EDMONTON, Nov. 8, 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 September 30, 2018.
Quarterly Highlights
- Return to profitability and adjusted EBITDA in the quarter
- 32% increase in revenue for the quarter compared with the third
quarter of 2017
- McCoy booked $17.2 million in
orders during the quarter representing a 35% sequential increase
over the second quarter of 2018 and fifth consecutive quarter of
increased bookings
- Fourth consecutive quarter of increasing backlog, positioning
McCoy to capitalize on improving markets for the remainder of 2018
and into 2019
- Continued progress on developing technologies that leverage the
Corporation's depth of continuous innovation, engineering, and
in-the-field expertise
- Steadfast commitment to protecting shareholders from dilution
and preserving the Corporation's balance sheet
"Stronger industry fundamentals, paired with the results of our
restructuring initiatives and operational efficiency gains have
returned us to positive earnings and adjusted EBITDA in the
quarter," said Jim Rakievich,
President and CEO of McCoy Global.
"Customers are releasing capital for larger orders of equipment,
in the U.S. and international markets, and we are pleased to be
exiting the third quarter with backlog of $15.7 million. This positions McCoy Global to
participate in these improving market conditions for the final
quarter of this year and into 2019.
"We move forward with diligent focus on improving margins
through advancements in supply chain and operational efficiencies.
Our progress towards developing smart, data-driven solutions to
improve rig safety, productivity and support automation for
customers via data acquisition and analytics will drive our
longer-term vision of automation and predictive equipment
maintenance capabilities."
Operational Summary
Since July 1, 2018, McCoy
reported:
- Revenue of $13.9 million,
compared with $10.6 million in Q3
2017
- Net earnings of $0.2 million,
compared with a net loss of $3.4
million in Q3 2017. Adjusted EBITDA of $0.7 million, compared with ($1.5) million in Q3 2017
- Backlog of $15.7 million and
customer orders of $17.2 million,
compared to $6.8 million and
$10.3 million, respectively, in Q3
2017
- Book-to-bill ratio of 1.24, compared with 0.97 for Q3 2017
- Strong commercial success of McCoy's 10" 40K hydraulic power tong, developed in
collaboration with customers. This product was released into the
market in the second quarter of 2018 and quickly became the
top-selling capital product of Q3 2018
Quarterly Financial Summary
Revenue for the three months ended September 30, 2018 was $13.9 million, an increase of $3.3 million from the third quarter of 2017, as
overall industry fundamentals continued to strengthen in 2018.
Order intake again increased for the fifth sequential quarter, with
the Corporation reporting backlog of $15.7
million, positioning McCoy for solid revenue and margin
performance into 2019.
Gross profit for the three months ended September 30, 2018 increased 18 percentage points
from the third quarter of 2017. Increased revenue was the primary
driver behind higher gross profit. Operational efficiencies and
cost reductions attributed to restructuring initiatives implemented
in 2017 also contributed to the increase during the quarter,
however were offset to some extent by a shift in product mix.
General and administrative expense for the three months ended
September 30, 2018 was $1.9 million, compared with $2.3 million in the third quarter of 2017. As a
percentage of revenue, G&A expense decreased by 9 percentage
points and is expected to continue its decline as a result of
operational efficiencies coupled with revenue growth.
Sales and marketing expense also declined to $0.6 million for the three months ended
September 30, 2018, compared with
$1.0 million in the third quarter
2017 resulting from the consolidation of the sales force in key
operating regions. Even with this consolidation, McCoy Global has
remained steadfast in its customer-centric approach built around
responsiveness and technical expertise.
Research and development expenditures ("R&D expenditures")
for the three months ended September 30,
2018 was $0.7 million compared
to $0.9 million in the third quarter
of 2017. R&D expenditures declined as a result of the timing of
product development costs being incurred.
Net earnings for the three months ended September 30, 2018 was $0.2 million or $0.01 earning per basic share, compared with a
net loss of $3.4 million
($0.12 loss per basic share) in the
same quarter in 2017. Adjusted EBITDA for the three months ended
September 30, 2018 was $0.7 million compared with ($1.5) million for the same quarter in
2017.
As at September 30, 2018, the
Corporation had $12.3 million in cash
and cash equivalents.
Selected Quarterly Information
|
($000 except per
share amounts and percentages)
|
Q3 2018
|
Q3 2017
|
% Change
|
|
Total
revenue
|
13,899
|
10,563
|
32
|
|
Gross
profit
|
3,775
|
907
|
316
|
|
as a percentage of
revenue
|
27
|
9
|
200
|
|
Net earnings
(loss)
|
183
|
(3,390)
|
(105)
|
|
per common share –
basic and diluted
|
0.01
|
(0.12)
|
(108)
|
|
Adjusted
EBITDA1
|
687
|
(1,494)
|
(146)
|
|
per common share –
basic and diluted
|
0.02
|
(0.05)
|
(140)
|
|
Total
assets
|
54,948
|
62,228
|
(12)
|
|
Total
liabilities
|
17,234
|
15,085
|
14
|
|
Total non-current
liabilities
|
4,104
|
2,134
|
92
|
|
1 Adjusted
EBITDA is a non-GAAP measure defined as net earnings (loss), 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 earnings (loss) 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.