THE WOODLANDS, Texas,
May 8, 2018 /PRNewswire/
-- TETRA Technologies, Inc. ("TETRA" or the "Company")
(NYSE:TTI) today announced consolidated first quarter 2018 net loss
per share from continuing operations attributable to TETRA
stockholders of $0.10, which compares
to consolidated net loss of $0.23 per
share from continuing operations attributable to TETRA stockholders
in the fourth quarter of 2017, and an earnings per share from
continuing operations attributable to TETRA stockholders of
$0.04 in the first quarter of
2017.
TETRA's adjusted per share results attributable to TETRA
stockholders for the first quarter of 2018, from continuing
operations excluding special items, were a loss per share of
$0.06, which compares to adjusted
loss per share of $0.02 in the fourth
quarter of 2017 and adjusted loss per share of $0.04 in the first quarter of 2017, also from
continuing operations and excluding special items. First quarter
2018 revenue from continuing operations were $199 million, a decrease of 0.4% from the fourth
quarter of 2017 and increase of 25% from the first quarter of last
year.
(Adjusted earnings/loss per share is a non-GAAP financial
measure that is reconciled to the nearest GAAP measure in the
accompanying schedules.)
First Quarter
2018 Results
|
|
|
Three Months
Ended
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
March 31,
2017
|
|
|
(In Thousands, Except
per Share Amounts)
|
|
Revenue
|
$
|
199,381
|
|
|
$
|
200,081
|
|
|
$
|
159,409
|
|
|
Net loss before
discontinued operations
|
(21,057)
|
|
|
(31,727)
|
|
|
(4,245)
|
|
|
Adjusted
EBITDA before discontinued operations(1)
|
26,222
|
|
|
29,632
|
|
|
21,820
|
|
|
GAAP EPS before
discontinued operations attributable to TETRA
stockholders
|
(0.10)
|
|
|
(0.22)
|
|
|
0.04
|
|
|
Adjusted EPS
attributable to TETRA stockholders(1)
|
(0.06)
|
|
|
(0.02)
|
|
|
(0.04)
|
|
|
GAAP Net cash
provided (used) by operating activities
|
|
(31,261)
|
|
|
|
27,761
|
|
|
|
(20,538)
|
|
|
TETRA only adjusted
free cash flow from continuing operations(1)
|
$
|
(29,917)
|
|
|
$
|
4,360
|
|
|
$
|
(8,484)
|
|
|
|
(1) Non-GAAP financial measures are reconciled to GAAP in the
schedules below.
|
First Quarter Highlights include:
- Completed the acquisition of SwiftWater Energy Services to
expand its Permian Basin water management operations.
- Completed the divestiture of TETRA's Offshore Decommissioning
Services and Maritech business.
- CSI Compressco LP completed a $350
million offering of senior secured notes to retire its bank
revolver and increase liquidity for growth capital.
- Announced the addition of Brady
Murphy as TETRA's President and Chief Operating
Officer.
- Following the acquisition of SwiftWater and divestiture of the
decommissioning and Maritech operations, TETRA will report its
financial results through three operating
divisions: Completion Fluids & Products, Water &
Flowback Services, and Compression. The results of the
decommissioning and Maritech operations are now reported as
discontinued operations.
- Water & Flowback Services adjusted EBITDA increased 18%
from the fourth quarter of 2017 to $11.6
million, and was 18.9% of revenue reflecting the acquisition
of SwiftWater on February
28th, in addition to strong improvements in the
legacy TETRA water management operations. Profit before taxes
was $6.5 million, 10.7% of
revenue.
Stuart M. Brightman, TETRA's
Chief Executive Officer, stated, "During the first quarter we
brought to conclusion several initiatives to streamline our
business model and expand our focus on the U.S. shale plays.
With the acquisition of SwiftWater Energy Services, we
significantly increased our presence in the Permian Basin water
management operations, where currently more than 45% of the U.S.
operating land rigs are operating. Our exposure to the rapidly
recovering U.S. shale plays is now much greater across all of our
business segments. We are well positioned to participate in
the stronger onshore market with improved pricing and utilization
driven higher margin.
"The divestiture of the offshore decommissioning operations and
the Maritech operations will allow us to focus our resources and
capital on those businesses where we have a competitive advantage
and the returns on capital are more attractive. Going
forward, our focus will be on offshore and onshore fluids where our
chemistry know-how and vertically integrated business model have
proven to be strong throughout the full cycle, on water management
and frac flowback services in the shale plays, and on field
compression, supporting the industry's needs for equipment and
services to handle the significant volumes of associated gas coming
from the shale plays.
"CSI Compressco successfully completed a $350 million secured bond offering to provide
capital to participate in the recovering markets, eliminated
ongoing maintenance covenant requirements, and retired the maturing
bank revolver. Following this bond offering, the next debt
maturity for CSI Compressco is in August 2022. CSI Compressco
has increased the 2018 targeted capital investments to between
$90 million and $110 million to take advantage of stronger demand
for gathering system compression on improved pricing and higher
utilization rates.
