EDMONTON, May 11, 2017 /CNW/ - McCoy Global
Inc. ("McCoy" or "the Corporation") (TSX:MCB) today
announced its operational and financial results for the three
months ended March 31, 2017.
Quarterly Highlights
- Revenue of $10.2 million, a
67% increase from Q4 2016;
- New customer orders of $14.8
million, a 128% increase from Q4 2016;
- Backlog of $8.1 million, a
119% increase from December 31, 2016;
and
- Achievement of cost reduction initiatives
"Improving market fundamentals encouraged customers to purchase
both capital equipment and aftermarket products and services, which
resulted in a 128% increase in customer orders and a 67% increase
in revenue from the fourth quarter of 2016. This increase in
revenue along with an organization wide commitment to cost
reduction, resulted in McCoy achieving positive adjusted EBITDA in
the quarter," said Jim Rakievich,
President and CEO of McCoy Global. "We also made progress during
the quarter in enhancing our technology platforms. Early in the
quarter we welcomed the employees from recently acquired 3PS to our
team and are encouraged by their capabilities and the outlook for
data acquisition technologies. In addition, we progressed on a
number of new product initiatives that are now in various stages of
development and we look forward to bringing these to market over
the next several quarters."
Operational Summary
Since January 1, 2017, McCoy
Global reported:
- An increase in customer orders and backlog from the fourth
quarter of 2016. New customer orders increased to $14.8 million, up from $6.5 million from Q4 2016 and backlog increased
to $8.1 million, compared to
$3.7 million at December 31, 2016;
- The strategic asset acquisition of 3PS, Inc. ("3PS"), a company
specialized in sensors, systems and services for several heavy
industry applications, including Torque and Tension Sub ("TTS")
technology. The acquisition positions McCoy as a global leader in
TTS technology, enhances McCoy's capabilities in data acquisition
and sensor technologies and will contribute valuable design and
engineering expertise. During the quarter, the rapid integration of
3PS with McCoy commenced, with significant progress made toward
integration of all core aspects of the 3PS business with
McCoy;
- Plans to continue to reduce the Corporations operating model
cost structure. This includes:
-
- discontinuing manufacturing at McCoy's Edmonton production facility through
outsourcing of manufactured components to approved suppliers and
moving towards an assembly production model; and
- transitioning TTS and data acquisition technologies produced at
McCoy's Edmonton production facility to the
Austin production facility that
was acquired as part of the 3PS acquisition
- Revenue of $10.2 million,
compared to $7.2 million in Q1
2016;
- Net loss of $3.6 million,
compared to net loss of $9.4 million
in Q1 2016. The $3.6 million loss
includes $1.0 million in
restructuring charges, $0.3 million
in impairment charges and $0.5
million in other losses;
- Nominal Adjusted EBITDA1, compared to ($4.1 million) in Q1 2016; and
- Book-to-bill ratio3 of 1.46 for the three months
ended March 31, 2017, compared to
1.04 for the three months ended December 31,
2016
Quarterly Financial Summary
Revenue for the three months ended March
31, 2017 was $10.2 million, a
67% increase from the fourth quarter of 2016 and a 43% increase
from Q1 2016. Improving industry fundamentals resulted in an
increase in customers converting open quotations to purchase
orders. During the first quarter of 2017, customer orders increased
by 128% to $14.8 million from the
fourth quarter of 2016. This resulted in an increase in
revenue in both capital equipment and aftermarket products and
services and was realized in North
America and certain international markets. In addition, part
of the increase in revenue pertains to the acquisition of 3PS.
Gross profit percentage for the three months ended March 31, 2017 increased 38 percentage points
from the first quarter of 2016. Gross profit was positively
impacted by the increase in revenues realized from product and
service sales and the utilization of spare production capacity
which reduced the impact of under-absorption.
G&A expense for the three months ended March 31, 2017 was $2.1
million, a $1.0 million
decrease from the first quarter of 2016. The decrease is largely a
result of the successful implementation of restructuring
initiatives and continued spending discipline
Sales and marketing expense for the three months ended
March 31, 2017 was $0.9 million, which was consistent with the
comparative quarter.
Research and development costs increased in the first quarter of
2017 to $0.9 million, from
$0.4 million in the comparative
period. The acquisition of 3PS enhanced McCoy's engineering team which will contribute
valuable sensor technology expertise. In addition,
development and prototype costs were incurred, as several
technology projects progressed and reached critical design testing
phases.
Net loss for the three months ended March
31, 2017 was $3.6 million
($0.13 loss per basic share),
compared to net loss of $9.4 million
($0.34 loss per basic share) in the
first quarter of 2016.
