THE WOODLANDS, Texas,
Aug. 2, 2021 /PRNewswire/ -- TETRA
Technologies, Inc. ("TETRA" or the "Company") (NYSE:TTI) today
announced second quarter 2021 results.
Second quarter 2021 revenue was $102
million, a sequential increase of 32% over the first quarter
of 2021 reflecting improvements by all business segments, including
the seasonal peak in Northern
Europe chemicals sales. Net loss before discontinued
operations was $6.7 million,
inclusive of $4.7 million of
non-recurring charges and expenses. This compares to a net loss
before discontinued operations of $11.9
million in the first quarter, inclusive of $6.6 million of non-recurring charges and
expenses. Net loss per share from continuing operations in
the second quarter was $0.05.
Excluding the non-recurring charges and expenses, the net loss per
share from continuing operations was $0.02. Adjusted EBITDA, excluding
non-recurring charges, was $13.0
million, which includes a $1.6
million benefit from the increase in TETRA's equity
ownership in CSI Compressco LP and Standard Lithium, where we own
approximately 10.9% and 1.1%, respectively. Second
quarter adjusted EBITDA was up 44% from the first quarter of 2021
reflecting stronger operational performance from both business
segments. Cash flow from operating activities was
$1.8 million in the second quarter of
2021 and compared to $5.8 million in
the first quarter of 2021, while adjusted free cash flow from
continuing operations was a use of cash of $4.5 million reflecting a buildup in working
capital from the higher activity levels towards the end of the
second quarter. This compares to $5.4
million of adjusted free cash flow from continuing
operations in the first quarter of 2021.
Brady Murphy, TETRA's Chief
Executive Officer, stated, "We achieved good overall revenue and
EBITDA progression from the first quarter, and even more so as the
quarter progressed, and with some great wins and key milestones in
all of our business segments, I am very encouraged with the outlook
going forward. By early June we saw meaningful increase in
demand for international and Gulf of Mexico Completion Fluids,
which is consistent with what we believe to be the start of strong,
multi-year international and offshore recovery. We exited the
quarter with June being our highest revenue and Adjusted EBITDA
month since March 2020 reflecting
sequential improvements in all of our business groups.
Completion Fluids and Products Adjusted EBITDA margin of 27.7% was
an improvement of 400 basis points from the first quarter of
2021. Although faced with some inflationary headwinds in our
Water and Flowback business ahead of our ability to get broad based
price increases, the third quarter EBITDA and related margins are
expected to benefit from two newly awarded recycling projects, a
fully deployed SandstormTM project in Argentina and continued improvement and
alignment of service pricing. Going into the second half of
the year, we expect to see a continued recovery in our North
American onshore business with higher prices plus continued
stronger activity in our international fluids business with the
potential for strong market recovery in all of our segments heading
into 2022."
"The second quarter, and also more recently in July, we received
a lot of positive news for our oil and gas related business as well
as our low carbon energy opportunities. In July we completed our
first international TETRA CS Neptune® fluids job in the
North Sea, which also was our first ever high-density monovalent
operation. While the revenue from this project was considerably
smaller than our typical TETRA CS Neptune® fluids
projects in the Gulf of Mexico, it
reflects acceptance of this proprietary technology into new
markets. We were awarded a three-year completion fluids and
services contract with one of the most active deepwater super major
operators in the Gulf of Mexico
(GoM) that represents a significant market share increase for this
customer and for our GoM operations. We have also received a
multi-year major completion fluids award through partnering with a
major integrated service company for deepwater work in Brazil. We are expecting our
international and offshore fluids sales to increase materially in
the second half of the year from the first half due to major
project awards and overall increased customer activity. With
the ongoing growth and success of our Northern European industrial
chemicals business, we are proceeding with a planned expansion for
our Kokkola calcium chloride plant in Finland to increase capacity by over 25% by
mid-2022.
