measures”).
- Net loss excluding goodwill impairment, restructuring charge
and deferred tax write-down (see “Non-IFRS Financial
Measures”).
- Quarterly revenue was $88.8
million, down 12% from the same quarter last year due to the impact
of COVID-19.
- Annual revenue was $409.1 million,
the Company’s highest annual revenue since 2013. Adjusted net
earnings for the year were $3.9 million compared to an adjusted net
loss of $8.6 million for the previous year.
- Earnings were impacted by one-time
charges of $71.2 million, including $70.8 million non-cash charges
(pre-tax goodwill impairment charge of $58.7 million,
de-recognition of deferred tax assets and tax impact of goodwill
impairment of $10.0 million and restructuring charge of $2.1
million).
- Adjusted net loss for the quarter
was $3.1 million compared to $1.6 million for the same quarter last
year.
- Net cash, excluding the impact of
IFRS 16 Leases (“IFRS 16”), remains strong at $7.1 million.
“Our first and most important priority in this
tumultuous climate is to protect the health and well-being of our
employees and customers. Our management team has been
proactive from the onset of the COVID-19 pandemic. We are
continuously communicating with our clients and employees on how to
implement preventative measures to reduce transmission of the virus
and protective measures to stay safe. We are grateful for the
dedication and commitment of our employees, especially those on the
front-line, in the field and workshops,” said Denis Larocque,
President and CEO of Major Drilling Group International Inc.
“While the COVID-19 pandemic has presented significant
challenges to our business in certain regions, we have a global,
diversified and durable business model that serves us well during
typical industry downturns as well as in situations such as the one
we are currently facing, therefore the Company is well positioned
to return to growth after the impact of the pandemic subsides.
Early on in the outbreak, we decided to reassure our employees that
their jobs and salaries would not be affected in the short-term
given we are able to generate cash and are in a strong financial
position. This not only served to keep our team ready for
growth but also helped alleviate potential mental health issues as
the situation is already stressful enough, without having to wonder
if you will be employed the next morning.”
“While we had a good start to the quarter, by
mid-March, operations were impacted by COVID-19 and in the second
half of the quarter, we saw a significant decrease of activity in
some of the regions where we operate. North America was
impacted particularly hard, with revenue down 22% in Canada, U.S.
and Mexico. By mid-May, we started to see a slow yet gradual
increase in activity levels in those regions as some of the
restrictions were lifted. Although the Company continues to
operate globally, there can be no assurance that certain countries
will continue to allow mining and drilling related activities as
the impact of the global COVID-19 pandemic unfolds. The
Company is closely following developments in each of the regions in
which it operates and it will continue to take actions if
warranted.”
“In the fourth quarter, the Company assessed the
impairment indicators that existed as at April 30, 2020 in light of
the uncertainty surrounding the impact of the COVID-19 outbreak and
the significant volatility in equity markets. This resulted
in the Company recognizing a pre-tax, non-cash goodwill impairment
charge of $58.7 million. The goodwill impairment reflects the
impact and uncertainty COVID-19 is having on the Company’s Canadian
and U.S. Cash Generating Units (“CGUs”). This impairment is
primarily triggered by near-term impacts caused by COVID-19, as
management believes longer-term cash flows are consistent with
those forecasted prior to the pandemic. As well, due to the
unknown near-term impacts caused by COVID-19 in the current year,
the Company has de-recognized $14.7 million of its deferred income
tax assets, related to previously recognized tax losses.
Combined with the tax impact of the goodwill impairment, the
Company recorded a one-time non-cash charge of $10.0 million in
deferred tax expense.”
“Despite this slowdown, the Company generated
$7.3 million in EBITDA and has taken steps to continue to generate
positive EBITDA, which should provide some stability if the
situation in regards to the COVID-19 pandemic causes further
deterioration of operations. The Company’s experienced
management team and the Board of Directors have managed
successfully through several industry and economic cycles in the
past, and are confident that we have taken the necessary steps to
position the Company to effectively navigate through this pandemic,
while maintaining its strong financial position.”
“The Company’s net cash position (excluding
lease liabilities reported under IFRS 16) remains positive at $7.1
million. Capital expenditures were $7.1 million as we added
one drill rig and support equipment. Most of these purchases
were done in anticipation of a busier quarter. During the
quarter, the Company reduced forward inventory purchases, minimized
discretionary expenditures and significantly reduced capital spend.
