Major Drilling Group International Inc.

Good morning, ladies and gentlemen. Welcome to the first quarter 2021 results conference call. I would now like to turn the meeting over to Denis Laroque, President and CEO. Please go ahead.

Thank you, and good morning, everyone, and welcome to our first quarter conference call for fiscal 2021. As well on the call is Ian Ross, our CFO. You should have seen our results, which came out last night. 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 be making forward-looking statements about future events or future financial performance of the company. These statements are forward-looking in nature, and actual events or results may differ materially. First of all, I want to start by acknowledging our employees and management for their effort to ensure we continue to operate safely and efficiently during these uncertain times. I also want to thank our customers with whom we have worked closely to find ways to operate and get back to work with the health and well-being of our employees and their families as our top priority. I must say that I'm pleased that the company was able to generate 14 million in EBITDA given the quarter started extremely slow as many projects remained shut down. Some of our operations were able to grow their revenue as compared to last year, while other larger operations, including Canada, US, Mexico, and Chile, were affected more than others by COVID-19. As the quarter progressed, we saw more and more projects resuming, but many of them would have reduced number of rates due to restrictions on travel and mining activities. As we look at busier times coming up, we continue to be the leader in specialized drilling, but we also bolstered our underground services by adding 12 underground rates this quarter, with half of those going to work immediately. Through this, we continue to maintain the strongest balance sheet in the industry. Ian will take us through our quarterly results, and I'll come back to discuss the outlook. Thanks, Denis.

Total revenue for the quarter was $89.4 million, down 24% from revenue of $117.5 million recorded in the same quarter last year. While COVID-19 impacts were felt heavily in May and the first part of June, activity levels started to ramp up in the latter half of the quarter. The foreign exchange translation impact on revenue, when comparing to the effective rates for the same period last year, is negligible, with a minimal impact on net earnings. The overall gross margin percentage, excluding depreciation for the quarter, was 27.8%, compared to 26.1% for the same period last year. Margins were positively impacted by approximately 1% due to government assistance programs available to the company in the hardest-hit regions. Also, the moderate price improvements we saw coming into calendar 2020 have aided margins and should continue into Q2. G&A costs were down $1 million and $11.2 million when compared to the same quarter last year. The decrease is mainly related to reduced travel and various government assistance programs for our administrative employees. These temporary reductions will subside once activity levels return in those impacted regions and government restrictions are eased. The income tax provision for the quarter was an expense of $1.2 million compared to an expense of $2 million for the prior year period. The income tax provision was impacted by non-deductible expenses and losses in certain jurisdictions not being tax effective. Net earnings were $2.1 million or $0.03 per share for the quarter compared to net earnings of $6 million or $0.08 per share for the prior year quarter. EBITDA was $14 million compared to $18 million in the prior year quarter. Although activity levels remain impacted in certain jurisdictions, our ongoing operations in other areas performed very well, and cost control initiatives implemented in the prior quarter allowed for a positive EBITDA result. In terms of our financial strength, despite the continued impacts of COVID-19 on the quarter, we maintain a very strong balance sheet. We ended the quarter with net debt, excluding lease liabilities of $2 million. The decrease is tied to an increase in net working capital, mainly related to an increase in receivables as activity levels picked up in the second half of the quarter. Also during the quarter, we repaid $20 million of the $35 million precautionary draw from our credit facilities made in the previous quarter. We will continue to monitor the situation and look to repay the remaining $15 million precautionary draw as the environment permits. As mentioned above, the increase in our accounts receivable was due to increased activity levels in the second half of the quarter. We have not had any collection issues related to COVID-19, and we do not expect any issues moving forward as our current customer mix is predominantly seniors and well-established intermediates. The company also spent $7.5 million on capital expenditures, adding a total of 13 drills, with 12 of them being underground drills in line with our diversification strategy. We took advantage of an opportunity to buy 10 rigs at a discount price, and we were able to put a number of them to work immediately. We dispose of seven rigs in line with our strategy of continuously improving the quality of our fleet. The total rig count is 613. As activity levels pick up, our CAPEX will mainly be focused on support equipment in the coming quarters. The new breakdown of our fleet and utilization is as follows. 308 specialized drills at 30% utilization, 129 conventional drills at 30% utilization, and 176 underground drills at 48% 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. 57% specialized, 10% conventional, and 33% underground. Also, seniors and intermediates represented 89% of our revenue in Q1, while juniors were 11% of our revenue. Our established relationship with seniors and intermediates continue to drive our revenue, However, the recent increase in junior finance could potentially change this mix going forward. In terms of commodities, gold projects represented 63% 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 Denis to discuss the outlook.