"Each of our low carbon energy business initiatives continues to
advance at an accelerated pace. Following diligence and
successful CO2 mineralization to design specifications in a San
Antonio SkyCycle pilot plant, we have agreed to make a $5 million investment in CarbonFree in the form
of a convertible note. This will allow us to participate in
the equity upside as CarbonFree continues to make progress in
commercializing its SkyCycle proprietary technology and we continue
to advance our long term business relationship. Our
PureFlowTM high purity zinc bromide has been qualified
by three energy storage manufacturers, and we have received our
first commercial purchase order well ahead of our year end
expectations. We expect that this will be the first of many
opportunities for TETRA to expand our PureFlow sales into the
energy storage markets. In regard to lithium activities, Standard
Lithium announced in the second quarter that they launched an
engineering feasibility study to extract lithium from the brine,
which would also include bromine, underlying the TETRA Arkansas
leases as part of the 2017 agreement between Standard Lithium and
TETRA. According to Standard Lithium, the results of this
study are expected to be completed in the third quarter of
2021. As previously announced by Standard Lithium, this
acreage has 890,000 tons of LCE equivalent at the inferred resource
category. As we announced earlier today, we
completed a preliminary exploratory study of the bromine and
lithium in our Arkansas leases
that includes the leases outside of the Standard Lithium
agreement. The study indicates a rich brine
concentration for both lithium and bromine and supports our actions
to further evaluate a full economic feasibility of these
assets. Finally, we have executed a memorandum of
understanding to work with Anson Resources, an Australian publicly
traded minerals company, to explore a business relationship for
lithium and bromine extraction from their Paradox Basin Brine
Project in southern Utah. The
collaboration will include, among other things, the potential
off-take agreement of bromine to meet our growing demands for both
oil and gas and energy storage, potential licensing of TETRA's
patented bromine derivative manufacturing process, as well as
operational management of the plant(s).
"We have reduced our term loan by $36.3
million from $220.5 million as
of September 30, 2020, to
$184.2 million as of June 30, 2021 and reduced it by another
$8.2 million in July. This will
save us approximately $3.2 million
per year, on an annualized basis, in interest expense. In
July, we amended our Asset Based Loan ("ABL") extending the
maturity to May 2025 and increased
our availability for our ABL by approximately $9.4 million. With this amendment, we do
not have any maturities until May
2025 other than our requirement to offer to prepay a
percentage of excess cash flow following the conclusion of each
calendar year. During the first half of 2021, we have
recorded mark to market gains of $5.6
million on our equity holdings of CSI Compressco LP and
Standard Lithium. As of July
30, 2021, the market value of these investments
was $17.8 million, with no
restrictions on our ability to monetize these investments.
Additionally, in July we received an expected payment of
$548,000 from our sale of our
controlling interest in CSI Compressco."
This press release includes the following financial measures
that are not presented in accordance with generally accepted
accounting principles in the United
States ("GAAP"): Adjusted earnings per share from continuing
operations, Adjusted EBITDA, and Adjusted EBITDA Margin (Adjusted
EBITDA as a percent of revenue) on consolidated and segment basis,
Adjusted income/(loss) before tax, adjusted free cash flow from
continuing operations, and net debt. Please see Schedules E
through H for reconciliations of these non-GAAP financial measures
to the most directly comparable GAAP measures.
Second Quarter Results and Highlights
A summary of key
financial metrics for the second quarter are as follows:
Second Quarter
2021 Results
|
|
Three Months
Ended
|
|
June 30,
2021
|
|
March 31,
2021
|
|
June 30,
2020
|
|
(In Thousands, Except
per Share Amounts)
|
Revenue
|
$
|
102,326
|
|
|
$
|
77,324
|
|
|
$
|
96,070
|
|
Loss before
discontinued operations
|
(6,654)
|
|
|
(11,943)
|
|
(13,179)
|
|
Adjusted EBITDA
before discontinued operations
|
12,967
|
|
|
8,981
|
|
|
8,941
|
|
GAAP EPS from
continuing operations
|
(0.05)
|
|
|
(0.10)
|
|
|
(0.11)
|
|
Adjusted EPS
from continuing operations
|
(0.02)
|
|
|
(0.04)
|
|
|
(0.06)
|
|
GAAP net cash
provided by operating activities
|
1,788
|
|
|
5,819
|
|
|
38,211
|
|
Adjusted free cash
flow from continuing operations
|
$
|
(4,450)
|
|
|
$
|
5,369
|
|
|
$
|
31,350
|
|
Completion Fluids & Products second quarter of 2021 revenue
of $64.6 million increased 39% from
the first quarter of 2021 driven by the seasonal increase for our
Northern Europe industrial
chemicals business and stronger offshore completion fluid sales.
Completion Fluids & Products income before taxes was
$16.4 million in the second quarter
(25.4% of revenue) compared to $9.0
million (19.4% of revenue) in the first quarter of
2021. Adjusted EBITDA of $17.9
million increased $6.8 million
sequentially. Second quarter Adjusted EBITDA included
$1.5 million favorable mark to market
adjustment from TETRA's investment in Standard Lithium.
