EDMONTON, AB, May 10, 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 March 31, 2024. The Corporation also announced that its Board of Directors has declared a quarterly cash dividend of $0.02 per common share payable on July 15, 2024, to shareholders of record as of close of business on June 30, 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. First Quarter Highlights: As anticipated, revenue for the quarter declined by 2.4% from the comparative period to $16.5 million, due to timing of certain customer purchase commitments; Net earnings increased 85% to $1.0 million compared to the first quarter of 2023 of $0.5 million on revenues of $16.5 million and $16.9 million, respectively; Adjusted EBITDA1 of $2.3 million, or 14% of revenue, compared with $2.4 million, or 14% of revenue, in 2023; Advanced its Digital Technology Roadmap: Delivered fourteen (14) of McCoy's Flush Mount Spider (FMS) during the first quarter of 2024 (Q1 2023 – 4 tools). With a growing number of tools operating in-field, operators are recognizing the benefits of McCoy's FMS, which has in turn led to more widespread adoption resulting in robust order intake. 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 as well as the ability to integrate with McCoy Smart Casing Running Tool (smartCRT™). Progressed in-field trials with our partnering customer in North America for the smarTR™, McCoy's integrated casing running system. Field trials are a critical stage to full commercialization and the process continues to provide valuable data which has led to continued refinement our technology. We expect further advancements toward commercialization and look forward to reporting our progress on key milestones. McCoy completed the design for an enhanced smartCRT™ that will address the new tool specifications introduced by National Oil Companies (NOCs) and major operators in certain key regions. With product prototyping scheduled for Q2 2024, McCoy's enhanced smartCRT™ will not only address the new contract requirements, but also provide an intelligent, connected enhancement to conventional casing running tool on the market today, offering superior safety, efficiency and simplified operating procedure, with real-time data collection and analysis capabilities. Declared a quarterly cash dividend of $0.02 per common share payable on July 15, 2024, to shareholders of record as of close of business on June 30, 2024. "McCoy's first quarter earnings performance benefitted from the continued revenue growth of McCoy's recently introduced Flush Mount Spider (FMS) in the North American land market, in spite of declining rig count and drilling activity levels in the region," said Jim Rakievich, President & CEO of McCoy. "Looking ahead, oil and gas market fundamentals remain robust for international markets, especially in the Middle East and North Africa (MENA) region, and our base TRS product lines, including hydraulic power tongs, torque-turn systems, and aftermarket parts and consumables continue to provide consistent revenue contributions. As we advance through the commercialization phase of our 'Digital Technology Roadmap' initiative, as proven by our success with the FMS, we anticipate future revenues will rely less on the cyclical nature of drilling activity, and more on technology adoption, demand from emerging local and regional market players, and market share expansion in new geographical areas." "For the first quarter of 2024, McCoy reported net earnings of $1.0 million, on revenues of $16.5 million, an increase of 85% from the comparative period (Q1 2023 - $0.5 million on revenues of $16.9 million). Though revenues were impacted by timing delays on certain customer purchase commitments, and greater than anticipated book-and-ship revenues that positively impacted Q4, 2023, earnings growth was achieved as a result of favourable product margins due to shifts in product mix towards McCoy's recently introduced Flush Mount Spider (FMS), as well as material cost improvements. Earnings also benefited from a reduction in finance charges with repayment of the Corporation's borrowings in the first quarter of 2023," said Lindsay McGill, Vice President & CFO of McCoy. "As at March 31, 2024, McCoy's backlog totaled $25.2 million (US$18.6 million), which will support strong revenue and earnings performance for the remainder of 2024." First Quarter Financial Highlights: Total revenue of $16.5 million, compared with $16.9 million in Q1 2023; Net earnings of $1.0 million, compared to $0.5 million in Q1 2023; Adjusted EBITDA1 of $2.3 million, or 14% of revenue, compared with $2.4 million, or 14% of revenue, in 2023; Booked backlog2 of $25.2 million at March 31, 2024, compared to $26.1 million in the first quarter of 2023; Book-to-bill ratio3 was 1.13 for the three months ended March 31, 2024, compared with 1.14 in the first quarter of 2023. Financial Summary Revenue of $16.5 million for the three months ended March 31, 2024, decreased 2% from the comparative period. As anticipated, timing delays on certain customer purchase commitments, and greater than anticipated book-and-ship revenues that positively impacted Q4, 2023 resulted in quarter-to-quarter fluctuations in revenue, negatively impacting Q1, 2024. Revenue in the first quarter of 2024 included sales for fourteen (14) of McCoy's FMS tool, demonstrating continued strong adoption of the Corporation's new technologies. Gross profit, as a percentage of revenue for the three months March 31, 2024, was 32%, an increase of 3% compared to the comparative period in 2023. This was due to a shift in product mix towards new technologies such as the FMS with favourable product margins and away from traditional capital equipment which commands higher material cost, as well as supply chain cost containment efforts. For the three months ended March 31, 2024, general and administrative expenses (G&A) of $2.2 million remained consistent from the comparative period and included bad debts provision of $0.3 million (2023 – $0.1 million). As a percentage of revenue, G&A was consistent with the comparative period. For the three months ended March 31, 2024, sales and marketing expenses increased from the comparative period by $0.2 million due to increased headcount for sales and customer support activities, as well as increased marketing expenses to promote the Corporation's newly developed products. During the three months ended March 31, 2024, the Corporation further advanced its 'Digital Technology Roadmap' initiative through continued focused on accelerating customer adoption of new technologies as well as the design and development of additional 'smart' product enhancements and complementary product accessories. For the remainder of 2024, the Corporation has committed US$0.7 million of capital toward the development of these enhancements and additional product offerings, including enhancements to McCoy's smartCRT™ to address new contractual operating requirements in certain geographies. In the current period, Product development and support expenses increased from the comparative period due to increased headcount to support customer adoption of new technologies. For the three months ended March 31, 2024, as well as the comparative period, other losses, net is comprised of foreign exchange losses. Net earnings for the three months ended March 31, 2024, was $1.0 million or $0.04 per basic share, compared with net earnings of $0.5 million or $0.02 per basic share in the first quarter of 2023. Adjusted EBITDA1 for the three months ended March 31, 2024, was $2.3 million compared with $2.4 million for the first quarter of 2023. As at March 31, 2024, the Corporation had $10.6 million in cash and cash equivalents. Selected Quarterly Information ($000 except per share amounts and percentages) Q1 2024 Q1 2023