CALGARY, ALBERTA--(CCNMatthews - May 11, 2006) - EcoMax Energy Services Ltd. ("EcoMax") (TSX VENTURE:EES) announced record results for the quarter ended March 31, 2006.
EcoMax reported record quarterly sales of $3,544,000, up 9% from the 1st quarter of 2005 and up from the previous record recorded in the 4th quarter of 2005. Sales increased due to sales of new valves and BOP parts. Earnings for the quarter of a record $127,000 ($0.005 per share) were up 72% from the $74,000 ($0.003 per share) in the same quarter of 2005. Gross margin of 25% was down slightly from 27% in the 1st quarter of 2005 due to slightly lower sales of the EcoMax Pump.
In reviewing the Company's past and future performance, Wayne Thomson, the Company's CEO, noted:
"I am very pleased to report the continued sales and earnings growth in your Company. The Company recorded a profit of $127,000 for the quarter ended March 31, 2006 compared to earnings of $73,000 in the same period of 2005. This represents the Company's 5th consecutive profitable quarter and the sixth consecutive quarter where earnings and sales have exceeded the corresponding period of the prior year.
The Company's base business (valve and BOP sales and service) continues to lead the growth. Sales in the base business are up 17% from the 1st quarter of 2005 with margins holding steady at approximately 25%. We anticipate a strong 2nd quarter as it is usually the strongest for maintenance and repair work. At the end of Q1, the Company had a backlog of approximately $6.5 million in orders for new BOP stacks. We anticipate that approximately 50% of that backlog will be delivered in 2006, with the result that new BOP sales should reach approximately $4 million in 2006, up 48% from the $2.7 million in sales in 2005. This backlog should also give the BOP operation a good base with which to begin 2007.
Q1-2006 unit sales of the EcoMax Pump fell to 18 from 34 in the same period of the prior year as 2005 sales were helped by a backlog from the previous year. Sales efforts continue to be hampered by the frenetic activity levels in the natural gas industry as many operators are too busy to change production methods. The Company has, however, several trial units in the field and commitments to place several more over the next few months. The Company has an inventory of pumps available for sale and is ready to capitalize when sales opportunities are finalized.
The Company's financial position also continues to improve. As a result of the conversion to common shares of $410,000 of its debentures, the exercise of $68,000 of its warrants and the exercise of $108,000 of its options, the Company was able to reduce long-term debt by $540,000 in the 1st quarter and improve its working capital position. We are in compliance with our bank covenants and our expected continued strong operating performance should allow us to continue to improve our financial position and pursue expansion through new product lines and geographic locations and looking for opportunities to grow through strategic partnerships or acquisitions.
The Company is looking forward to continued growth through the remainder of 2006 and creating positive returns for our valued shareholders."
Summarized financial information for the quarters ended March 31, 2006 and 2005 are as follows (in thousands of Canadian dollars):
Quarter ended March 31 ----------------------- 2006 2005 ----- ----- Sales 3,544 3,249 Cost of sales 2,660 2,373 ----- ----- Gross margin 884 876 Selling, general & admin 677 712 ----- ----- 207 164 Interest 49 37 Amortization 31 53 ----- ----- Net income 127 74 ----- ----- ----- ----- Working capital 670 464 Shareholders' Equity 2,244 1,141
Working capital has improved primarily as a result of earnings. Shareholders' equity has improved as a result of earnings, the conversion of most of the Company's convertible debenture and the exercise of warrants and options.
To review the complete financials, please go to SEDAR's web-site at www.sedar.com.
EcoMax Energy Services Ltd. is an oilfield services company whose product offering includes BOP and valve sales and service solutions to the oil and gas and other industries in Western Canada and the patented EcoMax Chemical Pump. The EcoMax Pump reduces operating costs and greenhouse gas emissions at natural gas installations by utilizing a small pressure differential from the wellhead to the flow line to power a methanol chemical injection pump, which prevents hydrates from forming at the wellhead. The pump returns the exhaust gas to the sales line increasing natural gas sales and eliminating wellhead atmospheric emissions. The EcoMax Pump offers significant economic benefits to customers while enhancing safety and landowner relations. Operators can sell gas now being emitted to the atmosphere from sweet gas facilities, eliminate the need for propane at sour gas facilities and may accumulate carbon credits for greenhouse gas reductions. The EcoMax Pump addresses issues in the Kyoto agreement and the Alberta Energy and Utilities Board Guide 60 on the emission of fugitive gases from well sites.
FOR FURTHER INFORMATION PLEASE CONTACT:
EcoMax Energy Services Ltd. Mark Hopkins COO/CFO (403) 319-2026 Email: mhopkins@ecomax.ca Website: www.ecomax.ca
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