McCoy Global's Bold Move: Automatic Share Purchase Program

McCoy Global Inc. (TSX: MCB) has announced an Automatic Share Purchase Program, also known as a Normal Course Issuer Bid (NCIB), which allows the company to repurchase its shares on the open market. This strategic move is designed to enhance shareholder value, stabilize the share price, and optimize capital allocation. Let's dive into the details and implications of this significant announcement.

The Mechanics of the NCIB

On August 20, 2024, McCoy Global received approval from the Toronto Stock Exchange to repurchase up to 4,735,000 of its common shares, representing approximately 5% of the public float. This program, effective from August 23, 2024, to August 22, 2025, provides McCoy Global with the flexibility to buy back shares when it believes the stock is undervalued, thereby optimizing shareholder returns.

Benefits of the NCIB

1. Share Price Stability and Support:
- The NCIB helps stabilize the share price by reducing the number of shares available for trading. This can be particularly beneficial during periods of market volatility, providing a buffer against sudden price drops.

2. Enhanced Shareholder Value:
- By reducing the number of outstanding shares, the NCIB can increase earnings per share (EPS), making the company more attractive to investors. This can lead to an increase in the stock price over time.

3. Flexibility in Capital Allocation:
- The NCIB provides McCoy Global with the flexibility to allocate capital more efficiently. The company can choose to repurchase shares when it believes the stock is undervalued, thereby optimizing shareholder returns.

Risks and Considerations

1. Market Timing Risk:
- There is a risk that the company may repurchase shares at prices that are higher than the market value, leading to a reduction in shareholder value. This is a common risk associated with share repurchase programs.

2. Dilution of Earnings:
- If the company repurchases shares at a time when earnings are not growing as expected, the reduction in the number of outstanding shares may not result in a significant increase in EPS. This could lead to a perception of stagnant or declining earnings growth.

3. Opportunity Cost:
- The funds used for share repurchases could potentially be invested in other growth opportunities, such as research and development, acquisitions, or capital expenditures. If these opportunities yield higher returns than the share repurchases, the company may miss out on potential growth.

Financial Performance and Dividend Increase

McCoy Global's strong financial performance in 2024 has provided a solid foundation for this strategic move. The company reported a 28% increase in revenue to $25.2 million in Q4 2024, driven by strong demand for its recently commercialized smartProducts. Net earnings increased by 59% to $4.3 million, and adjusted EBITDA rose to $6.5 million, or 26% of revenue.

On March 6, 2025, McCoy Global announced an increase in its quarterly cash dividend to $0.025 per common share, payable on April 15, 2025. This increase reflects the company's commitment to returning value to shareholders and its confidence in its financial health.

Visualization of McCoy Global's Financial Performance



Conclusion

McCoy Global's decision to implement an Automatic Share Purchase Program is a strategic move that aligns with its long-term growth strategy and financial health. The NCIB provides the company with the flexibility to manage its share price, enhance shareholder value, and optimize capital allocation. While there are risks associated with this program, McCoy Global's strong financial performance and commitment to returning value to shareholders suggest that the benefits may outweigh the risks. As the company continues to execute its Technology Roadmap and pursue growth opportunities, the NCIB will play a crucial role in supporting its long-term success.