HOUSTON, March 7, 2006 (PRIMEZONE) -- T-3 Energy Services, Inc. ("T-3 Energy") (Nasdaq:TTES) reported fourth quarter 2005 income from continuing operations of $2.9 million, or $0.27 per diluted share, up 37% and 35%, respectively, from $2.1 million, or $0.20 per diluted share reported for the third quarter of 2005, and up 198% and 200%, respectively, from $1.0 million, or $0.09 per diluted share reported for the fourth quarter of 2004. Revenues for the fourth quarter of 2005 increased 26% over the previous quarter and 72% over the prior year quarter. The fourth quarter 2005 financial results include a charge of $0.6 million associated with the termination of the Company's public offering. Excluding the impact of the terminated public offering costs, T-3 Energy's income from continuing operations increased 242% from the fourth quarter of 2004 to the fourth quarter of 2005.
For the fourth quarter of 2005, the Company reported EBITDA (defined as income from continuing operations, excluding terminated public offering costs, plus interest expense, net of interest income, provision for income taxes, depreciation and amortization) of $5.9 million, a 159% increase over the same period for 2004.
For the year ended December 31, 2005, income from continuing operations of $8.1 million, or $0.75 per diluted share, increased 180% and 178%, respectively, over 2004 amounts. Excluding the impact of the terminated public offering costs, income from continuing operations of $8.5 million, or $0.79 per diluted share, increased 195% and 193%, respectively over 2004 amounts. For the year ended December 31, 2005, revenues of $103.2 million were up 53% from the prior year. Revenues from new products for the year ended December 31, 2005 were up 90% from the prior year.
For the year ended December 31, 2005, the Company reported EBITDA of $17.7 million, a 100% increase over the same period for 2004.
The increase in revenues and earnings growth were primarily attributable to increased activity in the oil and gas industry, the purchase of the Company's Canadian operations during the fourth quarter of 2004, which allowed the Company to recognize the full benefit of their products and services being offered in Canada, the willingness of drilling contractors and oil and gas companies to spend increased capital for their projects worldwide, and increased market share for our T-3 brand pressure and flow control products.
During 2005 and 2004, the Company sold substantially all of the assets of its distribution and products segments, respectively. These assets constituted businesses and thus their results of operations have been reported as discontinued operations for all periods presented. Loss from discontinued operations, net of tax for the year ended December 31, 2005 was $3.5 million compared to $1.4 million for the same period in 2004. The increase in loss was primarily attributable to the pre-tax loss of $3.6 million for the sale of the distribution segment during 2005 as compared to a loss of $2.9 million for the sale of a portion of the products segment during 2004.
Gus D. Halas, T-3 Energy's Chairman, President and Chief Executive Officer commented "T-3 had an excellent year in 2005. We are at an inflection point for our products and services that will continue to carry into 2006 with full momentum. Our T-3 brand identity has now been accepted by substantially all the major drilling contractors for use throughout the world. For example, BOP and BOP control systems shipments have increased 500% and 180%, respectively, in 2005 as compared to 2004. Over the next twelve months we plan to significantly expand our manufacturing capacity through facility expansions and operational improvements, through several selected geographical expansions and the continued introduction of new products being developed by our engineering group, which has more than doubled in size since mid 2005. This should allow us to continue and improve our already rapid response time to customer demands and enable us to build market share worldwide."
We believe that the outlook for the Company through 2006 is favorable, as the overall activity in the markets we operate in is expected to remain high and our backlog, especially for our pressure and flow control business, began to increase significantly in the third quarter of 2005. Backlog has increased $26.7 million, or 785%, from December 31, 2004 backlog of $3.4 million to December 31, 2005 backlog of $30.1 million. We expect that the high levels of drilling activity in North America and the increased demand for our products to be shipped internationally will continue to drive significant levels of backlog. We believe that a significant amount of future activity will be related to new products and that substantially all of the orders and commitments included in backlog at December 31, 2005, will be completed within the next twelve months.
Looking into 2006 and beyond, we expect average rig activity to remain at high levels, and we expect our new products sales to increase compared to 2005 levels due to our product acceptance by the industry, new product introductions, significant capital and geographical expansions, and continued rapid response time to our customers. The Company's actual results will also be dependent on the pace and level of activities in the markets served by the Company.
T-3 Energy Services, Inc. provides a broad range of oilfield products and services primarily to customers in the drilling and completion of new oil and gas wells, the workover of existing wells and the production and transportation of oil and gas. Certain comments contained in this news release concerning the anticipated financial results of the Company constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Whenever possible, the Company has identified these "forward-looking" statements by words such as "believe", "encouraged", "expect", "expected" and similar phrases. The forward-looking statements are based upon management's expectations and beliefs and, although these statements are based upon reasonable assumptions, actual results might differ materially from expected results due to a variety of factors including, but not limited to, overall demand for and pricing of the Company's products, changes in the level of oil and natural gas exploration and development, and variations in global business and economic conditions. The Company assumes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise. For a discussion of additional risks and uncertainties that could impact the Company's results, review the T-3 Energy Services, Inc. quarterly Report on Form 10-Q for the period ending
September 30, 2005 and its Annual Report on Form 10-K for the year ended December 31, 2004 and other filings of the Company with the Securities and Exchange Commission.
