Major Drilling Group International Inc.

All participants, please stand by. Your meeting is ready to begin. Good morning, ladies and gentlemen. Welcome to the fourth quarter 2020 results conference call. I would now like to turn the meeting over to Denny LaRocque, President and CEO. Please go ahead, Mr. LaRocque.

Good morning, everyone, and welcome to Major Drilling's conference call for the fourth quarter of fiscal 2020. As well on the call is Ian Ross, our Chief Financial Officer. You should all have seen our results that came out last night, and if not, you can go to our website at majordwelling.com. Before we get started, I'd like to caution you, as usual, that during this conference call, we'll make forward-looking statements about future events and the future financial performance of the company, These statements are forward-looking in nature, and actual events or results may differ materially. In addition, during the call, certain data will be discussed on a reported and on an adjusted basis. Discussion of items on an adjusted basis are non-IFRS financial measures designed to give insight into certain trends of the operations. I want to spend some time on the challenges we face around COVID-19 and how we've managed it and how we see our business as we move forward. The health and wellbeing of our employees and their families, as well as the communities we operate in is paramount. And that was our top priority in the early days of the pandemic. Our focus has been to react quickly and effectively to ensure that all necessary measures and safeguards are implemented to protect everyone and slow down the spread of the virus. 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 as we started to see projects around the world temporarily shutting down as mining companies and governments put measures in place to deal with the pandemic. The impact was varied depending on the jurisdictions, but our Canadian operations were some of the most affected as we saw more than half of our rigs stopped in mid-quarter as the bulk of our projects are in Ontario and Quebec. We also saw complete shutdowns over the same period in Chile, Argentina, and South Africa. In Asia, most of our projects continued to operate, whereas the rest of our operations around the world were also impacted by some shortages. In order to remain cash flow positive, We adjusted their spending, including capital expenditures. I must say that our teams out there did an amazing job of managing the business at the same time as they were implementing all the protocols to keep our employees safe. As well, we're grateful for the dedication and commitment of our employees, especially on the front line in the field and the workshops. On the financial highlights, Given the uncertainty surrounding the COVID-19 outbreak and the significant volatility seen in the equity markets on our valuation, there is a lot of noise in our earnings. This is why we added the adjusted earnings table in our press release to provide some sense of what our earnings look like when you exclude the one-time charges we had to take relative to the impairment indicators in place. Ian will take you through the various charges we had to take this quarter, but in essence, excluding these one-time charges, we were still able to generate 7.3 million of EBITDA, which is why our net cash position stayed positive at 7.1 million. This is still a strong position considering the impact that COVID-19 had on our industry. As we look forward, employee retention, access to supplies, and having REITs ready will be key to success in a recovery. And given our financial situation, we have been able to address all those points, and we're ready. I'll take you through how we are positioned on these points after Ian deciphers the different charges we had this quarter and take you through our quarterly results.

Ian? Thanks, Denis. Total revenue for the quarter was $88.8 million. down 12% from revenue of $100.4 million recorded in the same quarter last year. The impacts of COVID-19 were felt starting in mid-March, April being particularly challenging in certain jurisdictions. Favorable foreign exchange transactions impacted the quarter when comparing to the effective rates in the same period last year, estimated at $1 million on revenue, with negligible impacts on net earnings. The overall gross margin percentage, excluding depreciation, the fourth quarter was 21.5%, compared to 23% for the same period last year. The impacts of COVID-19 were felt in our margins as we incurred normal fourth quarter ramp-up costs, but that our revenue streams abruptly stopped in many countries. We also incurred standby labor charges in a few of those countries as we weighted activity levels to resume. However, this was partially offset by a $1.1 million benefit related to the Canadian employment wage surplus. General and administrative costs were down $100,000 at $11.1 million when compared to the same quarter last year. The additional G&A from the NOREX acquisition was offset by reduced travel as well as a $600,000 benefit related to the Canadian employment basement. This quarter, we recorded a $58.7 million pre-tax, non-cash goodwill impairment charge. As the quarter unfolded, there was a significant decline in the global equity markets, including our own share price. Under IFRS accounting rules, a significant decline in our stock price is a potential impairment indicator of goodwill. A goodwill impairment reflects the impact and uncertainty COVID-19 is having on the company's Canadian and U.S. cash generating units. This impairment is primarily driven by near-term impacts caused by COVID-19, as we believe longer-term cash flows are consistent with those forecasted prior to the pandemic. As well, due to the unknown near-term impacts caused by COVID-19, we have derecognized $14.7 million of deferred income tax assets related to previously recognized tax deposits. Combined with the tax impact of the goodwill impairment, the company recorded a non-cash charge of $10 million in deferred tax benefits. The company also recorded an additional restructuring charge of $2.4 million, including $2.1 million in non-cash charges, mainly related to the previously announced closure of its Colombian operation. COVID-19 has negatively impacted the ability to execute the initial restructuring plan, resulting in additional dirt. These three COVID-19 related charges resulted in a 71.2 million negative impact on our fourth quarter results, of which 70.8 million was non-cash. Net loss for the quarter was 74.3 million, or 92 cents per share. However, adjusted net loss, including the one-time write-downs, 3.1 million, or 4 cents per share, versus an adjusted net loss of $1.6 million or $0.02 per share in the same quarter last year. EBITDA was $7.3 million compared to $10.7 million in the prior year quarter. Despite the challenging situation, we were able to generate cash due to the diverse nature of our operations, cost savings initiatives, and management experience in dealing with sudden decreases in activity levels that accompany a cyclical industry. In terms of our financial strength, we maintain a very strong balance sheet. Our net cash position, net of debt and excluding lease liabilities decreased by $3 million but remained healthy at $7.1 million. As a strictly precautionary measure, during the quarter, the company threw down the remaining $35 million of its $50 million credit facility and placed it in the short-term deposit to ensure access to capital in case of a prolonged slowdown. As activity levels have stabilized for the time being, the company plans to repay $20 million of this in Q1. With respect to accounts receivable, we are well situated due to our custom-made being predominantly seniors and intermediate, and well-capitalized consumers. At this time, there are no concerns with the collectability of our receipts. Companies spent $7.1 million on capital expenditures in February and March, adding one new rig to our fleet, support equipment, and a number of rig rebuilds in expectation of a busier calendar year pre-COVID-19. We disposed of five rigs in line with our strategy of continuously improving the quality of our fleet. The total rig count is at 607. The new breakdown of our fleet and utilization is as follows. 307 specialized drills, 132 conventional, and 168 for a total of 607 drills. 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. 65% specialized, 5% conventional, and 30% under. Also, seniors and intermediates represented 91% of our revenue in Q4, while juniors were at 9%. Our established relationships with seniors and intermediates continue to drive our revenue, while junior exploration activities remain suppressed. However, there have been some financings lately for goals-related projects. In terms of commodities, gold projects represented 57% of our revenue, while copper was at 21% this quarter. With that overview on our financial situation, I'll now turn the presentation back to Denis to discuss their book.