THE
WOODLANDS, Texas, Oct. 31,
2022 /PRNewswire/ -- TETRA Technologies, Inc.
("TETRA" or the "Company") (NYSE:TTI) today announced third-quarter
2022 financial results.
Third-quarter 2022 revenue of $135
million increased 41% from the third quarter of 2021 but
decreased 4% from the second quarter of 2022 reflecting the
seasonality of our European industrial chemicals business.
Net income before discontinued operations was break even, inclusive
of $2.7 million of non-recurring
charges and expenses. This compares to net income before
discontinued operations of $1.8 million in the second quarter of 2022,
inclusive of $4.9 million of
non-recurring charges and expenses. Net income per share from
continuing operations was also break even in the third quarter
compared to $0.01 in the second
quarter of 2022. Adjusted net income per share from
continuing operations was $0.02
compared to $0.05 in the second
quarter of 2022 and to $0.01 in the
third quarter of 2021.
Adjusted EBITDA for the third quarter was $18.6 million (13.8% of revenue) compared to
$18.7 million (13.3% of revenue)
in the second quarter of 2022, and up 24% year-on-year from
$15.0 million in the third
quarter of 2021. The third quarter of 2022 included
unrealized losses on investments of $548,000. Excluding these unrealized losses
on investments, Adjusted EBITDA for the third quarter of 2022 was
$19.1 million.
Cash flow from operating activities was $2.1 million in the third quarter of 2022
compared to $17.9 million in the
second quarter of 2022. Adjusted free cash flow from
continuing operations was a use of $9.8 million, primarily driven by a build of
inventory to support new and previously announced deepwater
contract awards.
Brady Murphy, TETRA President and
Chief Executive Officer, stated, "I am pleased with our third
quarter results as our energy services business continues to
improve while also reaching a major milestone with a very positive
Inferred Resources report for bromine and lithium in our
Arkansas brine leased
acreage. Adjusting for our seasonal decrease in our European
industrial chemical business, revenue increased 7.5% from the
second quarter led by our Water & Flowback Services segment,
which increased 15% quarter-on-quarter. This growth was
despite relatively flat frac activity in the third quarter compared
to the second quarter, and while inflationary pressures continue,
both segments increased Adjusted EBITDA margins
quarter-on-quarter. Annualized third quarter Water &
Flowback Services revenue of $303
million matches our full year 2018 revenue on approximately
35% less active frac crew activity, demonstrating the significant
market penetration success with our differentiated technologies and
integrated water management strategy.
"Water & Flowback Services revenue of $76 million
improved $29 million or 62% year-on-year, and $9.9 million or 15%
quarter-on-quarter. Income before taxes was $6.5 million while Adjusted EBITDA of
$13.2 million improved by
$8 million or 158% year-on-year, and $3.2 million or 33%
quarter-on-quarter. This marks the highest Adjusted EBITDA
since the fourth quarter of 2018. Water & Flowback
Services Adjusted EBITDA margins of 17.4% were up 230 basis points
reflecting the margin expansion efforts driven by investments in
automation, new technologies and the benefit of our early
production facilities being online for the full quarter in
Argentina which are longer-term
projects with stable and predictable margins and cash flows.
Our fleet of TETRA SandStormTM advanced cyclone
equipment remains at high utilization with continued market
penetration and positive pricing progression.
"During the quarter, we announced exclusive technology
agreements with KMX Technologies LLC and Hyrec Holdings Company for
recycling produced water from oil and gas wells for the purpose of
beneficial re-use. These strategic relationships will allow
us to create new, sustainable markets for produced water, reduce
the industry's reliance on disposal and preserve precious
freshwater resources. We are currently mobilizing a produced
water beneficial reuse pilot project for one of the largest North
American shale operators with many other opportunities in
discussion.
"Completion Fluids & Products third-quarter 2022 revenue of
$59 million increased year-on-year by 22% and decreased from
the second quarter of 2022 by 21% as the prior quarter benefited
from the seasonal uplift for our European industrial chemicals
business. Income before taxes for the quarter was
$12.4 million and Adjusted
EBITDA margins were 24.9%, up from 23.7% in the second
quarter. We remain very positive on the longer-term outlook
for the offshore and deepwater markets and our strong market
position is validated by the 2022 Kimberlite Annual Completion
Fluids & Wellbore Cleanup Tools Supplier Performance
Report. The Kimberlite report indicated that TETRA holds the
second highest market share in completion fluids in the
Gulf of Mexico at 30%.
Within the report, Kimberlite mentions 'TETRA Technologies
continues to be positioned as the top performing supplier in the
Gulf of Mexico and receives the
highest customer loyalty ratings as measured by the Net Promoter
Score.' This was further supported by a multi-year contract renewal
for one of the most active deepwater supermajors in the
Gulf of Mexico that was executed
in the third quarter.
