THE WOODLANDS, Texas,
Nov. 7, 2016 /PRNewswire/ -- TETRA
Technologies, Inc. (NYSE:TTI) (TETRA or the Company) today
announced a consolidated third quarter 2016 net loss per share
attributable to TETRA stockholders of $0.16, which compares to a net loss per share of
$0.32 in the second quarter of 2016
and earnings per share of $0.12 in
the third quarter of 2015.
TETRA's adjusted per share results attributable to TETRA
stockholders for the third quarter of 2016, excluding Maritech and
other charges, were a loss of $0.05,
which compares to adjusted loss per share of $0.15 in the second quarter of 2016 and adjusted
earnings per share of $0.17 in the
third quarter of 2015, also excluding Maritech and other charges.
Third quarter 2016 revenue of $176.6
million increased by 1% sequentially and declined 42% from
the third quarter of 2015 primarily as a result of lower rig count.
(Adjusted diluted earnings (loss) per share is a non-GAAP financial
measure that is reconciled to the nearest GAAP measure in the
accompanying schedules.)
Third Quarter
2016 Results
|
|
Three Months
Ended
|
|
September 30,
2016
|
|
June 30,
2016
|
|
September 30,
2015
|
|
(In Thousands, Except
per Share Amounts)
|
Revenue
|
$
|
176,553
|
|
|
$
|
175,660
|
|
|
$
|
305,144
|
|
Net income (loss)
attributable to TETRA stockholders
|
(15,009)
|
|
|
(26,574)
|
|
|
9,755
|
|
Adjusted
EBITDA(1)
|
36,927
|
|
|
32,949
|
|
|
76,421
|
|
Diluted EPS
attributable to TETRA stockholders
|
(0.16)
|
|
|
(0.32)
|
|
|
0.12
|
|
Adjusted diluted EPS
attributable to TETRA stockholders(1)
|
(0.05)
|
|
|
(0.15)
|
|
|
0.17
|
|
Consolidated net cash
provided (used) by operating activities
|
(7,933)
|
|
|
8,336
|
|
|
36,065
|
|
TETRA only adjusted
free cash flow(1)
|
$
|
(13,924)
|
|
|
$
|
(8,773)
|
|
|
$
|
30,176
|
|
|
|
(1)
|
Non-GAAP
financial measures are reconciled to GAAP in the schedules
below.
|
Highlights of the 2016 third quarter include:
- Fluids operating margin improved sequentially to 14.1% from
0.7%, with income before tax improving to $8.8 million. Adjusted EBITDA margins
improved sequentially to 26.2% from 13.6%, with adjusted EBITDA
doubling to $16.4 million.
- Offshore Services operating margin improved sequentially to
6.4% from 0.1%, with income before tax improving to $1.9 million. Adjusted EBITDA margins
improved sequentially to 16.0% from 11.3%, with adjusted EBITDA
improving by 58% to $4.7
million.
- Production Testing revenues increased sequentially by 13%
driven by North America land
activity. Production Testing loss before tax was reduced to
$4.2 million while Adjusted EBITDA
loss was $452,000.
- Compression operating margin deteriorated sequentially to a
loss of 22.3% from a loss of 5.3%, with loss before tax
deteriorating to $15.8 million
primarily due to expenses from the recent equity offering and a
non-cash charge from a revaluation of the convertible preferred
notes. Adjusted EBITDA margins of 32.7% improved sequentially
by 30 basis points.
- CSI Compressco completed a convertible preferred equity
offering for a total of $80 million
and further amended its credit facility leverage covenants (to
5.95X through June, 2018) to provide incremental financial
flexibility to manage through this downturn, converting their
credit facility to an asset-based facility and reducing the amount
of the credit facility from $340 million to
$315 million.
- TETRA only adjusted free cash flow was a use of cash of
$13.9 million as customers delayed
payments into the fourth quarter.
(1)
|
Non-GAAP financial
measures are reconciled to GAAP in the schedules below.
|
Stuart M. Brightman, TETRA's
President and Chief Executive Officer, stated, "Despite a continued
challenging market environment we saw sequential adjusted EBITDA
margin improvements in Fluids, Compression and Offshore Services,
reflecting our market position in each of these segments. We also
experienced sequential revenue improvements in Production Testing
(up 13%), Offshore Services (up 12%) and Fluids (up 3%). Our Fluids
division executed one TETRA CS Neptune® deep water Gulf of Mexico project during the third
quarter, and expects to start another in the fourth quarter. While
we are seeing improvements in activity on the U.S. onshore side
that are benefiting our production testing, calcium chloride sales,
water management and wellhead compression, we believe the offshore
markets will continue to be challenging.
