McCOY GLOBAL ANNOUNCES SECOND QUARTER 2024 RESULTS AND DECLARATION OF QUARTERLY DIVIDEND
Second Quarter Highlights :
- Reported revenue of
$19.9 million for the quarter, an increase of 23% from the comparative period, lead by strong adoption of McCoy's FMS and delivery of wellbore equipment; - Net earnings increased 119% to
$3.1 million compared to the second quarter of 2023 of$1.4 million ; - Adjusted EBITDA1 of
$4.7 million , or 24% of revenue, compared with$2.9 million , or 18% of revenue, in 2023; - Since
January 1, 2024 advanced its Digital Technology Roadmap:- Delivered twenty-six (26) of McCoy's Flush
Mount Spider (FMS) (H1 2023 – 6 tools). With a growing number of tools operating in-field, operators are recognizing the benefits of McCoy's FMS, which in turn has led to more widespread adoption. McCoy's FMS is a hydraulic rotary flush mounted spider that when fully connected (smartFMS™), handles casing while providing information on the state of the tool to the driller's display in real-time as well as the ability to integrate with McCoy's Smart Casing Running Tool (smartCRT™). - Completed prototyping and test rig trials for an enhanced smartCRT™ that will address the new tool specifications introduced by National Oil Companies (NOCs) and major operators in certain key regions. McCoy's enhanced smartCRT™ will not only address the new contract requirements, but also provide an intelligent, connected enhancement to conventional casing running tool on the market today, offering superior safety, efficiency and simplified operating procedure, with real-time data collection and analysis capabilities.
- While in-field trials with our partnering customer for smarTR™, McCoy's land-targeted integrated casing running system, were temporarily delayed due to market conditions and CRT specification requirements, the recent successful test-rig trials of its smartCRT™ enhancement will provide the ability to continue in-field trials in Q3 2024. Field trials are a critical stage to full commercialization and the process continues to provide valuable data which has led to continued refinement our technology. We expect further advancements toward commercialization and look forward to reporting our progress in the coming quarters.
- Accepted a contract award totaling
$3.7 million for deep-water offshore integrated casing running systems destined forLatin America and, subsequent toJune 30, 2024 , accepted an additional$1.8 million in awards for deep-water systems for a separate customer inBrazil . Delivering this technology will complete the first step on a roadmap to a comprehensive smarTR™ system tailored for offshore and deep-water markets. TheLatin America contract award also marks the first offshore commercial Software as a Service (SaaS) purchase commitment for its Virtual Thread-Rep™ technology. McCoy's Virtual Thread-Rep™ technology enables customers to remotely monitor and control premium connection make-up. It also facilitates the autonomous evaluation and confirmation of premium connection make-up on location.
- Delivered twenty-six (26) of McCoy's Flush
- Declared a quarterly cash dividend of
$0.02 per common share payable onOctober 15, 2024 , to shareholders of record as of close of business onSeptember 30, 2024 .
"We have continued to advance our 'Digital Technology Roadmap' initiative on multiple fronts, first off, we are excited about the recent success of test-rig trials for our smartCRT™ enhancements. These enhancements offer a significant competitive advantage with superior safety, efficiency and simplified operating procedure, with real-time data collection and analysis capabilities, and will also allow us to continue in-field trials of our land-targeted smarTR™ system." said
"As we advance through the commercialization of our new technology offerings, we anticipate that future revenues will rely less on the cyclical nature of drilling activity, and more driven by technology adoption, demand from emerging local and regional market players, and market share expansion in new geographical areas. However, the inherent characteristics of our capital equipment product offerings as well as the rate of technology adoption, and timing of contract awards, leads to fluctuations in order intake and revenues on a quarter-to-quarter basis. Consequently, these factors also may impact fluctuations in working capital balances due to the timing of customer shipments and billings." said
Second Quarter Financial Highlights:
- Total revenue of
$19.9 million , compared with$16.2 million in Q2 2023; - Net earnings of
$3.1 million , compared to$1.4 million in Q2 2023; - Adjusted EBITDA1 of
$4.7 million , or 24% of revenue, compared with$2.9 million , or 18% of revenue, in 2023; - Booked backlog2 of
$22.3 million atJune 30, 2024 , compared to$25.6 million in the second quarter of 2023; - Book-to-bill ratio3 was 0.84 for the three months ended
June 30, 2024 , compared with 1.01 in the second quarter of 2023.
