McCoy Corporation

McCoy Corporation

March 13, 2009 08:05 ET

McCoy Corporation Announces 2008 Annual Results-Growth in International Sales Offsets Weak Domestic Demand

EDMONTON, ALBERTA--(Marketwire - March 13, 2009) - McCoy Corporation ("McCoy" or "the Corporation") (TSX:MCB) today announced results for the three and twelve months ended December 31, 2008. Revenue for the year was $168.4 million, an increase of $7.3 million or 4.6% compared to 2007. EBITDAS(1) for 2008 was $17.9 million, compared to $17.8 million in 2007. Annual net earnings was impacted by a fourth quarter non-cash impairment of goodwill and intangibles in the amount of $14.9 million, resulting in a net loss of $(5.6) million, compared to earnings of $8.1 million in the 2007 fiscal year. Excluding the impact of the goodwill and intangibles impairment charge, net earnings for 2008 were $8.3 million, a slight increase over net earnings for 2007. Revenue for the 2008 fourth quarter was $41.2 million, a decrease of $1.9 million or 4.5% compared to the 2007 fourth quarter. Net (loss) earnings for the fourth quarter was $(12.1) million, compared to $1.7 million for the fourth quarter of 2007. Excluding the impact of the $14.9 million goodwill and intangibles impairment charge, net earnings for the fourth quarter of 2008 was $1.8 million, modestly higher than net earnings for the fourth quarter of 2007.

Year Ended
December 31
2008 2007
Goodwill and Goodwill and
Per Financial Intangibles Intangibles Per Financial
($000 s except per Statements Impairment Impairment Statements
share amounts)

Net (loss) earnings
before taxes (2,975) 14,900 11,925 12,491
Taxes 2,578 (1,000) 3,578 4,388
Net (loss) earnings (5,553) 13,900 8,347 8,103
Basic (loss)
earnings per share (0.20) 0.50 0.30 0.34
Diluted (loss)
earnings per share (0.20) 0.50 0.30 0.33

McCoy's Energy Products & Services segment achieved 39.8% growth in its annual revenue compared to 2007 sales, mainly due to the inclusion of a full twelve months of results from two of McCoy's United States operating companies, Superior Manufacturing & Hydraulics ("Superior") and Precision Die Technologies ("PDT"), compared to five months in 2007. The rest of the increase was directly attributable to continued sales growth in the international oil and gas markets. The Trailer Manufacturing segment experienced a significant decrease in revenue of $14.6 million, or 27.5%, to $38.6 million in 2008. The decrease is mainly due to the reduction in conventional oil and gas activity in the Western Canadian Sedimentary Basin. The Truck & Trailer Products & Services segment experienced a revenue decrease of $4.6 million, or 12.8%, to $31.3 million in 2008. The bulk of this decrease is related to a decline in sales at the Peerless parts and services locations, which is related to the decline in trailer sales.

Mr. Jim Rakievich, McCoy's President and CEO commented, "The global reach of our sales enabled us to post our seventh consecutive year of revenue and operating earnings growth however 2008 was a challenging year and we are continuing to respond by reducing our workforce and cutting discretionary expenses and capital expenditures. Our Energy Products & Services segment had its best year ever because the markets for most of its products are international. Going forward, a primary focus of our company is to continue to grow our international business because we believe strongly that the global oil and gas marketplace, with its broadly diversified customer, geographic and geologic base, will continue to outperform the local western Canadian market. We will continue to refine our operations through our lean manufacturing initiatives and integration of operating entities to continually improve efficiencies. As well, we will be looking to exploit accretive acquisition situations that may only arise in the current economic environment, and we are optimistic that the coming year may generate some excellent windows of opportunity. McCoy is well positioned to weather this recession and emerge as a stronger company."

Financial Highlights

Year Ended December 31
($000 s except per share amounts) 2008 2007 2006

Total revenue 168,395 161,061 144,499

Net (loss) earnings for the year
before discontinued operations (5,553) 8,706 8,383

Net (loss) earnings for the year (5,553) 8,103 7,865

Basic (loss) earnings per share
before discontinued operations (0.20) 0.36 0.45

Basic (loss) earnings per share (0.20) 0.34 0.42

Diluted (loss) earnings per share
before discontinued operations (0.20) 0.36 0.43

Diluted (loss) earnings per share (0.20) 0.33 0.40

EBITDAS(1) 17,875 17,821 16,830

EBITDAS(1) per share 0.65 0.75 0.90

Total Assets 100,587 116,197 82,288

Total Liabilities 32,436 40,137 52,127

Three Months Ended December 31
($000 s except per share amounts) 2008 2007 2006

Total revenue 41,235 43,175 42,397

Net (loss) earnings for the period
before discontinued operations (12,061) 1,817 2,437

Net (loss) earnings for the period (12,061) 1,679 2,252

Basic (loss) earnings per share
before discontinued operations (0.44) 0.07 0.13

Basic (loss) earnings per share (0.44) 0.06 0.12

Diluted (loss) earnings per share
before discontinued operations (0.44) 0.07 0.12

Diluted (loss) earnings per share (0.44) 0.06 0.11

EBITDAS(1) 4,101 4,198 5,741

EBITDAS(1) per share 0.15 0.15 0.30

(1) EBITDAS is a non-GAAP measurement defined as earnings before interest,
taxes, depreciation, amortization (including non-cash impairment
charges) and stock-based compensation .


