THE WOODLANDS, Texas,
Aug. 9, 2017 /PRNewswire/ --TETRA
Technologies, Inc. ("TETRA" or the "Company") (NYSE:TTI) announced
a consolidated second quarter 2017 net loss per share attributable
to TETRA stockholders of $0.10, which
compares to a loss of $0.02 per share
in the first quarter of 2017 and a loss of $0.32 per share in the second quarter of
2016.
TETRA's adjusted per share results attributable to TETRA
stockholders for the second quarter of 2017, excluding Maritech and
special items, were a loss of $0.04,
which compares to adjusted losses per share of $0.10 in the first quarter of 2017 and
$0.15 in the second quarter of 2016,
also excluding Maritech and special items. Second quarter 2017
revenue of $208 million increased 24%
from the first quarter of 2017 and 19% from the second quarter of
last year, primarily as a result of stronger activity in our Fluids
Division water management and product sales in the Gulf of
Mexico.
(Adjusted earnings/loss per share is a non-GAAP financial
measure that is reconciled to the nearest GAAP measure in the
accompanying schedules.)
Second Quarter
2017 Results
|
|
Three Months
Ended
|
|
June 30,
2017
|
|
March 31,
2017
|
|
June 30,
2016
|
|
(In Thousands, Except
per Share Amounts)
|
Revenue
|
$
|
208,369
|
|
|
$
|
168,001
|
|
|
$
|
175,660
|
|
Net loss attributable
to TETRA stockholders
|
(10,991)
|
|
|
(2,463)
|
|
|
(26,574)
|
|
Adjusted
EBITDA(1)
|
28,537
|
|
|
18,275
|
|
|
32,949
|
|
GAAP EPS attributable
to TETRA stockholders
|
(0.10)
|
|
|
(0.02)
|
|
|
(0.32)
|
|
Adjusted EPS
attributable to TETRA stockholders(1)
|
(0.04)
|
|
|
(0.10)
|
|
|
(0.15)
|
|
Consolidated net cash
provided (used) by operating activities
|
19,977
|
|
|
(20,538)
|
|
|
9,795
|
|
TETRA only adjusted
free cash flow(1)
|
$
|
6,090
|
|
|
$
|
(13,847)
|
|
|
$
|
(7,314)
|
|
|
|
(1)
|
Non-GAAP
financial measures are reconciled to GAAP in the schedules
below.
|
Highlights include:
- Fluids Division revenues increased 22% sequentially and 47%
compared to the second quarter of 2016 due to the start, late in
the second quarter, of a significant Gulf of Mexico TETRA CS
Neptune™ completion fluids project that is expected to be completed
in the third quarter and the traditional ramp-up in fluids sales in
Northern Europe.
- Compression Division revenues increased 15% over the first
quarter as the business continues to see signs of a recovery.
Compression fleet utilization improved 190 basis points to 78.9%
compared to the first quarter, the third consecutive quarter of
improved utilization driven largely by demand for large horsepower
equipment.
- On August 1, the Compression
Division launched its new, fully automated ERP system that enables
real-time field data capture, enhances cash flow processes,
provides the sales and operations team with customer-centric data
to facilitate prompt and effective services on the fleet of
equipment, and streamlines our back office and field organization
with expected annual savings in excess of $4.0 million.
- Consolidated net cash provided by operating activities was
$20 million, an improvement of
$40.5 million over the first quarter
of 2017. TETRA only adjusted free cash flow was $6.1 million, an improvement of $20 million over the first quarter. (See Schedule
G for the reconciliation of TETRA only adjusted free cash flow to
GAAP.)
Stuart M. Brightman, TETRA's
President and Chief Executive Officer, stated, "The second quarter
was favorably impacted by the start of a TETRA CS Neptune
completion fluids project in the Gulf of Mexico. This project
started late in the second quarter and has continued to run into
the third quarter. The rebound with US Onshore shale activity
is favorably impacting demand for our water management, fluids,
production testing, and compression products and services,
particularly in West Texas and the
Mid-Con regions. We are adding additional distribution
centers for our fluids in West
Texas and have added additional lay flat hose to respond to
increasing water management demands.
