McCoy Corporation announces fourth quarter and annual results for 2013
EDMONTON, March 14, 2014 /CNW/ - McCoy Corporation ("McCoy" or "the Corporation") (TSX:MCB) (OTCQX:MCCRF), a supplier of innovative products and services for the global energy industry, today announced its operational and financial results for the three months and year ended December 31, 2013.
"In 2013 we increased both revenue and gross profit while making progress on many important initiatives that will deliver long-term value to our shareholders," said Jim Rakievich, President and CEO of McCoy. "Despite a challenging fourth quarter, the operational business plan and growth strategy remain positive."
Following a strategic decision to place greater focus on the Corporation's key competencies, management committed to a formal process in the fourth quarter of 2013 to divest of its non-core businesses, which include the Mobile Solutions segment and Coatings & Hydraulics division. Financial results related to these operations have been included in net earnings from discontinued operations in the consolidated financial statements.
Since January 1, 2013, McCoy:
- Reported 2013 revenue of $110.2 million, compared to $101.8 million in 2012
- Reported net earnings of $9.8 million in 2013, compared to $11.8 million in 2012; net earnings from continuing operations were $7.8 million in 2013, compared to $9.9 million in 2012
- Reported adjusted EBITDA1 of $17.0 million in 2013, an 8% decrease compared to 2012
- Completed a $32.86 million secondary bought deal financing, where Foundation Equity Corporation sold 5,200,000 common shares of McCoy at a price of Cdn$6.32 per share
- Reported a backlog2 of $38.5 million for the three months ended December 31, 2013, a 2% decrease from September 30, 2013
- Reported a book-to-bill ratio3 from continuing operations of 0.94 for the three months ended December 30, 2013, compared to 0.82 for the three months ended September 30, 2013
- Commenced operations at its first two international technical sales and service centers in Scotland and Singapore and progressed in setting up additional centers in the Middle East and Latin America
- Commercialized the weTORQ85TM iron roughneck and the weVERIFYTM, a remote calibration tool used in conjunction with the WinCatt® system to calibrate customers' equipment remotely
- Progressed the development of products in its "we" product line, including the weBUCKTM, an electric bucking unit, and the weHOLD, a casing handling tool system with flush mount spider, conventional spider and elevator configurations
- Completed the expansion of the dies and inserts manufacturing facility in Louisiana
- Celebrated the sale of the "1000th" WinCatt® system, McCoy's Torque Turn Monitoring and Data Logging unit
- Completed the transition of remaining operations onto McCoy's Enterprise Resource Planning (ERP) system
- Commenced trading on OTCQX International, under the symbol "MCCRF"
- Re-branded the Corporation as "McCoy Global"
Quarterly Financial Highlights
Revenue for the three months ended December 31, 2013 was $25.1 million, a decrease of $1.7 million from the comparative quarter in 2012.
Gross profit percentage for the three months ended December 31, 2013 was 32%, a 2% decrease from the comparative quarter in 2012. Profitability was impacted by the implementation of a new ERP system at McCoy's two largest manufacturing facilities, which diverted management resources from key operational assignments, as well as an additional provision for warranty was accrued to fund certain identified product quality issues. These quality issues have been isolated to a small number of product models and a solution has been implemented. Revenue and gross profit were further impacted by delays in the timing of delivery of a large custom order of hydraulic power tongs destined for Latin America.
Net earnings for the quarter was $0.7 million ($0.03 per basic share), compared to $3.3 million ($0.12 per basic share) in the fourth quarter of 2012.
Adjusted EBITDA1 for the three months ended December 31, 2013 was $2.3 million, a 54% decrease from the comparative quarter in 2012.
As at December 31, 2013, McCoy had working capital of $56.6 million, including $13.3 million in cash and cash equivalents.
|Selected Quarterly Information|
|($000 except per share amounts and percentages)||Q4 2013||Q4 2012||% Change|
|Gross profit as % of revenue||32%||34%||(2)|
|Net earnings per common share - basic||0.03||0.12||(75)|
|Net earnings per common share -diluted||0.03||0.12||(75)|
|Adjusted EBITDA1 per common share - basic||0.09||0.19||(53)|
|Adjusted EBITDA1 per common share - diluted||0.08||0.19||(58)|
Annual Financial Highlights
Revenue for the year ended December 31, 2013 was $110.2 million, an increase of $8.4 million, or 8%, from 2012. Increases in life-cycle revenues generated from service, replacement parts, and consumables in addition to revenues generated for recent "we" product launches are the primary factors for the overall increase in revenue.
