Major Drilling Group International Inc. (“Major Drilling” or the
“Company”) (TSX: MDI), a leading provider of specialized drilling
services to the mining sector, today reported results for the
second quarter of fiscal 2024, ended October 31, 2023.
Quarterly Highlights
- Revenue of $207.0 million, highest revenue since July
2012.
- EBITDA(1) of $43.6 million (or $0.53 per share), up from $43.0
million (or $0.52 per share) for the same period last year.
- Net earnings of $23.7 million (or $0.29 per share), up from
$23.6 million (or $0.29 per share) for the same period last
year.
- Spent $7.3 million repurchasing 875,268 shares.
- Net cash(1) position increased $23.4 million during the quarter
to $84.2 million.
“We continued to see strength in our business as
the increase in demand from copper and battery metal customers more
than offset the slowdown in exploration from junior gold
companies,” said Denis Larocque, President and CEO of Major
Drilling. “During the quarter, we saw our combined revenue from
copper and lithium increase by 40% as compared to last year, now
representing over 30% of our activity, while gold represented
approximately 40%. In addition, growth from our South American
operations outweighed a decline in North American revenue,
showcasing the effectiveness of our global diversification
strategy.”
“The Company delivered excellent financial
results in the quarter with EBITDA of $43.6 million amidst a
backdrop of challenging macro-economic factors. Our lean structure
and debt free balance sheet drove strong cash flow generation of
$23.4 million, growing our net cash position to $84.2 million,”
said Ian Ross, CFO of Major Drilling. “Our robust cash generation
provides the opportunity to modernize and optimize our fleet and
support equipment to differentiate ourselves in an industry that
has seen a lack of investment over the years. We spent $17.4
million on capital expenditures in the quarter, including 6 new
drills while disposing of 5 older, less efficient drills, bringing
the total fleet count to 602.”
“Providing returns to shareholders remains Major
Drilling’s priority and with challenging capital markets negatively
impacting company valuations across the mining sector, we took the
opportunity to allocate capital to our share buyback efforts. In
total, we spent $7.3 million in the quarter acquiring and
cancelling 875,268 shares at a weighted average price of $8.31 per
share. The Company continues to view investment in the Normal
Course Issuer Bid ("NCIB") program as an effective method to
deliver shareholder value while maintaining a financially prudent
capital structure,” said Mr. Ross.
“Looking at calendar 2024, customer demand is
expected to remain strong as the growing supply shortfall in most
mineral commodities should continue to drive demand for our
services for several years,” said Denis Larocque. “The growing
global demand for electrification will only increase the need for
metals like copper, nickel and lithium. The enormous volume of
copper, battery metals, and likely uranium required will further
increase pressure on the existing supply/demand dynamic. We expect
all of this to continue to drive substantial additional investments
in copper and other base metal exploration projects as we help our
customers discover the metals that will allow the world to
accelerate its efforts toward decarbonization. With gold prices
recently reaching record highs, this could have a positive impact
on funding for junior mining companies. In the short term, it is
important to note that we are now in our third quarter,
traditionally the weakest quarter of our fiscal year, as mining and
exploration companies pause their drilling programs, often for
extended periods over the holiday season. While conversations
remain encouraging heading into calendar 2024, we have started to
see several projects slowing down earlier than the previous
year.”
“Major Drilling is committed to invest in its
fleet and support equipment, innovation in the field, and Tier 1
safety standards. Coupled with our industry-leading balance
sheet, we are extremely well positioned to support our customers in
their efforts to supply the world with minerals needed to
transition to a more sustainable future. Driven by a diversified
commodity mix, the Company has focused operations on strategic
mining geographies and stable jurisdictions. We believe that this
provides our shareholders and potential new investors an
opportunity to invest in the mining industry with growing exposure
to precious metals, battery metals and critical minerals, while
limiting mine or country exposure.”
In millions of Canadian dollars (except earnings per share) |
|
Q2 2024 |
|
|
Q2 2023 |
|
|
YTD 2024 |
|
|
YTD 2023 |
|
Revenue |
|
$ |
207.0 |
|
|
$ |
201.7 |
|
|
$ |
405.8 |
|
|
$ |
401.6 |
|
Gross margin |
|
|
25.3 |
% |
|
|
26.3 |
% |
|
|
25.0 |
% |
|
|
25.9 |
% |
Adjusted gross margin (1) |
|
|
31.0 |
% |
|
|
31.8 |
% |
|
|
30.6 |
% |
|
|
31.3 |
% |
EBITDA (1) |
|
|
43.6 |
|
|
|
43.0 |
|
|
|
83.9 |
|
|
|
86.5 |
|
As percentage of revenue |
|
|
21.1 |
% |
|
|
21.3 |
% |
|
|
20.7 |
% |
|
|
21.5 |
% |
Net earnings |
|
|
23.7 |
|
|
|
23.6 |
|
|
|
45.5 |
|
|
|
47.9 |
|
Earnings per share |
|
|
0.29 |
|
|
|
0.29 |
|
|
|
0.55 |
|
|
|
0.58 |
|
(1) See “Non-IFRS Financial Measures” |
|
Second Quarter Ended October 31,
2023
Total revenue for the quarter was $207.0
million, up 2.6% from revenue of $201.7 million recorded in the
same quarter last year. The favourable foreign exchange translation
impact on revenue and net earnings for the quarter, when comparing
to the effective rates for the same period last year, was
approximately $3 million and $1 million, respectively. Mining
companies continued elevated spending on exploration and resource
definition as reserves are depleting, and the need for battery
metals drives exploration.
Revenue for the quarter from Canada - U.S.
drilling operations decreased by 5.7% to $106.7 million, compared
to the same period last year. Canada continues to be negatively
impacted by financing constraints for the junior miners, which has
caused a slowdown in this region compared to the same quarter last
year.
South and Central American revenue increased by
25.9% to $52.5 million for the quarter, compared to the same
quarter last year. The demand for battery metals is driving
activity levels in both Chile and Argentina as operations have seen
positive impacts from these commodities.
