McCoy Global Inc. Announces Second Quarter 2018 Results
Edmonton, Alberta – McCoy Global Inc. today announced its operational and financial results for the three months ended June 30, 2018.
Quarterly Highlights
- Fifth consecutive quarter of increasing customer orders
- Fourth consecutive quarter of increasing backlog
- Completion of restructuring efforts to consolidate operational facilities to deliver significant operational efficiencies
- Improved visibility into the remainder of 2018 and into 2019
“Positive industry sentiment and steady customer activity contributed to $12.7 million in orders received during the second quarter, a 60% increase over the same period in 2017.” said Jim Rakievich, President and CEO of McCoy Global. “With customers beginning to deploy capital for large equipment orders, including off-shore markets, we are pleased to be entering the second half of 2018 with $12.7 million in secured backlog. Further, we remain actively engaged with our customers in negotiations on supplying equipment on a number of projects in both the Eastern and Western Hemisphere over the second half of 2018 and into 2019.”
“During the second quarter, McCoy successfully commercialized the 10” 40K power tong which was designed for the US land market, where tubular make-up requirements have increased. This technologically advanced product provides customers with superior performance and safety features while reducing weight and footprint of the equipment on the rig. Our R&D team continues to ensure that McCoy remains the technology leader in tubular make-up as customer orders are already exceeding expectations.”
“Given our growing backlog balance and positive customer sentiment, the second half of 2018 should result in increased revenues and margins for McCoy,” continued Jim Rakievich. “McCoy has remained focused on preserving its balance sheet and protecting shareholders from dilutive capital raises during this extended downcycle, which has positioned McCoy to take advantage of a market upturn to the benefit of all stakeholders of McCoy.”
Operational Summary
Since April 1, 2018, McCoy Global reported:
- Revenue of $10.4 million, compared to $9.2 million in Q2 2017
- Net loss of $3.0 million, compared to net loss of $3.1 million in Q2 2017. Included in the $3.0 million net loss is a one-time depreciation charge that increased depreciation by $1.0 million. In addition, the $3.0 million net loss includes a $0.5 million recovery from inventory provision adjustments, whereas the second quarter of 2017 includes a $0.6 million expense from inventory provision adjustments
- Adjusted EBITDA1 of ($0.8) million, compared to ($0.9) million in Q2 2017
- Backlog2 of $12.7 million and customer orders of $12.7 million, compared to $7.7 million and $8.8 million, respectively, in Q2 2017
- Book-to-bill ratio3 of 1.23, compared to 0.96 for the three months ended June 30, 2017
The first customer deliveries of McCoy’s new 10” 40K hydraulic power tong, which was developed in collaboration with its customers. The product has thus far been a success in the market, with customer orders exceeding expectations
Other Developments
- On May 10, 2018, at the Corporation’s Annual General and Special Meeting, the Corporation received approval to move from the Toronto Stock Exchange (TSX) to the TSX Venture Exchange.
- Upon further consideration, McCoy Global will remain on the TSX rather than voluntarily transferring to the TSX Venture Exchange
- On July 16, 2018, McCoy Global was pleased to announce that Ms. Lindsay McGill has been appointed Vice President & Chief Financial Officer, effective September 4, 2018
Quarterly Financial Summary
Revenue for the three months ended June 30, 2018 was $10.4 million, an increase of $1.2 million, or 13% from the second quarter of 2017, as overall industry fundamentals continued to follow a positive trend. Most of the revenue increase is attributable to aftermarket revenue, however second quarter 2018 backlog of $12.7 million contains an increase in capital equipment orders, which will be realized in upcoming quarters.
Gross profit for the three months ended June 30, 2018 increased 11 percentage points from the second quarter of 2017. The increase includes a $0.5 million recovery from inventory provision adjustments, compared to a $0.6 million expense in the second quarter of 2017, and a one-time depreciation charge resulting from a change in accounting estimates used to depreciate rental equipment, which increased depreciation in the quarter by $1.0 million.
G&A expense for the three months ended June 30, 2018 was $2.3 million, compared to $2.5 million in the second quarter of 2017. As a percentage of revenue, G&A expense decreased by 5%. As a percentage of revenue, G&A continues to decline as a result of efforts to identify efficiencies and simplify the organization.
Net loss for the three months ended June 30, 2018 was $3.0 million ($0.11 loss per basic share), compared to net loss of $3.1 million ($0.11 loss per basic share) in the second quarter of 2017.
Adjusted EBITDA1 for the three months ended June 30, 2018 was ($0.8) million compared to ($0.9) million for the second quarter of 2017.
As at June 30, 2018, the Corporation had $12.6 million in cash and cash equivalents. In the second quarter of 2018, McCoy borrowed $4.0 million USD, which will provide additional liquidity to continue to evaluate strategic growth opportunities and respond to revenue opportunities.