Good morning, everyone. Thank you for attending the presentation. My name is Bing Deng. I'm the President and CEO of McCoy Global. I've been in this role for just over a month, but I've been with the company for more than 20 years. I joined McCoy right out of college as a technical sales and service rep. From there, I transitioned into sales and marketing and sales and management, where I spent more than 10 years traveling the globe, building new relationships, and opening new markets. After sales, I transitioned into a product line management role where I had the opportunity to work with engineering and our sales team to improve existing products and develop new ones. I joined the executive team in 2018 as the head of sales and marketing, took over our technology team in 2021, and our production team in 2024.
I've seen this company from just about every angle. I'm confident what we're building today is the most exciting chapter in our history. For more than two decades, McCoy has been known as the leader in tubular running service equipment. Our story is much bigger than that today. We're transitioning the company from an equipment manufacturer to a technology platform. We're just getting started. Why invest in McCoy? I believe there are three key reasons. Number one is our foundation. We've been supplying equipment in this industry for more than 30 years. Our brand is well recognized by the largest oil and gas companies all over the world. We have the broadest product and service offerings in this space. The second key reason is our financial track record.
Over the last five years, we grew our revenue from CAD 33 million- CAD 84 million. More importantly, our adjusted EBITDA grew from CAD 3.4 million- CAD 16.8 million. We have a pristine balance sheet supported by net cash. The last reason is the one that I'm most excited about, is our technology transformation. Over the last five years, we've grew our Smart Product revenues from nearly zero to over 50% last year. In Q2 of last year, we commercialized our flagship product, smarTR, which is an integrated casing running system, and recognized our first software subscription revenue. Before we get into more about the technology, let me provide an overview of the industry we operate in. McCoy's in the business of delivering technologies to improve safety and efficiency of casing running operations all over the world. What is casing running?
That's where steel pipe with threaded ends are coupled together and installed in the well bore. Every well drilled, doesn't matter if it's offshore, onshore, for oil or for gas, requires casing. McCoy is not a service company. We provide the technology that's needed so the service companies can get their job done in a safe and efficient manner. We're a global company. Our head office is in Edmonton, Alberta. We have two production facilities in the U.S., one in Broussard, Louisiana, that's where we produce all of our hardware. One in Austin, Texas. That's where we produce all of our data acquisition and software products. We also have a service and sales distribution center in Dubai. On average year, we'll ship product to more than 50 countries. Our revenue is split between 30% in the Western Hemisphere and 50% in the Eastern Hemisphere.
I'm going to spend some time on this slide. This is really our technology transformation story. Before I talk about the technology, I want to share why what we're doing matters. Just two weeks ago, we had a casing operator in West Texas. He was killed working the red zone. Object dropped from the top drive, unfortunately, hit him in the head. He didn't make it. Similar incident happened just last year in Canada, Grand Prairie. Same guy, power tong operator, working the red zone. Equipment fell from the top drive. He didn't make it either. These guys came to work, expected to go home. They never made it. Conventional casing running is one of the most dangerous jobs in well construction.
You have multiple people working the red zone, slamming tongs, pulling slips, tailing pipe in with piece of rope. People are getting hurt all the time. We're developing technologies to remove them from the red zone to protect them from getting hurt so they can go home safe after every casing job. Seven years ago, we decided to transform casing running from a manual, labor-intensive process to a safer, faster, data-driven intelligence system. Sounds simple. This is an industry that has not changed its workflow for more than 50 years. There are four key challenges when it comes to conventional TRS. It's labor intensive, it's dangerous, there's no real-time operational visibility. The performance is inconsistent. It varies crew by crew rig by rig, there's no data, there's no standard process, there's no way to improve. That's the problem we're trying to solve.
Our first step was focused on safety. We decided to develop individual products one at a time to get people out of the red zone. Our customer can adopt without disrupting their entire operation. The FMS product, the one on the bottom left, is what we introduced in 2022. That product replaces the manual hand slip and the backup tong. Since introduction over the last three and a half years, we've delivered over 150 tools into the market, with majority of them heading to North America land. Our smartCRT was introduced at end of 2024. Since introduction, we have successfully deployed that product into multiple regions. More importantly, last year, through an extensive pilot program, we received technical approval with a major national oil company in the Middle East. Altogether, the individual products can achieve up to 67% of reduction in red zone exposure.
That's only the beginning. Once these products are proven in the field, our next step is to integrate them into a smart intelligence system. That's the smarTR product we commercialized in Q2 of last year Like any other transformational products, it takes time to get it right. We spent all of second half of last year working with our customer in West Texas, listening to their feedback, making improvements in the system. I'm happy to report that investment has paid off. We're seeing excellent results in the field. It's reliable. We have one more final piece to finish, which is our Tailing and Stabbing Arm. This product is currently being field trialed in West Texas. We expect to complete that in Q3 of this year. Once that's complete, we will integrate the Tailing and Stabbing Arm into our smarTR system.