Gross profit percentage for the year ended December 31, 2013 was 37%, consistent with 2012. Despite an increase in higher margin life-cycle product sales throughout the year, profitability in 2013 was negatively impacted by events that occurred in the fourth quarter.
Net earnings for the year was $9.8 million ($0.37 per basic share), compared to $11.8 million ($0.44 per basic share) in 2012.
Adjusted EBITDA1 for the year ended December 31, 2013 decreased by $1.5 million or 8% from the prior year. As a percentage of revenue, adjusted EBITDA fell from 18% in 2012 to 15%. An increase in gross profit was offset by higher overhead expenses from adding management resources to support strategic growth initiatives; and realizing start-up costs associated with McCoy's international service centers.
|Selected Annual Information|
|($000 except per share amounts and percentages)||2013||2012||% Change|
|Gross profit as % of revenue||37||37||-|
|Net earnings per common share - basic||0.37||0.44||(16)|
|Net earnings per common share -diluted||0.36||0.44||(18)|
|Adjusted EBITDA1 per common share - basic||0.63||0.70||(10)|
|Adjusted EBITDA1 per common share - diluted||0.62||0.69||(10)|
EBITDA is an additional GAAP measure presented under IFRS defined as "net earnings before impairment losses, finance charges (net), income tax expense, depreciation and amortization." Adjusted EBITDA is a non-GAAP measure defined as "net earnings from continuing operations before finance charges (net), income tax expense, depreciation, amortization, impairment losses, net changes in fair value related to derivative financial instruments and share-based compensation. Adjusted EBITDA is not considered an alternative to net earnings in measuring McCoy'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 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.
2 The Corporation defines backlog as work that has a high certainty of being performed 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 most are 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 work. Typically, expected delivery dates for orders recorded in backlog usually span from one to six months, and thus may not translate into revenue in the consecutive quarter.
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. A ratio of above "1.0" indicates more net sales orders were received than orders shipped and billed. 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 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.
Conference Call Information
McCoy will host a conference call and webcast at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time) on March 14, 2014. Management participants will include: Jim Rakievich, President & CEO; Jacob Coonan, CFO; Kenny Watt, Senior Vice President, McCoy Global; and Peter Watson, General Counsel and Corporate Secretary.
Participants calling from Canada or the United States should call toll-free at: 1-888-231-8191. Callers from other locations may call in at: 1-647-427-7450. A live audio webcast of the conference call will be available at the following link: http://www.newswire.ca/en/webcast/detail/1315041/1452049.
The conference call will be archived for replay until Friday, March 21, 2014 at midnight. To access the archived conference call, dial 1-855-859-2056 or 1-416-849-0833 and enter the replay passcode 7655882. The transcript of the conference call will be archived on the conference calls page of McCoy's website.
McCoy provides innovative products and services to the global energy industry. McCoy operates internationally through direct sales and distributors with its operations based out of Western Canada, the U.S. Gulf Coast, Europe and Asia-Pacific. McCoy's corporate office is located in Edmonton, Alberta, Canada with offices in Alberta, Louisiana, Texas, Aberdeen, Singapore and Luxembourg.
This News Release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this News Release contains forward-looking statements and information concerning McCoy's future financial performance. The forward-looking statements and information are based on certain key expectations and assumptions made by McCoy, including expectations and assumptions concerning fluctuations in the level of oil and gas industry capital expenditures, McCoy's ability to integrate acquired businesses and complete strategic acquisitions of additional businesses and other factors that affect demand for McCoy's products. Although McCoy believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because McCoy can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause McCoy's actual results and experience to differ materially from the anticipated results or expectations expressed. These risks and uncertainties, include, but are not limited to, fluctuations in oil and gas prices, fluctuations in the level of oil and gas industry capital expenditures and other factors that affect demand for McCoy's products, industry competition, the need to effectively integrate acquired businesses, uncertainties as to McCoy's ability to implement its business strategy effectively in Canada and the United states, labour, equipment and material costs, access to capital markets, interest and McCoy's ability to attract and retain key personnel. Additional information on these and other factors is available in continuous disclosure materials filed by McCoy with Canadian securities regulators. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this News Release or otherwise, and to not use future-oriented information or financial outlooks for anything other than their intended purpose. McCoy undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
SOURCE McCoy CorporationFor further information:
Mr. Peter Watson
General Counsel & Corporate Secretary