HOUSTON, Aug. 4, 2009 (GLOBE NEWSWIRE) -- T-3 Energy Services, Inc. (Nasdaq:TTES) reported second quarter 2009 net income of $4.9 million, or $0.38 per diluted share. For the first quarter of 2009, net income was $3.8 million, or $0.30 per diluted share, which included pre-tax charges for separation and acquisition costs of $4.2 million, or $0.22 per diluted share after tax. Excluding these items, net income and diluted earnings per share for the first quarter of 2009 were $6.6 million, or $0.52 per diluted share.
Revenues for the second quarter decreased 11.2% to $55.7 million from $62.8 million in the first quarter of 2009. During the quarter, industry declines and the seasonal spring break-up in Canada caused average worldwide rig counts to decrease at more than twice this rate, or 25%. For the quarter, revenues on items destined for delivery to customer locations outside the United States represented 61% of total revenues, which is sequentially up from 56% and reflects the Company's continued success in international markets.
Net bookings for the quarter were $41.8 million compared with $46.1 million in the prior quarter, and backlog decreased to $45.4 million at June 30 versus $59.4 million at March 31, 2009. Gross margins were 37% for the second quarter of 2009, compared to 38% for the first quarter.
Steve Krablin, T-3 Energy's Chairman, President and Chief Executive Officer commented, "Even though our revenues continued to decline during the second quarter, we maintained our focus on operating efficiencies, international sales and working capital management. As a result, we produced healthy margins by reducing our global workforce and shifting manufacturing to lower cost facilities, particularly our facility in India. We also continue to have success selling into the offshore and international land markets, which remain relatively strong. During the quarter, we reduced our debt by approximately $18 million and, as of today, we have zero debt outstanding under our senior credit facility.
"Subsequent to the end of the quarter, industry activity and Company bookings appear to be stabilizing or even improving modestly. In this environment, we anticipate that overall Company revenues will approximate bookings over the next 2-3 quarters. One exception to this is our wellhead business unit, which should increase revenues by several million dollars related to an international order that we expect to complete and ship during the third quarter."
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.
Except for historical information, statements made in this release, including those relating to potential future revenues, bookings, cash flow, backlog and growth 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", "should" 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 or revise 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 June 30, 2009, June 30, 2008 and March 31, 2009. 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
-----------------------------
June 30,
------------------- March 31,
2009 2008 2009
---- ---- ----
Revenues:
Products $ 49,206 $ 57,724 $ 53,341
Services 6,542 9,966 9,445
--------- --------- ---------
55,748 67,690 62,786
Cost of revenues:
Products 31,226 35,271 33,181
Services 3,860 5,339 5,579
--------- --------- ---------
35,086 40,610 38,760
Gross profit 20,662 27,080 24,026
Selling, general and administrative
expenses 13,468 15,781 18,078
--------- --------- ---------
Income from operations 7,194 11,299 5,948
Interest expense (232) (601) (250)
Interest income -- 24 --
Equity in earnings of unconsolidated
affiliates 359 274 194
Other income, net 225 93 25
--------- --------- ---------
Income from continuing operations before
provision for income taxes 7,546 11,089 5,917
Provision for income taxes 2,658 3,573 2,097
--------- --------- ---------
Income from continuing operations 4,888 7,516 3,820
Loss from discontinued operations, net
of tax -- (9) --
--------- --------- ---------
Net income $ 4,888 $ 7,507 $ 3,820
========= ========= =========
Basic earnings per common share:
Continuing operations $ .39 $ .60 $ .30
========= ========= =========
Discontinued operations $ -- $ -- $ --
========= ========= =========
Net income per common share $ .39 $ .60 $ .30
========= ========= =========
Diluted earnings per common share:
Continuing operations $ .38 $ .58 $ .30
========= ========= =========
