Major Drilling reports record annual and quarterly revenue

About this update from Major Drilling Group International Inc.

MONCTON, NB, June 5, 2012 /CNW/ - Major Drilling Group International Inc. (TSX: MDI) today reported results for its fourth quarter of fiscal 2012, ended April 30, 2012. Highlights             In millions of Canadian dollars (except earnings per share) Q4-12 Q4-11 Fiscal 2012 Fiscal 2011 Revenue $237.2 $137.3 $797.4 $482.3 Gross profit 78.5 34.9 251.1 120.4   As percentage of revenue 33.1% 25.4% 31.5% 25.0% EBITDA (1) 57.0 22.9 174.4 73.5   As percentage of revenue 24.0% 16.7% 21.9% 15.2% Net earnings 30.7 9.5 89.7 27.6 Earnings per share $0.39 $0.13 $1.18 $0.39 (1) Earnings before interest, taxes, depreciation and amortization (see "non-gaap measures") Major Drilling posted the highest quarterly revenue in its history at $237.2 million, up 73% from the $137.3 million recorded for the same quarter last year.  Record annual revenue of $797.4 million was recorded, an increase of 65% over last year. Gross margin percentage for the quarter was 33.1% compared to 25.4% for the corresponding period last year. EBITDA increased 149% to $57.0 million for the quarter compared to the corresponding period last year. Net earnings for the quarter were at $30.7 million, an increase of 225% over last year.  Net earnings for fiscal 2012 increased 225% to $89.7 million ($1.18 per share), an annual record. "We are pleased to report record annual and quarterly revenue.  Revenue in the quarter grew year-over-year by 73% to $237 million.  Despite poor weather conditions in Canada, Mongolia and Australia, as well as more shifting between contracts than usual, margins were at 33.1%.  We saw our EBITDA for the quarter increase by two and half times compared to the corresponding period last year to $57 million.  All regions contributed to this growth.  Earnings for the quarter were $30.7 million despite a foreign exchange loss of $1.3 million and depreciation costs increasing by more than 50%," said Francis McGuire, President and CEO of Major Drilling. "Fiscal 2012 was a very satisfying year as the Company continued to increase its investments in productive equipment and in training and safety.  At year end, we posted record revenue of $797 million and record earnings of $89.7 million.  In September, the Company also completed the largest acquisition in its history with the purchase of the Bradley operations and we will see the full impact of this acquisition in our next fiscal year." "Looking forward, the demand for drilling services from the senior mining houses continues to be strong.  The demand for specialized drilling from the senior mining houses, particularly in Latin America and Africa, continues to grow as our customers need to replace their reserves.  At the end of April, the utilization rate for our specialized drills stood at 75%, very close to the maximum utilization rate.  We foresee adding several more rigs to our recently established branch in West Africa and in addition, we will continue to make in-roads drilling for coal and iron ore customers.  As junior miners become more cautious in their spending given the difficulty in accessing capital, we anticipate that senior miners will represent a greater proportion of our drilling projects going forward.  Should our senior customers follow through with their current stated plans, we could add up to 75 rigs to our fleet over the coming year as part of our capital expenditures estimated at some $100 million, the highest level in our history.  While we are optimistic that our senior customers will continue with their projects, we are well aware of the present volatility in the financial markets, and the ability of those customers to modify their plans on short notice, at which point we would adjust our capital expenditure plans accordingly." "Overall, we continue to expect growth for specialized drilling in the year ahead.  While financing difficulties for junior mining ventures will moderate our growth over the short-term, it also provides a strong upside potential when their exploration activities pick up, as they must, if the mining industry is to provide the world with the resources it needs toward the end of the decade." Fourth quarter ended April 30, 2012 Total revenue for the fourth quarter was $237.2 million compared to $137.3 million recorded for the prior year period.  All of the Company's regions contributed to this growth as did the newly acquired Bradley operations. Revenue from Canada-U.S. drilling operations was up 105% to $106.7 million for the quarter compared to the same period last year.  In Canada, the Bradley acquisition accounted for more than half of the increase but the existing Canadian operations also saw increased activity levels although mitigated by mild weather.  U.S. operations continued its strong growth, particularly with its senior mining customers. In South and Central America, revenue for the quarter was $73.3 million, up 45% from the prior year quarter.  This increase was driven by stronger activity levels in Mexico, Chile and Argentina, combined with additional contracts in Colombia and Suriname from the Bradley acquisition. Australian, Asian and African drilling operations reported revenue of $57.3 million, up 65% from the same period last year.  