During the quarter, we disposed of 5 older and inefficient
rigs, bringing the fleet total to 607 rigs,” said Mr.
Larocque. “As a cautionary measure given the current
uncertainty with respect to the COVID-19 pandemic, during the
quarter, following its March 26th announcement, the Company drew an
additional $15 million from its revolving bank loan facility,
drawing down a total of $35 million (the remaining portion of its
$50 million facility) to ensure access to cash if there is a
prolonged slowdown. The Company has no current plans to use
these funds.”
“As we look forward, the price of gold, which
historically has accounted for approximately 50% of the Company’s
drilling activity, has increased above the US$1,700 level. In
light of existing conditions, industry experts are forecasting gold
prices to remain at this level for the short to medium term.
Regarding copper, which typically accounts for 20-25% of the
Company’s drilling activity, many industry experts expect that
copper will face a deficit position in the next few years, due to
the continued production and high grading of mines, combined with
the lack of exploration work conducted to replace reserves.
The anticipated decrease in demand for base metals due to the
slowdown in the global economy could be offset by new
infrastructure stimulus programs currently being contemplated by
many governments. Ongoing discussions regarding such stimulus
plans revolve around green economy initiatives, which by default
will require more conductive and battery metals such as copper,
lithium and cobalt.”
COVID-19 Response
The impact of COVID-19 is being felt around the
world, and as a Company, we are committed to playing a role in
helping get through these difficult times.
The health and well-being of our employees and
their families, as well as the communities we operate in, is
paramount and remains our top priority. Our focus has been to
react quickly and effectively to ensure all necessary precautions
and safeguards were, and continue to be, implemented to protect
everyone and slow down the spread of the virus.
From the onset of the pandemic, management and
the Board of Directors have been in regular communication to ensure
the impact of this unique and unprecedented situation is reviewed
as it evolves. The Company formally implemented its business
continuity plan during the quarter, which is focused on ensuring
that: (i) employees who can work remotely do so; and (ii) employees
in the field and workshops, who are not able to work remotely, are
able to work safely and in a manner that complies with applicable
governmental orders and guidelines and ensures they remain healthy.
This plan includes, among other things, health screening,
enhanced cleaning arrangements, travel bans, revised work schedules
and the reorganization of processes and procedures to limit contact
with other employees, customers and contractors on-site.
Supply chains and logistics have become
challenging in certain regions, but we continue to evaluate
alternatives to ensure the jobs currently operating will be able to
continue. Also, because of our strong financial position, we
do have a large inventory of consumables and parts, which should
allow us to continue to service our drills despite issues with
supply levels felt by many of our suppliers. The duration of
these impacts is unknown; however, the Company will continue to
react quickly to this changing environment, as necessary. We
expect our variable cost structure and strong balance sheet to
allow us to navigate through these challenging times, while
maintaining flexibility to respond quickly once operations can
proceed safely.
Despite the impacts of COVID-19, the Company has
been able to maintain its key employees and teams in place globally
to service customers in the future. In order to help achieve
this goal in Canada, the Company is eligible to benefit from the
Canada Emergency Wage Subsidy ("CEWS") program. By
quarter-end, the Company recorded a $1.7 million benefit from this
program in its results from operations.
Environmental, Social and Governance
(“ESG”)
We believe that Major Drilling’s long-term
sustainability depends on us serving as: stewards of the
environment where we work; valued contributors to the communities
where we operate; and responsible corporate citizens in the eyes of
our workforce, our clients, our shareholders and other external
stakeholders. While the Board of Directors and management
have long had responsibility and oversight over ESG practices of
the Company, in fiscal 2020, we began the process of consolidating
our ESG efforts under an ESG Framework in order to formalize its
risk management structure and mitigation strategies. As part
of these efforts, we’re currently in the process of preparing our
second annual CDP (formerly the Carbon Disclosure Project)
submission as part of a broader pursuit to identify and manage
business risks and reduce greenhouse gas emissions.
Fourth Quarter Ended April 30,
2020
Total revenue for the quarter was $88.8 million,
down 12% from revenue of $100.4 million recorded in the same
quarter last year. The favourable foreign exchange
translation impact for the quarter, when comparing to the effective
rates for the same period last year, is estimated at $1 million on
revenue, with a negligible impact on net earnings.
Revenue for the quarter from Canada - U.S.
drilling operations decreased by 19.4% to $41.1 million, compared
to the same period last year. The region was impacted
significantly in mid-March due to government and customer imposed
restrictions on operations caused by COVID-19.