"Fluids Division revenue for the second quarter of 2017 was
$89.1 million compared to
$72.9 million in the first quarter of
2017, reflecting the start of the TETRA CS Neptune completion
fluids project in the Gulf of
Mexico, higher Northern
Europe fluids sales and stronger water management
activity. Fluids Division income before taxes was
$15.8 million, while Adjusted EBITDA
was $21.7 million. Income
before tax and adjusted EBITDA were 17.7% and 24.3% of revenue,
respectively, in the second quarter of 2017.
"Second quarter 2017 Compression Division revenue improved 15%
to $75.3 million, mainly as a result
of stronger equipment sales. Compression Division loss before taxes
was $6.2 million, while adjusted
EBITDA was $17.5 million, (8.2)% and
23.2% of revenue, respectively. Overall quarter-end service
fleet utilization was 78.9%, compared to 77.0% at the end of the
first quarter. Large horsepower equipment (greater than 800 HP)
utilization was 89.6% at the end of the second quarter. New
equipment orders were $12 million. On
July 21, 2017, CSI Compressco LP
declared cash distributions attributable to the second quarter of
2017 of $0.1875 per outstanding
common unit. This distribution resulted in a coverage ratio of .85x
for the second quarter of 2017.
"Second quarter 2017 revenue for the Production Testing Division
decreased sequentially by 26%, to $15.9
million, as the first quarter of 2017 included a significant
equipment sale in South America.
Production Testing loss before taxes was $3.1 million, while adjusted EBITDA was slightly
below breakeven at a loss of $0.6
million.
"Our Offshore Services segment revenue improved 8% to
$28.3 million compared to the prior
year quarter on stronger activity levels and by 238% sequentially
reflecting the seasonality of the business. Loss before
taxes was $6.4 million, while
adjusted EBITDA was a slight loss of $0.3
million (adjusted EBITDA improved by $3.2 million from the first quarter).
Inclement weather conditions negatively impacted the results and
resulted in projects being delayed into the backend of
2017."
Free Cash Flow and Balance Sheet
TETRA only adjusted free cash flow in the second quarter of 2017
was $6 million, an improvement of
$20 million from the first quarter of
2017. Historically, the first two quarters of the year have
traditionally represented our weakest free cash flow generation
quarters and the last two quarters have been the strongest.
The third and fourth quarters of 2017 are expected to reflect the
benefit from our TETRA CS Neptune completion fluids projects and
the collection of receivables from the peak summer and fall
decommissioning in the Gulf of Mexico. Consolidated net cash
provided by operating activities for the second quarter of 2017 was
$20 million, compared to a use of
$21 million in the first quarter of
2017. TETRA only days sales outstanding (excluding CSI
Compressco LP) improved from 76 days at the end of the first
quarter to 68 days at the end of June. TETRA only debt was
$137.7 million and net debt was
$119.5 million at June 30, a decrease of $5.7 million from the end of the first
quarter.
Special items and Maritech
Maritech reported a pre-tax loss of $0.1
million in the second quarter of 2017.
Consolidated second quarter pre-tax earnings included income
from non-cash items of $10.3 million,
partially offset by $4.4 million of
expected cash charges. In addition to reflecting a normalized
tax benefit of 30%, special items include:
- $5.5 million of non-cash income
from a fair value adjustment of the outstanding TETRA warrants
- $4.8 million non-cash income for
a fair value adjustment of the CSI Compressco Series A Convertible
Preferred units
- $3.3 million for an unfavorable
arbitration ruling based on a 2014 early termination of a charter
agreement by Offshore Services, which the Company intends to
challenge.
- $0.6 million of cash severance
expense
- $0.5 million of other special
charges.
Financial Guidance
We expect total year TETRA only adjusted free cash flow to be
between $20 million and $40 million
in 2017.
No reconciliation of the forecasted range of TETRA only adjusted
free cash flow for the full year 2017 to the nearest GAAP measure
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 these results
today, August 9, 2017, 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. A replay of the conference call will be available
at 1-877-344-7529, conference number 10101592, for one week
following the conference call and the archived web call will be
available through the Company's website for thirty days following
the conference call.
