Canada's Major Drilling Q1 revenue rises 19.3%

Overview

• Major Drilling Group International fiscal Q1 revenue up 19.3% yr/yr

• The specialised drilling services provider's Q1 adjusted gross margin falls to 25.2% from 28.9% year ago

• EBITDA for fiscal Q1 decreases to C$32.1 mln from C$34.3 mln last year

• South & Central American revenue up 92.4%, offsetting Australasian slowdown

Outlook

• Company expects continued revenue growth from new project start-ups

• Major Drilling anticipates modest margin improvement next quarter

• Company optimistic about North American market recovery

• Company cites geopolitical concerns impacting future performance

Result Drivers

• SOUTH AMERICAN GROWTH - Revenue in South and Central America surged 92.4%, driven by increased activity in Peru and Chile

• AUSTRALASIAN SLOWDOWN - Revenue in the Australasian region decreased due to project delays and changes in drill programs

• COMPETITIVE PRICING - Lower gross margins attributed to competitive pricing pressures in North America

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 5 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the mining support services & equipment peer group is "buy"

• Wall Street's median 12-month price target for Major Drilling Group International Inc is C$13.00, about 21% above its September 5 closing price of C$10.27

• The stock recently traded at 15 times the next 12-month earnings vs. a P/E of 11 three months ago

Press Release: ID:nGNXc7XRk0