Australasian and African revenue increased by
1.9% to $47.8 million, compared to the same period last year.
Demand for our specialized services in Australia continues to drive
growth in this region.
Gross margin percentage for the quarter was
25.3%, compared to 26.3% for the same period last year.
Depreciation expense totaling $11.8 million is included in direct
costs for the current quarter, versus $11.2 million in the same
quarter last year. Adjusted gross margin, which excludes
depreciation expense, was 31.0% for the quarter, compared to 31.8%
for the same period last year. Margins held relatively steady
year-over-year as inflationary headwinds have been mainly offset by
modest price improvements.
General and administrative costs were $17.6
million, an increase of $1.5 million compared to the same quarter
last year. The increase from the prior year was driven by annual
inflationary wage increases and higher travel costs associated with
elevated business activity levels.
Other expenses were $3.2 million, down from $4.7
million in the prior year quarter, primarily due to a decrease in
the annual allowance for doubtful accounts as compared to the prior
year quarter.
Foreign exchange loss was $0.9 million, compared
to a loss of $1.1 million for the same quarter last year. While the
Company's reporting currency is the Canadian dollar, various
jurisdictions have net monetary assets or liabilities exposed to
various other currencies.
The income tax provision for the quarter was an
expense of $7.4 million, compared to an expense of $7.5 million for
the prior year period. The tax provision was flat compared to the
prior year as profit levels were consistent year-over-year.
Net earnings were $23.7 million or $0.29 per
share ($0.29 per share diluted) for the quarter, compared to net
earnings of $23.6 million or $0.29 per share ($0.28 per share
diluted) for the prior year quarter.
Non-IFRS Financial Measures
The Company’s financial data has been prepared
in accordance with IFRS, with the exception of certain financial
measures detailed below. The measures below have been used
consistently by the Company’s management team in assessing
operational performance on both segmented and consolidated levels,
and in assessing the Company’s financial strength. The Company
believes these non-IFRS financial measures are key, for both
management and investors, in evaluating performance at a
consolidated level and are commonly reported and widely used by
investors and lending institutions as indicators of a company’s
operating performance and ability to incur and service debt, and as
a valuation metric. These measures do not have a standardized
meaning prescribed by IFRS and therefore may not be comparable to
similarly titled measures presented by other publicly traded
companies and should not be construed as an alternative to other
financial measures determined in accordance with IFRS.
Adjusted gross profit/margin - excludes
depreciation expense:
(in $000s CAD) |
|
|
Q2 2024 |
|
|
|
Q2 2023 |
|
|
|
YTD 2024 |
|
|
|
YTD 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
206,951 |
|
|
$ |
201,716 |
|
|
$ |
405,835 |
|
|
$ |
401,551 |
|
Less: direct costs |
|
|
154,590 |
|
|
|
148,713 |
|
|
|
304,465 |
|
|
|
297,374 |
|
Gross profit |
|
|
52,361 |
|
|
|
53,003 |
|
|
|
101,370 |
|
|
|
104,177 |
|
Add: depreciation |
|
|
11,840 |
|
|
|
11,177 |
|
|
|
22,791 |
|
|
|
21,591 |
|
Adjusted gross profit |
|
|
64,201 |
|
|
|
64,180 |
|
|
|
124,161 |
|
|
|
125,768 |
|
Adjusted gross margin |
|
|
31.0 |
% |
|
|
31.8 |
% |
|
|
30.6 |
% |
|
|
31.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA - earnings before interest, taxes,
depreciation, and amortization:
(in $000s
CAD) |
|
|
Q2 2024 |
|
|
|
Q2 2023 |
|
|
|
YTD 2024 |
|
|
|
YTD 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
23,694 |
|
|
$ |
23,611 |
|
|
$ |
45,467 |
|
|
$ |
47,859 |
|
Finance (revenues) costs |
|
|
(275 |
) |
|
|
26 |
|
|
|
(957 |
) |
|
|
456 |
|
Income tax provision |
|
|
7,434 |
|
|
|
7,541 |
|
|
|
14,610 |
|
|
|
14,826 |
|
Depreciation and amortization |
|
|
12,780 |
|
|
|
11,829 |
|
|
|
24,769 |
|
|
|
23,370 |
|
EBITDA |
|
$ |
43,633 |
|
|
$ |
43,007 |
|
|
$ |
83,889 |
|
|
$ |
86,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (debt) – cash net of debt,
excluding lease liabilities reported under IFRS 16
Leases:
(in $000s
CAD) |
|
October 31, 2023 |
|
|
April 30, 2023 |
|
|
|
|
|
|
|
|
Cash |
|
$ |
92,467 |
|
|
$ |
94,432 |
|
Contingent consideration |
|
|
(8,270 |
) |
|
|
(15,113 |
) |
Long-term debt |
|
|
- |
|
|
|
(19,972 |
) |
Net cash (debt) |
|
$ |
84,197 |
|
|
$ |
59,347 |
|
|
|
|
|
|
|
|
|
|
Forward-Looking Statements
This news release includes certain information
that may constitute “forward-looking information” under applicable
Canadian securities legislation. All statements, other than
statements of historical facts, included in this news release that
address future events, developments, or performance that the
Company expects to occur (including management’s expectations
regarding the Company’s objectives, strategies, financial
condition, results of operations, cash flows and businesses) are
forward-looking statements. Forward-looking statements are
typically identified by future or conditional verbs such as
“outlook”, “believe”, “anticipate”, “estimate”, “project”,
“expect”, “intend”, “plan”, and terms and expressions of similar
import. All forward-looking information in this news release is
qualified by this cautionary note.
Forward-looking information is necessarily based
upon various estimates and assumptions including, without
limitation, the expectations and beliefs of management related to
the factors set forth herein. While these factors and assumptions
are considered reasonable by the Company as at the date of this
document in light of management’s experience and perception of
current conditions and expected developments, these statements are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements and undue reliance
should not be placed on such statements and information.