The revenue increase came primarily from Australia and new operations in Mozambique, Burkina Faso and Democratic Republic of the Congo ("DRC"). The overall gross margin percentage for the quarter was 33.1% compared to 25.4% for the same period last year. New pricing on contracts that were signed or renewed for this calendar year reflected the current stronger pricing environment.  Also, our training and recruitment efforts allowed the Company to increase the number of shifts in the field during the quarter. Margins were somewhat impacted by weather issues and more shifting between jobs than usual. General and administrative costs were $16.0 million for the quarter compared to $11.3 million in the same period last year.  The increase was due to the acquisition of Bradley, the addition of new operations in Burkina Faso, Mozambique and the DRC and also increased costs to support the strong growth in activity levels. Other expenses were $4.0 million, up from $1.6 million in the prior year quarter, due primarily to higher incentive compensation expenses given the Company's increased profitability. Foreign exchange loss was $1.3 million compared to a gain of $0.7 million in the prior year period. The loss was due to the effect of exchange rate variations on monetary working capital items. Depreciation and amortization expense increased to $12.6 million for the quarter compared to $8.2 million for the same quarter last year. A significant portion of the increase relates to the acquisition of Bradley, including the amortization of intangible assets, which are amortized over four years. Investments in equipment over the last year account for the rest of the increase. Non-GAAP Financial Measures In this news release, the Company uses the following non-GAAP financial measures: EBITDA and EBITDA margin. The Company believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance of the Company. These measures do not have a standardized meaning prescribed by GAAP and therefore they 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 GAAP. Some of the statements contained in this press release may be forward-looking statements, such as, but not limited to, those relating to worldwide demand for gold and base metals and overall commodity prices, the level of activity in the minerals and metals 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, and 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 factors set out in the discussion on pages 17 to 20 of the 2011 Annual Report 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. Based in Moncton, New Brunswick, Major Drilling Group International Inc. is one of the world's largest metals and minerals contract drilling service companies. To support its customers' mining operations, mineral exploration and environmental activities, Major Drilling maintains operations on every continent. Financial statements are attached. Major Drilling will provide a simultaneous webcast of its quarterly conference call on Wednesday, June 6, 2012 at 9:00 AM (EDT).  To access the webcast please go to the investors/webcast section of Major Drilling's website at www.majordrilling.com and click the attached link, or go directly to the CNW Group website at www.newswire.ca   for directions.  Participants will require Windows MediaPlayer, which can be downloaded prior to accessing the webcast.  Please note that this is listen only mode. Major Drilling Group International Inc. Interim Condensed Consolidated Statements of Operation s (in thousands of Canadian dollars, except per share info rmation) (unaudited)                           Three months ended April 30   Twelve months ended April 30                           2 0 12   2011   2 012   2011                                                 TOTAL REVENUE $ 237,238   $ 137,258   $ 797,432   $ 482,276                         DIRECT COSTS   158,786     102,345     546,306     361,857                         GROSS PROFIT   78, 452     34,913     251, 126     120,419                         OPERATING EXPENS ES                         General and administrative   16,024     11,323     57,980     40,963   Other expenses    4,019     1,577     16,055     7,582   Loss (gain) on disposal of property, plant and equipment   54     50     1,370     (377)   Gain on sale of investment   -     (313)     -     (313)   Foreign exchange loss (gain)   1,338     (672)     1,319     (892)   Finance costs   707     399     3,367     1,275   Depreciation and amortization   12,641     8,177     42, 604     30,919     34 ,783     20,541     122,695     79,157                         EARNINGS BEFORE INC OME TAX   4 3,669     14,372     128, 431     41,262                         INCOME TAX - PROV ISION                         Current   11,215     4,101     24,592     13,548   Deferred   1,723     805     14,0 90     122     12, 938     4,906     38,6 82     13,670                         NET EARNINGS $ 30,73 1   $ 9,466   $ 89,7 49   $ 27,592                                                 EARNINGS PER S HARE                       Basic  * $ 0. 39   $ 0.13   $ 1. 18   $ 0.39 Diluted  ** $ 0. 38   $ 0.13   $ 1. 