T-3 Reports Q2 Net Income Up 41%
T-3 Energy Services, Inc. has reported second quarter 2008 net income from continuing operations of $7.5 million, or $0.58 per diluted share, up 41% and 32%, respectively, from $5.3 million or $0.44 per diluted share for the second quarter of 2007. Year to date 2008 net income from continuing operations of $17.0 million, or $1.32 per diluted share, was up 58% and 40%, respectively, from $10.8 million, or $0.94 per diluted share, reported during 2007.
The second quarter 2008 financial results include costs, which were $2.5 million before tax and $1.6 million after tax, related to the pursuit of strategic alternatives for the Company. The second quarter 2007 financial results include a charge, which was $2.5 million before tax and $1.9 million after tax, associated with a change of control payment and the immediate vesting of previously unvested stock options and restricted stock held by Gus D. Halas, the Company's Chairman, President and Chief Executive Officer, pursuant to the terms of his then existing employment agreement. Excluding the impact of these strategic alternatives costs and change of control costs, T-3 Energy's net income from continuing operations and diluted earnings per share for the second quarter of 2008 were $9.1 million and $0.70, respectively, which is an increase of 26% and 17%, respectively, from $7.2 million and $0.60 per diluted share in 2007.
Revenues for the second quarter of 2008 increased 30% to $67.7 million from $51.9 million for the same period in 2007. Year to date 2008 revenues increased 37% to $136.9 million from $99.8 million for the same period in 2007. The Company's revenues increased primarily due to the acquisitions of Energy Equipment Corporation ("EEC") and Pinnacle Wellhead, Inc. ("Pinnacle") along with the continued demand for its pressure and flow control and pipeline original equipment products and services. As a result of the continued demand for the Company's pressure and flow control and pipeline products and services, its backlog has increased approximately 31% from $61.8 million at June 30, 2007 to $80.7 million at June 30, 2008.
Operating income for the second quarter of 2008 increased 42% to $11.3 million from $7.9 million for the same period in 2007. Year to date 2008 operating income increased 53% to $25.7 million from $16.8 million for the same period in 2007. The increase in the Company's operating income is primarily related to increased revenues and gross margins. Gross margins were 40% during the three and six months ended June 30, 2008, compared to 38% and 37% during the three and six months ended June 30, 2007, respectively. This gross margin increase resulted from the sale of higher margin products and services and operational efficiencies.
Gus D. Halas, T-3 Energy's Chairman, President and Chief Executive Officer commented, "The demand for our products and services remains strong as our backlog continues to grow from previous periods. We look forward to the second half of 2008 when we expect to realize the benefits of some of the international multi-rig packages that we have been quoting. We also will continue to focus on expanding our geographic presence during the second half of 2008 through acquisitions and/or joint venture arrangements. We are excited about the joint venture arrangement that we recently entered into with Aswan International Engineering Company LLC in Dubai and believe this relationship will provide us with a strong presence in the Middle East. We recently exercised our option to purchase the India manufacturing operations of HP&T Products, Inc. to provide us with another means of low cost country sourcing. Our gross margin of 40% for 2008 is another milestone for T-3 Energy. We will continue to work on sourcing and manufacturing efficiency opportunities to improve our margins. To date, 2008 has provided several new financial and operational records for T-3, such as gross profit margin and backlog levels.
"Despite the slight sequential decline, the second quarter was an important quarter for T-3 Energy and it set the stage for what we believe will be a successful second half of the year. This is demonstrated by our strong closing backlog. T-3 Energy continues to execute on our strategic growth plan as our results demonstrate. Most importantly, we continue to gain recognition as a name-brand original equipment manufacturer and service provider on an international scale and we remain steadily committed to providing responsive value to our customers."
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