Investor Contact
TETRA Technologies, Inc., The
Woodlands, Texas
Stuart M. Brightman,
281-367-1983
Fax: 281-364-4346
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: Special Items
Schedule F: Non-GAAP Reconciliation to GAAP Financials
Schedule G: Non-GAAP Reconciliation to TETRA Only 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 news 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 the
anticipated recovery of the oil and gas industry, expected results
of operational business segments for 2017, anticipated benefits
from CSI Compressco following the acquisition of Compressor
Systems, Inc. (CSI) in 2014, including levels of 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 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, 2016, 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
June 30,
|
|
Six months ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(In Thousands, Except
per Share Amounts)
|
Revenues
|
$
|
208,369
|
|
|
$
|
175,660
|
|
|
$
|
376,370
|
|
|
$
|
344,989
|
|
|
|
|
|
|
|
|
|
Cost of sales,
services and rentals
|
152,861
|
|
|
125,593
|
|
|
277,119
|
|
|
246,034
|
|
Depreciation,
amortization and accretion
|
28,620
|
|
|
33,538
|
|
|
58,098
|
|
|
67,145
|
|
Impairments of
long-lived assets
|
—
|
|
|
257
|
|
|
—
|
|
|
10,927
|
|
Total cost of
revenues
|
181,481
|
|
|
159,388
|
|
|
335,217
|
|
|
324,106
|
|
Gross profit
|
26,888
|
|
|
16,272
|
|
|
41,153
|
|
|
20,883
|
|
|
|
|
|
|
|
|
|
General and
administrative expense
|
31,232
|
|
|
27,181
|
|
|
59,688
|
|
|
60,792
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
106,205
|
|
Interest expense,
net
|
14,328
|
|
|
14,335
|
|
|
28,095
|
|
|
28,974
|
|
Warrants fair value
adjustment income
|
(5,545)
|
|
|
—
|
|
|
(11,521)
|
|
|
—
|
|
CCLP Series A
Preferred fair value adjustment income
|
(4,834)
|
|
|
—
|
|
|
(3,203)
|
|
|
—
|
|
Litigation
arbitration award expense (income), net
|
2,714
|
|
|
—
|
|
|
(10,102)
|
|
|
—
|
|
Other (income)
expense, net
|
209
|
|
|
2,210
|
|
|
574
|
|
|
1,506
|
|
Income (loss) before
taxes
|
(11,216)
|
|
|
(27,454)
|
|
|
(22,378)
|
|
|
(176,594)
|
|
Provision (benefit)
for income taxes
|
3,403
|
|
|
1,770
|
|
|
3,493
|
|
|
361
|
|
Net income
(loss)
|
(14,619)
|
|
|
(29,224)
|
|
|
(25,871)
|
|
|
(176,955)
|
|
(Income) loss
attributable to noncontrolling interest
|
3,628
|
|
|
2,650
|
|
|
12,417
|
|
|
62,056
|
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
(10,991)
|
|
|
$
|
(26,574)
|
|
|
$
|
(13,454)
|
|
|
$
|
(114,899)
|
|
|
|
|
|
|
|
|
|
Basic per share
information:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
(0.10)
|
|
|
$
|
(0.32)
|
|
|
$
|
(0.12)
|
|
|
$
|
(1.42)
|
|
Weighted average shares
outstanding
|
114,534
|
|
|
81,842
|
|
|
114,375
|
|
|
80,631
|
|
|
|
|
|
|
|
|
|
Diluted per share
information:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