16   $ 0.38                         *Based on 79,129,765 and 71,794,149 daily weighted average shares outstanding for the quarter ended April 30, 2012 and 2011, respectively and on 76,074,556 and 71,530,882 daily weighted average shares outstanding for the fiscal year to date 2012 and 2011, respectively.  The total number of shares outstanding on April 30, 2012 was 79,147,378.                                               ** Based on 80,326,601 and 72,984,266 daily weighted average shares outstanding for the quarter ended April 30, 2012 and 2011, respectively, and on 77,102,194 and 72,253,591 daily weighted average shares outstanding for the fiscal year to date 2012 and 2011, respectively.                           Major Drilling Group Internation al Inc. Interim Condensed Consolidated Statements of Com prehensive Earnings (in thousands of Canadian dollars) (unaudited)                             Three months ended    April 30   Twelve months ended April 30                           2 012   2011   20 12   2011                         NET EARNINGS $ 30,731   $ 9,466   $ 89,749   $ 27,592                         OTHER COMPREHENSIVE EARNINGS                         Unrealized (losses) gains on foreign currency translations (net of tax)   (7,989)     (7,942)     1,871     (3,662)   Unrealized gain on interest swap (net of tax)   240     -     1 21     -                         COMPREHENSIVE EARNINGS $ 22,9 82   $ 1,524   $ 91 ,741   $ 23,930 M ajor Drilling Group International Inc. Interim Condensed Consolidated Statements of Changes in E quity For the twelve months ended April 30, 2011 and 2012 (in thousands of Canadian dollars) (unaudited)                                     Share capital       Reserve s     Share-based payments rese rve     Retained e arnings     Foreign c urrency translation reserve       Total                           BALANCE AS AT MAY 1, 2010   $ 144,919   $ -   $ 9,236   $ 153,358   $ -   $ 307,513                               Exercise of stock options   5,723   -   (1,558)   -   -   4,165   Share-based payments reserve   -   -   2,602   -   -   2,602   Dividends   -   -   -   (10,525)   -   (10,525)     150,642   -   10,280   142,833   -   303,755 Comprehensiv e earnings:                           Net earnings    -   -   -   27,592   -   27,592   Unrealized losses on foreign currency translations   -   -   -   -   (3,662)   (3,662)   Total comprehensive earnings   -   -   -   27,592   (3,662)   23,930                           BALANCE AS AT APRIL 30, 2011   $ 150,642   $ -   $ 10,280   $ 170,425   $ (3,662)   $ 327,685                                                     BALANCE AS AT MAY 1, 2011   $ 150,642   $ -   $ 10,280   $ 170,425   $ (3,662)   $ 32 7,685                             Exercise of stock options   2,932   -   (909)   -   -   2,023   Share issue (net of issue costs)   77,189   -   -   -   -   77,189   Share-based payments reserve   -   -   2,426   -   -   2,426   Dividends   -   -   -   (13, 365)   -   (13, 365)     230 ,763   -   11 ,797   157 ,060   (3,662)   39 5,958 Comprehensive earnings:                           Net earnings    -   -   -   89,749   -   89,749   Unrealized gains on foreign currency translations   -   -   -   -   1,871   1,871   Unrealized gain on interest rate swap   -   121   -   -   -   121 Total comprehensive earnings   -   121   -   89 ,749   1,871   91,741                           BALANCE AS AT AP RIL 30, 2012   $ 230, 7 63   $ 12 1   $ 11,797   $ 246 ,809   $ (1,7 91)   $ 487 ,6 99 Major Drilling Group International Inc. Interim Condensed Consolidated Statements of Cash Flows (in thousands of Canadian dollars) (unaudited)                             Three months ended April 30   Twelve months ended April 30                           2 0 12   2011   2 012   2011                         OPERATING ACTIVITIES                       Earnings before income tax $ 43,669   $ 14,372   $ 128,431   $ 41,262 Operating items not involving cash                         Depreciation and amortization   12,641     8,177     42,604     30,919   Loss (gain) on disposal of property, plant and equipment   54     50     1,370     (377)   Share-based payments reserve   660     696     2,426     2,602 Finance costs recognized in earnings before income tax   70 7     399     3,367     1,275     57,731     23,694     178,198     75,681 Changes in non-cash operating working capital items   (28,158)     (17,769)     (32,787)     (22,553) Finance costs paid   (708)     (399)     (3,432)     (1,275) Income taxes paid   (11, 262)     (5,221)     (27,5 02)     (4,748) Cash flow from operating activities   17, 603     305     114,4 77     47,105                         FINANCING ACTIVITIES                       Repayment of long-term debt   (1,573)     (1,815)     (17,390)     (8,939) Proceeds from long-term debt   -     10,000     25,000     10,000 Repayment of short-term debt   (7,847)     (3,131)     (12,988)     (3,131) Proceeds from short-term debt   -     -     -     10,400 Issuance of common shares   1,073     2,753     79,212     4,165 Dividends paid   -     -     (1 1,525)     (9,993) Cash flow (used in) from financing activities   (8,347)     7,807     6 2,309     2,502                         INVESTING ACTIVITIES                       