McCoy Corporation
TSX : MCB

McCoy Corporation

November 08, 2007 11:49 ET

McCoy Corporation Announces Restated Third Quarter Results - Recent U.S. Acquisitions Largely Offset Reduced Domestic Sales

EDMONTON, ALBERTA--(Marketwire - Nov. 8, 2007) - McCoy Corporation (TSX:MCB) ("McCoy" or "Corporation") today announced restated results for the third quarter and first nine months of 2007, first announced November 7, 2007. The restated results reflect a revision to the weighted average number of shares outstanding at the three months ending September 30, 2007, which affects basic earnings per share, diluted earnings per share, EBITDA per share, cash flow per share from operations and the percentage increase or decrease to each of these items.

Revenue for the quarter was $36.7 million, a reduction of $1.1 million or 3% compared to the third quarter of 2006. Net earnings were $1.5 million, down $0.3 million compared to Q3 2006. These decreases were largely attributable to softening domestic sales and a strengthening Canadian dollar, offset to a large extent by two months of positive results from McCoy's recent U.S. acquisitions, Superior Manufacturing and Hydraulics Inc. ("Superior") and Precision Die Technologies L.L.C. ("PDT"). Despite the decrease in revenue, consolidated gross margin as a percentage of sales increased by 5% to 35% compared to 30% for the same period in 2006. This is directly attributable to the Corporation's strategic efforts to focus growth into higher margin products in international markets. Revenue and earnings for the nine months ended September 30, 2007 both increased by 14% over the comparable period in 2006 to $119.5 million and $6.4 million respectively. EBITDA(1) for the nine months ended September 30, 2007 increased 21% over the prior year period to $13.5 million. McCoy remains on track for a growth year in 2007.

Mr. Jim Rakievich, McCoy's President and CEO, noted that the Corporation is responding to the new market conditions in several ways. "We tightened up capital spending in facilities that are experiencing excess capacity and we have adjusted our workforce in areas where customer demand is lagging historical numbers. We are diversifying our product offering in our Trailer Manufacturing group by designing and marketing trailers geared for the construction and non-oilfield transportation markets. We expect McCoy's strong balance sheet to allow the Corporation to weather industry slowdowns. As a result, McCoy is well-positioned to be an acquirer as company valuations decline."



Financial Highlights
Three months ended September 30

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($000's, except per share amounts) 2007 2006 % increase
(decrease)
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Revenue 36,721 37,781 (3)
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Net earnings for the quarter 1,542 1,841 (16)
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Basic earnings per share 0.06 0.10 (40)
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Diluted earnings per share 0.06 0.08 (25)
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EBITDA (1) 3,637 3,797 (4)
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EBITDA (1) per share 0.13 0.21 (38)
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Cash flow from operations(2) 2,816 3,001 (6)
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Cash flow per share from operations(2) 0.10 0.16 (38)
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(1) EBITDA, a non-GAAP measurement, is defined by the Corporation as
"Earnings before interest, taxes, depreciation, amortization and
stock-based compensation".

(2) Before net change in non-cash working capital items


Nine months ended September 30

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($000's, except per share amounts) 2007 2006 % increase
(decrease)
----------------------------------------------------------------------------
Revenue 119,549 104,808 14
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Net earnings for the period 6,424 5,613 14
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Basic earnings per share 0.28 0.30 (7)
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Diluted earnings per share 0.28 0.29 (3)
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EBITDA (1) 13,459 11,089 21
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EBITDA (1) per share 0.59 0.60 (2)
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Cash flow from operations(2) 9,411 8,782 7
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Cash flow per share from operations(2) 0.42 0.47 (10)
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Total Assets 117,453 77,138 52
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Total Liabilities 42,300 49,300 (14)
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Total Long-term Liabilities 16,533 14,323 15
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(1) EBITDA, a non-GAAP measurement, is defined by the Corporation as
"Earnings before interest, taxes, depreciation, amortization and
stock-based compensation".

(2) Before net change in non-cash working capital items


External factors affecting the third quarter financial results include:

1. Reduced demand in the conventional Western Canadian oil and gas industry and the Western Canadian logging market caused a considerable reduction in the Corporation's trailer sales and truck and trailer service businesses.

2. Reduced Western Canadian natural gas drilling activity caused a decline of the vacuum tank market.

3. A substantial increase in the value of the Canadian dollar and higher international sales, because Farr Canada generates approximately 95% of its revenue outside of Canada, increased the foreign exchange loss. The Q3 foreign exchange loss in 2007 is $170,862 compared to income of $4,463 in Q3 2006. The foreign exchange loss for the nine months ended September 30, 2007 is $674,984 compared to $89,457 in the same period in 2006.

The Corporation continues to implement its strategy to aggressively target international oil and gas markets which are much less exposed to the cyclicality of the Western Canadian Sedimentary Basin.

The following positive internal action and development lessened the impact of the aforementioned external factors:

The acquisition of Superior and PDT on July 31, 2007 added two months of positive results to the Energy Products & Services segment and helped to offset the reduction experienced in the Trailer Manufacturing and Truck & Trailer Products & Services segments. Gross profit increased by 14%, or $1.5 million for the third quarter of 2007 compared to the same period in 2006. This increase is directly related to the revenue increase in the Energy Products & Services segment.

The restated Q3 Financial Report and MD&A will be filed on SEDAR at www.sedar.com.

Conference Call and Investor Meetings

McCoy hosted a conference call and webcast today at 8 a.m. Calgary time (10 a.m. Eastern).

If you were unable to participate during the live conference call, the call will also be available via telephone until midnight on November 20, 2007 by calling +1-866-245-6755 or +1-416-915-1035. The replay passcode number is 305177. The webcast of the conference call will be posted on the investor page of McCoy's website.

McCoy will be hosting presentations to retail investors in Toronto on November 13 and Vancouver on November 20. For more information or to RSVP, please contact:



Brandon Tran, Bryan Mills Iradesso
e-mail: mccoylunch@bmir.com
phone: 1-866-415-1070 x229
fax: 1-866-205-0111


About McCoy Corporation

McCoy Corporation is a well-established services and equipment provider focused primarily on the global oil and gas sector. McCoy has three operating segments: Energy Products and Services ("EP&S"), Trailer Manufacturing ("TLM") and Truck and Trailer Products and Services ("TT&S"). McCoy's EP&S segment is the leading worldwide manufacturer of tubular make-up power tongs used on drill rigs to thread sections of drill and casing pipe together. EP&S also manufactures vacuum tanks, hydrovac systems and dies and inserts for oilfield tools, and produces wear-reducing coatings for drilling tools and oilsands equipment. TLM is the leading Western Canadian manufacturer of custom heavy duty trailers serving the oil and gas, forestry and construction markets. TT&S is engaged in heavy duty truck and trailer repairs, maintenance, parts distribution and sales. McCoy employs approximately 900 individuals in Alberta, British Columbia and Louisiana.

This release may contain forward looking statements within the meaning of the "safe harbor" provisions of U.S. and other applicable laws. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements. The Corporation does not assume any obligation to update any forward looking information contained in this news release.

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