When complete, we'll be able to achieve up to 60% in reduction in labor requirements and deliver a system that's faster, safer, and more consistent than any other system available today. That's the immediate value you get with smarTR. What truly differentiate the smarTR is the data. For the first time, every single sequence, every step in the casing running process is captured and analyzed. What does that mean? It takes two seconds to close a single joint, three seconds to tail the pipe in the well center, five seconds to make it up, 10 seconds to lower the joint down hole. Every step, every single joint is captured. Instead of an operator trying to guess on conventional way, how long is this job gonna take? We don't know.
Let's hope the best casing crew shows up so we can get the job done quicker. With smarTR, now the operator can plan, monitor in real time, and optimize over time. Think about a large operator with a fleet of rigs. Now they can assess the performance across the fleet of rigs, identify the best performing rig, and figure out why, and implement the learnings to the rest of the fleet. From an operator perspective, when it comes to casing running, they're not just paying the casing running service. They're paying the casing running service, they're paying for the rig crew, the rig, and all the other concurrent services. As you increase the fleet, and you drill more wells, you increase your saving.
You take that to an operator in the Middle East region, an NOC, a large NOC who's got 100 rigs in UAE, maybe 200 rigs in Saudi, and they're drilling thousands of wells a year. Every percent of improvement matters. Then you go to the value flywheel. The more job we do with smarTR, the more data we collect. With that data, we can improve the performance and deliver more value to our customers, which will continue to accelerate the adoption of smarTR. I think that's a value flywheel that's very difficult to replicate. Let's talk about the opportunity. Excluding Russia and China, there's 1,750 active drilling rigs, and every one of these rigs will run casing. Every one of them is a potential customer for smarTR.
At average price of CAD 1 million per package for the hardware, you're looking at the market opportunity of CAD 1.7 billion for the hardware. The second piece is the reoccurring revenue for supporting the hardware install base. Lastly, we see a CAD 200 million opportunity for software-enabled service. That's for the labor cost reduction that the system can provide and also the data through the data analytics, the efficiency gains we can provide to E&Ps. Here's the proof of the track record. As you can see, starting from 2022, we have significantly grew our Smart Product revenue. In 2025, we reached more than half of our revenue was from Smart Products. The majority of that growth came from our hydraulic, our smartFMS.
As I mentioned before, our hydraulic CRT and Link Tilt System received technical approval from a large NOC, and we're expecting some major tenders to be announced in the Middle East region over the next two years. We'll be well-positioned to capitalize on that opportunity. Here's a slide with all of our products and service offerings and the margin profile. I think there's two key takeaways from this slide. Our Smart Product from a capital equipment category carries the highest margin and is the fastest growing product line. We also have a really stable business, aftermarket business, that's extremely profitable. Every piece of hardware, Smart Products we get out there, that will drive additional revenue for our aftermarket. I get asked quite a bit, "Why can't somebody else do this? How difficult is it to replicate?" Well, there's three key things. Number one is time.
As you can see, we've been at this for a long time. Two acquisitions and years of product development, prototype, field trial, commercialization. You can't fast-track that with capital. Number two is switching cost. Once the customers spend the capital on a product like an FMS on a hydraulic CRT, the FMS is somewhere around CAD 250,000 per tool. A hydraulic CRT is CAD 750,000 per tool. Once they have deployed the capital, it's very difficult for them to switch. The third point is the data. As I mentioned before, once we get the system out there, once they're utilized, we're collecting data on every job. With the data we collect, we can optimize the system and increase the gap between what our system can deliver and a new entrant. We're the only company in our space that can supply the entire package.
We have competitors for individual products, but they're different competitors. As I mentioned before, for somebody to put the whole package together requires a lot of time and a lot of capital. In terms of our financial performance, as I mentioned before, since coming out of COVID, we grew our revenue almost two and a half times in the last five years and our adjusted EBITDA almost five times. That demonstrate operating leverage and our cost discipline. We have a pristine balance sheet, debt-free, supported by net cash, and we treat our balance sheet as a strategic asset, especially in times like this when we're going through the Middle East crisis. Also allow us to continue to invest in our new technology while others may not be able to. We're disciplined in terms of capital allocation.
We deploy capital primarily for product development and even in our rental fleet, and we have to meet our cost of capital. The excess cash, we return that to our shareholders through a dividend and share buyback. Just a quick note on the Middle East region. I think everybody's well aware what's happening. We have some positive developments over last weekend. Hopefully, we'll get this new agreement signed this Friday in Switzerland and get the strait open. That's definitely a positive development for McCoy, but for the whole world. At end of Q1, our backlog sat at just over CAD 23 million, with 30% tied to the Middle East region. Assuming the strait gets open in the near future, we do expect it's going to take some time to clear the congestion and the backlog of shipment.
