EDMONTON, Nov. 9, 2017 /CNW/ - McCoy Global
Inc. ("McCoy", "McCoy Global" or "the Corporation")
(TSX:MCB) today announced its operational and financial results for
the three months ended September 30,
2017.
"During the quarter, we recorded orders of $11.8 million and continued to experience stable
quoting activity," said Jim
Rakievich, President and CEO of McCoy Global. "Revenue
generation and growth are top priorities, and we are actively
reviewing growth opportunities in the short-term and exploring
strategic opportunities that will enhance or accelerate our market
position over the longer-term.
"The company also announced the retirement of two long-standing
McCoy Directors, Mr. Frank Burdzy
and Mr. John Irwin," said Mr.
Chris Seaver, Chairman of the Board
of McCoy Global. "Both Frank and John were exceptional contributors
to our Board and, on behalf of the Board, the executive team and
our shareholders, we thank Frank and John for their service to
McCoy Global." The duties of the retired board members will be
assumed by the existing board members.
"Although 2017 has been an improvement over 2016, it has proven
to be another challenging year as our customers remain restrained
on capital spending," continued Jim
Rakievich, President and CEO. "All opportunities to improve
profitability while retaining our core business value and
capabilities remain a priority as we look toward 2018. Our team has
done an excellent job of transitioning McCoy to become a more
efficient and cost effective organization, while repositioning the
organization for future growth by providing data-based solutions
and advanced designs for critical well-bore construction products
and services."
Operational Summary
Since July 1, 2017, McCoy Global
reported:
- Revenue of $10.6 million,
compared to $7.1 million in Q3
2016;
- Net loss of $3.4 million,
compared to net loss of $3.1 million
in Q3 2016;
- Adjusted EBITDA1 of ($1.5
million), compared to ($2.4
million) in Q3 2016;
- Backlog2 of $6.8
million and customer orders of $11.8
million, compared to $3.3
million and $5.2 million,
respectively, in Q3 2016; and
- Book-to-bill ratio3 of 1.11, compared to 0.72 in Q3,
2016.
Quarterly Financial Summary
Revenue for the three months ended September 30, 2017 was $10.6 million, a 48% increase from Q3 2016.
Overall industry fundamentals have improved in 2017 resulting in an
increase in revenue, mainly driven by aftermarket opportunities,
strength in the western hemisphere and increased revenues from the
acquisition of 3PS Inc. ("3PS"). However, market instability
continues to create a challenging environment for customers, who
remain hesitant to commit to capital equipment orders.
Gross profit percentage for the three months ended September 30, 2017 increased 26 percentage points
from Q3 2016. Gross profit was positively impacted by the
restructuring measures undertaken by the Corporation to reduce its
production cost structure, higher revenues that increased the
absorption of production costs and positive product mix from sales
of higher margin data acquisition products and aftermarket
revenues. This was partially offset by the transitional impacts of
moving to an outsourced production model in Edmonton and customer pricing pressure.
Foreign exchange volatility continues to impact gross profit, and
in Q3 2017 a strengthening Canadian dollar had a negative impact on
gross profit.
G&A expense for the three months ended September 30, 2017 was $2.3 million, which is consistent with Q3 2016.
The Corporation's revenue has increased without a corresponding
increase in G&A and as a result, G&A expense has declined
as a percentage of revenue.
Sales and marketing expense for the three months ended
September 30, 2017 was $1.0 million, a 43% increase from Q3 2016. The
acquisition of 3PS and investments in sales and marketing efforts
to take advantage of revenue generation opportunities contributed
to higher sales and marketing expenses, which were partially offset
by restructuring initiatives in 2016 and continued discipline
around overhead spend.
Research and development costs increased in the three months
ended September 30, 2017 to
$0.7 million, from $0.1 million in Q3 2016. The increase is a result
of the acquisition of 3PS, which enhanced McCoy's engineering team,
and development and prototype costs that were incurred in 2017 as
several technology projects progressed and reached critical
milestones.
Net loss for the three months ended September 30, 2017 was $3.3 million ($0.12
loss per basic share), compared to net loss of $3.1 million ($0.11
loss per basic share) in Q3 2016.
Adjusted EBITDA1 for the three months ended
September 30, 2017 was ($1.5 million) compared to ($2.3 million) in Q3 2016.
At September 30, 2017, the
Corporation had $14.4 million in cash
and cash equivalents, of which $2.5
million is restricted. The Corporation also had $5.1 million in borrowings as at September 30, 2017.
Selected Quarterly Information
|
($000 except per
share amounts and percentages)
|
Q3 2017
|
Q3 2016
|
% Change
|
|
Total
revenue
|
10,563
|
7,137
|
48
|
|
Gross
profit
|
907
|
(1,182)
|
177
|
|
as a percentage of
revenue
|
9
|
(17)
|
26
|
|
Net loss
|
(3,390)
|
(3,094)
|
(9)
|
|
per common share –
basic
|
(0.12)
|
(0.11)
|
9
|
|
per common share
–diluted
|
(0.12)
|
(0.11)
|
9
|
|
Adjusted
EBITDA1
|
(1,494)
|
(2,322)
|
36
|
|
per common share –
basic
|
(0.05)
|
(0.09)
|
44
|
|
per common share –
diluted
|
(0.05)
|
(0.09)
|
44
|
|
Total
assets
|
62,228
|
73,875
|
(16)
|
|
Total
liabilities
|
15,085
|
10,679
|
41
|
|
Total non-current
liabilities
|
2,134
|
3,039
|
(30)
|
|
|
|
|
|
1 Adjusted
EBITDA is a non-GAAP measure defined as net (loss) earnings,
before: depreciation of property, plant and equipment; amortization
of intangible assets; income tax expense (recovery );finance
charges, net;); provisions for excess and obsolete inventory;
other losses (gains), net; restructuring charges; share-based
compensation; and impairment charges. 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 may be 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.
|
|
|
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.
|
About McCoy
McCoy provides equipment and technologies designed to support
wellbore integrity and assist with collecting critical data for 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.