South and Central American revenue decreased by
20.7% to $22.2 million for the quarter, compared to the same
quarter last year. All countries in the region experienced
some operational challenges in relation to government or customer
imposed restrictions regarding COVID-19. The duration of
these impacts varied throughout the region.
Asian and African operations reported revenue of
$25.5 million, up 19.2% from the same period last year. This
region incurred minimal impacts in relation to COVID-19 during the
quarter, which is reflected in the results. Strong growth in
Indonesia and Mongolia contributed to the overall performance of
the region.
Gross margin for the quarter was 10.6%, compared
to 13.3% for the same period last year. Depreciation expense
totaling $9.7 million is included in direct costs for both the
current quarter and the same quarter last year. Adjusted
gross margin, excluding depreciation expense, was 21.5% for the
quarter, compared to 23.0% for the same period last year.
Although the quarter started off well, by mid-March, COVID-19
related operational impacts were being felt in many regions.
Standby labour costs, as well as normal fourth quarter ramp-up
costs, contributed to lower margins as jobs were abruptly shut down
in many jurisdictions.
General and administrative costs were $11.1
million, a decrease of $0.1 million compared to the same quarter
last year. The additional general and administrative expenses
from the Norex acquisition were offset by reduced travel and
various cost saving initiatives. As well, the Company
recorded a benefit of $0.6 million related to the CEWS program.
Depreciation and amortization was flat at $9.9 million.
Increases related to IFRS 16 and the Norex acquisition were
offset by the impact of reduced capital expenditures during the
recent industry downturn.
At April 30, 2020, after assessing impairment
indicators driven by impacts of the COVID-19 pandemic, the Company
recorded a pre-tax, non-cash goodwill impairment charge of $58.7
million in relation to its U.S. and Canadian CGUs. The impact
COVID-19 had on these CGUs in the quarter created near-term
uncertainty in cash flow generation however, management did not
change their long-term projections for growth in these areas.
In the quarter, the Company recorded an
additional restructuring charge of $2.4 million, including $2.1
million in non-cash charges, mainly related to the previously
announced closure of its Colombian operations. COVID-19 has
negatively impacted the ability to execute the initial
restructuring plan, resulting in additional charges.
The income tax provision for the quarter was an
expense of $10.1 million compared to an expense of $2.7 million for
the prior year period. Due to the unknown near-term impacts
caused by COVID-19, the Company has de-recognized a portion of its
deferred income tax assets related to previously recognized tax
losses. Combined with the tax impact of the goodwill
impairment, the Company recorded a one-time non-cash charge of
$10.0 million in deferred tax expense.
Net loss was $74.3 million or $0.92 per share
($0.92 per share diluted) for the quarter, compared to a net loss
of $3.0 million or $0.04 per share ($0.04 per share diluted) for
the prior year quarter.
Non-IFRS Financial Measures
EBITDAThe Company uses the non-IFRS financial
measure, EBITDA. The Company believes this non-IFRS financial
measure is key, for both management and investors, in evaluating
performance at a consolidated level. EBITDA is commonly
reported and widely used by investors and lending institutions as
an indicator of a company’s operating performance and ability to
incur and service debt, and as a valuation metric. This
measure does 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.
|
|
|
|
|
|
|
|
|
|
|
|
(in $000s CAD) |
|
Q4 2020 |
|
|
|
Q4 2019 |
|
|
|
YTD 2020 |
|
|
|
YTD 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(74,307 |
) |
|
$ |
(2,957 |
) |
|
$ |
(70,962 |
) |
|
$ |
(18,084 |
) |
Finance costs |
|
392 |
|
|
|
182 |
|
|
|
1,108 |
|
|
|
775 |
|
Income tax provision |
|
10,114 |
|
|
|
2,664 |
|
|
|
15,408 |
|
|
|
7,748 |
|
Depreciation and
amortization |
|
9,913 |
|
|
|
9,817 |
|
|
|
39,542 |
|
|
|
40,909 |
|
Impairment of goodwill |
|
58,743 |
|
|
|
- |
|
|
|
58,743 |
|
|
|
- |
|
Restructuring charge |
|
2,437 |
|
|
|
977 |
|
|
|
4,553 |
|
|
|
7,874 |
|
EBITDA |
$ |
7,292 |
|
|
$ |
10,683 |
|
|
$ |
48,392 |
|
|
$ |
39,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net earningsAdjusted net earnings and
adjusted earnings per share are not recognized measures under IFRS
and do not have a standardized meaning prescribed by IFRS.
