Major Drilling Group International Inc.

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

Thank you. Good morning, everyone, and welcome to Major Drilling's conference call for the second quarter 2020. With me is Ian Ross, our CFO. You should have seen our results that were posted on our website at majordrilling.com. Before we get started, I'd like to caution you as usual that during this conference call we'll be making forward-looking statements about future events or future financial performance of the company and these statements are forward-looking in nature and actual events or results may differ materially. I'm quite pleased with the progress that we made in all of our regions this quarter. In most markets, We've been able to grow our market share with senior and intermediate companies due to our specialized drilling expertise, our innovative solutions, and our safety culture. This quarter's performance, again, demonstrated the company's operational leverage as good revenue growth of 15% translated into a 31% increase in EBITDA. We continue to reap productivity benefits from the tools we've developed over the last couple of years and from our enhanced training and skilled labor force while keeping our administrative costs stable. The company improved its net cash position by $12.8 million to $22.5 million this quarter as we spent $5 million on capital expenditures adding one rig to our fleet as well as rod handlers and support equipment. And with the retirement of one rig, it brings our fleet total or keeps our fleet total unchanged at 601 rigs. Ian will take you through our financials in more detail, and I'll come back with the outlook.

Thanks, Denis. Total revenue for the quarter was $121.2 million, up 15% from revenue of $105.5 million recorded in the same quarter last year. 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 28.1%, compared to 27.4% for the same period last year. A good quarter operationally with solid production that was somewhat strengthened by a one-time revenue adjustment from escalation and currency clauses on one of our contracts. G&A costs were up $300,000 at $11.5 million when compared to the same quarter last year. The increase was mainly driven by our share-based compensation that was impacted by the positive upward movement in the share price in the quarter. Despite the revenue growth, our G&A costs remain relatively flat, providing good operational leverage for increased profitability. EBITDA was $20.5 million or 16.9% of revenue for the quarter, up 31% in the same quarter last year. Revenue growth and productivity gains aided this improvement. Income taxes for the quarter were $3 million versus $2 million in the same quarter last year. This results in an effective tax rate of 29% for the quarter. Net earnings for the quarter were $7.3 million or $0.09 per share, compared to net earnings of 3.3 million or 4 cents per share for the prior year quarter. 124% increase in earnings illustrates the company's strong position in the current market. In terms of our financial strength, we continue to have one of the most solid balance sheets in our industry. During the quarter, our net cash position, net of debt, increased by 12.8 million. The bulk of this increase was tied to capital inflow from revenue growth over the past two quarters. The company also spent $5.5 million on capital expenditures, adding one new rig to our fleet, as well as support equipment, including rod handlers. We disposed of one rig in line with our strategy of improving our fleet. The total rig count remains at 601. It's worth noting that the acquisition of NOREX closed on November 1st, with a payment issued that will be reflected in our Q3 results. The new breakdown of our fleet and utilization is as follows. 293 specialized drills at 39%, 137 conventional drills at 30% utilization, 171 underground drills at 49% utilization, for a total of 601 drills at 40% utilization. As we've mentioned before, specialized work in our definition is not necessarily conducted with a specialized drill. Therefore, we should always give you the breakdown of our revenue by type of work for the quarter. 65% specialized, 9% conventional, and 26% underground. Seniors and intermediates represented 86% of our revenue in Q2, while juniors were 14%. The lower levels of junior activity is evidence of the current challenges they face in raising capital. However, our continued strength with the seniors illustrates the growth in market share we are achieving with this customer base. In terms of commodities, gold projects represented 52% of our revenue, while copper was at 22% this quarter. With that overview on our financial situation, I'll now turn the presentation back to the Dean to discuss the outlook.