MAJOR DRILLING $7.38 (Toronto symbol MDI; TSINetwork Rating: Speculative) (1-866- 264-3986; www.majordrilling.com; Shares outstanding: 79.2 million; Market cap: $584.2 million; Dividend yield: 2.7%) is a large contract-drilling firm that mainly serves the mining industry.
In the quarter ended July 31, 2013, Major’s revenue fell 54.4%, to $108.2 million from a record $237.6 million a year ago. Earnings also fell sharply, to $1.5 million, or $0.02 a share, from $31.9 million, or $0.40.
The latest earnings included $2.0 million of one-time restructuring charges, including layoff-related costs. Major has cut its staff by 45%, or 2,300 workers, in the past year.
Even with uncertain resource markets, which have caused a significant industry downturn, Major reported cash flow of $0.24 a share in the latest quarter. That should let it maintain its semi-annual dividend of $0.10, which gives the stock a 2.7% yield.
Major’s results could remain weaker for the rest of this year, but its longer-term outlook is positive.
Major Drilling is still a buy.