(0.10)
|
|
|
$
|
(0.32)
|
|
|
$
|
(0.12)
|
|
|
$
|
(1.42)
|
|
Weighted average shares
outstanding
|
114,534
|
|
|
81,842
|
|
|
114,375
|
|
|
80,631
|
|
Schedule B:
Financial Results By Segment (Unaudited)
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(In
Thousands)
|
Revenues by
segment:
|
|
|
|
|
|
|
|
Fluids
Division
|
$
|
89,146
|
|
|
$
|
60,833
|
|
|
$
|
162,041
|
|
|
$
|
119,946
|
|
Production Testing
Division
|
15,937
|
|
|
13,384
|
|
|
37,449
|
|
|
33,255
|
|
Compression
Division
|
75,312
|
|
|
76,091
|
|
|
140,871
|
|
|
157,786
|
|
Offshore
Division
|
|
|
|
|
|
|
|
Offshore
Services
|
28,261
|
|
|
26,119
|
|
|
36,622
|
|
|
36,365
|
|
Maritech
|
175
|
|
|
248
|
|
|
406
|
|
|
337
|
|
Intersegment
eliminations
|
—
|
|
|
7
|
|
|
—
|
|
|
(516)
|
|
Offshore Division
total
|
28,436
|
|
|
26,374
|
|
|
37,028
|
|
|
36,186
|
|
Eliminations and
other
|
(462)
|
|
|
(1,022)
|
|
|
(1,019)
|
|
|
(2,184)
|
|
Total
revenues
|
$
|
208,369
|
|
|
$
|
175,660
|
|
|
$
|
376,370
|
|
|
$
|
344,989
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss) by segment:
|
|
|
|
|
|
|
|
Fluids
Division
|
$
|
22,974
|
|
|
$
|
6,585
|
|
|
$
|
36,469
|
|
|
$
|
14,076
|
|
Production Testing
Division
|
(861)
|
|
|
(2,598)
|
|
|
(778)
|
|
|
(6,022)
|
|
Compression
Division
|
7,533
|
|
|
13,727
|
|
|
13,696
|
|
|
20,682
|
|
Offshore
Division
|
|
|
|
|
|
|
|
Offshore
Services
|
(2,133)
|
|
|
1,767
|
|
|
(7,096)
|
|
|
(4,222)
|
|
Maritech
|
(512)
|
|
|
(3,097)
|
|
|
(938)
|
|
|
(3,412)
|
|
Intersegment
eliminations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Offshore Division
total
|
(2,645)
|
|
|
(1,330)
|
|
|
(8,034)
|
|
|
(7,634)
|
|
Corporate overhead and
eliminations
|
(113)
|
|
|
(112)
|
|
|
(200)
|
|
|
(219)
|
|
Total gross
profit
|
$
|
26,888
|
|
|
$
|
16,272
|
|
|
$
|
41,153
|
|
|
$
|
20,883
|
|
|
|
|
|
|
|
|
|
Income (loss)
before taxes by segment:
|
|
|
|
|
|
|
|
Fluids
Division
|
$
|
15,786
|
|
|
$
|
454
|
|
|
$
|
36,062
|
|
|
$
|
96
|
|
Production Testing
Division
|
(3,091)
|
|
|
(4,328)
|
|
|
(5,160)
|
|
|
(23,702)
|
|
Compression
Division
|
(6,180)
|
|
|
(4,040)
|
|
|
(20,513)
|
|
|
(108,740)
|
|
Offshore
Division
|
|
|
|
|
|
|
|
Offshore
Services
|
(6,445)
|
|
|
37
|
|
|
(12,780)
|
|
|
(7,671)
|
|
Maritech
|
(121)
|
|
|
(3,401)
|
|
|
(784)
|
|
|
(4,021)
|
|
Intersegment
eliminations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Offshore Division
total
|
(6,566)
|
|
|
(3,364)
|
|
|
(13,564)
|
|
|
(11,692)
|
|
Corporate overhead and
eliminations
|
(11,165)
|
|
|
(16,176)
|
|
|
(19,203)
|
|
|
(32,556)
|
|
Total income (loss)
before taxes
|
$
|
(11,216)
|
|
|
$
|
(27,454)
|
|
|
$
|
(22,378)
|
|
|
$
|
(176,594)
|
|
|
Please note that the
above results by Segment include special charges and expenses.
Please see Schedule E for details of those special
items.
