EDMONTON, Aug. 9, 2018 /CNW/ - McCoy Global
Inc. ("McCoy", "McCoy Global" or "the Corporation")
(TSX:MCB) today announced its operational and financial results for
the three months ended June 30,
2018.
Quarterly Highlights
- Fifth consecutive quarter of increasing customer orders
- Fourth consecutive quarter of increasing backlog
- Completion of restructuring efforts to consolidate operational
facilities to deliver significant operational efficiencies
- Improved visibility into the remainder of 2018 and into
2019
"Positive industry sentiment and steady customer activity
contributed to $12.7 million in
orders received during the second quarter, a 60% increase over the
same period in 2017," said Jim
Rakievich, President and CEO of McCoy Global. "With
customers beginning to deploy capital for large equipment orders,
including off-shore markets, we are pleased to be entering the
second half of 2018 with $12.7
million in secured backlog. Further, we remain actively
engaged with our customers in negotiations on supplying equipment
on a number of projects in both the Eastern and Western Hemisphere
over the second half of 2018 and into 2019."
"During the second quarter, McCoy successfully commercialized
the 10" 40K power tong which was
designed for the US land market, where tubular make-up requirements
have increased. This technologically advanced product provides
customers with superior performance and safety features while
reducing weight and footprint of the equipment on the rig. Our
R&D team continues to ensure that McCoy remains the technology
leader in tubular make-up as customer orders are already exceeding
expectations."
"Given our growing backlog balance and positive customer
sentiment, the second half of 2018 should result in increased
revenues and margins for McCoy," continued Jim Rakievich. "McCoy has remained focused on
preserving its balance sheet and protecting shareholders from
dilutive capital raises during this extended downcycle, which has
positioned McCoy to take advantage of a market upturn to the
benefit of all stakeholders of McCoy."
Operational Summary
Since April 1, 2018, McCoy Global
reported:
- Revenue of $10.4 million,
compared to $9.2 million in Q2
2017
- Net loss of $3.0 million,
compared to net loss of $3.1 million
in Q2 2017. Included in the $3.0
million net loss is a one-time depreciation charge that
increased depreciation by $1.0
million. In addition, the $3.0
million net loss includes a $0.5
million recovery from inventory provision adjustments,
whereas the second quarter of 2017 includes a $0.6 million expense from inventory provision
adjustments
- Adjusted EBITDA1 of ($0.8)
million, compared to ($0.9)
million in Q2 2017
- Backlog2 of $12.7
million and customer orders of $12.7
million, compared to $7.7
million and $8.8 million,
respectively, in Q2 2017
- Book-to-bill ratio3 of 1.23, compared to 0.96 for
the three months ended June 30,
2017
- The first customer deliveries of McCoy's new 10" 40K hydraulic power tong, which was developed in
collaboration with its customers. The product has thus far been a
success in the market, with customer orders exceeding
expectations
Other Developments
- On May 10, 2018, at the
Corporation's Annual General and Special Meeting, the Corporation
received approval to move from the Toronto Stock Exchange (TSX) to
the TSX Venture Exchange. Upon further consideration, McCoy Global
will remain on the TSX rather than voluntarily transferring to the
TSX Venture Exchange
- On July 16, 2018, McCoy Global
was pleased to announce that Ms. Lindsay
McGill has been appointed Vice President & Chief
Financial Officer, effective September 4,
2018
Quarterly Financial Summary
Revenue for the three months ended June
30, 2018 was $10.4 million, an
increase of $1.2 million, or 13% from
the second quarter of 2017, as overall industry fundamentals
continued to follow a positive trend. Most of the revenue increase
is attributable to aftermarket revenue, however second quarter 2018
backlog of $12.7 million contains an
increase in capital equipment orders, which will be realized in
upcoming quarters.
Gross profit for the three months ended June 30, 2018 increased 11 percentage points from
the second quarter of 2017. The increase includes a $0.5 million recovery from inventory provision
adjustments, compared to a $0.6
million expense in the second quarter of 2017, and a
one-time depreciation charge resulting from a change in accounting
estimates used to depreciate rental equipment, which increased
depreciation in the quarter by $1.0
million.
G&A expense for the three months ended June 30, 2018 was $2.3
million, compared to $2.5
million in the second quarter of 2017. As a percentage of
revenue, G&A expense decreased by 5%. As a percentage of
revenue, G&A continues to decline as a result of efforts to
identify efficiencies and simplify the organization.
Net loss for the three months ended June
30, 2018 was $3.0 million
($0.11 loss per basic share),
compared to net loss of $3.1 million
($0.11 loss per basic share) in the
second quarter of 2017.
Adjusted EBITDA1 for the three months ended
June 30, 2018 was ($0.8) million compared to ($0.9) million for the second quarter of
2017.
As at June 30, 2018, the
Corporation had $12.6 million in cash
and cash equivalents. In the second quarter of 2018, McCoy borrowed
$4.0 million USD, which will provide
additional liquidity to continue to evaluate strategic growth
opportunities and respond to revenue opportunities.
Selected Quarterly Information
|
($000 except per
share amounts and percentages)
|
Q2 2018
|
Q2 2017
|
% Change
|
|
Total
revenue
|
10,391
|
9,214
|
13
|
|
Gross
profit
|
1,823
|
1,648
|
11
|
|
as a percentage of
revenue
|
18
|
18
|
-
|
|
Net loss
|
(2,954)
|
(3,097)
|
(5)
|
|
per common share –
basic
|
(0.11)
|
(0.11)
|
-
|
|
per common share
–diluted
|
(0.11)
|
(0.11)
|
-
|
|
Adjusted
EBITDA1
|
(772)
|
(919)
|
16
|
|
per common share –
basic
|
(0.03)
|
(0.03)
|
-
|
|
per common share –
diluted
|
(0.03)
|
(0.03)
|
-
|
|
Total
assets
|
53,893
|
68,255
|
(21)
|
|
Total
liabilities
|
15,664
|
16,422
|
(5)
|
|
Total non-current
liabilities
|
4,625
|
3,428
|
35
|
|
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; restructuring charges; other losses (gains), net; provisions
for excess and obsolete inventory; share-based compensation; and
impairment charges. The Corporation reports on EBITDA and
adjusted EBITDA because they are important 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, unusual (i.e. infrequent and not considered part of
ongoing operations), 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.
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. In certain instances, the
order is secured by a deposit and/or requires 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 are generally within six months.
|
|
|
3 The
book-to-bill ratio is a measure of the amount of net sales orders
received to revenues recognized. 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 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.