EDMONTON, May 10, 2019 /CNW/ - McCoy Global
Inc. ("McCoy", "McCoy Global" or "the Corporation")
(TSX:MCB) today announced its operational and financial results for
the three months ended March 31,
2019.
"We remained disciplined in the management of our business and
advanced the development of new technology to better serve our
customers during the first quarter of 2019. We have gained solid
footing in an ever-changing global energy marketplace and are
proving our ability to drive revenue growth and profitability
despite uncertain market fundamentals," said Jim Rakievich, President and CEO of McCoy
Global.
"For the first quarter of the year, we recorded our third
consecutive quarter of positive earnings and adjusted EBITDA.
Although customer order activity was slow in Q1 with bookings below
our expectations, we experienced an uptick and renewed acceleration
in the month of April, having received several orders totalling
$7.2 MM for the second quarter. We
are encouraged by the improving outlook in the international and
offshore markets. With the number of active drilling rigs on the
rise, and our strong market position in these markets, we are well
positioned to capitalize on this opportunity.
"We are very encouraged with the progress that our engineering
team has made in development of our new data driven technologies
that we believe will be ready for first field trials in the second
half of 2019 and we expect to launch first phase of our new product
solutions for customers in Q4 of this year."
Operational Summary
Since January 1, 2019, McCoy
Global reported:
- A third consecutive quarter of positive net earnings and
positive adjusted EBITDA
- Revenue of $14.8 million,
compared to $11.2 million in the
first quarter of 2018
- Net earnings of $0.5 million,
compared to net loss of $2.0 million
in the first quarter of 2018
- Adjusted EBITDA1 of $0.7
million, compared to adjusted EBITDA loss of $0.5 million in the first quarter of 2018
- Backlog2 of $9.9
million and customer orders of $10.1
million, compared to $15.0
million and $12.1 million,
respectively, for the three months ended December 31, 2018. Market uncertainty in early
2019 drove delays in project approvals for many customers, and as a
result backlog decreased in comparison to the previous quarter
- Book-to-bill ratio3 of 0.68, compared to 0.90 for
the three months ended December 31,
2018
- The decline in first order intake for the first quarter of
2019, was offset by $7.2 million of
orders received in the month of April
2019
- The Corporation continued its focus on developing new
technology including deploying $0.5
million towards its "Digital Technology Roadmap." This
strategic initiative is a priority as the industry trends toward
data acquisition and automation solutions for customers, with
commercialization of two key products planned for 2019
- Purchased and cancelled 144,400 common shares under McCoy's
current normal course issuer bid ("NCIB") which continues until
June 4, 2019
Financial Summary
Revenue for the three months ended March
31, 2019 was $14.8 million, an
increase of $3.6 million, or 32% from
the first quarter of 2018. Industry fundamentals strengthened for
the majority of 2018 and McCoy entered 2019 with backlog of
$15.0 million, supporting strong
revenues for the quarter.
Gross profit for the three months ended March 31, 2019 was $4.6
million, an increase of $1.7
million, or 58% from the first quarter of 2018. Gross profit
percentage for the three months ended March
31, 2019 increased 5 percentage points compared to the first
quarter of 2018 due to additional production through-put combined
with cost reductions from restructuring initiatives implemented in
previous years in addition to continued focus on supply chain
efficiencies. Gross profit in the comparative period includes the
transitional impact of consolidating production facilities and the
costs associated with transitioning to an assembly production
model.
General and administration ("G&A") expense for the three
months ended March 31, 2019 was
consistent at $2.4 million, compared
to the first quarter of 2018. As a percentage of revenue, G&A
expense decreased by 4% as McCoy's current overhead cost structure
can be leveraged for revenue growth.
Sales and marketing ("Sales & Marketing") expense for the
three months ended March 31, 2019 was
$0.6 million, compared to
$0.8 million in the first quarter of
2018. Sales & Marketing spend has decreased year over year due
to previously announced restructuring initiatives. Sales &
Marketing spend has remained consistent over recent quarters.
Research and development ("R&D") expenditures for the three
months ended March 31, 2019 were
$1.3 million, compared to
$0.7 million in the first quarter of
2018. R&D expenditures increased year over year as a result of
strategic expenditures on McCoy's Digital Technology Roadmap
initiative. Development of this technology strategy began during
the current quarter and is planned to launch before the end of
2019.
Net earnings for the three months ended March 31, 2019 was $0.5
million or $0.02 earnings per
basic share, compared to net loss of $2.0
million or ($0.07) loss per
basic share in the first quarter of 2018.
Adjusted EBITDA1 for the three months ended
March 31, 2019 was $0.7 million, compared to $0.5 million loss for the first quarter of 2018.
Adjusted EBITDA for the three months ended March 31, 2019 was negatively impacted by
$0.8 million due to recovery of
excess and obsolete inventory provisions (three months ended
March 31, 2018 - $0.1 million recovery). For the three months
ended March 31, 2019, the adoption of
IFRS 16 resulted in a $0.2 million
increase in EBITDA and adjusted EBITDA. Adjusted EBITDA for the
three months ended March 31, 2018 has
not been restated for the adoption of this standard.
As at March 31, 2019, the
Corporation had $10.3 million in cash
and cash equivalents, of which $0.5
million was restricted per the conditions of the
Corporation's credit facility. During the three months ended
March 31, 2019, cashflows were
impacted by investment activities primarily related to investment
in McCoy's 'Digital Technology Roadmap' for the development of two
strategic products scheduled for commercialization by the end of
2019 and additions to the Corporation's rental fleet. Cashflows
were also impacted by financing activities related to repayment of
the Corporation's borrowings and the principal portion of lease
payments, offset by positive operating cashflows.
Selected Quarterly Information
|
($000 except per
share amounts and percentages)
|
Q1 2019
|
Q1 2018
|
% Change
|
|
|
Total
revenue
|
14,840
|
11,243
|
32
|
|
|
Gross
profit
|
4,570
|
2,896
|
58
|
|
|
as a percentage of
revenue
|
31
|
26
|
5
|
|
|
Net earnings
(loss)
|
524
|
(1,951)
|
(127)
|
|
|
per common share –
basic
|
0.02
|
(0.07)
|
(129)
|
|
|
per common share –
diluted
|
0.02
|
(0.07)
|
(129)
|
|
|
Adjusted
EBITDA1
|
713
|
(482)
|
(248)
|
|
|
per common share –
basic
|
0.03
|
(0.02)
|
(250)
|
|
|
per common share –
diluted
|
0.03
|
(0.02)
|
(250)
|
|
|
Total
assets
|
59,780
|
50,429
|
19
|
|
|
Total
liabilities
|
19,668
|
9,879
|
99
|
|
|
Total non-current
liabilities
|
6,348
|
632
|
904
|
|
|
|
|
|
|
|
|
|
1 EBITDA a
non-GAAP measure 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.
|
|
|
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.
|
|
|
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, the United Kingdom, Singapore 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.