CALGARY, ALBERTA--(Marketwire - May 11, 2012) - Wenzel Downhole Tools Ltd. (WZL.TO - News) today announced its financial results for Q1, the three months ended March 31, 2012. First quarter revenues were $24.5 million compared to $17.3 million in the first quarter of 2011, a 42% increase. Earnings before income tax for the quarter were $4.2 million compared to $2.3 million which is an increase of 83% compared to the same period in 2011. After tax earnings for the period were $3.2 million or $0.10 per share (basic), compared to $1.3 million or $0.04 per share in 2011.
The Company is also pleased to announce that Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) for the first quarter of 2012 were $6.2 million compared to $5.3 million in quarter one of 2011.
Reflecting global oil and gas activity, the Company's revenues rose in all geographies. Revenue increases in Canada, US and internationally were 45%, 35% and 58% respectively.
Highlights of the first quarters of 2012 and 2011 are summarized in the following table together with comparative year end 2011 highlights:
3 mos. ended 3 mos. ended FY ended
March 31, 2012 March 31, 2011 Dec. 31, 2011
($000's, except for earnings per share)
Revenue 24,545 17,324 90,739
Gross Profit 9,083 6,530 34,638
Gross Profit Percentage 37% 38% 38%
EBITDA(1) 6,190 5,338 24,858
EBITDA(1) Percentage 25% 31% 27%
Earnings Before Income Taxes 4,208 2,301 15,230
Net Earnings 3,159 1,266 10,335
Total Comprehensive Income 2,997 1,096 10,676
Net Earnings per Share - basic 0.10 0.04 0.34
Net Earnings per Share -
diluted 0.09 0.04 0.29
Total Assets 82,838 63,388 84,285
Short Term Debt 11,822 5,380 13,303
Long Term Debt - 500 -
Shareholders' Equity 56,676 44,013 53,634
Note (1) Refer to Non-generally accepted accounting principles ("GAAP")
measures at the end of this news release.
Outlook for the Remainder of 2012
The outlook for oil and gas drilling for the remainder of 2012 remains favourable. The bottom of the current cycle in industry activity occurred in the summer of 2009 and since then there has been a gradual but continuous increase in rig count and drilling activity. The Company had prepared for the significant business increases experienced to date in 2012. The second quarter is almost always the slowest quarter due primarily to spring breakup conditions in Canada.
While natural gas prices are low, leading to a reduction in gas wells, the price of oil remains at levels which make it economic to develop oil production from reservoirs previously deemed to be depleted. Moreover, tight oil deposits, which were previously uneconomic, are now being developed using the technologies that had initially been developed to produce natural gas from low permeability shale formations. Application of these new techniques requires the types of tools manufactured by the Company, and Wenzel tools have an excellent reputation for quality and durability. It is a growing majority of wells that are now drilled with mud motors, including vertical wells. Therefore management feels optimistic about its revenue and profit prospects for the remainder of 2012.
International opportunities continue to be attractive. Techniques and equipment developed in North America for the economic exploitation of older and smaller oil and gas deposits are increasingly being applied in international locations. This factor along with the growing positive reputation of Wenzel mud motors and other tools has resulted in the Company getting requests for quotations in greater numbers and from a greater number of countries than at any time in its past.
The expanding energy industry in Alberta has led to shortages in skilled trades persons which could be a limiting factor to growth expansion but probably only to the rate of growth. Another factor which could limit profitability is the appreciation of the Canadian dollar compared to the US dollar and the euro. This factor squeezes profits and increases competition in some markets.
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 a sales and service facility in Celle, Germany. Wenzel Downhole Tools Ltd. is listed for trading on the TSX, symbol WZL. The Company's First Quarter Consolidated Financial Statements and Management's Discussion and Analysis will be posted on SEDAR (www.sedar.com) on or about May 12, 2011.
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 there from. Please refer to the Company's public disclosure documents for more information on these risks and uncertainties as they apply to the Company.
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, share-based compensation expense has been excluded so as to make period to period comparisons more meaningful.
2012 2011 2011
Q1 Q1 Year
Net earnings $ 3,159 $ 1,266 $ 10,335
Income taxes 1,048 1,034 4,895
Depreciation and amortization 1,832 2,072 8,253
Interest 134 42 411
Share-based compensation 17 924 964
EBITDA $ 6,190 $ 5,338 $ 24,858
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 for 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 GAAP.
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.
Chief Financial Officer
(403) 265-8154 (FAX)