Press release from CNW Group

McCoy Corporation announces record third quarter 2012 results

Thursday, November 08, 2012

EDMONTON , Nov. 8, 2012 /CNW/ - McCoy Corporation ("McCoy" or "the Company") (TSX:MCB), a supplier of innovative products and services for the global energy industry, today announced its operational and financial results for the third quarter of 2012.

"McCoy achieved record quarterly revenue and net earnings in the quarter, and in addition commercially launched the weCATT Torque Sub, the first in our new "we" product line," said Jim Rakievich, President and CEO of McCoy. "Key elements of McCoy's growth strategy include the acquisition of complementary businesses and increasing our global sales and service footprint. McCoy positioned itself to execute on this strategy by entering into credit facility agreements to support potential acquisitions, and appointing {C} Mr. Kenny Watt{C} to lead the development of McCoy's global technical service and customer support team."

McCoy also announced the next project in its "we" development pipeline, the weHOLD, a casing handling tool system with flush mount spider, conventional spider and elevator configurations.

Operational Highlights

  • Achieved record overall quarterly revenue of $48.4 million and a 54 per cent increase in revenue in the Energy Products and Services (EP&S) segment from the third quarter of 2011 as compared to the third quarter of 2012;
  • Achieved record net earnings in the third quarter of 2012 of $4.2 million , or $0.16 per share, a 41% increase from the same period in 2011;
  • Announced that it had entered into a credit agreement subsequent to September 30, 2012 with a syndicate of lenders for a CAD$50 million committed senior secured revolving credit facility and an unsyndicated credit agreement for a CAD$3 million committed senior Letter of Credit facility, to assist McCoy with achieving its 5 year growth strategy, amongst other things;
  • Commercialized the weCATT Torque Sub, the first new product under the "we" product line, with very positive customer feedback;
  • Announced the appointment of Mr. Kenny Watt as Vice-President, Global Services for the Drilling and Completions division on October 11, 2012 . Based in Aberdeen, Scotland, Mr. Watt will develop McCoy's global technical service and customer support team through various strategic locations worldwide;
  • Announced the departure of Chief Financial Officer Milica Stolic on {C} October 11{C} , 2012. {C} Ms. Stolic{C} 's departure will be effective December 31, 2012 , with the immediate initiation of a search for Ms. Stolic 's replacement;
  • Transitioned the Precision Die Technologies business unit onto the new Enterprise Resource Planning (ERP) system, which will assist with the integration of the Drilling and Completions segment's operations; and
  • Continued the development of its Drilling and Completions head office in Houston , Texas by securing new office space and hiring several key management personnel.

Financial Highlights

Record revenue for the three months ended September 30, 2012 was $48.4 million , an increase of $10.6 million , or 28%, from the comparative period in 2011. Increased Energy Products and Services (EP&S) manufacturing throughput contributed to the significant revenue growth in the third quarter.

Gross profit for the three months ended September 30, 2012 was $14.2 million , which was an increase of $3.4 million , or 32%, from the comparative quarter. The increase in gross profit is a result of both increased EP&S revenue and gross margin percentages. Mobile Solutions continues to experience a decline in profitability from lower market fundamentals, including a shift towards lower margin products.

Net earnings for the quarter were $4.2 million ( $0.16 per share), a 41% increase when compared to the third quarter of 2011.

EBITDAS1 for the third quarter of 2012 increased $1.5 million , or 26%, to $7.5 million from $5.9 million in the same quarter of 2011.

In both periods, strong results in the EP&S segment were offset by declining profitability in the Mobile Solutions segment and an increase in corporate costs. McCoy continues to invest in strategic hires, infrastructure and new product development to support its long-term growth initiatives. The most significant of these investments are being made in the Drilling and Completions division and at Corporate. These investments are driving higher general and administrative expenses as well as sales and marketing expenses and will continue to do so for the near term. Once a global management team and international infrastructure are put into place, McCoy anticipates these costs will stabilize and, as a percentage of revenue, decline to more historic levels.

As at September 30, 2012 , McCoy had working capital of $43 million , including $15.5 million in cash and cash equivalents.

Selected Quarterly Information

( $000 except per share amounts and percentages)       Sept 30, 2012     Sept 30, 2011     % Change
                     
Total revenue       48,410     37,815     28
Gross profit       14,184     10,742     32
  Energy Products and Services       12,723     7,813     63
  Mobile Solutions       1,461     2,929     (50)
Gross profit as % of revenue       29%     28%     4
  Energy Products and Services       38%     36%     6
  Mobile Solutions       10%     18%     (44)
Net earnings       4,236     3,010     41
Net earnings per share - basic and diluted       0.16     0.11     45
EBITDAS1       7,451     5,905     26
EBITDAS1 per share - basic and diluted       0.28     0.22     27
Total assets       113,531     101,849     11
Non-current liabilities       6,640     8,116     (18)
Total liabilities       38,583     34,376     12

 

 

1EBITDAS and net cash are non-GAAP measurements. EBITDAS is defined as "earnings from continuing operations before impairment losses, interest, taxes, amortization and share-based compensation." EBITDAS is not considered an alternative to net earnings in measuring McCoy's performance. Net cash is defined as "cash on hand less the sum of current portion of borrowings, current portion of finance lease liabilities, borrowings and finance lease liabilities." EBITDAS and net cash do not have a standardized meaning and are therefore not likely to be comparable with similar measures used by other issuers. However, McCoy calculates EBITDAS and net cash consistently from period to period.