EcoMax Energy Services Ltd.
TSX VENTURE : EES

EcoMax Energy Services Ltd.

April 18, 2007 14:09 ET

EcoMax Announces 2006 Results

CALGARY, ALBERTA--(CCNMatthews - April 18, 2007) - EcoMax Energy Services Ltd. ("EcoMax") (TSX VENTURE:EES) announced record results for the quarter and year ended December 31, 2006.

EcoMax reported record 4th quarter sales of $3,569,000, up slightly from the previous record $3,531,000 recorded in the 4th quarter of 2005. Record sales in the valve / BOP business were largely offset by decreased sales of the EcoMax Pump. Fourth quarter earnings of $395,000 represented an improvement from earnings of $75,000 in the 4th quarter of 2005. The earnings increase was a result of the tax benefit recognition, offset by increased amortization of deferred development costs and higher costs of regulatory compliance and increased costs associated with the sales and marketing of the EcoMax Pump.

In reviewing the Company's past and future performance, Mark Hopkins, the Company's CEO, noted:

"I am pleased to report the Company again set records for sales and profits in its 2006 fiscal year. EcoMax recorded a profit of $506,000 ($0.02 per share) for the year ended December 31, 2006 compared to a profit of $320,000 ($0.01 per share) in the prior year. 2006 earnings included the recognition of the benefits of income tax loss carry-forwards of $621,000. Record sales of $13,762,000 were slightly higher than the previous record of $13,437,000 for the year ended December 31, 2005.

2006 results were led by the Company's base business (valve and BOP sales and service). Base business sales rose 10% to $13.4 million, largely due to sales of new BOP stacks. Earnings for the base business increased 32% from $976,000 in 2005 to $1,293,000 in 2006. The Company continues to enjoy a backlog of BOP sales of $4.0 million, which should help us continue this strong performance. The Company expects activity in its base business to continue to grow, with expected declines in project activity in the 1st and 2nd quarters of 2006 being offset by increases in maintenance and certification work.

The Company sold 28 EcoMax Pumps in 2006 compared to 113 in 2005. This resulted in the Pump division losing $1,276,000 in the year ended December 31, 2006 compared to a loss of $475,000 in 2005. EcoMax has invested several million dollars over the past 4 years on the development and marketing of our patented, emission-free chemical injection pump. Our Pump has been field proven, reduces maintenance and increases safety at well sites and, in addition to eliminating emissions, provides positive economic returns to our customers. Payback for an investment in the EcoMax Pump ranges from 3 months to 2 years in common operating conditions.

The Company is continuing to make changes in the sales and marketing of the Pump. The changes in the pricing and warranty programs at the end of the 2nd quarter, the addition of a rental program in October and a sales review by one of its directors with significant sales and sales leadership experience have been designed to develop a more strategic sales approach and to attempt to identify and remove roadblocks that have limited the success of the Pump marketing process.

Recent changes to the political and regulatory climate are providing many positives for the Pump's marketing. Both the Federal and Alberta governments have indicated that they are moving to regulate emissions of greenhouse gases as part of their strategy with respect to global warming. Last November, the Alberta Energy and Utilities Board approved Directive 060 with respect to flaring, incinerating and venting gas in the upstream petroleum industry. This directive requires that operators adopt emission-reducing technology where it is economic.

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 are actively pursuing options that will allow us to benefit from the expected future success of the Pump, while reducing the risk to the Company while sales are growing.

We are very optimistic about 2007. The base business, particularly as it relates to BOPs, continues to grow. We are planning to expand our BOP facility in Leduc, open a new BOP facility in Red Deer and investigate other ways to grow this business. We will fix the marketing issues around the EcoMax Pump or we will look to other ways to reduce costs and risks to our shareholders. I would like to thank our shareholders for their continued support and look forward to significant improvements in EcoMax's results."

Summarized financial information for the quarters and years ended December 31, 2006 and 2005 are as follows (in thousands of Canadian dollars):



3 months ended Dec. 31 Year ended Dec. 31
------------------------- --------------------
2006 2005 2006 2005
------- ------- -------- --------
Sales 3,569 3,531 13,762 13,437
Cost of sales 2,691 2,525 10,280 9,814
------- ------- -------- --------
Gross margin 878 1,006 3,482 3,623
------- ------- -------- --------

Expenses
Selling, general & admin 779 769 2,962 2,775
Stock-based compensation 51 7 146 103
Interest 31 43 116 262
Amortization 243 112 373 163
------- ------- -------- --------
1,104 931 3,597 3,303
------- ------- -------- --------
Income (loss) before income
taxes (226) 75 (115) 320

Future income tax benefit 621 - 621 -
------- ------- -------- --------
Net income (loss) 395 75 506 320
------- ------- -------- --------
------- ------- -------- --------
Working capital 495 464

Shareholders' Equity 2,811 1,512


Working capital improved despite reclassification of $397,000 of long-term debt as current as the Company is in default of its bank covenant at December 31, 2006 (actual current ratio - 1.23; required current ratio - 1.25). Equity increased as the result of current year's earnings, debt conversions and the exercise of stock options and warrants. EcoMax expects to be in compliance with its bank covenants by the end of the 2nd quarter of 2007 and expects its working capital position to continue to improve in 2007 with improved operating results.

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.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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