CALGARY, ALBERTA, Aug 2, 2007 -- EcoMax Energy Services Ltd. (TSX VENTURE:EES) ("EcoMax") announced record 2nd quarter sales and margins for the quarter ended June 30, 2007.
EcoMax reported record Q2 sales of $4,185,000, up 29% from $3,246,000 in the 2nd quarter of 2006. Gross margin was a record $1,139,000 (27%) compared to $910,000 (28%) in the 2nd quarter of 2006. The Company recorded earnings of $66,000 ($0.003 per share) compared to $26,000 ($0.001 per share) in the same quarter of 2006. The earnings increase came despite incurring costs of opening its Red Deer BOP facility ($80,000) and higher non-cash charges for amortization and stock-based compensation (up $83,000) and income taxes ($36,000).
In reviewing the Company's past and future performance, Mark Hopkins, the Company's CEO, noted:
"We continue to be pleased with the performance of the Company's base business (valve and BOP sales and service). Q2 earnings for the base business increased to $476,000 in 2007 from $328,000 in 2006 largely due to increased BOP (blowout preventer) sales and despite recording costs of approximately $80,000 related to the start-up of our new facility in Red Deer. Activity in the oil and gas industry is expected to remain slow in the 3rd quarter, particularly with respect to natural gas drilling and completions.
The EcoMax Pump division lost $341,000 in the 2nd quarter of 2007 compared to a loss of $272,000 in the 2nd quarter of 2006 as we continue to experience delays in the sales and marketing of the Pump. We continue to believe in the benefits and reliability of the EcoMax Pump and that the current regulatory environment (the Alberta government's Bill 3 and the Alberta Energy and Utilities Board Directive 060) creates a positive marketplace for our technology. Although we are continuing to invest in the sales and marketing of the Pump and believe that its proven field record and the current environmental climate provide a good base for growing sales, we continue to pursue alternatives to market the Pump, while reducing the risk to the Company.
Our new BOP facility in Red Deer opened in late June and, with the planned expansion of the Leduc BOP facility (to be completed in October 2007), our capacity to handle BOP certifications and related work will be enhanced considerably. We also continue to explore opportunities to rationalize and grow the Company's valve operations.
While the 3rd quarter may be slower for many in the oilfield service industry, including EcoMax, we believe the slowdown in natural gas related activity is temporary and are optimistic about the future."
Summarized financial information for the quarter and six months ended June
30, 2007 and 2006 are as follows (in thousands of Canadian dollars):
Quarter ended Six months ended
June 30 June 30
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2007 2006 2007 2006
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Sales 4,185 3,246 7,367 6,790
Cost of sales 3,046 2,336 5,503 4,996
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Gross margin 1,139 910 1,864 1,794
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Expenses
Selling, general & admin 860 794 1,523 1,451
Stock-based compensation 55 25 110 44
Amortization 93 40 184 89
Interest 29 26 61 67
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1,037 884 1,878 1,641
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Income (loss) before taxes 102 26 (14) 153
Income tax expense 36 - 36 -
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Net income 66 26 (50) 153
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Working capital 497 694
Shareholder's equity 2,870 2,356
The Company reclassified $456,000 of its bank debt from long-term to current as it was not in compliance with its current ratio covenant at the end of the 2nd quarter of 2007. Without this reclassification, working capital would have increased to $953,000 at June 30, 2007 compared to $694,000 at June 30, 2006.
To review the complete financials, please go to SEDAR's web-site at www.sedar.com.
About EcoMax Energy Services Ltd.:
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.
Corporate Inquiries
EcoMax Energy Services Ltd.
Mark Hopkins Email: mhopkins@ecomax.ca Website: www.ecomax.ca
Investor Relations
AGORACOM Investor Relations
Email: ees@Agoracom.com
Website: www.agoracom.com/IR/ecomax