TETRA's value of the 1.6 million shares that we own in Standard
Lithium was $9.7 million as of
July 31, 2021.
Water & Flowback Services revenue was $37.7 million in the second quarter of 2021, an
increase of 22% from the first quarter of 2021, and loss before
taxes was $5.0 million.
Adjusted EBITDA of $2.0 million (5.3%
of revenue) increased 123% sequentially as we saw a rebound in
Water Management and Flowback testing from the first quarter that
was negatively impacted by winter storms.
Free Cash Flow and Balance Sheet
Cash from operating activities was $1.8
million in the second quarter while adjusted free cash flow
from continuing operations was a use of cash of $4.5 million. Liquidity at the end of
second quarter was $82.0
million. Liquidity is defined as unrestricted cash
plus availability under the revolving credit facility. At the
end of the second quarter unrestricted cash was $50.3 million and availability under our credit
facility was $31.7 million.
Debt was $171.8 million before the
$8.2 million paydown in July, while
net debt was $121.4 million.
Non-recurring Charges and Expenses Items
Non-recurring charges and expenses are reflected on Schedule E
and include $1.3 million of
cumulative adjustments to long-term incentives and appreciation
right expenses, $0.7 million of
restructuring and transaction expenses, and $2.7 million of stock warrant fair value
adjustment expense.
Conference Call
TETRA will host a conference call to discuss these results
tomorrow, August 3, 2021, at
10:30 a.m. Eastern Time. The phone
number for the call is 1-888-347-5303. The conference call will
also be available by live audio webcast and may be accessed through
the Company's investor relations website at
http://ir.tetratec.com/events-and-webcasts. A replay of the
conference call will be available at 1-877-344-7529 conference
number 10158935, for one week following the conference call and the
archived webcast will be available through the Company's website
for thirty days following the conference call.
Investor Contact
For further information: Elijio
Serrano, CFO, TETRA Technologies, Inc., The Woodlands, Texas, Phone: 281.367.1983,
www.tetratec.com
Financial Statements, Schedules and Non-GAAP Reconciliation
Schedules (Unaudited)
Schedule A: Consolidated Income Statement
Schedule B: Condensed Consolidated Balance Sheet
Schedule C: Consolidated Statements of Cash Flows
Schedule D: Statement Regarding Use of Non-GAAP Financial
Measures
Schedule E: Non-GAAP Reconciliation of Adjusted Income (Loss) From
Continuing Operations
Schedule F: Non-GAAP Reconciliation of Adjusted EBITDA
Schedule G: Non-GAAP Reconciliation of Net Debt
Schedule H: Non-GAAP Reconciliation to Adjusted Free Cash Flow From
Continuing Operations
Company Overview and Forward-Looking Statements
TETRA Technologies, Inc. is a geographically diversified oil and
gas services company, focused on completion fluids and associated
products and services, water management, frac flowback, and
production well testing. TETRA owns an 10.9% equity
interest in CSI Compressco LP (NASDAQ: CCLP) and approximately 1.1%
equity interest in Standard Lithium (NYSE: SLI).
Cautionary Statement Regarding Forward Looking
Statements
This news release includes certain statements that are deemed to
be forward-looking statements. Generally, the use of words such as
"may," "see," "expectation," "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 economic and operating conditions that are