"As the offshore and deepwater markets continue to improve, our
pipeline of TETRA CS Neptune® completion fluid
opportunities continue to grow as well. We are currently
executing a smaller TETRA CS Neptune® completion fluid
job in the UK and have a job in Norway confirmed and expected to be delivered
in the first quarter of 2023.
"Despite improved Adjusted EBITDA margins in the third quarter,
supply chain and inflation continue to be challenging issues,
especially with certain chemicals and raw materials. The
previously announced supply chain constraint impacting a European
supplier is improving but we are not yet back to full production
levels, although we believe we will be well positioned for the
second quarter peak season. In North America key raw material
prices are still very inflated and as we exhaust our yearly
contractual supply of bromine, we are fulfilling demand with spot
market bromine which impacts our margins. These further
support progressing our evaluation as to whether to develop our own
source of bromine from our brine acreage in Arkansas.
"Our Low Carbon initiatives continue to move forward with a lot
of positive results and momentum. Sales of our high purity
zinc bromine solution, TETRA PureFlow® ultra-pure zinc
bromide clear brine fluid, increased during the third quarter by
42% compared to the second quarter of 2022. As mentioned
previously, with the growing demand for bromine for deepwater
projects and for zinc bromide electrolytes for long-duration
battery storage, our bromine needs are expected to expand well
beyond our current long-term supply agreement. Along with
additional supply, we anticipate that producing our own bromine
from our leased acreage may be more cost-effective than our current
sources, creating an opportunity for margin enhancement in addition
to significant incremental volumes. During the quarter we
announced the completion of our maiden inferred bromine and lithium
brine resource estimation report. The technical report
reflects that the brine resource underlying the approximately
40,000 gross acres where TETRA holds the bromine mineral rights is
estimated to contain an inferred resource of 5.25 million short
tons (4.763 million metric tonnes) of elemental bromine. We
are on track to complete and announce a bromine initial economic
assessment before the end of the year which will highlight the
economics of the potential investment and a corresponding business
plan.
"The technical report also stated that the Li-brine resource
underlying the south-southeast portion of the property is estimated
to contain 234,000 short tons of LCE (Lithium Carbonate
Equivalent). We expect the initial economic assessment for
lithium to be completed in the fall of 2023. Furthermore, we
remain active in applying for government grants and loans as the
supply of bromine and lithium are critical to the current and
future global energy needs.
"As we look towards the coming years there is a lot to be
excited about, both for our current business as well as the clear
line of sight opportunities in our low carbon energy
business. We continue to work diligently to set the stage for
significant shareholder value creation."
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 income (loss) 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) from continuing operations,
adjusted free cash flow from continuing operations, net debt and
net leverage ratio. Please see Schedules E through I for
reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP measures.
Third Quarter Results and Highlights
A summary of key financial metrics for the third quarter are as
follows:
Third Quarter
2022 Results
|
|
Three Months
Ended
|
|
September
30,
2022
|
|
June 30,
2022
|
|
September
30,
2021
|
|
(in thousands, except
per share amounts)
|
Revenue
|
$
135,012
|
|
$
140,716
|
|
$
95,474
|
Net income attributable
to TETRA stockholders
|
278
|
|
1,745
|
|
2,513
|
Income (loss) before
discontinued operations
|
(63)
|
|
1,759
|
|
2,495
|
Adjusted EBITDA before
discontinued operations
|
18,595
|
|
18,697
|
|
15,022
|
GAAP EPS from
continuing operations
|
0.00
|
|
0.01
|
|
0.02
|
Adjusted income per
share from continuing operations
|
0.02
|
|
0.05
|
|
0.01
|
GAAP net cash provided
by operating activities
|
2,145
|
|
17,869
|
|
2,817
|
Adjusted free cash flow
from continuing operations
|
$
(9,774)
|
|
$
6,418
|
|
$
1,000
|
Completion Fluids & Products third-quarter 2022 revenue of
$59 million decreased 21% from the
second quarter of 2022 due to the seasonal impact for our European
industrial chemicals business, partially offset by an increase in
international markets and higher shipments of TETRA
PureFlow® ultra-pure zinc bromide clear brine
fluid. Completion Fluids & Products income before taxes
was $12.4 million in the third
quarter (20.9% of revenue) compared to $15.3 million (20.4% of revenue) in the
second quarter of 2022. Adjusted EBITDA of $14.7 million, which included a $0.2 million unrealized gain from
investments, decreased $3.0 million sequentially. Completion
Fluids & Products Adjusted EBITDA margins were 24.9% in the
third quarter compared to 23.7% in the second quarter of
2022. Excluding the unrealized gains and losses from
investments for both periods, Adjusted EBITDA margins increased
sequentially by 50 basis points. Third-quarter margins were
negatively impacted by inflationary pressures as we continue to see
increased pricing for raw materials.