We expect the logistics through the strait to be normalized sometime in late Q3 to early Q4. The more important question is what happens next. Well, we believe the recovery will be in 2 stages. The first stage is immediate. As all the shutting wells get brought back online, that's going to drive a lot of workover and intervention services as oil companies try and get these wells back to original production levels. The second stage will be more structural. Analysts has estimated that 20% of the production capacity in the MENA region is not coming back, and you can only get that back through more drilling. UAE just recently left OPEC. They want to produce more oil, increase their production, which requires more drilling also. The third point is energy security.
As countries across the region look at and review their strategic reserves, we believe most likely they will rebuild the strategic reserve much higher than where they were before the crisis. You put all this stuff together, that would support a foundation of a multi-year drilling investment rather than a short-term recovery. We will continue to manage our cash, continue to invest in our new technology, and position the company for the recovery when it arrives. I'll finish with our team. You guys heard about my background in the beginning. Lindsay McGill. She's our CFO, and Dusty Sowney, he's our vice president of products and technology. Both of them has been with us for more than 10 years, and we have been executing on this strategy for many years. We're confident in the strategy, we're confident in the opportunity, and we're confident in our ability to deliver.
With that, I just saw the sign. I got a few minutes left. I'm happy to answer any questions, but I look forward to meeting all of you over the next couple of days through our one-on-one sessions. Yes.
Two quick questions.
Sure.
First one, can your connect interface with other vendors? Let's say that the buyer uses the hardware from you guys, the other one is the competitor that you mentioned. You can use-
Yeah, we have open architecture in the API to connect to our software can connect to other vendors.
Is there any interest, because you improved the safety performance, from insurance companies to work together with you to incentivize customers, to give insurance rates?
I think that's the key driver from the E&P perspective. All these injuries and fatalities is costing the operators, the E&P companies, a lot of money, that's why some of the larger operators in the region like ExxonMobil, BPX, over in the Middle East, you have Aramco, you have ADNOC, all of them are really driving safety initiatives. In the U.S. now, these large E&Ps, they have a clear the floor initiatives. They want to get the people out of the red zone. Yeah. Yes.
I think the tenders in, ADNOC tender and the Aramco tender.
Yes
Has the timing for those tenders changed with the
We're still unclear on the timing, but we've been staying close contact with our customers in the region. What I can share with you is for the ADNOC tender, ADNOC has reached out to the service providers to start negotiation on the commercial terms. That's a positive development. However, timing on when they're going to award the tender is still uncertain. In terms of the Aramco tender, we still expect that to happen sometime in 2027. Yes.
There are a lot of consolidation going on in the industry right now. For that matter, we did the company NCS, they were actually going to present, but they got bought out about a couple of weeks ago by a company called Weatherford. I'm wondering a little bit consolidation
Well, we've seen a lot of consolidation from the E&P space. On the oil field service side, we have not seen a lot of consolidation. Maybe, with the current uncertainty, once we get through that, you may see more of that, a lot of consolidation on E&P side, and you saw Transocean acquired Valaris, an offshore driller. On the land side, we have not seen a lot of consolidation. Yes.
Just wondering how the demand for your smarTR products is evolving outside of the Middle East. We would expect the oil companies making money with higher oil price, that would probably be an incentive for them to look for your products or if you get demand right now than it.
Well, like I said, our smartFMS product, we start delivering that end of 2022. We've deployed over 150 systems, and majority of that went to the U.S. land market, and our large contract for our smarTR package, which we announced in Q2 of last year, CAD 11 million, that was going to the U.S. also. As I mentioned in my presentation, it takes time. That's a transformational product. It takes time to get it right and to prove out the track record, and then to show the E&P and demonstrate the value proposition we can deliver. As we finish the last piece of the puzzle is our Tailing and Stabbing Arm. We'll be able to deliver a consistent package where we can perform your casing job faster, cheaper, more consistent than any other system out there.
We're controlled with our deployment until we finish the last piece. I only got one Am I done? One minute? Go ahead.
Just a slide on the
Yeah.
How customers perceive that.
Well, I think in North America land, you got lots of small mom-and-pop TRS companies, so they can go out and pick the cheapest provider. They can pick and choose. But when it comes to international, especially large NOCs or large regional players or multinationals, they definitely want to deal with one supplier for the whole suite of products. Think about it. You got one MSA for service. You got one training program versus multiple suppliers. That's definitely a competitive advantage for McCoy.
Could you please quickly talk about the deep offshore Brazil opportunity?
Yeah, the deepwater offshore, we had a large contract a year and a half ago. We deployed the system last year to Valaris, and our system is working now, working well in Brazil. In terms of future opportunity, that's been put on hold right now because of the acquisition of Transocean. Until that's cleared, we're on hold for a little while. Okay. I'm running out of time. Thank you, everyone.