Such forward-looking statements are subject to a
number of risks and uncertainties that include, but are not limited
to: the level of activity in the mining industry and the demand for
the Company’s services; competitive pressures; global and local
political and economic environments and conditions; the level of
funding for the Company’s clients (particularly for junior mining
companies); exposure to currency movements (which can affect the
Company’s revenue in Canadian dollars); currency restrictions;
efficient management of the Company’s growth; the integration of
business acquisitions and the realization of the intended benefits
of such acquisitions; safety of the Company’s workforce; risks and
uncertainties relating to climate change and natural disaster; the
Company’s dependence on key customers; the geographic distribution
of the Company’s operations; the impact of operational changes;
changes in jurisdictions in which the Company operates (including
changes in regulation); failure by counterparties to fulfill
contractual obligations; disease outbreak; as well as other risk
factors described under “General Risks and Uncertainties” in the
Company’s MD&A for the year ended April 30, 2023, available on
the SEDAR+ website at www.sedarplus.ca. Should one or more risk,
uncertainty, contingency, or other factor materialize or should any
factor or assumption prove incorrect, actual results could vary
materially from those expressed or implied in the forward-looking
information.
Forward-looking statements made in this document
are made as of the date of this document and the Company disclaims
any intention and assumes no obligation to update any
forward-looking statement, even if new information becomes
available, as a result of future events, or for any other reasons,
except as required by applicable securities laws.
About Major Drilling
Major Drilling Group International Inc. is one
of the world’s largest drilling services companies primarily
serving the mining industry. Established in 1980, Major Drilling
has over 1,000 years of combined experience and expertise within
its management team. The Company maintains field operations and
offices in Canada, the United States, Mexico, South America, Asia,
Africa, and Australia. Major Drilling provides a complete suite of
drilling services including surface and underground coring,
directional, reverse circulation, sonic, geotechnical,
environmental, water-well, coal-bed methane, shallow gas,
underground percussive/longhole drilling, surface drill and blast,
and a variety of mine services.
Webcast/Conference Call
Information
Major Drilling Group International Inc. will
provide a simultaneous webcast and conference call to discuss its
quarterly results on Friday, December 8, 2023 at 8:00 AM (EST). To
access the webcast, which includes a slide presentation, please go
to the investors/webcasts section of Major Drilling’s website at
www.majordrilling.com and click on the link. Please note that this
is listen-only mode.
To participate in the conference call, please
dial 416-340-2217, participant passcode 6861492#
and ask for Major Drilling’s Second Quarter Results Conference
Call. To ensure your participation, please call in approximately
five minutes prior to the scheduled start of the call.
For those unable to participate, a taped
rebroadcast will be available approximately one hour after the
completion of the call until Monday, January 8, 2024. To access the
rebroadcast, dial 905-694-9451 and enter the passcode 2298856#. The
webcast will also be archived for one year and can be accessed on
the Major Drilling website at www.majordrilling.com.
For further information: Ian
Ross, Chief Financial Officer Tel: (506) 857-8636 Fax: (506)
857-9211 ir@majordrilling.com
|
|
Major
Drilling Group International Inc. |
|
Interim
Condensed Consolidated Statements of Operations |
|
(in
thousands of Canadian dollars, except per share
information) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
October 31 |
|
|
October 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL REVENUE |
|
$ |
206,951 |
|
|
$ |
201,716 |
|
|
$ |
405,835 |
|
|
$ |
401,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIRECT COSTS (note 9) |
|
|
154,590 |
|
|
|
148,713 |
|
|
|
304,465 |
|
|
|
297,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
52,361 |
|
|
|
53,003 |
|
|
|
101,370 |
|
|
|
104,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative (note 9) |
|
|
17,602 |
|
|
|
16,068 |
|
|
|
34,112 |
|
|
|
32,242 |
|
Other (revenue) expenses |
|
|
3,222 |
|
|
|
4,723 |
|
|
|
6,093 |
|
|
|
7,743 |
|
(Gain) loss on disposal of property, plant and equipment |
|
|
(260 |
) |
|
|
(22 |
) |
|
|
(497 |
) |
|
|
(720 |
) |
Foreign exchange (gain) loss |
|
|
944 |
|
|
|
1,056 |
|
|
|
2,542 |
|
|
|
1,771 |
|
Finance (revenues) costs |
|
|
(275 |
) |
|
|
26 |
|
|
|
(957 |
) |
|
|
456 |
|
|
|
|
21,233 |
|
|
|
21,851 |
|
|
|
41,293 |
|
|
|
41,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS BEFORE INCOME TAX |
|
|
31,128 |
|
|
|
31,152 |
|
|
|
60,077 |
|
|
|
62,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE (RECOVERY) (note 10) |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
7,286 |
|
|
|
6,564 |
|
|
|
13,929 |
|
|
|
14,265 |
|
Deferred |
|
|
148 |
|
|
|