"Our Fluids Division's revenues for the third quarter of 2016
were $62.6 million compared to
$60.8 million in the second quarter
of 2016. The traditional seasonal decline in Northern Europe chemical sales was more than
offset by a TETRA CS Neptune project in the Gulf of Mexico and a strong rebound of water
management activity in U.S. onshore markets, mainly in the Permian
and Midcontinent Basins. Sequentially, water management revenue
improved significantly, as onshore completions activity continues
to rebound in these areas. This mix resulted in adjusted EBITDA
margins improving to 26.2% in the third quarter compared to 13.6%
in the second quarter. Going into the end of this year and early
into next year, our expectations for the Fluids Division are that
we will see increasing activity in the onshore North America markets but weaker deep water
Gulf of Mexico activity.
"Third quarter 2016 revenue for our Production Testing Division
improved 13% over the second quarter led by stronger activity
levels in North America land and
Saudi Arabia with the North America improvements reflecting the
higher rig count and completions activity. Adjusted EBITDA was a
loss of $452,000 compared to an
adjusted EBITDA loss of $164,000 in
the second quarter reflecting continued pricing pressures. We
expect going into next year that we will continue to see improving
activity in North America land,
mainly in the Permian Basin, and internationally in Saudi Arabia.
"For the third quarter of 2016 our Compression Division reported
adjusted EBITDA of $23.1 million, at
32.7% of revenue, compared to the second quarter of $24.7 million, or 32.4% of revenue. Utilization
was 75.2%, compared to 75.8% in the second quarter, as the rate of
decline in utilization appears to be slowing down given stronger
activity levels in the Permian Basin. On October 21, 2016, CSI Compressco LP declared a
cash distribution attributable to the third quarter of 2016 of
$0.3775 per common unit, unchanged
from the distribution attributable to the second quarter of this
year. This distribution resulted in a coverage ratio of 0.99x for
the third quarter of 2016.
"Our Offshore Service segment reported adjusted EBITDA of
$4.7 million, or 16.0% of revenue, a
58% sequential improvement of $1.7
million over the second quarter and reflecting the seasonal
peak of decommissioning activity in the Gulf of Mexico. We expect the fourth quarter
of this year and the first quarter of next year to be weaker
reflecting the weakness in customer spend during this downturn and
the seasonal low of this market."
Free Cash Flow and Balance Sheet
TETRA only adjusted free cash flow in the third quarter was a
use of cash of $13.9 million
primarily as a result of delayed payments by a significant customer
at quarter-end (which has been subsequently collected). TETRA
only day's sales outstanding increased from 61 days at the end of
the second quarter to 73 days at the end of September.
During the third quarter, CSI Compressco completed offerings of
its Series A Convertible Preferred Units for an aggregate of
$80 million. This $80 million is reflected as a liability for U.S.
GAAP reporting purposes although it is considered equity for
reporting compliance with CSI Compressco's revolving credit
agreement.
CSI Compressco announced on November 4,
2016 an additional amendment to its credit facility whereby,
among other changes, the leverage covenant has been increased from
5.75X to 5.95X through June, 2018 and to 5.75X through December 31, 2018 and the credit facility was
changed to an asset-based facility. The credit limit was also
reduced to $315 million from
$340 million.
Special Charges and Maritech
Maritech reported a pre-tax loss of $0.6
million in the third quarter of 2016.
Special charges were $10.5 million
in the quarter, which included the following:
- $9.3 million related to the
recent offerings by CSI Compressco of its Series A Convertible
Preferred units (transaction related expenses of $3.0 million and a non-cash charge of
$6.3 million for a mark to market
valuation of the related liability).
- $1.4 million of bad debt expenses
and increased bad debt reserves to reflect the deteriorating
financial conditions of some of our customers.
Financial Guidance
The forecast for full year 2016 TETRA only adjusted free cash
flow will be impacted by the timing of year-end collections from
some large projects that will negatively impact working capital as
these projects are being pushed towards the end of the
quarter. Partially as a result of these potential deferred
collections, total year projected free cash flow is expected to be
between $5 million and $15
million.
No reconciliation of the forecasted range of adjusted free cash
flow for the full year 2016 is included in this release because the
reconciliation would require presenting forecasted information for
CSI Compressco that is not publicly disclosed.
Conference Call
TETRA will host a conference call to discuss third quarter 2016
results today, November 7, 2016, at
10:30 a.m. ET. The phone number for
the call is (888) 347-5303. The conference will also be available
by live audio webcast and may be accessed through TETRA's website
at www.tetratec.com.
Financial Statements, Schedules and Non-GAAP Reconciliation
Schedules (Unaudited)
Schedule A: Consolidated Income
Statement
Schedule B: Financial Results By Segment
Schedule C: Consolidated Balance Sheet
Schedule D: Long-Term Debt
Schedule E: Second Quarter Special Charges
Schedule F: Non-GAAP Reconciliation to GAAP Financials
Schedule G: Non-GAAP Reconciliation to Adjusted Free Cash Flow
Schedule H: Non-GAAP Reconciliation of TETRA Net Debt
Company Overview and Forward Looking Statements
TETRA is a geographically diversified oil and gas services
company, focused on completion fluids and associated products and
services, water management, frac flowback, production well testing,
offshore rig cooling, compression services and equipment, and
selected offshore services including well plugging and abandonment,
decommissioning, and diving. TETRA owns an equity interest,
including all of the general partner interest, in CSI Compressco LP
(NASDAQ:CCLP), a master limited partnership.