Water & Flowback Services revenue was $76 million in
the third quarter of 2022, an increase of 15% from the second
quarter of 2022. Income before taxes was $6.5 million. Adjusted EBITDA of
$13.2 million (17.4% of revenue)
increased 33% sequentially and was up 158% from the third quarter
of 2021 due to stronger activity in the North America onshore business as well as
growth in Latin America. Adjusted EBITDA margins improved 230
basis points from the second quarter of 2022 to 17.4% as we
continue to see some pricing improvements to help offset
inflationary pressures.
Free Cash Flow, Balance Sheet and Income Taxes
Cash from operating activities was $2.1
million in the third quarter and adjusted free cash flow
from continuing operations was a use of $9.8
million. Liquidity at the end of the third quarter was
$92 million. Liquidity is
defined as unrestricted cash plus availability under our revolving
credit facilities. At the end of the third quarter,
unrestricted cash was $25 million and
availability under our credit agreements was $67 million. Long-term debt, with a
September 2025 maturity, was
$154 million, while net debt was
$129 million. TETRA's net
leverage ratio continued to improve and was 1.7X at the end of the
third quarter of 2022.
With the strong rebound in activity, TETRA now expects to be
profitable for income tax purposes in 2022 on a pre-tax basis in
the United States. As of year-end 2021, TETRA has accumulated
US federal net operating losses that can offset more than
$440 million of future US profits and
can offset approximately $190 million
of various state profits. In addition, TETRA has tax loss
carry forwards that can offset approximately $40 million of various international pretax
earnings. As activity from our two segments continues to
improve and from future profits that are expected to be generated
from our bromine and lithium assets as we further expand into the
battery storage markets, these tax loss carryforwards should
provide significant value in the net income to cash flow
conversion.
Non-recurring Charges and Expenses
Non-recurring charges and expenses are reflected on Schedule E
and include $1.7 million of
cumulative adjustments to long-term incentives and appreciation
right expenses, $0.9 million of
costs associated with the brine resource project, and $0.1 million of transaction and other
expenses. The $0.5 million
of unrealized losses on investments are included in both our
reported and adjusted earnings.
Conference Call
TETRA will host a conference call to discuss these results
tomorrow, November 1, 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 2427423, 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, please contact Elijio Serrano, CFO, TETRA Technologies, Inc. at
(281) 367-1983 or via email at eserrano@tetratec.com or
Rigo Gonzalez, Manager of Corporate
Finance and Investor Relations, at (281) 364-2213 or via email at
rgonzalez@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
Schedule I: Non-GAAP Reconciliation to Net Leverage Ratio
Company Overview
TETRA Technologies, Inc. is an energy services and solutions
company operating on six continents with a focus on bromine-based
completion fluids, calcium chloride, water management solutions,
frac flowback, and production well testing services. Calcium
chloride is used in the oil and gas, industrial, agricultural,
road, food, and beverage markets. TETRA is evolving its
business model by expanding into the low carbon energy markets with
its chemistry expertise, key mineral acreage, and global
infrastructure. Low carbon energy initiatives include
commercialization of TETRA PureFlow®, an ultra-pure zinc
bromide clear brine fluid for stationary batteries and energy
storage; advancing an innovative carbon capture utilization and
storage technology with CarbonFree to capture CO2 and
mineralize emissions to make commercial, carbon-negative chemicals;
and development of TETRA's lithium and bromine mineral acreage to
meet the growing demand for oil and gas products and energy
storage. Visit the Company's website at www.tetratec.com for
more information.
