Wenzel Downhole Tools Ltd.
TSX : WZL

Wenzel Downhole Tools Ltd.

November 08, 2005 18:49 ET

Wenzel Announces Results for Third Quarter Ended September 30, 2005

CALGARY, ALBERTA--(CCNMatthews - Nov. 8, 2005) - Wenzel Downhole Tools Ltd. (TSX:WZL) (WZL) announced today its financial results for the three and nine month periods ending September 30, 2005.

The Company is also pleased to confirm that the Alberta Securities Commission has lifted the cease-trade order that had been in place since March 19, 2004. The Company is applying for the remaining approvals necessary for the Toronto Stock Exchange to recommence trading in the common shares and for the securities commissions in Ontario and British Columbia to lift their cease trade orders.

Results for Third Quarter and Nine Months Ended September 30, 2005

Total consolidated revenues for the third quarter ending September 30, 2005 were $9,356,197 compared to $5,557,784 for the same period in 2004, an increase of 68%. Revenues for the first nine months of 2005 were $27,262,626 compared to $23,502,136 for the same period in 2004, an increase of 16%. Revenues in Canada and the United States increased by 28% and 50% respectively over the same nine month period while international revenues were down by 63%. This reflects the high level of drilling activity and the Company's solid market base in North America as well as the improvements in our delivery of services in the U.S. The international market also remains buoyant but sales in these markets tend to be large and intermittent.

Gross margins for the first nine months of 2005 were 47% compared to 41% for the same period in 2004. This margin improvement is largely related to better controls in place, more efficient facilities in Edmonton and Conroe, Texas and substantial reduction in sale-leaseback agreements.

As a result of the improvements in revenue and margins, earnings before interest, taxes, depreciation and amortization ("EBITDA") grew to $8.3 million for the nine months ending September 30, 2005 compared to $5.6 million for the same period in 2004.



Highlights are Summarized as Follows:

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9 months Ended September 30
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($000's)
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2005 2004
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Total Revenues 27,263 23,502
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Gross Margins 47% 41%
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Earnings before interest, taxes, depreciation,
amortization (1) 8,258 5,599
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Income before tax 3,696 1,468
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Income after tax 3,614 991
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Net income (loss) per share - diluted 0.12 0.03
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Total assets 40,551 38,912
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(1) EBITDA, or earnings before interest, taxes, depreciation and amortization is calculated by adding these items back to reported net income. 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 other measures of financial performance calculated in accordance with GAAP.

About Wenzel Downhole Tools Ltd.

Wenzel Downhole Tools Ltd. (WZL) and its predecessor companies has been a leading supplier of downhole drilling tools to the oil and gas industry for almost thirty years. WZL manufactures, rents, sells and services mud motors, shock tools, drilling jars, mud saver valves and other equipment. The company owns several patents on the technology utilized in the drilling tools and continues to develop new and innovative technology for use in the downhole drilling industry.

The Company is listed on the TSX but is not trading due to the cease trading order disclosed in news releases dated March 23, 2004 and April 5, 2004.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this release

Contact Information

  • Wenzel Downhole Tools Ltd.
    Harvie Andre
    President and C.E.O.
    (403) 205-6696
    or
    Wenzel Downhole Tools Ltd.
    Ron Dooley
    Chief Financial Officer
    (403) 205-6696
    (403) 265-8154 (FAX)