Major Drilling Announces Annual and Fourth Quarter Results for Fiscal 2015

MONCTON, NEW BRUNSWICK--(Marketwired - June 4, 2015) - Major Drilling Group International Inc. (MDI.TO) today reported results for the year and fourth quarter ended April 30, 2015.

Highlights

In millions of Canadian dollars		Q4-15		Q4-14		Fiscal		Fiscal
(except earnings per share)						2015		2014
Revenue		$81.2		$82.6		$305.7		$354.9
Gross profit		20.7		21.5		65.9		104.4
	As percentage of revenue	25.5	%	26.0	%	21.6	%	29.4	%
EBITDA(1)		6.8		8.4		13.4		44.4
	As percentage of revenue	8.4	%	10.2	%	4.4	%	12.5	%
Net loss		(13.1	)	(24.9	)	(49.6	)	(55.3	)
Loss per share - Basic		($0.16	)	($0.31	)	($0.62	)	($0.70	)

(1)	Earnings before interest, taxes, depreciation and amortization, excluding restructuring charges and goodwill impairment (see "non- GAAP financial measures")

• Cash on hand at quarter-end was $44.9 million while total debt was $15.3 million, for a net cash position of $29.6 million.
  
  

• Quarterly revenue was $81.2 million, down 2% from the $82.6 million recorded for the same quarter last year.
  
  

• Gross margin percentage for the quarter was 25.5%, compared to 26.0% for the corresponding period last year.
  
  

• During the quarter, the Company wrote down recognized tax losses for a total of $4.0 million on its South African and Brazilian deferred tax assets.
  
  

• Net loss was $13.1 million or $0.16 per share for the quarter, compared to a net loss of $24.9 million or $0.31 per share for the prior year quarter.
  
  

"Despite market conditions that continue to be extr emely difficult, we are pleased to have met our goal for the year of generating cash while still paying a dividend and investing in our fleet as appropriate. EBITDA for the quarter was $6.8 million. This year, we used up some of our cash reserves to purchase the assets of Taurus Drilling, and this new division is performing well, with the Company looking to grow these services," said F rancis McGuire, President and CEO of Major Drilling. "Revenue for the quarter was $81.2 million. The gains made with the addition of our new percussive drilling division were offset by the loss of revenue in our energy business and the closures of our operations in Australia and the Democratic Republic of Congo ("DRC")".

"Given the very competitive pricing environment res ulting from the current industry downturn, we had a good quarter operationally, as evidenced by our margins at 25.5%, the highest quarterly margins in this fiscal year. These margins were achieved despite current low levels of specialized drilling and a higher level of underground drilling, which tends to have lower margins. These margins are an indication that pricing appears to have now stabilized but are also a result of our discipline on pricing," observed Mr . McGuire. "The Company will continue to focus on balancing pricing with revenue generation and cash preservation."

"During the quarter, we incurred a restructuring ch arge of $0.8 million as we continued our efforts on cost containment. Our general and administrative costs for the quarter are down 13% over last year, and down 20% if you exclude the impact of higher foreign exchange translation. The Company continues to have a variable cost structure whereby most of its direct costs, including field staff, go up or down with contract revenue and a large part of management's compensation relates to variable incentive compensation based on the Company's profitability."

"During the quarter, the Company wrote down recogni zed tax losses for a total of $4.0 million on its South African and Brazilian deferred tax assets related to carry-forward losses, given the uncertainty in the near-term outlook for adequate taxable income in those countries."

"Major Drilling remains net debt free, with a net c ash position of $29.6 million at the end of the quarter. The Company spent $2.1 million on capital expenditures this quarter, adding one underground percussive drill while selling/retiring nine rigs and equipment for cash proceeds of $1.9 million. Total capital expenditures for the year totaled $16.1 million," added Mr. McGuire.

"At this moment, although mine reserve issues are s tarting to come back to the forefront, we expect calendar 2015 to continue at the present pace. For this reason, we currently expect capital expenditures in fiscal 2016 to be in line with fiscal 2015, although we may invest more to grow our percussive drilling business."

