HOUSTON, Nov. 5, 2007 (PRIME NEWSWIRE) -- T-3 Energy Services, Inc. ("T-3 Energy") (Nasdaq:TTES) reported third quarter 2007 income from continuing operations of $7.2 million, or $0.58 per diluted share, up 41% and 26%, respectively, from $5.1 million or $0.46 per diluted share for the third quarter of 2006. Year to date 2007 income from continuing operations of $18.0 million, or $1.52 per diluted share, was up 35% and 24%, respectively, from $13.4 million, or $1.23 per diluted share, reported during 2006. Revenues for the third quarter of 2007 increased 20% to $53.2 million from $44.2 million for the same period in 2006. Year to date 2007 revenues increased 30% to $153.1 million from $117.9 million for the same period in 2006. The year to date 2007 financial results include a Q2 2007 charge, net of tax, of $1.9 million, associated with a change of control payment and the immediate vesting of previously unvested stock options and restricted stock held by Gus D. Halas, the Company's Chairman, President and Chief Executive Officer, pursuant to the terms of his then existing employment agreement. The third quarter 2006 and year to date 2006 financial results include a charge, net of tax, of $0.3 million, related to terminated public offering costs. Excluding the impact of these change of control and public offering costs, the Company's year to date 2007 income from continuing operations and diluted earnings per share increased 47% and 34%, respectively, from $13.6 million and $1.25 per diluted share in 2006 to $20.0 million and $1.68 per diluted share in 2007.
For the third quarter of 2007 and year to date 2007, the Company reported Adjusted EBITDA (defined as income from continuing operations, excluding the change of control compensation charge and public offering costs, plus interest expense, net of interest income, provision for income taxes and depreciation and amortization), of $12.0 million and $33.9 million, respectively, a 25% and 37% increase over the same periods for 2006, respectively.
The Company's quarterly revenues continue to increase due to the continued strong demand for its original equipment products and services and its increase in manufacturing capacity through improvements and geographic expansion. The Company's original equipment product revenues accounted for approximately 76% of total revenues for the third quarter of 2007 as compared to 65% of total revenues for the third quarter of 2006.
As a result of the continued strong demand for the Company's products and services, its backlog and quoting activity continues to be strong. As of September 30, 2007, backlog was $58.7 million. Outstanding quotes in the pressure control group increased approximately 13% from September 2006 to September 2007. Outstanding quotes, excluding recently acquired Energy Equipment Corporation and HP&T Products, Inc, are at $213.6 million as of November 2, 2007. Based on our historical hit rate, the outstanding quote activity should yield favorable results. The Company believes backlog volumes will continue to fluctuate due to growing international sales, as international orders tend to be more complex due to several factors, including financing, legal arrangements, agent structures, engineering demands and delivery logistics.
Gus D. Halas, T-3 Energy's Chairman, President and Chief Executive Officer commented, "The continuing increase in demand for our original equipment products and the increase in our manufacturing capacity have resulted in an increase in our revenues for the third quarter. Our outstanding quotes continue to grow from previous periods and our backlog remains steady even with the increase in shipments of all of our original equipment products. Our focused efforts on the manufacturing and selling of our T-3 branded wellhead product line, the completion of our aftermarket repair capacity expansion program and the introduction of our subsea blowout preventer line should provide incremental revenues beginning in 2008. Additionally, we are excited about our recently announced acquisitions of Energy Equipment Corporation and HP&T Products, Inc. and believe that the addition of their proprietary products and extensive manufacturing and service capabilities promises to yield great opportunities for T-3 Energy's customers."
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, 2007 and its Annual Report on Form 10-K for the year ended December 31, 2006 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 news release for the corresponding reconciliations to GAAP financial measures for the periods ended September 30, 2007 and 2006. 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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
---- ---- ---- ----
Revenues:
Products $ 42,903 $ 33,439 $ 121,743 $ 86,903
Services 10,327 10,744 31,320 31,028
--------- --------- --------- ---------
53,230 44,183 153,063 117,931
Cost of revenues:
Products 27,493 20,826 77,332 55,349
Services 6,370 6,529 19,125 18,515
--------- --------- --------- ---------
33,863 27,355 96,457 73,864
Gross profit 19,367 16,828 56,606 44,067
Operating expenses 8,789 8,723 29,230 23,056
--------- --------- --------- ---------
Income from operations 10,578 8,105 27,376 21,011
Interest expense 98 234 354 744
Interest income (424) (6) (705) (18)
Equity in earnings of
unconsolidated affiliate (175) -- (485) --
Other income, net (126) (205) (295) (681)
--------- --------- --------- ---------
Income from continuing
operations before provision
for income taxes 11,205 8,082 28,507 20,966
Provision for income taxes 3,984 2,978 10,474 7,613
--------- --------- --------- ---------
Income from continuing
operations 7,221 5,104 18,033 13,353
Loss from discontinued
operations, net of tax (92) (20) (1,167) (150)
--------- --------- --------- ---------
Net income $ 7,129 $ 5,084 $ 16,866 $ 13,203
========= ========= ========= =========
Basic earnings (loss)
per common share:
Continuing operations $ .59 $ .48 $ 1.56 $ 1.26
========= ========= ========= =========
Discontinued operations $ -- $ -- $ (.10) $ (.01)