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 recovery of
the oil and gas industry; customer delays for international
completion fluids related to global shipping and logistics issues;
potential revenue associated with prospective energy storage
projects or our pending carbon capture partnership; inferred
mineral resources of lithium and bromine, the potential extraction
of lithium and bromine from the leased acreage, the economic
viability thereof, the demand for such resources, and the timing
and costs of such activities; the ability to obtain an initial
economic assessment regarding our lithium and bromine acreage;
projections concerning the Company's business activities, financial
guidance, profitability, 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. With respect to the Company's
disclosures of inferred mineral resources, including bromine and
lithium carbonate equivalent concentrations, it is uncertain if
further exploration will ever result in the estimation of a higher
category of mineral resource or a mineral reserve. Inferred
mineral resources are considered to have the lowest level of
geological confidence of all mineral resources. Investors are
cautioned that mineral resources do not have demonstrated economic
value. Inferred mineral resources have a high degree of
uncertainty as to their existence and to whether they can be
economically or legally commercialized. A significant amount
of exploration must be completed in order to determine whether an
inferred mineral resource may be upgraded to a higher
category. Therefore, you are cautioned not to assume that all
or any part of an inferred mineral resource exists, that it can be
economically or legally commercialized, or that it will ever be
upgraded to a higher category. 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
|
|
September
30,
2022
|
|
June 30,
2022
|
|
September
30,
2021
|
|
(in thousands, except
per share amounts)
|
Revenues
|
$
135,012
|
|
$
140,716
|
|
$
95,474
|
|
|
|
|
|
|
Cost of sales,
services, and rentals
|
96,905
|
|
102,599
|
|
71,419
|
Depreciation,
amortization, and accretion
|
8,634
|
|
7,748
|
|
8,308
|
Impairments and other
charges
|
—
|
|
2,262
|
|
—
|
Total cost of
revenues
|
105,539
|
|
112,609
|
|
79,727
|
Gross profit
|
29,473
|
|
28,107
|
|
15,747
|
|
|
|
|
|
|
Exploration and
appraisal costs
|
936
|
|
634
|
|
—
|
General and
administrative expense
|
23,833
|
|
23,620
|
|
18,714
|
Interest expense,
net
|
3,999
|
|
3,610
|
|
4,083
|
Other income,
net
|
(1,410)
|
|
(1,037)
|
|
(10,132)
|
Income before taxes and
discontinued operations
|
2,115
|
|
1,280
|
|
3,082
|
Provision (benefit) for
income taxes
|
2,178
|
|
(479)
|
|
587
|
Income (loss) before
discontinued operations
|
(63)
|
|
1,759
|
|
2,495
|
Income from
discontinued operations, net of taxes
|
319
|
|
(34)
|
|
18
|
Net income
(loss)
|
256
|
|
1,725
|
|
2,513
|
Less: loss
attributable to noncontrolling interest
|
22
|
|
20
|
|
—
|
Net income (loss)
attributable to TETRA stockholders
|
$
278
|
|
$
1,745
|
|
$
2,513
|
|
|
|
|
|
|
Basic per share
information:
|
|
|
|
|
|
Income (loss) from
continuing operations
|
$
0.00
|
|
$
0.01
|
|
$
0.02
|
Income from
discontinued operations
|
$
0.00
|
|
$
0.00
|
|
$
0.00
|
Net income attributable
to TETRA stockholders
|
$
0.00
|
|
$
0.01
|
|
$
0.02
|
Weighted average shares
outstanding
|
128,407
|
|
127,992
|
|
126,733
|
|
|
|
|
|
|
Diluted per share
information:
|
|
|
|
|
|
Income (loss) from
continuing operations
|
$
0.00
|
|
$
0.01
|
|
$
0.02
|
Income from
discontinued operations
|
$
0.00
|
|
$
0.00
|
|
$
0.00
|
Net income attributable
to TETRA stockholders
|
$
0.00
|
|
$
0.01
|
|
$
0.02
|
Weighted average shares
outstanding
|
128,407
|
|
130,099
|
|
128,694
|
Schedule B:
Condensed Consolidated Balance Sheet (Unaudited)
|
|
|
September
30,
2022
|
|
December 31,
2021
|
|
(in
thousands)
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
25,247
|
|
$
31,551
|
Trade accounts
receivable
|
105,656
|
|
91,202
|
Inventories
|
71,558
|
|
69,098
|
Prepaid expenses and
other current assets
|
21,831
|
|
18,539
|
Total current
assets
|
224,292
|
|
210,390
|
Property, plant, and
equipment, net
|
95,025
|
|
88,976
|
Other intangible
assets, net
|
33,667
|
|
36,958
|
Operating lease
right-of-use assets
|
33,415
|
|
36,973
|
Investments
|
13,313
|
|
11,233
|
Other assets
