T-3 Energy Services, Inc. Announces Second Quarter 2009 Earnings

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.

CONTACT:  T-3 Energy Services, Inc.
          James M. Mitchell, Senior Vice President and 
           Chief Financial Officer
          713-996-4118