McCoy Global Announces Second Quarter 2020 Results

Source Company Press Release
Company McCoy Global Inc.
Tags Corporate: Corporate Results, Guidance, Overview/Strategy, Country: Canada, Financial - Costs & Metrics: Capital Expenditures
Date August 13, 2020

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, 2020.

Quarterly Highlights

  • Quarterly revenue of $10.4 million continues to be leveraged toward international customers as the North American market remained in a historic decline
  • Reported net earnings of $0.8 million compared to a net loss of $1.6 million in the second quarter of 2019
  • COVID-19 continued to negatively impact the industry as oil consumption stalled globally, however operations and customer support continued throughout the quarter though the COVID-19 crisis continued to restrict certain activities
  • Exceeded cost reduction targets announced in April of 2020, for an estimated $7.2 million of annualized savings"

The continued impact of the COVID-19 pandemic remained at the forefront of the global oil & gas industry during the quarter. The rise in worldwide oil consumption that was experienced through the end of April has stalled as spikes in positive COVID-19 cases have once again stagnated economic activity. McCoy's proactive response to these new market realities continued throughout the second quarter. The achievements we made to reduce our cost structure is the full reflection of the commitment and focused efforts of our global team. Despite a sequential revenue reduction of $1.1 million as compared to the first quarter, 2020, we are very pleased to report net earnings of $0.8 million. McCoy's global footprint continues to illustrate its value as international revenues dominate so far in 2020. The North American land market will go on to bear the brunt of this unprecedented decline in global oil consumption," said Jim Rakievich President and CEO of McCoy Global. "As we look ahead into the second half of 2020 and into the first half of 2021, we expect these to be the most challenging quarters of this negative cycle. The continued lag in global oil consumption, coupled with capital spending cuts across the industry will indeed create another hurdle in the recovery."

Now more than ever, the increased emphasis on capital discipline from our customers is driving the need for increased efficiency through innovative technologies. During the second quarter, we continued our journey to advance tubular running operations toward a digital and automated future. Our goal of introducing safer, more efficient technologies that result in not only cost savings but also improved wellbore integrity, continues as we have now launched the Virtual ThreadRepTM platform. The next phases of the project will continue to be developed throughout the remainder of 2020 and 2021.

"In closing, I want to thank our extraordinary team and their incredibly supportive families for the continued attention to a safety-first approach during these trying times. We have witnessed determination, compassion, caring and creativity on a daily basis from our teams across the globe."

Operational Summary

For the three months ended June 30, 2020, McCoy Global reported:

  • Revenue of $10.4 million, compared to revenue of $11.5 million in the second quarter of 2019; revenue was supported by orders received in late 2019 and into early 2020
  • Cash generated from operating activities for the period ending June 30, 2020 was $0.4 million compared to cash generated in operating activities of $2.2 million in 2019
  • Net earnings of $0.8 million, compared to net loss of $1.6 million in the second quarter of 2019
  • Adjusted EBITDA1 of $1.3 million, compared to Adjusted EBITDA loss of $0.1 million in the second quarter of 2019
  • Customer orders of $4.1 million, compared to $13.0 million for the three months ended March 31, 2020; subsequent to June 30, 2020 order intake improved with $6.5 million of orders received to August 12, 2020
  • Backlog2 of $8.3 million, a decrease of 45% compared to $15.1 million from March 31, 2020; this is expected to set up challenging quarters ahead from a revenue and earnings standpoint
  • Book-to-bill ratio3 of 0.39, compared to 1.15 for the three months ended March 31, 2020

Financial Summary

Revenue for the three months ended June 30, 2020 was $10.4 million, a decrease of $1.1 million from the second quarter of 2019. Revenue for the three months ended June 30, 2020 was supported by backlog that was derived through late 2019 and into early 2020. The continued COVID-19 pandemic has resulted in a material reduction in capital spending by our customers. In the comparative period, 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, 2020 was $2.6 million, a decrease of $0.2 million, from the second quarter of 2019. Gross profit percentage for the three months ended June 30, 2020 remained consistent with the comparative period despite the $1.1 million decline in revenue. This was a direct result of committed cost reduction initiatives that were announced in both April of 2020 and the fourth quarter of 2019.

General and administration (G&A) expense for the three months ended June 30, 2020 was $1.5 million which represents a decrease of $1.0 million or 39% from the second quarter of 2019. Sequentially, G&A declined $0.3 million or 15% from the first quarter of 2020. The decrease in G&A is in direct response to the continued activity levels in the oil & gas industry as well as our initiative to become more efficient and productive for the long term.

Sales & Marketing expense for the three months ended June 30, 2020 decreased by $0.3 million or 42% for the second quarter of 2019 primarily due cost containment initiatives, as well as travel restrictions and a major tradeshow cancellation in the second quarter.

Research and development expenditures ("R&D") for the three months ended June 30, 2020 were $0.8 million, compared to $1.6 million in the second quarter of 2019. The decline in spend is a result of deferring certain external project expenditures as part of the cash preservation measures announced in April, while advancing the development of McCoy's digital platform of technologies that will drive the technology success in the future using internal resources.

Net earnings for the three months ended June 30, 2020 was $0.8 million or $0.03 earnings per basic share, compared to net loss of $1.6 million or $0.06 loss per basic share in the second quarter of 2019.

Adjusted EBITDA1 for the three months ended June 30, 2020 was $1.3 million, compared to a nominal $0.1 million loss for the second quarter of 2019.

As at June 30, 2020, the Corporation had $10.3 million in cash and cash equivalents, of which $0.5 million was restricted per the conditions of its credit facility.

Selected Quarterly Information

($000 except per share amounts and percentages)  Q2 2020  Q2 2019  % Change 
Total revenue  10,361  11,455  (10) 
Gross profit  2,631  2,851  (8) 
as a percentage of revenue  25  25 
Net earnings (loss)  782  (1,590)  149 
per common share – basic  0.03  (0.06)  150 
per common share – diluted  0.03  (0.06)  150 
Adjusted EBITDA1  1,327  (61)  2,275 
per common share – basic  0.05 
per common share – diluted  0.05 
Total assets  63,028  57,682 
Total liabilities  22,781  20,322  12 
Total non-current liabilities  11,347  5,514  106 

Summary of Quarterly Results

McCoy reported its fourth consecutive quarter of positive Adjusted EBITDA:

($000 except per share amounts)  Q2 2020  Q1 2020  Q4 2019  Q3 2019  Q2 2019  Q1 2019  Q4 2018  Q3 2018 
Revenue  10,361  11,323  11,875  15,222  11,455  14,840  13,543  13,899 
Impairment & restructuring charges  136  65  15 
Net (loss) earnings  782  (87)  61  1,238  (1,590)  524  931  183 
Basic & diluted (loss) earnings per share  0.03  0.04  (0.06)  0.02  0.03  0.01 
EBITDA  1,886  1,078  1,176  2,144  (828)  1,289  1,513  911 
Adjusted EBITDA  1,327  1,919  1,487  2,213  (61)  713  776  687 

Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd