Tag Archives: MCB

McCoy Global $MCB.to (update)

Very quick update.

I’m no stranger to McCoy. McCoy Global $MCB.to. 

The share price has not performed very well since then. I have owned a small amount of shares thinking that at some point oil and gas activity would bottom and McCoy would benefit from renewed interest in the industry. I have been wrong.

The market cap is now around 11.9mil with an EV of 12.4mil.


  • purchased Draworks in late 2019
    • they assumed some backlog (2mil)
    • complimentary product to their portfolio that would not have been able to build in house
    • 6 mil purchase, had about 6 mil in rev in previous TTM
  • they did release a new torque turn product in Q2 2019
  • they have been working on a remote monitoring solution for customers (Virtual Thread Rep)
  • sales in the TTM have been down due to lower activity (obviously)
    • there is stronger activity internationally than in north america
  • covid
    • salary and wage cuts across the board
    • cut capex by 80%
    • took 2.7mil in PPP loan at 0.98% due April 2022
      • much of this may be forgivin
  • their backlog was down to 8.3 mil
    • although order activity did pick up after the quarter ended
  • from a GAAP standpoint they are net cash neutral as the cash on the balance sheet in 2019 was spent on Draworks


To me this fits nicely in a net-net basket. They business has been impacted and expectations are very low. In the meantime, management has pulled the levers they can in order to lessen the blow. The are not bleeding cash in a time when there is essentially zero interest in their industry.


Anyone else own this one?



*the author is long $MCB.to at time of writing

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McCoy Global $MCB.to

Continuing from the post where I said I was sniffing around the energy services names I took a look at McCoy Global. I’m no stranger to McCoy and owned it a few times in the past. The most recent post is from early 2012. I ended up selling in mid 2013 and early 2014.


McCoy is a leader in threaded connections in well casings. They have exposure to onshore and offshore markets. Despite listing in Toronto, they do most of their business internationally.  About 5% of their revenue is derived from the WCSB.

McCoy has worked to remove the high cost manufacturing form their book of business, they outsource as much as possible now. Focusing on supply chain as they have become a global business has been a priority; especially given their size, their geographical exposure and large business customer base.

Current State

Their current backlog was only 9.9mil in Q1 2019, down from 15mil at the end of 2018. 7.2 mil of orders came in April 2019 and this gives confidence that they will survive this lean environment. Their top line has bounced back somewhat after the lows in 2016, but is very far below previous cycle peaks. As you can see McCoy has done what they can to control opex costs.


At $0.63 (from a few weeks ago) McCoy has a market cap of just over $17mil and an EV of $12mil. See the valuations below.

Management compensation is reasonable and the board owns 3%. It could be better, but I’ve definitely seen worse in O&G. Several large institutions own significant stakes in McCoy.

McCoy has also continued to invest in R&D and building a suite of products that uses data to ensure the best possible connection and monitoring for the customer. I’m expecting a couple new products by the end of 2019.

Given the ever increasing well complexity (which lend well to McCoy’s products), diverse geographical exposure, off-the-grid size of the business and modest valuation; I feel that McCoy has substantially more upside than downside.

Are you finding any value out there?




Disclosure: the author is long MCB.to at time of writing.

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McCoy Re-buy

Very similar to Flint Energy Services (FES.to), I have been buying shares of McCoy Corp. recently (MCB.to). I sold MCB late 2010, so this is my second kick at the can.

You can see from the chart that MCB has done a good job of taking advantage of the increased economic activity. Ebitda margins are near record and ROC is on its way up. The CCC is at an all-time low.

Why is this…

MCB has been deploying it capital intellegently. They recently (June 2011) announced that they would divest Rebel Metal Fabricators. Rebel manufactures and supplies vac and hydrovac systems to customers operating mainly in Western Canada. Earlier (February 2011) they announced another division sale, McCoy Parts and Services.

Apart these operations aren’t extremely meaningful. But together they show how important capital allocation is to management.

MCB had about $0.68/share in cash at quarter end. They recently announced they would issue a quarterly dividend of $0.03/share. Giving MCB a yield of 3.87%. I would expect the dividend to grow quickly going forward.

As you can see, MCB is trading near the valuation low of q4 2008 on an EV/Ebitda basis. Though we are at a larger premium to tangible book and EV/Revenue. You can see that the share price rebounded sharply and the stock appeared expensive on ttm EV/Ebitda basis. Now that those expected earnings have come in (quicker than I had expected), and shares are down 20% or so, the company is cheap enough to warrant purchase.

As long as we aren’t at peak cycle, I think MCB is worth picking up. Given the current economy and outlook, $4.50 doesn’t seem like a far stretch for fair value.   Upper limit fair value could be $6.00, but we’ll talk at $4.50 (if we get there).


Disclosure: The author is long MCB.to at time of writing.

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