|
13,774
|
|
13,736
|
Total long-term
assets
|
189,194
|
|
187,876
|
Total assets
|
$
413,486
|
|
$
398,266
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Trade accounts
payable
|
$
46,162
|
|
$
37,943
|
Current portion of
long-term debt
|
14
|
|
—
|
Compensation and
employee benefits
|
29,213
|
|
20,811
|
Operating lease
liabilities, current portion
|
7,858
|
|
8,108
|
Accrued
taxes
|
8,334
|
|
7,085
|
Accrued liabilities
and other
|
19,004
|
|
21,810
|
Liabilities of
discontinued operations
|
919
|
|
1,385
|
Total current
liabilities
|
111,504
|
|
97,142
|
Long-term debt,
net
|
153,873
|
|
151,936
|
Operating lease
liabilities
|
27,724
|
|
31,429
|
Asset retirement
obligations
|
13,368
|
|
12,984
|
Deferred income
taxes
|
1,284
|
|
1,669
|
Other
liabilities
|
3,977
|
|
4,543
|
Total long-term
liabilities
|
200,226
|
|
202,561
|
Commitments and
contingencies
|
|
|
|
TETRA stockholders'
equity
|
102,969
|
|
99,704
|
Noncontrolling
interests
|
(1,213)
|
|
(1,141)
|
Total equity
|
101,756
|
|
98,563
|
Total liabilities and
equity
|
$
413,486
|
|
$
398,266
|
Schedule C:
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
Three Months
Ended
|
|
September 30,
2022
|
|
June 30,
2022
|
|
September 30,
2021
|
|
(in
thousands)
|
Operating
activities:
|
|
|
|
|
|
Net income
(loss)
|
$
256
|
|
$
1,725
|
|
$
2,513
|
Adjustments to
reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation,
amortization, and accretion
|
8,634
|
|
7,748
|
|
8,309
|
Impairment and other
charges
|
—
|
|
2,262
|
|
—
|
Loss (gain) on
investments
|
549
|
|
710
|
|
(6,190)
|
Equity-based
compensation expense
|
1,098
|
|
1,159
|
|
1,057
|
Provision for
(recovery of) doubtful accounts
|
(213)
|
|
183
|
|
(87)
|
Amortization and
expense of financing costs
|
805
|
|
793
|
|
891
|
Warrants fair value
adjustment
|
—
|
|
—
|
|
(3,164)
|
Gain on sale of
assets
|
(261)
|
|
(501)
|
|
(204)
|
Other non-cash
credits
|
(112)
|
|
(212)
|
|
(183)
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
(2,080)
|
|
(1,396)
|
|
448
|
Inventories
|
(10,226)
|
|
(60)
|
|
(3,007)
|
Prepaid expenses and
other current assets
|
(1,500)
|
|
(4,792)
|
|
(485)
|
Trade accounts payable
and accrued expenses
|
5,884
|
|
11,176
|
|
3,936
|
Other
|
(689)
|
|
(926)
|
|
(1,017)
|
Net cash provided by
operating activities
|
2,145
|
|
17,869
|
|
2,817
|
Investing
activities:
|
|
|
|
|
|
Purchases of property,
plant, and equipment, net
|
(12,266)
|
|
(11,107)
|
|
(2,131)
|
Proceeds from sale of
CSI Compressco, net of cash divested
|
—
|
|
—
|
|
548
|
Proceeds from sale of
property, plant, and equipment
|
295
|
|
778
|
|
262
|
Other investing
activities
|
(390)
|
|
2
|
|
(392)
|
Net cash used in
investing activities
|
(12,361)
|
|
(10,327)
|
|
(1,713)
|
Financing
activities:
|
|
|
|
|
|
Proceeds from
long-term debt
|
28
|
|
134
|
|
—
|
Principal payments on
long-term debt
|
(25)
|
|
(2,456)
|
|
(8,157)
|
Payments on financing
lease obligations
|
—
|
|
(1,174)
|
|
—
|
Repurchase of common
stock
|
—
|
|
—
|
|
(461)
|
Financing costs and
other financing activities
|
—
|
|
—
|
|
(263)
|
Net cash provided by
(used in) financing activities
|
3
|
|
(3,496)
|
|
(8,881)
|
Effect of exchange rate
changes on cash
|
(872)
|
|
(565)
|
|
(739)
|
(Decrease) increase in
cash and cash equivalents
|
(11,085)
|
|
3,481
|
|
(8,516)
|
Cash and cash
equivalents at beginning of period
|
36,332
|
|
32,851
|
|
50,379
|
Cash and cash
equivalents at end of period
|
25,247
|
|
36,332
|
|
41,863
|
|
|
|
|
|
|
Supplemental cash flow
information:
|
|
|
|
|
|
Interest
paid
|
$
3,522
|
|
$
4,960
|
|
$
7,350
|
Income taxes
paid
|
1,055
|
|
729
|
|
822
|
(Decrease) increase in
accrued capital expenditures
|
(5,813)
|
|
(452)
|
|
846
|
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: adjusted income (loss) per
share from continuing operations; consolidated and segment Adjusted
EBITDA; segment Adjusted EBITDA as a percent of revenue ("Adjusted
EBITDA margin"); adjusted income (loss) from continuing operations,
adjusted free cash flow from continuing operations; net debt, and
net leverage ratio. 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 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, less
payments on financing lease obligations and including cash
distributions to TETRA from CSI Compressco 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.
