Q2 2026 Major Drilling Group International Inc Earnings Call

December 11, 2025

Operator: Good day, ladies and gentlemen, and welcome to the Q2 2026 results conference call. All participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call may be recorded. I would like to turn the call over to Ryan Hanley, Director of Capital Markets. You may begin.

Speaker #1: recorded. I would like to turn the call As a reminder, this call may be over to Ryan Hanley, Director of Capital Markets. You may begin.

Speaker #2: Thank you, and good morning, everyone. As mentioned, we would like to welcome you to Major Drilling's conference call for the second quarter of fiscal 2026.

Ryan Hanley: Thank you, and good morning, everyone. As mentioned, we would like to welcome you to Major Drilling's conference call for the second quarter of fiscal 2026. With me on the call today are Denis Larocque, President and CEO, and Ian Ross, CFO. Our results were released last night and can be found on our website at www.majordrilling.com. We also invite you to visit our website for further information. Before we get started, we'd like to caution you that during this conference call, we will be making forward-looking statements about future events or the future financial performance of the company. These statements are forward-looking in nature, and actual events or results may differ materially from those currently anticipated in such statements. I'll now turn the presentation over to Denis Larocque, President and CEO.

Speaker #2: With me on the call today are Denis Leroque, President and CEO, and Ian Ross, CFO. The results were released last night and can be found on our website at www.majordrilling.com.

Speaker #2: I invite you to visit our website for further information. Before we get started, we'd like to caution you that during this conference call, we will be making forward-looking statements about future events or the future financial performance of the company.

Speaker #2: These statements are anticipated; in such results, actual events may differ materially from those currently forward-looking in nature. Leroque, President, and I will now turn the presentation over to Denis, CEO.

Speaker #3: Thanks, Ryan. And good morning, everyone, and thank you for joining us today to discuss our second quarter results. I'd like to begin by highlighting what was a record-setting quarter.

Denis Larocque: Thanks, Ryan, and good morning, everyone. Thank you for joining us today to discuss our Q2 results. I'd like to begin by highlighting what was a record-setting quarter, which resulted in quarterly revenue increasing by 29% to CAD 244 million when compared to the same period last year. This represents the highest quarterly revenue generated in the company's 45-year history and a level that we hope to build upon. We are continuing our proactive efforts by leveraging our strong balance sheet to ensure that rates and inventory are ready for rapid deployment, which will position us to take on expected increased demand from mining customers in anticipation of what we believe will be a busier calendar 2026. In the quarter, our Canadian operations saw a strong rebound in activity levels with a 63% year-over-year increase in revenue, as strategic market positioning drove results despite the continued competitive environment.

Speaker #3: Which resulted in quarterly revenue increasing by 29% to $244 million when compared to the same period last year. This represents the highest quarterly revenue generated in the company's 45-year history, and a level that we hope to build upon.

Speaker #3: We are continuing our proactive efforts by leveraging our strong balance sheet to ensure that rates and inventory are ready for rapid deployment, which will position us to take on the expected increased demand from mining customers in anticipation of what we believe will be a busier calendar 2026.

Speaker #3: In the quarter, our Canadian operations saw a strong rebound in activity levels, with a 63% year-over-year increase in revenue, as strategic market positioning drove results despite the continued competitive environment.

Speaker #3: While the majority of incremental demand continued to come from senior mining companies, the number of discussions with juniors has also begun to increase, following the number of financings that were completed over the last few months.

Denis Larocque: While the majority of incremental demand continued to come from senior mining companies, the number of discussions with juniors has also begun to increase following the number of financings which were completing over the last few months. In South America, we also saw further growth in the Peruvian market, with Explomin's revenue run rate continuing to grow following the closing of the acquisition in November 2024. Additionally, slowdowns in Argentina and Chile due to challenging economic conditions and customer delays were more than offset by growth in Brazil and Guiana Shield. Strength throughout the North, and South American markets was partially offset by the Australian, and African region, which was impacted by the company's largest customer in Indonesia experiencing an operational incident that resulted in the suspension of all mine site activity for the majority of the quarter.

While the majority of incremental demand continued to come from senior mining companies, the number of discussions with juniors has also begun to increase following the number of financings which were completing over the last few months. In South America, we also saw further growth in the Peruvian market, with Explomin's revenue run rate continuing to grow following the closing of the acquisition in November 2024. Additionally, slowdowns in Argentina and Chile due to challenging economic conditions and customer delays were more than offset by growth in Brazil and Guiana Shield. Strength throughout the North, and South American markets was partially offset by the Australian, and African region, which was impacted by the company's largest customer in Indonesia experiencing an operational incident that resulted in the suspension of all mine site activity for the majority of the quarter.

Speaker #3: In South America, we also saw further growth in the Peruvian market, with ExpoMin's revenue run rate continuing to grow following the closing of the acquisition in November 2024.

Speaker #3: Additionally, slowdowns in Argentina and Chile due to challenging economic conditions and customer delays were more than offset by growth in Brazil and Guyana.

Speaker #3: Strength throughout the North and South American markets was partially offset by the Australian and African region, which was impacted by the company's largest customer in Indonesia experiencing an operational incident that resulted in a suspension of all mine site activity for the majority of the quarter.

