HOUSTON, May 10, 2006 (PRIMEZONE) -- T-3 Energy Services, Inc. ("T-3 Energy") (Nasdaq:TTES) reported first quarter 2006 income from continuing operations of $3.9 million, or $0.36 per diluted share, up 34% and 33%, respectively, from $2.9 million, or $0.27 per diluted share, reported for the fourth quarter of 2005, and up 454% and 500%, respectively, from $0.7 million, or $0.06 per diluted share, reported for the first quarter of 2005. Revenues increased 9% over the previous quarter and 80% over the prior year quarter. The first quarter 2006 financial results include a charge of $0.2 million associated with the adoption of FASB Statement No. 123 (R), "Share-Based Payment" effective January 1, 2006. Excluding the impact of the stock based compensation costs, T-3 Energy's income from continuing operations increased 476% from the first quarter of 2005 compared to the first quarter of 2006.
For the first quarter of 2006, the Company reported EBITDA (defined as income from continuing operations, excluding stock based compensation costs and terminated public offering costs, plus interest expense, net of interest income, provision for income taxes and depreciation and amortization), of $7.3 million, a 204% increase over the same period for 2005.
The Company's increase in revenues was primarily attributable to improved demand for its products and services resulting from higher price levels for oil and natural gas and correspondingly higher levels of construction of drilling rigs that require the type of equipment T-3 manufactures. For example, backlog has increased to $44.6 million at March 31, 2006, a 48% increase over December 31, 2005 backlog of $30.1 million and a 325% increase over March 31, 2005 backlog of $10.5 million. Management also believes that its T-3 branded products have gained market acceptance, resulting in greater sales to customers that use its products in both their domestic and in international operations. For example, T-3 original equipment revenues have increased 126% in the first quarter of 2006 as compared to the first quarter of 2005. The T-3 Rockies acquisition, which was completed in January 2006, has positively impacted the Company's first quarter results and management sees excellent opportunities in that region for future growth.
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 are reported as discontinued operations for all periods presented. Income (loss) from discontinued operations, net of tax for the three months ended March 31, 2006 was ($0.1) million as compared to $0.1 million in the three months ended March 31, 2005.
Gus D. Halas, T-3 Energy's Chairman, President and Chief Executive Officer, commented "T-3 is off to an excellent start in 2006. We have experienced a strong demand for our products and services throughout our three product lines resulting in higher revenues, operating gross profit and operating gross profit margins over the prior quarter and the first quarter of last year. We believe that customer demand for our products and services will continue to be strong throughout the remainder of 2006 and into 2007. We remain focused on introducing new products being developed by our highly qualified engineering group, increasing our manufacturing capacity, improving our processes and growing through geographic expansion. Our goal is to continue to increase our domestic and international market share."
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. Annual Report on Form 10-K for the year ended December 31, 2005 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, 2006 and 2005 and December 31, 2005. 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, December 31,
2006 2005 2005
------- ------- -------
Revenues:
Products $25,001 $11,105 $24,081
Services 10,682 8,677 8,525
------- ------- -------
35,683 19,782 32,606
Cost of revenues:
Products 16,564 7,775 15,310
Services 5,995 5,601 5,463
------- ------- -------
22,559 13,376 20,773
Gross profit 13,124 6,406 11,833
Operating expenses 6,907 4,782 7,407
------- ------- -------
Income from operations 6,217 1,624 4,426
Interest expense 256 396 272
Interest income (6) (23) (14)
Other (income) expense, net (84) 25 (35)
------- ------- -------
Income from continuing operations
before provision for income taxes 6,051 1,226 4,203
Provision for income taxes 2,187 528 1,314
------- ------- -------
Income from continuing operations 3,864 698 2,889
Income (loss) from discontinued
operations, net of tax (80) 72 239
------- ------- -------
Net income $ 3,784 $ 770 $ 3,128
======= ======= =======
Basic earnings (loss) per common
share:
Continuing operations $ 0.37 $ 0.06 $ 0.27
Discontinued operations (0.01) 0.01 0.02
------- ------- -------
Net income (loss) per common
share $ 0.36 $ 0.07 $ 0.29
======= ======= =======
Diluted earnings (loss) per common
share:
Continuing operations $ 0.36 $ 0.06 $ 0.27
Discontinued operations (0.01) 0.01 0.02
------- ------- -------
Net income (loss) per common
share $ 0.35 $ 0.07 $ 0.29
======= ======= =======
Weighted average common shares
outstanding:
Basic 10,584 10,582 10,582
======= ======= =======
Diluted 10,696 10,634 10,700
======= ======= =======
T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except for share amounts)
March 31, December 31,
2006 2005
-------- --------
(unaudited)
--------
ASSETS
Current assets:
Cash and cash equivalents $ 818 $ 1,162
Accounts receivable - trade, net 23,289 21,527
Inventories 21,576 18,268
Notes receivable, current portion 758 480
Deferred income taxes 1,767 1,731
Prepaids and other current assets 4,597 5,887
-------- --------
Total current assets 52,805 49,055
Property and equipment, net 20,645 18,652
Notes receivable, less current portion 36 327
Goodwill, net 71,055 69,607
Other intangible assets, net 2,863 2,325
Other assets 767 822
-------- --------
Total assets $148,171 $140,788
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 14,565 $ 12,943
Accrued expenses and other 9,380 9,439
Current maturities of long-term debt 24 36
-------- --------
Total current liabilities 23,969 22,418
Long-term debt, less current maturities 7,571 7,058
Other long-term liabilities 70 82
Deferred income taxes 3,287 2,018
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, 10,586,974
and 10,581,986 shares issued and
outstanding at March 31, 2006 and
December 31, 2005, respectively 11 11
Warrants, 327,862 issued and outstanding
at March 31, 2006 and 332,862 issued
and outstanding at December 31, 2005 644 644
Additional paid-in capital 123,460 123,175
Retained deficit (11,636) (15,420)
Accumulated other comprehensive income 795 802
-------- --------
Total stockholders' equity 113,274 109,212
-------- --------
Total liabilities and stockholders' equity $148,171 $140,788
======== ========
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, December 31,
--------- -----------
2006 2005 2005
------ ------ ------
INCOME FROM CONTINUING OPERATIONS:
GAAP Income from continuing
operations $3,864 $ 698 $2,889
Terminated public offering costs,
net of tax -- -- 423
Stock-based compensation costs,
net of tax 156 -- --
------ ------ ------
Non-GAAP Income from continuing
operations (B) $4,020 $ 698 $3,312
====== ====== ======
DILUTED EARNINGS PER SHARE:
GAAP continuing operations diluted
earnings per share $ 0.36 $ 0.06 $ 0.27
Terminated public offering costs,
net of tax -- -- 0.04
Stock-based compensation costs,
net of tax 0.02 -- --
------ ------ ------
Non-GAAP continuing operations
diluted earnings per share (B) $ 0.38 $ 0.06 $ 0.31
====== ====== ======
EBITDA:
GAAP Income from continuing
operations $3,864 $ 698 $2,889
Terminated public offering costs,
net of tax -- -- 423
Stock-based compensation costs,
net of tax 156 -- --
Provision for income taxes 2,268 528 1,532
Depreciation and amortization 807 814 771
Interest Expense 256 396 272
Interest Income (6) (23) (14)
------ ------ ------
EBITDA (A) $7,345 $2,413 $5,873
====== ====== ======
(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 and stock-based
compensation 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 stock-based compensation
costs, net of tax and 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 stock-based compensation costs, net of tax per
share and 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. Additionally, the Company believes that
reporting income from continuing operations and diluted
earnings per share excluding stock-based compensation 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.