- Record Revenue Growth: Q2 revenue hit $244.1M, up 29% YoY and 7.8% QoQ, driven by 63% YoY growth in Canadian operations.
- Strong South American Performance: Peruvian market growth post-Explomin acquisition offset weaker Australasian/African regions, impacted by Indonesia customer incident.
- Margin Decline: Adjusted gross margin fell to 26% (vs. 30.5% in Q2 2025) despite revenue gains, reflecting competitive pressures.
- High Utilization Rates: Fleet utilization averaged 51% (707 drills), with underground drills at 54% and conventional at 54%.
- Strong Liquidity & Buyback: Cash rose $17.6M to $14.3M net cash, and a 5% share repurchase program was announced for 2026.
Regional Performance
The company's performance was driven by strategic market positioning in North and South America, particularly in Canada and Peru. The Australasian and African region was impacted by an operational incident at the company's largest customer in Indonesia. Revenue growth was driven by operations in North and South America, with Explomin's revenue run rate continuing to grow following the closing of the acquisition in November.
Operational Highlights
The company continued to see high levels of demand for its specialized services, with conventional drilling increasing slightly to 16% of revenue for the quarter, while underground drilling contributed 24% of total revenue. The company's fleet utilization was 51%, with 310 specialized drills at 47% utilization, 160 conventional drills at 54% utilization, and 237 underground drills at 54% utilization.
Outlook and Valuation
Major Drilling expects to see a pause in activity over the holiday period, but remains well-positioned to take advantage of rapidly growing demand for drilling services driven by higher gold prices, copper prices, and the increasing importance of critical minerals. Analysts estimate next year's revenue growth at 17.2%. With a current P/E Ratio of 41.62 and P/S Ratio of 1.49, the market is pricing in significant growth expectations. The company's return on equity (ROE) is 4.93%, and its net debt to EBITDA ratio is -0.09, indicating a healthy balance sheet.
Management's Confidence
According to Denis Larocque, "We continue to aggressively and successfully invest in the recruitment and training of new drillers to ensure that Major Drilling remains both the operator and employer of choice in the industry." This confidence is reflected in the company's decision to announce a normal course issuer bid, whereby 5% of the issued and outstanding shares may be repurchased over a 12-month period.