Accordingly, adjusted net earnings and adjusted earnings per share
may not be comparable to similar measures presented by other
issuers. Readers of this press release are cautioned that
adjusted net earnings and adjusted earnings per share should not be
construed as an alternative to net earnings, or net earnings per
share, determined in accordance with IFRS as indicators of the
Company's performance. The following table reconciles net
earnings to adjusted net earnings based on the historical
Consolidated Financial Statements of the Company for the periods
indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in $000s CAD) |
|
Q4 2020 |
|
|
|
Q4 2019 |
|
|
|
YTD 2020 |
|
|
|
YTD 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(74,307 |
) |
|
$ |
(2,957 |
) |
|
$ |
(70,962 |
) |
|
$ |
(18,084 |
) |
Impairment of goodwill |
|
58,743 |
|
|
|
- |
|
|
|
58,743 |
|
|
|
- |
|
Restructuring charge |
|
2,437 |
|
|
|
977 |
|
|
|
4,553 |
|
|
|
7,874 |
|
De-recognition of deferred tax
assets and tax impact of goodwill impairment |
|
10,018 |
|
|
|
401 |
|
|
|
11,523 |
|
|
|
1,613 |
|
Adjusted net (loss) earnings |
|
(3,109 |
) |
|
|
(1,579 |
) |
|
|
3,857 |
|
|
|
(8,597 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Per share |
$ |
(0.04 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.05 |
|
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Looking Statements
This news release contains statements that
constitute forward-looking statements about
the Company’s objectives, strategies, financial
condition, results of operations, cash flows and businesses. All
statements, other than historical facts, are “forward-looking”
because they are based on current expectations, estimates,
assumptions, risks and uncertainties. These 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.
Forward-looking statements include, but are not
limited to: worldwide demand for gold and base metals and overall
commodity prices; the level of activity in the mining industry and
the demand for the Company’s services; the Canadian and
international economic environments; the Company’s ability to
attract and retain customers and to manage its assets and operating
costs; sources of funding for its clients (particularly for junior
mining companies); competitive pressures; currency movements (which
can affect the Company’s revenue in Canadian dollars); 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; and other
factors as may be set forth as well as objectives or goals
including words to the effect that the Company or management
expects a stated condition to exist or occur. Since
forward-looking statements address future events and conditions, by
their very nature, they involve inherent risks and
uncertainties. Actual results in each case could differ
materially from those currently anticipated in such statements by
reason of factors such as, but not limited to, the risks relating
to the COVID-19 outbreak and the factors set out in the discussion
on pages 15 to 19 of the 2020 Management’s Discussion &
Analysis entitled “General Risks and Uncertainties”, and such other
documents as available on SEDAR at www.sedar.com. All such
factors should be considered carefully when making decisions with
respect to the Company. The Company does not undertake to
update any forward-looking statements, including those statements
that are incorporated by reference herein, whether written or oral,
that may be made from time to time by or on its behalf, except in
accordance with applicable securities laws. All of the
forward-looking statements made in this news release are qualified
by these cautionary statements.
About Major Drilling
Major Drilling Group International Inc. is one
of the world’s largest drilling services companies primarily
serving the mining industry. Established in 1980, Major Drilling
has over 1,000 years of combined experience and expertise within
its management team alone. The Company maintains field
operations and offices in Canada, the United States, Mexico, South
America, Asia, Africa and Europe. 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, and a variety of mine services.
Webcast/Conference Call
Information
Major Drilling Group International Inc. will
provide a simultaneous webcast and conference call to discuss its
quarterly results on Friday, June 5, 2020 at 9:00 AM (EDT).