"Operationally, the first quarter of 2018 reflected a strong
improvement in Water and Flowback Services that led total TETRA
consolidated adjusted EBITDA of $26.2
million on revenues of $199
million. The first quarter was impacted by weather
delays, particularly in our Completion Fluids & Product
Division where we experienced some plant shut-downs from river
flooding and our Compression Division where we experienced higher
field costs to restart equipment from the unusually freezing
weather conditions in January in Texas.
"Completion Fluids & Products revenue was $53.1 million for the first quarter of 2018, a
decline of 5.6% from the first quarter of 2017. Although the
first quarter of 2018 did not include any CS Neptune®
fluids projects, we are advancing several CS Neptune®
opportunities that are currently targeted for the second half of
the year. Our chemical plants experienced some
weather-related delays in the quarter, which forced temporary
facility shutdowns. We are currently in the midst of the
traditionally strong second quarter and are seeing volumes rebound
to expected levels. Completion Fluids & Products Division
profit before taxes was $2.4 million
(4.6% of revenue), while adjusted EBITDA was $6.2 million (11.6% of revenue).
"Water & Flowback Services first quarter 2018 revenue
decreased slightly to $61.1 million
sequentially, but was 60% above the same quarter of 2017, led by
one month of SwiftWater operations and significantly stronger
activity in the U.S. shale plays. In the month of March,
SwiftWater generated $8.1 million of
revenue and $1.8 million of PBT,
inclusive of $0.5 million of
depreciation expense. We continue to see significant
opportunities in this division, particularly in the water
management services, as U.S. operators struggle with the volumes of
water needed for fracking operations and then handling those same
volumes during the flowback phase of the completion. The U.S.
Energy Information Administration has estimated that U.S. crude oil
production is now over 10 million barrels per day. The
SwiftWater acquisition has resulted in a significant amount of
cross-selling opportunities that we are taking advantage of as the
addition of SwiftWater has made us one of the largest water
management companies in the Permian Basin. Water &
Flowback Services profit before taxes was $6.5 million (10.7% of revenue), while adjusted
EBITDA was $11.6 million (18.9% of
revenue).
"First quarter 2018 Compression revenue increased 2.8%
sequentially to $85.4 million.
Total service fleet utilization at the end of the quarter increased
100 basis points (bps) compared to the end of the fourth quarter,
to 84.2%. Utilization for large horsepower equipment, greater
than 1000 hp per unit, increased to 92.9%. New equipment orders of
$71.5 million were received in the
first quarter, resulting in a backlog of $102.5 million at the end of the first quarter
after a record $67 million order to
fabricate and sell 45 large horsepower compressors to a midstream
operator in the Permian Basin. Compression loss before tax
for the quarter ended March 31, 2018
was $14.0 million compared to a
$9.7 million loss for the fourth
quarter of 2017 and $14.3 million
loss for the first quarter of 2017. Adjusted EBITDA was
$18.9 million, compared to
$19.2 million in the fourth
quarter. During the quarter we incurred approximately
$1 million of costs for weather
related events. On April 20,
2018, CSI Compressco LP declared a cash distribution
attributable to the first quarter of 2018 of $0.1875 per outstanding common unit, which will
be paid on May 15, 2018 to common
unitholders of record as of the close of business on May 1, 2018. The distribution coverage
ratio for the first quarter of 2018 was 0.64X."
Free Cash Flow and Balance Sheet
Consolidated net use of cash from operating activities for the
first quarter of 2018 was $31.3
million, compared to $27.8
million cash generated in the fourth quarter of 2017.
TETRA only adjusted free cash flow in the first quarter was a net
use of $31.2 million reflecting an
unusually high increase in working capital that we expect to
monetize during the second and third quarters. Consolidated
net debt was $719 million, while
TETRA only net debt was $177
million. At the end of the first quarter TETRA only
cash on hand was $14.0 million.
With a strong balance sheet, TETRA is positioned to invest
opportunistically into the recovering market.
Special items
Special items, including Discontinued Operations, that were
incurred in the first quarter, as detailed on Schedule E, include
the following:
- Discontinued operations pre-tax loss of $44.0 million from Offshore Decommissioning and
Maritech
- $3.5 million non-cash prior debt
issuance expense associated with the termination of CSI Compressco
revolver
- $2.0 million non-cash income for
a fair value adjustment of the outstanding TETRA warrants
- $1.4 million non-cash expense for
a fair value adjustment of the CSI Compressco Series A Convertible
Preferred units
- $1.0 million charge for
transaction related expenses and other special charges
Additionally, a normalized tax rate of 21% is reflected in
Adjusted Net Income, as shown on Schedule E.
Total Year 2018 Guidance
We expect total year 2018 revenue from continuing operations to
be between $945 million and
$985 million with consolidated
adjusted EBITDA of between $168
million and $188 million.