977 |
|
|
|
681 |
|
|
|
561 |
|
|
|
|
7,434 |
|
|
|
7,541 |
|
|
|
14,610 |
|
|
|
14,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS |
|
$ |
23,694 |
|
|
$ |
23,611 |
|
|
$ |
45,467 |
|
|
$ |
47,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE (note 11) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.29 |
|
|
$ |
0.29 |
|
|
$ |
0.55 |
|
|
$ |
0.58 |
|
Diluted |
|
$ |
0.29 |
|
|
$ |
0.28 |
|
|
$ |
0.55 |
|
|
$ |
0.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major
Drilling Group International Inc. |
|
Interim
Condensed Consolidated Statements of Comprehensive
Earnings |
|
(in
thousands of Canadian dollars) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
October 31 |
|
|
October 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS |
|
$ |
23,694 |
|
|
$ |
23,611 |
|
|
$ |
45,467 |
|
|
$ |
47,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE EARNINGS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on foreign currency translations |
|
|
10,588 |
|
|
|
15,079 |
|
|
|
2,289 |
|
|
|
11,987 |
|
Unrealized gain (loss) on derivatives (net of tax) |
|
|
(841 |
) |
|
|
54 |
|
|
|
(819 |
) |
|
|
(1,578 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE EARNINGS |
|
$ |
33,441 |
|
|
$ |
38,744 |
|
|
$ |
46,937 |
|
|
$ |
58,268 |
|
|
|
Major
Drilling Group International Inc. |
|
Interim
Condensed Consolidated Statements of Changes in
Equity |
|
For the six
months ended October 31, 2023 and 2022 |
|
(in
thousands of Canadian dollars) |
|
(unaudited) |
|
|
|
|
|
Share capital |
|
|
Retainedearnings |
|
|
Otherreserves |
|
|
Share-basedpayments reserve |
|
|
Foreign currencytranslation reserve |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT MAY 1, 2022 |
|
$ |
263,183 |
|
|
$ |
31,022 |
|
|
$ |
1,536 |
|
|
$ |
3,996 |
|
|
$ |
60,021 |
|
|
$ |
359,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options |
|
|
1,467 |
|
|
|
- |
|
|
|
- |
|
|
|
(403 |
) |
|
|
- |
|
|
|
1,064 |
|
Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
243 |
|
|
|
- |
|
|
|
243 |
|
|
|
|
264,650 |
|
|
|
31,022 |
|
|
|
1,536 |
|
|
|
3,836 |
|
|
|
60,021 |
|
|
|
361,065 |
|
Comprehensive earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
- |
|
|
|
47,859 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
47,859 |
|
Unrealized gain (loss) on foreign currency translations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,987 |
|
|
|
11,987 |
|
Unrealized gain (loss) on derivatives |
|
|
- |
|
|
|
- |
|
|
|
(1,578 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1,578 |
) |
Total comprehensive earnings |
|
|
- |
|
|
|
47,859 |
|
|
|
(1,578 |
) |
|
|
- |
|
|
|
11,987 |
|
|
|
58,268 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT OCTOBER 31, 2022 |
|
|
264,650 |
|
|
|
78,881 |
|
|
|
(42 |
) |
|
|
3,836 |
|
|
|
72,008 |
|
|
|
419,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT MAY 1, 2023 |
|
$ |
266,071 |
|
|
$ |
105,944 |
|
|
$ |
(37 |
) |
|
$ |
3,696 |
|
|
$ |
76,903 |
|
|
$ |
452,577 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options |
|
|
606 |
|
|
|
(197 |
) |
|
|
- |
|
|
|
(295 |
) |
|
|
- |
|
|
|
114 |
|
Share-based compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
159 |
|
|
|
- |
|
|
|
159 |
|
Share buyback (note 8) |
|
|
(3,170 |
) |
|
|
(5,397 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(8,567 |
) |
Stock options expired/forfeited |
|
|
- |
|
|
|
1 |
|
|
|
- |
|
|
|
(1 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
263,507 |
|
|
|
100,351 |
|
|
|
(37 |
) |
|
|
3,559 |
|
|
|
76,903 |
|
|
|
444,283 |
|
Comprehensive earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
- |
|
|
|
45,467 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
45,467 |
|
Unrealized gain (loss) on foreign currency translations |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,289 |
|
|
|
2,289 |
|
Unrealized gain (loss) on derivatives |
|
|
- |
|
|
|
- |
|
|
|
(819 |
) |
|
|
- |
|
|
|
- |
|
|
|
(819 |
) |
Total comprehensive earnings |
|
|
- |
|
|
|
45,467 |
|
|
|
(819 |
) |
|
|
- |
|
|
|
2,289 |
|
|
|
46,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AS AT OCTOBER 31, 2023 |
|
$ |
263,507 |
|
|
$ |
145,818 |
|
|
$ |
(856 |
) |
|
$ |
3,559 |
|
|
$ |
79,192 |
|
|
$ |
491,220 |
|
|
|
Major
Drilling Group International Inc. |
|
Interim
Condensed Consolidated Statements of Cash Flows |
|
(in
thousands of Canadian dollars) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
October 31 |
|
|
October 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax |
|
$ |
31,128 |
|
|
$ |
31,152 |
|
|
$ |
60,077 |
|
|
$ |
62,685 |
|
Operating items not involving cash |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (note 9) |
|
|
12,780 |
|
|
|
11,829 |
|
|
|
24,769 |
|
|
|
23,370 |
|
(Gain) loss on disposal of property, plant and equipment |
|
|
(260 |
) |
|
|
(22 |
) |
|
|
(497 |
) |
|
|
(720 |
) |
Share-based compensation |
|
|
58 |
|
|
|
131 |
|
|
|
159 |
|
|
|
243 |
|
Finance (revenues) costs recognized in earnings before income
tax |
|
|
(275 |
) |
|
|
26 |
|
|
|
(957 |
) |
|
|
456 |
|
|
|
|
43,431 |
|
|
|
43,116 |
|
|
|
83,551 |
|
|
|
86,034 |
|
Changes in non-cash operating working capital items |
|
|
6,732 |
|
|
|
13,316 |
|
|
|
(9,392 |
) |
|
|
(3,152 |
) |
Finance revenues received (costs paid) |
|
|