This press release includes certain statements that are deemed
to be forward-looking statements. Generally, the use of words such
as "may," "expect," "intend," "estimate," "projects," "anticipate,"
"believe," "assume," "could," "should," "plans," "targets" or
similar expressions that convey the uncertainty of future events,
activities, expectations or outcomes identify forward-looking
statements that the Company intends to be included within the safe
harbor protections provided by the federal securities laws. These
forward-looking statements include statements concerning expected
results of operational business segments for 2016, anticipated
benefits from CSI Compressco following the acquisition of CSI
Compressco in 2014, including increases in cash distributions per
unit, projections concerning the Company's business activities,
financial guidance, estimated earnings, earnings per share, and
statements regarding the Company's beliefs, expectations, plans,
goals, future events and performance, and other statements that are
not purely historical. These forward-looking statements are based
on certain assumptions and analyses made by the Company in light of
its experience and its perception of historical trends, current
conditions, expected future developments and other factors it
believes are appropriate in the circumstances. Such statements are
subject to a number of risks and uncertainties, many of which are
beyond the control of the Company, including the ability of CSI
Compressco to successfully integrate the operations of CSI
Compressco and recognize the anticipated benefits of the
acquisition. Investors are cautioned that any such statements are
not guarantees of future performances or results and that actual
results or developments may differ materially from those projected
in the forward-looking statements. Some of the factors that could
affect actual results are described in the section titled "Risk
Factors" contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 2015, as
well as other risks identified from time to time in its reports on
Form 10-Q and Form 8-K filed with the Securities and Exchange
Commission.
Schedule A:
Consolidated Income Statement (Unaudited)
|
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(In
Thousands)
|
Revenues
|
$
|
176,553
|
|
$
|
305,144
|
|
$
|
521,542
|
|
$
|
872,555
|
|
|
|
|
|
|
|
|
Cost of sales,
services, and rentals
|
115,948
|
|
195,701
|
|
361,982
|
|
569,755
|
Depreciation,
amortization, and accretion
|
31,852
|
|
38,909
|
|
98,997
|
|
116,319
|
Impairments of
long-lived assets
|
—
|
|
—
|
|
10,927
|
|
—
|
Total cost of
revenues
|
147,800
|
|
234,610
|
|
471,906
|
|
686,074
|
Gross profit
|
28,753
|
|
70,534
|
|
49,636
|
|
186,481
|
|
|
|
|
|
|
|
|
General and
administrative expense
|
28,589
|
|
40,910
|
|
89,381
|
|
113,651
|
Goodwill
impairment
|
—
|
|
—
|
|
106,205
|
|
—
|
Interest expense,
net
|
14,325
|
|
13,196
|
|
43,299
|
|
40,231
|
Other (income)
expense, net
|
8,424
|
|
1,005
|
|
9,930
|
|
1,123
|
Income (loss) before
taxes
|
(22,585)
|
|
15,423
|
|
(199,179)
|
|
31,476
|
Provision (benefit)
for income taxes
|
1,443
|
|
4,687
|
|
1,804
|
|
8,997
|
Net income
(loss)
|
(24,028)
|
|
10,736
|
|
(200,983)
|
|
22,479
|
Net (income) loss
attributable to noncontrolling interest
|
9,019
|
|
(981)
|
|
71,075
|
|
(2,247)
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
(15,009)
|
|
$
|
9,755
|
|
$
|
(129,908)
|
|
$
|
20,232
|
|
|
|
|
|
|
|
|
Basic per share
information:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
(0.16)
|
|
$
|
0.12
|
|
$
|
(1.53)
|
|
$
|
0.26
|
Weighted average shares
outstanding
|
91,746
|
|
79,219
|
|
85,093
|
|
79,098
|
|
|
|
|
|
|
|
|
Diluted per share
information:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
(0.16)
|
|
$
|
0.12
|
|
$
|
(1.53)
|
|
$
|
0.25
|
Weighted average shares
outstanding
