T3 Energy Services Inc (TTES) filed Quarterly Report for the period ended 2009-09-30.
T-3 Energy Services Inc. is a consolidator of high-end equipment repair and specialty machining operations focused in the Gulf of Mexico. T-3 currently competes in three distinct business lines: the repair and refurbishment of production valves and drilling equipment primarily blow-out preventers; flow control equipment manufacturing primarily consisting of control valves pressure safety valves and a proprietary line of production chokes; and the repair and refurbishment of electric motors to drilling contractors petrochemical plants and refineries. T3 Energy Services Inc has a market cap of $253.2 million; its shares were traded at around $19.55 with a P/E ratio of 9.2 and P/S ratio of 0.9. T3 Energy Services Inc had an annual average earning growth of 54.3% over the past 5 years.
Highlight of Business Operations:
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $2.8 million, or 18%, in the three months ended September 30, 2009 compared to the three months ended September 30, 2008. Selling, general and administrative expenses for the three months ended September 30, 2008 included $2.2 million of costs related to the pursuit of strategic alternatives. Selling, general and administrative expenses, excluding the strategic alternative costs in 2008, decreased $0.6 million during the three months ended September 30, 2009 primarily due to a $0.3 million decrease in bad debt expense and a $0.2 million decrease in legal and environmental expenses.
Income Taxes. Income tax expense for the three months ended September 30, 2009 was $1.1 million as compared to $5.4 million in the three months ended September 30, 2008. Our effective tax rate was 21.3% for the three months ended September 30, 2009 compared to 53.2% for the three months ended September 30, 2008. The tax rate was lower than the statutory rate in 2009 primarily due to $0.5 million of tax benefits from prior periods that were realized as a result of the expiration of the statute of limitations in the U.S. The tax rate in 2008 was higher than the statutory rate primarily due to $2.6 million of non-recurring non-deductible costs, of which $0.4 million of these costs were recorded in the second quarter of 2008, related to the pursuit of strategic alternatives.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $0.2 million, or 0.4%, in the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. Selling, general and administrative expenses for the nine months ended September 30, 2009 included $3.9 million of separation costs for our former President, Chief Executive Officer and Chairman of the Board, as well as $0.1 million related to Azura acquisition costs. Selling, general and administrative expenses for the nine months ended September 30, 2008 included $4.7 million of costs related to the pursuit of strategic alternatives. Selling, general and administrative expenses, excluding the separation and Azura costs in 2009 and the strategic alternatives costs in 2008, increased $0.9 million primarily due to increased employee stock-based compensation expense of $0.4 million, abandoned acquisition costs of $0.2 million and facility closing costs of $0.1 million.
Net Cash Used in Investing Activities. Our principal uses of cash are for capital expenditures and acquisitions. For the nine months ended September 30, 2009 and 2008, we made capital expenditures of approximately $4.2 million and $7.5 million. We made equity investments in our unconsolidated affiliates of $2.0 million for the nine months ended September 30, 2009, with no such investments for the nine months ended September 30, 2008. Cash consideration paid for business acquisitions, net of cash acquired, was $7.5 million and $2.7 million for the nine months ended September 30, 2009 and 2008 (see Note 2 to our condensed consolidated financial statements).
Net Cash Used in Financing Activities. Sources of cash from financing activities primarily include borrowings under our senior credit facility and proceeds from the exercise of warrants and stock options. Principal uses of cash include payments on our senior credit facility. Financing activities used net cash of $16.3 million for the nine months ended September 30, 2009 compared to $24.9 million for the nine months ended September 30, 2008. We made net repayments under our senior credit facility of $18.8 million and $29.6 million during the nine months ended September 30, 2009 and 2008. We had proceeds from the exercise of stock options of $2.4 million and $3.1 million and from the excess tax benefits from stock-based compensation of $0.1 million and $1.7 million during the nine months ended September 30, 2009 and 2008.
Principal Debt Instruments. Our senior credit facility provides for a $180 million revolving line of credit, maturing October 26, 2012, that we can increase by up to $70 million (not to exceed a total commitment of $250 million) with the approval of the senior lenders. The senior credit facility consists of a U.S. revolving credit facility that includes a swing line subfacility and letter of credit subfacility up to $25 million and $50 million. We expect to use the proceeds from any advances made pursuant to the senior credit facility for working capital purposes, for capital expenditures, to fund acquisitions and for general corporate purposes. As of September 30, 2009, we had no outstanding balances under our senior credit facility and debt instruments entered into or assumed in connection with acquisitions, as well as other bank financings. As of September 30, 2009, availability under our senior credit facility was $151.5 million.
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