275 |
|
|
|
(26 |
) |
|
|
957 |
|
|
|
(456 |
) |
Income taxes paid |
|
|
(5,047 |
) |
|
|
(4,321 |
) |
|
|
(10,012 |
) |
|
|
(9,671 |
) |
Cash flow from (used in) operating activities |
|
|
45,391 |
|
|
|
52,085 |
|
|
|
65,104 |
|
|
|
72,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of lease liabilities |
|
|
(412 |
) |
|
|
(392 |
) |
|
|
(731 |
) |
|
|
(836 |
) |
Repayment of long-term debt (note 7) |
|
|
- |
|
|
|
- |
|
|
|
(20,000 |
) |
|
|
(20,000 |
) |
Issuance of common shares due to exercise of stock options |
|
|
57 |
|
|
|
570 |
|
|
|
440 |
|
|
|
1,064 |
|
Cash-settled stock options |
|
|
(326 |
) |
|
|
- |
|
|
|
(326 |
) |
|
|
- |
|
Repurchase of common shares (note 8) |
|
|
(7,276 |
) |
|
|
- |
|
|
|
(8,567 |
) |
|
|
- |
|
Cash flow from (used in) financing activities |
|
|
(7,957 |
) |
|
|
178 |
|
|
|
(29,184 |
) |
|
|
(19,772 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Payment of consideration for previous business acquisition |
|
|
(6,991 |
) |
|
|
(6,289 |
) |
|
|
(6,991 |
) |
|
|
(6,289 |
) |
Acquisition of property, plant and equipment (note 6) |
|
|
(17,443 |
) |
|
|
(13,334 |
) |
|
|
(33,717 |
) |
|
|
(26,488 |
) |
Proceeds from disposal of property, plant and equipment |
|
|
1,351 |
|
|
|
548 |
|
|
|
1,644 |
|
|
|
2,839 |
|
Cash flow from (used in) investing activities |
|
|
(23,083 |
) |
|
|
(19,075 |
) |
|
|
(39,064 |
) |
|
|
(29,938 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes |
|
|
2,199 |
|
|
|
3,392 |
|
|
|
1,179 |
|
|
|
3,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH |
|
|
16,550 |
|
|
|
36,580 |
|
|
|
(1,965 |
) |
|
|
26,438 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH, BEGINNING OF THE PERIOD |
|
|
75,917 |
|
|
|
61,118 |
|
|
|
94,432 |
|
|
|
71,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH, END OF THE PERIOD |
|
$ |
92,467 |
|
|
$ |
97,698 |
|
|
$ |
92,467 |
|
|
$ |
97,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Major
Drilling Group International Inc. |
|
Interim
Condensed Consolidated Balance Sheets |
|
As at
October 31, 2023 and April 30, 2023 |
|
(in
thousands of Canadian dollars) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
October 31, 2023 |
|
|
April 30, 2023 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
92,467 |
|
|
$ |
94,432 |
|
Trade and other receivables (note 13) |
|
|
134,915 |
|
|
|
137,633 |
|
Income tax receivable |
|
|
1,732 |
|
|
|
2,336 |
|
Inventories |
|
|
119,242 |
|
|
|
115,128 |
|
Prepaid expenses |
|
|
13,224 |
|
|
|
10,996 |
|
|
|
|
361,580 |
|
|
|
360,525 |
|
|
|
|
|
|
|
|
PROPERTY, PLANT AND EQUIPMENT (note 6) |
|
|
224,239 |
|
|
|
215,085 |
|
|
|
|
|
|
|
|
RIGHT-OF-USE ASSETS |
|
|
5,405 |
|
|
|
5,637 |
|
|
|
|
|
|
|
|
DEFERRED INCOME TAX ASSETS |
|
|
2,979 |
|
|
|
4,444 |
|
|
|
|
|
|
|
|
GOODWILL |
|
|
22,361 |
|
|
|
22,690 |
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS |
|
|
2,707 |
|
|
|
3,304 |
|
|
|
|
|
|
|
|
|
|
$ |
619,271 |
|
|
$ |
611,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
Trade and other payables |
|
$ |
94,964 |
|
|
$ |
102,144 |
|
Income tax payable |
|
|
7,146 |
|
|
|
3,674 |
|
Current portion of lease liabilities |
|
|
1,434 |
|
|
|
1,617 |
|
Current portion of contingent consideration |
|
|
8,270 |
|
|
|
7,138 |
|
|
|
|
111,814 |
|
|
|
114,573 |
|
|
|
|
|
|
|
|
LEASE LIABILITIES |
|
|
3,994 |
|
|
|
3,965 |
|
|
|
|
|
|
|
|
CONTINGENT CONSIDERATION |
|
|
- |
|
|
|
7,975 |
|
|
|
|
|
|
|
|
LONG-TERM DEBT (note 7) |
|
|
- |
|
|
|
19,972 |
|
|
|
|
|
|
|
|
DEFERRED INCOME TAX LIABILITIES |
|
|
12,243 |
|
|
|
12,623 |
|
|
|
|
128,051 |
|
|
|
159,108 |
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Share capital |
|
|
263,507 |
|
|
|
266,071 |
|
Retained earnings |
|
|
145,818 |
|
|
|
105,944 |
|
Other reserves |
|
|
(856 |
) |
|
|
(37 |
) |
Share-based payments reserve |
|
|
3,559 |
|
|
|
3,696 |
|
Foreign currency translation reserve |
|
|
79,192 |
|
|
|
76,903 |
|
|
|
|
491,220 |
|
|
|
452,577 |
|
|
|
|
|
|
|
|
|
|
$ |
619,271 |
|
|
$ |
611,685 |
|
|
|
|
|
|
|
|
|
|
MAJOR DRILLING GROUP INTERNATIONAL
INC.NOTES TO INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTSFOR THE THREE AND SIX MONTHS
ENDED OCTOBER 31, 2023 AND 2022 (UNAUDITED)(in
thousands of Canadian dollars, except per share
information)
1. NATURE OF
ACTIVITIES
Major Drilling Group International Inc. (the
“Company”) is incorporated under the Canada Business Corporations
Act and has its head office at 111 St. George Street, Moncton, NB,
Canada. The Company’s common shares are listed on the Toronto Stock
Exchange (“TSX”). The principal source of revenue consists of
contract drilling for companies primarily involved in mining and
mineral exploration. The Company has operations in Canada, the
United States, Mexico, South America, Asia, Africa, and
Australia.
2. BASIS OF
PRESENTATION
Statement of compliance These
Interim Condensed Consolidated Financial Statements have been
prepared in accordance with IAS 34 Interim Financial Reporting
(“IAS 34”) as issued by the International Accounting Standards
Board (“IASB”) and using the accounting policies as outlined in the
Company’s annual Consolidated Financial Statements for the year
ended April 30, 2023.
On December 7, 2023, the Board of Directors
authorized the financial statements for issue.