|
91,746
|
|
79,792
|
|
85,093
|
|
79,455
|
Schedule B:
Financial Results By Segment (Unaudited)
|
|
|
Three months
ended
September 30, 2016
|
|
Nine months
ended
September 30, 2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(In
Thousands)
|
Revenues by
segment:
|
|
|
|
|
|
|
|
Fluids
Division
|
$
|
62,610
|
|
|
$
|
110,587
|
|
|
$
|
182,556
|
|
|
$
|
332,850
|
|
Production Testing
Division
|
15,065
|
|
|
28,942
|
|
|
48,320
|
|
|
100,885
|
|
Compression
Division
|
70,718
|
|
|
128,926
|
|
|
228,504
|
|
|
358,270
|
|
Offshore
Division
|
|
|
|
|
|
|
|
Offshore
Services
|
29,239
|
|
|
37,882
|
|
|
65,604
|
|
|
85,396
|
|
Maritech
|
238
|
|
|
475
|
|
|
575
|
|
|
2,375
|
|
Intersegment
eliminations
|
(297)
|
|
|
(429)
|
|
|
(813)
|
|
|
(3,609)
|
|
Offshore Division
total
|
29,180
|
|
|
37,928
|
|
|
65,366
|
|
|
84,162
|
|
Eliminations and
other
|
(1,020)
|
|
|
(1,239)
|
|
|
(3,204)
|
|
|
(3,612)
|
|
Total
revenues
|
$
|
176,553
|
|
|
$
|
305,144
|
|
|
$
|
521,542
|
|
|
$
|
872,555
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss) by segment:
|
|
|
|
|
|
|
|
Fluids
Division
|
$
|
15,369
|
|
|
$
|
41,704
|
|
|
$
|
29,445
|
|
|
$
|
107,424
|
|
Production Testing
Division
|
(2,032)
|
|
|
926
|
|
|
(8,054)
|
|
|
7,703
|
|
Compression
Division
|
12,353
|
|
|
22,163
|
|
|
33,035
|
|
|
66,100
|
|
Offshore
Division
|
|
|
|
|
|
|
|
Offshore
Services
|
3,459
|
|
|
7,296
|
|
|
(763)
|
|
|
6,017
|
|
Maritech
|
(297)
|
|
|
(1,331)
|
|
|
(3,709)
|
|
|
(30)
|
|
Intersegment
eliminations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Offshore Division
total
|
3,162
|
|
|
5,965
|
|
|
(4,472)
|
|
|
5,987
|
|
Corporate overhead and
eliminations
|
(99)
|
|
|
(224)
|
|
|
(318)
|
|
|
(733)
|
|
Total gross
profit
|
$
|
28,753
|
|
|
$
|
70,534
|
|
|
$
|
49,636
|
|
|
$
|
186,481
|
|
|
|
|
|
|
|
|
|
Income (loss)
before taxes by segment:
|
|
|
|
|
|
|
|
Fluids
Division
|
$
|
8,835
|
|
|
$
|
33,215
|
|
|
$
|
8,931
|
|
|
$
|
83,535
|
|
Production Testing
Division
|
(4,222)
|
|
|
(4,528)
|
|
|
(27,924)
|
|
|
(4,961)
|
|
Compression
Division
|
(15,766)
|
|
|
2,070
|
|
|
(124,506)
|
|
|
5,974
|
|
Offshore
Division
|
|
|
|
|
|
|
|
Offshore
Services
|
1,879
|
|
|
4,576
|
|
|
(5,792)
|
|
|
(1,977)
|
|
Maritech
|
(643)
|
|
|
(1,649)
|
|
|
(4,664)
|
|
|
(987)
|
|
Intersegment
eliminations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Offshore Division
total
|
1,236
|
|
|
2,927
|
|
|
(10,456)
|
|
|
(2,964)
|
|
Corporate overhead and
eliminations
|
(12,668)
|
|
|
(18,261)
|
|
|
(45,224)
|
|
|
(50,108)
|
|
Total income (loss)
before taxes
|
$
|
(22,585)
|
|
|
$
|
15,423
|
|
|
$
|
(199,179)
|
|
|
$
|
31,476
|
|
|
Please note that the
above results by Segment are inclusive of the special charges and
expenses. Please see Schedule E for details of those special
charges and expenses.
|
Schedule C:
Consolidated Balance Sheet (Unaudited)
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
(In
Thousands)
|
Balance
Sheet:
|
|
|
|
Cash (excluding
restricted cash)
|
$
|
22,210
|
|
|
$
|
23,057
|
|
Accounts receivable,
net
|
120,175
|
|
|
184,172
|
|
Inventories
|
128,405
|
|
|
117,009
|
|
Other current
assets
|
26,649
|
|
|
29,791
|
|
PP&E,
net
|
977,455
|
|
|
1,048,004
|
|
Other
assets
|
97,156
|
|
|
234,169
|
|
Total
assets
|
$
|
1,372,050
|
|
|
$
|
1,636,202
|
|
|
|
|
|
Current portion of
decommissioning liabilities
|
$
|
376
|
|
|
$
|
14,570
|
|
Other current
liabilities
|
114,526
|
|
|
170,676
|
|
Long-term debt
(1)
|
738,032
|
|
|
853,228
|
|
Long-term portion of
decommissioning liabilities
|
54,962
|
|
|
42,879
|
|
CCLP Series A
Preferred
|
77,018
|
|
|
—
|
|
Other long-term
liabilities
|
29,902
|
|
|
40,669
|
|
Equity
|
357,234
|
|
|
514,180
|
|
Total liabilities and
equity
|
$
|
1,372,050
|
|
|
$
|
1,636,202
|
|
|
|
(1)
|
Please see
Schedule D for the individual debt obligations of TETRA and CSI
Compressco LP.