outside of our control, including statements concerning the
anticipated recovery of the oil and gas industry; curtailments in
production and completion activities related to extreme winter
weather; potential revenue associated with prospective energy
storage projects or our pending carbon capture partnership;
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 Reports on Form 10-K, 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
|
|
Six Months
Ended
|
|
June 30,
2021
|
|
March 31,
2021
|
|
June 30,
2020
|
|
June 30,
2021
|
|
June 30,
2020
|
|
(In Thousands, Except
per Share Amounts)
|
Revenues
|
$
|
102,326
|
|
|
$
|
77,324
|
|
|
$
|
96,070
|
|
|
$
|
179,650
|
|
|
$
|
228,773
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales,
services, and rentals
|
77,208
|
|
|
60,614
|
|
|
70,607
|
|
|
137,822
|
|
|
164,722
|
|
Depreciation,
amortization, and accretion
|
8,236
|
|
|
8,951
|
|
|
9,726
|
|
|
17,187
|
|
|
19,277
|
|
Impairments and other
charges
|
449
|
|
|
—
|
|
|
—
|
|
|
449
|
|
|
—
|
|
Insurance
recoveries
|
—
|
|
|
(110)
|
|
|
(74)
|
|
|
(110)
|
|
|
(74)
|
|
Total cost of
revenues
|
85,893
|
|
|
69,455
|
|
|
80,259
|
|
|
155,348
|
|
|
183,925
|
|
Gross profit
|
16,433
|
|
|
7,869
|
|
|
15,811
|
|
|
24,302
|
|
|
44,848
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative expense
|
17,351
|
|
|
20,012
|
|
|
23,862
|
|
|
37,363
|
|
|
44,210
|
|
Interest expense,
net
|
3,886
|
|
|
4,404
|
|
|
4,604
|
|
|
8,290
|
|
|
9,896
|
|
Warrants fair value
adjustment expense (income)
|
2,698
|
|
|
323
|
|
|
11
|
|
|
3,021
|
|
|
(327)
|
|
Other income,
net
|
(2,232)
|
|
|
(5,095)
|
|
|
(541)
|
|
|
(7,327)
|
|
|
(520)
|
|
Loss before taxes and
discontinued operations
|
(5,270)
|
|
|
(11,775)
|
|
|
(12,125)
|
|
|
(17,045)
|
|
|
(8,411)
|
|
Provision for income
taxes
|
1,384
|
|
|
168
|
|
|
1,054
|
|
|
1,552
|
|
|
1,776
|
|
Loss before
discontinued operations
|
(6,654)
|
|
|
(11,943)
|
|
|
(13,179)
|
|
|
(18,597)
|
|
|
(10,187)
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations, net of taxes
|
(126)
|
|
|
120,990
|
|
|
(23,788)
|
|
|
120,864
|
|
|
(37,156)
|
|
Net income
(loss)
|
(6,780)
|
|
|
109,047
|
|
|
(36,967)
|
|
|
102,267
|
|
|
(47,343)
|
|
Less: (income) loss
attributable to noncontrolling interest(1)
|
27
|
|
|
(333)
|
|
|
15,712
|
|
|
(306)
|
|
|
24,537
|
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
(6,753)
|
|
|
$
|
108,714
|
|
|
$
|
(21,255)
|
|
|
$
|
101,961
|
|
|
$
|
(22,806)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
per share information:
|
|
|
|
|
|
|
|
|
|
Loss from continuing
operations
|
$
|
(0.05)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.11)
|
|
|
$
|
(0.15)
|
|
|
$
|
(0.08)
|
|
Income (loss) from
discontinued operations
|
$
|
0.00
|
|
|
$
|
0.96
|
|
|
$
|
(0.06)
|
|
|
$
|
0.96
|
|
|
$
|
(0.10)
|
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
(0.05)
|
|
|
$
|
0.86
|
|
|
$
|
(0.17)
|
|
|
$
|
0.81
|
|
|
$
|
(0.18)
|
|
Weighted average shares
outstanding
|
126,583
|
|
126,149
|
|
|
125,886
|
|
126,365
|
|
|
125,736
|
|
|
(1)
|
(Income) loss
attributable to noncontrolling interest includes zero, $333 income
and $15,781 loss for the three-month periods ended June 30,
2021, March 31, 2021 and June 30, 2020, respectively, and $333
income and $24,615 loss for the six-month periods ended June 30,
2021 and 2020, respectively, related to discontinued
operations.
