T-3 Energy Services, Inc. (Nasdaq:TTES) reported that third quarter
2010 income from continuing operations increased to $4.5 million,
or $0.34 per diluted share, compared to $3.3 million, or $0.25 per
diluted share for the second quarter.
Revenues for the third quarter of 2010 increased 12% to $54.1
million, up from $48.4 million in the second quarter. During the
quarter, pricing remained flat. North American activity accounted
for 73% of total revenues during the quarter. Our pressure
control group, or PCG, product line revenues increased 11% to $35.8
million, compared with $32.4 million in the second quarter. In
that product line, onshore revenues increased to 66% of total
revenues, up from 60% in the prior quarter. Our wellhead and
production systems group, or WPS, product line revenues increased
11% to $14.3 million, compared with $12.9 million in the second
quarter. Our pipeline valve, or PVS, product line revenues
increased 31% to $4.0 million, compared with $3.1 million in the
second quarter.
Gross profit margins for the third quarter of 2010 were 34.4%,
compared with 35.8% for the second quarter. Our PCG product line
gross margin was 37.4%, compared with 39.9% in the second quarter,
due to a less favorable product mix. Our WPS product line
gross margin was 26.3%, compared with 23.9% in the second quarter,
due to an increase in higher-margin service work. Our PVS
product line gross margin was 31.8%, compared to 36.6% in the
second quarter, due to a less favorable product mix.
Selling, general and administrative expense for the third
quarter of 2010 was $13.1 million, compared to $12.7 million in the
second quarter, primarily due to a $0.4 million increase in
stock-based compensation. The company incurred minimal costs
related to the proposed merger with Robbins & Myers during the
quarter.
Equity in earnings of unconsolidated affiliates was $437,000 for
the third quarter of 2010, compared with $458,000 in the second
quarter.
Operating income for the third quarter of 2010 increased 17% to
$5.9 million, compared with $5.0 million in the second
quarter. At PCG, operating income increased 7% to $8.1
million, compared with $7.5 million in the second quarter, a 16%
incremental margin. WPS operating income increased 201% to
$0.8 million, compared with $0.3 million in the second quarter, a
40% incremental margin. PVS operating income increased 13% to
$0.7 million, compared with $0.6 million in the second quarter, an
8% incremental margin.
Income tax expense for the third quarter of 2010 was $1.4
million compared to $1.6 million in the second quarter. Our
effective tax rate was 23.7% for the third quarter of 2010,
compared to 33.2% in the second quarter, primarily due to an
increase in benefits relating to tax positions taken in prior years
that were realized as a result of the expiration of statute of
limitations as well as benefits related to the filing of prior year
tax returns.
Our accounts receivable balances increased $5.4 million
sequentially in conjunction with higher revenues. Our inventories
increased $6.5 million sequentially as we continue to add stock for
anticipated book-and-ship orders as well as for orders in our
September 30, 2010 backlog, which stands at $51.7 million, a 23%
increase from $42.1 million at June 30, 2010.
Steve Krablin, T-3's Chairman, President and Chief Executive
Officer commented, "After years of success, we are excited for T-3
to be entering the next phase of company growth with the announced
merger with Robbins & Myers. For us, this merger
accelerates a number of our strategic goals and helps us gain
expertise in important areas. The transaction creates a larger
and more diverse company with a more comprehensive product offering
and a larger sales and service footprint. Importantly, the
combined company will have more critical mass in international
markets and will offer a number of consumable products that tend to
have a shorter life than the capital goods we currently sell to our
customers. While the companies' product lines are generally
complementary, we believe the combined company will benefit from
sharing engineering, manufacturing, sales and technological
expertise. Financially, the combined company will have greater
flexibility and borrowing capacity to help fund future
growth. Overall, we think this offers good value and
opportunity for our shareholders.
"Specifically at T3, we were pleased during this quarter to
continue to see the recovery across our business lines where our
quarterly bookings sequentially increased 25% to $63.6 million,
which is their highest level in more than two years. Going forward,
we believe that despite the continuing uncertainties over potential
new rules and regulations for Gulf Coast offshore drilling, we will
continue to see an increase in demand for our pressure control
equipment and for the servicing of existing equipment. We
intend to continue to deliver improving operating results while we
focus on growing value and completing a successful merger."
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.
Additional Information
In connection with the proposed merger, Robbins & Myers,
Inc. ("R&M") and T-3 Energy Services, Inc. ("T-3") intend to
file documents relating to the merger with the SEC, including a
registration statement of R&M, which will include a joint proxy
statement of R&M and T-3. INVESTORS AND SECURITY HOLDERS ARE
URGED TO CAREFULLY READ THE REGISTRATION STATEMENT AND THE RELATED
JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER MATERIALS REGARDING
THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT R&M, T-3 AND THE PROPOSED
MERGER. Investors and security holders may obtain a free copy of
the registration statement and the joint proxy statement/prospectus
(when they are available) and other documents containing
information about R&M and T-3, without charge, at the SEC's web
site at www.sec.gov. Copies of R&M's SEC filings also may be
obtained for free by directing a request to Robbins & Myers,
Inc., 51 Plum Street, Suite 260, Dayton, Ohio 45440, +1-(937)
458-6600. Copies of T-3's SEC filings also may be obtained for free
by directing a request to T-3 Energy Services, Inc., 7135 Ardmore,
Houston, Texas 77054, +1-(713) 996-4110.