|
Schedule D:
Long-Term Debt
|
|
TETRA Technologies
Inc. and its subsidiaries, excluding CSI Compressco LP and its
subsidiaries, are obligated under a bank credit agreement and
senior notes, neither of which are obligations of CSI Compressco LP
and its subsidiaries. CSI Compressco LP and its subsidiaries are
obligated under a separate bank credit agreement and senior notes,
neither of which are obligations of TETRA and its other
subsidiaries. Amounts presented are net of deferred financing
costs.
|
|
|
September 30,
2016
|
|
December 31,
2015
|
|
(In
Thousands)
|
TETRA
|
|
|
|
Bank revolving line
of credit facility
|
$
|
125,849
|
|
|
$
|
21,572
|
|
TETRA Senior Notes at
various rates
|
116,492
|
|
|
264,998
|
|
Other debt
|
—
|
|
|
50
|
|
TETRA total
debt
|
242,341
|
|
|
286,620
|
|
Less current
portion
|
—
|
|
|
(50)
|
|
TETRA total
long-term debt
|
$
|
242,341
|
|
|
$
|
286,570
|
|
|
|
|
|
CSI Compressco
LP
|
|
|
|
CCLP Bank Credit
Facility
|
$
|
176,567
|
|
|
$
|
229,555
|
|
CCLP 7.25% Senior
Notes
|
319,124
|
|
|
337,103
|
|
CCLP total
debt
|
495,691
|
|
|
566,658
|
|
Less current
portion
|
—
|
|
|
—
|
|
CCLP total
long-term debt
|
$
|
495,691
|
|
|
$
|
566,658
|
|
Consolidated total
long-term debt
|
$
|
738,032
|
|
|
$
|
853,228
|
|
Non-GAAP Financial Measures
In addition to financial results determined in accordance with
GAAP, this press release includes the following non-GAAP financial
measures for the Company: net debt, adjusted consolidated and
segment income (loss) before taxes, excluding the Maritech segment
and special charges; adjusted EBITDA; and adjusted free cash flow.
The following schedules provide reconciliations of these non-GAAP
financial measures to their most directly comparable GAAP measures.
The non-GAAP financial measures should be considered in addition
to, not as a substitute for, financial measures prepared in
accordance with GAAP, as more fully discussed in the Company's
financial statements and filings with the Securities and Exchange
Commission.
Management believes that following the sale of essentially all
of Maritech's oil and gas properties, it is helpful to show the
Company's results excluding the impact of the costs and charges
relating to the decommissioning of Maritech's remaining properties
since these results will show the Company's historical results of
operations on a basis consistent with expected future
operations. Management also believes that the exclusion of
the special charges from the historical results of operations
enables management to evaluate more effectively the Company's
operations over the prior periods and to identify operating trends
that could be obscured by the excluded items.
Adjusted income (loss) before taxes (and adjusted income (loss)
before taxes as a percent of revenue) is defined as the Company's
(or its Segments') income (loss) before taxes excluding certain
special or other charges (or credits). Adjusted income (loss)
before taxes (and adjusted income (loss) before taxes as a percent
of revenue) is used by management as a supplemental financial
measure to assess financial performance, without regard to charges
or credits that are considered by management to be outside of its
normal operations.
Adjusted diluted earnings (loss) per share is defined as the
Company's diluted earnings (loss) per share excluding certain
special or other charges (or credits) and using a normalized
effective income tax rate. Adjusted diluted earnings (loss) per
share is used by management as a supplemental financial measure to
assess financial performance, without regard to charges or credits
that are considered by management to be outside of its normal
operations.
Adjusted EBITDA (and Adjusted EBITDA as a percent of revenue) is
defined as before interest, taxes, depreciation, amortization,
impairments and special charges, and equity compensation. Adjusted
EBITDA (and Adjusted EBITDA as a percent of revenue) is used by
management as a supplemental financial measure to assess the
financial performance of the Company's assets, without regard to
financing methods, capital structure or historical cost basis and
to assess the Company's ability to incur and service debt and fund
capital expenditures.
TETRA only adjusted free cash flow is a non-GAAP measure that
the Company defines as cash from TETRA's operations, excluding cash
settlements of Maritech AROs, less capital expenditures net of
sales proceeds, and including cash distributions to TETRA from CSI
Compressco LP. Management uses this supplemental financial measure
to:
- assess the Company's ability to retire debt;
- evaluate the capacity of the Company to further invest and
grow; and
- to measure the performance of the Company as compared to its
peer group of companies.
TETRA only adjusted free cash flow does not necessarily imply
residual cash flow available for discretionary expenditures, as it
excludes cash requirements for debt service or other
non-discretionary expenditures that are not deducted.
