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 | ||||||||
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 | 7.3 8.2% | 10.7 10.6% | 48.4 11.8% | 39.2 10.2% | ||||
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) | 3.9 0.05 | (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
“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
“In the fourth quarter, the Company assessed the impairment indicators that existed as at
“Despite this slowdown, the Company generated
“The Company’s net cash position (excluding lease liabilities reported under IFRS 16) remains positive at
“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
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
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
Fourth Quarter Ended
Total revenue for the quarter was
Revenue for the quarter from
South and Central American revenue decreased by 20.7% to
Asian and African operations reported revenue of
Gross margin for the quarter was 10.6%, compared to 13.3% for the same period last year. Depreciation expense totaling
General and administrative costs were
Depreciation and amortization was flat at
At
In the quarter, the Company recorded an additional restructuring charge of
The income tax provision for the quarter was an expense of
Net loss was
Non-IFRS Financial Measures
EBITDA
The 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 earnings
Adjusted 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
Webcast/Conference Call Information
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,
For further information:
Tel: (506) 857-8636
Fax: (506) 857-9211
ir@majordrilling.com
Condensed Consolidated Statements of Operations | ||||||||||||||||
(in thousands of Canadian dollars, except per share information) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
(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 | ) |
Condensed Consolidated Statements of Comprehensive Earnings | ||||||||||||||||
(in thousands of Canadian dollars) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
(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 | ) |
Condensed Consolidated Statements of Changes in Equity | ||||||||||||||||||||||||
For the twelve months ended | ||||||||||||||||||||||||
(in thousands of Canadian dollars) | ||||||||||||||||||||||||
Retained | ||||||||||||||||||||||||
earnings | Other | Share-based | Foreign currency | |||||||||||||||||||||
Share capital | (deficit) | reserves | payments reserve | translation reserve | Total | |||||||||||||||||||
BALANCE AS AT | $ | 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 | $ | 241,264 | $ | 29,020 | $ | (570 | ) | $ | 14,503 | $ | 78,783 | $ | 363,000 | |||||||||||
BALANCE AS AT | $ | 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 | $ | 243,189 | $ | (35,691 | ) | $ | (611 | ) | $ | 8,519 | $ | 81,640 | $ | 297,046 |
*Opening balances have been allocated to include expired or forfeited stock options of
Condensed Consolidated Statements of Cash Flows | ||||||||||||||||
(in thousands of Canadian dollars) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
(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 |
Condensed Consolidated Balance Sheets | ||||||||
As at | ||||||||
(in thousands of Canadian dollars) | ||||||||
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 | ||||||
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 | |||||
SELECTED FINANCIAL INFORMATION
FOR THE THREE AND TWELVE MONTHS ENDED
(in thousands of Canadian dollars)
SEGMENTED INFORMATION
The Company’s operations are divided into three geographic segments corresponding to its management structure:
Q4 2020 | Q4 2019 | YTD 2020 | YTD 2019 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Revenue | ||||||||||||||||
$ | 41,058 | $ | 50,982 | $ | 205,551 | $ | 196,105 | |||||||||
South and | 22,209 | 28,044 | 104,002 | 108,139 | ||||||||||||
25,517 | 21,371 | 99,591 | 80,578 | |||||||||||||
$ | 88,784 | $ | 100,397 | $ | 409,144 | $ | 384,822 | |||||||||
(Loss) earnings from operations | ||||||||||||||||
$ | (2,329 | ) | $ | 1,554 | $ | 4,825 | $ | 6,057 | ||||||||
South and | (2,838 | ) | (757 | ) | (5,738 | ) | (4,307 | ) | ||||||||
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 | ||||||||||||||||
| $ | 4,837 | $ | 4,648 | $ | 18,434 | $ | 19,168 | ||||||||
South and | 3,301 | 3,522 | 14,226 | 13,085 | ||||||||||||
| 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 |
*
**General and corporate expenses include expenses for corporate offices, stock options and certain unallocated costs.
Source:
2020 GlobeNewswire, Inc., source