Participants in the Solicitation
R&M and T-3 and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from their respective stockholders in respect of the
proposed merger. Information about these persons can be found in
R&M's Annual Report on Form 10-K for its fiscal year ended
August 31, 2009, as filed with the SEC on October 26,
2009, R&M's proxy statement relating to its 2010 Annual Meeting
of Shareholders, as filed with the SEC on December 4, 2009,
T-3's proxy statement relating to its 2010 Annual Meeting of
Stockholders, as filed with the SEC on April 30, 2010, and
T-3's Current Report on Form 8-K filed with the SEC on
June 16, 2010. These documents can be obtained free of charge
from the sources indicated above. Additional information about the
special interests of these persons in the proposed merger will be
included in the registration statement and the joint proxy
statement/prospectus to be filed with the SEC in connection with
the proposed merger.
Forward-Looking Statements
Statements set forth in this communication that are not
historical facts, including statements regarding potential future
revenues, bookings, cash flow, backlog, growth, business trends and
prospects, future financial performance, future competitive
positioning and business synergies, future acquisition cost
savings, future accretion to earnings per share, future market
demand, future benefits to shareholders, future economic and
industry conditions, the proposed merger (including its benefits,
results, effects and timing), the attributes of T-3 as a subsidiary
of R&M and whether and when the transactions contemplated by
the merger agreement will be consummated, are "forward-looking"
statements within the meaning of the federal securities
laws. Whenever possible, T-3 has identified these
"forward-looking" statements by words such as "believe",
"encouraged", "expect", "expected", "anticipate", "should" and
similar phrases. These forward-looking statements are subject to
numerous risks and uncertainties, many of which are beyond the
companies' control, which could cause actual benefits, results,
effects and timing to differ materially from the results predicted
or implied by the statements. These risks and uncertainties
include, but are not limited to: the failure of the shareholders of
R&M or the stockholders of T-3 to approve the merger;
satisfaction of the conditions to the closing of the merger
(including the receipt of regulatory approvals; potential
uncertainties regarding market acceptance of the combined company;
uncertainties as to the timing of the merger; competitive responses
to the proposed merger; costs and difficulties related to
integration of T-3's businesses and operations; delays, costs and
difficulties relating to the proposed merger; the inability to or
delay in obtaining cost savings and synergies from the merger;
inability to retain key personnel; change in the overall demand for
and pricing of T-3's or R&M's products; changes in the demand
for or price of oil and/or natural gas, which has been
significantly impacted by the worldwide recession and the worldwide
financial and credit crisis; changes in the level of oil and
natural gas exploration and development; a significant decline in
capital expenditures; the ability to realize the benefits of
restructuring programs; increases in competition; changes in the
availability and cost of raw materials; foreign exchange rate
fluctuations as well as economic or political instability in
international markets and performance in hyperinflationary
environments, such as Venezuela; work stoppages related to union
negotiations; customer order cancellations; the possibility of
product liability lawsuits that could harm our businesses; events
or circumstances which result in an impairment of, or valuation
against, assets; the potential impact of U.S. and foreign
legislation, government regulations, and other governmental action,
including those relating to export and import of products and
materials, and changes in the interpretation and application of
such laws and regulations; the outcome of audit, compliance,
administrative or investigatory reviews; proposed changes in U.S.
tax law which could impact our future tax expense and cash flow;
decline in the market value of R&M's pension plan investment
portfolios; and other important risk factors discussed more fully
in R&M's and T-3's reports on Form 10-K for the years ended
August 31, 2009 and December 31, 2009, respectively;
their respective recent Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K; their joint proxy statement/prospectus to be
filed with the Securities and Exchange Commission (SEC); and other
reports filed by them from time to time with the SEC. Neither
R&M nor T-3 undertakes any obligation to revise or update
publicly any forward-looking statements for any reason.