TETRA net debt is defined as the sum of long-term and short-term
debt on its consolidated balance sheet, less cash, excluding
restricted cash on the consolidated balance sheet and excluding the
debt and cash of CSI Compressco LP. Management views TETRA net debt
as a measure of TETRA's ability to reduce debt, add to cash
balances, pay dividends, repurchase stock, and fund investing and
financing activities.
Schedule E: Third
Quarter Special Charges
|
|
|
Three Months
Ended
|
|
September 30,
2016
|
|
Income
(Loss) Before
Tax
|
Provision
(Benefit) for
Tax
|
Noncont.
Interest
|
Net Income
Attributable to
TETRA
Stockholders
|
EPS
|
|
(In Thousands, Except
per Share Amounts)
|
Income (loss)
attributable to TETRA stockholders, excluding unusual charges and
Maritech
|
$
|
(11,428)
|
|
$
|
(3,428)
|
|
$
|
(3,019)
|
|
$
|
(4,981)
|
|
$
|
(0.05)
|
|
Severance
expense
|
(210)
|
|
(63)
|
|
(33)
|
|
(114)
|
|
0.00
|
|
Debt refinancing gain
on early retirement
|
397
|
|
119
|
|
309
|
|
(31)
|
|
0.00
|
|
Allowance for doubtful
accounts
|
(1,361)
|
|
(408)
|
|
(416)
|
|
(537)
|
|
(0.01)
|
|
Equity related
expenses
|
(9,340)
|
|
(2,802)
|
|
(5,860)
|
|
(678)
|
|
(0.01)
|
|
Effect of deferred tax
valuation allowance and other related tax adj.
|
—
|
|
8,025
|
|
—
|
|
(8,025)
|
|
(0.09)
|
|
Maritech profit
(loss)
|
(643)
|
|
—
|
|
—
|
|
(643)
|
|
(0.01)
|
|
Net Income (loss)
attributable to TETRA stockholders, as reported
|
$
|
(22,585)
|
|
$
|
1,443
|
|
$
|
(9,019)
|
|
$
|
(15,009)
|
|
$
|
(0.16)
|
|
|
|
|
|
|
|
|
June 30,
2016
|
|
Income
(Loss) Before
Tax
|
Provision
(Benefit) for
Tax
|
Noncont.
Interest
|
Net Income
Attributable to
TETRA
Stockholders
|
EPS
|
|
|
Income (loss)
attributable to TETRA stockholders, excluding unusual charges and
Maritech
|
$
|
(20,511)
|
|
$
|
(6,154)
|
|
$
|
(2,011)
|
|
$
|
(12,346)
|
|
$
|
(0.15)
|
|
Asset
impairments
|
(365)
|
|
(109)
|
|
—
|
|
(256)
|
|
0.00
|
|
Severance
expense
|
(595)
|
|
(179)
|
|
(170)
|
|
(246)
|
|
0.00
|
|
Debt refinancing
cost
|
(2,582)
|
|
(775)
|
|
(469)
|
|
(1,338)
|
|
(0.02)
|
|
Effect of deferred tax
valuation allowance and other related tax adj.
|
—
|
|
8,987
|
|
—
|
|
(8,987)
|
|
(0.11)
|
|
Maritech profit
(loss)
|
(3,401)
|
|
—
|
|
—
|
|
(3,401)
|
|
(0.04)
|
|
Net Income (loss)
attributable to TETRA stockholders, as reported
|
$
|
(27,454)
|
|
$
|
1,770
|
|
$
|
(2,650)
|
|
$
|
(26,574)
|
|
$
|
(0.32)
|
|
|
|
|
|
|
|
|
September 30,
2015
|
|
Income
(Loss) Before
Tax
|
Provision
(Benefit) for
Tax
|
Noncont.
Interest
|
Net Income
Attributable to
TETRA
Stockholders
|
EPS
|
|
|
|
|
|
|
Income (loss)
attributable to TETRA stockholders, excluding unusual charges and
Maritech
|
$
|
21,117
|
|
$
|
6,335
|
|
$
|
960
|
|
$
|
13,822
|
|
$
|
0.17
|
|
Severance
expense
|
(375)
|
|
(113)
|
|
21
|
|
(283)
|
|
0.00
|
|
Allowance for bad
debt
|
(2,570)
|
|
(771)
|
|
—
|
|
(1,799)
|
|
(0.02)
|
|
Brazil VAT
audit
|
(1,100)
|
|
(330)
|
|
—
|
|
(770)
|
|
(0.01)
|
|
Effect of deferred
tax valuation allowance and other related tax adj.
|
—
|
|
(434)
|
|
—
|
|
434
|
|
0.01
|
|
Maritech profit
(loss)
|
(1,649)
|
|
—
|
|
—
|
|
(1,649)
|
|
(0.02)
|
|
Net Income (loss)
attributable to TETRA stockholders, as reported
|
$
|
15,423
|
|
$
|
4,687
|
|
$
|
981
|
|
$
|
9,755
|
|
$
|
0.12
|
|
Schedule F:
Non-GAAP Reconciliation to GAAP Financials
|
|
|
Three Months
Ended
|
|
September 30,
2016
|
|
Income
(Loss)
Before Tax,
as Reported
|
Impairments
& Special
Charges
|
Adjusted
Income
(Loss)
Before Tax
|
Adjusted
Interest
Expense,
Net(1)
|
Depreciation
&
Amortization
|
Equity
Comp.
