HOUSTON, May 1, 2009 (GLOBE NEWSWIRE) -- T-3 Energy Services, Inc. (Nasdaq:TTES) reported first quarter 2009 income from continuing operations of $3.8 million, or $0.30 per diluted share, which included pre-tax charges for severance-related costs of $3.9 million, or $0.20 per diluted share after tax, and for acquisition-related costs of $0.3 million, or $0.02 per diluted share after tax. For the fourth quarter of 2008, net loss was ($8.7) million, or ($0.69) per diluted share, which included a goodwill impairment charge of $23.5 million, or $1.62 per diluted share after tax and a non-operating tax benefit of ($0.9) million, or ($0.07) per diluted share after tax, related to the deductibility of strategic alternatives costs. Excluding these separately highlighted items above, net income from continuing operations and diluted earnings per share for the first quarter of 2009 were $6.6 million, or $0.52 per diluted share, compared to $10.9 million, or $0.86 per diluted share for the fourth quarter of 2008.
Revenues for the first quarter of 2009 decreased 20.2% to $62.8 million from $78.6 million in the fourth quarter of 2008. These revenue decreases are in line with average worldwide rig counts, which decreased 21% during the quarter. International revenues represented 56% of total revenues, which is sequentially up from 46%, approximating the proportional shift in industry activity.
Net bookings for the quarter were $46.1 million compared with $60.5 million in the prior quarter, and backlog decreased to $59.4 million at March 31, 2009, versus $76.1 million at December 31, 2008. Gross margins were 38% for the first quarter of 2009, compared to 39% for the fourth quarter of 2008.
Excluding the previously mentioned severance, acquisition and goodwill impairment costs, operating income for the quarter was $10.2 million compared with $16.2 million in the fourth quarter of 2008. The decrease represents a 38% decremental margin.
Steve Krablin, T-3 Energy's Chairman, President and Chief Executive Officer commented, "T-3 has excellent international brand acceptance, a strong balance sheet and good cash flow. Our current results reflect the continuing worldwide drilling activity decline, and we are actively adjusting our cost structure in response. We also intend to focus on our non-capital products and services and further expand our international presence. We do not expect our markets to improve during 2009, but we intend to stay committed to offering exceptional service and products to our customers and to expanding our product offerings."
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, 2008 and other filings of the Company with the Securities and Exchange Commission.
Non-GAAP Financial Measures. Certain information discussed in this news release is not generally accepted accounting principles, or 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, 2009, March 31, 2008 and December 31, 2008. 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
----------------------------
March 31,
------------------ Dec. 31,
2009 2008 2008
---- ---- ----
Revenues:
Products $ 53,341 $ 58,027 $ 65,942
Services 9,445 11,143 12,689
-------- -------- --------
62,786 69,170 78,631
Cost of revenues:
Products 33,181 35,104 40,852
Services 5,579 6,895 7,450
-------- -------- --------
38,760 41,999 48,302
Gross profit 24,026 27,171 30,329
Operating expenses:
Impairment of goodwill -- -- 23,500
Selling, general and administrative
expenses 18,078 12,749 14,092
-------- -------- --------
18,078 12,749 37,592
Income (loss) from operations 5,948 14,422 (7,263)
Interest expense (250) (892) (411)
Interest income -- 39 5
Other income (expense), net 219 140 225
-------- -------- --------
Income (loss) from continuing
operations before provision for
income taxes 5,917 13,709 (7,444)
Provision for income taxes 2,097 4,196 1,246
-------- -------- --------
Income (loss) from continuing operations 3,820 9,513 (8,690)
Loss from discontinued operations, net
of tax -- (2) (28)
-------- -------- --------
Net income (loss) $ 3,820 $ 9,511 $ (8,718)
======== ======== ========
Basic earnings (loss) per common share:
Continuing operations $ .30 $ .77 $ (.69)
======== ======== ========
Discontinued operations $ -- $ -- $ --
======== ======== ========
Net income (loss) per common share $ .30 $ .77 $ (.69)
======== ======== ========
Diluted earnings (loss) per common
share:
Continuing operations $ .30 $ .75 $ (.69)
======== ======== ========
Discontinued operations $ -- $ -- $ --
======== ======== ========
Net income (loss) per common share $ .30 $ .75 $ (.69)
======== ======== ========
Weighted average common shares
outstanding:
Basic 12,529 12,330 12,514
======== ======== ========
Diluted 12,605 12,763 12,514
======== ======== ========
T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)
March 31, Dec. 31,
2009 2008
---- ----
(unaudited)
---------
ASSETS
Current assets:
Cash and cash equivalents $ 1,352 $ 838
Accounts receivable - trade, net 46,705 47,822
Inventories 62,284 58,422
Deferred income taxes 6,245 5,131
Prepaids and other current assets 4,273 4,585
--------- ---------
Total current assets 120,859 116,798
Property and equipment, net 49,280 46,071
Goodwill, net 87,784 87,929
Other intangible assets, net 34,174 33,477
Other assets 2,780 2,837
--------- ---------
