First Quarter Highlights:
- Order intake increased 46% to
$19.3 million compared with$13.2 million for the first quarter of 2022, alongside a 66% increase in order backlog to$26.1 million , compared to$15.7 million for the first quarter of 2022; - Revenue increased 90% to
$16.9 million , compared to$8.9 million in 2022; - Net earnings increased 203% to
$0.5 million compared to the first quarter of 2022 of$0.2 million ; - Adjusted EBITDA1 increased 66% to
$2.4 million , or 14% of revenue, compared to$1.5 million , or 16% of revenue, in 2022; - Maintained a strong statement of financial position, ending the quarter with
$19.9 million of net cash5 as atMarch 2023 , compared to$6.8 million as atMarch 2022 , with additional funds available under undrawn credit facilities; - Advanced its Digital Technology Roadmap:
- Reported four (4) commercial sales for McCoy's Flush
Mount Spider (FMS) and received purchase order commitments for sale and rental of seven (7) additional tools scheduled for delivery in 2023. McCoy's FMS is a hydraulic rotary flush mounted spider that when fully connected (smartFMSTM), 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 Smart Casing Running Tool (smartCRT™). Subsequent toMarch 31, 2023 , McCoy received additional purchase order commitments for sale and rental of eighteen (18) more tools scheduled for delivery in 2023. - Reported the second commercial sale for McCoy's smartCRTTM and received purchase order commitments for the rental of four (4) additional tools. McCoy's smartCRTTM is an intelligent, connected enhancement of our conventional casing running tool that offers superior safety, efficiency and simplified operating procedure, with real-time data collection and analysis capabilities. This technology effectively mitigates the risk of human error, while providing actionable insights that optimize future performance;
- Reinstituted a quarterly cash dividend of
$0.01 per common share payable onJuly 15, 2023 to shareholders of record as of close of business onJune 30, 2023 , a first since 2014; and - Subsequent to
March 31 , increased its revolving demand facility fromUS$2.5 million toUS$5.5 million . In addition to increasing the demand facility, the Corporation secured a commitment for aUS$3.4 million term loan, bearing interest at US Prime + 0.90%. The commitment is valid untilDecember 31, 2023 and is subject to customary terms and conditions, including a financial covenant minimum debt service coverage ratio.
"McCoy's strong first quarter performance was the result of the continued execution of our strategy to develop and commercialize smart technologies and grow key strategic customer relationships. Market adoption of our newly commercialized FMS and smartCRTTM has steadily accelerated through 2023, with first quarter revenues including shipments of five units of McCoy's FMS and McCoy's smartCRTTM, and purchase and rental commitments for an additional twenty-nine (29) FMS and smartCRTTM tools. In both international and the North American land market, we expect to see growing interest in our new technologies that deliver superior safety, efficiency and simplified operating procedures," said
"For the first quarter of 2023, McCoy reported net earnings of
First Quarter Financial Highlights:
- Total revenue of
$16.9 million , compared with$8.9 million in Q1 2022; - Net earnings of
$0.5 million , compared to$0.2 million in Q1 2022; - Adjusted EBITDA1 increased to
$2.4 million , or 14% of revenue, compared with$1.5 million , or 16% of revenue, in 2022; - Booked backlog2 of
$26.1 million atMarch 31, 2023 , compared to$15.7 million in the first quarter of 2022; - Book-to-bill ratio3 was 1.14 for the three months ended
March 31, 2023 , compared with 1.48 in the first quarter of 2022.
