McCOY GLOBAL INC. ANNOUNCES FOURTH QUARTER AND ANNUAL RESULTS FOR 2017
Edmonton, Alberta – McCoy Global Inc. (“McCoy” or “the Corporation”) (TSX:MCB) today announced its operational and financial results for the three months and year ended December 31, 2017.
“McCoy closed 2017 having executed on several key strategic initiatives to increase revenue and reduce McCoy’s cost structure,” said Jim Rakievich, President and CEO of McCoy Global. “In 2017, McCoy’s revenues increased by 48% and customer orders increased by 72%, as compared to 2016. This is a result of the strategic acquisition of 3PS, positive Western Hemisphere demand for McCoy’s products and services and our focus on responsiveness to customers.”
“Market fundamentals appear to be trending positively as we start 2018, which should contribute to improved financial performance in the second half of 2018,” continued Jim Rakievich. “In 2018, revenue growth remains a priority and McCoy will focus on introducing new technologies and strategic acquisition opportunities that complement the Corporation’s technology platforms and solve customer challenges. In addition, cost disciple will remain a focus and the Corporation will continue to drive supply chain improvements and the optimization of the assembly production model to achieve production cost improvements and a reduction in lead times and delivery times for standard products.”
Quarterly Financial Summary
Revenue for the three months ended December 31, 2017 was $10.1 million, an increase of $4.0 million, or 64%,
from the fourth quarter of 2016, due to improving industry fundamentals in 2017. The majority of the increase was
driven by aftermarket opportunities, strength in the Western Hemisphere, and increased revenues from the
acquisition of 3PS.
Gross profit percentage for the three months ended December 31, 2017 decreased four percentage points from
the fourth quarter of 2016. The decline was due to a provision for excess and obsolete inventory of $3.7 million,
which was offset by the impact of restructuring initiatives taken. The inventory charge is primarily related to
components for non-standard product models, which have seen limited customer demand. In addition, customer
pricing pressure remains strong, placing pressure on margins.
G&A expense for the three months ended December 31, 2017 was $2.3 million, consistent with the fourth quarter
of 2016. As a percentage of revenue, G&A expense decreased by 17%. The Corporation continues to review its
processes and overhead spend with an emphasis on agile costs that offer flexibility to increases or decreases in
revenue demand; however, a base level of overhead is needed to support the international nature of the
Sales & Marketing expense for the three months ended December 31, 2017 increased by $0.5 million from the
fourth quarter of 2016. As a percentage of revenue this was a slight increase, which is a result of the 3PS acquisition
and strategic sales efforts in targeted markets.
R&D expenditures for the three months ended December 31, 2017 increased by $0.5 million from the fourth quarter
of 2016. R&D expenditures increased as a result of the 3PS acquisition, which added a strong engineering team
to McCoy and increased R&D capabilities and expense. In addition, strategic investments were made to allocate
capital to develop and prototype several key technology projects.