Net leverage ratio is defined as debt excluding financing fees
& discount on term loan and including letters of credit and
guarantees, less cash divided by trailing twelve months adjusted
EBITDA for credit facilities. Adjusted EBITDA for credit
facilities consists of adjusted EBITDA described above, plus equity
compensation expense, less non-cash (gain) loss on sale of
investments, (gain) loss on sales of assets and excluding certain
special or other charges (or credits). Management primarily
uses this metric to assess TETRA's ability to borrow, reduce debt,
add to cash balances, pay distributions, and fund investing and
financing activities.
Schedule E: Non-GAAP
Reconciliation of Adjusted Income (Loss) From Continuing Operations
(Unaudited)
|
|
|
Three Months
Ended
|
|
September 30,
2022
|
|
June 30,
2022
|
|
September 30,
2021
|
|
(in thousands, except
per share amounts)
|
|
|
|
|
|
|
Income (loss) before
taxes and discontinued operations
|
$
2,115
|
|
$
1,280
|
|
$
3,082
|
Provision (benefit) for
income taxes
|
2,178
|
|
(479)
|
|
587
|
Noncontrolling interest
attributed to continuing operations
|
22
|
|
20
|
|
—
|
Income (loss) from
continuing operations
|
(85)
|
|
1,739
|
|
2,495
|
Exploration and
appraisal costs
|
936
|
|
634
|
|
—
|
Adjustment to long-term
incentives
|
1,731
|
|
1,450
|
|
656
|
Transaction, legal and
other expenses
|
82
|
|
556
|
|
1,350
|
Impairments and other
charges
|
—
|
|
2,262
|
|
—
|
Former CEO stock
appreciation right expense
|
—
|
|
—
|
|
(466)
|
Restructuring
charges
|
—
|
|
—
|
|
295
|
Stock warrant fair
value adjustment
|
—
|
|
—
|
|
(3,164)
|
Adjusted income
(loss) from continuing operations
|
$
2,664
|
|
$
6,641
|
|
$
1,166
|
|
|
|
|
|
|
Diluted per share
information
|
|
|
|
|
|
Income (loss) from
continuing operations
|
$
0.00
|
|
$
0.01
|
|
$
0.02
|
Adjusted income (loss)
from continuing operations
|
$
0.02
|
|
$
0.05
|
|
$
0.01
|
Diluted weighted
average shares outstanding
|
128,407
|
|
130,099
|
|
128,694
|
Schedule F: Non-GAAP
Reconciliation of Adjusted EBITDA (Unaudited)
|
|
|
Three Months Ended
September 30, 2022
|
|
Completion Fluids
& Products
|
|
Water & Flowback
Services
|
|
Corporate
SG&A
|
|
Other and
Eliminations
|
|
Total
|
|
(in thousands, except
percents)
|
Revenues
|
$
59,163
|
|
$
75,849
|
|
$
—
|
|
$
—
|
|
$
135,012
|
Net income (loss)
before taxes and
discontinued
operations
|
12,357
|
|
6,482
|
|
(11,968)
|
|
(4,756)
|
|
2,115
|
Impairment
expense
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Exploration and
appraisal costs
|
936
|
|
—
|
|
—
|
|
—
|
|
936
|
Adjustment to
long-term incentives
|
—
|
|
—
|
|
1,731
|
|
—
|
|
1,731
|
Transaction and other
expenses
|
—
|
|
82
|
|
—
|
|
—
|
|
82
|
Adjusted income
(loss) before taxes and
discontinued operations
|
$
13,293
|
|
$
6,564
|
|
$
(10,237)
|
|
$
(4,756)
|
|
$
4,864
|
|
|
|
|
|
|
|
|
|
|
Adjusted interest
(income) expense, net
|
(436)
|
|
(2)
|
|
—
|
|
4,437
|
|
3,999
|
Adjusted depreciation
and amortization
|
1,846
