Major Drilling Group International Inc.

Good morning, ladies and gentlemen. Welcome to the first quarter 2020 results conference call. I would now like to turn the meeting over to Daniel LaRock, President and CEO. Please go ahead, Mr. LaRock.

Thank you. Good morning, everyone, and welcome to major drawings conference call for the first quarter fiscal 2020. With me is Ian Ross, our Chief Financial Officer. You should have received a copy of our results last night. If not, you can go to our website at majordrilling.com. Before we start, I'd like to draw your attention on the first slide on the picture. The What you see on that picture is one of our two specialized rigs that we bought this quarter. It's a deep hole with hands-free rod handling. This went right away to one of our senior customers' site. for which we purchased. It should be there for a while. And this is just an example of our financial strength and being able to respond to senior customers' need as they have requests. And we were able to bring this rig right away for a longtime customer. Now, let's get to the call, and before we start, as usual, I'd like to caution you that during this call, we'll make forward-looking statements about future events and future performance, and these statements are forward-looking in nature, and actual events or results may differ materially. I'm quite pleased with the progress we've made in all of our regions this quarter. Each region delivered good increases in revenue as compared to last year and marked improvement in profitability. In most of our markets, we've been able to grow our market share due to our specialized drilling expertise, our innovative solutions, our safety culture, and our customers' appreciation of our financial strength. We added several new contracts with senior and intermediate companies, which have more than offset a reduction in our work from junior customers due to financing constraints. This quarter's performance demonstrated the company's operational leverage as good revenue growth of 19% translated into 78% increase in EBITDA. Improved productivity Better pricing, lower administrative costs are responsible for most of the improvement in our net earnings this quarter. We continue to reap the productivity benefits from the tools we've developed over the last couple of years and from our enhanced training and skilled labor force. The company maintained through this a strong working capital position with net cash, net of debt staying relatively flat at $9.7 million. while during the quarter we added seven new rigs to our fleet, land and support equipment, with two of our new rigs being truly specialized, as I mentioned at the start of the call, and going to service new contracts with senior customers. Ian will take you through a summary of our quarterly results, and I'll come back to talk about the outlook.

Thanks, Denis. Total revenue for the quarter was $117.5 million, up 19% from revenue of $98.5 million recorded in the same quarter last year. The favorable 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. The overall gross margin percentage for the quarter was 26.1% compared to 23.8% for the same period last year. Price increases and productivity improvements had a positive impact on margins. G&A costs were down $600,000 and $11.8 million when compared to the same quarter last year, despite a higher volume of activity. The decrease was driven by the shutdown of operations in Burkina Faso, as well as the impact of the implementation of IFRS 16, which reclasses our lease expenses to depreciation. Provision for income tax for the quarter was an expense of $2 million compared to an expense of $1.2 million in the same quarter last year. The low effective tax rate for the quarter was mainly caused by the utilization of non-tax effective losses in certain jurisdictions. This combined for net earnings of $6 million or $0.08 per share for the quarter compared to a net loss of $2.5 million or $0.03 per share for the prior year quarter. A very positive quarter illustrating our operational leverage. In terms of our financial position, we continue to have one of the most solid balance sheets in our industry. During the quarter, our net cash position, net of debt, remained relatively flat at $9.7 million, as net working capital increase related to increased activity and capital expenditures were offset by cash generated from operations. The company spent $10.6 million on capital expenditures, adding seven new rigs, land, and support equipment. Two of the drills were highly specialized and went to service new contracts with senior customers. We dispose of seven older rigs in line with our strategy of improving our fleet and services. The total rig count remains flat at 601. New breakdown of our fleet and utilization is as follows. 293 specialized drills at 39% utilization, 137 conventional drills at 27% utilization, and 171 underground drills at 49% utilization. or a total of 601 drills at 39% utilization. As we've mentioned before, specialized work, in our definition, is not necessarily conducted with a specialized drill. Therefore, we should also give you the breakdown of our revenue by type of work for the quarter. 62% specialized, 11% conventional, and 27% unmanned. Seniors and intermediates represented 89% of our revenue in Q1, while juniors represented 11%. Revenue from the seniors and intermediates has increased 39% versus the same quarter last year, mainly due to market share growth. Our highly skilled labor force, stringent safety culture, and financial strength have provided this opportunity for this growth. Juniors continue to have difficulty accessing capital. However, with gold prices on the rise, there is renewed optimism this will improve. In terms of commodities, gold projects represented 53% of our revenue, while copper was at 23%. With that overview on our financial situation, I'll now turn the presentation back to Denis to discuss the outlook. Thanks, Ian.