HOUSTON, May 7, 2007 (PRIME NEWSWIRE) -- T-3 Energy Services, Inc. ("T-3 Energy") (Nasdaq:TTES) reported first quarter 2007 net income of $5.5 million, or $0.51 per diluted share, up 45% and 46%, respectively, from $3.8 million or $0.35 per diluted share for the first quarter of 2006. Total revenues increased approximately 34% to $47.9 million for the quarter ended March 31, 2007 from $35.7 million for the same period in 2006.
For the first quarter of 2007, the Company reported EBITDA (defined as income from continuing operations, plus interest expense, net of interest income, provision for income taxes and depreciation and amortization), of $9.9 million, a 39% increase over the same period for 2006. For the quarter ended March 31, 2007 and 2006, net income included a pre-tax expense of $0.6 million and $0.2 million, respectively, for stock-based compensation costs.
The Company had a year-over-year increase in revenues in all of its product lines. In addition, the Company's original equipment product revenues accounted for approximately 75% of total revenues for the first quarter of 2007 as compared to 57% of total revenues for the first quarter of 2006. This increase is due to the continued strong demand for the Company's original equipment products and services. The Company is continuing its efforts on the engineering and design of its wellhead product line and is in the process of expanding its aftermarket repair capacity. The Company believes it will see positive results from these two initiatives in the second half of 2007.
As a result of the continued strong demand for the Company's products and services, its backlog increased approximately 57% from $44.6 million at March 31, 2006 to $69.9 million at March 31, 2007.
Gus D. Halas, T-3 Energy's Chairman, President and Chief Executive Officer commented, "The demand for our products and services remained strong during the first quarter of 2007. Our backlog continues to grow from previous periods indicating that the outlook for the remainder of 2007 remains positive. Revenues continue to increase in all our product lines and we look forward to the second half of 2007 when our focused efforts of developing our T-3 branded wellhead product line, the completion of our aftermarket repair capacity expansion program and our geographical expansions should provide incremental revenues. We remain focused on our commitment to meet the demands of our customers. Additionally, we are very pleased to have completed the underwritten offering among us, the selling stockholder and the underwriters in April 2007. We look forward to concentrating our efforts on the execution of our strategy to increase our market share in all our product lines and provide shareholder value."
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 March 31, 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 quarters ended March 31, 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 March 31, 2007 2006 ---- ---- Revenues: Products $ 37,839 $ 25,001 Services 10,061 10,682 -------- -------- 47,900 35,683 Cost of revenues: Products 24,313 16,246 Services 6,236 6,313 -------- -------- 30,549 22,559 Gross profit 17,351 13,124 Operating expenses 8,488 6,907 -------- -------- Income from operations 8,863 6,217 Interest expense 153 256 Interest income (22) (6) Equity in (earnings) loss of unconsolidated affiliate1 6 -- Other (income) expense, net (17) (84) -------- -------- Income from continuing operations before provision for income taxes 8,733 6,051 Provision for income taxes 3,234 2,187 -------- -------- Income from continuing operations 5,499 3,864 Loss from discontinued operations, net of tax -- (80) -------- -------- Net income $ 5,499 $ 3,784 ======== ======== Basic earnings (loss) per common share: Continuing operations $ .51 $ .37 Discontinued operations -- (.01) -------- -------- Net income (loss) per common share $ .51 $ .36 Diluted earnings (loss) per common share: Continuing operations $ .51 $ .36 ======== ======== Discontinued operations -- (.01) -------- -------- Net income (loss) per common share $ .51 $ .35 ======== ======== Weighted average common shares outstanding: Basic 10,684 10,584 ======== ======== Diluted 10,888 10,696 ======== ======== T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands except for share amounts) March 31, December 31, --------------------------- 2007 2006 ---- ---- (unaudited) ASSETS Current assets Cash and cash equivalents $ 3,180 $ 3,393 Accounts receivable -- trade, net 33,929 25,634 Inventories 31,335 27,227 Notes receivable, current portion 14 14 Deferred income taxes 2,184 2,208 Prepaids and other current assets 2,899 5,557 ------------ ------------ Total current assets 73,541 64,033 Property and equipment, net 24,406 24,639 Notes receivable, less current portion 325 325 Goodwill, net 70,644 70,569 Other intangible assets, net 2,399 2,510 Other assets 678 567 ------------ ------------ Total assets $ 171,993 $ 162,643 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable -- trade $ 14,987 $ 14,453 Accrued expenses and other 14,778 14,457 Current maturities of long-term debt 1,643 85 ------------ ----------- Total current liabilities 31,408 28,995 Long-term debt, less current maturities -- -- Other long-term liabilities 1,129 34 Deferred income taxes 3,967 3,454 Commitments and contingencies Stockholders' equity: Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued or outstanding -- -- Common stock, $.001 par value, 20,000,000 shares authorized, 10,763,131 and 10,762,016 shares issued and outstanding at March 31, 2007 and December 31, 2006, respectively 11 11 Warrants, 327,862 issued and outstanding 644 644 Additional paid-in capital 126,663 126,054 Retained earnings 7,288 2,672 Accumulated other comprehensive income 883 779 ------------ ----------- Total stockholders' equity 135,489 130,160 Total liabilities and stockholders' equity $ 171,993 $ 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 ------------------ March 31, ---------- 2007 2006 ---- ---- EBITDA: Income from continuing operations $ 5,499 $ 3,864 Provision for income taxes 3,234 2,187 Depreciation and amortization 1,021 807 Interest Expense 153 256 Interest Income (22) (6) -------- -------- EBITDA (A) $ 9,885 $ 7,108 ======== ========
(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, 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.