McCOY GLOBAL ANNOUNCES THIRD QUARTER 2024 RESULTS AND DECLARATION OF QUARTERLY DIVIDEND
EDMONTON, AB, Nov. 8, 2024 /CNW/ - McCoy Global Inc. ("McCoy," "McCoy Global" or "the Corporation") (TSX:MCB) today announced its operational and financial results for the three months ended September 30, 2024. The Corporation also announced that its Board of Directors has declared a quarterly cash dividend of $0.02 per common share payable on January 15, 2025, to shareholders of record as of close of business on December 31, 2024. The dividend per common share is a regular dividend and is an "eligible" dividend for purposes of the Income Tax Act (Canada) and any similar provincial/territorial legislation.
Third Quarter Highlights:
Reported order intake of $24.1 million for the three months ended September 30, 2024, a 57% increase from the $15.4 million of order intake reported in the third quarter of 2023, and a sequential increase of 35% compared to the $16.7 million reported in the second quarter of 2024. Order intake in the third quarter of 2024 included a significant contract award for McCoy's enhanced hydraulic CRT tools, as well as a significant contract award for its deep-water integrated casing systems.
Reported revenue of $15.8 million for the quarter, a decrease of 6% from the comparative period, primarily due to timing of contract awards, which led to fluctuations in order intake and customer shipments between quarters. The decline in revenue and production throughput, alongside an increase in stock-based compensation expense due to the appreciation of the Corporation's share price, lead to a decrease in net earnings of 72% to $0.5 million compared to the third quarter of 2023 of $1.9 million;
Since January 1, 2024, advanced its Digital Technology Roadmap:
Delivered forty-two (42) of McCoy's Flush Mount Spider (FMS) (2023, 11 tools). With a growing number of tools operating in-field, operators are increasingly recognizing the benefits of McCoy's FMS leading to more widespread adoption. Consolidation in the North American E&P space has also become a favourable trend as safety and efficiency standards are integrated across these mergers. 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. The tool has the ability to integrate with McCoy Smart Casing Running Tool (smartCRT™) and McCoy's smartTR™
Announced the acceptance of a contract award totaling CAD$4.3 million for several enhanced hydraulic smart casing running tools (smartCRT™s) destined for the Middle East market. Our unique, patented solution is a hydraulic option to our smart product suite and is fully ready to integrate into our smarTR™ system. This represents an important milestone on our journey towards automating tubular running services. The expedited development and commercialization of this enhancement was a response to certain new Casing Running Tool (CRT) requirements for future contract tender awards announced by National Oil Companies (NOCs) and major operators in certain key regions in the first quarter of 2024. McCoy's hydraulic smartCRT™ not only addresses the new contract requirements, but also offers an intelligent, connected enhancement to conventional casing running tools available today. This tool provides superior safety, efficiency and simplified operating procedures along with real-time data collection and analysis capabilities. This technology mitigates the risk of conventional, mechanical CRT technology, while providing actionable insights that optimize future performance. We officially launched the tool at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) earlier this week and have received substantial customer interest.
In-field trials with our partnering customer for smarTR™, McCoy's land-targeted integrated casing running system, continue to progress. The success of McCoy's CRT enhancement has alleviated several external hurdles to advance in field trials and further improves speed, efficiency and simplifies operating procedures of the smarTR™ system.
Won a contract award totaling $3.7 million for deep-water offshore integrated casing running systems destined for Latin America and an additional $1.8 million in awards for deep-water systems for a separate customer in Brazil. Delivering this technology will complete the first step on a roadmap to a comprehensive smarTR™ system tailored for offshore and deep-water markets. The Latin 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.
Declared a quarterly cash dividend of $0.02 per common share payable on January 15, 2025, to shareholders of record as of close of business on December 31, 2024.