Total year projected loss before taxes is expected to be between
$7.5 and $27.5
million. The table below reflects our total year
expectations by division. Completions Fluids & Products
is projecting two CS Neptune® projects in the second
half of the year. Water & Flowback Services are expected
to be driven by strong activity levels in the Permian Basin and
other shale play markets. The improvement in Compression from
the first quarter levels is projected to reflect a stronger price
environment, higher equipment sales from the $102.5 million backlog, the deployment of
incremental capital, and higher aftermarket services activity.
|
|
|
Low
|
|
High
|
|
|
( $ in
Millions)
|
Revenue
|
|
|
|
|
|
Completion Fluids
& Products
|
$
275
|
|
$
290
|
|
Water & Flowback
Services
|
$
285
|
|
$
295
|
|
Compression
|
$
385
|
|
$
400
|
Total
Revenue
|
$
945
|
|
$
985
|
|
|
|
|
|
|
|
|
|
Low
|
|
High
|
EBITDA
|
|
|
|
|
|
Completion Fluids
& Products
|
$
55
|
|
$
62
|
|
Water & Flowback
Services
|
$
60
|
|
$
66
|
|
Compression
|
$
93
|
|
$
98
|
|
Corporate &
Other
|
$
(40)
|
|
$
(38)
|
Total
EBITDA
|
$
168
|
|
$
188
|
|
|
|
|
Projected total year capital expenditures for TETRA only are
expected to be between $40 million
and $50 million. CSI Compressco
capital expenditures are expected to be between $90 million and $110
million inclusive of maintenance capital expenditures of
between $15 million and $20 million.
Projected total year TETRA only free cash flow is expected to be
between $15 million and $25 million inclusive of distributions from CSI
Compressco.
Schedule J reconciles projected adjusted EBITDA to profit before
taxes.
Conference Call
TETRA will host a conference call to discuss these results
today, May 8, 2018, 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 10115959, for one week
following the conference call and the archived webcast 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
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 of TETRA Net Debt
Schedule H: Non-GAAP Reconciliation to TETRA Only Adjusted Free
Cash Flow
Schedule I: Non-GAAP Reconciliation to TETRA Only Adjusted Cash
Flow From Continuing Operations
Schedule J: Non-GAAP Reconciliation to Total Year Guidance Adjusted
EBITDA
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,
and compression services and equipment. 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 benefits
from the acquisition of SwiftWater Energy Services and expected
results of operational business segments for 2018, 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. 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, 2017, 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
March 31,
|
|
2018
|
|
2017
|
|
(In Thousands, Except
per Share Amounts)
|
Revenues
|
$
|
199,381
|
|
|
$
|
159,409
|
|
|
|
|
|
Cost of sales,
services, and rentals
|
144,957
|
|
|
113,231
|
|
Depreciation,
amortization, and accretion
|
26,441
|
|
|
26,524
|
|
Total cost of
revenues
|
171,398
|
|
|
139,755
|
|
Gross profit
|
27,983
|
|
|
19,654
|
|
|
|
|
|
General and
administrative expense
|
30,803
|
|
|
26,751
|
|
Interest expense,
net
|
14,973
|
|
|
13,767
|
|
Warrants fair value
adjustment income
|
(1,994)
|
|
|
(5,976)
|
|
CCLP Series A
Preferred fair value adjustment
|
1,358
|
|
|
1,631
|
|
Litigation
arbitration award income
|
—
|
|
|
(12,816)
|
|
Other (income)
expense, net
|
2,776
|
|
|
461
|
|
Loss before taxes and
discontinued operations
|
(19,933)
|
|
|
(4,164)
|
|
Provision (benefit)
for income taxes
|
1,124
|
|
|
81
|
|
Loss before
discontinued operations
|
(21,057)
|
|
|
(4,245)
|
|
Discontinued
operations:
|
|
|
|
Loss from discontinued