|
Schedule B:
Condensed Consolidated Balance Sheet (Unaudited)
|
|
|
June
30, 2021
|
|
December
31,
2020
|
|
(In
Thousands)
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
50,314
|
|
$
|
67,252
|
Restricted
cash
|
65
|
|
65
|
Trade accounts
receivable
|
79,467
|
|
64,078
|
Inventories
|
70,071
|
|
76,658
|
Assets of discontinued
operations
|
—
|
|
710,006
|
Prepaid expenses and
other current assets
|
15,881
|
|
13,487
|
Total current
assets
|
215,798
|
|
931,546
|
Property, plant, and
equipment, net
|
91,423
|
|
96,856
|
Patents, trademarks
and other intangible assets, net
|
39,237
|
|
41,487
|
Deferred tax assets,
net
|
44
|
|
52
|
Operating lease
right-of-use assets
|
39,517
|
|
43,448
|
Investments
|
16,221
|
|
2,675
|
Other
assets
|
14,569
|
|
16,775
|
Total long-term
assets
|
201,011
|
|
201,293
|
Total
assets
|
$
|
416,809
|
|
$
|
1,132,839
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Trade accounts
payable
|
$
|
38,868
|
|
$
|
22,573
|
Unearned
income
|
3,019
|
|
2,675
|
Accrued liabilities
and other
|
44,069
|
|
38,791
|
Liabilities of
discontinued operations
|
1,601
|
|
734,039
|
Current portion of
long-term debt
|
8,157
|
|
—
|
Total current
liabilities
|
95,714
|
|
798,078
|
Long-term debt,
net
|
163,603
|
|
199,894
|
Deferred income
taxes
|
1,939
|
|
1,942
|
Asset retirement
obligations
|
12,699
|
|
12,484
|
Warrants
liability
|
3,219
|
|
198
|
Operating lease
liabilities
|
33,786
|
|
37,569
|
Other
liabilities
|
6,792
|
|
11,612
|
Total long-term
liabilities
|
222,038
|
|
263,699
|
Commitments and
contingencies
|
|
|
|
TETRA stockholders'
equity
|
100,158
|
|
(9,640)
|
Noncontrolling
interests
|
(1,101)
|
|
80,702
|
Total
equity
|
99,057
|
|
71,062
|
Total liabilities and
equity
|
$
|
416,809
|
|
$
|
1,132,839
|
Schedule C:
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
Six Months
Ended June
30,
|
|
2021
|
|
2020
|
|
(In
Thousands)
|
Operating
activities:
|
|
|
|
Net income
(loss)
|
$
|
102,267
|
|
|
$
|
(47,343)
|
|
Reconciliation of net
income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation,
amortization, and accretion
|
17,215
|
|
|
59,302
|
|
Gain on GP
Sale
|
(120,574)
|
|
|
—
|
|
Impairment and other
charges
|
449
|
|
|
14,348
|
|
Gain on retained CSI
Compressco units and Standard Lithium shares
|
(5,613)
|
|
|
(183)
|
|
Equity-based
compensation expense
|
2,554
|
|
|
2,896
|
|
Amortization and
expense of financing costs and deferred financing gains
|
1,429
|
|
|
2,755
|
|
Debt-related
expenses
|
—
|
|
|
4,754
|
|
Warrants fair value
adjustment
|
3,021
|
|
|
(326)
|
|
Gain on sale of
assets
|
(275)
|
|
|
(2,019)
|
|
Other non-cash
charges
|
(70)
|
|
|
5,380
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(15,694)
|
|
|
55,552
|
|
Inventories
|
5,456
|
|
|
10,733
|
|
Prepaid expenses and
other current assets
|
(2,442)
|
|
|
(3,038)
|
|
Trade accounts payable
and accrued expenses
|
21,295
|
|
|
(42,853)
|
|
Other
|
(1,411)
|
|
|
429
|
|
Net cash provided by
operating activities
|
7,607
|
|
|
60,387
|
|
Investing
activities:
|
|
|
|
Purchases of property,
plant, and equipment, net
|
(12,489)
|
|
|
(19,608)
|
|
Proceeds from sale of
CCLP, net of cash divested
|
18
|
|
|
—
|
|
Proceeds on sale of
property, plant, and equipment
|
754
|
|
|
5,311
|
|
Insurance recoveries
associated with damaged equipment
|
110
|
|
|
591
|
|
Other investing
activities
|
1,156
|
|
|
(357)
|
|
Net cash used in
investing activities
|
(10,451)
|
|
|
(14,063)
|
|
Financing
activities:
|
|
|
|
Proceeds from
long-term debt
|
—
|
|
|
338,343
|
|
Principal payments on
long-term debt
|
(29,320)
|
|
|
(341,364)
|
|
CSI Compressco
distributions
|
—
|
|
|
(620)
|
|
Tax remittances on
equity based compensation
|
—
|
|
|
(341)
|
|
Debt issuance costs
and other financing activities
