HOUSTON, Oct. 30, 2006 (PRIMEZONE) -- T-3 Energy Services, Inc. ("T-3 Energy") (Nasdaq:TTES) reported third quarter 2006 income from continuing operations of $5.1 million, or $0.46 per diluted share, up 16% and 15%, respectively, from $4.4 million, or $0.40 per diluted share, reported for the second quarter 2006 and up 143% and 130%, respectively, from $2.1 million, or $0.20 per diluted share, reported for the third quarter of 2005. Year to date 2006 income from continuing operations of $13.4 million, or $1.23 per diluted share, was up 158% and 156%, respectively, from $5.2 million, or $0.48 per diluted share, reported during 2005. Revenues for the third quarter of 2006 increased 16% over the second quarter of 2006 and 71% over the third quarter of 2005. Year to date 2006 revenues increased 67% over the prior year to date. The third quarter 2006 and year to date 2006 financial results include a charge, net of tax, of $0.4 million and $0.9 million, respectively, associated with FASB Statement No. 123(R), "Share-Based Payment", and $0.3 million, net of tax, of costs related to the Form S-1 Registration Statement and subsequent Amendments ("S-1 costs"). Excluding the impact of the stock based compensation costs and S-1 costs, T-3 Energy's income from continuing operations increased 173% and 180% from the third quarter of 2005 and year to date 2005, respectively.
For the third quarter of 2006 and year to date 2006, the Company reported Adjusted EBITDA (defined as income from continuing operations, excluding stock based compensation costs and S-1 costs, plus interest expense, net of interest income, provision for income taxes and depreciation and amortization), of $10.2 million and $25.9 million, respectively, a 140% and 120% increase over the same periods for 2005, respectively.
The Company's increase in revenues was primarily attributable to improved demand for its products and services resulting from historically higher price levels for oil and correspondingly higher levels of construction of new and refurbishment of existing drilling rigs that require the type of equipment T-3 manufactures. As a result, backlog has increased to $61.1 million at September 30, 2006, a 194% increase over September 30, 2005 backlog of $20.8 million. Management believes that its T-3 branded products continue to gain market acceptance, resulting in greater sales to customers that use its products in both their domestic and international operations. For example, T-3 original equipment revenues have increased 93% in the third quarter of 2006 as compared to the third quarter of 2005. The increase in the Company's manufacturing capacity through facility expansions and improvements has also contributed to the increased revenues. T-3's geographical expansions into East Texas, the Rocky Mountain and Midwest regions have positively impacted the Company's 2006 results, and management believes opportunities exist in those regions for future growth in all of the Company's product lines.
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 through facility expansions and improvements have resulted in an increase in our revenues for the third quarter. Original equipment products accounted for 65% of our revenues for the quarter. Even with the increase in shipments of all of our products, and particularly our original equipment products, our backlog continues to grow. Our engineering group continues to be on target for the development and design of our new wellhead product line that will be rolled out in the first quarter of 2007. Our goal is to continue to increase our market share with our existing and the introduction of our future original equipment products and through our geographical expansion."
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 and year to date ended September 30, 2006 and 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 Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
------- ------- -------- -------
Revenues:
Products $33,439 $16,464 $ 86,903 $41,554
Services 10,744 9,327 31,028 29,058
------- ------- -------- -------
44,183 25,791 117,931 70,612
Cost of revenues:
Products 21,273 10,634 56,412 27,087
Services 6,082 6,140 17,452 18,424
------- ------- -------- -------
27,355 16,774 73,864 45,511
Gross profit 16,828 9,017 44,067 25,101
Operating expenses 8,723 5,578 23,056 15,714
------- ------- -------- -------
Income from operations 8,105 3,439 21,011 9,387
Interest expense 234 146 744 1,219
Interest income (6) (15) (18) (69)
Other (income) expense,
net (205) (10) (681) 19
------- ------- -------- -------
Income from continuing
operations before
provision for income
taxes 8,082 3,318 20,966 8,218
Provision for income taxes 2,978 1,214 7,613 3,052