Financial Summary
Revenue of
Gross profit, as a percentage of revenue, for the three and six months
For the three and six months ended
For the three and six months ended
With total product development and support expenditures of
For the three and six months ended
Net earnings for the three months ended
As at
Selected Quarterly Information
( |
Q2 2024 |
Q2 2023 |
% Change |
Total revenue |
19,910 |
16,248 |
23 % |
Gross profit |
6,743 |
5,404 |
25 % |
as a percentage of revenue |
34 % |
33 % |
1 % |
Net earnings |
3,125 |
1,427 |
119 % |
as a percentage of revenue |
16 % |
9 % |
7 % |
per common share – basic |
0.12 |
0.05 |
140 % |
per common share – diluted |
0.11 |
0.05 |
120 % |
Adjusted EBITDA1 |
4,728 |
2,862 |
65 % |
as a percentage of revenue |
24 % |
18 % |
6 % |
per common share – basic |
0.18 |
0.10 |
80 % |
per common share – diluted |
0.17 |
0.10 |
70 % |
Total assets |
82,189 |
72,077 |
14 % |
Total liabilities |
22,933 |
19,574 |
17 % |
Total non-current liabilities |
2,758 |
3,728 |
(26 %) |
Summary of Quarterly Results
( |
Q2 |
Q1 |
Q4 2023 |
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Revenue |
19,910 |
16,542 |
19,699 |
16,878 |
16,248 |
16,684 |
18,264 |
12,410 |
12,863 |
Net earnings |
3,125 |
975 |
2,674 |
1,900 |
1,427 |
528 |
7,264 |
274 |
1,051 |
as a % of revenue |
16 % |
6 % |
14 % |
11 % |
9 % |
4 % |
40 % |
2 % |
8 % |
per share – basic |
0.12 |
0.04 |
0.10 |
0.07 |
0.05 |
0.02 |
0.26 |
0.01 |
0.04 |
per share – diluted |
0.11 |
0.04 |
0.10 |
0.07 |
0.05 |
0.02 |
0.25 |
0.01 |
0.04 |
EBITDA1 |
4,638 |
2,191 |
3,001 |
3,641 |
2,639 |
1,954 |
7,319 |
1,149 |
1,943 |
as a % of revenue |
23 % |
13 % |
15 % |
22 % |
16 % |
12 % |
40 % |
9 % |
15 % |
Adjusted EBITDA1 |
4,728 |
2,273 |
3,987 |
3,856 |
2,862 |
2,419 |
3,681 |
1,099 |
2,296 |
as a % of revenue |
24 % |
14 % |
20 % |
23 % |
18 % |
14 % |
20 % |
9 % |
18 % |
Outlook and Forward-Looking Information
Over the near and medium term, the oil and gas market in international regions, particularly the
Over the past several quarters, the deep-water offshore market has maintained rig utilization rates upwards of 90%. Looking ahead, this heightened activity, coupled with a shift from large multinational service providers to drilling contractors and local participants, is expected to lead to a notable expansion in capital expenditures, particularly in
During the second quarter of 2024, rig count and drilling activity continued its decline in the North America Land market. While McCoy continues to anticipate robust demand for our innovative FMS technology in this market, quoting activity has begun to shift from capital equipment purchases towards rental contracts due to customer capital constraints. Despite this shift, McCoy's rental equipment business has historically yielded attractive returns, and we expect our innovative FMS tool rentals to achieve equally, if not more, enticing returns. This optimism is based on the inherent performance and safety benefits of its unique design that offers a solution to the persistent labor challenges encountered by many of our customers. The tool handles casing using replaceable die carriers and provides back-up torque from first pipe joint, eliminating the need for manual backup tongs and, in some cases, enabling service companies to reduce their crew size by up to 20%. Furthermore, with a growing number of tools operating in-field, operators have begun to recognize the benefits of McCoy's FMS, and have begun to require the tools use in certain operations.