|
Schedule C:
Consolidated Balance Sheet (Unaudited)
|
|
|
June 30,
2017
|
|
December 31,
2016
|
|
(In
Thousands)
|
Balance
Sheet:
|
|
|
|
Cash (excluding
restricted cash)
|
$
|
23,098
|
|
|
$
|
29,840
|
|
Accounts receivable,
net
|
148,027
|
|
|
114,284
|
|
Inventories
|
118,085
|
|
|
106,546
|
|
Other current
assets
|
26,963
|
|
|
25,121
|
|
PP&E,
net
|
911,903
|
|
|
945,451
|
|
Other
assets
|
89,809
|
|
|
94,298
|
|
Total
assets
|
$
|
1,317,885
|
|
|
$
|
1,315,540
|
|
|
|
|
|
Current portion of
decommissioning liabilities
|
$
|
809
|
|
|
$
|
1,451
|
|
Other current
liabilities
|
133,272
|
|
|
115,434
|
|
Long-term debt
(1)
|
647,412
|
|
|
623,730
|
|
Long-term portion of
decommissioning liabilities
|
55,190
|
|
|
54,027
|
|
CCLP Series A
Preferred
|
67,636
|
|
|
77,062
|
|
Warrant
liability
|
6,982
|
|
|
18,503
|
|
Other long-term
liabilities
|
22,857
|
|
|
24,867
|
|
Equity
|
383,727
|
|
|
400,466
|
|
Total liabilities and
equity
|
$
|
1,317,885
|
|
|
$
|
1,315,540
|
|
|
|
(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, other than CSI Compressco LP and its
subsidiaries, are obligated under a bank credit agreement and
senior note, 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.
|
|
|
June 30,
2017
|
|
December 31,
2016
|
|
(In
Thousands)
|
TETRA
|
|
|
|
Bank revolving line
of credit facility
|
$
|
20,627
|
|
|
$
|
3,229
|
|
TETRA 11% Senior
Note
|
117,035
|
|
|
116,411
|
|
TETRA total
debt
|
137,662
|
|
|
119,640
|
|
Less current
portion
|
—
|
|
|
—
|
|
TETRA total
long-term debt
|
$
|
137,662
|
|
|
$
|
119,640
|
|
|
|
|
|
CSI Compressco
LP
|
|
|
|
Bank Credit
Facility
|
$
|
222,348
|
|
|
$
|
217,467
|
|
7.25% Senior
Notes
|
287,402
|
|
|
286,623
|
|
Total debt
|
509,750
|
|
|
504,090
|
|
Less current
portion
|
—
|
|
|
—
|
|
CCLP total
long-term debt
|
$
|
509,750
|
|
|
$
|
504,090
|
|
Consolidated total
long-term debt
|
$
|
647,412
|
|
|
$
|
623,730
|
|
Non-GAAP Financial Measures
In addition to financial results determined in accordance with
GAAP, this news 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; consolidated and segment adjusted EBITDA; and
TETRA only 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 the segment's) 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 earnings before interest, taxes, depreciation,
amortization, impairments and special charges or credits, equity
compensation, and allocated corporate overhead charges to our CSI
Compressco LP subsidiary, pursuant to our Omnibus Agreement, which
were reimbursed with CSI Compressco LP common units. 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 defined as cash from
TETRA's operations, excluding cash settlements of Maritech AROs,
less capital expenditures net of sales proceeds and cost of
equipment sold, and including cash distributions to TETRA from CSI
Compressco LP and debt restructuring costs. 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 the carrying value 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:
Special Items
|
|
|
|
|
Three Months
Ended
|
|
June 30,
2017
|
|
Income
(Loss) Before
Tax
|
Provision
(Benefit) for
Tax
|
Noncont.
Interest
|
Net Income
Attributable
to TETRA
Stockholders
|
Diluted
EPS
|
|
(In Thousands, Except
per Share Amounts)
|
Income (loss)
attributable to TETRA stockholders, excluding unusual charges and
Maritech
|
$
|
(17,036)
|
|
$
|
(5,110)
|
|
$
|
(6,983)
|
|
$
|
(4,943)
|
|
$
|
(0.04)
|
|
Severance
expense
|
(589)
|
|
(176)
|
|
—
|
|
(413)
|
|
0.00
|
|
Stock warrant fair
value adjustment
|
5,545
|
|
1,663
|
|
—
|
|
3,882
|
|
0.03
|
|
Bad debt expense for
customer bankruptcies
|
(198)
|
|
(59)
|
|
—
|
|
(139)
|
|
0.00
|
|
Convertible Series A
preferred offering cost and fair value adjustments
|
4,834
|
|
1,450
|
|
3,478
|
|
(94)
|
|
0.00
|
|
Offshore Services
arbitration ruling
|
(3,255)
|
|
(977)
|
|
—
|
|
(2,278)
|
|
(0.02)
|
|
Asset repairs due to
weather event
|
(200)
|
|
(60)
|
|
—
|
|
(140)
|
|
0.00
|
|
Software
implementation
|
(196)
|
|
(59)
|
|
(123)
|
|
(14)
|
|
0.00
|
|
Effect of deferred tax
valuation allowance and other related tax adj.