Adjusted EBITDA1 for the three months ended
March 31, 2017 was $0.02 million compared to ($4.1 million) in the first quarter of 2016.
Adjusted EBITDA was positively impacted by improving industry
fundamentals and cost containment initiatives.
During the first quarter of 2016, the Corporation cancelled its
operating line of credit and entered into a new credit facility to
finance the acquisition of 3PS. The Corporation borrowed
$6.0 million under the facility,
which is the only debt that the Corporation has outstanding.
At March 31, 2017, the Corporation
had $21.2 million in cash and cash
equivalents, of which $2.5 million is
restricted per the conditions of the credit facility.
Selected Quarterly Information
|
($000 except per
share amounts and percentages)
|
Q1 2017
|
Q1 2016
|
% Change
|
|
Total
revenue
|
10,214
|
7,159
|
43
|
|
Gross
profit
|
1,845
|
(1,429)
|
234
|
|
as a percentage of
revenue
|
18
|
(20)
|
39
|
|
Net loss
|
(3,576)
|
(9,377)
|
63
|
|
per common share –
basic
|
(0.13)
|
(0.34)
|
62
|
|
per common share
–diluted
|
(0.13)
|
(0.34)
|
62
|
|
Adjusted
EBITDA1
|
15
|
(4,137)
|
102
|
|
per common share –
basic
|
0.00
|
(0.15)
|
100
|
|
per common share –
diluted
|
0.00
|
(0.15)
|
100
|
|
Total
assets
|
73,028
|
95,265
|
(23)
|
|
Total
liabilities
|
17,215
|
10,441
|
65
|
|
Total non-current
liabilities
|
3,475
|
428
|
712
|
|
1 EBITDA
is calculated under IFRS and is reported as an additional subtotal
in the Corporation's consolidated statements of cash flows. EBITDA
is defined as net (loss) earnings, before finance charges, net;
income tax expense (recovery); depreciation; and amortization.
Adjusted EBITDA is a non-GAAP measure defined as net (loss)
earnings, before: finance charges, net; income tax expense
(recovery); depreciation; amortization; impairment losses;
restructuring charges; other (gains) losses, net; inventory excess
and obsolete charges; and share-based compensation. The Corporation
reports on EBITDA and adjusted EBITDA because they are key measures
used by management to evaluate performance. The Corporation
believes adjusted EBITDA assists investors in assessing McCoy
Global's current operating performance on a consistent basis
without regard to non-cash or non-recurring items that can vary
significantly depending on accounting methods or non-operating
factors. Adjusted EBITDA is not considered an alternative to net
(loss) earnings in measuring McCoy Global's performance. Adjusted
EBITDA does not have a standardized meaning and is therefore not
likely to be comparable to similar measures used by other issuers.
For comparative purposes, in previous financial disclosures
'adjusted EBITDA' was defined as "net (loss) earnings before
finance charges, net, income tax expense (recovery), depreciation,
amortization, impairment losses, restructuring charges, non-cash
changes in fair value related to derivative financial instruments
and share-based compensation. The Corporation revised its
definition of adjusted EBITDA in the fourth quarter of 2016, as
management believes the revised metric provides a better measure
for assessing McCoy Global's current operating performance without
regard to inventory excess and obsolete charges and other gains or
losses, net; which are non-cash or non-recurring in nature.
Adjusted EBITDA should not be used as an exclusive measure of cash
flow since it does not account for the impact of working capital
changes, capital expenditures, debt changes and other sources and
uses of cash, which are disclosed in the consolidated statements of
cash flows.
|
|
|
2 The
Corporation defines backlog as orders that have a high certainty of
being delivered and is measured on the basis of a firm customer
commitment, such as the receipt of a purchase order. Customers may
default on or cancel such commitments, but several are secured by a
deposit and/or require reimbursement by the customer upon default
or cancellation. Backlog reflects likely future revenues; however,
cancellations or reductions may occur and there can be no assurance
that backlog amounts will ultimately be realized as revenue, or
that the Corporation will earn a profit on backlog once fulfilled.
Expected delivery dates for orders recorded in backlog historically
spanned from one to six months. Under current market conditions
many customers have shifted their purchasing habits towards a
just-in-time model and to standard capital equipment and
aftermarket parts and consumables that are carried in finished
goods inventory, which typically move through backlog quicker than
more complex custom orders that require longer production lead
times.
|
|
|
3 The
book-to-bill ratio is a measure of the amount of net sales orders
received to revenues recognized and billed in a set period of time.