To access the webcast, which includes a slide presentation, please
go to the investors/webcast 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 and ask for Major Drilling’s Fourth 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 midnight, Saturday, June 20,
2020. To access the rebroadcast, dial 905-694-9451 and enter
the passcode 4670367#. 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:Ian Ross, Chief
Financial OfficerTel: (506) 857-8636Fax: (506)
857-9211ir@majordrilling.com
|
|
Major Drilling Group International Inc. |
|
Condensed Consolidated Statements of
Operations |
|
(in thousands of Canadian dollars, except per share
information) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Twelve months ended |
|
|
|
April 30 |
|
|
April 30 |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUE |
|
$ |
88,784 |
|
|
$ |
100,397 |
|
|
$ |
409,144 |
|
|
$ |
384,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECT
COSTS |
|
|
79,383 |
|
|
|
87,018 |
|
|
|
348,501 |
|
|
|
333,749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT |
|
|
9,401 |
|
|
|
13,379 |
|
|
|
60,643 |
|
|
|
51,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
11,080 |
|
|
|
11,223 |
|
|
|
48,042 |
|
|
|
47,579 |
|
Other expenses |
|
|
80 |
|
|
|
923 |
|
|
|
2,846 |
|
|
|
4,228 |
|
Loss (gain) on disposal of property, plant and equipment |
|
|
127 |
|
|
|
33 |
|
|
|
(44 |
) |
|
|
(342 |
) |
Foreign exchange loss |
|
|
735 |
|
|
|
334 |
|
|
|
949 |
|
|
|
1,295 |
|
Finance costs |
|
|
392 |
|
|
|
182 |
|
|
|
1,108 |
|
|
|
775 |
|
Impairment of goodwill |
|
|
58,743 |
|
|
|
- |
|
|
|
58,743 |
|
|
|
- |
|
Restructuring charge |
|
|
2,437 |
|
|
|
977 |
|
|
|
4,553 |
|
|
|
7,874 |
|
|
|
|
73,594 |
|
|
|
13,672 |
|
|
|
116,197 |
|
|
|
61,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME
TAX |
|
|
(64,193 |
) |
|
|
(293 |
) |
|
|
(55,554 |
) |
|
|
(10,336 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX
PROVISION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
758 |
|
|
|
1,653 |
|
|
|
5,617 |
|
|
|
7,761 |
|
Deferred |
|
|
9,356 |
|
|
|
1,011 |
|
|
|
9,791 |
|
|
|
(13 |
) |
|
|
|
10,114 |
|
|
|
2,664 |
|
|
|
15,408 |
|
|
|
7,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
$ |
(74,307 |
) |
|
$ |
(2,957 |
) |
|
$ |
(70,962 |
) |
|
$ |
(18,084 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS PER
SHARE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.92 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.88 |
) |
|
$ |
(0.23 |
) |
Diluted |
|
$ |
(0.92 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.88 |
) |
|
$ |
(0.23 |
) |
|
|
Major Drilling Group International Inc. |
|
Condensed Consolidated Statements of Comprehensive
Earnings |
|
(in thousands of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Twelve months ended |
|
|
|
April 30 |
|
|
April 30 |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
$ |
(74,307 |
) |
|
$ |
(2,957 |
) |
|
$ |
(70,962 |
) |
|
$ |
(18,084 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
EARNINGS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified
subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain on foreign currency translations |
|
|
11,496 |
|
|
|
3,767 |
|
|
|
2,857 |
|
|
|
8,762 |
|
Unrealized loss on derivatives (net of tax) |
|
|
(917 |
) |
|
|
(287 |
) |
|
|
(41 |
) |
|
|
(606 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS)
EARNINGS |
|
$ |
(63,728 |
) |
|
$ |
523 |
|
|
$ |
(68,146 |
) |
|
$ |
(9,928 |
) |
|
|
Major Drilling Group International Inc. |
|
Condensed Consolidated Statements of Changes in
Equity |
|
For the twelve months ended April 30, 2020 and
2019 |
|