Speaker #3: While some activity is now gradually beginning to resume, drilling operations are expected to return to full capacity in our fourth fiscal quarter. I'll discuss the rest of our outlook in more detail once Ian has taken us through the financials.

Denis Larocque: While some activity now gradually beginning to resume, drilling operations are expected to return to full capacity in our fourth fiscal quarter. I'll discuss the rest of our outlook in more detail once Ian has taken us through the financials. Ian?

While some activity now gradually beginning to resume, drilling operations are expected to return to full capacity in our fourth fiscal quarter. I'll discuss the rest of our outlook in more detail once Ian has taken us through the financials. Ian?

Speaker #3: Ian?

Speaker #4: Thanks, Denis. Revenues in the second quarter were $244.1 million, up 7.8% from the prior quarter, and 29% from the $189.3 million recorded over the same period last year.

Ian Ross: Thanks, Denis. Revenue for the second quarter was CAD 244.1 million, up 7.8% from the prior quarter and 29% from the CAD 189.3 million recorded over the same period last year. Revenue growth was driven by operations in North and South America, particularly Canada and Peru, which was partially offset by the Australasia and African region, largely due to a pause in activity in Indonesia, as previously discussed. Favorable foreign exchange translation impact on revenue when compared to the effective rates of the same period last year was approximately CAD 2.7 million, while the impact on net earnings was minimal as expenditures in foreign jurisdictions tend to be in the same currency as revenue. The overall adjusted gross margin percentage, excluding depreciation, was 26% for the quarter compared to 30.5% in the same period last year.

Speaker #4: Revenue growth was driven by operations in North and South America, particularly Canada and Peru, which was partially offset by the Australasia and African region, largely due to a pause in activity in Indonesia, as previously discussed.

Speaker #4: Favorable foreign exchange translation impact on revenue when compared to the effective rates of the same period last year was approximately $2.7 million, while the impact on net earnings was minimal, as expenditures and foreign jurisdictions tend to be in the same currency as revenue.

Speaker #4: The overall adjusted gross margin percentage, excluding depreciation, was 26% for the quarter, compared to 30.5% from the same period last year. The decrease in margins was attributable to the continued competitive pricing environment in North America, as well as ongoing training and maintenance programs at various branches around the world, which are well-positioned for an increase in demand through calendar 2026.

Ian Ross: Decrease in margins was attributable to the continued competitive pricing environment in North America, as well as ongoing training and maintenance programs at various branches around the world, which are the company's well-positioned for an increase in demand through calendar 2026. Additionally, ExpoMin's margin profile also continues to have a moderate impact given its focus on longer-term contracts and a higher proportion of underground drilling. While these programs typically result in lower margins, they provide increased revenue diversification and stability. G&A costs increased by CAD 3.6 million to a total of CAD 21.7 million compared to the same quarter last year due to the addition of ExpoMin's operations.

Decrease in margins was attributable to the continued competitive pricing environment in North America, as well as ongoing training and maintenance programs at various branches around the world, which are the company's well-positioned for an increase in demand through calendar 2026. Additionally, ExpoMin's margin profile also continues to have a moderate impact given its focus on longer-term contracts and a higher proportion of underground drilling. While these programs typically result in lower margins, they provide increased revenue diversification and stability. G&A costs increased by CAD 3.6 million to a total of CAD 21.7 million compared to the same quarter last year due to the addition of ExpoMin's operations.

Speaker #4: ExpoMin's margin profile also continues to additionally have a moderate impact, given its focus on longer-term contracts and a higher proportion of underground drilling. While these programs typically result in lower margins, they provide increased revenue diversification and stability.

Speaker #4: G&A costs increased by $3.6 million to a total of $21.7 million compared to the same quarter last year, due to the addition of ExpoMin's operations.

Ian Ross: The company generated EBITDA of CAD 37.7 million in the quarter compared to CAD 38.7 million in the prior year period, with net earnings of CAD 13.9 million or $0.17 per share compared to net earnings of CAD 18.2 million or $0.22 per share for the prior year period. Given prior investments in the fleet, CapEx in the quarter totaled CAD 11.8 million compared to CAD 20.1 million in the same period last year, with the addition of two new drill rigs and support equipment, while four older, less efficient rigs were disposed of, bringing the total rig count at quarter-end to 707. The company increased its cash position by over CAD 17.6 million, ending the quarter with CAD 14.3 million in net cash, while total available liquidity grew to over CAD 149 million.

The company generated EBITDA of CAD 37.7 million in the quarter compared to CAD 38.7 million in the prior year period, with net earnings of CAD 13.9 million or $0.17 per share compared to net earnings of CAD 18.2 million or $0.22 per share for the prior year period. Given prior investments in the fleet, CapEx in the quarter totaled CAD 11.8 million compared to CAD 20.1 million in the same period last year, with the addition of two new drill rigs and support equipment, while four older, less efficient rigs were disposed of, bringing the total rig count at quarter-end to 707. The company increased its cash position by over CAD 17.6 million, ending the quarter with CAD 14.3 million in net cash, while total available liquidity grew to over CAD 149 million.

Speaker #4: EBITDA was $37.7 million in the quarter compared to $38.7 million in the prior year period, with net earnings of $13.9 million, or $0.17 per share, compared to net earnings of $18.2 million, or $0.22 per share, from the prior year period.