"In the medium-term, we believe that most commoditi es will face an imbalance between supply and demand as mine reserves continue to decrease due to the lack of exploration. At the same time, worldwide consumption continues to increase. At some point in the future, the need to develop resources in areas that are increasingly difficult to access will significantly increase, at which time we expect to see a resurgence in demand for specialized drilling."

Fourth quarter ended April 30, 2015

Total revenue for the quarter was $81.2 million, down 2% from the $82.6 million recorded in the same quarter last year. Uncertainty around economic matters impacting the mining market continues to cause delays in customers' exploration drilling plans. Also, many junior customers have scaled back or suspended drilling activities due to a lack of capital. The favourable foreign exchange translation impact for the quarter is estimated at $4.4 million on revenue but negligible on net earnings, when comparing to the effective rates for the same period last year.

Revenue for the quarter from Canada-U.S. drilling operations increased by 7% to $49.9 million compared to the same period last year. The increase relates to the Taurus asset acquisition and is somewhat offset by the slowdown in the energy sector.

South and Central American revenue was up 34% to $21.0 million for the quarter, compared to the prior year quarter. Most of the increase came from Mexico and the Guiana Shield, while other regions were flat.

Australian, Asian and African operations reported revenue of $10.3 million, down 50% from the same period last year. The Company closed its operations in Australia and the DRC earlier in the year, and Mongolia continues to be affected by political uncertainty around mining laws.

The overall gross margin percentage for the quarter was 25.5% compared to 26.0% for the same period last year. Given the current market conditions, the Company had a good quarter operationally, and this was the highest quarterly margins in this fiscal year. Margins continue to be affected by reduced pricing due to increased competitive pressures, and customers are often focusing on mine site drilling, especially underground drilling, which tends to have lower margins.

General and administrative costs were $11.0 million for the quarter, a reduction of 13% compared to $12.7 million in the same period last year, and a reduction of 20% when excluding higher foreign exchange translation. With the decrease in activity, the Company has reduced its general and administrative costs across the operation.

The income tax provision for the quarter was an expense of $5.1 million compared to an expense of $0.2 million for the prior year period. The Company wrote down recognized tax losses for a total of $4.0 million on its South African and Brazilian deferred tax assets related to carry- forward losses, given the uncertainty in the near-term outlook for adequate taxable income in those countries. The tax expense for the quarter was also impacted by non-tax affected losses and non-deductible expenses.

Non-GAAP Financial Measures

In this news release, the Company uses the non-GAAP financial measure, EBITDA, excluding restructuring charges and goodwill impairment. The Company believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance of the Company. These measures do not have a standardized meaning prescribed by GAAP and therefore they 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 GAAP.

Forward-Looking Statements

Some of the statements contained in this press release may be forward-looking statements, such as, but not limited to, those relating to worldwide demand for gold and base metals and overall commodity prices, the level of activity in the minerals and metals industry and the demand for the Company's services, the Canadian and international economic environments, the Company's ability to attract and retain customers and to manage its assets and operating costs, sources of funding for its clients, particularly for junior mining companies, competitive pressures, currency movements, which can affect the Company's revenue in Canadian dollars, 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, and other factors as may be set forth, as well as objectives or goals, and including words to the effect that the Company or management expects a stated condition to exist or occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements by reason of factors such as, but not limited to, the factors set out in the discussion on pages 15 to 18 of the 2014 Annual Report entitled "General Risks and Unce rtainties", and such other documents as available on SEDAR at www.sedar.com. All such factors should be considered carefully when making decisions with respect to the Company. The Company does not undertake to update any forward-looking statements, including those statements that are incorporated by reference herein, whether written or oral, that may be made from time to time by or on its behalf, except in accordance with applicable securities laws.

