CALGARY, ALBERTA--(Marketwire - March 20, 2012) - Wenzel Downhole Tools Ltd. (TSX:WZL.TO - News) (the "Company") is pleased to report on its financial results for the fourth quarter and full year ended December 31, 2011. All amounts are in Canadian dollars.
Revenues of $26.5 million for the fourth quarter of 2011 were up 41% from the same quarter in 2010. For the whole year, revenues of $90.7 million for 2011 were up 48% compared to 2010. From the substantially depressed levels of 2009, beginning in early 2010 drilling activity in North America has shown significant growth through 2011, both in absolute numbers of wells drilled and in the percentage of wells which are horizontal and/or directional and thus are likely to require the kinds of tools the Company supplies.
Selected Financial Information
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($000s except for earnings per
share amounts)
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3 months ended Year ended Dec.
Dec. 31, 31,
2011 2010 2011 2010
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Revenue 26,496 18,829 90,739 61,369
Gross Profit 11,137 7,852 34,638 22,791
Gross Profit % 42% 42% 38% 37%
EBITDA (1) 4,580 5,365 24,858 16,790
EBITDAS % (1) 17% 28% 27% 27%
Earnings Before Income Tax (loss) 2,545 3,235 15,230 8,876
Net Earnings 2,159 2,319 10,335 5,981
Per share - basic $0.07 $0.08 $0.34 $0.19
Per share - diluted $0.06 $0.07 $0.29 $0.17
Total Assets 84,285 59,605 84,285 59,605
Short Term Debt 13,303 2,494 13,303 2,494
Long Term Debt - - - -
Shareholders' Equity 53,634 41,977 53,634 41,977
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1. Refer to Non-GAAP measures at the end of this news release.
As can be seen, there has been a significant improvement in almost all measures of performance between 2010 and 2011. For 2011, earnings before income taxes were up $6.4 million to $15.2 million from $8.9 million in 2010. On a "basic" per share basis, after tax profits were $0.34 compared to $0.19 in 2010. The Company's EBITDA and Earnings Before Income Taxes for the 3 month period ended December 31, 2011, were burdened by increased legal costs, severance expenses and increased performance incentive compensation over the same period in 2010.
Revenues for each quarter of 2011 exceeded the revenues in the equivalent quarter of 2010. The following table shows the quarter-to-quarter data for the two previous years.
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($000s, except for per share
amounts)
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Three month periods Dec 31 Sep 30 Jun 30 Mar 31
ended 2011 2011 2011 2011
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Total revenue 26,496 28,651 18,267 17,324
Gross profit 11,137 10,725 6,247 6,530
Gross profit percentage 42% 37% 34% 38%
EBITDA 4,580 9,408 5,530 5,338
Total comprehensive income 1,973 5,502 2,105 1,096
Net earnings per share
- basic 0.07 0.15 0.07 0.04
- diluted 0.06 0.15 0.06 0.04
Total assets as at 84,285 81,034 70,991 63,388
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($000s, except for per share
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Three month periods Dec 31 Sep 30 Jun 30 Mar 31
ended 2010 2010 2010 2010
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Total revenue 18,829 15,815 13,075 13,651
Gross profit 7,852 5,779 4,340 4,821
Gross profit percentage 42% 37% 33% 35%
EBITDA 5,365 4,375 3,787 3,263
Total comprehensive income 2,128 1,481 1,353 754
Net earnings per share
- basic 0.08 0.05 0.04 0.03
- diluted 0.07 0.05 0.03 0.02
Total assets as at 59,605 54,576 52,028 52,538
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Operating Highlights
The 2011 increase in drilling activity in the US and in Canada was more than matched by the increase in revenues. Using average monthly rig count as a measure of activity, US drilling increased by an average of 22% in 2011 compared to 2010, while the Company's revenue from US operations increased by 44% to $43.0 million from $30.0 million. In Canada, the average rig count increased by 21% while the revenue increased by 32% to $28.5 million from $21.7 million. International revenue increased by 97% from $9.7 million to $19.2 million.
Financially, the Company is in good shape. During 2011, the Company spent $14 million for the purchase and manufacture of capital assets and has budgeted $11 million for 2012. In 2011, the Company opened a sales and service facility in Germany to service the growing European market.
Non-GAAP Measure
Note (1) EBITDA, or earnings before interest, taxes, depreciation and amortization is calculated by adding these items back to reported net earnings. In addition to EBITDA, stock based compensation expense and loss (gain) on re-measurement of derivative asset have been excluded so as to make year to year comparisons more meaningful.
(000s) (000s)
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2011 2010
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Net (loss) earnings $ 10,335 $ 5,981
Income taxes 4,895 2,895
Depreciation and amortization 8,253 7,696
Interest 411 196
Stock based compensation 964 16
Loss (gain) on derivative asset - 6
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EBITDA $ 24,858 $ 16,790
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Management uses EBITDA as a measurement to determine the ability of the Company to generate cash from normal operations. EBITDA does not have a standardized meaning under IFRS or previous Canadian generally accepted accounting principles ("GAAP") and therefore may not be comparable with calculations of similar measures presented by other issuers. EBITDA is not intended to represent net income for the period nor should it be viewed as an alternative to operating or net income or cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS or previous GAAP.
About Wenzel Downhole Tools Ltd.
Wenzel Downhole Tools Ltd. is a manufacturer, seller and renter of drilling tools used in oil and gas exploration. Wenzel's Canadian sales, manufacturing and servicing facilities are located in Edmonton, Alberta and its US servicing facilities are located in Conroe, Texas, Morgantown, West Virginia and Casper, Wyoming. Wenzel's main corporate office is located in Calgary, Alberta and it has US sales offices in Conroe, Casper and Oklahoma City, Oklahoma. Wenzel also has a sales and service facility in Celle, Germany. Wenzel Downhole Tools Ltd. is listed for trading on the TSX, symbol WZL. The Company's 2011 Consolidated Financial Statements and Management's Discussion and Analysis will be posted on SEDAR (www.sedar.com) on or about March 20, 2012.
This news release may contain forward-looking information. Actual future results may differ materially from those contemplated. The risks, uncertainties and other factors, both known and unknown, that could influence actual results may be substantial and include those described in documents filed with regulatory authorities, such as the Company's most recently filed Annual Information Form. Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom. Please refer to the Company's public disclosure documents for more information on these risks and uncertainties as they apply to the Company.
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY AND ACCURACY OF THIS NEWS RELEASE.
Wenzel Downhole Tools Ltd.
Chair and Interim CEO
(403) 262-3050
(403) 265-8154 (FAX)
William T. Spence
Wenzel Downhole Tools Ltd.
Chief Financial Officer
(403) 262-3050
(403) 265-8154 (FAX)
www.downhole.com