operations (including 2018 loss on disposal of $31.5 million), net
of taxes
|
(41,706)
|
|
|
(7,007)
|
|
Net loss
|
(62,763)
|
|
|
(11,252)
|
|
Loss attributable to
noncontrolling interest
|
9,115
|
|
|
8,789
|
|
Net loss attributable
to TETRA stockholders
|
$
|
(53,648)
|
|
|
$
|
(2,463)
|
|
|
|
|
|
Basic per share
information:
|
|
|
|
Loss before
discontinued operations attributable to TETRA
stockholders
|
$
|
(0.10)
|
|
|
$
|
0.04
|
|
Loss from discontinued
operations attributable to TETRA stockholders
|
$
|
(0.36)
|
|
|
$
|
(0.06)
|
|
Net loss attributable
to TETRA stockholders
|
$
|
(0.46)
|
|
|
$
|
(0.02)
|
|
Weighted average shares
outstanding
|
117,598
|
|
|
114,197
|
|
|
|
|
|
Diluted per share
information:
|
|
|
|
Loss before
discontinued operations attributable to TETRA
stockholders
|
$
|
(0.10)
|
|
|
$
|
0.04
|
|
Loss from discontinued
operations attributable to TETRA stockholders
|
$
|
(0.36)
|
|
|
$
|
(0.06)
|
|
Net loss attributable
to TETRA stockholders
|
$
|
(0.46)
|
|
|
$
|
(0.02)
|
|
Weighted average shares
outstanding
|
117,598
|
|
|
114,197
|
|
Schedule B:
Financial Results By Segment (Unaudited)
|
|
|
Three Months
Ended
March 31,
|
|
2018
|
|
2017
|
|
(In
Thousands)
|
Revenues by
segment:
|
|
|
|
Completion Fluids &
Products Division
|
$
|
53,104
|
|
|
$
|
56,228
|
|
Water & Flowback
Services Division
|
61,075
|
|
|
38,179
|
|
Compression
Division
|
85,422
|
|
|
65,559
|
|
Eliminations and
other
|
(220)
|
|
|
(557)
|
|
Total
revenues
|
$
|
199,381
|
|
|
$
|
159,409
|
|
|
|
|
|
Gross profit
(loss) by segment:
|
|
|
|
Completion Fluids &
Products Division
|
$
|
6,686
|
|
|
$
|
11,330
|
|
Water & Flowback
Services Division
|
11,404
|
|
|
2,248
|
|
Compression
Division
|
10,040
|
|
|
6,163
|
|
Corporate overhead and
eliminations
|
(146)
|
|
|
(87)
|
|
Total gross
profit
|
$
|
27,984
|
|
|
$
|
19,654
|
|
|
|
|
|
Income (loss)
before taxes by segment:
|
|
|
|
Completion Fluids &
Products Division
|
$
|
2,449
|
|
|
$
|
19,473
|
|
Water & Flowback
Services Division
|
6,548
|
|
|
(1,265)
|
|
Compression
Division
|
(14,018)
|
|
|
(14,333)
|
|
Corporate overhead and
eliminations
|
(14,912)
|
|
|
(8,039)
|
|
Total income (loss)
before taxes
|
$
|
(19,933)
|
|
|
$
|
(4,164)
|
|
Please note that the above results by Segment include special
charges and expenses. Please see Schedules E and F for details of
those special items.
Schedule C:
Consolidated Balance Sheet (Unaudited)
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
(In
Thousands)
|
Balance
Sheet:
|
|
|
|
Cash (excluding
restricted cash)
|
$
|
104,113
|
|
|
$
|
26,128
|
|
Accounts receivable,
net
|
175,262
|
|
|
144,051
|
|
Inventories
|
127,925
|
|
|
115,438
|
|
Assets of
discontinued operations
|
7,907
|
|
|
121,092
|
|
Other current
assets
|
31,596
|
|
|
17,900
|
|
PP&E,
net
|
824,768
|
|
|
809,432
|
|
Other
assets
|
136,691
|
|
|
74,573
|
|
Total
assets
|
$
|
1,408,262
|
|
|
$
|
1,308,614
|
|
|
|
|
|
Liabilities of
discontinued operations
|
$
|
14,287
|
|
|
$
|
71,874
|
|
Other current
liabilities
|
143,474
|
|
|
148,026
|
|
Long-term debt
(1)
|
823,565
|
|
|
629,855
|
|
Long-term portion of
decommissioning liabilities
|
11,929
|
|
|
11,738
|
|
CCLP Series A
Preferred
|
54,214
|
|
|
61,436
|
|
Warrant
liability
|
11,207
|
|
|
13,202
|
|
Other long-term
liabilities
|
24,125
|
|
|
19,922
|
|
Equity
|
325,461
|
|
|
352,561
|
|
Total liabilities and
equity
|
$
|
1,408,262
|
|
|
$
|
1,308,614
|
|
|
(1) Please see
Schedule D for the separate 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 senior notes and senior
secured notes, neither of which are obligations of TETRA and its
other subsidiaries. Amounts presented are net of deferred financing
costs.