Expense
|
Adjusted
EBITDA
|
|
(In
Thousands)
|
Fluids
Division
|
$
|
8,835
|
|
$
|
701
|
|
$
|
9,536
|
|
$
|
8
|
|
$
|
6,873
|
|
$
|
—
|
|
$
|
16,417
|
|
Production Testing
Division
|
(4,222)
|
|
26
|
|
(4,196)
|
|
(147)
|
|
3,891
|
|
—
|
|
(452)
|
|
Compression
Division
|
(15,766)
|
|
10,497
|
|
(5,269)
|
|
9,763
|
|
17,830
|
|
774
|
|
23,098
|
|
Offshore Services
Segment
|
1,879
|
|
11
|
|
1,890
|
|
—
|
|
2,793
|
|
—
|
|
4,683
|
|
Eliminations and
other
|
(2)
|
|
—
|
|
(2)
|
|
—
|
|
(4)
|
|
—
|
|
(6)
|
|
Subtotal
|
(9,276)
|
|
11,235
|
|
1,959
|
|
9,624
|
|
31,383
|
|
774
|
|
43,740
|
|
Corporate and
other
|
(12,666)
|
|
(721)
|
|
(13,387)
|
|
4,699
|
|
101
|
|
1,774
|
|
(6,813)
|
|
TETRA excluding
Maritech
|
(21,942)
|
|
10,514
|
|
(11,428)
|
|
14,323
|
|
31,484
|
|
2,548
|
|
36,927
|
|
Maritech
|
(643)
|
|
—
|
|
(643)
|
|
2
|
|
368
|
|
—
|
|
(273)
|
|
Total
TETRA
|
$
|
(22,585)
|
|
$
|
10,514
|
|
$
|
(12,071)
|
|
$
|
14,325
|
|
$
|
31,852
|
|
$
|
2,548
|
|
$
|
36,654
|
|
|
|
|
|
|
|
|
|
|
June 30,
2016
|
|
Income
(Loss)
Before Tax,
as Reported
|
Impairments
& Special
Charges
|
Adjusted
Income
(Loss)
Before Tax
|
Adjusted
Interest Expense,
Net(1)
|
Depreciation
&
Amortization
|
Equity
Comp.
Expense
|
Adjusted
EBITDA
|
|
|
Fluids
Division
|
$
|
454
|
|
$
|
501
|
|
$
|
955
|
|
$
|
2
|
|
$
|
7,326
|
|
$
|
—
|
|
$
|
8,283
|
|
Production Testing
Division
|
(4,328)
|
|
131
|
|
(4,197)
|
|
(143)
|
|
4,176
|
|
—
|
|
(164)
|
|
Compression
Division
|
(4,040)
|
|
984
|
|
(3,056)
|
|
8,148
|
|
18,753
|
|
825
|
|
24,670
|
|
Offshore Services
Segment
|
37
|
|
56
|
|
93
|
|
—
|
|
2,865
|
|
—
|
|
2,958
|
|
Eliminations and
other
|
3
|
|
—
|
|
3
|
|
—
|
|
(3)
|
|
—
|
|
—
|
|
Subtotal
|
(7,874)
|
|
1,672
|
|
(6,202)
|
|
8,007
|
|
33,117
|
|
825
|
|
35,747
|
|
Corporate and
other
|
(16,179)
|
|
1,870
|
|
(14,309)
|
|
5,596
|
|
112
|
|
5,803
|
|
(2,798)
|
|
TETRA excluding
Maritech
|
(24,053)
|
|
3,542
|
|
(20,511)
|
|
13,603
|
|
33,229
|
|
6,628
|
|
32,949
|
|
Maritech
|
(3,401)
|
|
—
|
|
(3,401)
|
|
10
|
|
309
|
|
—
|
|
(3,082)
|
|
Total
TETRA
|
$
|
(27,454)
|
|
$
|
3,542
|
|
$
|
(23,912)
|
|
$
|
13,613
|
|
$
|
33,538
|
|
$
|
6,628
|
|
$
|
29,867
|
|
|
|
|
|
|
|
|
|
|
September 30,
2015
|
|
Income
(Loss)
Before Tax,
as Reported
|
Impairments
& Special
Charges
|
Adjusted
Income
(Loss)
Before Tax
|
Interest
Expense,
Net
|
Depreciation
&
Amortization
|
Equity
Comp.