T-3 ENERGY SERVICES,
INC. |
CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED) |
(in thousands, except
per share amounts) |
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September
30, |
June 30, |
September
30, |
|
2010 |
2009 |
2010 |
2010 |
2009 |
Revenues: |
|
|
|
|
|
Products |
$41,541 |
$39,098 |
$39,630 |
$117,803 |
$141,645 |
Services |
12,550 |
8,392 |
8,803 |
29,723 |
24,379 |
|
54,091 |
47,490 |
48,433 |
147,526 |
166,024 |
Cost of revenues: |
|
|
|
|
|
Products |
28,501 |
25,819 |
26,032 |
78,663 |
90,226 |
Services |
7,004 |
5,049 |
5,066 |
17,277 |
14,488 |
|
35,505 |
30,868 |
31,098 |
95,940 |
104,714 |
|
|
|
|
|
|
Gross profit |
18,586 |
16,622 |
17,335 |
51,586 |
61,310 |
|
|
|
|
|
|
Selling, general and administrative
expenses |
13,122 |
12,876 |
12,745 |
38,824 |
44,422 |
|
|
|
|
|
|
Equity in earnings of unconsolidated
affiliates |
437 |
359 |
458 |
1,001 |
912 |
|
|
|
|
|
|
Income from operations |
5,901 |
4,105 |
5,048 |
13,763 |
17,800 |
|
|
|
|
|
|
Interest expense |
(147) |
(159) |
(175) |
(489) |
(641) |
|
|
|
|
|
|
Other income, net |
121 |
1,234 |
75 |
258 |
1,484 |
|
|
|
|
|
|
Income from continuing operations before
provision for income taxes |
5,875 |
5,180 |
4,948 |
13,532 |
18,643 |
|
|
|
|
|
|
Provision for income taxes |
1,393 |
1,101 |
1,643 |
3,765 |
5,856 |
|
|
|
|
|
|
Income from continuing operations |
4,482 |
4,079 |
3,305 |
9,767 |
12,787 |
|
|
|
|
|
|
Income from discontinued operations, net of
tax |
-- |
-- |
76 |
76 |
-- |
|
|
|
|
|
|
Net income |
$4,482 |
$4,079 |
$3,381 |
$9,843 |
$12,787 |
|
|
|
|
|
|
Basic earnings per common share: |
|
|
|
|
|
Continuing operations |
$.34 |
$.32 |
$.25 |
$.75 |
$1.01 |
Discontinued operations |
$ -- |
$ -- |
$.01 |
$.01 |
$ -- |
Net income per common share |
$.34 |
$.32 |
$.26 |
$.76 |
$1.01 |
|
|
|
|
|
|
Diluted earnings per common share: |
|
|
|
|
|
Continuing operations |
$.34 |
$.32 |
$.25 |
$.74 |
$1.00 |
Discontinued operations |
$ -- |
$ -- |
$.01 |
$.01 |
$ -- |
Net income per common share |
$.34 |
$.32 |
$.26 |
$.75 |
$1.00 |
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
Basic |
13,136 |
12,811 |
13,022 |
13,025 |
12,660 |
Diluted |
13,255 |
12,887 |
13,195 |
13,181 |
12,758 |
|
T-3 ENERGY SERVICES,
INC. |
CONSOLIDATED BALANCE
SHEETS |
(in thousands, except
for share amounts) |
|
|
|
|
|
September 30, |
June 30, |
December 31, |
|
2010 |
2010 |
2009 |
|
(unaudited) |
(unaudited) |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$6,720 |
$7,833 |
$11,747 |
Accounts receivable – trade, net |
38,159 |
32,713 |
28,450 |
Inventories |
68,945 |
62,412 |
53,689 |
Deferred income taxes |
3,660 |
3,114 |
2,485 |
Prepaids and other current assets |
4,259 |
6,516 |
7,311 |
Total current assets |
121,743 |
112,588 |
103,682 |
|
|
|
|
Property and equipment, net |
49,755 |
49,093 |
49,353 |
Goodwill, net |
88,871 |
88,699 |
88,779 |
Other intangible assets, net |
30,260 |
30,877 |
32,091 |
Other assets |
6,129 |
5,699 |
5,916 |
|
|
|
|
Total assets |
$296,758 |
$286,956 |
$279,821 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable – trade |
$17,642 |
$15,166 |
$17,213 |
Accrued expenses and other |
13,382 |
12,138 |
14,359 |
Current maturities of long-term
debt |
-- |
-- |
-- |
Total current liabilities |
31,024 |
27,304 |
31,572 |
|
|
|
|
Long-term debt, less current
maturities |
-- |
-- |
-- |
Other long-term liabilities |
746 |
959 |
1,144 |
Deferred income taxes |
8,692 |
8,710 |
8,009 |
|
|
|
|
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, 13,338,861, 13,337,819 and 13,038,143 shares
issued and outstanding at September 30, 2010, June 30, 2010 and
December 31, 2009 |
13 |
13 |
13 |
Warrants, 8,595, 10,157 and 10,157 issued and
outstanding at September 30, 2010, June 30, 2010 and December 31,
2009 |
17 |
20 |
20 |
Additional paid-in capital |
188,260 |
186,835 |
181,115 |
Retained earnings |
66,044 |
61,562 |
56,201 |
Accumulated other comprehensive
income |
1,962 |
1,553 |
1,747 |
Total stockholders' equity |
256,296 |
249,983 |
239,096 |
Total liabilities and stockholders'
equity |
$296,758 |
$286,956 |
$279,821 |
CONTACT: T-3 Energy Services, Inc.
James M. Mitchell, Senior Vice President and
Chief Financial Officer
713-996-4118
T-3 Energy Services (MM) (NASDAQ:TTES)
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