Speaker #4: Given prior investments in this league, CAPEX in the quarter totaled $11.8 million compared to $20.1 million in the same period last year. With the addition of two new drill arrangements for equipment, while four older, less efficient rigs were disposed of, bringing the total rig count at quarter-end to 707.

Speaker #4: The company increased its cash position by over $17.6 million, ending the quarter with $14.3 million in net cash, while total available liquidity grew to over $149 million.

Speaker #4: While the company remains focused on balance sheet strength and is well-positioned to take advantage of additional growth opportunities, it also continues to evaluate options to drive shareholder returns.

Ian Ross: While the company remains focused on balance sheet strength and being well-positioned to take advantage of additional growth opportunities, it also continues to evaluate options to drive shareholder returns. To that effect, during the quarter, the company announced a Normal Course Issuer Bid, whereby up to 5% of the issued and outstanding shares of Major Drilling may be repurchased over a 12-month period beginning 21 October. The company intends to be opportunistic in the use of its NCIB, taking advantage of any potential share price weakness resulting in a valuation that we feel does not accurately reflect our strong financial position and underlying fundamentals. The breakdown of our fleet and utilization in the quarter is as follows: 310 specialized drills at 47% utilization, 160 conventional drills at 54% utilization, 237 underground drills at 54% utilization, for a total of 707 drills at 51% utilization.

While the company remains focused on balance sheet strength and being well-positioned to take advantage of additional growth opportunities, it also continues to evaluate options to drive shareholder returns. To that effect, during the quarter, the company announced a Normal Course Issuer Bid, whereby up to 5% of the issued and outstanding shares of Major Drilling may be repurchased over a 12-month period beginning 21 October. The company intends to be opportunistic in the use of its NCIB, taking advantage of any potential share price weakness resulting in a valuation that we feel does not accurately reflect our strong financial position and underlying fundamentals. The breakdown of our fleet and utilization in the quarter is as follows: 310 specialized drills at 47% utilization, 160 conventional drills at 54% utilization, 237 underground drills at 54% utilization, for a total of 707 drills at 51% utilization.

Speaker #4: Effectively, during the quarter, the company announced a normal course issuer bid, whereby up to 5% of the issued and outstanding shares of Major Drilling may be repurchased over a 12-month period beginning October 21st.

Speaker #4: The company intends to be opportunistic in the use of its MCIB, taking advantage of any potential share price weakness resulting in a valuation that we feel does not actively reflect our strong financial position and underlying fundamentals.

Speaker #4: The breakdown of our fleet and utilization in the quarter is as follows: 310 specialized drills at 47% utilization, 160 conventional drills at 54% utilization, and 237 underground drills at 54% utilization, for a total of 707 drills at 51% utilization.

Speaker #4: As we've mentioned before, specialized work in our definition is not necessarily conducted with a specialized drill. Rather, it is work that requires the need for rigorous standards of our customers in terms of technical capabilities, operational and safety standards, and other related factors.

Ian Ross: As we've mentioned before, specialized work, in our definition, is not necessarily conducted with a specialized drill. Rather, it is work that requires we meet the rigorous standards of our customers in terms of technical capabilities, operational, and safety standards, and other related factors. These standards are becoming increasingly important to our customers. In Q2, specialized work accounted for 60% of our total revenue. We continue to see high levels of demand for our specialized services and expect this trend to continue as deposits become increasingly more challenging to find, with discoveries continuing to be made in remote locations. Conventional drilling, which is mostly driven by juniors, increased slightly to 16% of revenue for the quarter, while underground drilling contributed 24% of total revenue, aided by the contribution of Explomin.

As we've mentioned before, specialized work, in our definition, is not necessarily conducted with a specialized drill. Rather, it is work that requires we meet the rigorous standards of our customers in terms of technical capabilities, operational, and safety standards, and other related factors. These standards are becoming increasingly important to our customers. In Q2, specialized work accounted for 60% of our total revenue. We continue to see high levels of demand for our specialized services and expect this trend to continue as deposits become increasingly more challenging to find, with discoveries continuing to be made in remote locations. Conventional drilling, which is mostly driven by juniors, increased slightly to 16% of revenue for the quarter, while underground drilling contributed 24% of total revenue, aided by the contribution of Explomin.

Speaker #4: These standards are becoming increasingly important to our customers. In the second quarter, specialized work accounted for 60% of our total revenue, with continuously high levels of demand for our specialized services. We expect this trend to continue as deposits become increasingly more challenging to find, with discoveries continuing to be made in remote locations.

Speaker #4: Conventional drilling, which is mostly driven by juniors, increased slightly to 16% of revenue for the quarter, while underground drilling contributed 24% of total revenue, aided by the contribution of ExpoMin.

Speaker #4: We continue to see the bulk of our revenue driven by seniors and intermediates, representing 92% of revenue this quarter, as they continue their elevated efforts to address depleting reserves.

Ian Ross: We continue to see the bulk of our revenue driven by senior intermediates, representing 92% of revenue this quarter, as they continue their elevated efforts to address completing reserves. While junior financings have begun to increase, there is usually a six-month delay between an increase in financing activity and increased activity levels in the field. As a result, juniors continue to represent approximately 8% of our revenue in the second quarter. In terms of commodities, gold represented 39% of revenue in the second quarter, while copper accounted for 31% of revenue, driven primarily by strength in the South and Central American region. Iron ore continues to make a meaningful contribution at 10%, aided by our Australian operations and demonstrating the diversity in the commodities for which we drill for around the world.