|
March 31,
2018
|
|
December 31,
2017
|
|
(In
Thousands)
|
TETRA
|
|
|
|
Bank revolving line
of credit facility
|
$
|
73,143
|
|
|
$
|
—
|
|
TETRA 11% Senior
Note
|
118,008
|
|
|
117,679
|
|
TETRA total
debt
|
191,151
|
|
|
117,679
|
|
Less current
portion
|
—
|
|
|
—
|
|
TETRA total
long-term debt
|
$
|
191,151
|
|
|
$
|
117,679
|
|
|
|
|
|
CSI Compressco
LP
|
|
|
|
Bank Credit
Facility
|
$
|
—
|
|
|
$
|
223,985
|
|
7.25% Senior
Notes
|
288,588
|
|
|
288,191
|
|
7.50% Senior Secured
Notes
|
343,826
|
|
|
—
|
|
Total debt
|
632,414
|
|
|
512,176
|
|
Less current
portion
|
—
|
|
|
—
|
|
CCLP total
long-term debt
|
$
|
632,414
|
|
|
$
|
512,176
|
|
Consolidated total
long-term debt
|
$
|
823,565
|
|
|
$
|
629,855
|
|
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 special charges;
consolidated and segment adjusted EBITDA; and TETRA only adjusted
free cash flow and TETRA only free cash flow from continuing
operations. 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 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. TETRA only adjusted free cash flow from continuing
operations is defined as TETRA only adjusted free cash flow less
the discontinued operations EBITDA and discontinued operations
capital expenditures. Management uses these supplemental financial
measures 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 and TETRA only adjusted free
cash flow from continuing operations 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
|
|
March 31,
2018
|
|
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 special items and
discontinued operations
|
$
|
(16,067)
|
|
$
|
(3,375)
|
|
$
|
(5,896)
|
|
$
|
(6,796)
|
|
$
|
(0.06)
|
|
Severance
expense
|
(73)
|
|
(15)
|
|
—
|
|
(58)
|
|
0.00
|
|
Stock warrant fair
value adjustment
|
1,994
|
|
419
|
|
—
|
|
1,575
|
|
0.01
|
|
Convertible Series A
preferred fair value adjustments
|
(1,358)
|
|
(285)
|
|
(981)
|
|
(92)
|
|
0.00
|
|
Prior debt issuance
cost
|
(3,541)
|
|
(744)
|
|
(2,238)
|
|
(559)
|
|
0.00
|
|
Transaction
costs
|
(888)
|
|
(186)
|
|
—
|
|
(702)
|
|
(0.01)
|
|
Effect of deferred tax
valuation allowance and other related tax adj.
|
—
|
|
5,310
|
|
—
|
|
(5,310)
|
|
(0.05)
|
|
Net income (loss)
before discontinued operations
|
(19,933)
|
|
1,124
|
|
(9,115)
|
|
(11,942)
|
|
(0.10)
|
|
Loss from discontinued
operations
|
|
|
|
|
|
|
(41,706)
|
|
(0.36)
|
|
Net Income (loss)
attributable to TETRA stockholders, as reported
|
|
|
|
|
|
|
|
|
|
$
|
(53,648)
|
|
$
|
(0.46)
|
|
|
|
|
Three Months
Ended
|
|
December 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 special items and
discontinued operations
|
$
|
(11,475)
|
|
$
|
(4,175)
|
|
$
|
(5,150)
|
|
$
|
(2,150)
|
|
$
|
(0.02)
|
|
Asset Impairment,
including inventory adjustments
|
(14,784)
|
|
(4,435)
|
|
—
|
|
(10,349)
|
|
(0.09)
|
|
Severance
expense
|
(87)
|
|
(26)
|
|
—
|
|
(61)
|
|
0.00
|
|
Stock warrant fair
value adjustment
|
(6,266)
|
|
(1,880)
|
|
—
|
|
(4,386)
|
|
(0.04)
|
|
Bad debt expense from
customer bankruptcies
|
(100)
|
|
(30)
|
|
—
|
|
(70)
|
|
0.00
|
|
Convertible Series A
preferred fair value adjustments
|
(1,365)
|
|
(410)
|
|
(965)
|
|
10
|
|
0.00
|
|
Software
implementation
|
(194)
|
|
(58)
|
|
(120)
|
|
(16)
|
|
0.00
|
|
Transaction
Costs
|
(881)
|
|
(264)
|
|
—
|
|
(617)
|
|
(0.01)
|
|
Effect of deferred tax
valuation allowance and other related tax adj.
|
—
|
|
7,853
|
|
—
|
|
(7,853)
|
|
(0.07)
|
|
Net income (loss)
before discontinued operations
|
(35,152)
|
|
(3,425)
|
|
(6,235)
|
|
(25,492)
|
|
(0.22)
|
|
Loss from discontinued
operations
|
|
|
|
|
|
|
(3,247)
|
|
(0.3)
|
|
Net Income (loss)
attributable to TETRA stockholders, as reported
|
|
|
|
|
|
|
|
|
|
$
|
(28,739)
|
|
$
|
(0.25)
|
|
|
|
|
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 special items and
discontinued operations
|
$
|
(20,869)
|
|
$
|
(8,170)
|
|
$
|
(7,647)
|
|
$
|
(5,052)
|
|
$
|
(0.04)
|
|
Severance
expense
|
(345)
|
|
(104)
|
|
(33)
|
|
(208)
|
|
—
|
|
Stock warrant fair
value adjustment
|
5,976
|
|
1,793
|
|
—
|
|
4,183
|
|
0.04
|
|
Allowance for Bad
Debt
|
(103)
|
|
(31)
|
|
—
|
|
(72)
|
|
—
|
|
Convertible Series A
preferred fair value adjustments
|
(1,631)
|
|
(489)
|
|
(1,109)
|
|
(33)
|
|
—
|
|
ARO adjustment
(Accretion)
|
(71)
|
|
(21)
|
|
—
|
|
(50)
|
|
—
|
|
Legal
settlement
|
12,879
|
|
3,864
|
|
—
|
|
9,015
|
|
0.08
|
|
Effect of deferred tax
valuation allowance and other related tax adj.