Based in Moncton, New Brunswick, Major Drilling Group International Inc. is one of the world's largest metals and minerals contract drilling services companies. To support its customers' mining operations, mineral exploration and environmental activities, Major Drilling maintains field operations and offices in Canada, the United States, Mexico, South America, Asia, and Africa.

Financial statements are attached.

Webcast/Conference Call Information

Major Drilling will provide a simultaneous webcast and conference call to discuss its quarterly results on Friday, June 5, 2015 at 9:00 AM (EDT). To access the webcast, which includes a slide presentation, please go to the investors/webcast 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 416-340-2216 and ask for Major Drilling's Fourth Quarter and Year-End 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 midnight, Friday June 19, 2015. To access the rebroadcast, dial 905-694-9451 and enter the passcode 7658482. The webcast will also be archived for one year and can be accessed on the Major Drilling website at www.majordrilling.com.

Major Drilling Group International Inc.
Condensed Consolidated Statements of Operations
(in thousands of Canadian dollars, except per share information)
			Three months ended						Twelve months ended
			April 30						April 30
			(unaudited)
			2015			2014			2015			2014
TOTAL REVENUE		$	81,191		$	82,637		$	305,718		$	354,946
DIRECT COSTS			60,484			61,113			239,822			250,519
GROSS PROFIT			20,707			21,524			65,896			104,427
OPERATING EXPENSES
	General and administrative		11,006			12,701			44,913			50,087
	Other expenses		1,892			905			5,872			3,624
	(Gain) loss on disposal of property, plant and equipment		(179	)		358			(1,740	)		1,617
	Loss on short-term investments		-			61			-			368
	Foreign exchange loss (gain)		1,157			(918	)		3,479			4,377
	Finance costs		114			266			686			1,002
	Depreciation of property, plant and equipment		12,973			13,085			51,080			51,947
	Amortization of intangible assets		959			332			3,158			1,359
	Impairment of goodwill		-			2,269			-			14,326
	Restructuring charge		784			17,234			4,610			20,454
			28,706			46,293			112,058			149,161
LOSS BEFORE INCOME TAX			(7,999	)		(24,769	)		(46,162	)		(44,734	)
INCOME TAX - PROVISION (RECOVERY)
	Current		2,977			3,488			7,297			12,849
	Deferred		2,111			(3,322	)		(3,894	)		(2,273	)
			5,088			166			3,403			10,576
NET LOSS		$	(13,087	)	$	(24,935	)	$	(49,565	)	$	(55,310	)
LOSS PER SHARE
Basic		$	(0.16	)	$	(0.31	)	$	(0.62	)	$	(0.70	)
Diluted		$	(0.16	)	$	(0.31	)	$	(0.62	)	$	(0.70	)

Major Drilling Group International Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands of Canadian dollars)
			Three months ended						Twelve months ended
			April 30						April 30
			(unaudited)
			2015			2014			2015			2014
NET LOSS		$	(13,087	)	$	(24,935	)	$	(49,565	)	$	(55,310	)
OTHER COMPREHENSIVE LOSS
Items that may be reclassified subsequently to profit or loss
	Unrealized (loss) gains on foreign currency translations (net of tax)		(18,435	)		(6,230	)		25,188			15,428
COMPREHENSIVE LOSS		$	(31,522	)	$	(31,165	)	$	(24,377	)	$	(39,882	)

