Major Drilling Group International Inc. (MDI.TO) Monday reported a substantially higher profit for the second quarter, on robust activity levels in all regions, and normalization of ramp-up costs. The company reported the highest quarterly earnings and highest quarterly revenue in its history.
For the second quarter ended October 31, Moncton, New Brunswick-based Major Drilling Group's net income soared to C$31.6 million or C$0.42 per share from C$11.3 million or C$0.16 per share in the year-ago period.
On average, 5 analysts polled by Thomson Reuters expected earnings of C$0.29 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter surged 67 percent to C$213.9 million from C$127.8 million in the year-ago quarter. Four Street analysts had a consensus revenue estimate of $177.6 million for the quarter.
Francis McGuire, president and CEO, said," Excluding the $11 million in revenue contributed by Bradley in the month of October, the Company still generated $203 million in revenue, well above the previous record of $191 million achieved in the second quarter of fiscal 2009."
Effective September 30, 2011, the company acquired Bradley Group Limited. Revenue for the quarter from Bradley, for one month, was C$11 million.
Revenue for the quarter from Canada-U.S. drilling operations increased 66 percent from last year to C$84.2 million. South and Central American revenue was up 62 percent to C$68.1 million. Australian, Asian and African operations reported revenue of C$61.6 million, up 75 percent from the same period last year.
Gross margin for the quarter improved significantly to 34.6 percent from 27.5 percent last year, attributed to the stabilisation of ramp-up costs and deriving the full benefit of higher pricing in contracts that were signed or renewed in the previous quarter.
Going forward, margins are expected to remain at present levels, as the shortage of experienced drill crews is expected to add pressure on labour costs and productivity. Other costs are expected to rise as well.
McGuire said," Our ongoing efforts on training and recruitment should allow our global utilization rates to continue to improve as each month goes by and as we add more drillers....Our biggest operational challenge continues to be the shortage of labour. We continue to aggressively and successfully invest in the recruitment and training of new drillers."
The company added 124 rigs to its fleet, mostly from the Bradley acquisition, for a total of 700 rigs.
MDI.TO last traded at C$14.30, up C$0.65 or 4.76%, on the Toronto stock Exchange. Over the past year, the stock traded in a range of C$9.34 - C$17.78.
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