Non-GAAP Financial Measures. Certain information discussed in this news release are considered non-GAAP financial measures. See the Supplementary Data - Schedule 1 in this release for the corresponding reconciliations to GAAP financial measures for the yearly and quarterly periods ended December 31, 2005 and 2004. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results.
T-3 ENERGY SERVICES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands except per share amounts)
Three Months Ended
-------------------------------------
December 31, September 30,
-------------------- ------------
2005 2004 2005
-------- -------- --------
Revenues:
Products $ 24,081 $ 12,197 $ 16,464
Services 8,525 6,745 9,327
-------- -------- --------
32,606 18,942 25,791
Cost of revenues:
Products 15,310 8,839 10,634
Services 5,463 4,481 6,140
-------- -------- --------
20,773 13,320 16,774
Gross profit 11,833 5,622 9,017
Operating expenses 7,407 4,163 5,578
-------- -------- --------
Income from operations 4,426 1,459 3,439
Interest expense 272 435 146
Interest income (14) (35) (15)
Other (income) expense, net (35) 14 (10)
-------- -------- --------
Income from continuing
operations before provision
for income taxes 4,203 1,045 3,318
Provision for income taxes 1,314 77 1,214
-------- -------- --------
Income from continuing
operations 2,889 968 2,104
Income (loss) from
discontinued operations,
net of tax 239 465 (3,856)
-------- -------- --------
Net income (loss) $ 3,128 $ 1,433 $ (1,752)
======== ======== ========
Basic earnings (loss) per
common share:
Continuing operations $ 0.27 $ 0.09 $ 0.20
Discontinued operations 0.02 0.04 (0.37)
-------- -------- --------
Net income (loss) per
common share $ 0.29 $ 0.13 $ (0.17)
======== ======== ========
Diluted earnings (loss) per
common share:
Continuing operations $ 0.27 $ 0.09 $ 0.20
Discontinued operations 0.02 0.04 (0.36)
-------- -------- --------
Net income (loss) per
common share $ 0.29 $ 0.13 $ (0.16)
======== ======== ========
Weighted average common
shares outstanding:
Basic 10,582 10,582 10,582
======== ======== ========
Diluted 10,700 10,584 10,716
======== ======== ========
T-3 ENERGY SERVICES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands except per share amounts)
Year Ended December 31,
----------------------
2005 2004
--------- ---------
Revenues:
Products $ 65,635 $ 43,263
Services 37,583 24,165
--------- ---------
103,218 67,428
Cost of revenues:
Products 42,397 29,567
Services 23,887 15,548
--------- ---------
66,284 45,115
Gross profit 36,934 22,313
Operating expenses 23,121 15,888
--------- ---------
Income from operations 13,813 6,425
Interest expense 1,491 2,319
Interest income (83) (205)
Other (income) expense, net (16) 134
--------- ---------
Income from continuing operations before
provision for income taxes 12,421 4,177
Provision for income taxes 4,366 1,305
--------- ---------
Income from continuing operations 8,055 2,872
Loss from discontinued operations,
net of tax (3,542) (1,353)
--------- ---------
Net income $ 4,513 $ 1,519
========= =========
Basic earnings (loss) per common share:
Continuing operations $ 0.76 $ 0.27
Discontinued operations (0.33) (0.13)
--------- ---------
Net income per common share $ 0.43 $ 0.14
========= =========
Diluted earnings (loss) per common share:
Continuing operations $ 0.75 $ 0.27
Discontinued operations (0.33) (0.13)
--------- ---------
Net income per common share $ 0.42 $ 0.14
========= =========
Weighted average common shares outstanding:
Basic 10,582 10,582
========= =========
Diluted 10,670 10,585
========= =========
T-3 ENERGY SERVICES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands except for share amounts)
December 31,
----------------------
2005 2004
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 1,162 $ 95
Accounts receivable - trade, net 21,527 13,296
Inventories 18,268 11,861
Notes receivable, current portion 480 1,160
Deferred income taxes 1,731 2,086
Prepaids and other current assets 5,887 3,114
Current assets of discontinued operations -- 18,226
--------- ---------
Total current assets 49,055 49,838
Property and equipment, net 18,652 18,746
Notes receivable, less current portion 327 365
Goodwill, net 69,607 68,393
Other intangible assets, net 2,325 3,445
Other assets 822 1,554
--------- ---------
Total assets $ 140,788 $ 142,341
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 12,943 $ 6,355
Accrued expenses and other 9,439 6,408
Current maturities of long-term debt 36 44
Current liabilities of discontinued
operations -- 4,048
--------- ---------
Total current liabilities 22,418 16,855
Long-term debt, less current maturities 7,058 18,824
Other long-term liabilities 82 130
Deferred income taxes 2,018 2,216
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value,
25,000,000 shares authorized, no shares
issued or outstanding -- --
Common stock, $.001 par value,
