McCoy Global Inc. Announces Second Quarter 2019 Results

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McCoy Global Inc. Announces Second Quarter 2019 Results

McCOY GLOBAL ANNOUNCES SECOND QUARTER 2019 RESULTS

Edmonton, Alberta – McCoy Global Inc. (“McCoy”, “McCoy Global” or “the Corporation”) (TSX:MCB) today announced its operational and financial results for the three months ended June 30, 2019.

Quarterly Highlights

  • For the three months ended June 30, 2019, McCoy Global generated $2.2 million of operating cashflows through improved working capital efficiency, in line with strategic objectives
  • As at June 30, 2019, McCoy reported backlog of $15.4 million which will positively position McCoy for the remainder of 2019

“We continue to be disciplined in managing our business and in progressing forward with developing new technology solutions to better serve our customers. Though we are reporting a 23% sequential decrease in revenue due to postponed shipments arising from delays in collecting customer payments, we generated $2.2 million of operating cashflows and reported a nominal Adjusted EBITDA loss for the quarter,” said Jim Rakievich, President and CEO of McCoy Global.

“We continue advancing our Digital Technology Roadmap initiative as planned, and recently partnered with a leading global technology developer on this endeavor. The investments we are making illustrate our strong focus on delivering data driven, customer-focused solutions to generate value added technologies of the future.

“Order intake increased by 68% sequentially to $17.0 million for the second quarter with backlog of $15.4 million, which will positively position McCoy for the remainder of 2019. The gradual recovery in international and offshore market highlights an area of opportunity for us while we drive further profitability and cashflows through supply chain and operational efficiencies.”

Operational Summary

For the three months ended June 30, 2019, McCoy Global reported:

  • Revenue of $11.5 million, compared to revenue of $10.4 million in the second quarter of 2018. Revenue was impacted in the quarter by $1.8 million of orders not shipped due to delays in collecting payment from certain customers without credit
  • Cash generated from operating activities for the period ending June 30, 2019 was $2.2 million compared to cash used in operating activities of $4.5 million
  • Net loss of $1.6 million, compared to net loss of $3.0 million in the second quarter of 2018
  • Adjusted EBITDA1 loss of $0.1 million, compared to Adjusted EBITDA1 loss of $0.8 million in the second quarter of 2018
  • Customer orders of $17.0 million, compared to $10.1 million for the three months ended March 31, 2019. The 68% increase in orders positions McCoy for stronger second half results in
  • Backlog2 of $15.4 million, an increase of 56% compared to $9.9 million for the three months ended March 31, 2019
  • Book-to-bill ratio3 of 1.48, compared to 0.68 for the three months ended March 31, 2019
  • A continued focus on developing new technology and during the three months ended June 30, 2019 the Corporation invested $0.8 million in its “Digital Technology Roadmap” for a total investment of $1.3 million in the first half of the year. McCoy has partnered with a global leading technology developer in this strategic endeavor. The initiative is a priority for McCoy as the industry trends toward data acquisition and automation solutions for
  • The introduction and delivery of the next generation of the McCoy Torque Turn (“MTT”) monitoring and control software product. Along with recently acquired ATEX certification for hazardous environments, the MTT has many improved functions and features that are already receiving positive customer response.
  • The purchase and cancellation of 57,800 common shares under McCoy’s current normal course issuer bid (“NCIB”) which continues until June 4, The NCIB was renewed on May 31, 2019.

Financial Summary

Revenue for the three months ended June 30, 2019 was $11.5 million, an increase of $1.1 million, or 10% from the second quarter of 2018. Revenue was impacted by $1.8 million of completed orders that did not ship due to delays in collecting payment from certain Eastern Hemisphere customers for whom credit terms were not extended.

Gross profit for the three months ended June 30, 2019 was $2.9 million, an increase of $1.0 million, or 56% from the second quarter of 2018. Gross profit percentage for the three months ended June 30, 2019 increased 7 percentage points compared to the second quarter of 2018. The gross profit improvements are a result of increased production throughput, cost reductions realized from restructuring initiatives implemented in the prior years and a continued focus on supply chain efficiencies.

General and administration expense (“G&A”) for the three months ended June 30, 2019 was consistent with the comparative period at $2.4 million. As a percentage of revenue, G&A decreased slightly by one percentage point as the Corporation continues to exhibit ongoing cost discipline.

Sales and marketing expense (“Sales & Marketing”) for the three months ended June 30, 2019 was $0.6 million, a 7% decrease compared to the second quarter of 2018. Sales & Marketing has decreased from past quarters due to previously announced restructuring initiatives and has remained consistent over recent quarters.

Research and development expenditures (“R&D”) for the three months ended June 30, 2019 were $1.6 million, compared to $1.0 million in the second quarter of 2018. R&D increased year over year primarily due to strategic spending on the Corporation’s Digital Technology Roadmap initiative. McCoy has recently partnered with a global leading technology developer to deliver on this strategic endeavor. Doing so is a key priority for McCoy as the industry continues to focus on data-driven solutions that increase efficiency. McCoy expects to launch its first commercial products under the initiative before the end of 2019.

Net loss for the three months ended June 30, 2019 was $1.1 million or $0.04 loss per basic share, compared to net loss of $3.0 million or $0.11 loss per basic share in the second quarter of 2018.

Adjusted EBITDA1 loss for the three months ended June 30, 2019 was nominal at $0.1 million, compared to a $0.8 million loss for the second quarter of 2018.

Net loss and Adjusted EBITDA1 for the three months ended June 30, 2019 were impacted by the adoption of IFRS 16, effective January 1, 2019, which replaced operating expenses with depreciation of right-of-use- assets and financing charges on lease liabilities. For the three months ended June 30, 2019, the adoption of IFRS 16 resulted in a $0.2 million increase in Adjusted EBITDA1.

As at June 30, 2019, the Corporation had $9.7 million in cash and cash equivalents, of which $0.5 million was restricted per the conditions of its credit facility.

Cash generated from operating activities for the three months ended June 30, 2019, was $2.2 million, which was driven by increased working capital efficiency.

Selected Quarterly Information

($000 except per share amounts and percentages) Q2 2019 Q2 2018 % Change
Total revenue 11,455 10,391 10
Gross profit 2,851 1,823 56
as a percentage of revenue 25 18 39
Net earnings (loss) (1,066) (2,954) (64)
per common share – basic (0.04) (0.11) (64)
per common share – diluted (0.04) (0.11) (64)
Adjusted EBITDA1 (61) (772) 92
per common share – basic - (0.03) (100)
per common share – diluted - (0.03) (100)
Total assets 57,682 59,780 (4)
Total liabilities 20,322 19,668 3
Total non-current liabilities 5,514 6,348 (13)

 

For further information, please contact:

 

Mr. Jim Rakievich                                              Phone: 1.780.453.8451

President and CEO                                             E-mail: info@mccoyglobal.com

McCoy Global Inc.                                           Website: www.mccoyglobal.com

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