We continue to see the bulk of our revenue driven by senior intermediates, representing 92% of revenue this quarter, as they continue their elevated efforts to address completing reserves. While junior financings have begun to increase, there is usually a six-month delay between an increase in financing activity and increased activity levels in the field. As a result, juniors continue to represent approximately 8% of our revenue in the second quarter. In terms of commodities, gold represented 39% of revenue in the second quarter, while copper accounted for 31% of revenue, driven primarily by strength in the South and Central American region. Iron ore continues to make a meaningful contribution at 10%, aided by our Australian operations and demonstrating the diversity in the commodities for which we drill for around the world.

Speaker #4: While junior financing has begun to increase, there is usually a six-month delay between an increase in financing activity and increased activity levels in the field.

Speaker #4: As a result, juniors continue to represent approximately 8% of our revenue in the second quarter. In terms of commodities, gold represented 39% of revenue in the second quarter, while copper accounted for 31% of revenue.

Speaker #4: Driven primarily by strength in sales in the Central American region, iron ore continues to make a meaningful contribution at 10%, aided by our Australian operations and demonstrating the diversity in the commodities for which we drill around the world.

Speaker #4: Also of note in the second quarter was silver, which represents 6% of revenue, driven by record-high silver prices. With that overview of our financial results, I'll now turn the presentation back to Denis to discuss the.

Ian Ross: Also of note in the second quarter was silver, which represented 6% of revenue driven by record-high silver price. With that overview of our financial results, I'll now turn the presentation back to Denis to discuss the outlook. Thanks, Ian. As we head into our seasonally weaker fiscal third quarter, we expect to see the usual pause in activity as programs shut down over the holiday period. Also, as Ian mentioned, we continue to move through training and maintenance programs in order to ensure that we're well-prepared for what we expect to be a busier calendar year. These preparation initiatives are expected to have a slight impact on third-quarter margins. While challenging to forecast, numerous data points continue to influence our positive outlook for calendar 2026. As seniors move through the budgeting period, the gold price continues to trade near record highs, remaining above $4,200 an ounce level.

Also of note in the second quarter was silver, which represented 6% of revenue driven by record-high silver price. With that overview of our financial results, I'll now turn the presentation back to Denis to discuss the outlook. Thanks, Ian. As we head into our seasonally weaker fiscal third quarter, we expect to see the usual pause in activity as programs shut down over the holiday period. Also, as Ian mentioned, we continue to move through training and maintenance programs in order to ensure that we're well-prepared for what we expect to be a busier calendar year. These preparation initiatives are expected to have a slight impact on third-quarter margins. While challenging to forecast, numerous data points continue to influence our positive outlook for calendar 2026. As seniors move through the budgeting period, the gold price continues to trade near record highs, remaining above $4,200 an ounce level.

Speaker #4: outlook. Thanks,

Speaker #1: Ian, as we head into our seasonally weaker fiscal third quarter (Q3), we expect to see the usual pause in activity as programs shut down over the holiday period.

Speaker #1: Also, as Ian mentioned, we continue to move through training and maintenance programs in order to ensure that we're well prepared for what we expect to be a busier calendar year.

Speaker #1: Preparation initiatives are expected to have a slight impact on third quarter margins. While challenging to forecast, numerous data points continue to influence our positive outlook for calendar 2026.

Speaker #1: As seniors move through the budgeting period, the gold price continues to trade near record highs, remaining above the $4,200 announced level. This represents an increase of over $1,600 when compared to the same time last year, when seniors were compiling their budgets.

Ian Ross: This represents an increase of over $1,600 an ounce when compared to the same time last year when seniors were compiling their budgets. Higher gold prices have led to substantially higher levels of pre-cash flow generation and stronger balance sheets for senior mining companies as they assess depleting reserves following a long period of subdued exploration. Also, we've seen that the current gold price environment has led to a sharp increase in the number and size of junior financings over the last few months. Copper prices have also more than doubled over the last two years, recently reaching an all-time high while the world continues to work towards increased electrification and decarbonization, both of which are expected to require enormous amounts of copper. Recent supply disruptions are only expected to further exacerbate the projected supply deficit.

This represents an increase of over $1,600 an ounce when compared to the same time last year when seniors were compiling their budgets. Higher gold prices have led to substantially higher levels of pre-cash flow generation and stronger balance sheets for senior mining companies as they assess depleting reserves following a long period of subdued exploration. Also, we've seen that the current gold price environment has led to a sharp increase in the number and size of junior financings over the last few months. Copper prices have also more than doubled over the last two years, recently reaching an all-time high while the world continues to work towards increased electrification and decarbonization, both of which are expected to require enormous amounts of copper. Recent supply disruptions are only expected to further exacerbate the projected supply deficit.

Speaker #1: Higher gold prices have led to substantially higher levels of pre-cash flow generation and stronger balance sheets for senior mining companies as they assess depleting reserves following a long period of subdued exploration.

Speaker #1: Also, we've seen that the current gold price environment has led to a sharp increase in the number and size of junior financings over the last few months.

