T-3 Energy Services' Profit Down, Backlog Up in Third Quarter
T-3 Energy Services has reported third quarter 2008 net income from continuing operations of $4.7 million, or $0.37 per diluted share, which included the negative impact of hurricanes and the cost for strategic alternatives of $0.24 and $0.18 per diluted share, respectively.
Net income from continuing operations is down 35% and 36%, respectively, from $7.2 million or $0.58 per diluted share for the third quarter of 2007. Year to date 2008 net income from continuing operations of $21.7 million, or $1.69 per diluted share, included the negative impact of hurricanes and the cost for strategic alternatives of $0.24 and $0.31 per diluted share, respectively.
Net income from continuing operations was up 21% and 11%, respectively, from $18.0 million, or $1.52 per diluted share reported during 2007.
As previously released by the Company, the third quarter 2008 financial results include costs, which were $2.2 million before tax and $2.3 million after tax, related to the pursuit of strategic alternatives for the Company, and the impact of hurricanes Gustav and Ike, which was $4.7 million before tax and $3.1 million after tax.
Revenues for the third quarter of 2008 increased 31% to $69.8 million from $53.2 million for the same period in 2007. Year to date 2008 revenues increased 35% to $206.7 million from $153.1 million for the same period in 2007.
The Company's revenues increased primarily due to past acquisitions and the continued demand for its pressure and flow control and pipeline original equipment products and services. These revenue increases were partially offset by the impact of the hurricanes, which delayed sales of approximately $8.5 million originally anticipated to ship during the third quarter of 2008 into the fourth quarter of 2008 and the first quarter of 2009.
Backlog has increased approximately 61% to $94.2 million at September 30, 2008 from $58.7 million at September 30, 2007, primarily as a result of the continued demand for the Company's products and services and the delayed sales due to the hurricanes.
Operating income for the third quarter of 2008 was $10.6 million, and was flat compared with the same period in 2007, despite the strategic alternatives costs and the hurricanes. Year to date 2008 operating income increased 33% to $36.3 million from $27.4 million for the same period in 2007. The increase in the Company's year to date operating income is primarily related to increased revenues and gross margins.
Gross margins were 38% and 39% during the three and nine months ended September 30, 2008, compared to 36% and 37% during the three and nine months ended September 30, 2007, respectively. This gross margin increase resulted from the sale of higher margin products and services and operational efficiencies, partially offset by hurricane-related costs associated with lost absorption, downtime pay and minimal property damage.
As of September 30, 2008, availability under our senior credit facility, which matures October 26, 2012, was $147.3 million.
Gus D. Halas, T-3 Energy's Chairman, President and Chief Executive Officer commented, "The third quarter of 2008 provided record revenues for T-3, even with the impact of the hurricanes on our Gulf Coast facilities. Despite the current economic environment, the demand for our products and services remains strong as evidenced by our backlog continuing to grow as compared to prior periods and outstanding quotes remaining at high levels. Our gross margin of 39% for 2008 is down slightly from the 40% achieved through June 30, 2008, due to the hurricane impact, but is still higher year over year.
"We believe that our strong liquidity and past success gaining recognition as a name-brand original equipment manufacturer and service provider on an international scale leave us well positioned for potential industry volatility in the upcoming quarters, and we remain steadily committed to providing responsive value to our customers."
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