25,000,000 shares authorized at
December 31, 2005 and 50,000,000 shares
authorized at December 31, 2004,
10,581,986 shares issued and outstanding
at December 31, 2005 and 2004 11 11
Warrants, 332,862 issued and outstanding
at December 31, 2005 and 517,862 issued
and outstanding at December 31, 2004 644 853
Additional paid-in capital 123,175 122,962
Retained earnings (deficit) (15,420) (19,933)
Accumulated other comprehensive income 802 423
--------- ---------
Total stockholders' equity 109,212 104,316
--------- ---------
Total liabilities and stockholders' equity $ 140,788 $ 142,341
========= =========
T-3 ENERGY SERVICES, INC., AND SUBSIDIARIES
SUPPLEMENTARY DATA - SCHEDULE 1 (UNAUDITED)
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
---------------- ----------------
2005 2004 2005 2004
------- ------- ------- -------
INCOME FROM CONTINUING
OPERATIONS:
GAAP Income from continuing
operations $ 2,889 $ 968 $ 8,055 $ 2,872
Terminated public offering
costs, net of tax 423 -- 423 --
------- ------- ------- -------
Non-GAAP Income from continuing
operations (B) $ 3,312 $ 968 $ 8,478 $ 2,872
======= ======= ======= =======
DILUTED EARNINGS PER SHARE:
GAAP continuing operations
diluted earnings per share $ 0.27 $ 0.09 $ 0.75 $ 0.27
Terminated public offering costs,
net of tax 0.04 -- 0.04 --
------- ------- ------- -------
Non-GAAP continuing operations
diluted earnings per share (B) $ 0.31 $ 0.09 $ 0.79 $ 0.27
======= ======= ======= =======
EBITDA:
GAAP Income from continuing
operations $ 2,889 $ 968 $ 8,055 $ 2,872
Terminated public offering costs,
net of tax 423 -- 423 --
Provision for income taxes 1,532 77 4,584 1,305
Depreciation and amortization 771 823 3,183 2,517
Interest Expense 272 435 1,491 2,319
Interest Income (14) (35) (83) (205)
------- ------- ------- -------
EBITDA (A) $ 5,873 $ 2,268 $17,653 $ 8,808
======= ======= ======= =======
(A) EBITDA is a non-generally accepted accounting principle, or
GAAP, financial measure equal to income from continuing
operations, the most directly comparable GAAP measure, excluding
terminated public offering costs, plus interest expense, net of
interest income, provision for income taxes, depreciation and
amortization. We have presented EBITDA because we use EBITDA as
an integral part of our internal reporting to measure our
performance and to evaluate the performance of our senior
management. We consider EBITDA to be an important indicator of
the operational strength of our business. Management uses EBITDA:
-- as a measure of operating performance that assists us in
comparing our performance on a consistent basis because it
removes the impact of our capital structure and asset base
from our operating results;
-- as a measure for budgeting and for evaluating actual results
against our budgets;
-- to assess compliance with financial ratios and covenants
included in our senior credit facility;
-- in communications with lenders concerning our financial
performance; and
-- to evaluate the viability of potential acquisitions and overall
rates of return.
EBITDA eliminates the effect of considerable amounts of non-cash
depreciation and amortization. A limitation of this measure,
however, is that it does not reflect the periodic costs of certain
capitalized tangible and intangible assets used in generating
revenues in our business. Management evaluates the costs of such
tangible and intangible assets and the impact of related
impairments through other financial measures, such as capital
expenditures, investment spending and return on capital.
Therefore, we believe that EBITDA provides useful information to
our investors regarding our performance and overall results of
operations. EBITDA is not intended to be a performance measure
that should be regarded as an alternative to, or more meaningful
than, either income from continuing operations as an indicator of
operating performance or to cash flows from operating activities
as a measure of liquidity. In addition, EBITDA is not intended to
represent funds available for dividends, reinvestment or other
discretionary uses, and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with GAAP. The EBITDA measure presented above may not be
comparable to similarly titled measures presented by other
companies, and may not be identical to corresponding measures used
in our various agreements.
(B) Non-GAAP income from continuing operations is equal to income
from continuing operations plus terminated public offering costs,
net of tax. Non-GAAP continuing operations diluted earnings per
share is equal to continuing operations diluted earnings per
share plus terminated public offering costs, net of tax per
share. We have presented Non-GAAP income from continuing
operations and Non-GAAP continuing operations diluted earnings
per share because the costs related to the terminated public
offering are one-time costs that are non-recurring in nature.