Through its regional locations, McCoy Global supports customers around the world by providing technical and calibration services; replacement parts; consumables and rentals.
McCoy Global operates in an evolving energy market with a long-term trend towards more complex well construction, driving demand for premium tubular connections. The Company’s expertise in producing high specification tubular make-up products positions McCoy Global to meet the technological challenges faced by customers in unconventional markets.
McCoy Global continues to be the global land and offshore market leader of hydraulic power tongs. As well construction continues to become more complex and customer demand for safer, more efficient technologies increases, McCoy Global’s vision is to be the leader in providing these solutions.
In 2015, McCoy Global’s customers were confronted with new challenges as energy market fundamentals deteriorated. Anticipating the impact of a challenging market, the Company evaluated its operational costs and executed on several initiatives that have resulted in a leaner and more cost effective organization. McCoy Global's ability to effectively support its customers remains a priority, even in this difficult business environment.
McCoy Global’s long-term strategy persists: we are committed to developing technologies that address the challenges our customers around the globe will encounter in the ever-evolving energy market.”
The Company is currently focusing on product enhancements and development of quick-to-market technologies, while ensuring customers continue to receive timely and effective support.
McCoy Global strives to be the technology leader in tubular make-up, handling and data acquisition, and has historically invested approximately three percent of annual revenue in research and development to realize this vision. In 2015, McCoy Global demonstrated its ongoing commitment to innovation by investing in product enhancement and less capital-intensive, quick-to-market technologies. In addition to developing new products for its customers, these efforts will expand McCoy Global’s current product offering and create future revenue generation opportunities.
Research and development continues to be a cornerstone of McCoy Global’s strategy as we are committed to providing our customers with the safest, highest-quality, best performing and most technologically advanced tubular make-up products.”
In 2015, McCoy Global delivered products and services to customers in 63 countries compared to 53 in 2013, and international sales as a percent of total revenue increased to 55 percent, compared to 38 percent in 2013.
In 2015, the international energy market proved more stable than the North American energy market, with the Middle East experiencing year-over-year growth of 47%.
McCoy Global has a long history of providing its customers with quality products and technical support across North America and internationally. This commitment to our customers is essential as we continue to operate in a tremendously challenging market environment.”
“McCoy Global has the benefit of a strong balance sheet and a leadership team with experience weathering downturns, both of which will support our endurance during this challenging time.”
1Adjusted EBITDA is a non-GAAP measure defined as “net earnings (loss) from continuing operations 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 reports on EBITDA and adjusted EBITDA because they are key measures used by management to evaluate performance. Adjusted EBITDA is used in making decisions relating to distributions to shareholders and is used in monitoring compliance with debt covenants. The Corporation believes adjusted EBITDA assists investors in assessing McCoy Global’s performance on a consistent basis without regard to impairment losses, restructuring charges, non-cash changes in fair value related to derivative financial instruments, depreciation, amortization and share-based compensation expense, which are non-cash in nature and 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. However, McCoy Global calculates adjusted EBITDA consistently from period to period. 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 statement of cash flows.
Jim Rakievich, President and CEO, and George Andrews (NAIT) at the McCoy Global gift announcement.
2015 was a challenging year in the global energy market. Weak industry fundamentals placed increasing financial pressure on our customers, which reduced equipment and aftermarket demand. As a result, to best-position the Company to endure the downturn, operational efficiency and cost containment became priorities for McCoy Global in 2015. To further mitigate the impact of the market decline, we focused on our operations in the less-volatile international energy market, and in keeping with our long-term growth strategy, strategically invested in product and technology development.
McCoy Global executed on several difficult, but effective, cost containment initiatives throughout the year that contributed to positive 2015 cash flow from operating activities and a positive cash position at the end of the year. Organizational efficiencies, process improvements, reductions in workforce, salary and wage freezes and enhanced operational productivity, including those resulting from the consolidation of our two Louisiana-based production facilities, contributed to a significant reduction in costs. McCoy Global is now operating more efficiently, which is critical in this environment, but will also benefit the Company in the future.
The manner in which falling commodity prices impacted the global energy market in 2015 affirmed the rationale of strategically positioning the Company as a global brand. McCoy Global’s presence in the Middle East was particularly advantageous as that market experienced year-over-year growth, with the Company realizing a 47 percent increase in revenue from this region in 2015 compared with last year.
Our vision to be the global leader of tubular make-up and handling equipment solutions persists, and investment in research and development is essential to realizing this vision. In 2015, investment in new product development remained consistent with prior years at approximately three percent of revenue. McCoy Global deployed this capital in the context of current market conditions by investing in product enhancement and developing less capital-intensive technologies that can be commercialized quickly. These investments will enable the Company to continue expand our product portfolio in a cost-effective manner and create opportunities for future revenue generation.
These are truly the most difficult times our industry has faced in more than three decades, and we expect the global energy market to be challenging for the remainder of 2016 and likely into 2017. Our leadership team continues to run the business in a prudent manner, evaluating the Company’s cost structure on an ongoing basis. It is clear that this cycle has not yet run its course and we expect our customers will continue to manage their spending accordingly. As 2016 unfolds, initiatives to “right size” the organization will ensure McCoy Global preserves its financial stability. In addition to our established presence in less-volatile energy markets, McCoy Global has the benefit of a strong balance sheet and a leadership team with experience weathering downturns, all of which will support the Company’s endurance during this challenging time.
Frank Burdzy, MBA
T.D. (Terry) Freeman, FCA, ICD.D
Jim Rakievich, ICD.D
Chris Seaver, MBA, J.D. – Chair
Jim Rakievich, ICD.D – President and Chief Executive Officer
Jacob Coonan, MPAcc, CA – Chief Financial Officer
Kenny Watt – Senior Vice President
Peter Watson, Esq. – Vice President, Corporate Development & General Counsel
Suzanne Langier, CHRP – Vice President, Human Resources
The Toronto Stock Exchange: MCB
The 2016 annual meeting of shareholders will be held on May 11, 2016, at 5:00 p.m. MDT, at Hotel Clique Calgary Airport, 24 Aero Crescent NE, Calgary, Alberta.