(in thousands of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
earnings |
|
|
Other |
|
|
Share-based |
|
|
Foreign currency |
|
|
|
|
|
|
|
Share capital |
|
|
(deficit) |
|
|
reserves |
|
|
payments reserve |
|
|
translation reserve |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT MAY 1,
2018* |
|
$ |
241,264 |
|
|
$ |
45,159 |
|
|
$ |
36 |
|
|
$ |
15,922 |
|
|
$ |
70,021 |
|
|
$ |
372,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
526 |
|
|
|
- |
|
|
|
526 |
|
Stock options expired |
|
|
- |
|
|
|
1,945 |
|
|
|
- |
|
|
|
(1,945 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
241,264 |
|
|
|
47,104 |
|
|
|
36 |
|
|
|
14,503 |
|
|
|
70,021 |
|
|
|
372,928 |
|
Comprehensive
earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
(18,084 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(18,084 |
) |
Unrealized gain on foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
translations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,762 |
|
|
|
8,762 |
|
Unrealized loss on derivatives |
|
|
- |
|
|
|
- |
|
|
|
(606 |
) |
|
|
- |
|
|
|
- |
|
|
|
(606 |
) |
Total comprehensive loss |
|
|
- |
|
|
|
(18,084 |
) |
|
|
(606 |
) |
|
|
- |
|
|
|
8,762 |
|
|
|
(9,928 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT APRIL
30, 2019 |
|
$ |
241,264 |
|
|
$ |
29,020 |
|
|
$ |
(570 |
) |
|
$ |
14,503 |
|
|
$ |
78,783 |
|
|
$ |
363,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT MAY 1,
2019 |
|
$ |
241,264 |
|
|
$ |
29,020 |
|
|
$ |
(570 |
) |
|
$ |
14,503 |
|
|
$ |
78,783 |
|
|
$ |
363,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share issue |
|
|
1,925 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,925 |
|
Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
267 |
|
|
|
- |
|
|
|
267 |
|
Stock options expired |
|
|
- |
|
|
|
6,251 |
|
|
|
- |
|
|
|
(6,251 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
243,189 |
|
|
|
35,271 |
|
|
|
(570 |
) |
|
|
8,519 |
|
|
|
78,783 |
|
|
|
365,192 |
|
Comprehensive
earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
(70,962 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(70,962 |
) |
Unrealized gain on foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
translations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,857 |
|
|
|
2,857 |
|
Unrealized loss on derivatives |
|
|
- |
|
|
|
- |
|
|
|
(41 |
) |
|
|
- |
|
|
|
- |
|
|
|
(41 |
) |
Total comprehensive loss |
|
|
- |
|
|
|
(70,962 |
) |
|
|
(41 |
) |
|
|
- |
|
|
|
2,857 |
|
|
|
(68,146 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT APRIL
30, 2020 |
|
$ |
243,189 |
|
|
$ |
(35,691 |
) |
|
$ |
(611 |
) |
|
$ |
8,519 |
|
|
$ |
81,640 |
|
|
$ |
297,046 |
|
*Opening balances have been allocated to include
expired or forfeited stock options of $3,799, previously recorded
in share-based payments reserve, in retained earnings (deficit),
consistent with current year presentation.
|
|
Major Drilling Group International Inc. |
|
Condensed Consolidated Statements of Cash
Flows |
|
(in thousands of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Twelve months ended |
|
|
|
April 30 |
|
|
April 30 |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax |
|
$ |
(64,193 |
) |
|
$ |
(293 |
) |
|
$ |
(55,554 |
) |
|
$ |
(10,336 |
) |
Operating items not involving
cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
|
9,819 |
|
|
|
9,817 |
|
|
|
39,353 |
|
|
|
40,909 |
|
Amortization of intangible assets |
|
|
94 |
|
|
|
- |
|
|
|
189 |
|
|
|
- |
|
Loss (gain) on disposal of property, plant and equipment |
|
|
127 |
|
|
|
33 |
|
|
|
(44 |
) |
|
|
(342 |
) |
Share-based compensation |
|
|
73 |
|
|
|
123 |
|
|
|
267 |
|
|
|
526 |
|