"We are pleased with our continued commercial success and the growing customer demand for our smart product technology offerings, driving $24.1 million of order intake in the third quarter. Despite a modest decrease in revenue, the robust adoption of our Flush Mount Spiders (FMS) and significant contract awards for our deep-water integrated casing running solutions highlight our strategic advancements. These milestones represent the value of McCoy's technology strategy in an otherwise flat to down US land market. The successful launch and substantial interest in our enhanced hydraulic smartCRT™ at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) marks a significant milestone in our journey towards automating tubular running services," said Jim Rakievich, President & CEO of McCoy. "As field trials for our integrated smarTR™ system for land application progress towards completion, we expect 2025 to be a pivotal year for the initial adoption of this technology in the North America land market, setting the stage for future revenue growth in 2026 and beyond. Our commitment to innovation and operational excellence is evident in the successful launch of our smart products and the substantial interest they have garnered. We remain focused on delivering value to our shareholders and customers."
"Our financial results for 2024 year to date, reflect the robust demand for our newly commercialized products and our disciplined approach to cost management. Although we experienced a decrease in revenue and net earnings this quarter, our strong order intake and solid net cash position underscore our financial stability. The 57% increase in order intake and continued investment in our Digital Technology Roadmap are testaments to our strategic execution. As we continue to commercialize our new technology offerings, we expect future revenues to be driven more by technology adoption and market expansion, though as we've experienced in 2024, fluctuations in order intake and revenues, and subsequently earnings and working capital, may occur due to the nature of our capital equipment and timing of contract awards." said Lindsay McGill, Vice President & CFO of McCoy. "As at September 30, 2024, McCoy's backlog totaled $30.1 million, and although quarter-to-quarter fluctuations negatively impacted earnings and revenue for the third quarter as anticipated, this backlog will support strong revenue and earnings performance for the quarter ahead."
Third Quarter Financial Highlights:
Total revenue of $15.8 million, compared with $16.9 million in Q3 2023;
Net earnings of $0.5 million, compared to $1.9 million in Q3 2023;
Adjusted EBITDA1 of $2.7 million, or 17% of revenue, compared with $3.9 million, or 23% of revenue, in 2023;
Booked backlog2 of $30.1 million at September 30, 2024, compared to $24.7 million in the third quarter of 2023;
Book-to-bill ratio3 was 1.53 for the three months ended September 30, 2024, compared with 0.91 in the third quarter of 2023.
Financial Summary
Revenue of $15.8 million for the three months ended September 30, 2024, decreased 6% from the comparative period, primarily due to the timing of contract awards, which led to fluctuations in order intake and customer shipments. For the nine months ended September 30, 2024, revenue increased by 5% to $52.3 million, driven by strong adoption of McCoy's FMS, as well as robust order intake and delivery of traditional wellbore equipment and aftermarket parts in the Middle East North Africa (MENA) region. Revenue in the first three quarters of 2024 included sales of forty-two (42) of McCoy's FMS tools, an innovative technology commercialized in late 2022.
Gross profit, as a percentage of revenue, for the three and nine months ended September 30, 2024, was 34% and 33% respectively, a decrease of 3 percentage points and no change from comparative periods in 2023. Gross profit was impacted by reduced production throughput, as well as increased service and technical support costs associated with introducing new products to market despite lower quarterly revenues.
For the three and nine months ended September 30, 2024, general and administrative expenses (G&A) $2.6 million and $6.4 million, respectively, an increase from the comparative periods primarily due to stock-based compensation expense from the appreciation of the Corporation's stock price in Q3. As a percentage of revenue, G&A increased by 5 percentage points and remained unchanged, respectively, compared to 2023.
For the three and nine months ended September 30, 2024, sales and marketing expenses were $0.8 million and $2.0 million, respectively, which include increased headcount and travel for sales and customer support activities related to the commercialization of McCoy's new technologies. As a percentage of revenue, Sales & Marketing increased 2 percentage points and 1 percentage point respectively, compared to the comparative periods.
