Mccoy Global's SmartTR™: Pioneering the Energy Sector's Digital Future Through SaaS Innovation and Global Expansion

The global energy sector is undergoing a seismic shift toward automation, data-driven decision-making, and operational efficiency. At the forefront of this transformation is McCoy Global (MCKY), a leader in tubular running automation solutions. Its proprietary smartTR™ technology, delivered via a Software as a Service (SaaS) model, is redefining safety, cost structures, and market reach for oil and gas operators. For investors, McCoy's dual focus on margin expansion through recurring SaaS revenue and strategic offshore market penetration presents a compelling growth story.

The SaaS Revolution: From Hardware to High-Margin Recurring Revenue

McCoy's smartTR™ system, which integrates hydraulic power tongs, real-time data analytics, and remote monitoring (via Virtual Thread-Rep™), is more than just hardware—it's a subscription-based service ecosystem. By shifting a portion of its revenue to SaaS, McCoy has unlocked a critical advantage: predictable, high-margin income.

The data shows a clear upward trajectory. In 2024, SaaS-driven smartProduct sales accounted for 38% of revenue, with Adjusted EBITDA surging to $16.2 million—a 26% margin. This contrasts sharply with traditional energy equipment providers, which often face volatile margins tied to cyclical drilling activity.

The SaaS model's power is evident in recent contracts. For example, a $11.0 million 2024 deal for smartTR hardware included a utilization-based SaaS component, ensuring recurring revenue as clients use the technology. Meanwhile, the first offshore SaaS purchase—a $3.7 million Latin American deep-water contract—demonstrates the scalability of this model beyond land-based operations.

Offshore Market Penetration: A Strategic Play for Dominance

McCoy's 2024-2025 expansion into offshore markets—particularly the Middle East and Latin America—is a masterstroke. These regions are prioritizing safety and efficiency as they modernize aging infrastructure and tackle complex deep-water projects.

• Middle East: A $4.3 million contract for smartCRT™ tools met stringent technical requirements from National Oil Companies, positioning McCoy as a preferred partner.
• Latin America: A $1.8 million Brazilian contract and a $3.7 million deep-water deal underscore the region's growing reliance on automation.

These wins are not just about revenue—they signal market validation. McCoy's SaaS-enabled systems address a critical pain point for operators: reducing labor costs by up to 67% while enhancing safety via autonomous evaluations. With in-field trials now expanded to three new partners in North America and the Middle East, the path to broader adoption is clear.

Navigating Challenges: Mitigating Risks, Securing Growth

No company is immune to industry headwinds. McCoy's trials faced delays due to rig unavailability—a temporary setback, not a systemic flaw. The company also addressed U.S.-Canada tariff pressures by leveraging the depreciating Canadian dollar and diversifying suppliers, a prudent move that protected margins.

The bigger picture remains positive. McCoy's backlog of $23.5 million (as of Q4 2024) and a book-to-bill ratio of 0.67 suggest sustained demand. With Q1 2025 orders expected to boost performance, McCoy is primed to capitalize on its technology roadmap, which aims to reduce reliance on drilling cycles altogether.

Investment Thesis: A Play on Energy's Digital Future

McCoy Global is uniquely positioned to benefit from two secular trends:
1. The shift to automation in energy operations, driven by safety regulations and labor cost pressures.
2. The rise of SaaS in industrial sectors, which offers recurring revenue and higher profit margins.

While McCoy's stock has faced volatility tied to energy sector cycles, its SaaS model and offshore growth could re-rate its valuation. A dividend increase to $0.025 per share signals confidence, but investors should focus on the long-term trajectory: a company transitioning from cyclical hardware vendor to a tech-driven SaaS leader.

Risks to Consider

• Market cyclicality: Oil prices and drilling activity still influence McCoy's legacy product sales, though SaaS reduces this exposure.
• Competitor imitation: While McCoy's proprietary tech (e.g., Virtual Thread-Rep™) creates barriers, competitors may replicate aspects of its model.

Final Take: A Buy for Patient Investors

McCoy Global is no longer just an equipment provider—it's an energy tech innovator. Its SaaS-driven margin expansion and offshore penetration are creating a new revenue engine with global reach. For investors willing to look beyond short-term rig counts, McCoy offers exposure to a transformative trend: the digitization of one of the world's oldest industries.

Actionable Insight: Consider accumulating McCoy shares on dips, particularly if energy sector sentiment stabilizes. Monitor its Q2 2025 results for SaaS adoption rates and North American trial outcomes—a potential catalyst for revaluation.

In a sector ripe for disruption, McCoy's smartTR™ isn't just a tool—it's a blueprint for the energy industry's future.