Speaker #1: Copper prices have also more than doubled over the last two years, recently reaching an all-time high, while the world continues to work towards increased electrification and decarbonization, both of which are expected to require enormous amounts of copper.

Speaker #1: Recent supply disruptions are only expected to further exacerbate the projected supply deficit. Lastly, critical minerals continue to move increasingly into the spotlight as countries around the world look to secure an increased supply of various strategic commodities.

Ian Ross: Lastly, critical minerals continue to move increasingly into the spotlight as countries around the world look to secure and increase supplies of various strategic commodities. With substantial investments having been made in our fleet and inventory through the most recent downturn, the company remains very well-positioned to take advantage of rapidly growing demand for drilling services driven by these various factors. While the shortage of experienced drill crews is expected to put temporary pressure on labor costs and productivity, particularly in our busiest markets, we expect wider industry demand for drilling services to drive pricing improvements and expedite margin recovery over the longer term. It's crucial that 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.

Lastly, critical minerals continue to move increasingly into the spotlight as countries around the world look to secure and increase supplies of various strategic commodities. With substantial investments having been made in our fleet and inventory through the most recent downturn, the company remains very well-positioned to take advantage of rapidly growing demand for drilling services driven by these various factors. While the shortage of experienced drill crews is expected to put temporary pressure on labor costs and productivity, particularly in our busiest markets, we expect wider industry demand for drilling services to drive pricing improvements and expedite margin recovery over the longer term. It's crucial that 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.

Speaker #1: With substantial investments having been made in our fleet and inventory through the most recent downturn, the company remains very well positioned to take advantage of rapidly growing demand for drilling services, driven by these various factors.

Speaker #1: While the shortage of experienced drill crews is expected to put temporary pressure on labor costs and productivity, particularly in our busiest markets, we expect wider industry demand for drilling services to drive pricing improvements and expedite margin recovery over the longer term.

Speaker #1: It's crucial that 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.

Speaker #1: Finally, I know it's a bit early, but I'd like to wish happy holidays to our more than 6,000 employees around the world and thank you for your amazing dedication and hard work.

Ian Ross: Finally, I know it's a bit early, but I'd like to wish happy holidays to our more than 6,000 employees around the world and thank you for your amazing dedication and hard work. I'm always amazed by the passion and commitment of our crews and staff to safety and getting the job done. I hope you each get a chance to rest up, as it should be a busy year ahead. With that, we can open the call to questions. Operator?

Finally, I know it's a bit early, but I'd like to wish happy holidays to our more than 6,000 employees around the world and thank you for your amazing dedication and hard work. I'm always amazed by the passion and commitment of our crews and staff to safety and getting the job done. I hope you each get a chance to rest up, as it should be a busy year ahead. With that, we can open the call to questions. Operator?

Speaker #1: I'm always amazed by the passion and commitment of our crews and staff to safety and getting the job done. I hope each of you gets a chance to rest up, as it should be a busy year ahead.

Speaker #1: With that, we can open the call to questions. Operators?

Speaker #3: Thank you. If you would like to ask a question, please press *11. If your question has been answered and you'd like to remove yourself from the queue, please press *11 again.

Operator: Thank you. If you would like to ask a question, please press star 11. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again. One moment while we compile the Q&A roster. Our first question comes from Donangelo Volpe with Beacon Securities. Your line is open.

Speaker #3: One moment while we compile the Q&A roster. And our first question comes from Donangelo Volp with Beacon Securities. Your line is open.

Speaker #4: Hey, good morning, guys. Congratulations on the results. Strong print. I just wanted to highlight the candidate here—Canadian revenues. I think they're up about 63% year over year.

Donangelo Volpe: Hey, good morning, guys. Congratulations on the results. Strong print. Just wanted to highlight the Canadian revenues. I think they were up about 63% year over year. Majority of the peers reflected year-over-year declines in Canada through the July through September period. Just wondering if momentum kind of accelerated throughout the quarter and you guys finished with a strong October, or was it kind of a function of pricing dynamics that led to the strong year-over-year improvement?

Speaker #4: The majority of the peers reflected year-over-year declines in Canada through the July to September period. I'm just wondering if momentum kind of accelerated throughout the quarter, and whether you guys finished with a strong October, or if it was more a function of pricing dynamics that led to the strong year-over-year improvement?

Speaker #1: Yeah, it was pretty much throughout the quarter, and driven, yes, by pricing dynamics. As I said, we've had strategic market initiatives that we put in place to gain market share, and obviously, it worked.

Denis Larocque: Yeah, it was pretty much throughout the quarter and driven by pricing dynamics. As I said, we've had strategic market initiatives that we put in place to gain market share and obviously work. Basically, the idea is to be positioned on key projects going forward as we see, as we said, as we see good activity coming up in the future.

Speaker #1: And basically, the idea is to be positioned on key projects going forward, as we see, as we said, good activity coming up in the future.

Speaker #4: Okay, thank you. And then just pivoting over to kind of the junior financings, I usually look at the TSX. So October was a record-setting month in terms of the financings.

Donangelo Volpe: Okay, thank you. And then just pivoting over to kind of the junior financings, I usually look at the TSXV. So October was a record-setting month in terms of financings. It's now up 74% year-over-year on a year-to-date basis, and highest level we've seen in the last decade. So I'm just wondering how you view the pipeline for juniors heading into calendar 2026 on the back of these financings, and if you're starting to see any improvements in activity levels now that we're kind of, let's call it the halfway point through December?

