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Major Drilling Group International, the world’s largest drilling services provider to the mining sector, posted a 14.9% year-on-year revenue increase to C$184.6 million for its fiscal third quarter ended 31 January 2026, according to results released on 25 February — but missed analyst expectations on both the top and bottom line as aggressive spending to prepare for an anticipated exploration surge weighed on profitability.
Revenue Grows, Margins Compress
The Moncton, New Brunswick-based company reported a net loss of C$10.8 million, or C$0.13 per share, compared with a net loss of C$9.1 million a year earlier. Revenue came in below the C$189.1 million consensus tracked by Investing.com, while the loss per share of C$0.13 was far wider than the C$0.03 loss analysts had forecast. Despite the miss, shares rose 1.8% in after-hours trading, according to Investing.com, as investors focused on the forward outlook.
The quarter’s most striking deterioration was in adjusted gross margin, which fell to 14.3% from 19.5% a year ago — a 5.2 percentage point contraction the company attributed to front-loaded costs in its earnings release. CEO Denis Larocque said the firm had “aggressively prepared for what is shaping up to be a very busy year,” retaining and hiring crews through the holiday season and completing additional equipment maintenance beyond normal levels. CFO Ian Ross added that the company had “proactively ordered additional supplies in order to minimise the impact of any potential future supplier delays” as industry-wide demand for parts accelerates.
North America Surges, Australasia Falters
Regional performance was sharply uneven, according to the company’s segmented results. Canada and United States operations delivered the standout result, with revenue surging 56.7% year-on-year to C$67.4 million as programme extensions ran deeper into December and strategic hiring initiatives bore fruit. South and Central American revenue edged up 4.2% to C$78.5 million, driven by growth in Peru, Colombia and Brazil but partly offset by contract terminations in Chile and Argentina aimed at repositioning the region for higher-margin work.
Australasia and Africa, by contrast, contracted 8.7% to C$38.7 million. The company attributed the decline to a slowdown with its largest customer in Indonesia following a mine incident in the prior quarter, though it expects activity to recover to pre-incident levels by fiscal year-end. The region’s gross margin fell to 6.6% from 10.3% a year earlier.
Mining Capital Flood Sets Up Deployment Cycle
The bullish case for the coming quarters rests on a wave of capital entering the mining sector. Larocque cited the most recent TSX Market Intelligence Report showing that mining companies listed on the Toronto Stock Exchange and TSX Venture Exchange raised nearly C$16 billion in equity in 2025, an increase of more than 53% — a figure independently confirmed by TMX Group’s 26 February disclosure ahead of the PDAC 2026 convention. Gold accounted for 39% of Major Drilling’s quarterly revenue, copper for 32%, iron ore for 8% and silver for 6%, according to the earnings call transcript, reflecting the commodity price tailwinds underpinning the cycle: gold is trading above US$5,200 per ounce, according to JM Bullion, and copper near all-time highs.
Junior exploration companies — historically the most sensitive leading indicator of drilling demand — rose to 10% of Major Drilling’s quarterly revenue, up from 8% in the prior quarter and 6% a year ago, according to CFO Ross’s commentary during the 26 February earnings call. Larocque said many senior mining customers had recently released “sharply higher exploration budgets” for calendar 2026, rewarded by the market for growing their reserve bases.
Fleet Tightens as Labour Squeeze Persists
Capital expenditure totalled C$10.3 million for the quarter, down from C$12.6 million a year earlier, with Ross telling analysts during the earnings call that an uptick is expected in the fourth quarter though spending will come in below the C$70 million full-year target. The company added new drill rigs and support equipment while accelerating fleet optimisation by disposing of 13 older units, reducing the total fleet to 697 rigs.
Labour availability remains the industry’s binding constraint. Major Drilling has been hiring and training crews ahead of demand, but Ross cautioned in the earnings release that “although margins are expected to expand as we progress through the year, the pace of margin improvement is anticipated to lag revenue growth.” The company expects to deploy rigs at incrementally higher prices through 2026, with the strongest exploration spending growth concentrated in Canada and the United States and more gradual increases elsewhere — a pattern consistent with the renewed exploration push in Canadian provinces like Quebec.
Board Appointment and Outlook
Major Drilling announced the appointment of Shannon McCrae to its board of directors, effective 25 February. McCrae is a professional geologist with more than 25 years of experience spanning early-stage exploration to mine-site operations. She previously held the role of Director of Exploration and Growth at Barrick Gold and has served on the boards of Gold Fields, Boart Longyear and Probe Gold, according to the company’s press release — a governance addition signalling the firm’s orientation toward the discovery-stage exploration cycle now underway.
The fiscal third quarter is traditionally Major Drilling’s weakest, as clients pause programmes over the holiday period. Management’s central thesis — that record commodity prices, surging TSX fundraising and expanding exploration budgets will translate into a materially busier 2026 — now faces a practical test in the fourth quarter and beyond. Investors will be watching whether the margin compression that accompanied this quarter’s preparatory spending proves temporary or becomes structural as labour costs continue to rise across the drilling sector.