Basis of consolidation These
Interim Condensed Consolidated Financial Statements incorporate the
financial statements of the Company and entities controlled by the
Company. Control is achieved when the Company is exposed or has
rights to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over
the investee.
The results of subsidiaries acquired or disposed
of during the period are included in the Consolidated Statements of
Operations from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Intercompany transactions, balances, income and
expenses are eliminated on consolidation, where appropriate.
Basis of preparation These
Interim Condensed Consolidated Financial Statements have been
prepared based on the historical cost basis, except for certain
financial instruments that are measured at fair value, using the
same accounting policies and methods of computation as presented in
the Company’s annual Consolidated Financial Statements for the year
ended April 30, 2023.
3.
APPLICATION OF NEW AND REVISED
IFRS
The Company has not applied the following IASB
standard amendment that has been issued, but is not yet
effective:
- IAS 21 (as amended in 2023) - The Effect of Changes in Foreign
Exchange Rates - effective for periods beginning on or after
January 1, 2025, with earlier application permitted.
The Company is currently in the process of
assessing the impact the adoption of the above amendment will have
on the Consolidated Financial Statements.
4. KEY
SOURCES OF ESTIMATION UNCERTAINTY AND CRITICAL ACCOUNTING
JUDGMENTS
The preparation of financial statements, in
conformity with International Financial Reporting Standards
(“IFRS”), requires management to make judgments, estimates and
assumptions that are not readily apparent from other sources, which
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised, if the
revision affects only that period, or in the period of the revision
and future periods, if the revision affects both current and future
periods. Significant areas requiring the use of management
estimates relate to the useful lives of property, plant and
equipment for depreciation purposes, property, plant and equipment
and inventory valuation, determination of income and other taxes,
assumptions used in the compilation of fair value of assets
acquired and liabilities assumed in business acquisitions, amounts
recorded as accrued liabilities, contingent consideration,
allowance for impairment of trade receivables, and impairment
testing of goodwill and intangible assets.
The Company applied judgment in determining the
functional currency of the Company and its subsidiaries, the
determination of cash-generating units (“CGUs”), the degree of
componentization of property, plant and equipment, the recognition
of provisions and accrued liabilities, and the determination of the
probability that deferred income tax assets will be realized from
future taxable earnings.
5.
SEASONALITY OF OPERATIONS
The third quarter (November to January) is
normally the Company’s weakest quarter due to the shutdown of
mining and exploration activities, often for extended periods over
the holiday season.
6. PROPERTY,
PLANT AND EQUIPMENT
Capital expenditures for the three and six
months ended October 31, 2023 were $17,443 (2022 - $13,334) and
$33,717 (2022 - $26,488). The Company did not obtain direct
financing for the three and six months ended October 31, 2023 or
2022.
7.
LONG-TERM DEBT
During the previous quarter, the Company made a
discretionary payment of $20,000 on its $75,000 revolving-term
facility (maturing in September 2027), bringing long-term debt to
nil.
8. SHARE
BUYBACK
During the previous quarter, the Company
initiated its Normal Course Issuer Bid ("NCIB"). During the three
and six months ended October 31, 2023, the Company has repurchased
875,268 and 1,020,568 common shares, respectively, at an average
price of $8.31 and $8.40, respectively.
9. EXPENSES
BY NATURE
Direct costs by nature are as follows:
|
|
|
Q2 2024 |
|
|
|
Q2 2023 |
|
|
|
YTD 2024 |
|
|
|
YTD 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
$ |
11,840 |
|
|
$ |
11,177 |
|
|
$ |
22,791 |
|
|
$ |
21,591 |
|
Employee salaries and benefit expenses |
|
|
70,361 |
|
|
|
68,086 |
|
|
|
138,714 |
|
|
|
134,078 |
|
Materials, consumables and external costs |
|
|
63,177 |
|
|
|
61,176 |
|
|
|
124,243 |
|
|
|
119,625 |
|
Other |
|
|
9,212 |
|
|
|
8,274 |
|
|
|
18,717 |
|
|
|
22,080 |
|
|
|
$ |
154,590 |
|
|
$ |
148,713 |
|
|
$ |
304,465 |
|
|
$ |
297,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses by nature are
as follows:
|
|
|
Q2 2024 |
|
|
|
Q2 2023 |
|
|
|
YTD 2024 |
|
|
|
YTD 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets |
|
$ |
259 |
|
|
$ |
358 |
|
|
$ |
525 |
|
|
$ |
720 |
|
Depreciation |
|
|
681 |
|
|
|
294 |
|
|
|
1,453 |
|
|
|
1,059 |
|
Employee salaries and benefit expenses |
|
|
9,003 |
|
|
|
8,165 |
|
|
|
17,926 |
|
|
|
16,830 |
|
Other general and administrative expenses |
|
|
7,659 |
|
|
|
7,251 |
|
|
|
14,208 |
|
|
|
13,633 |
|
|
|
$ |
17,602 |
|
|
$ |
16,068 |
|
|
$ |
34,112 |
|
|
$ |
32,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10. INCOME
TAXES
The income tax provision for the period can be
reconciled to accounting earnings before income tax as follows:
|
|
|
Q2 2024 |
|
|
|
Q2 2023 |
|
|
|
YTD 2024 |
|
|
|
YTD 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income tax |
|
$ |
31,128 |
|
|
$ |
31,152 |
|
|
$ |
60,077 |
|
|
$ |
62,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory Canadian corporate income tax rate |
|
|
27 |
% |
|
|
27 |
% |
|
|
27 |
% |
|
|
27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax provision based on statutory rate |
|
|
8,405 |
|
|
|
8,411 |
|
|
|
16,221 |
|
|
|
16,925 |
|
Non-recognition of tax benefits related to losses |
|
|
(102 |
) |
|
|
491 |
|
|
|
536 |
|
|
|
647 |
|
Utilization of previously unrecognized losses |
|
|
(1,610 |
) |
|
|
(2,903 |
) |
|
|
(2,974 |
) |
|
|
(4,848 |
) |
Other foreign taxes paid |
|
|
146 |
|
|
|
949 |
|
|
|
292 |
|
|
|
1,955 |
|
Rate variances in foreign jurisdictions |
|
|
(3 |
) |
|
|
(64 |
) |
|
|
119 |
|
|
|
38 |
|
Permanent differences and other |
|
|
598 |
|
|
|
657 |
|
|
|
416 |
|
|
|
109 |
|
Income tax provision recognized in net earnings |
|
$ |
7,434 |
|
|
$ |
7,541 |
|
|
$ |
14,610 |
|
|
$ |
14,826 |
|
|
The Company periodically assesses its
liabilities and contingencies for all tax years open to audit based
upon the latest information available. For those matters where it
is probable that an adjustment will be made, the Company records
its best estimate of these tax liabilities, including related
interest charges. Inherent uncertainties exist in estimates of tax
contingencies due to changes in tax laws. While management believes
they have adequately provided for the probable outcome of these
matters, future results may include favourable or unfavourable
adjustments to these estimated tax liabilities in the period the
assessments are made, or resolved, or when the statutes of
limitations lapse.