Speaker #4: It's now up 74% year-over-year on a year-to-date basis, and at the highest level we've seen in the last decade. So, I'm just wondering how you view the pipeline for juniors heading into calendar 2026 on the back of these financings, and if you're starting to see any improvements in activity levels now that we're kind of, let's call it the halfway point through December.

Speaker #1: Yeah, the level of discussion has certainly increased. It's still early because, as we said, there's always a lag of about six months. Sometimes it could be a bit longer, or it could be shorter, but usually, on average, it takes six months between the time that money is raised and the time it gets deployed, with all the logistics and everything.

Denis Larocque: Yeah. The level of discussion has certainly increased. It's still early because, as we said, there's always a lag of like six months. Sometimes it could be a bit longer or it could be shorter, but usually, on average, it takes six months between the time that money is raised and the time it gets deployed with all the logistics and everything. But we've certainly seen an increase in discussions, phone calls, and things like that. So we certainly see activity bubbling right now.

Speaker #1: But we've certainly seen an increase in discussions and phone calls and things like that. So we certainly see activity bubbling right now.

Speaker #4: Okay, good to hear. And then, final question from me, and then I'll pass the line. Just to understand, direct costs are increasing in preparation for elevated activity levels for a busy calendar in 2026.

Donangelo Volpe: Okay, good to hear. And then final question for me, and then I'll pass the line. Just, I understand that direct costs are increasing in preparation for elevated activity levels for a busy calendar 2026. We've kind of seen an uptick in salaries and benefits, as well as materials and consumables. Just wondering if we're approaching a level that you're starting to feel prepared for the upcoming bump in activity, or do we still have a little bit of room to grow here?

Speaker #4: We've kind of seen an uptick in salaries and benefits, as well as materials and consumables. Just wondering if we're approaching a level that you're starting to feel prepared for the upcoming bump in activity, or do we still have a little bit of room to grow here?

Speaker #1: Well, the third quarter is always a time where there's a lot of activity that happens that way, right? We bring in, first of all, the rigs that have been busy during the year; we bring them in the shop to do the maintenance, the yearly maintenance on them and everything.

Denis Larocque: Well, the third quarter is always a time where there's a lot of activity that happens that way, right? We bring in, first of all, the rigs that have been busy during the year. We bring them in the shop to do the maintenance, the yearly maintenance on them and everything. But at the same time, that's the time where, as we forecast the level of activity, that's where we bring in more rigs that have been parked just to give them a bit of a cleanup or get them ready. And so that's where you have a little bit of extra cost. So every time that we have a pickup in activity coming, we usually see a bit of a pickup in the third quarter from these types of costs.

Speaker #1: But at the same time, as we forecast the level of activity, that's where we bring in more rates that have been parked, just to give them a bit of a cleanup or get them ready.

Speaker #1: And so that's where you have a little bit of extra cost. Every time that we have a pickup in activity coming, we usually see a bit of a pickup in the third quarter from these types of costs.

Speaker #1: But the good news is that the investments we've made in our fleet over the last few years, while we were in the downturn and keeping our fleet fresh and everything, that's where it's going to pay off because we can pull rates out and have rates ready very quickly and not have to rebuild or replace all kinds of parts that have been stripped off of them or things like that.

Denis Larocque: But the good news is that the investments we've made in our fleet over the last few years, while we were in the downturn and keeping our fleet fresh and everything, that's where it's going to pay off because we can pull rigs out and have rigs ready very quickly and not have to rebuild or replace all kinds of parts that have been stripped off of them or things like that. So the cost is going to be very reasonable, but it's just when you've got an uptick of activity that happens, there's a lot of that happening and a lot of upfront hiring, mobilization, and things like that. So upfront, there's always upfront costs, and then things take off after that.

Speaker #1: So the cost is going to be very reasonable, but it's just when you've got an uptick in activity that happens, there's a lot of that happening and a lot of upfront hiring and mobilization and things like that.

Speaker #1: So, upfront, there's always upfront costs, and then things take off after.

Speaker #1: that.

Speaker #4: Okay, awesome. Thanks for all the color.

Donangelo Volpe: Okay, awesome. Thanks for all the color there, Denis. Congratulations on the results again, guys. I'll hop back in the queue.

Speaker #4: There, Denis. Queue. And congratulations on the thank you.

Speaker #4: Results again, guys. I'll hop back in the.

Denis Larocque: Thank you.

Speaker #3: Thank you. Our next question comes from James Vale. With Arcadia Advisors, your line is open.

Speaker #3: Thank you. Our next question comes from James Vale. With Arcadia Advisors, your line is open. Good morning.

Operator: Thank you. Our next question comes from James Vale with Arcadia Advisors. Your line is open.

James Vale: Good morning. Great, great call. I've got two nitpick questions. In the income statement, you highlight some extra income that could come in over the course of the year. One was foreign exchange, and I forget what the other one was. But how will that play into future earnings, or is that just an accounting issue?

Speaker #5: Great call. I've got two nitpick questions. In the income statement, you highlight some extra income that could come in over the course of the year.

Speaker #5: One was foreign exchange, and I forget what the other one was. But how will that play into future earnings, or is that just an accounting?