As we advance through the commercialization phase of our 'Digital Technology Roadmap' initiative, we anticipate that future revenues will rely less on the cyclical nature of drilling activity, and more driven by technology adoption, demand from emerging local and regional market players, and market share expansion in new geographical areas. However, the inherent characteristics of our capital equipment product offerings as well as the rate of technology adoption, and timing of contract awards, may lead to fluctuations in order intake and revenues on a quarter-to-quarter basis. Consequently, these factors also may impact fluctuations in working capital balances due to the timing of customer shipments and billings. As at
As we progress through 2024, we continue to focus on our key strategic initiatives to deliver value to all of our stakeholders:
- Accelerating market adoption of new and recently developed 'smart' portfolio products;
- Taking advantage of the current market trajectory by focusing on revenue generation from key strategic customers;
- Focus on capital allocation priorities; a) investment in growth through both organic and strategic M&A opportunities where returns are favourable, and b) return excess cash to our shareholders in the form of share buy-backs and quarterly dividends.
We believe this strategy, together with our committed and agile team, McCoy's global brand recognition, intimate customer knowledge and global footprint will further advance McCoy's competitive position and generate strong returns on invested capital.
About
Throughout McCoy's 100-year history, it has proudly called
1 EBITDA is calculated under IFRS and is reported as an additional subtotal in the Corporation's consolidated statements of cash flows. EBITDA is defined as net earnings (loss), before depreciation of property, plant and equipment; amortization of intangible assets; income tax expense (recovery); and finance charges, net. Adjusted EBITDA is a non-GAAP measure defined as net earnings (loss), before: depreciation of property, plant and equipment; amortization of intangible assets; income tax expense (recovery); finance charges, net; provisions for excess and obsolete inventory; other (gains) losses, net; restructuring charges; share-based compensation; and impairment losses. The Corporation reports on EBITDA and adjusted EBITDA because they are key measures used by management to evaluate performance. The Corporation believes adjusted EBITDA assists investors in assessing |
( |
Q2 2024 |
Q2 2023 |
Net earnings |
3,125 |
1,427 |
Depreciation of property, plant and equipment |
590 |
471 |
Amortization of intangible assets |
473 |
418 |
Income tax expense |
415 |
322 |
Finance (income) charges, net |
35 |
1 |
EBITDA |
4,638 |
2,639 |
(Recovery of) provisions for excess and obsolete inventory |
(25) |
78 |
Other (gains) losses, net |
(27) |
71 |
Share-based compensation |
142 |
74 |
Adjusted EBITDA |
4,728 |
2,862 |
2
|
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. |
4 Net cash is a non-GAAP measure defined as cash and cash equivalents, plus: restricted cash, less: borrowings. |
Forward-Looking Information
This News Release contains forward looking statements and forward looking information (collectively referred to herein as "forward looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward looking statements. Forward looking information is often, but not always, identified by the use of words such as "could", "should", "can", "anticipate", "expect", "objective", "ongoing", "believe", "will", "may", "projected", "plan", "sustain", "continues", "strategy", "potential", "projects", "grow", "take advantage", "estimate", "well positioned" or similar words suggesting future outcomes. This New Release contains forward looking statements respecting the business opportunities for the Corporation that are based on the views of management of the Corporation and current and anticipated market conditions; and the perceived benefits of the growth strategy and operating strategy of the Corporation are based upon the financial and operating attributes of the Corporation as at the date hereof, as well as the anticipated operating and financial results. Forward looking statements regarding the Corporation are based on certain key expectations and assumptions of the Corporation concerning anticipated financial performance, business prospects, strategies, the sufficiency of budgeted capital expenditures in carrying out planned activities, the availability and cost of labour and services and the ability to obtain financing on acceptable terms, which are subject to change based on market conditions and potential timing delays. Although management of the Corporation consider these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect. By their very nature, forward looking statements involve inherent risks and uncertainties (both general and specific) and risks that forward looking statements will not be achieved. Undue reliance should not be placed on forward looking statements, as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in the forward looking statements, including inability to meet current and future obligations; inability to complete or effectively integrate strategic acquisitions; inability to implement the Corporation's business strategy effectively; access to capital markets; fluctuations in oil and gas prices; fluctuations in capital expenditures of the Corporation's target market; competition for, among other things, labour, capital, materials and customers; interest and currency exchange rates; technological developments; global political and economic conditions; global natural disasters or disease; and inability to attract and retain key personnel. Readers are cautioned that the foregoing list is not exhaustive. The reader is further cautioned that the preparation of financial statements in accordance with IFRS requires management to make certain judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. These judgments and estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes. The information contained in this News Release identifies additional factors that could affect the operating results and performance of the Corporation. We urge you to carefully consider those factors. The forward looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward looking statements included in this News Release are made as of the date of this New Release and the Corporation does not undertake and is not obligated to publicly update such forward looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.
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