The ratio is an indicator of customer demand and sales order
processing times. The book-to-bill ratio is not a GAAP measure and
therefore the definition and calculation of the ratio will vary
among other issuers reporting the book-to-bill ratio. McCoy Global
calculates the book-to-bill ratio as net sales orders taken in the
reporting period divided by the revenues reported for the same
reporting period.
|
Conference Call Information
McCoy Global will host a conference call and webcast at
9:00 a.m. Mountain Time (11:00 a.m. Eastern Time) on May 11, 2017. Management participants will
include: Jim Rakievich, President
& CEO; Jacob Coonan, Senior Vice
President and CFO; Kenny Watt,
Senior Vice President, Sales and Technology; and Suzanne Langier, Senior Vice President,
Corporate Services, People and Culture.
Participants calling from Canada or the United
States should call toll-free at: 1-888-231-8191. Callers
from other locations may call in at: 1-647-427-7450. A live audio
webcast of the conference call will be available at the following
link:
http://event.on24.com/r.htm?e=1415156&s=1&k=1B36100A51E6A555731F900FF773991D
The conference call will be archived for replay until
Thursday, May 18, 2017 at midnight.
To access the archived conference call, dial 1-855-859-2056 or
1-416-849-0833 and enter the replay passcode 12909263.
About McCoy
McCoy provides innovative
products and services to the global energy industry. The
Corporation operates internationally through direct sales and
distributors with operations in Canada, the United
States of America, the United
Kingdom, Singapore and the
United Arab Emirates. McCoy's corporate headquarters are located in
Edmonton, Alberta, Canada.
Forward-Looking Information
This News Release contains forward looking statements and
forward looking information (collectively referred to herein as
"forward looking statements") within the meaning of applicable
Canadian securities laws. All statements other than statements of
present or historical fact are forward looking statements. Forward
looking information is often, but not always, identified by the use
of words such as "could", "should", "can", "anticipate", "expect",
"objective", "ongoing", "believe", "will", "may", "projected",
"plan", "sustain", "continues", "strategy", "potential",
"projects", "grow", "take advantage", "estimate", "well positioned"
or similar words suggesting future outcomes. This New Release
contains forward looking statements respecting the business
opportunities for the Corporation that are based on the views of
management of the Corporation and current and anticipated market
conditions; and the perceived benefits of the growth strategy and
operating strategy of the Corporation are based upon the financial
and operating attributes of the Corporation as at the date hereof,
as well as the anticipated operating and financial results. Forward
looking statements regarding the Corporation are based on certain
key expectations and assumptions of the Corporation concerning
anticipated financial performance, business prospects, strategies,
the sufficiency of budgeted capital expenditures in carrying out
planned activities, the availability and cost of labour and
services and the ability to obtain financing on acceptable terms,
which are subject to change based on market conditions and
potential timing delays. Although management of the Corporation
consider these assumptions to be reasonable based on information
currently available to them, they may prove to be incorrect. By
their very nature, forward looking statements involve inherent
risks and uncertainties (both general and specific) and risks that
forward looking statements will not be achieved. Undue reliance
should not be placed on forward looking statements, as a number of
important factors could cause the actual results to differ
materially from the beliefs, plans, objectives, expectations,
anticipations, estimates and intentions expressed in the forward
looking statements, including inability to meet current and future
obligations; inability to complete or effectively integrate
strategic acquisitions; inability to implement the Corporation's
business strategy effectively; access to capital markets;
fluctuations in oil and gas prices; fluctuations in capital
expenditures of the Corporation's target market; competition for,
among other things, labour, capital, materials and customers;
interest and currency exchange rates; technological developments;
global political and economic conditions; global natural disasters
or disease; and inability to attract and retain key personnel.
Readers are cautioned that the foregoing list is not exhaustive.
The reader is further cautioned that the preparation of financial
statements in accordance with IFRS requires management to make
certain judgments and estimates that affect the reported amounts of
assets, liabilities, revenues and expenses. These judgments and
estimates may change, having either a negative or positive effect
on net earnings as further information becomes available, and as
the economic environment changes. The information contained in
this News Release identifies additional factors that could affect
the operating results and performance of the Corporation. We urge
you to carefully consider those factors. The forward looking
statements contained herein are expressly qualified in their
entirety by this cautionary statement. The forward looking
statements included in this News Release are made as of the date of
this New Release and the Corporation does not undertake and is not
obligated to publicly update such forward looking statements to
reflect new information, subsequent events or otherwise unless so
required by applicable securities laws.
SOURCE McCoy Global Inc.