Total assets $ 294,877 $ 287,112
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 20,693 $ 26,331
Accrued expenses and other 21,454 19,274
Current maturities of long-term debt 57 5
--------- ---------
Total current liabilities 42,204 45,610
Long-term debt, less current maturities 23,983 18,753
Other long-term liabilities 1,690 1,628
Deferred income taxes 10,411 10,026
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, 50,000,000
shares authorized, 12,547,458 shares
issued and outstanding at March 31, 2009
and December 31, 2008 13 13
Warrants, 10,157 issued and outstanding at
March 31, 2009 and December 31, 2008 20 20
Additional paid-in capital 173,065 171,042
Retained earnings 43,856 40,036
Accumulated other comprehensive loss (365) (16)
--------- ---------
Total stockholders' equity 216,589 211,095
--------- ---------
Total liabilities and stockholders' equity $ 294,877 $ 287,112
========= =========
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,
-------------- Dec. 31,
2009 2008 2008
---- ---- ----
INCOME FROM CONTINUING OPERATIONS:
GAAP income (loss) from continuing
operations $ 3,820 $ 9,513 $ (8,690)
Severance-related costs, net
of tax (A) 2,516 -- --
Acquisition-related costs, net
of tax (B) 224 -- --
Goodwill impairment, net of tax (C) -- -- 20,526
Strategic alternatives costs, net
of tax (D) -- -- (895)
-------- -------- --------
Non-GAAP income from continuing
operations (E) $ 6,560 $ 9,513 $ 10,941
======== ======== ========
DILUTED EARNINGS PER SHARE (F):
GAAP continuing operations diluted
earnings (loss) per share $ 0.30 $ 0.75 $ (0.69)
Severance-related costs, net of tax 0.20 -- --
Acquisition-related costs, net of tax 0.02 -- --
Goodwill impairment, net of tax -- -- 1.62
Strategic alternatives costs, net
of tax -- -- (0.07)
-------- -------- --------
Non-GAAP continuing operations
diluted earnings per share (E) $ 0.52 $ 0.75 $ 0.86
======== ======== ========
ADJUSTED EBITDA:
GAAP Income (loss) from continuing
operations $ 3,820 $ 9,513 $ (8,690)
Severance-related costs, net of tax 2,516 -- --
Acquisition-related costs, net of tax 224 -- --
Goodwill impairment, net of tax -- -- 20,526
Strategic alternatives costs, net
of tax -- -- (895)
Provision for income taxes (G) 3,572 4,196 5,115
Depreciation and amortization 2,036 2,185 1,905
Interest Expense 250 892 411
Interest Income -- (39) (5)
-------- -------- --------
Adjusted EBITDA (H) $ 12,418 $ 16,747 $ 18,367
======== ======== ========
(A) Represents severance-related costs of $3.9 million before tax and
$2.5 million after tax incurred in connection with the March 2009
resignation of Gus D. Halas, the Company's former President, Chief
Executive Officer and Chairman of the Board.
(B) Represents costs of $0.1 million before tax and $0.1 million
after tax related to the acquisition of the surface wellhead business
of Azura Energy Systems Surface, Inc., as well as costs of $0.2
million before tax and $0.1 million after tax related to abandoned
acquisitions.
(C) Represents costs of $23.5 million before tax and $20.5 million
after tax related to impairment of goodwill for the Company's
pressure and flow control reporting unit for the three months ended
December 31, 2008.
(D) Represents $0.9 million of tax benefit recorded during the three
months ended December 31, 2008 as a result of the deductibility of
$2.6 million of strategic alternative costs that were recorded in
prior quarters.
(E) The Company has presented non-GAAP income from continuing
operations and non-GAAP continuing operations diluted earnings per
share because we believe that reporting income from continuing
operations and diluted earnings per share excluding the severance-
related costs, the acquisition-related costs, goodwill impairment
charges and strategic alternatives costs provides useful supplemental
information regarding the Company's on-going economic performance. We
use this financial measure internally to evaluate and manage the
Company's operations, and we believe many investors use similar
comparisons of the operating results.
(F) For purposes of this computation, diluted earnings per share for
the three months ended December 31, 2008 is computed using 12,677,000
shares, which reflects the effect of dilutive stock options,
restricted stock and warrants. For GAAP purposes, these dilutive
stock options, restricted stock and warrants have not been included
because the effect would have been anti-dilutive for the quarter
ended December 31, 2008.
(G) Provision for income taxes in the Adjusted EBITDA calculation has
been increased by $1.4 million for the tax effect of the severance-
related costs and by $0.1 million for the tax effect of the
acquisition-related costs for the three months ended March 31, 2009.
Provision for income taxes in the adjusted EBITDA calculation has
been increased by $3.0 million for the tax effect of the goodwill
impairment charges and $0.9 million for the tax effect of the
strategic alternative costs for the three months ended December 31,
2008.
(H) Adjusted EBITDA is not a GAAP financial measure. Management uses
adjusted EBITDA because we believe it provides useful supplemental
information regarding the Company's on-going economic performance and,
therefore, we use 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 similar
comparisons of operating results.