Wenzel Downhole Tools Ltd.

TSX : WZL


Wenzel Downhole Tools Ltd.

November 12, 2012 06:00 ET

Wenzel Downhole Tools Ltd Announces Third Quarter Results for 2012

CALGARY, ALBERTA--(Marketwire - Nov. 12, 2012) - Wenzel Downhole Tools Ltd. (the "Company") (TSX:WZL) is pleased to report its financial results for the three month and nine month periods ending September 30, 2012. Comparing the results for the first nine months of 2012 to those of 2011, Revenues were up 6%, Gross Profit was down 7% and Earnings Before Income Tax were down 29%. Comparing the results for the third quarter of 2012 to those of 2011, Revenues were down 33%, Gross Profit was down 48% and Earnings Before Income Tax were down 75%.

2012 Third Quarter Results

The Company achieved revenues of $19.2 million in the third quarter of 2012, $9.5 million less than the $28.7 million in the same period of 2011. Canadian revenue, which is comprised of rental, sales and service revenue, decreased from $7.6 million in Q3 2011 to $5.7 million in Q3 2012, a decrease of 25%. The decrease in Canadian equipment sales revenue is due to a general decrease in customer capital spending on new products which significantly reduced the Company's revenue from oilfield equipment sales. Decreased Canadian drilling activity resulted in lower rental and service revenue. US revenue, mainly rental and service revenue, decreased from $11.9 million in Q3 2011 to $11.1 million in Q3 2012, a decrease of 7%. This is a direct result of the decreased US drilling activity. International product sales decreased from $9.1 million in Q3 2011 to $2.4 million in Q3 2012, a decrease of 74%, mainly as a result of the political instability in some oil and gas producing areas of the world where the Company previously generated significant business and an international customer having been acquired by a third party with competing product lines.

For the first nine months of 2012, the Company achieved revenues of $68.3 million compared to $64.2 million in the same period of 2011. The change in revenue over the same period in 2011 is a result of increases of $6.1 million (33%) in revenues from Canada, $5.1 million (17%) in revenues from the United States, and a decrease of $7.2 million (45%) on international product sales.

Overall Performance

The earnings before taxes for the third quarter were $1.8 million compared to $7.1 million for the same period in 2011. Earnings before interest, taxes, depreciation and amortization and share-based compensation ("EBITDA") for the third quarter of 2012 was $3.9 million compared to $9.4 million in the same period in 2011. Comparing the nine month period ending September 30, earnings before taxes were $9.0 million in 2012 versus $12.7 million in 2011. For the nine month period EBITDA was $15.2 million in 2012 and $20.3 million in 2011.

Financially the Company remains in good shape. Capital expenditures can be financed from internally generated funds. Total debt at September 30, 2012 was $2.8 million, compared to $13.3 million on December 31, 2011.

Financial Highlights

Highlights of the 3 and 9 month periods of 2012 and 2011 are summarized in the following table together with comparative year end 2011 highlights:

3 months ended
September 30,
9 months ended
September 30,
Year ended December 31,
2012 2011 2012 2011 2011
($000s except for earnings per share)
Revenue 19,191 28,651 68,256 64,242 90,739
Gross Profit 5,529 10,725 21,881 23,502 34,638
Gross Profit Percentage 29 % 37 % 32 % 37 % 38 %
EBITDA(1) 3,904 9,408 15.150 20,277 24,858
Earnings Before Income Tax 1,807 7,112 8,990 12,685 15,230
Net Earnings 1,338 4,765 6,419 8,176 10,335
Total Comprehensive Income 1,129 5,502 6,125 8,703 10,676
Net Earnings per Share - basic 0.04 0.15 0.21 0.26 0.34
Net Earnings per Share - diluted 0.04 0.13 0.18 0.23 0.29
As of September 30, December 31,
2012 2011 2011
Short-term debt 2,774 13,991 13,303
Long-term debt - - -
Shareholders' Equity 59,851 51,661 53,634

Note (1) Refer to Non-generally accepted accounting principles ("GAAP") measure at the end of this news release.

About Wenzel Downhole Tools Ltd.

WZL is a manufacturer, seller and renter of drilling tools used in oil and gas exploration that operates in Canada, the United States and internationally. The Company's shares trade on the Toronto Stock Exchange under the symbol "WZL". The Company's Canadian sales, manufacturing and servicing facilities are located in Edmonton, Alberta, its US servicing facilities are located in Conroe, Texas, Morgantown, West Virginia and Casper, Wyoming and its US Sales offices are located in Conroe, Casper and Oklahoma City, Oklahoma. The Company's main corporate office is located in Calgary, Alberta. Wenzel also has a sales and service facility in Celle, Germany. The Company's Third Quarter Consolidated Financial Statements and Management's Discussion and Analysis will be posted on SEDAR (www.sedar.com) on or about November 12, 2012.

Forward-Looking Information

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.

Non-GAAP Measure

Non-GAAP Measure: 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 year to year comparisons more meaningful.

3 months ended 9 months ended Year ended
September 30, September 30, December 31,
2012 2011 2012 2011 2011
Net earnings $ 1,338 $ 4,765 $ 6,419 $ 8,176 $ 10,335
Income tax 468 2,347 2,571 4,509 4,895
Depreciation and amortization 2,021 2,164 5,812 6,360 8,253
Interest 77 132 315 268 411
Share-based compensation - - 33 964 964
EBITDA $ 3,904 $ 9,408 $ 15,150 $ 20,277 $ 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 IFRS and GAAP.

THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY AND ACCURACY OF THIS NEWS RELEASE.

Contact Information

  • Wenzel Downhole Tools Ltd.
    Ron Patterson
    Chief Executive Officer
    (403) 262-3050
    (403) 265-8154 (FAX)
    www.downhole.com