|
—
|
|
6,731
|
|
—
|
|
(6,731)
|
|
(0.06)
|
|
Maritech profit
(loss)
|
(121)
|
|
—
|
|
—
|
|
(121)
|
|
—
|
|
Net Income (loss)
attributable to TETRA stockholders, as reported
|
$
|
(11,216)
|
|
$
|
3,403
|
|
$
|
(3,628)
|
|
$
|
(10,991)
|
|
$
|
(0.10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March 31,
2017
|
|
Income
(Loss) Before
Tax
|
Provision
(Benefit) for
Tax
|
Noncont.
Interest
|
Net Income
Attributable
to TETRA
Stockholders
|
Diluted
EPS
|
|
(In Thousands, Except
per Share Amounts)
|
Income (loss)
attributable to TETRA stockholders, excluding unusual charges and
Maritech
|
$
|
(26,998)
|
|
$
|
(8,100)
|
|
$
|
(7,647)
|
|
$
|
(11,251)
|
|
$
|
(0.10)
|
|
Severance
expense
|
(409)
|
|
(123)
|
|
(33)
|
|
(253)
|
|
0.00
|
|
Stock warrant fair
value adjustment
|
5,976
|
|
1,793
|
|
—
|
|
4,183
|
|
0.04
|
|
Allowance for bad
debt
|
(245)
|
|
(74)
|
|
—
|
|
(171)
|
|
0.00
|
|
Convertible Series A
preferred offering cost and fair value adjustments
|
(1,631)
|
|
(489)
|
|
(1,109)
|
|
(33)
|
|
0.00
|
|
ARO adjustment
(accretion)
|
(71)
|
|
(21)
|
|
—
|
|
(50)
|
|
0.00
|
|
Fluids El Dorado legal
award
|
12,879
|
|
3,864
|
|
—
|
|
9,015
|
|
0.08
|
|
Effect of deferred tax
valuation allowance and other related tax adj.
|
—
|
|
3,240
|
|
—
|
|
(3,240)
|
|
(0.03)
|
|
Maritech profit
(loss)
|
(663)
|
|
—
|
|
—
|
|
(663)
|
|
(0.01)
|
|
Net Income (loss)
attributable to TETRA stockholders, as reported
|
$
|
(11,162)
|
|
$
|
90
|
|
$
|
(8,789)
|
|
$
|
(2,463)
|
|
$
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
June 30,
2016
|
|
Income
(Loss) Before
Tax
|
Provision
(Benefit) for
Tax
|
Noncont.
Interest
|
Net Income
Attributable
to TETRA
Stockholders
|
Diluted
EPS
|
|
(In Thousands, Except
per Share Amounts)
|
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)
|
|
—
|
|
Severance
expense
|
(595)
|
|
(179)
|
|
(170)
|
|
(246)
|
|
—
|
|
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)
|
|
Schedule F:
Non-GAAP Reconciliation to GAAP Financials
|
|
|
Three Months
Ended
|
|
June 30,
2017
|
|
Net
Income
(Loss),
as
reported
|
Tax
Provision
|
Income
(Loss)
Before
Tax, as
Reported
|
Impairments
& Special
Charges
(Credits)
|
Adjusted
Income
(Loss)
Before
Tax
|
Interest
Expense
|
Depreciation
&
Amortization
|
Equity
Comp.