Expense
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
Fluids
Division
|
$
|
33,215
|
|
$
|
360
|
|
$
|
33,575
|
|
$
|
(15)
|
|
$
|
8,735
|
|
$
|
—
|
|
$
|
42,295
|
|
Production Testing
Division
|
(4,528)
|
|
3,124
|
|
(1,404)
|
|
4
|
|
5,999
|
|
—
|
|
4,599
|
|
Compression
Division
|
2,070
|
|
43
|
|
2,113
|
|
8,897
|
|
20,648
|
|
455
|
|
32,113
|
|
Offshore Services
Segment
|
4,576
|
|
507
|
|
5,083
|
|
—
|
|
2,879
|
|
—
|
|
7,962
|
|
Eliminations and
other
|
5
|
|
—
|
|
5
|
|
—
|
|
(1)
|
|
—
|
|
4
|
|
Subtotal
|
35,338
|
|
4,034
|
|
39,372
|
|
8,886
|
|
38,260
|
|
455
|
|
86,973
|
|
Corporate and
other
|
(18,266)
|
|
12
|
|
(18,255)
|
|
4,310
|
|
230
|
|
3,163
|
|
(10,551)
|
|
TETRA excluding
Maritech
|
17,072
|
|
4,046
|
|
21,117
|
|
13,196
|
|
38,490
|
|
3,618
|
|
76,421
|
|
Maritech
|
(1,649)
|
|
—
|
|
(1,649)
|
|
—
|
|
419
|
|
—
|
|
(1,230)
|
|
Total
TETRA
|
$
|
15,423
|
|
$
|
4,046
|
|
$
|
19,468
|
|
$
|
13,196
|
|
$
|
38,909
|
|
$
|
3,618
|
|
$
|
75,191
|
|
|
|
(1)
|
Adjusted interest
expense, net, for the three month period ended June 30, 2016,
excludes $0.7 million of interest expense related to CCLP debt
refinancing.
|
Schedule G:
Non-GAAP Reconciliation to Adjusted Free Cash Flow
|
|
|
Three Months
Ended
|
|
September 30,
2016
|
|
June 30,
2016
|
|
September 30,
2015
|
|
(In
Thousands)
|
Consolidated
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
(7,933)
|
|
|
$
|
8,336
|
|
|
$
|
36,065
|
|
ARO
settlements
|
324
|
|
|
64
|
|
|
785
|
|
Capital expenditures,
net of sales proceeds
|
(5,727)
|
|
|
(4,732)
|
|
|
(21,915)
|
|
Consolidated adjusted
free cash flow
|
(13,336)
|
|
|
3,668
|
|
|
14,935
|
|
|
|
|
|
|
|
CSI Compressco
LP
|
|
|
|
|
|
Net cash provided by
operating activities
|
9,958
|
|
|
20,469
|
|
|
11,340
|
|
Capital expenditures,
net of sales proceeds
|
(3,796)
|
|
|
(2,453)
|
|
|
(18,906)
|
|
CSI Compressco free
cash flow
|
6,162
|
|
|
18,016
|
|
|
(7,566)
|
|
|
|
|
|
|
|
TETRA
Only
|
|
|
|
|
|
Cash from operating
activities
|
(17,891)
|
|
|
(12,133)
|
|
|
24,725
|
|
ARO
settlements
|
324
|
|
|
64
|
|
|
785
|
|
Capital expenditures,
net of sales proceeds
|
(1,931)
|
|
|
(2,279)
|
|
|
(3,009)
|
|
Free cash flow before
ARO settlements
|
(19,498)
|
|
|
(14,348)
|
|
|
22,501
|
|
Distributions from CSI
Compressco LP
|
5,574
|
|
|
5,575
|
|
|
7,675
|
|
Adjusted free cash
flow
|
(13,924)
|
|
|
(8,773)
|
|
|
30,176
|
|
Schedule H:
Non-GAAP Reconciliation of TETRA Net Debt
|
|
The cash and debt
positions of TETRA and CSI Compressco LP as of September 30, 2016,
are shown below. TETRA and CSI Compressco LP's debt agreements are
distinct and separate with no cross default provisions, no cross
collateral provisions and no cross guarantees. Management believes
that the most appropriate method to analyze the debt positions of
each company is to view them separately, as noted below.
|
|
The following
reconciliation of net debt is presented as a supplement to
financial results prepared in accordance with GAAP.
|
|
|
September 30,
2016
|
|
TETRA
|
|
CCLP
|
|
Consolidated
|
|
(In
Millions)
|
|
|
Non-restricted
cash
|
$
|
8.8
|
|
|
$
|
13.4
|
|
|
$
|
22.2
|
|
|
|
|
|
|
|
Revolver debt
outstanding
|
125.8
|
|
|
176.6
|
|
|
302.4
|
|
Senior Notes
outstanding
|
116.5
|
|
|
319.1
|
|
|
435.6
|
|
Net Debt
|
$
|
233.5
|
|
|
$
|
482.3
|
|
|
$
|
715.8
|
|
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SOURCE TETRA Technologies, Inc.