McCoy Global Inc. announces second quarter 2015 results
McCoy Global Inc. today announced its operational and financial results for the three months ended June 30, 2015.
"The continued decline in North American drilling and completions activity significantly impacted McCoy Global's second quarter revenue and gross profit," said Jim Rakievich, President and CEO of McCoy Global. "Although the timing of any recovery remains uncertain, we will continue to responsibly manage costs and cash flow throughout the downturn and focus on working with our strong customer base to deliver market leading technologies. McCoy Global has a proven leadership team in place, a strong balance sheet and a long-term strategy for the Corporation to which we remain committed. As this downturn evolves, our long-term plan to strategically position the Corporation into the global market has become increasingly important. Additionally, our focus on aftermarket opportunities has provided additional revenue in an environment of tight capital equipment budgets."
Since April 1, 2015, McCoy Global reported:
Revenue of US$23.0 million, compared to US$27.9 million in Q2 2014
Loss from continuing operations of US$0.5 million, compared to earnings of US$2.3 million in Q2 2014
Adjusted EBITDA1 of US$1.3 million, compared to US$3.9 million in Q2 2014
Backlog2 of US$20.8 million at June 30, 2015, compared to US$29.8 million at March 31, 2015
Book-to-bill ratio3 of 0.77 for the three months ended June 30, 2015 compared to 0.93 for the three months ended March 31, 2015
Since April 1, 2015, McCoy Global:
Amended the US$50 million syndicated credit facility and extended the facility's maturity date to May 31, 2018
Appointed Mrs. Suzanne Langier to the executive team in the position of Vice President, Human Resources
Appointed Mr. Peter Watson to serve as Vice President, Corporate Development in addition to serving as McCoy Global's General Counsel and Corporate Secretary
Elected Mr. Dale Tremblay to the Board of Directors
Adopted a shareholder rights plan at the McCoy Global annual and special meeting of shareholders
Executed cost containment initiatives to adjust the Corporation's cost structure to align with anticipated near-term activity and mitigate the impact of the cyclical downturn, including consolidating production facilities in Louisiana, a reduction in organisational headcount from January 1, 2015 of 22%, of which 14% occurred over the course of the second quarter, and reductions in both supply chain costs and discretionary spending
Quarterly financial highlights
Revenue for the three months ended June 30, 2015 was US$23.0 million, a decrease of US$5.0 million, or 18%, from US$27.9 million in the comparative quarter of 2014. The decrease in revenue was primarily driven by a sharp decline in North American capital equipment demand, partially offset by a modest increase in aftermarket revenues.
Gross profit percentage for the three months ended June 30, 2015 was 29%, a 14 percentage point decrease from Q2 2014. Gross profit was impacted by an unfavorable shift in product mix with fewer high-margin technical and proprietary software product sales, underutilized production capacity which resulted in the under absorption of production facility expenses and challenging market conditions which generated pricing pressure on certain orders.
General and administrative ('G&A') expense for the three months ended June 30, 2015 was US$4.9 million, a decrease of US$2.0 million from the comparative period in 2014. Continued discipline over discretionary spending and the execution of cost reduction initiatives contributed to the overall decrease in overhead expenditures. This was offset to some extent by G&A costs added to support Eastern hemisphere regional locations and by the impact of foreign exchange as a significant portion of G&A expenses are denominated in United States dollars, with the weakening Canadian dollar negatively impacting G&A expense.
McCoy Global's tax expense was impacted by geographic mix of earnings and losses. For the three months ended June 30, 2015, this resulted in a net tax expense of US$0.1 million on an accounting loss of US$0.5 million. In the comparative quarter, the overall effective tax rate was 25%.
Loss from continuing operations was US$0.5 million ($0.02 loss per basic share) in Q2 2015, compared to earnings of US$2.3 million (US$0.08 earnings per basic share) in Q2 2014.
Adjusted EBITDA1 for the three months ended June 30, 2015 was US$1.3 million, a 66% decrease from US$3.9 million during the same period in 2014, due mainly to lower revenues and gross profit, partially offset by reduced general and administration expenses.
At June 30, 2015, McCoy Global had working capital of US$75.1 million, including US$23.0 million in cash and cash equivalents.
Adapted from a press release by Louise Mulhall