Restructuring charge (non-cash portion) |
|
|
1,966 |
|
|
|
1,227 |
|
|
|
3,469 |
|
|
|
7,274 |
|
Impairment of goodwill |
|
|
58,743 |
|
|
|
- |
|
|
|
58,743 |
|
|
|
- |
|
Finance costs recognized in
loss before income tax |
|
|
392 |
|
|
|
182 |
|
|
|
1,108 |
|
|
|
775 |
|
|
|
|
7,021 |
|
|
|
11,089 |
|
|
|
47,531 |
|
|
|
38,806 |
|
Changes in non-cash operating
working capital items |
|
|
(4,351 |
) |
|
|
(14,528 |
) |
|
|
1,692 |
|
|
|
(7,345 |
) |
Finance costs paid |
|
|
(392 |
) |
|
|
(182 |
) |
|
|
(1,108 |
) |
|
|
(775 |
) |
Income taxes recovered
(paid) |
|
|
181 |
|
|
|
(2,851 |
) |
|
|
(6,004 |
) |
|
|
(9,724 |
) |
Cash flow from (used in)
operating activities |
|
|
2,459 |
|
|
|
(6,472 |
) |
|
|
42,111 |
|
|
|
20,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of lease
liabilities |
|
|
(10 |
) |
|
|
- |
|
|
|
(1,300 |
) |
|
|
- |
|
Repayment of long-term
debt |
|
|
(249 |
) |
|
|
(509 |
) |
|
|
(1,057 |
) |
|
|
(2,137 |
) |
Proceeds from draw on
long-term debt |
|
|
35,000 |
|
|
|
- |
|
|
|
35,000 |
|
|
|
- |
|
Cash flow from (used in)
financing activities |
|
|
34,741 |
|
|
|
(509 |
) |
|
|
32,643 |
|
|
|
(2,137 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business acquisitions (net of
cash acquired) |
|
|
- |
|
|
|
- |
|
|
|
(13,945 |
) |
|
|
- |
|
Acquisition of property, plant
and equipment |
|
|
(7,149 |
) |
|
|
(6,321 |
) |
|
|
(32,041 |
) |
|
|
(25,487 |
) |
Proceeds from disposal of
property, plant and equipment |
|
|
456 |
|
|
|
2,290 |
|
|
|
1,256 |
|
|
|
11,933 |
|
Cash flow used in investing
activities |
|
|
(6,693 |
) |
|
|
(4,031 |
) |
|
|
(44,730 |
) |
|
|
(13,554 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes |
|
|
1,188 |
|
|
|
387 |
|
|
|
1,043 |
|
|
|
839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN
CASH |
|
|
31,695 |
|
|
|
(10,625 |
) |
|
|
31,067 |
|
|
|
6,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, BEGINNING OF THE PERIOD |
|
|
26,738 |
|
|
|
37,991 |
|
|
|
27,366 |
|
|
|
21,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, END OF THE PERIOD |
|
$ |
58,433 |
|
|
$ |
27,366 |
|
|
$ |
58,433 |
|
|
$ |
27,366 |
|
|
|
Major Drilling Group International Inc. |
|
Condensed Consolidated Balance Sheets |
|
As at April 30, 2020 and April 30, 2019 |
|
(in thousands of Canadian dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2020 |
|
|
April 30, 2019 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
58,433 |
|
|
$ |
27,366 |
|
Trade and other receivables |
|
|
71,597 |
|
|
|
88,029 |
|
Note receivable |
|
|
44 |
|
|
|
560 |
|
Income tax receivable |
|
|
4,350 |
|
|
|
3,978 |
|
Inventories |
|
|
99,823 |
|
|
|
90,325 |
|
Prepaid expenses |
|
|
4,497 |
|
|
|
5,099 |
|
|
|
|
238,744 |
|
|
|
215,357 |
|
|
|
|
|
|
|
|
|
|
PROPERTY, PLANT AND
EQUIPMENT |
|
|
168,906 |
|
|
|
164,266 |
|
|
|
|
|
|
|
|
|
|
DEFERRED INCOME TAX
ASSETS |
|
|
9,613 |
|
|
|
23,374 |
|
|
|
|
|
|
|
|
|
|
GOODWILL |
|
|
7,708 |
|
|
|
58,300 |
|
|
|
|
|
|
|
|
|
|
INTANGIBLE
ASSETS |
|
|
946 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
425,917 |
|
|
$ |
461,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
Trade and other payables |
|
$ |
55,858 |
|
|
$ |
63,376 |
|
Income tax payable |
|
|
926 |
|
|
|
1,209 |
|
Current portion of lease liabilities |
|
|
1,121 |
|
|
|
- |
|
Current portion of long-term debt |
|
|
1,024 |
|
|
|
1,060 |
|
|
|
|
58,929 |
|
|
|
65,645 |
|
|
|
|
|
|
|
|
|
|
LEASE
LIABILITIES |
|
|
2,701 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
CONTINGENT
CONSIDERATION |
|
|
1,807 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
LONG-TERM
DEBT |
|
|
50,333 |
|
|
|
16,298 |
|
|
|
|
|
|
|
|
|
|
DEFERRED INCOME TAX
