EDMONTON, March 7, 2019 /CNW/ - McCoy Global
Inc. ("McCoy," "McCoy Global" or "the Corporation")
(TSX:MCB) today announced its operational and financial results for
the three months and year ended December 31,
2018.
"We have been disciplined in managing our business and
implementing cost reductions and operating efficiencies during the
extended downcycle for the global energy industry. In 2018 we
experienced some strengthening of industry fundamentals and
delivered solid financial results, including two consecutive
quarters of positive earnings and adjusted EBITDA to close out the
year," said Jim Rakievich, President
and CEO of McCoy Global.
"For 2019 we will continue to manage the business with the focus
on generating positive cash flow and adjusted EBITDA and
maintaining our strong balance sheet despite the ongoing uncertain
market fundamentals. Over the latter half of 2018, McCoy invested
in working capital to support the sharp increase in customer
demand. With activity levels expected to stabilize heading into
2019, generating operating cashflows and increasing working capital
efficiency is another key priority for the Corporation going
forward.
"I thank our employees for their focus on introducing new
technologies and finding creative ways to partner with customers
while still tightly managing the costs in our business.
Achievements in the past year included commercializing the new 10"
40K hydraulic power tong in response
to the changing land market in North
America and our next generation McCoy Torque-Turn System
(MTT), as well as developing a comprehensive technology strategy to
address customer challenges. We possess the engineering know-how
and expertise to implement the data-driven technology customers are
demanding in all markets, and specifically in offshore and
international operations. Organic growth via McCoy's increased
investments in new data driven technologies will also remain a
priority."
Quarterly Operational Summary
Since October 1, 2018, McCoy
Global reported:
- An increase of revenue to $13.5
million, compared to $10.1
million in Q4 2017;
- Net earnings of $0.9 million, a
significant increase from net loss of $6.3
million in Q4 2017;
- Adjusted EBITDA1 of $0.8
million, compared to ($0.9
million) in Q4 2017;
- Backlog2 of $15.0
million at December 31, 2018,
compared to $8.7 million at
December 31, 2017. The improved order
backlog, coupled with McCoy's continued discipline on managing its
costs, has positioned the Corporation with a stable beginning to
2019;
- Book-to-bill ratio3 of 0.90 for the three months
ended December 31, 2018, compared to
1.15 for the three months ended December 31,
2017;
- A strong cash balance of $11.4
million at December 31,
2018;
- McCoy successfully commercialized its next generation McCoy
Torque-Turn System, delivering the first units in the fourth
quarter; and
- Investment in new technology remains a priority with the
Corporation developing a technology strategy called the Digital
Technology Roadmap to address customer challenges around complex
well construction and evolving data acquisition and automation
demands.
Quarterly Financial Summary
Revenue for the three months ended December 31, 2018 was $13.5 million, an increase of $3.4 million from the fourth quarter of 2017 due
to strengthening industry fundamentals for the majority of 2018.
The increase was driven by an increase in capital equipment order
intake from the Eastern Hemisphere coupled with revenues from the
product launch of the 10" 40K
hydraulic power tong for the North American land market.
Gross profit as a percentage of revenue for the three months
ended December 31, 2018 was 31%, an
increase of 45 percentage points from the fourth quarter of 2017.
The significant improvement was due to increased production
through-put and cost reductions realized as a result of the
restructuring initiatives implemented in 2017, in addition to a
recovery for excess and obsolete inventory of $0.7 million in 2018 (2017 - $3.7 million charge).
G&A expense for the three months ended December 31, 2018 was $2.0
million, a decrease of $0.3
million compared to the fourth quarter of 2017. As a
percentage of revenue, G&A expense decreased by 8%, as McCoy's
current overhead cost structure can be leveraged for revenue
growth.
Sales & Marketing expense for the three months ended
December 31, 2018 decreased by
$0.4 million from the fourth quarter
of 2017. As a percentage of revenue this was a 5% decrease,
resulting from restructuring efforts, which saw the consolidation
of the sales force in key regions globally and allowed for the
realization of several efficiencies
R&D expenditures for the three months ended December 31, 2018 were $0.8 million, a small increase of $0.2 million from the fourth quarter of 2017.
During the quarter the Corporation allocated resources to plan and
execute the first phase of its Digital Technology Roadmap
strategy.
Net earnings for the three months ended December 31, 2018 were $0.9 million ($0.03
earnings per basic share), compared to net loss of $6.3 million ($0.23
loss per basic share) in the fourth quarter of 2017.
Adjusted EBITDA1 for the three months ended
December 31, 2018 was $0.8 million compared to ($0.9 million) for the fourth quarter of 2017.
As at December 31, 2018 the
Corporation had $11.4 million in cash
and cash equivalents, of which $0.5
million was restricted per the conditions of the
Corporation's credit facility.