|
(455)
|
|
|
(2,504)
|
|
Net cash provided by
(used in) financing activities
|
(29,775)
|
|
|
(6,486)
|
|
Effect of exchange
rate changes on cash
|
(896)
|
|
|
(826)
|
|
(Decrease) increase
in cash and cash equivalents
|
(33,515)
|
|
|
39,012
|
|
Cash and cash
equivalents and restricted cash at beginning of period
|
83,894
|
|
|
17,768
|
|
Cash and cash
equivalents at beginning of period associated with discontinued
operations
|
16,577
|
|
|
2,370
|
|
Cash and cash
equivalents and restricted cash at beginning of period associated
with continuing operations
|
67,317
|
|
|
15,398
|
|
Cash and cash
equivalents and restricted cash at end of period
|
50,379
|
|
|
56,780
|
|
Cash and cash
equivalents at end of period associated with discontinued
operations
|
—
|
|
|
6,757
|
|
Cash and cash
equivalents and restricted cash at end of period associated with
continuing operations
|
$
|
50,379
|
|
|
$
|
50,023
|
|
Schedule D: Statement Regarding Use of Non-GAAP
Financial Measures
In addition to financial results determined in accordance with
U.S. GAAP, this press release may include the following non-GAAP
financial measures for the Company: net debt; adjusted consolidated
and segment income (loss) before taxes, special charges and
discontinued operations; adjusted diluted earnings (loss) per share
from continuing operations; consolidated and segment adjusted
EBITDA; adjusted free cash flow and free cash flow from continuing
operations; and segment adjusted EBITDA as a percent of revenue
("Adjusted EBITDA margin"). The following schedules provide
reconciliations of these non-GAAP financial measures to their most
directly comparable U.S. GAAP measures. The non-GAAP financial
measures should be considered in addition to, not as a substitute
for, financial measures prepared in accordance with U.S. 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) from continuing operations is defined as
the Company's income (loss) before noncontrolling interests
and discontinued operations, excluding certain special or other
charges (or credits), and including noncontrolling interest
attributable to continued operations. Adjusted income (loss) from
continuing operations 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 from continuing operations is defined as the
Company's diluted earnings (loss) per share excluding certain
special or other charges (or credits), discontinued operations and
noncontrolling interest attributable to discontinued operations.
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 certain non-cash charges,
non-recurring adjustments and discontinued operations. Adjusted
EBITDA (and Adjusted EBITDA margin) 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. Adjusted free cash flow from continuing
operations is defined as cash from operations less discontinued
operations EBITDA and discontinued operations capital expenditures,
less capital expenditures net of sales proceeds and cost of
equipment sold and including cash distributions to TETRA from CSI
Compressco LP and cash from other investments. 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.
Adjusted free cash flow from continuing operations do not
necessarily imply residual cash flow available for discretionary
expenditures, as they exclude cash requirements for debt service or
other non-discretionary expenditures that are not deducted.
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 balance sheet.
Management views 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:
Non-GAAP Reconciliation of Adjusted Income (Loss) From Continuing
Operations (Unaudited)
|
|
|
Three Months
Ended
|
|
June 30,
2021
|
|
March 31,
2021
|
|
June 30,
2020
|
|
(In Thousands, Except
per Share Amounts)
|
|
|
|
|
|
|
Loss before taxes
and discontinued operations