11. EARNINGS
PER SHARE
All of the Company’s earnings are attributable
to common shares, therefore, net earnings are used in determining
earnings per share.
|
|
|
Q2 2024 |
|
|
|
Q2 2023 |
|
|
|
YTD 2024 |
|
|
|
YTD 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
23,694 |
|
|
$ |
23,611 |
|
|
$ |
45,467 |
|
|
$ |
47,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic (000s) |
|
|
82,636 |
|
|
|
82,847 |
|
|
|
82,822 |
|
|
|
82,793 |
|
Diluted (000s) |
|
|
82,816 |
|
|
|
83,149 |
|
|
|
83,050 |
|
|
|
83,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.29 |
|
|
$ |
0.29 |
|
|
$ |
0.55 |
|
|
$ |
0.58 |
|
Diluted |
|
$ |
0.29 |
|
|
$ |
0.28 |
|
|
$ |
0.55 |
|
|
$ |
0.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The calculation of diluted earnings per share
for the three and six months ended October 31, 2023 excludes the
effect of 297,000 and 205,000 options, respectively (2022 - 210,000
and 180,897, respectively) as they were not in-the-money.
The total number of shares outstanding on October
31, 2023 was 82,093,486 (2022 - 82,865,254).
12. SEGMENTED
INFORMATION
The Company’s operations are divided into the
following three geographic segments, corresponding to its
management structure: Canada - U.S.; South and Central America; and
Australasia and Africa. The services provided in each of the
reportable segments are essentially the same. The accounting
policies of the segments are the same as those described in the
Company’s annual Consolidated Financial Statements for the year
ended April 30, 2023. Management evaluates performance based on
earnings from operations in these three geographic segments before
finance costs, general corporate expenses and income taxes. Data
relating to each of the Company’s reportable segments is presented
as follows:
|
|
|
Q2 2024 |
|
|
|
Q2 2023 |
|
|
|
YTD 2024 |
|
|
|
YTD 2023 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S.* |
|
$ |
106,688 |
|
|
$ |
113,066 |
|
|
$ |
208,140 |
|
|
$ |
225,666 |
|
South and Central America |
|
|
52,467 |
|
|
|
41,725 |
|
|
|
104,105 |
|
|
|
89,178 |
|
Australasia and Africa |
|
|
47,796 |
|
|
|
46,925 |
|
|
|
93,590 |
|
|
|
86,707 |
|
|
|
$ |
206,951 |
|
|
$ |
201,716 |
|
|
$ |
405,835 |
|
|
$ |
401,551 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Canada - U.S. includes revenue of $34,074 and
$42,389 for Canadian operations for the three months ended October
31, 2023 and 2022, respectively and $70,762 and $88,412 for the six
months ended October 31, 2023 and 2022, respectively.
|
|
|
Q2 2024 |
|
|
|
Q2 2023 |
|
|
|
YTD 2024 |
|
|
|
YTD 2023 |
|
Earnings from operations |
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S. |
|
$ |
14,929 |
|
|
$ |
22,024 |
|
|
$ |
29,814 |
|
|
$ |
45,776 |
|
South and Central America |
|
|
9,386 |
|
|
|
5,235 |
|
|
|
19,376 |
|
|
|
14,288 |
|
Australasia and Africa |
|
|
10,256 |
|
|
|
7,847 |
|
|
|
18,143 |
|
|
|
11,011 |
|
|
|
|
34,571 |
|
|
|
35,106 |
|
|
|
67,333 |
|
|
|
71,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance (revenues) costs |
|
|
(275 |
) |
|
|
26 |
|
|
|
(957 |
) |
|
|
456 |
|
General and corporate expenses** |
|
|
3,718 |
|
|
|
3,928 |
|
|
|
8,213 |
|
|
|
7,934 |
|
Income tax |
|
|
7,434 |
|
|
|
7,541 |
|
|
|
14,610 |
|
|
|
14,826 |
|
|
|
|
10,877 |
|
|
|
11,495 |
|
|
|
21,866 |
|
|
|
23,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
23,694 |
|
|
$ |
23,611 |
|
|
$ |
45,467 |
|
|
$ |
47,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
**General and corporate expenses include
expenses for corporate offices and stock-based compensation.