Financial Summary
Revenue of
Gross profit, as a percentage of revenue for the three months
For the three months ended
For the three months ended
During the three months ended
For the three months ended
Net earnings for the three months ended
As at
Selected Quarterly Information
( | Q1 2023 | Q1 2022 | % Change |
Total revenue | 16,864 | 8,891 | 90 % |
Gross profit | 4,828 | 2,692 | 79 % |
as a percentage of revenue | 29 % | 30 % | (1 %) |
Net earnings | 528 | 174 | 203 % |
as a percentage of revenue | 3 % | 2 % | 1 % |
per common share – basic | 0.02 | 0.01 | 100 % |
per common share – diluted | 0.02 | 0.01 | 100 % |
Adjusted EBITDA1 | 2,419 | 1,461 | 66 % |
as a percentage of revenue | 14 % | 16 % | (2 %) |
per common share – basic | 0.08 | 0.05 | 60 % |
per common share – diluted | 0.08 | 0.05 | 60 % |
Total assets | 71,742 | 55,522 | 29 % |
Total liabilities | 19,425 | 15,890 | 22 % |
Total non-current liabilities | 4,113 | 5,953 | (31 %) |
Summary of Quarterly Results
( | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
Revenue | 16,864 | 18,264 | 12,410 | 12,863 | 8,891 | 9,451 | 9,855 | 6,086 | 7,374 |
Net earnings (loss) | 528 | 7,264 | 274 | 1,051 | 174 | 2,464 | 621 | 1,151 | (158) |
as a % of revenue | 3 % | 40 % | 2 % | 8 % | 2 % | 26 % | 6 % | 19 % | (2 %) |
per share – basic | 0.02 | 0.26 | 0.01 | 0.04 | 0.01 | 0.09 | 0.02 | 0.04 | (0.01) |
per share – diluted | 0.02 | 0.25 | 0.01 | 0.04 | 0.01 | 0.08 | 0.02 | 0.04 | (0.01) |
EBITDA1 | 1,954 | 7,319 | 1,149 | 1,943 | 1,146 | 3,504 | 1,550 | 2,077 | 749 |
as a % of revenue | 12 % | 40 % | 9 % | 15 % | 13 % | 37 % | 16 % | 34 % | 10 % |
Adjusted EBITDA1 | 2,419 | 3,681 | 1,099 | 2,296 | 1,461 | 1,213 | 1,376 | 174 | 673 |
as a % of revenue | 14 % | 20 % | 9 % | 18 % | 16 % | 13 % | 14 % | 3 % | 9 % |
Outlook and Forward-Looking Information
As at
Despite current economic uncertainty and threats of a recession, over the short to medium term, global oil & gas market fundamentals continue to be positive, particularly in international regions. Increased drilling activity levels, paired with new international market entrants will serve to further enhance commercial opportunities for new products, as well as for our legacy capital equipment. With respect to international markets, we continue to see a growing trend of drilling contractors, new local and regional market entrants, and in some cases national oil companies, entering the Tubular Running Services (TRS) space, taking market share from large multinational service companies. This trend benefits McCoy considerably as it creates additional capital equipment demand over and above market growth from increased drilling activity alone, as these new entrants require significant capital investment in capital equipment to execute tubular running service contracts. McCoy is aptly positioned to respond to this demand with its strong brand of product quality and responsive, local customer support. Among its competitors, McCoy offers the broadest portfolio of TRS equipment and now offers market leading technologies that provide superior safety, efficiency and simplified operating procedures.
The global CRT market continues to grow as customers experience the advantages of running casing with the CRT versus conventional power tongs, in the form of time and cost savings, risk reduction, and improved safety. This is another area of opportunity for McCoy with its DWCRTTM tool introduced in 2019. In the first quarter of 2023, McCoy received orders from five new customers and two new geographies for the DWCRTTM. Looking ahead, we expect continued growth in orders intake and revenue generation from this product line as more and more markets adopt this technology as the preferred method to run casing.
Turning to the
As we progress through 2023, 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;
- Continuing to seek and evaluate acquisition opportunities where the strategic fit and returns on invested capital are acceptable;
- Generating cashflow from operations through fiscal discipline and working capital efficiency; and
- Return excess cash to our shareholders in the form of share buybacks 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
( | Q1 2023 | Q1 2022 |
Net earnings | 528 | 174 |
Depreciation of property, plant and equipment | 450 | 596 |
Amortization of intangible assets | 420 | 200 |
Finance charges, net | 355 | 176 |
EBITDA | 1,954 | 1,146 |
(Recovery of) provisions for excess and obsolete inventory | (6) | 262 |
Other losses (gains), net | 44 | (201) |
Share-based compensation | 427 | 254 |
Adjusted EBITDA | 2,419 | 1,461 |
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 New product and technology offerings as products or technologies introduced to our portfolio in the past 36 months.
5 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.
SOURCE
© Canada Newswire, source