Expense
|
Omnibus
Equity
|
Adjusted
EBITDA
|
|
(In
Thousands)
|
Fluids
Division
|
|
|
$
|
15,786
|
|
$
|
—
|
|
$
|
15,786
|
|
$
|
27
|
|
$
|
5,870
|
|
$
|
—
|
|
$
|
—
|
|
$
|
21,683
|
|
Production Testing
Division
|
|
|
(3,091)
|
|
5
|
|
(3,086)
|
|
(125)
|
|
2,599
|
|
—
|
|
—
|
|
(612)
|
|
Compression
Division
|
|
|
(6,180)
|
|
(4,638)
|
|
(10,818)
|
|
10,184
|
|
17,204
|
|
935
|
|
|
17,505
|
|
Offshore Services
Segment
|
|
|
(6,445)
|
|
3,658
|
|
(2,787)
|
|
—
|
|
2,463
|
|
—
|
|
—
|
|
(324)
|
|
Eliminations and
other
|
|
|
4
|
|
—
|
|
4
|
|
2
|
|
(7)
|
|
—
|
|
—
|
|
(1)
|
|
Subtotal
|
|
|
74
|
|
(975)
|
|
(901)
|
|
10,088
|
|
28,129
|
|
935
|
|
—
|
|
38,251
|
|
Corporate and
other
|
|
|
(11,169)
|
|
(4,966)
|
|
(16,135)
|
|
4,240
|
|
118
|
|
2,063
|
|
—
|
|
(9,714)
|
|
TETRA excluding
Maritech
|
|
|
(11,095)
|
|
(5,941)
|
|
(17,036)
|
|
14,328
|
|
28,247
|
|
2,998
|
|
—
|
|
28,537
|
|
Maritech
|
|
|
(121)
|
|
—
|
|
(121)
|
|
—
|
|
373
|
|
—
|
|
—
|
|
252
|
|
Total
TETRA
|
$
|
(14,619)
|
|
$
|
3,403
|
|
$
|
(11,216)
|
|
$
|
(5,941)
|
|
$
|
(17,157)
|
|
$
|
14,328
|
|
$
|
28,620
|
|
$
|
2,998
|
|
$
|
—
|
|
$
|
28,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March 31,
2017
|
|
Net
Income
(Loss),
as
reported
|
Tax
Provision
|
Income
(Loss)
Before
Tax, as
Reported
|
Impairments &
Special
Charges
(Credits)
|
Adjusted
Income
(Loss)
Before
Tax
|
Adjusted
Interest
Expense,
Net
|
Adjusted
Depreciation
&
Amortization
(1)
|
Equity
Comp.
Expense
|
Omnibus
Equity (2)
|
Adjusted
EBITDA
|
|
(In
Thousands)
|
Fluids
Division
|
|
|
$
|
20,276
|
|
$
|
(12,681)
|
|
$
|
7,595
|
|
$
|
13
|
|
$
|
5,984
|
|
$
|
—
|
|
$
|
—
|
|
$
|
13,592
|
|
Production Testing
Division
|
|
|
(2,069)
|
|
265
|
|
(1,804)
|
|
(122)
|
|
3,085
|
|
—
|
|
—
|
|
1,159
|
|
Compression
Division
|
|
|
(14,333)
|
|
1,687
|
|
(12,646)
|
|
10,102
|
|
17,297
|
|
956
|
|
1,746
|
|
17,455
|
|
Offshore Services
Segment
|
|
|
(6,335)
|
|
206
|
|
(6,129)
|
|
—
|
|
2,584
|
|
—
|
|
—
|
|
(3,545)
|
|
Eliminations and
other
|
|
|
(166)
|
|
—
|
|
(166)
|
|
—
|
|
(5)
|
|
—
|
|
—
|
|
(171)
|
|
Subtotal
|
|
|
(2,627)
|
|
(10,523)
|
|
(13,150)
|
|
9,993
|
|
28,945
|
|
956
|
|
1,746
|
|
28,490
|
|
Corporate and
other
|
|
|
(7,872)
|
|
(5,976)
|
|
(13,848)
|
|
3,774
|
|
92
|
|
1,513
|
|
(1,746)
|
|
(10,215)
|
|
TETRA excluding
Maritech
|
|
|
(10,499)
|
|
(16,499)
|
|
(26,998)
|
|
13,767
|
|
29,037
|
|
2,469
|
|
—
|
|
18,275
|
|
Maritech
|
|
|
(663)
|
|
—
|
|
(663)
|
|
—
|
|
370
|
|
—
|
|
—
|
|
(293)
|
|
Total
TETRA
|
$
|
(11,252)
|
|
$
|
90
|
|
$
|
(11,162)
|
|
$
|
(16,499)
|
|
$
|
(27,661)
|
|
$
|
13,767
|
|
$
|
29,407
|
|
$
|
2,469
|
|
$
|
—
|
|
$
|
17,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
June 30,
2016
|
|
Net
Income
(Loss), as
reported
|
Tax
Provision
|
Income
(Loss)
Before
Tax, as
Reported
|
Impairments
& Special
Charges
|
Adjusted
Income
(Loss)
Before
Tax
|
Adjusted
Interest
Expense,
Net (3)
|
Depreciation
&
Amortization
|
Equity
Comp.