|
|
|
Q2 2024 |
|
|
|
Q2 2023 |
|
|
|
YTD 2024 |
|
|
|
YTD 2023 |
|
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S. |
|
$ |
5,823 |
|
|
$ |
9,440 |
|
|
$ |
14,834 |
|
|
$ |
17,846 |
|
South and Central America |
|
|
6,817 |
|
|
|
2,062 |
|
|
|
10,886 |
|
|
|
5,393 |
|
Australasia and Africa |
|
|
4,803 |
|
|
|
1,832 |
|
|
|
7,928 |
|
|
|
2,984 |
|
Unallocated and corporate assets |
|
|
- |
|
|
|
- |
|
|
|
69 |
|
|
|
265 |
|
Total capital expenditures |
|
$ |
17,443 |
|
|
$ |
13,334 |
|
|
$ |
33,717 |
|
|
$ |
26,488 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Canada - U.S. |
|
$ |
5,875 |
|
|
$ |
6,126 |
|
|
$ |
11,791 |
|
|
$ |
11,521 |
|
South and Central America |
|
|
2,962 |
|
|
|
2,650 |
|
|
|
5,529 |
|
|
|
5,163 |
|
Australasia and Africa |
|
|
3,795 |
|
|
|
2,989 |
|
|
|
7,109 |
|
|
|
6,402 |
|
Unallocated and corporate assets |
|
|
148 |
|
|
|
64 |
|
|
|
340 |
|
|
|
284 |
|
Total depreciation and amortization |
|
$ |
12,780 |
|
|
$ |
11,829 |
|
|
$ |
24,769 |
|
|
$ |
23,370 |
|
|
|
October 31, 2023 |
|
|
April 30, 2023 |
|
Identifiable assets |
|
|
|
|
|
|
Canada - U.S.* |
|
$ |
288,482 |
|
|
$ |
283,895 |
|
South and Central America |
|
|
175,824 |
|
|
|
154,384 |
|
Australasia and Africa |
|
|
198,371 |
|
|
|
193,739 |
|
Unallocated and corporate liabilities |
|
|
(43,406 |
) |
|
|
(20,333 |
) |
Total identifiable assets |
|
$ |
619,271 |
|
|
$ |
611,685 |
|
*Canada - U.S. includes property, plant and
equipment as at October 31, 2023 of $64,159 (April 30, 2023 -
$65,481) for Canadian operations.
13. FINANCIAL
INSTRUMENTS
Fair value The carrying values
of cash, trade and other receivables, demand credit facilities and
trade and other payables approximate their fair value due to the
relatively short period to maturity of the instruments. The
carrying value of contingent consideration and long-term debt
approximates their fair value as the interest applicable is
reflective of fair market rates.
Financial assets and liabilities measured at
fair value are classified and disclosed in one of the following
categories:
- Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
- Level 2 - inputs other than quoted prices included in level 1
that are observable for the assets or liabilities, either directly
(i.e., as prices) or indirectly (i.e., derived from prices);
and
- Level 3 - inputs for the assets or liabilities that are not
based on observable market data (unobservable inputs).
The Company enters into certain derivative
financial instruments to manage its exposure to interest rate and
market risks, comprised of share-price forward contracts with a
combined notional amount of $7,331 maturing at varying dates
through June 2026.
The fair value hierarchy requires the use of
observable market inputs whenever such inputs exist. A financial
instrument is classified to the lowest level of the hierarchy for
which a significant input has been considered in measuring fair
value.
The Company’s derivatives, with fair values as
follows, are classified as level 2 financial instruments. There
were no transfers of amounts between level 1, level 2 and level 3
financial instruments for the three and six months ended October
31, 2023.
|
|
October 31, 2023 |
|
|
April 30, 2023 |
|
|
|
|
|
|
|
|
Interest rate swap |
|
$ |
- |
|
|
$ |
28 |
|
Share-price forward contracts |
|
$ |
(1,879 |
) |
|
$ |
2,189 |
|
|
|
|
|
|
|
|
|
|
Credit risk As at October 31,
2023, 95.0% (April 30, 2023 - 97.0%) of the Company’s trade
receivables were aged as current and 2.8% (April 30, 2023 - 2.5%)
of the trade receivables were impaired.
The movements in the allowance for impairment of
trade receivables during the six and twelve-month periods were as
follows:
|
|
October 31, 2023 |
|
|
April 30, 2023 |
|
|
|
|
|
|
|
|
Opening balance |
|
$ |
3,303 |
|
|
$ |
1,517 |
|
Increase in impairment allowance |
|
|
766 |
|
|
|
2,620 |
|
Recovery of amounts previously impaired |
|
|
(364 |
) |
|
|
(51 |
) |
Write-off charged against allowance |
|
|
- |
|
|
|
(824 |
) |
Foreign exchange translation differences |
|
|
(24 |
) |
|
|
41 |
|
Ending balance |
|
$ |
3,681 |
|
|
$ |
3,303 |
|
|
|
|
|
|
|
|
|
|
Foreign currency risk As at
October 31, 2023, the most significant carrying amounts of net
monetary assets and/or liabilities (which may include intercompany
balances with other subsidiaries) that: (i) are denominated in
currencies other than the functional currency of the respective
Company subsidiary; and (ii) cause foreign exchange rate exposure,
including the impact on earnings before income taxes (“EBIT”), if
the corresponding rate changes by 10%, are as follows (in $000s
CAD):
|
|
Rate variance |
|
MNT/USD |
|
IDR/USD |
|
ARS/USD |
|
MXN/USD |
|
USD/CLP |
|
USD/CAD |
|
Other |
Net exposure on monetary assets (liabilities) |
|
|
|
8,375 |
|
7,172 |
|
6,386 |
|
3,027 |
|
(6,789 |
) |
|
(11,473 |
) |
|
(162 |
) |
EBIT impact |
|
+/-10% |
|
931 |
|
797 |
|
710 |
|
336 |
|
754 |
|
|
1,275 |
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity risk The following
table details contractual maturities for the Company’s financial
liabilities:
|
|
|
1 year |
|
|
|
2-3 years |
|
|
|
4-5 years |
|
|
Thereafter |
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
$ |
94,964 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
94,964 |
|
Lease liabilities (interest included) |
|
|
1,726 |
|
|
|
2,668 |
|
|
|
1,490 |
|
|
|
235 |
|
|
|
6,119 |
|
Contingent consideration (undiscounted) |
|
|
8,807 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
8,807 |
|
|
|
$ |
105,497 |
|
|
$ |
2,668 |
|
|
$ |
1,490 |
|
|
$ |
235 |
|
|
$ |
109,890 |
|
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