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1. Company Snapshot

1.a. Company Description

Major Drilling Group International Inc.provides contract drilling services for mining and mineral exploration companies.The company offers a 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 related mining services.


The company was founded in 1980 and is based in Moncton, Canada with additional offices in Mexico, South America, Asia, Africa, USA, and Australia.

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1.b. Last Insights on MDI

Major Drilling Group International Inc.'s recent momentum is driven by its record quarterly revenue, which surged 29.0% year-over-year to $244.1 million, as reported in its fiscal second-quarter 2026 earnings release. This robust growth is attributed to strong demand for specialized services and strategic market positioning. The company's ability to capitalize on favorable market conditions has been underscored by its solid earnings growth, with the Canadian market experiencing a 12.3% year-over-year increase in fourth-quarter results.

1.c. Company Highlights

2. Major Drilling's Record Quarter: Strong Rebound in Canadian Operations

Major Drilling reported a record-breaking second quarter with revenue increasing by 29% to $244.1 million, driven by a strong rebound in Canadian operations, which saw a 63% year-over-year increase in revenue. The company's adjusted gross margin percentage, excluding depreciation, was 26% for the quarter, compared to 30.5% in the same period last year. Earnings per share (EPS) came in at $0.1699, beating analyst estimates of $0.1667.

Publication Date: Dec -20

📋 Highlights
  • 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.

3. NewsRoom

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Institutions profited after Major Drilling Group International Inc.'s (TSE:MDI) market cap rose CA$104m last week but retail investors profited the most

Jan -09

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3 TSX Stocks Estimated To Be Up To 49.5% Below Intrinsic Value

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.00%)

6. Segments

Contract Drilling

Expected Growth: 1%

Contract Drilling growth driven by increasing demand for drilling services from major mining companies, rising commodity prices, and expansion into new geographic markets. Additionally, Major Drilling's strategic acquisitions and investments in technology, such as autonomous drilling, have enhanced operational efficiency and competitiveness, contributing to the segment's growth.

7. Detailed Products

Drilling Services

Major Drilling provides drilling services to the mining industry, including surface and underground drilling, directional drilling, and reverse circulation drilling.

Camp Services

Major Drilling offers camp services, including camp construction, management, and logistics, to support remote drilling operations.

Water Drilling

Major Drilling provides water drilling services for mining and non-mining applications, including water supply and monitoring wells.

Geotechnical Drilling

Major Drilling offers geotechnical drilling services for site investigation, rock mechanics, and geotechnical engineering applications.

Environmental Drilling

Major Drilling provides environmental drilling services for contaminated site remediation, groundwater monitoring, and environmental monitoring.

8. Major Drilling Group International Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Major Drilling Group International Inc. is medium due to the availability of alternative drilling services and equipment. However, the company's specialized drilling services and equipment may limit the threat of substitutes.

Bargaining Power Of Customers

The bargaining power of customers for Major Drilling Group International Inc. is low due to the company's strong market position and the lack of concentration among its customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Major Drilling Group International Inc. is medium due to the availability of alternative suppliers and the company's dependence on a few key suppliers.

Threat Of New Entrants

The threat of new entrants for Major Drilling Group International Inc. is low due to the high barriers to entry, including the need for significant capital investment and specialized expertise.

Intensity Of Rivalry

The intensity of rivalry for Major Drilling Group International Inc. is high due to the competitive nature of the drilling services industry and the presence of several established competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 5.34%
Debt Cost 3.95%
Equity Weight 94.66%
Equity Cost 12.16%
WACC 11.72%
Leverage 5.65%

11. Quality Control: Major Drilling Group International Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Major Drilling

A-Score: 4.8/10

Value: 3.9

Growth: 6.2

Quality: 5.0

Yield: 0.0

Momentum: 9.0

Volatility: 4.7

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Momentum: 6.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

16.83$

Current Price

16.83$

Potential

-0.00%

Expected Cash-Flows