Canadian contractor Major Drilling International “appears well positioned” for a record calendar 2026 and fiscal 2027, according to Red Cloud Securities, despite continuing pressure on margins.
The Toronto-based investment firm cited its “improved outlook on global exploration activities” and positive view of Major’s underlying performance for its call on the driller, which recently reported a 15% year-on-year increase in third-quarter revenue to C$184.6 million but a 34% yoy fall in EBITDA to $5.1 million.
Major blamed higher mobilisation, labour, supplies and fleet maintenance costs in preparation for what CEO Denis Larocque predicted to be a “much busier year” ahead for the earnings squeeze.
“Although [2026] Q3 results were weaker than expected revenues increased more than anticipated, signalling a strengthening in activity across all markets,” Red Cloud said, highlighting in particular Major’s robust North America revenue growth.
“With the weakest quarter of the fiscal year in the rear-view mirror we are expecting sustained revenue growth and margin expansion beginning in FY27.
“Margin compression may linger in Q4/26 as ramp-up continues to meet robust demand [but] with strong metal prices, healthy junior financing activity and expanding exploration budgets from the majors, we continue to like the Major Drilling story.”
Larocque said the latest TSX Market Intelligence Report indicated equity capital raised by mining companies on the main and venture Toronto boards in 2025 rose by more than 53% yoy to nearly $16 billion.
“With the pace and size of these financings continuing to accelerate through the end of the year and into 2026, these funds are expected to increasingly be deployed over the coming quarters and years,” he said.
“Additionally, many of our senior mining customers have recently released sharply higher exploration budgets for calendar 2026 as they are now being rewarded for growing reserve bases and remain well supported by very strong precious and base metal prices.”
Larocque said the company used its strong balance sheet to be as “prepared as possible for what we anticipate will be growing levels of demand throughout the calendar year”.
“While the third fiscal quarter is traditionally the weakest of the year as customers pause operations for the holiday season, we completed several preparatory initiatives, including retaining and hiring additional crews through the holiday season as labour is expected to represent the largest challenge in the industry as activity levels increase,” he said.
“We also proactively ordered additional supplies in order to minimise the impact of any potential future supplier delays, as demand for these items increases, and completed additional maintenance on equipment beyond what would typically be done in the quarter, to maximise the availability of rigs and support equipment.”
Major’s share price dipped nearly 10% after it posted its latest financials, giving it a market capitalisation of about $1.36 billion.