Business acquisitions (net of cash acquired)   (1,825)     (1,209)     (76,304)     (3,776) Acquisition of property, plant and equipment (net of direct financing)   (21,097)     (22,053)     (81,129)     (62,571) Proceeds from disposal of property, plant and equipment   517     569     2,228     4,498 Cash flow used in investing activities   (22, 4 05)     (22,693)     (155 ,205)     (61,849)                         Effect of exchange rate changes   269     (1,371)     ( 559)     (1,775)                         (DECREASE) INCREASE IN CASH   (12,880)     (15,952)     21,022     (14,017)                         CASH, BEGINNING OF THE PERIOD   50,1 17     32,167     16 ,215     30,232                         CASH, END OF THE PERIOD $ 37,2 37   $ 16,215   $ 37,237   $ 16,215 Major Drilling Group Internati onal Inc. Interim Condensed Consolidated Balance Sheets As at April 30, 2012 and 201 1 and May 1, 2010 (in thousands of Canadian dollars) (unaudite d)                                       April 30 , 2012   April 30, 2011   May 1, 2010 ASSETS                                   CURRENT ASSETS                   Cash $ 37,237   $ 16,215   $ 30,232   Trade and other receivables   159,770     100,300     62,128   Income tax receivable   3,314     2,720     10,053   Inventories   95,905     69,864     63,170   Prepaid expenses   7 ,476     8,439     4,813     303,702     197,538     170,396                   PROPERTY, PLANT AND EQUIP MENT   318,17 1     235,473     198,935                   DEFERRED INCOME TAX ASSE TS    2,859     11,575     9,379                   GOODWILL    54,946     28,316     26,475                   INTANGIBLE ASSET S   6,295     1,235     1,074                     $ 685,9 73   $ 474,137   $ 406,259                                     LIABILITIES                                   CURRENT LIABILITIES                   Trade and other payables $ 115,805   $ 88,599   $ 53,992   Income tax payable   3,142     4,297     2,830   Short-term debt   -     7,919     -   Current portion of long-term debt   8, 712     8,402     8,887     127,659     109,217     65,709                   CONTINGENT CONSIDERATIO NS   2,760     2,612     2,011                   LONG-TERM DEBT   42,274     16,630     15,041                   DEFERRED INCOME TAX LI ABILITIES    25,581     17,993     15,985                       198 ,274     146,452     98,746                   SHAREHOLDERS' EQ UITY                   Share capital    230,763     150,642     144,919   Reserves   121     -     -   Share-based payments reserve   11,797     10,280     9,236   Retained earnings   246,809     170,425     153,358   Foreign currency translation reserve   (1,7 91)     (3,662)     -     487 ,699     327,685     307,513                     $ 685, 973   $ 474,137   $ 406,259 MAJOR DRIL LING GROUP INTERNATIONAL INC. SELECTED FINANCIAL INFORMATION FOR THE THREE AND TWELVE MONTHS ENDED APRIL 30, 2012 AND 2011 (UNAUDITED) (in thousand s 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 Australia, Asia and Africa. The services provided in each of the reportable drilling segments are essentially the same. The accounting policies of the segments are the same as those described in Note 4 presented in the first quarter Notes to Interim Condensed Consolidated Financial Statements for the three months ended July 31, 2011. Management evaluates performance based on earnings from operations in these three geographic segments before finance costs and income tax.  Data relating to each of the Company's reportable segments is presented as follows:     2012 Q4   201 1 Q4   201 2 Y TD   20 11 YT D                         Revenue                         Canada - U.S. $ 106,653   $ 52,069   $ 322,047   $ 181,280   South and Central America   73,311     50,485     251,833     169,381   Australia, Asia and Africa   57, 274     34,704     2 23,552     131,615   $ 2 37 ,2 38   $ 137,258   $ 797, 432   $ 482,276                         Earnings from operations                         Canada - U.S. $ 23,375   $ 4,918   $ 57,629   $ 21,567   South and Central America   19,061     9,653     55,790     20,188   Australia, Asia and Africa   6,5 53     4,108     36,36 5     14,716     48,989     18,679     149,784     56,471 Eliminations   (23 5)     (221)     (9 39)     (921)     48,754     18,458     148,845     55,550 Finance costs   707     399     3,367     1,275 General corporate expenses *   4,378     3,687     17,047     13,013 Income tax   12,9 38     4,906     38,682     13,670 Net earnings $ 30,7 31   $ 9,466   $ 89,749   $ 27,592                         *General corporate expenses include expenses for corporate offices, stock options and certain un-allocated costs                         Depreciation and amortization                         Canada - U.S. $ 5 ,448   $ 2,814   $ 17,813   $ 10,195   South and Central America   2, 406     2,447     9,877     8,708   Australia, Asia and Africa   3,428     2,645     11,672     10,593 Unallocated and corporate assets   1,359     271     3,242     1,423   $ 1 2,641   $ 8,177   $ 42,604   $ 30,919   Denis Larocque, C hief Financial Officer   Tel: (506) 857-8636 Fax: (506) 857-9211 [email protected]

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