Expense
|
Omnibus
Equity
|
Adjusted
EBITDA
|
|
(In
Thousands)
|
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
|
$
|
(29,224)
|
|
$
|
1,770
|
|
$
|
(27,454)
|
|
$
|
3,542
|
|
$
|
(23,912)
|
|
$
|
13,613
|
|
$
|
33,538
|
|
$
|
6,628
|
|
$
|
—
|
|
$
|
29,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted depreciation
& amortization, net, for the three month period ended March 31,
2017 excludes and $0.1 million of certain accretion expense which
is included as a special charge.
|
(2)
|
Reimbursement from
CCLP under Omnibus Agreement that was or will be settled with
common units.
|
(3)
|
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 TETRA Only Adjusted Free Cash
Flow
|
|
|
|
Three Months
Ended
|
|
June 30,
2017
|
|
March 31,
2017
|
|
June 30,
2016
|
|
(In
Thousands)
|
Consolidated
|
|
|
|
|
|
Net cash provided
(used) by operating activities
|
$
|
19,977
|
|
|
$
|
(20,538)
|
|
|
$
|
9,795
|
|
ARO
settlements
|
23
|
|
|
474
|
|
|
64
|
|
Capital expenditures,
net of sales proceeds
|
(11,451)
|
|
|
(4,812)
|
|
|
(4,732)
|
|
Consolidated adjusted
free cash flow
|
8,549
|
|
|
(24,876)
|
|
|
5,127
|
|
|
|
|
|
|
|
CSI Compressco
LP
|
|
|
|
|
|
Net cash provided by
operating activities
|
9,533
|
|
|
1,821
|
|
|
20,469
|
|
Capital expenditures,
net of sales proceeds
|
(4,262)
|
|
|
(7,215)
|
|
|
(2,453)
|
|
CSI Compressco free
cash flow
|
5,271
|
|
|
(5,394)
|
|
|
18,016
|
|
|
|
|
|
|
|
TETRA
Only
|
|
|
|
|
|
Net cash provided
(used) by operating activities (1)
|
10,444
|
|
|
(20,327)
|
|
|
(10,674)
|
|
ARO
settlements
|
23
|
|
|
474
|
|
|
64
|
|
Capital expenditures,
net of sales proceeds (1)
|
(7,189)
|
|
|
371
|
|
|
(2,279)
|
|
Free cash flow before
ARO settlements
|
3,278
|
|
|
(19,482)
|
|
|
(12,889)
|
|
Distributions from CSI
Compressco LP
|
2,812
|
|
|
5,635
|
|
|
5,575
|
|
Adjusted free cash
flow
|
6,090
|
|
|
$
|
(13,847)
|
|
|
(7,314)
|
|
|
|
(1)
|
TETRA only cash from
operating activities and capital expenditures, net, for the three
months ended March 31, 2017, include the elimination of an
intercompany equipment sale of $2.0 million.
|
Schedule H:
Non-GAAP Reconciliation of TETRA Net Debt
|
|
The cash and debt
positions of TETRA and CSI Compressco LP as of June 30, 2017, 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.
|
|
|
June 30,
2017
|
|
TETRA
|
|
CCLP
|
|
Consolidated
|
|
(In
Millions)
|
Non-restricted
cash
|
$
|
18.1
|
|
|
$
|
5.0
|
|
|
$
|
23.1
|
|
|
|
|
|
|
|
Carrying value of
long-term debt:
|
|
|
|
|
|
Revolver debt
outstanding
|
20.6
|
|
|
222.3
|
|
|
242.9
|
|
Senior Notes
outstanding
|
117.0
|
|
|
287.4
|
|
|
404.4
|
|
Net debt
|
$
|
119.5
|
|
|
$
|
504.7
|
|
|
$
|
624.2
|
|
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SOURCE TETRA Technologies, Inc.