Selected Quarterly Information
|
($000 except per
share amounts and percentages)
|
Q4 2018
|
Q4 2017
|
% Change
|
|
Total
revenue
|
13,543
|
10,054
|
35
|
|
Gross
profit
|
4,192
|
(1,416)
|
(396)
|
|
as a percentage of
revenue
|
31%
|
(14%)
|
45
|
|
Net earnings
(loss)
|
931
|
(6,254)
|
(115)
|
|
per common share –
basic
|
0.03
|
(0.23)
|
(113)
|
|
per common share
–diluted
|
0.03
|
(0.23)
|
(113)
|
|
Adjusted
EBITDA1
|
776
|
(898)
|
(186)
|
|
per common share –
basic
|
0.03
|
(0.03)
|
(200)
|
|
per common share –
diluted
|
0.03
|
(0.03)
|
(200)
|
|
Total
assets
|
59,742
|
57,438
|
4
|
|
Total
liabilities
|
19,335
|
16,232
|
19
|
|
Total non-current
liabilities
|
3,955
|
666
|
494
|
Summary of Quarterly Results
|
($000 except per
share
amounts)
|
Q4
2018
|
Q3
2018
|
Q2
2018
|
Q1
2018
|
Q4
2017
|
Q3
2017
|
Q2
2017
|
Q1
2017
|
|
Revenue
|
13,543
|
13,899
|
10,391
|
11,243
|
10,054
|
10,563
|
9,214
|
10,214
|
|
Impairment
and
|
65
|
15
|
1,028
|
798
|
1,288
|
319
|
365
|
1,344
|
|
restructuring
charges
|
|
(reversals)
|
|
Net earnings
(loss)
|
931
|
183
|
(2,954)
|
(1,951)
|
(6,254)
|
(3,390)
|
(3,097)
|
(3,576)
|
|
Basic and
diluted
|
0.03
|
0.01
|
(0.11)
|
(0.07)
|
(0.23)
|
(0.12)
|
(0.11)
|
(0.13)
|
|
earnings
(loss)
|
|
per share
|
|
EBITDA
|
1,513
|
911
|
(1,054)
|
(1,392)
|
(5,648)
|
(2,915)
|
(2,452)
|
(2,933)
|
|
Adjusted
EBITDA
|
776
|
687
|
(772)
|
(482)
|
(898)
|
(1,494)
|
(919)
|
15
|
Annual Operational Summary
Since January 1, 2018, McCoy
Global reported:
- 23% increase in revenue to $49.1
million, compared to $40.0
million in 2017;
- Gross profit of $12.7 million, a
significant increase from gross profit of $3.0 million in 2017. The improvement resulted
from increased production through-put along with cost reductions
from restructuring initiatives the Corporation implemented in
2017;
- Net loss of $3.8 million, down
from net loss of $16.3 million in
2017;
- Adjusted EBITDA1 of $0.2
million, compared to ($3.3
million) in 2017;
- McCoy successfully commercialized its new 10" 40K hydraulic power tong to respond to customer
needs in the changing land market; and
- Investment in new technology remains a priority with the
Corporation developing a technology strategy called the Digital
Technology Roadmap to address customer challenges around complex
well construction and evolving data acquisition and automation
demands.
Annual Financial Summary
Revenue for the year ended December 31,
2018 was $49.1 million, an
increase of $9.1 million, or 23%,
from 2017 due to improving overall industry fundamentals for the
majority of 2018. The majority of the increase was driven by
increased capital equipment order intake and orders for
corresponding parts and accessories.
Gross profit percentage for the year ended December 31, 2018 was 26%, an increase of 19
percentage points from the comparative period. The increase is
a result of increased production through-put, cost reductions
realized as a result of restructuring initiatives implemented in
2017, and the impact of consolidating production facilities and
moving to an assembly production model in early 2018.
G&A expense for the year ended December 31, 2018 decreased by $0.8 million, or 9%, from 2017. As a percentage
of revenue, G&A expense decreased by 6 percentage points. The
decline is a result of the completion of restructuring initiatives
as well as continued discipline around overhead spend.
Sales & Marketing expense for the year ended December 31, 2018 decreased by $1.2 million, or 31%, from 2017. The reduction is
a result of restructuring efforts and expenses.
R&D expenditures for the year ended December 31, 2018 were $3.2 million, a decrease of $0.2 million from the comparative period.
Investments to develop new technologies and upgrade product lines
remain a key priority for the Corporation.
Net loss for the year was $3.8
million ($0.14 loss per basic
share), compared to net loss of $16.3
million ($0.59 loss per basic
share) in 2017.
Adjusted EBITDA1 for the year ended December 31, 2018 was $0.2
million, compared to ($3.3
million) in 2017.
Selected Annual Information
|
($000 except per
share amounts and percentages)
|
2018
|
2017
|
% Change
|
|
Total
revenue
|
49,076
|
40,045
|
23
|
|
Gross
profit
|
12,686
|
2,984
|
325
|
|
as a percentage of
revenue
|
26%
|
7%
|
19
|
|
Net loss
|
(3,791)
|
(16,317)
|
(77)
|
|
per common share –
basic
|
(0.14)
|
(0.59)
|
(76)
|
|
per common share
–diluted
|
(0.14)
|
(0.59)
|
(76)
|
|
Adjusted
EBITDA1
|
205
|
(3,296)
|
(106)
|
|
per common share –
basic
|
0.01
|
(0.12)
|
(108)
|
|
per common share –
diluted
|
0.01
|
(0.12)
|
(108)
|
|
|
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 earnings (loss), before depreciation of property,
plant and equipment; amortization of intangible assets; income tax
expense (recovery); and finance charges, net. 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 (gains)
losses, net; restructuring charges; share-based compensation; and
impairment losses. 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, 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. For comparative purposes, in
previous financial disclosures 'adjusted EBITDA' was defined as
"net earnings (loss) 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."
|
|
|
2 McCoy
Global 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. Under current market conditions,
many customers have shifted their purchasing towards just-in-time
buying.
|
|
|
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 Global Inc.
McCoy Global 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. The Corporation's
shares are listed on the Toronto Stock Exchanges and trade under
the symbol "MCB".
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.