Speaker #5: issue? Sorry,

Denis Larocque: Sorry, Jim, you're really bold with coming in the middle. You said there's a line on we didn't get the.

Speaker #1: Really bold with coming in low. You said there's a line on—we, Jim, you didn't get that.

James Vale: You showed net income, and then you showed extra income, which was foreign exchange gains of like CAD 7 million. And then there was another total of that account came to CAD 10 million, Canadian, I guess. I mean, how does that come into earnings? Is that cash, or is it just accounting?

Speaker #5: You showed net income, and then you showed extra income, which was foreign exchange gains of about $7 million. Then there was another— the total of that account came to $10 million Canadian, I guess.

Speaker #5: I mean, how does that come into earnings? Is that cash, or is it just accounting?

Speaker #1: Are you looking at the other comprehensive earnings section?

Denis Larocque: Are you looking at the other comprehensive earnings section?

James Vale: Yes.

Speaker #1: Yeah. Oh, that doesn't—yes—flow through the P&L.

Denis Larocque: Yeah. That doesn't flow through the P&L.

Speaker #5: Oh, okay. All right.

James Vale: Oh, okay.

Speaker #1: Yeah, that accounting—yeah, a lot of that is just like the variation of, for example, the equipment that's denominated in U.S. dollars, like the value of that equipment.

Denis Larocque: Yeah.

James Vale: That's accounting.

Denis Larocque: Yeah. A lot of that is just the variation of, for example, the equipment that's denominated in US dollars, the value of that equipment. But it's not a P&L there.

Speaker #1: But it's not a P&L

Speaker #1: there. Okay, thank you.

James Vale: Okay, thank you. Now, my second question becomes, you mentioned a new accounting standard that you're examining to see how it's going to affect the company. I read that and concluded it was, excuse me, it was just written by lawyers. I had no idea what it means. Can you help me with that?

Speaker #5: Now, my second question becomes, you mentioned a new accounting standard that you're examining to see how it's going to affect the company. And I read that and concluded it was—excuse me—it was just written by lawyers.

Speaker #5: I had no idea what it means. Can you help me with that?

Speaker #1: Yeah, for sure. There's just some new presentation for the P&L that will be coming into effect, and a different breakout of different accounts. For us, we don't think it's going to have a material impact at this stage.

Denis Larocque: Yeah, for sure. There's just some new presentation for the P&L that will be coming into effect and different breakout of different accounts. For us, we don't think it's going to have a material impact at this stage, and it's not until fiscal 2028 that these changes need to go into effect. So we're just in the initial stages of reviewing those now, but we don't expect it to have a material impact.

Speaker #1: And it's not until fiscal 2028 that these changes need to go into effect. So we're just in the initial stages of reviewing those now, but we don't expect to have a material impact.

Speaker #1: impact.

Speaker #5: Okay, that's great

James Vale: Okay, that's great stuff. All right, thank you. Enjoy a Noel.

Speaker #5: Stuff. All right, thank you, and enjoy your.

Speaker #5: our Noel. Same to you,

Denis Larocque: Same to you, Tim.

Speaker #1: Tim.

Speaker #3: Thank you. As a reminder, to ask a question, please press star 11. Our next question comes from Brett Kearney, with American Rebirth Opportunity Partners. Your line is open.

Operator: Thank you. As a reminder, to ask a question, please press star 11. Our next question comes from Brett Kearney with American Rebirth Opportunity Partners. Your line is open.

Speaker #6: Hi, guys. Good morning. Thanks for taking my question.

Brett Kearney: Hi guys, good morning. Thanks for taking my question.

Speaker #1: Good morning. Good

Denis Larocque: Morning. Good morning.

Speaker #1: morning. Yeah, Denis, as you

Brett Kearney: Yeah, Denis, as you noted, the whole world's focused on critical minerals. You guys obviously have been ahead of the curve, expanding and upgrading the fleet the past several years. As we look ahead to calendar 2026, how do you think about the allocation of the fleet by geography, customer type? How much will you lock up with senior customers relative to a potential wave you see coming with juniors following the recent financings to maximize economics and returns for yourself?

Speaker #6: Noted, the whole world's focused on critical minerals. You guys obviously have been ahead of the curve, expanding and upgrading the fleet the past several years.

Speaker #6: As we look ahead to calendar 2026, how do you think about the allocation of the fleet by geography, customer type, and how much will you lock up with senior customers relative to a potential wave you see coming with juniors following the recent financings to maximize economics and returns for yourself?

Speaker #1: Yeah, that's a good question. Basically, first, the fleet is, I would say, well-positioned in terms of geography, but we can only move—we can always move rates if need be. However, we do have the fact that we're still in the 50% utilization rates. We do have capacity for branches.

Denis Larocque: Yeah. That's a good question. Basically, first, the fleet is, I would say, well-positioned in terms of geography, but we can always move rigs if need be. But we do have the fact that we're still in the 50% utilization rates. We do have capacity branches. As demand comes, we fill that demand with either adding rigs or just moving rigs around. So on that part, I feel really good and comfortable. On the contracts, and like you said, in terms of locking how we will play the seniors versus juniors versus, frankly, the thing that we're trying to avoid is to lock ourselves up in long-term contracts because at this point, the labor cost is highly unpredictable, material cost, and all these things. Those are going to fluctuate with the cycle. And so therefore, really, the contracts are de facto lots of times short-term.