------- ------- -------- -------
Income from continuing
operations 5,104 2,104 13,353 5,166
Loss from discontinued
operations, net of tax (20) (3,856) (150) (3,781)
------- ------- -------- -------
Net income (loss) $ 5,084 $(1,752) $ 13,203 $ 1,385
======= ======= ======== =======
Basic earnings (loss)
per common share:
Continuing operations $ .48 $ .20 $ 1.26 $ .49
======= ======= ======== =======
Discontinued operations $ --- $ (.37) $ (.01) $ (.36)
======= ======= ======== =======
Net income (loss) per
common share $ .48 $ (.17) $ 1.25 $ .13
======= ======= ======== =======
Diluted earnings (loss)
per common share:
Continuing operations $ .46 $ .20 $ 1.23 $ .48
======= ======= ======== =======
Discontinued operations $ --- $ (.36) $ (.01) $ (.35)
======= ======= ======== =======
Net income (loss) per
common share $ .46 $ (.16) $ 1.22 $ .13
======= ======= ======== =======
Weighted average common
shares outstanding:
Basic 10,625 10,582 10,601 10,582
======= ======= ======== =======
Diluted 11,003 10,716 10,881 10,659
======= ======= ======== =======
T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except for share amounts)
September 30, December 31,
2006 2005
------------ -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,242 $ 1,162
Accounts receivable - trade, net 28,529 21,527
Inventories 27,614 18,268
Notes receivable, current portion 734 480
Deferred income taxes 2,118 1,731
Prepaids and other current assets 1,082 5,887
--------- ---------
Total current assets 62,319 49,055
Property and equipment, net 24,113 18,652
Notes receivable, less current portion 35 327
Goodwill, net 71,130 69,607
Other intangible assets, net 2,681 2,325
Other assets 645 822
--------- ---------
Total assets $ 160,923 $ 140,788
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 15,763 $ 12,943
Accrued expenses and other 12,778 9,439
Current maturities of long-term debt 4,511 36
--------- ---------
Total current liabilities 33,052 22,418
Long-term debt, less current maturities -- 7,058
Other long-term liabilities 46 82
Deferred income taxes 3,045 2,018
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.001 par value,
5,000,000 and 25,000,000 shares
authorized at September 30, 2006
and December 31, 2005, respectively,
no shares issued or outstanding -- --
Common stock, $.001 par value,
20,000,000 and 25,000,000 shares
authorized at September 30, 2006
and December 31, 2005, respectively,
10,736,871 and 10,581,986 shares issued
and outstanding at September 30,
2006 and December 31, 2005, respectively 11 11
Warrants, 327,862 issued and
outstanding at September 30, 2006
and 332,862 issued and outstanding at
December 31, 2005 644 644
Additional paid-in capital 125,145 123,175
Retained deficit (2,217) (15,420)
Accumulated other comprehensive income 1,197 802
--------- ---------
Total stockholders' equity 124,780 109,212
--------- ---------
Total liabilities and stockholders' equity $ 160,923 $ 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 Nine Months Ended
September 30, September 30,
----------------- -----------------
2006 2005 2006 2005
------- ------- ------- -------
INCOME FROM CONTINUING
OPERATIONS:
GAAP Income from
continuing operations $ 5,104 $ 2,104 $13,353 $ 5,166
Stock-based compensation
costs, net of tax 387 -- 863 --
S-1 costs, net of tax 261 -- 261 --
------- ------- ------- -------
Non-GAAP Income from
continuing operations (B) $ 5,752 $ 2,104 $14,477 $ 5,166
======= ======= ======= =======
DILUTED EARNINGS
PER SHARE:
GAAP continuing operations
diluted earnings per share $ 0.46 $ 0.20 $ 1.23 $ 0.48
Stock-based compensation
costs, net of tax 0.04 -- 0.08 --
S-1 costs, net of tax 0.02 -- 0.02 --
------- ------- ------- -------
Non-GAAP continuing
operations diluted
earnings per share (B) $ 0.52 $ 0.20 $ 1.33 $ 0.48
======= ======= ======= =======
ADJUSTED EBITDA:
GAAP Income from continuing
operations $ 5,104 $ 2,104 $13,353 $ 5,166
Stock-based compensation
costs, net of tax 387 -- 863 --
S-1 costs, net of tax 261 -- 261 --
Provision for income taxes 3,312 1,214 8,192 3,052
Depreciation and amortization 896 795 2,550 2,412
Interest Expense 234 146 744 1,219
Interest Income (6) (15) (18) (69)
------- ------- ------- -------
Adjusted EBITDA (A) $10,188 $ 4,244 $25,945 $11,780
======= ======= ======= =======
(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 stock-based compensation costs and S-1 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 stock-based compensation costs
and S-1 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 and S-1
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 stock-based compensation costs and S-1 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.