3mo and 6mo results look a little weak on the earnings side????
Major Drilling Group International Inc MDI
Shares issued 8,710,855 Dec 5 close $24.45
Mon 8 Dec 97 News Release
Mr Paul Legere reports
Results for the three months ended October 31 1997 showed strong growth,
with revenues for the period reaching $44.2 million as compared to $22.0
million for the same period last year (an increase of 101%). Revenues
represent a second quarter record as well as the highest quarterly revenues
that the company has yet generated. Cash flow (EBITDA)(1) and net earnings
for the period grew by 28% ($1,382,000) and 11% ($289,000) to $6.3 million
and $3.0 million respectively.
Significant revenue growth came as a result of recent acquisitions by the
company (JT Thomas, Pontil, and Mining World). Revenues were down for the
period in Central America ($2.1 million) where the company had two large
one time contracts in Q2 last year, and in Venezuela ($2.0 million). These
shortfalls were offset by growth in Canada and in the established branches
in other Latin American countries.
Gross margins for the period are lower as compared to last year due to the
acquisition and operation of manufacturing and distribution facilities by
the company, which have slightly lower margins than the company's base
drilling operations. Additionally, bad weather in the Andes during August
and September and significant movement of drilling equipment in Mexico and
Peru, resulting from the completion of old contracts and the commencement
of new ones, had a short term effect on margins. Finally, the startup of
drilling operations in Chile, Indonesia and Brazil also had a short term
effect.
General and Administrative expenses increased during the quarter to $7.4
million from $3.0 million last year. All of the increase is attributable to
the new acquisitions ($4.0 million) and the startup of operations in the
new locations ($0.5 million).
Results for the six month period ended October 31 1997 showed that in
comparison with the same period last year, net earnings were up 51% to $7.6
million, and cash flow (EBITDA) (1) was up 57% to $14.6 million.
Revenues increased by 96% to $81.9 million, primarily as a result of the
new acquisitions and increased activity in Latin America, where the
established branches had growth of approximately 24% as compared to the
same period last year.
During the six month reporting period the company made several
acquisitions, as discussed above, that have dramatically increased the size
and profitability of the company. The company is endeavoring to further
improve upon results generated by these acquisitions by reducing general
and administrative expenses as a percentage of revenues. Relating to
Pontil, its operations have been expanded without significantly expanding
its administration. An additional branch (Icehill) was acquired and is
being administered by Pontil, and operations were commenced by Pontil in
Indonesia. Although this strategy caused a short term increase in general
and administrative in the reporting period, it should have the effect of
significantly decreasing it as a percentage of revenues in the second half
of the year. With regard to Mining World the company has identified
approximately $1.0 million in annual cost savings associated with mergers
of operations and the reduction of staff levels. Additionally, new product
lines have been added to the distribution business. These changes have, for
the most part, been implemented and should show a positive impact on
general and administrative as a percentage of revenues in the second half
of the year. As previously stated by the company it also intends to reduce
its overall investment in Mining World by selling the Rubicon division.
Net costs associated with the new operations in Brazil, Chile and Indonesia
have reduced the current period's EBITDA (1) by approximately $1.0 million
(mostly in Q2). None of these startup costs were deferred. These operations
should begin to generate revenues in Q3 without any significant increase in
general and administrative, as the support infrastructure is now in place.
By October 31 1997, the company had a dozen drills starting to work or
being mobilized to drill sites in these new locations.
FINANCIAL HIGHLIGHTS
Three Months Ended October 31
($000s)
1997 1996
Contract
revenues $44,179 $22,034
Gross profit
(% of sales) 30.2% 36.6%
EBITDA(1) $6,353 $4,971
EBITDA(1)
per share $0.63 $0.88
Net earnings $3,019 $2,730
Net earnings
per share(2) $0.30 $0.49
FINANCIAL HIGHLIGHTS
Six Months Ended October 31
1997 1996
Contract
revenues $81,853 $41,710
Gross profit
(% of sales) 33.1% 37.0%
EBITDA(1) $14,644 $9,348
EBITDA(1)
per share $1.57 $1.67
Net earnings $7,638 $5,062
Net earnings
per share(2) $0.82 $0.90
(1) Earnings before interest, income taxes, depreciation and amortization
(2) Based on 9,321,493 and 5,608,997 outstanding shares for the year to
date 1997 and 1996 respectively and on 10,018,886 and 5,624,062 outstanding
shares for the second quarter 1997 and 1996 respectively. |