For 2009, the global financial crisis and the economic slowdown worldwide has created a large degree of uncertainty. Management anticipates a reduction in demand for its manufactured products and does not expect sales to recover before the year end. Management is also mindful of the recent commodity price volatility and the impact it is having on customer spending. As a result of the continued downturn in demand for all of McCoy's manufactured product, management and the Board have implemented significant cash management measures including the reduction of labour and other operating costs, reducing non-critical capital expenditures and the reduction of the dividend.

The Corporation's continued implementation of "lean manufacturing" processes was a major success factor in 2008 and is expected to continue to show positive results in 2009 and beyond. McCoy is committed to continuously improving efficiencies and moving closer to its goal of having its operations become centers of excellence for manufacturing and being the low cost provider while maintaining high quality standards. The Corporation has established a lean consortium group representative of all of McCoy's business segments and believes its experience with lean implementations will be an advantage in any manufacturing businesses that McCoy may acquire.

The Corporation will continue to integrate Superior and PDT into its operations, specifically with Farr Canada. The Corporation will also continue to integrate McCoy's two trailer manufacturing business units in order to gain cost efficiencies and improve customer service.

McCoy's Energy Products & Services segment is focused on growing its replacement parts and service business for drilling equipment used worldwide. The recurring revenue from maintaining customers' existing equipment is a large, worldwide market that the Corporation has the ability to penetrate. This is an area in which McCoy is confident to invest in during these uncertain times. In addition, McCoy will continue to review and pursue opportunities to fill in the gaps in our suite of drilling equipment products that are part of the Corporation's long term strategy to become a significant supplier of drilling equipment globally. This is expected to be done through internal research and development and through acquisitions. The February 28, 2009 acquisition of RP Manufacturing and Calibration is an example of a tuck-in acquisition which filled a product line gap. Should additional acquisition opportunities at the right price become available, management will seriously consider acting on them while recognizing the need to also conserve cash in this uncertain business environment.

The ongoing credit crisis and depressed oil and gas commodity prices will negatively impact McCoy's 2009 results. The Corporation will continue to monitor the markets in which it operates and will continue to take decisive action to mitigate the impact.

Conference Call

McCoy will host a conference call and webcast today at 9 a.m. Mountain time (11 a.m. Eastern). Management participants will be:

- Jim Rakievich, President & Chief Executive Officer;

- Milica Stolic, Chief Financial Officer;

- Ted Redmond, Executive Vice President, Energy Products & Services; and

- Peggy Robertson, Vice President, Corporate Affairs.

Participants calling from Canada or the United States should call toll-free: 1-866-782-8903. Callers from other locations may access the call at: 1-647-426-1845. For those who prefer to join by webcast, a link will be displayed on the home page of McCoy's website at

A recording of the call will be available via telephone for seven days by calling 1-866-245-6755 or 1-416-915-1035. The replay passcode number is 97789. The transcript of the conference call will be archived on the investor page of McCoy's website.

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 & Services ("EP&S"), Trailer Manufacturing ("TLM") and Truck & Trailer Products & Services ("TTP&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, dies and inserts for oilfield tools, make/break machines and produces wear-reducing coatings for drilling tools and oil sands equipment. TLM is a leading Western Canadian manufacturer of custom heavy duty trailers serving the global oil and gas, forestry, construction, infrastructure and transportation markets. TTP&S is engaged in heavy duty truck and trailer repairs, maintenance, parts distribution and sales. McCoy employs approximately 575 individuals in Alberta, British Columbia and Louisiana.

Forward-Looking Information

This News Release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this News Release contains forward-looking statements and information concerning McCoy's future financial performance. The forward-looking statements and information are based on certain key expectations and assumptions made by McCoy, including expectations and assumptions concerning fluctuations in the level of oil and gas industry capital expenditures, McCoy's ability to integrate acquired businesses and complete strategic acquisitions of additional businesses and other factors that affect demand for McCoy's products. Although McCoy believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because McCoy can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause McCoy's actual results and experience to differ materially from the anticipated results or expectations expressed. These risks and uncertainties, include, but are not limited to, fluctuations in oil and gas prices, fluctuations in the level of oil and gas industry capital expenditures and other factors that affect demand for McCoy's products, industry competition, the need to effectively integrate acquired businesses, uncertainties as to McCoy's ability to implement it's business strategy effectively in Canada and the United states, labour, equipment and material costs, access to capital markets, interest and McCoy's ability to attract and retain key personnel. Additional information on these and other factors is available in continuous disclosure materials filed by McCoy with Canadian securities regulators. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this News Release or otherwise, and to not use future-oriented information or financial outlooks for anything other than their intended purpose. McCoy undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

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