|
—
|
|
3,239
|
|
—
|
|
(3,239)
|
|
(0.03)
|
|
Net income (loss)
before discontinued operations
|
(4,164)
|
|
81
|
|
(8,789)
|
|
4,544
|
|
0.04
|
|
Loss from discontinued
operations
|
|
|
|
|
|
|
(7,007)
|
|
(0.06)
|
|
Net Income (loss)
attributable to TETRA stockholders, as reported
|
|
|
|
|
|
|
|
|
|
(2,463)
|
|
$
|
(0.02)
|
|
Schedule F:
Non-GAAP Reconciliation to GAAP Financials
|
|
|
Three Months
Ended
|
|
March 31,
2018
|
|
Net Income (Loss), as
reported
|
Tax
Provision
|
Income (Loss) Before
Tax, as Reported
|
Impairments &
Special Charges
|
Adjusted Income
(Loss) Before Tax
|
Interest
Expense
|
Adjusted
Depreciation & Amortization
|
Equity Comp.
Expense
|
Omnibus
Equity
|
Adjusted
EBITDA
|
|
(In
Thousands)
|
Completion Fluids &
Products Division
|
|
|
$
|
2,449
|
|
$
|
70
|
|
$
|
2,519
|
|
$
|
(233)
|
|
$
|
3,901
|
|
$
|
—
|
|
$
|
—
|
|
$
|
6,187
|
|
Water & Flowback
Services Division
|
|
|
6,548
|
|
3
|
|
6,551
|
|
(15)
|
|
5,027
|
|
—
|
|
—
|
|
11,563
|
|
Compression
Division
|
|
|
(14,018)
|
|
4,898
|
|
(9,120)
|
|
11,214
|
|
17,367
|
|
(604)
|
|
—
|
|
18,857
|
|
Eliminations and
other
|
|
|
—
|
|
—
|
|
—
|
|
—
|
—
|
(5)
|
|
—
|
|
—
|
|
(5)
|
|
Subtotal
|
|
|
(5,021)
|
|
4,971
|
|
(50)
|
|
10,966
|
|
26,290
|
|
(604)
|
|
—
|
|
36,602
|
|
Corporate and
other
|
|
|
(14,912)
|
|
(1,106)
|
|
(16,018)
|
|
4,007
|
|
151
|
|
1,480
|
|
—
|
|
(10,380)
|
|
TETRA excluding
Discontinued Operations
|
(21,057)
|
1,124
|
(19,933)
|
|
3,865
|
|
(16,068)
|
|
14,972
|
|
26,441
|
|
876
|
|
—
|
|
26,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2017
|
|
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
|
Adjusted
Depreciation & Amortization
|
Equity Comp.
Expense
|
Omnibus
Equity
|
Adjusted
EBITDA
|
|
(In
Thousands)
|
Completion Fluids &
Products Division
|
|
|
$
|
6,406
|
|
$
|
83
|
|
$
|
6,489
|
|
$
|
(85)
|
|
$
|
4,018
|
|
$
|
—
|
|
$
|
—
|
|
$
|
10,422
|
|
Water & Flowback
Services Division
|
|
|
(9,718)
|
|
15,211
|
|
5,493
|
|
(3)
|
|
4,327
|
|
—
|
|
—
|
|
9,817
|
|
Compression
Division
|
|
|
(9,719)
|
|
1,559
|
|
(8,160)
|
|
10,985
|
|
17,280
|
|
(934)
|
|
—
|
|
19,171
|
|
Eliminations and
other
|
|
|
5
|
|
—
|
|
5
|
|
—
|
|
(5)
|
|
—
|
|
—
|
|
—
|
|
Subtotal
|
|
|
(13,026)
|
|
16,853
|
|
3,827
|
|
10,897
|
|
25,620
|
|
(934)
|
|
—
|
|
39,410
|
|
Corporate and
other
|
|
|
(22,126)
|
|
7,147
|
|
(14,979)
|
|
3,600
|
|
182
|
|
1,419
|
|
—
|
|
(9,778)
|
|
TETRA excluding
Discontinued Operations
|
(32,062)
|
(3,090)
|
(35,152)
|
|
24,000
|
|
(11,152)
|
|
14,497
|
|
25,802
|
|
485
|
|
—
|
|
29,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March 31,
2017
|
|
|
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
|
Adjusted
Depreciation & Amortization(1)
|
Equity Comp.