========= ========= ========= =========
Net income per common
share $ .59 $ .48 $ 1.46 $ 1.25
========= ========= ========= =========
Diluted earnings (loss)
per common share:
Continuing operations $ .58 $ .46 $ 1.52 $ 1.23
========= ========= ========= =========
Discontinued operations $ (.01) $ -- $ (.10) $ (.01)
========= ========= ========= =========
Net income per common
share $ .57 $ .46 $ 1.42 $ 1.22
========= ========= ========= =========
Weighted average common
shares outstanding:
Basic 12,170 10,625 11,550 10,601
========= ========= ========= =========
Diluted 12,523 11,003 11,879 10,881
========= ========= ========= =========
T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)
Sept. 30, Dec. 31,
2007 2006
---- ----
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 35,967 $ 3,393
Accounts receivable - trade, net 29,813 25,634
Inventories 39,289 27,227
Notes receivable, current portion 48 14
Deferred income taxes 3,231 2,208
Prepaids and other current assets 3,660 5,557
-------- --------
Total current assets 112,008 64,033
Property and equipment, net 26,343 24,639
Notes receivable, less current portion 291 325
Goodwill, net 71,759 70,569
Other intangible assets, net 2,306 2,510
Equity investment in unconsolidated
affiliate 945 --
Other assets 806 567
-------- --------
Total assets $214,458 $162,643
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 15,797 $ 14,453
Accrued expenses and other 14,789 14,457
Current maturities of long-term debt -- 85
-------- --------
Total current liabilities 30,586 28,995
Other long-term liabilities 1,070 34
Deferred income taxes 3,986 3,454
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value,
25,000,000 and 5,000,000 shares
authorized at September 30, 2007
and December 31, 2006,
respectively, no shares issued
or outstanding -- --
Common stock, $.001 par value,
50,000,000 and 20,000,000 shares
authorized at September 30, 2007
and December 31, 2006, respectively,
12,201,359 and 10,762,016 shares issued and
outstanding at September 30, 2007 and
December 31, 2006, respectively 12 11
Warrants, 13,919 and 327,862 issued and
outstanding at September 30, 2007 and
December 31, 2006, respectively 27 644
Additional paid-in capital 157,111 126,054
Retained earnings 18,655 2,672
Accumulated other comprehensive income 3,011 779
-------- --------
Total stockholders' equity 178,816 130,160
-------- --------
Total liabilities and stockholders' equity $214,458 $162,643
======== ========
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 Nine Months Ended
September 30, September 30,
------------------ ------------------
2007 2006 2007 2006
---- ---- ---- ----
INCOME FROM CONTINUING
OPERATIONS:
GAAP Income from
continuing operations $ 7,221 $ 5,104 $ 18,033 $ 13,353
Change of control charge,
net of tax -- -- 1,929 --
Public offering costs,
net of tax -- 261 -- 261
--------- --------- --------- ---------
Non-GAAP Income from
continuing
operations (B) $ 7,221 $ 5,365 $ 19,962 $ 13,614
========= ========= ========= =========
DILUTED EARNINGS PER SHARE:
GAAP continuing
operations diluted
earnings per share $ 0.58 $ 0.46 $ 1.52 $ 1.23
Change of control charge,
net of tax -- -- 0.16 --
Public offering costs,
net of tax -- 0.02 -- 0.02
--------- --------- --------- ---------
Non-GAAP continuing
operations diluted
earnings per share (B) $ 0.58 $ 0.48 $ 1.68 $ 1.25
========= ========= ========= =========
ADJUSTED EBITDA:
GAAP Income from
continuing operations $ 7,221 $ 5,104 $ 18,033 $ 13,353
Change of control charge,
net of tax -- -- 1,929 --
Public offering costs,
net of tax -- 261 -- 261
Provision for income
taxes (C) 3,984 3,112 11,067 7,747
Depreciation and
amortization 1,085 896 3,181 2,550
Interest Expense 98 234 354 744
Interest Income (424) (6) (705) (18)
--------- --------- --------- ---------
Adjusted EBITDA (A) $ 11,964 $ 9,601 $ 33,859 $ 24,637
========= ========= ========= =========
(A) Adjusted 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 the change of
control compensation charge and public offering costs, plus interest
expense, net of interest income, provision for income taxes, depreciation
and amortization. We have presented Adjusted EBITDA because we use
Adjusted EBITDA as an integral part of our internal reporting to
measure our performance and to evaluate the performance of our senior
management. We consider Adjusted EBITDA to be an important indicator of
the operational strength of our business. Management uses Adjusted
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.
Adjusted 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 Adjusted EBITDA
provides useful information to our investors regarding our performance
and overall results of operations. Adjusted 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, Adjusted 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 Adjusted 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 the change of control compensation charge
and public offering costs, net of tax. Non-GAAP continuing operations
diluted earnings per share is equal to continuing operations diluted
earnings per share plus the change of control compensation charge and
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 Company believes that reporting
income from continuing operations and diluted earnings per share
excluding the change of control compensation costs and public offering
costs provides useful supplemental information regarding the Company's
on-going economic performance and, therefore, uses this financial
measure internally to evaluate and manage the Company's operations.
The Company has chosen to provide this information to investors to
enable them to perform more meaningful comparisons of the operating
results and as a means to emphasize the results of on-going operations.
(C) Provision for income taxes in the Adjusted EBITDA calculation has
been increased by $593,000 for the tax effect of the change of control
charge for the nine months ended September 30, 2007, and $134,000 for
the tax effect of the public offering costs for the three and nine
months ended September 30, 2006.