LIABILITIES |
|
|
15,101 |
|
|
|
16,354 |
|
|
|
|
128,871 |
|
|
|
98,297 |
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
Share capital |
|
|
243,189 |
|
|
|
241,264 |
|
Retained earnings (deficit) |
|
|
(35,691 |
) |
|
|
29,020 |
|
Other reserves |
|
|
(611 |
) |
|
|
(570 |
) |
Share-based payments reserve |
|
|
8,519 |
|
|
|
14,503 |
|
Foreign currency translation reserve |
|
|
81,640 |
|
|
|
78,783 |
|
|
|
|
297,046 |
|
|
|
363,000 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
425,917 |
|
|
$ |
461,297 |
|
|
|
|
|
|
|
|
|
|
MAJOR DRILLING GROUP INTERNATIONAL
INC.SELECTED FINANCIAL
INFORMATIONFOR THE THREE AND TWELVE MONTHS ENDED
APRIL 30, 2020 AND 2019(in thousands of Canadian
dollars)
SEGMENTED INFORMATION
The Company’s operations are divided into three
geographic segments corresponding to its management structure:
Canada - U.S.; South and Central America; and Asia 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 note 4 presented in the Notes to
Consolidated Financial Statements for the year ended April 30,
2020. Management evaluates performance based on earnings from
operations in these three geographic segments before impairment of
goodwill, finance costs, general and corporate expenses,
restructuring charge and income tax. Data relating to each of
the Company’s reportable segments is presented as follows:
|
|
Q4 2020 |
|
|
Q4 2019 |
|
|
YTD 2020 |
|
|
YTD 2019 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S.* |
|
$ |
41,058 |
|
|
$ |
50,982 |
|
|
$ |
205,551 |
|
|
$ |
196,105 |
|
South and Central America |
|
|
22,209 |
|
|
|
28,044 |
|
|
|
104,002 |
|
|
|
108,139 |
|
Asia and Africa |
|
|
25,517 |
|
|
|
21,371 |
|
|
|
99,591 |
|
|
|
80,578 |
|
|
|
$ |
88,784 |
|
|
$ |
100,397 |
|
|
$ |
409,144 |
|
|
$ |
384,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings from
operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S. |
|
$ |
(2,329 |
) |
|
$ |
1,554 |
|
|
$ |
4,825 |
|
|
$ |
6,057 |
|
South and Central America |
|
|
(2,838 |
) |
|
|
(757 |
) |
|
|
(5,738 |
) |
|
|
(4,307 |
) |
Asia and Africa |
|
|
3,519 |
|
|
|
1,020 |
|
|
|
16,280 |
|
|
|
2,970 |
|
|
|
|
(1,648 |
) |
|
|
1,817 |
|
|
|
15,367 |
|
|
|
4,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of
goodwill |
|
|
58,743 |
|
|
|
- |
|
|
|
58,743 |
|
|
|
- |
|
Finance
costs |
|
|
392 |
|
|
|
182 |
|
|
|
1,108 |
|
|
|
775 |
|
General corporate
expenses** |
|
|
973 |
|
|
|
951 |
|
|
|
6,517 |
|
|
|
6,407 |
|
Restructuring
charge |
|
|
2,437 |
|
|
|
977 |
|
|
|
4,553 |
|
|
|
7,874 |
|
Income tax |
|
|
10,114 |
|
|
|
2,664 |
|
|
|
15,408 |
|
|
|
7,748 |
|
|
|
|
72,659 |
|
|
|
4,774 |
|
|
|
86,329 |
|
|
|
22,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(74,307 |
) |
|
$ |
(2,957 |
) |
|
$ |
(70,962 |
) |
|
$ |
(18,084 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S. |
|
$ |
4,837 |
|
|
$ |
4,648 |
|
|
$ |
18,434 |
|
|
$ |
19,168 |
|
South and Central
America |
|
|
3,301 |
|
|
|
3,522 |
|
|
|
14,226 |
|
|
|
13,085 |
|
Asia and Africa |
|
|
1,833 |
|
|
|
1,613 |
|
|
|
6,744 |
|
|
|
8,381 |
|
Unallocated and corporate
assets |
|
|
(58 |
) |
|
|
34 |
|
|
|
138 |
|
|
|
275 |
|
Total depreciation and
amortization |
|
$ |
9,913 |
|
|
$ |
9,817 |
|
|
$ |
39,542 |
|
|
$ |
40,909 |
|
*Canada - U.S. includes revenue of $20,774 and
$26,460 for Canadian operations for the three months ended April
30, 2020, and 2019 respectively, and $95,603 and $94,561 for the
twelve months ended April 30, 2020 and 2019 respectively.
**General and corporate expenses include
expenses for corporate offices, stock options and certain
unallocated costs.
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