Major Drilling Group International Inc.
Condensed Consolidated Statements of Changes in Equity
For the twelve months ended April 30, 2014 and 2015
(in thousands of Canadian dollars)
	Share capital		Share-based payments reserve			Retained earnings		Foreign currency translation reserve		Total
BALANCE AS AT MAY 1, 2013	$	230,985	$	14,204		$283,088		$	10,052	$538,329
Share-based payments reserve		-		1,733		-			-	1,733
Dividends		-		-		(15,833	)		-	(15,833	)
		230,985		15,937		267,255			10,052	524,229
Comprehensive loss:
Net loss		-		-		(55,310	)		-	(55,310	)
Unrealized gains on foreign currency translations		-		-		-			15,428	15,428
Total comprehensive loss		-		-		(55,310	)		15,428	(39,882	)
BALANCE AS AT APRIL 30, 2014	$	230,985	$	15,937		$ 211,945		$	25,480	$ 484,347
BALANCE AS AT MAY 1, 2014	$	230,985	$	15,937		$ 211,945		$	25,480	$ 484,347
Exercise of stock options		52		(13	)	-			-	39
Share issue		8,689		-		-			-	8,689
Share-based payments reserve		-		1,310		-			-	1,310
Dividends		-		-		(9,616	)		-	(9,616	)
		239,726		17,234		202,329			25,480	484,769
Comprehensive loss:
Net loss		-		-		(49,565	)		-	(49,565	)
Unrealized gains on foreign currency translations		-		-		-			25,188	25,188
Total comprehensive loss		-		-		(49,565	)		25,188	(24,377	)
BALANCE AS AT APRIL 30, 2015	$	239,726	$	17,234		$ 152,764		$	50,668	$ 460,392

Major Drilling Group International Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)
			Three months ended					Twelve months ended
			April 30					April 30
			(unaudited)
			2015			2014		2015		2014
OPERATING ACTIVITIES
Loss before income tax		$	(7,999	)	$	(24,769	)	$ (46,162	)	$ (44,734	)
Operating items not involving cash
	Depreciation and amortization		13,932			13,417		54,238		53,306
	(Gain) loss on disposal of property, plant and equipment		(179	)		358		(1,740	)	1,617
	Loss on short-term investments		-			61		-		368
	Share-based payments reserve		295			361		1,310		1,733
	Impairment of goodwill		-			2,269		-		14,326
	Restructuring charge		-			9,716		1,953		10,381
Finance costs recognized in loss before income tax			114			266		686		1,002
			6,163			1,679		10,285		37,999
Changes in non-cash operating working capital items			(5,684	)		18,535		12,731		20,532
Finance costs paid			(121	)		(261	)	(670	)	(983	)
Income taxes paid			(837	)		(4,742	)	(7,776	)	(16,624	)
Cash flow (used in) from operating activities			(479	)		15,211		14,570		40,924
FINANCING ACTIVITIES
(Decrease) increase in demand loan			(2,714	)		-		(4,038	)	4,066
Repayment of long-term debt			(1,683	)		(1,740	)	(9,837	)	(20,457	)
Issuance of common shares			5			-		39		-
Dividends paid			-			-		(15,930	)	(15,832	)
Cash flow used in financing activities			(4,392	)		(1,740	)	(29,766	)	(32,223	)
INVESTING ACTIVITIES
Business acquisition			-			-		(20,834	)	(205	)
Acquisition of short-term investments			-			-		-		(3,587	)
Proceeds from disposal of short-term investments			-			3,074		-		3,074
Acquisition of property, plant and equipment (net of direct financing)			(1,161	)		(5,190	)	(14,754	)	(22,626	)
Proceeds from disposal of property, plant and equipment			1,875			1,990		18,717		5,375
Cash flow from (used in) investing activities			714			(126	)	(16,871	)	(17,969	)
Effect of exchange rate changes			(1,692	)		(1,512	)	2,720		1,201
(DECREASE) INCREASE IN CASH			(5,849	)		11,833		(29,347	)	(8,067	)
CASH, BEGINNING OF THE PERIOD			50,746			62,411		74,244		82,311
CASH, END OF THE PERIOD		$	44,897		$	74,244		$ 44,897		$ 74,244

