McCoy Corporation

McCoy Corporation

May 12, 2008 19:56 ET

McCoy Corporation Announces First Quarter 2008 Results- Growth From Recent Acquisitions Sustains Profit as Truck and Trailer Businesses See Signs of Recovery

EDMONTON, ALBERTA--(Marketwire - May 12, 2008) - McCoy Corporation ("McCoy" or the "Corporation") (TSX:MCB) today announced results for the three months ended March 31, 2008. First quarter net earnings were $1.8 million, down $1.1 million compared to the 2007 first quarter, and up $0.1 million compared to the prior quarter ended December 31, 2007. Revenue for the quarter was $35.9 million, a decrease of $6.2 million compared to the first quarter of 2007, and down $7.2 million compared to the fourth quarter of 2007. McCoy's first quarter results reflect the continued impact of reduced conventional oil and gas activity in western Canada on the Trailer Manufacturing and Truck & Trailer Products & Services segments, which was offset to some extent by 41% sales growth in the Corporation's Energy Products & Services segment, compared to the first quarter of 2007. This growth is attributable to the inclusion of results from McCoy's recent U.S. acquisitions, Superior Manufacturing & Hydraulics, Inc. ("Superior") and Precision Die Technologies, L.L.C. ("PDT"). Increased order book activity in the Corporation's Trailer Manufacturing segment and increased business towards the end of the quarter for McCoy's Truck & Trailer Products & Services segment signaled expected improving results as the year progresses.

"Although our truck and trailer businesses had another challenging quarter, similar to the last half of 2007, we are seeing signs of recovery," said Mr. Jim Rakievich, McCoy's President and CEO. "Order books for our Trailer Manufacturing segment are starting to fill again, leading us to anticipate increased sales in the second half of 2008. For example, the recently announced $4.2 million heavy duty trailer order is expected to ship in the third quarter. As well, although our Truck & Trailer Products & Services segment had a weaker than expected January and February, in March business picked up with the second quarter looking strong as mobile equipment maintenance steps up during spring break-up. Meanwhile, the Energy Products & Services segment showed stellar revenue and earnings growth in the quarter, and results from this group would have been even stronger except for the timing of several large orders that had not yet shipped at the end of the quarter. We believe McCoy remains well positioned to be a $300 million revenue generating business by the end of 2009 as we continue to invest in the efficiency and growth of our current businesses and to pursue the strategic acquisition of growing, profitable companies that complement our present businesses."

Financial Highlights

($000's, except per Three Months Ended Three months ended
share amounts) March 31 Dec. 31
2008 2007 Percent 2007 Percent
increase increase
(decrease) (decrease)
Revenue 35,942 42,140 (15) 43,175 (17)
Net earnings 1,800 2,939 (39) 1,679 7
Basic and diluted
earnings per share 0.06 0.15 (60) 0.06 -
EBITDAS (1) 4,040 5,586 (28) 5,708 (29)
EBITDAS (1) per share 0.15 0.29 (48) 0.20 (25)
Total Assets 113,815 84,143 35 116,197 (2)
Total Liabilities 36,536 51,403 (29) 40,137 (9)
Total Long-term
Liabilities 13,639 13,808 (1) 14,903 (8)
(1) EBITDAS, a non-GAAP measurement, is defined by the Corporation as
"Earnings before interest, taxes, depreciation, amortization and
stock-based compensation".

Outlook for 2008

The Corporation's continued implementation of "lean manufacturing" processes was a major success factor in 2007 and is expected to continue to be so in 2008 as this implementation has shown positive results in improving efficiency and increasing capacity. The Corporation intends to continue to integrate its two power tong manufacturing businesses and its dies and inserts operation, Superior, Farr Canada and PDT, and will also continue to integrate its two trailer manufacturing business units, Peerless Limited and Scona Trailer Manufacturing, in order to gain efficiencies.

McCoy believes that its Energy Products & Services segment has solid growth potential from its international sales network and exposure to accelerating activity in the Alberta oil sands. The results of the Truck & Trailer Products & Services segment are expected to improve with the removal of the negative impact of the Fort St. John operation (discontinued operations) in the fourth quarter of 2007 and the return of healthy demand for services at the Alberta-based operations. Management anticipates that the Trailer Manufacturing segment will experience gradual revenue improvement in 2008 as it modifies its product offering to target the infrastructure, international oil and gas, construction and non-oil & gas transportation markets and reduce its dependence on the western Canada oil and gas and logging sectors. International sales increased from 16% of revenue in 2006 to 29% of revenue in 2007, and this trend is a result of our strategy to continue to grow our international sales. Natural gas prices have increased 27% over a year ago and oil prices are up by 71% over the same time last year. If the current upward trends in oil and gas commodity prices persist, this will have a positive impact on McCoy's 2008 results. The Corporation has a strong balance sheet that positions it well for the acquisition of growing, profitable, complementary companies as such opportunities arise.

Conference Call

McCoy will host a conference call and webcast on Tuesday, May 13 at 8 a.m. Mountain time (10 a.m. Eastern). Management participants will be:

- Jim Rakievich, President & Chief Executive Officer;

- Milica Stolic, Chief Financial Officer;

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

- Peggy Robertson, Vice President, Corporate Affairs.

Participants calling from Canada or the United States should call toll-free: +1-866-400-3310. Callers from other locations may access the call at: +1-416-850-9144. 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 until midnight on May 20, 2008 by calling +1-866-245-6755 or +1-416-915-1035. The replay passcode number is 136523. As well, the transcript of the conference call will be posted 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 ("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, dies and inserts for oilfield tools, and produces wear-reducing coatings for drilling tools and oil sands equipment. TLM is the leading Western Canadian manufacturer of custom heavy duty trailers serving the global oil and gas, forestry, construction, infrastructure and transportation markets. TT&S is engaged in heavy duty truck and trailer repairs, maintenance, parts distribution and sales. McCoy employs approximately 750 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 business and other factors that affect demand for McCoy's products. Although McCoy believe 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 its business strategy effectively in Canada and the United States, labour, equipment and material costs, access to capital markets, interest and currency exchange rates, technological developments, political and economic conditions 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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