Speaker #1: As demand comes, I feel that demand would either add to rates or just move rates around. So, on that part, I feel really good and comfortable.

Speaker #1: On the contracts, and like you said, in terms of how we will play the seniors versus juniors, frankly, the thing we're trying to avoid is locking ourselves up in long-term contracts.

Speaker #1: Because at this point, labor costs are highly unpredictable. Material costs, all these things, those are going to fluctuate with the cycle. And so therefore—really, the contracts are de facto, lots of times, short-term.

Speaker #1: So just for that reason, you end up kind of maximizing; you lock yourself into good contracts as the cycle lifts. We basically will price the jobs accordingly.

Denis Larocque: So just for that reason, you end up kind of maximizing. You lock yourself into good contracts as the cycle lifts. We basically will price the jobs accordingly. And it's a factor of availability of rigs, availability of crews. And as those get tighter, that's where the prices typically go up because there's a whole lot more. I always tell our managers a lot more headaches that come with that. And therefore, you need a higher price to basically be able to handle all these additional issues.

So just for that reason, you end up kind of maximizing. You lock yourself into good contracts as the cycle lifts. We basically will price the jobs accordingly. And it's a factor of availability of rigs, availability of crews. And as those get tighter, that's where the prices typically go up because there's a whole lot more. I always tell our managers a lot more headaches that come with that. And therefore, you need a higher price to basically be able to handle all these additional issues.

Speaker #1: And it's a factor of availability of rates, availability of crews, and as those get tighter, that's where the prices typically go up because there's a whole lot more— I always tell our managers, a lot more headaches that come with that.

Speaker #1: And therefore, you need a higher price to basically be able to handle all these additional.

Speaker #6: That's very helpful. Congrats to you and the team. In the past year, and good luck in the year ahead.

Brett Kearney: That's very helpful. Congrats to you and the team on the past year and good luck in the year ahead.

Speaker #1: Thank you.

Denis Larocque: Thank you.

Speaker #3: Thank you. Our next question comes from James Vale with Arcadia Advisors. Your line is open.

Operator: Thank you. Our next question comes from James Vale with Arcadia Advisors. Your line is open.

Speaker #5: I promise this is the last question. It kind of follows up to the previous question. Given the 707 rigs, what is the effective top capacity utilization you would experience before you have to make some major capital spending decisions?

James Vale: I promise this is the last question. It kind of follows up to the previous question. Given the 707 rigs, what is the effective top capacity utilization you would experience before you have to make some major capital spending decisions?

Speaker #1: Yeah. Well, it's not necessarily in terms of—in aggregate, it's more market by market where those decisions are made. So in other words, if I don't know if in Argentina there was a big boom all of a sudden in the decision to move rigs or buy rigs, sometimes, if things are busy everywhere else, you want to preserve your capacity. You might end up buying a bunch of rigs even though the global fleet might only be at, I don't know, 60%.

Denis Larocque: Yeah. Well, it's not necessarily in terms of an aggregate. It's more market by market where those decisions are made. So in other words, I don't know if in Argentina there was a big boom all of a sudden and the decision is to move rigs or buy rigs. Sometimes if things are busy everywhere else, you want to preserve your capacity; you might end up buying a bunch of rigs, even though the global fleet might only be at, I don't know, 60%. But we always say, though, that the maximum utilization that we can achieve with the total fleet is in the range of 75% to 80% just because there's always rigs being mobilized. There's seasonal factors. There's different types of rigs. So for us, 75% to 80% is the highest.

Speaker #1: But.

Speaker #5: Okay.

Speaker #1: We Right.

Speaker #1: We always say, though, that the maximum utilization we can achieve with the total fleet is in the range of 75% to 80%, just because there are always rigs being mobilized.

Speaker #1: There are seasonal factors, and there are different types of rigs. For us, 75% to 80% is the highest, and if we reach that, that's where we would be if the demand is still booming and we are able to prove that we would most likely be adding rigs at that point.

Denis Larocque: Once we reach that, that's where, yeah, we would be if the demand is still booming and we are able to prove, then we would most likely be adding rigs at that point. Again, it all depends on the economics, but yeah.

Once we reach that, that's where, yeah, we would be if the demand is still booming and we are able to prove, then we would most likely be adding rigs at that point. Again, it all depends on the economics, but yeah.

Speaker #1: Again, it all depends on the economics, but yeah.

Speaker #5: Okay. Well, thank you very much. And, like I said, this is my last.

James Vale: Well, thank you very much. Like I said, this is my last question.

Speaker #5: question. Thank

Denis Larocque: Thank you.

Speaker #1: you.

Speaker #3: Thank you. There are no further questions at this time. I'd like to turn the call back over to Denis Leroque for closing remarks.

Operator: Thank you. There are no further questions at this time. I'd like to turn the call back over to Denis Larocque for closing remarks.

Speaker #1: Well, thank you. Thank you, everybody. And Merry Christmas and happy holidays to everyone.

Denis Larocque: Well, thank you. And thank you, everybody. And Merry Christmas and happy holidays to everybody.

Operator: Thank you for your participation. This does conclude the program. You may now disconnect. Good day.

Q2 2026 Major Drilling Group International Inc Earnings Call

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