|
$
|
(5,270)
|
|
|
$
|
(11,775)
|
|
|
$
|
(12,125)
|
|
(Provision) benefit
for income taxes
|
(1,384)
|
|
|
(168)
|
|
|
(1,054)
|
|
Noncontrolling
interest attributed to continuing operations
|
27
|
|
|
—
|
|
|
(69)
|
|
Loss from continuing
operations
|
(6,627)
|
|
|
(11,943)
|
|
|
(13,248)
|
|
Adjustment to
long-term incentives
|
627
|
|
|
2,897
|
|
|
—
|
|
Transaction and other
expenses
|
(345)
|
|
|
2,550
|
|
|
186
|
|
Impairments and other
charges
|
—
|
|
|
—
|
|
|
—
|
|
Former CEO stock
appreciation right expense
|
714
|
|
|
509
|
|
|
—
|
|
Restructuring
charges
|
1,033
|
|
|
340
|
|
|
218
|
|
Debt
refinancing
|
—
|
|
|
—
|
|
|
—
|
|
Stock warrant fair
value adjustment
|
2,698
|
|
|
323
|
|
|
11
|
|
Severance
expenses
|
—
|
|
|
—
|
|
|
1,920
|
|
Bad debt
|
—
|
|
|
—
|
|
|
2,800
|
|
Adjusted income
(loss) from continuing operations
|
$
|
(1,900)
|
|
|
$
|
(5,324)
|
|
|
$
|
(8,113)
|
|
|
|
|
|
|
|
Basic and diluted
per share information
|
|
|
|
|
|
Loss from continuing
operations
|
$
|
(0.05)
|
|
|
$
|
(0.10)
|
|
|
$
|
(0.11)
|
|
Adjusted income (loss)
from continuing operations
|
$
|
(0.02)
|
|
|
$
|
(0.04)
|
|
|
$
|
(0.06)
|
|
Diluted weighted
average shares outstanding
|
126,583
|
|
|
126,149
|
|
|
125,886
|
|
Schedule F:
Non-GAAP Reconciliation of Adjusted EBITDA
(Unaudited)
|
|
|
Three Months Ended
June 30, 2021
|
|
Completion
Fluids &
Products
|
|
Water &
Flowback
Services
|
|
Corporate
SG&A
|
|
Other and
Eliminations
|
|
Total
|
|
(In Thousands, Except
Percents)
|
Revenues
|
$
|
64,607
|
|
|
$
|
37,719
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
102,326
|
|
Net income (loss)
before taxes and
discontinued
operations
|
16,427
|
|
|
(4,978)
|
|
|
(9,543)
|
|
|
(7,176)
|
|
|
(5,270)
|
|
Adjustment to
long-term incentives
|
—
|
|
|
—
|
|
|
627
|
|
|
—
|
|
|
627
|
|
Transaction and other
expenses
|
(391)
|
|
|
145
|
|
|
(99)
|
|
|
—
|
|
|
(345)
|
|
Former CEO stock
appreciation right expense
|
—
|
|
|
—
|
|
|
714
|
|
|
—
|
|
|
714
|
|
Restructuring
expenses
|
291
|
|
|
742
|
|
|
—
|
|
|
—
|
|
|
1,033
|
|
Stock warrant fair
value adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
2,698
|
|
|
2,698
|
|
Adjusted income
(loss) before taxes and discontinued operations
|
$
|
16,327
|
|
|
$
|
(4,091)
|
|
|
$
|
(8,301)
|
|
|
$
|
(4,478)
|
|
|
$
|
(543)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted interest
expense, net
|
(162)
|
|
|
3
|
|
|
—
|
|
|
4,044
|
|
|
3,885
|
|
Adjusted depreciation
and amortization
|
1,701
|
|
|
6,087
|
|
|
—
|
|
|
245
|
|
|
8,033
|
|
Equity compensation
expense
|
—
|
|
|
—
|
|
|
1,592
|
|
|
—
|
|
|
1,592
|
|
Adjusted
EBITDA
|
$
|
17,866
|
|
|
$
|
1,999
|
|
|
$
|
(6,709)
|
|
|
$
|
(189)
|
|
|
$
|
12,967
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a
% of revenue
|
27.7
|
%
|
|
5.3
|
%
|
|
|
|
|
|
12.7
|
%
|
|
|
Three Months Ended
March 31, 2021
|
|
Completion
Fluids &
Products
|
|
Water &
Flowback
Services
|
|
Corporate
SG&A
|
|
Other and
Eliminations
|
|
Total
|
|
(In Thousands, Except
Percents)
|
Revenues
|
$
|
46,522
|
|
|
$
|
30,802
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
77,324
|
|
Net income (loss)
before taxes and
discontinued
operations
|
9,010
|
|
|
(5,480)
|
|
|
(13,020)
|
|
|
(2,285)
|
|
|
(11,775)
|
|
Adjustment to
long-term incentives
|
281
|
|
|
—
|
|
|
2,616
|
|
|
—
|
|
|
2,897
|
|
Transaction and other
expenses
|
—
|
|
|
—
|
|
|
2,550
|
|
|
—
|
|
|
2,550
|
|
Former CEO stock
appreciation right expense
|
—
|
|
|
—
|
|
|
509
|
|
|
—
|
|
|
509
|
|
Restructuring and
severance expenses
|
181
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
341
|
|
Stock warrant fair
value adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
323
|
|
|
323
|
|
Adjusted income
(loss) before taxes and discontinued operations