Major Drilling Group International Inc.
Condensed Consolidated Balance Sheets
As at April 30, 2015 and 2014
(in thousands of Canadian dollars)
			2015		2014
ASSETS
CURRENT ASSETS
	Cash	$	44,897	$	74,244
	Trade and other receivables		58,559		66,211
	Income tax receivable		12,182		12,179
	Inventories		79,248		81,308
	Prepaid expenses		2,968		4,690
			197,854		238,632
PROPERTY, PLANT AND EQUIPMENT			276,594		307,288
DEFERRED INCOME TAX ASSETS			4,722		5,825
GOODWILL			57,274		38,056
INTANGIBLE ASSETS			6,260		1,923
		$	542,704	$	591,724
LIABILITIES
CURRENT LIABILITIES
	Demand loan	$	-	$	3,909
	Trade and other payables		33,820		52,155
	Income tax payable		2,388		3,416
	Current portion of contingent consideration		2,735		-
	Current portion of long-term debt		6,776		9,655
			45,719		69,135
CONTINGENT CONSIDERATION			7,395		-
LONG-TERM DEBT			8,569		14,187
DEFERRED INCOME TAX LIABILITIES			20,629		24,055
			82,312		107,377
SHAREHOLDERS' EQUITY
	Share capital		239,726		230,985
	Share-based payments reserve		17,234		15,937
	Retained earnings		152,764		211,945
	Foreign currency translation reserve		50,668		25,480
			460,392		484,347
		$	542,704	$	591,724

MAJOR DRILLING GROUP INTERNATIONAL INC.

SELECTED FINANCIAL INFORMATION

FOR THE THREE AND TWELVE MONTHS ENDED APRIL 30, 2015 AND 2014

(in thousands of Canadian dollars)

SEGMENTED INFORMATION

The Company's operations are divided into three geographic segments corresponding to its management structure, Canada - U.S., South and Central America, and Australia, Asia 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 Note 4 presented in the Notes to Consolidated Financial Statements for the year ended April 30, 2015. Management evaluates performance based on earnings from operations in these three geographic segments before finance costs and income tax. Data relating to each of the Company's reportable segments is presented as follows:

			Q4 2015			Q4 2014			YTD 2015			YTD 2014
Revenue			(unaudited)			(unaudited)
	Canada - U.S.	$	49,863		$	46,462		$	177,210		$	175,882
	South and Central America		20,989			15,688			75,604			73,583
	Australia, Asia and Africa		10,339			20,487			52,904			105,481
		$	81,191		$	82,637		$	305,718		$	354,946
(Loss) earnings from operations
	Canada - U.S.*	$	316		$	2,070		$	(5,250	)	$	9,315
	South and Central America**		(28	)		(2,821	)		(10,828	)		(25,125	)
	Australia, Asia and Africa***		(4,850	)		(21,539	)		(18,871	)		(19,776	)
			(4,562	)		(22,290	)		(34,949	)		(35,586	)
Eliminations			-			(135	)		-			(554	)
			(4,562	)		(22,425	)		(34,949	)		(36,140	)
Finance costs			114			266			686			1,002
General and corporate expenses ****			3,323			2,078			10,527			7,592
Income tax			5,088			166			3,403			10,576
Net loss		$	(13,087	)	$	(24,935	)	$	(49,565	)	$	(55,310	)
Depreciation and amortization
	Canada - U.S.	$	7,057		$	5,730		$	26,755		$	22,928
	South and Central America		3,138			3,149			12,749			12,072
	Australia, Asia and Africa		3,140			4,015			12,996			16,161
	Unallocated and corporate assets		597			523			1,738			2,145
		$	13,932		$	13,417		$	54,238		$	53,306

* Canada - U.S. includes restructuring charges for the current quarter of $149 (2014 - $123) and the current year of $367 (2014 - $503).

** South and Central America includes goodwill and intangible asset impairment charges in the previous year of $12,057 as well as restructuring charges in the current quarter of $269 (2014 - $201) and the current year of $882 (2014 - $1,665).

*** Australia, Asia and Africa includes goodwill and intangible asset impairment charges in the previous quarter and year of $2,269 as well as restructuring charges in the current quarter of $226 (2014 - $16,910) and the current year of $3,221 (2014 - $18,286).

**** General and corporate expenses include expenses for corporate offices, stock options and certain unallocated costs and restructure charges for the current quarter of $140 (2014 - nil) and the current year of $140 (2014 - nil).