Expense
|
Omnibus
Equity
|
Adjusted
EBITDA
|
|
|
(In
Thousands)
|
|
Completion Fluids &
Products Division
|
|
|
$
|
19,473
|
|
$
|
(12,681)
|
|
$
|
6,792
|
|
$
|
13
|
|
$
|
4,046
|
|
$
|
—
|
|
$
|
—
|
|
$
|
10,851
|
|
|
Water & Flowback
Services Division
|
|
|
(1,265)
|
|
265
|
|
(1,000)
|
|
(122)
|
|
5,023
|
|
—
|
|
—
|
|
3,901
|
|
|
Compression
Division
|
|
|
(14,333)
|
|
1,687
|
|
(12,646)
|
|
10,102
|
|
17,297
|
|
956
|
|
1,746
|
|
17,455
|
|
|
Eliminations and
other
|
|
|
(167)
|
|
—
|
|
(167)
|
|
—
|
|
(5)
|
|
—
|
|
—
|
|
(172)
|
|
|
Subtotal
|
|
|
3,708
|
|
(10,729)
|
|
(7,021)
|
|
9,993
|
|
26,361
|
|
956
|
|
1,746
|
|
32,035
|
|
|
Corporate and
other
|
|
|
(7,872)
|
|
(5,976)
|
|
(13,848)
|
|
3,774
|
|
92
|
|
1,513
|
|
(1,746)
|
|
(10,215)
|
|
|
TETRA excluding
Discontinued Operations
|
(4,245)
|
81
|
(4,164)
|
|
(16,705)
|
|
(20,869)
|
|
13,767
|
|
26,453
|
|
2,469
|
|
—
|
|
21,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted depreciation
& amortization, net, for the three month period ended March 31,
2017, excludes $0.1 million of certain accretion expense which
is included as a special charge.
|
Schedule G: Non-GAAP Reconciliation of TETRA Net Debt
The cash and debt positions of TETRA and CSI Compressco LP as of
December 31, 2017, are shown below.
TETRA and CSI Compressco LP's credit and 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 entity 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.
|
March 31,
2018
|
|
TETRA
|
|
CCLP
|
|
Consolidated
|
|
(In
Millions)
|
Non-restricted
cash
|
$
|
14.0
|
|
|
$
|
90.1
|
|
|
$
|
104.1
|
|
|
|
|
|
|
|
Carrying value of
long-term debt:
|
|
|
|
|
|
Revolver debt
outstanding
|
73.1
|
|
|
—
|
|
|
73.1
|
|
Senior Notes
outstanding
|
118.0
|
|
|
632.4
|
|
|
750.4
|
|
Net debt
|
$
|
177.1
|
|
|
$
|
542.3
|
|
|
$
|
719.4
|
|
Schedule H:
Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash
Flow
|
|
|
Three Months
Ended
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
|
March 31,
2017
|
|
|
|
(In
Thousands)
|
|
|
Consolidated
|
|
|
|
|
|
|
|
Net cash provided
(used) by operating activities
|
$
|
(31,261)
|
|
|
$
|
27,761
|
|
|
$
|
(20,538)
|
|
|
|
|
ARO
settlements
|
—
|
|
|
15
|
|
|
474
|
|
|
|
Capital expenditures,
net of sales proceeds
|
(28,816)
|
|
|
(23,260)
|
|
|
(4,812)
|
|
|
|
Consolidated adjusted
free cash flow
|
(60,077)
|
|
|
4,516
|
|
|
(24,876)
|
|
|
|
|
|
|
|
|
|
|
|
CSI Compressco
LP
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
(365)
|
|
|
14,496
|
|
|
1,821
|
|
|
|
Capital expenditures,
net of sales proceeds
|
(17,039)
|
|
|
(11,413)
|
|
|
(7,215)
|
|
|
|
CSI Compressco free
cash flow
|
(17,404)
|
|
|
3,083
|
|
|
(5,394)
|
|
|
|
|
|
|
|
|
|
|
|
TETRA
Only
|
|
|
|
|
|
|
|
Cash from operating
activities (1)
|
(30,896)
|
|
|
13,265
|
|
|
(20,327)
|
|
|
|
ARO
settlements
|
—
|
|
|
15
|
|
|
474
|
|
|
|
Capital expenditures,
net of sales proceeds (1)
|
(11,777)
|
|
|
(11,847)
|
|
|
371
|
|
|
|
Free cash flow before
ARO settlements
|
(42,673)
|
|
|
1,433
|
|
|
(19,482)
|
|
|
|
Distributions from CSI
Compressco LP
|
2,954
|
|
|
2,905
|
|
|
5,635
|
|
|
|
Adjusted TETRA only
free cash flow
|
$
(39,719)
|
|
|
$
4,338
|
|
|
$
(13,847)
|
|
|
|
|
|
(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 I: TETRA
Only Adjusted Cash Flow From Continuing Operations
|
|
|
Three Months
Ended
|
|
March 31,
2018
|
|
