McCoy Global Inc. Announces Fourth Quarter and Annual Results for 2014

EDMONTON, March 12, 2015 /CNW/ - McCoy Global Inc. ("McCoy", "McCoy Global" or "the Corporation") (TSX:MCB; OTCQB:MCCRF) today announced its operational and financial results for the three months and year ended December 31, 2014.

"In 2014, McCoy Global met a strategic milestone by achieving our goal of becoming a pure play tubular make-up and handling equipment solutions provider, strengthening our balance sheet in the process," said Jim Rakievich, President and CEO. "With our continued development of McCoy's three Eastern Hemisphere regional sales and service centers in 2014, we increased our presence in the more stable international oil and gas market which, combined with McCoy's solid balance sheet, puts the Corporation in a strong position for 2015 and supports McCoy's long-term growth."

Operational Highlights

Since January 1, 2014, McCoy:

  • Reported 2014 revenue of $120.6 million, compared to $110.2 million in 2013
  • Reported net earnings from continuing operations of $9.4 million in 2014, compared to $7.8 million in 2013
  • Reported net earnings of $18.0 million in 2014, compared to $9.8 million in 2013
  • Reported adjusted EBITDA1 of $21.0 million in 2014, a 23% increase compared to 2013
  • Reported a backlog2 of $26.9 million for the three months ended December 31, 2014, a 17% decrease from September 30, 2014
  • Reported a book-to-bill ratio3 of 0.79 for the three months ended December 31, 2014, compared to 0.69 for the three months ended September 30, 2014
  • Achieved its goal of becoming a pure-play, focusing on growing its tubular make-up and handling equipment business, by divesting the Coatings and Hydraulics division and Mobile Solutions segment
  • Commenced operations at its third Eastern Hemisphere regional sales and service facility in the Jebel Ali Free Zone (Dubai, United Arab Emirates)
  • Progressed the development of operations at its international sales and service centers in Aberdeen, Scotland and Singapore
  • Progressed development of the first piece of equipment under the weHOLD™ platform of handling tools, and subsequent to year end, commercially launched the weBUCK™, the market's first electric bucking unit
  • Completed its re-branding efforts and officially changed its name to McCoy Global Inc.

Quarterly Financial Highlights

Revenue for the three months ended December 31, 2014 was $27.2 million compared to $25.1 million in the comparative quarter in 2013. Revenue was impacted by shipping delays caused by challenges with customer availability in the latter part of December. Further, a noticeable decline in order intake impacted revenues in the United States. As previously disclosed in 2013, results for the fourth quarter of 2013 were negatively impacted by a large custom order of capital equipment destined for Latin America as well as the Corporation's ERP implementation.

Gross profit percentage for the three months ended December 31, 2014 was 34%, a two percentage point increase from the comparative quarter in 2013. Fourth quarter 2014 profitability was impacted by an inventory write-down in response to ongoing engineering improvements to legacy products.

Net earnings from continuing operations for the quarter were $1.8 million ($0.06 per basic share), compared to $0.4 million ($0.02 per basic share) in the fourth quarter of 2013. 

Adjusted EBITDA1 for the three months ended December 31, 2014 was $5.0 million, a 114% increase from the comparative quarter in 2013 due to higher gross profit and decreased overhead expenditures.

As at December 31, 2014, McCoy had working capital of $71.5 million, including $29.9 million in cash and cash equivalents.

Selected Quarterly Information


($000 except per share amounts and percentages)

Q4 2014

Q4 2013

% Change

Total revenue

27,209

25,105

8

Gross profit

9,195

8,082

14


as a percentage of revenue

34%

32%

2

Net earnings from continuing operations

1,753

372

371


per common share – basic

0.06

0.02

200


per common share –diluted

0.06

0.02

200

Earnings from discontinued operations (net of tax)4

(276)

329

(184)

Net earnings

1,477

701

111


per common share – basic

0.05

0.03

67


per common share –diluted

0.05

0.03

67

Adjusted EBITDA1

4,957

2,317

114


per common share – basic

0.18

0.09

100


per common share – diluted

0.18

0.08

125

Total assets

131,941

120,467

10

Non-current liabilities

4,081

1,919

113

Total liabilities

29,568

34,464

(14)

 

Annual Financial Highlights

Revenue for the year ended December 31, 2014 was $120.6 million, an increase of $10.4 million, or 9%, from 2013. As the substantial majority of the Corporation's revenue is denominated in United States currency, 2014 revenues benefited from the weakening Canadian dollar. Incremental revenues from McCoy Global's regional Eastern Hemisphere sales and service centers also contributed to the increase in revenue for 2014.

Gross profit percentage for the year ended December 31, 2014 was 38%, an increase of one percentage point from the 37% gross profit percentage realized in the comparative period. Gross profit was positively impacted by the effect of the weakening Canadian dollar on Canadian manufacturing operations. Increased sales of technical products, primarily in the first and second quarter of 2014, were offset by unfavourable shifts in product and customer mix in the third and fourth quarter of 2014.

Net earnings from continuing operations for the year were $9.4 million ($0.34 per basic share), compared to $7.8 million ($0.29 per basic share) in 2013.

Adjusted EBITDA1 for the year ended December 31, 2014 increased by $4.0 million, or 23%, from the prior year. As a percentage of revenue, adjusted EBITDA increased by 2% to 17% in 2014. Year-over-year increases in revenue, gross profit, depreciation and amortization were partially offset by additional overhead expenses.

Selected Annual Information

($000 except per share amounts and percentages)

2014

2013

% Change

Total revenue from continuing operations

120,619

110,212

9

Gross profit

46,203

40,808

13


as a percentage of revenue

38

37

1

Net earnings from continuing operations

9,369

7,760

21


per common share – basic

0.34

0.29

17


per common share –diluted

0.34

0.28

21

Earnings from discontinued operations (net of tax)4

8,638

2,084

314

Net earnings

18,007

9,844

83


per common share – basic

0.65

0.37

76


per common share –diluted

0.65

0.36

81

Adjusted EBITDA1

20,986

17,014

23


per common share – basic

0.76

0.63

21


per common share – diluted

0.76

0.62

23






 

1 EBITDA is an additional GAAP measure presented under IFRS defined as "net earnings from continuing operations, before 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." 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, net 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 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.
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 many 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. 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. 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.
4 Earnings from discontinued operations (net of tax) for the year includes an estimated one-time gain on the sale of the Corporation's former Mobile Solutions segment and Coating & Hydraulics division.

 

Conference Call Information

McCoy Global will host a conference call and webcast at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time) on March 12, 2015. Management participants will include: Jim Rakievich, President & CEO; Jacob Coonan, CFO; Kenny Watt, Senior Vice President; 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/1490021/1659169.

The conference call will be archived for replay until Thursday, March 19, 2015 at midnight. To access the archived conference call, dial 1-855-859-2056 or 1-416-849-0833 and enter the replay passcode 91795939. The transcript of the conference call will be archived on the conference calls page of McCoy's website.

About McCoy

McCoy Global provides innovative products and services to 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. The Corporation's corporate headquarters are located in Edmonton, Alberta, Canada.

Forward-Looking Information

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 Global, 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, 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 Global 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 Global Inc.

For further information: Mr. Peter Watson, McCoy Global Inc., General Counsel and Corporate Secretary, Phone: (832) 303-7410, E-mail: info@mccoyglobal.com, Website: www.mccoyglobal.com


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