|
$
|
9,472
|
|
|
$
|
(5,480)
|
|
|
$
|
(7,185)
|
|
|
$
|
(1,962)
|
|
|
$
|
(5,155)
|
|
Adjusted interest
expense, net
|
(138)
|
|
|
(522)
|
|
|
—
|
|
|
5,064
|
|
|
4,404
|
|
Adjusted depreciation
and amortization
|
1,705
|
|
|
6,899
|
|
|
—
|
|
|
166
|
|
|
8,770
|
|
Equity compensation
expense
|
—
|
|
|
—
|
|
|
962
|
|
|
—
|
|
|
962
|
|
Adjusted
EBITDA
|
$
|
11,039
|
|
|
$
|
897
|
|
|
$
|
(6,223)
|
|
|
$
|
3,268
|
|
|
$
|
8,981
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a
% of revenue
|
23.7
|
%
|
|
2.9
|
%
|
|
|
|
|
|
11.6
|
%
|
|
|
Three Months Ended
June 30, 2020
|
|
Completion
Fluids &
Products
|
|
Water &
Flowback
Services
|
|
Corporate
SG&A
|
|
Other and
Eliminations
|
|
Total
|
|
(In Thousands, Except
Percents)
|
Revenues
|
$
|
71,346
|
|
|
$
|
24,724
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
96,070
|
|
Net income (loss)
before taxes and
discontinued
operations
|
13,202
|
|
|
(8,418)
|
|
|
(11,611)
|
|
|
(5,298)
|
|
|
(12,125)
|
|
Severance
|
569
|
|
|
1,016
|
|
|
334
|
|
|
—
|
|
|
1,919
|
|
Transaction and other
expenses
|
(90)
|
|
|
—
|
|
|
276
|
|
|
—
|
|
|
186
|
|
Restructuring and
severance expenses
|
31
|
|
|
187
|
|
|
—
|
|
|
—
|
|
|
218
|
|
Stock warrant fair
value adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
11
|
|
Allowance for bad
debt
|
2,800
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,800
|
|
Adjusted income
(loss) before taxes and discontinued operations
|
16,512
|
|
|
(7,215)
|
|
—
|
(11,001)
|
|
|
(5,287)
|
|
|
(6,991)
|
|
Adjusted interest
expense, net
|
(143)
|
|
|
(2)
|
|
|
—
|
|
|
4,749
|
|
|
4,604
|
|
Adjusted depreciation
and amortization
|
1,934
|
|
|
7,617
|
|
|
—
|
|
|
175
|
|
|
9,726
|
|
Equity compensation
expense
|
—
|
|
|
—
|
|
|
1,602
|
|
|
—
|
|
|
1,602
|
|
Adjusted
EBITDA
|
$
|
18,303
|
|
|
$
|
400
|
|
|
$
|
(9,399)
|
|
|
$
|
(363)
|
|
|
$
|
8,941
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a
% of revenue
|
25.7
|
%
|
|
1.6
|
%
|
|
|
|
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule G:
Non-GAAP Reconciliation of TETRA Net Debt
(Unaudited)
|
|
The following
reconciliation of net debt is presented as a supplement to
financial results prepared in accordance with GAAP.
|
|
|
June 30,
2021
|
|
December
31,
2020
|
|
(In
Thousands)
|
Non-restricted
cash
|
$
|
50,314
|
|
|
$
|
67,252
|
|
|
|
|
|
Asset-Based Credit
Agreement
|
—
|
|
|
—
|
|
Term Credit
Agreement
|
$
|
171,760
|
|
|
$
|
199,894
|
|
Net debt
|
$
|
121,446
|
|
|
$
|
132,642
|
|
Schedule H: Non-GAAP Reconciliation
to Adjusted Free Cash Flow From Continuing Operations
(Unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2021
|
|
March 31,
2021
|
|
June 30,
2020
|
|
June 30,
2021
|
|
June 30,
2020
|
|
(In
Thousands)
|
Cash from operating
activities
|
$
|
1,788
|
|
|
$
|
5,819
|
|
|
$
|
38,211
|
|
|
$
|
7,607
|
|
|
$
|
60,387
|
|
Discontinued operations
operating activities (adjusted EBITDA income (loss))
|
—
|
|
|
(416)
|
|
|
4,823
|
|
|
(416)
|
|
|
18,180
|
|
Cash from continued
operating activities
|
1,788
|
|
|
6,235
|
|
|
33,388
|
|
|
8,023
|
|
|
42,207
|
|
Less: Continuing
operations capital expenditures
|
(6,290)
|
|
|
(3,220)
|
|
|
(2,207)
|
|
|
(9,510)
|
|
|
(6,689)
|
|
Distributions from CSI
Compressco LP (1)
|
52
|
|
|
—
|
|
|
169
|
|
|
52
|
|
|
338
|
|
Cash (distributed to
partners) received from other investments
|
|
—
|
|
|
2,354
|
|
|
|
—
|
|
|
|
2,354
|
|
|
|
—
|
|
Adjusted Free Cash Flow
From Continuing Operations
|
$
|
(4,450)
|
|
|
$
|
5,369
|
|
|
$
|
31,350
|
|
|
$
|
919
|
|
|
$
|
35,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Following the GP Sale
on January 29, 2021, TETRA retained a 10.9% limited partner
interest in CCLP.
|
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SOURCE TETRA Technologies, Inc.