|
|
6,626
|
|
—
|
|
162
|
|
8,634
|
Equity compensation
expense
|
—
|
|
—
|
|
1,098
|
|
—
|
|
1,098
|
Adjusted
EBITDA
|
$
14,703
|
|
$
13,188
|
|
$
(9,139)
|
|
$
(157)
|
|
$
18,595
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a %
of revenue
|
24.9 %
|
|
17.4 %
|
|
|
|
|
|
13.8 %
|
|
Three Months Ended
June 30, 2022
|
|
Completion Fluids
& Products
|
|
Water & Flowback
Services
|
|
Corporate
SG&A
|
|
Other and
Eliminations
|
|
Total
|
|
(in thousands, except
percents)
|
Revenues
|
$
74,798
|
|
$
65,918
|
|
$
—
|
|
$
—
|
|
$
140,716
|
Net income (loss)
before taxes and
discontinued
operations
|
15,261
|
|
1,644
|
|
(11,542)
|
|
(4,083)
|
|
1,280
|
Impairment
expense
|
220
|
|
2,042
|
|
—
|
|
—
|
|
2,262
|
Exploration and
appraisal costs
|
634
|
|
—
|
|
—
|
|
—
|
|
634
|
Adjustment to
long-term incentives
|
—
|
|
—
|
|
1,450
|
|
—
|
|
1,450
|
Transaction and other
expenses
|
—
|
|
556
|
|
—
|
|
—
|
|
556
|
Adjusted income
(loss) before taxes and
discontinued operations
|
$
16,115
|
|
$
4,242
|
|
$
(10,092)
|
|
$
(4,083)
|
|
$
6,182
|
|
|
|
|
|
|
|
|
|
|
Adjusted interest
(income) expense, net
|
(283)
|
|
(2)
|
|
—
|
|
3,895
|
|
3,610
|
Adjusted depreciation
and amortization
|
1,873
|
|
5,705
|
|
—
|
|
168
|
|
7,746
|
Equity compensation
expense
|
—
|
|
—
|
|
1,159
|
|
—
|
|
1,159
|
Adjusted
EBITDA
|
$ 17,705
|
|
$
9,945
|
|
$
(8,933)
|
|
$
(20)
|
|
$
18,697
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a %
of revenue
|
23.7 %
|
|
15.1 %
|
|
|
|
|
|
13.3 %
|
|
Three Months Ended
September 30, 2021
|
|
Completion Fluids
& Products
|
|
Water & Flowback
Services
|
|
Corporate
SG&A
|
|
Other and
Eliminations
|
|
Total
|
|
(in thousands, except
percents)
|
Revenues
|
$
48,691
|
|
$
46,783
|
|
$
—
|
|
$
—
|
|
$
95,474
|
Net income (loss)
before taxes and
discontinued
operations
|
14,675
|
|
(1,807)
|
|
(8,408)
|
|
(1,378)
|
|
3,082
|
Adjustment to
long-term incentives
|
—
|
|
—
|
|
656
|
|
—
|
|
656
|
Transaction and other
expenses
|
630
|
|
693
|
|
27
|
|
—
|
|
1,350
|
Former CEO stock
appreciation right expense
|
—
|
|
—
|
|
(466)
|
|
—
|
|
(466)
|
Restructuring and
severance expenses
|
254
|
|
41
|
|
—
|
|
—
|
|
295
|
Stock warrant fair
value adjustment
|
—
|
|
—
|
|
—
|
|
(3,164)
|
|
(3,164)
|
Adjusted income
(loss) before taxes and
discontinued operations
|
15,559
|
|
(1,073)
|
|
(8,191)
|
|
(4,542)
|
|
1,753
|
|
|
|
|
|
|
|
|
|
|
Adjusted interest
(income) expense, net
|
(165)
|
|
2
|
|
—
|
|
4,246
|
|
4,083
|
Adjusted depreciation
and amortization
|
1,712
|
|
6,192
|
|
—
|
|
225
|
|
8,129
|
Equity compensation
expense
|
—
|
|
—
|
|
1,057
|
|
—
|
|
1,057
|
Adjusted
EBITDA
|
$
17,106
|
|
$
5,121
|
|
$
(7,134)
|
|
$
(71)
|
|
$
15,022
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a %
of revenue
|
35.1 %
|
|
10.9 %
|
|
|
|
|
|
15.7 %
|
Schedule G: Non-GAAP Reconciliation of Net Debt
(Unaudited)
The following reconciliation of net debt is presented as a
supplement to financial results prepared in accordance with
GAAP.