Discontinued operations $ -- $ -- $ --
========= ========= =========
Net income per common share $ .38 $ .58 $ .30
========= ========= =========
Weighted average common shares
outstanding:
Basic 12,638 12,477 12,529
========= ========= =========
Diluted 12,744 13,063 12,605
========= ========= =========
T-3 ENERGY SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)
June 30, December 31,
2009 2008
---- ----
(unaudited)
------------
ASSETS
Current assets:
Cash and cash equivalents $ 422 $ 838
Accounts receivable - trade, net 31,004 47,822
Inventories 58,908 58,422
Deferred income taxes 6,497 5,131
Prepaids and other current assets 4,578 4,585
------------ ------------
Total current assets 101,409 116,798
Property and equipment, net 49,036 46,071
Goodwill, net 88,223 87,929
Other intangible assets, net 32,880 33,477
Other assets 5,213 2,837
------------ ------------
Total assets $ 276,761 $ 287,112
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 16,680 $ 26,331
Accrued expenses and other 15,236 19,274
Current maturities of long-term debt 40 5
------------ ------------
Total current liabilities 31,956 45,610
Long-term debt, less current maturities 6,024 18,753
Other long-term liabilities 1,753 1,628
Deferred income taxes 10,522 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,
12,945,458 and 12,547,458 shares issued
and outstanding at June 30, 2009 and
December 31, 2008 13 13
Warrants, 10,157 issued and outstanding
at June 30, 2009 and December 31, 2008 20 20
Additional paid-in capital 177,073 171,042
Retained earnings 48,744 40,036
Accumulated other comprehensive income
(loss) 656 (16)
------------ ------------
Total stockholders' equity 226,506 211,095
------------ ------------
Total liabilities and stockholders'
equity $ 276,761 $ 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
-----------------------------
June 30,
------------------- March 31,
2009 2008 2009
---- ---- ----
INCOME FROM CONTINUING OPERATIONS:
GAAP income from continuing
operations $ 4,888 $ 7,516 $ 3,820
Separation costs, net of tax (A) -- -- 2,516
Acquisition-related costs, net of tax
(B) -- -- 224
Strategic alternatives costs, net of
tax (C) -- 1,606 --
--------- --------- ---------
Non-GAAP income from continuing
operations (D) $ 4,888 $ 9,122 $ 6,560
========= ========= =========
DILUTED EARNINGS PER SHARE:
GAAP continuing operations diluted
earnings per share $ 0.38 $ 0.58 $ 0.30
Separation costs, net of tax -- -- 0.20
Acquisition-related costs, net of tax -- -- 0.02
Strategic alternatives costs, net of
tax -- 0.12 --
--------- --------- ---------
Non-GAAP continuing operations
diluted earnings per share (D) $ 0.38 $ 0.70 $ 0.52
========= ========= =========
ADJUSTED EBITDA:
GAAP Income from continuing
operations $ 4,888 $ 7,516 $ 3,820
Separation costs, net of tax -- -- 2,516
Acquisition-related costs, net of tax -- -- 224
Strategic alternatives costs, net of
tax -- 1,606 --
Provision for income taxes (E) 2,658 4,438 3,572
Depreciation and amortization 2,191 2,259 2,036
Interest Expense, net 232 577 250
--------- --------- ---------
Adjusted EBITDA (F) $ 9,969 $ 16,396 $ 12,418
========= ========= =========
(A) Represents costs of $3.9 million before tax and $2.5 million
after tax incurred in connection with the March departure of the
Company's former President, Chief Executive Officer and Chairman of
the Board.
(B) Represents costs of $145,000 before tax and $94,000 after tax
related to the acquisition of the surface wellhead business of Azura
Energy Systems Surface, Inc., as well as costs of $199,000 before tax
and $130,000 after tax related to abandoned acquisitions.
(C) Represents costs of $2.5 million before tax and $1.6 million
after tax related to the pursuit of strategic alternatives for the
Company.
(D) 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 separation
costs, acquisition-related costs 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.
(E) Provision for income taxes in the adjusted EBITDA calculation has
been increased by $865,000 for the tax effect of the strategic
alternative costs for the three months ended June 30, 2008. Provision
for income taxes in the adjusted EBITDA calculation has been
increased by $1.4 million for the tax effect of the separation costs
and by $120,000 for the tax effect of the acquisition-related costs
for the three months ended March 31, 2009.
(F) 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.