December 31,
2017
|
|
March 31,
2017
|
|
|
|
|
|
(In
Thousands)
|
TETRA
Only
|
|
|
|
|
|
Cash from operating
activities
|
$
(30,896)
|
|
$
13,265
|
|
$
(20,327)
|
|
|
|
|
|
|
Less: Discontinued
operations operating activities (adjusted
EBITDA)(1)
|
(8,176)
|
|
147
|
|
(4,062)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from continued
operating activities
|
(22,720)
|
|
13,118
|
|
(16,265)
|
|
|
|
|
|
|
Less: Continuing
operations capital expenditures(2)
|
(10,151)
|
|
(11,663)
|
|
2,146
|
|
|
|
|
|
|
Plus: Distributions
from CSI Compressco LP
|
2,954
|
|
2,905
|
|
5,635
|
|
|
|
|
|
|
TETRA only adjusted
free cash flow from continuing operations
|
$
(29,917)
|
|
$
4,360
|
|
$
(8,484)
|
|
|
|
|
|
|
|
(1)
|
Reconciled to loss
from discontinued operations as follows:
|
|
|
|
Three Months
Ended
|
|
March 31,
2018
|
|
December 31,
2017
|
|
March 31,
2017
|
|
|
|
|
|
(In
Thousands)
|
Loss from
discontinued operations
|
(41,706)
|
|
(3,247)
|
|
(7,007)
|
Plus:
Income tax provision (benefit)
|
(2,327)
|
|
335
|
|
(9)
|
Plus:
Depreciation & amortization
|
2,069
|
|
3,059
|
|
2,954
|
Plus: loss
on disposal of discontinued operations
|
33,788
|
|
—
|
|
—
|
Less: Discontinued
operations adjusted EBITDA
|
(8,176)
|
|
147
|
|
(4,062)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Reconciled to TETRA
only capital expenditures as follows:
|
|
|
|
Three Months
Ended
|
|
March 31,
2018
|
|
December 31,
2017
|
|
March 31,
2017
|
|
|
|
|
|
(In
Thousands)
|
|
|
|
|
|
|
TETRA only
capital expenditures
|
(11,777)
|
|
(11,847)
|
|
371
|
Less:
Discontinued operations capital expenditures
|
(1,626)
|
|
(184)
|
|
(1,775)
|
Plus: Continuing
operations capital expenditures
|
(10,151)
|
|
(11,663)
|
|
2,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule J:
Non-GAAP Reconciliation to TETRA Projected 2018 Adjusted
EBITDA
|
|
EBITDA
Reconciliation Table for adjusted EBITDA of $168
million
|
|
|
Adjusted
EBITDA
|
Equity Comp
Expense
|
DD&A
|
Interest
Expense
|
Adj Income Before
Tax
|
Impairments &
Special Charges
|
Income before
Tax
|
|
(In
Millions)
|
Completion Fluids
& Products
|
$
55.0
|
$
-
|
$
17.0
|
$
-
|
$
38.0
|
$
-
|
$
38.0
|
Water & Flowback
Services
|
$
60.0
|
$
-
|
$
23.0
|
$
-
|
$
37.0
|
$
-
|
$
37.0
|
Compression(1)
|
$
93.0
|
$
2.5
|
$
72.0
|
$
53.0
|
$
(34.5)
|
$
5.0
|
$
(39.5)
|
Corporate &
Other
|
$
(40.0)
|
$
6.0
|
$
0.5
|
$
17.5
|
$
(64.0)
|
$
(1.0)
|
$
(63.0)
|
Total
EBITDA
|
$
168.0
|
$
8.5
|
$
112.5
|
$
70.5
|
$
(23.5)
|
$
4.0
|
$
(27.5)
|
|
EBITDA
Reconciliation Table for adjusted EBITDA of $188
million
|
|
|
Adjusted
EBITDA
|
Equity Comp
Expense
|
DD&A
|
Interest
Expense
|
Adj Income Before
Tax
|
Impairments &
Special Charges
|
Income before
Tax
|
|
(In
Millions)
|
Completion Fluids
& Products
|
$
62.0
|
$
-
|
$
17.0
|
$
-
|
$
45.0
|
$
-
|
$
45.0
|
Water & Flowback
Services
|
$
66.0
|
$
-
|
$
23.0
|
$
-
|
$
43.0
|
$
-
|
$
43.0
|
Compression(1)
|
$
98.0
|
$
2.5
|
$
72.0
|
$
53.0
|
$
(29.5)
|
$
5.0
|
$
(34.5)
|
Corporate &
Other
|
$
(38.0)
|
$
6.0
|
$
0.5
|
$
17.5
|
$
(62.0)
|
$
(1.0)
|
$
(61.0)
|
Total
EBITDA
|
$
188.0
|
$
8.5
|
$
112.5
|
$
70.5
|
$
(3.5)
|
$
4.0
|
$
(7.5)
|
|
|
(1)
|
Does not include the
favorable impact to adjusted EBITDA from approximately $2 million
of used units cost of goods sold.
|
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SOURCE TETRA Technologies, Inc.