|
September
30,
2022
|
|
December 31,
2021
|
|
(in
thousands)
|
Non-restricted
cash
|
$
25,247
|
|
$
31,551
|
|
|
|
|
Swedish Credit
Facility
|
14
|
|
—
|
Asset-Based Credit
Agreement
|
—
|
|
67
|
Term Credit
Agreement
|
$
153,873
|
|
$
151,869
|
Net debt
|
$
128,640
|
|
$
120,385
|
Schedule H: Non-GAAP Reconciliation
to Adjusted Free Cash Flow From Continuing Operations
(Unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 30,
2022
|
|
June 30,
2022
|
|
September 30,
2021
|
|
September 30,
2022
|
|
September 30,
2021
|
|
(in
thousands)
|
Cash from operating
activities
|
$
2,145
|
|
$
17,869
|
|
2,817
|
|
$
25,948
|
|
$
10,424
|
Discontinued operations
operating activities
(adjusted EBITDA)
|
—
|
|
—
|
|
—
|
|
—
|
|
(416)
|
Cash from continued
operating activities
|
2,145
|
|
17,869
|
|
2,817
|
|
25,948
|
|
10,840
|
Less: Continuing
operations capital
expenditures, net of proceeds from asset
sales
|
(11,971)
|
|
(10,329)
|
|
(1,869)
|
|
(31,189)
|
|
(10,624)
|
Payments on financing
lease obligations
|
—
|
|
(1,174)
|
|
—
|
|
(1,174)
|
|
—
|
Distributions from CSI
Compressco LP (1)
|
52
|
|
52
|
|
52
|
|
157
|
|
104
|
Cash received from
other investments
|
—
|
|
—
|
|
—
|
|
—
|
|
2,354
|
Adjusted Free Cash Flow
From Continuing
Operations
|
$
(9,774)
|
|
$
6,418
|
|
$
1,000
|
|
$
(6,258)
|
|
$
2,674
|
(1)
Following the GP Sale on January 29, 2021, TETRA retained an
investment CSI Compressco representing a 3.7% limited partner
interest as of September 30, 2022.
|
Schedule I: Non-GAAP
Reconciliation to Net Leverage Ratio (Unaudited)
|
|
|
Three Months
Ended
|
|
Twelve
Months
Ended
|
|
September 30,
2022
|
|
June 30,
2022
|
|
March 31,
2022
|
|
December 31,
2021
|
|
September 30,
2022
|
|
(in
thousands)
|
Net income (loss)
before taxes and
discontinued
operations
|
2,115
|
|
$
1,280
|
|
$
8,934
|
|
$
(758)
|
|
$
11,571
|
Insurance
settlement
|
—
|
|
—
|
|
(3,750)
|
|
—
|
|
(3,750)
|
Exploration and
appraisal costs
|
936
|
|
634
|
|
1,930
|
|
—
|
|
3,500
|
Adjustment to
long-term incentives
|
1,731
|
|
1,450
|
|
784
|
|
495
|
|
4,460
|
Transaction, legal and
other expenses
|
82
|
|
556
|
|
—
|
|
62
|
|
700
|
Impairments and other
charges
|
—
|
|
2,262
|
|
—
|
|
132
|
|
2,394
|
Former CEO stock
appreciation right expense
|
—
|
|
—
|
|
472
|
|
107
|
|
579
|
Restructuring
expenses
|
—
|
|
—
|
|
—
|
|
381
|
|
381
|
Stock warrant fair
value adjustment
|
—
|
|
—
|
|
—
|
|
(56)
|
|
(56)
|
Provision for
(recovery of) doubtful accounts
|
(213)
|
|
—
|
|
—
|
|
(230)
|
|
(443)
|
Adjusted income
before taxes and discontinued operations
|
$
4,651
|
|
$
6,182
|
|
$
8,370
|
|
$
133
|
|
$
19,336
|
|
|
|
|
|
|
|
|
|
|
Adjusted interest
expense, net
|
3,999
|
|
3,610
|
|
3,324
|
|
4,003
|
|
14,936
|
Adjusted depreciation
and amortization
|
8,634
|
|
7,746
|
|
7,679
|
|
7,886
|
|
31,945
|
Equity compensation
expense
|
1,098
|
|
1,159
|
|
1,104
|
|
1,052
|
|
4,413
|
Non-cash (gain) loss on
investments
|
548
|
|
710
|
|
(1,100)
|
|
14,030
|
|
14,188
|
Gain on sale of
assets
|
(262)
|
|
(500)
|
|
(218)
|
|
(3)
|
|
(983)
|
Other debt covenant
adjustments
|
230
|
|
214
|
|
143
|
|
(236)
|
|
351
|
Debt covenant
adjusted EBITDA
|
$
18,898
|
|
$
19,121
|
|
$
19,302
|
|
$
26,865
|
|
$
84,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2022
|
|
|
|
|
|
|
|
|
|
(in thousands,
except ratio)
|
Term credit
agreement
|
|
|
|
|
|
|
|
|
$
163,071
|
Swedish credit
agreement
|
|
|
|
|
|
|
|
|
14
|
ABL letters of credit
and guarantees
|
|
|
|
|
|
|
|
|
4,714
|
Total debt and
commitments
|
|
|
|
|
|
|
|
|
167,799
|
Unrestricted
cash
|
|
|
|
|
|
|
|
|
25,247
|
Net debt and
commitments
|
|
|
|
|
|
|
|
|
$
142,552
|
Net leverage
ratio
|
|
|
|
|
|
|
|
|
1.7
|
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SOURCE TETRA Technologies, Inc.