EcoMax Energy Services Ltd.

EcoMax Energy Services Ltd.

August 09, 2006 09:00 ET

EcoMax Announces Record Q2 Sales / Margins

CALGARY, ALBERTA--(CCNMatthews - Aug. 9, 2006) - EcoMax Energy Services Ltd. (TSX VENTURE:EES) ("EcoMax") announced record 2nd quarter sales and margins for the quarter ended June 30, 2006.

EcoMax reported record Q2 sales of $3,246,000, up from $3,147,000 in the 2nd quarter of 2005. The Company recorded its 6th consecutive profitable quarter with earnings of $26,000 ($0.001 per share) compared to $54,000 ($0.003 per share) in the same quarter of 2005. The slight earnings decrease was due to higher SG&A costs resulting from a severance package and generally higher compensation required in the current Alberta labour market. Gross margin of 28% was up slightly from 27% in the 2nd quarter of 2005.

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

"The base business (valve and BOP sales and service) continues to lead the Company's performance. Sales in the base business are up 5% from the 2nd quarter of 2005 with margins improving from 27% to approximately 29%. At the end of Q2, the Company had a backlog of approximately $6 million in orders for new BOP stacks. We anticipate that approximately $2 million of that backlog will be delivered in the last half of 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. The Company plans to expand its facility in Leduc before the end of the year and is looking to broaden the product offering and geographic coverage of its valve sales and service location.

The Company has changed the leadership of the Pump sales group and has introduced a new pricing structure that will reduce the cost to customers of the Pump when larger quantities are purchased. In addition, the Company has introduced a new warranty program that emphasizes the reliability of the EcoMax Pump when compared to competitors. Initial reaction to these changes has been positive and the Company anticipates they will result in increased sales in the next two quarters.

The Company has expanded the credit facility with our bank. This combined with expected improvements in operating performance should allow us to continue to improve our financial position and pursue expansion through new product lines and geographic locations. We are also looking for opportunities to grow through strategic partnerships or acquisitions.

Summarized financial information for the quarter and six months ended June 30, 2006 and 2005 are as follows (in thousands of Canadian dollars):

Quarter ended June 30 Six months ended June 30
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2006 2005 2006 2005
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Sales 3,246 3,147 6,790 6,396
Cost of sales 2,336 2,295 4,996 4,668
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Gross margin 910 852 1,794 1,728
Selling, general & admin 818 707 1,495 1,419
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92 145 299 309

Interest 40 43 89 80
Amortization 26 48 57 101
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Net income 26 54 153 128
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To review the complete financials, please go to SEDAR's web-site at

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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