TETRA Technologies, Inc. Announces Second Quarter Results And Provides Update To Total Year Guidance
THE WOODLANDS, Texas, Aug. 9, 2018 /PRNewswire/ -- TETRA Technologies, Inc. ("TETRA") (NYSE:TTI) today announced consolidated second quarter 2018 net loss per share before discontinued operations attributable to TETRA stockholders of $0.05. This compares to consolidated net loss of $0.10 per share before discontinued operations attributable to TETRA stockholders in the first quarter of 2018, and a net loss per share before discontinued operations attributable to TETRA stockholders of $0.04 in the second quarter of 2017.
TETRA's adjusted per share results attributable to TETRA stockholders for the second quarter of 2018, before discontinued operations excluding special items, were earnings per share of $0.03. This compares to adjusted loss per share of $0.06 in the first quarter of 2018 and adjusted earnings per share of $0.02 in the second quarter of 2017 before discontinued operations, which exclude special items detailed later in this press release.
Second quarter 2018 revenue before discontinued operations was $260 million, an increase of 30% from the first quarter of 2018 and an increase of 45% from the second 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.)
Second Quarter 2018 Results
Three Months Ended
June 30, March 31, June 30,
2018 2018 2017
---- ---- ----
(In Thousands, Except per Share Amounts)
Revenue before
discontinued
operations $260,072 $199,381 $179,931
Loss before
discontinued
operations (12,132) (21,057) (7,966)
Adjusted EBITDA
before
discontinued
operations (1) 46,285 26,222 28,865
GAAP EPS before
discontinued
operations
attributable to
TETRA
stockholders (0.05) (0.10) (0.04)
Adjusted EPS
attributable to
TETRA
stockholders(1) 0.03 (0.06) 0.02
GAAP net cash
provided (used)
by operating
activities 19,134 (31,261) 19,977
TETRA only
adjusted free
cash flow before
discontinued
operations (1) 18,018 (29,917) 11,327
----------------- ------ ------- ------
(1) Non-GAAP financial
measures are reconciled to
GAAP in the schedules
below.
Second Quarter Highlights include:
-- Adjusted EBITDA was 17.8% of revenue and increased $20 million (77%)
from the first quarter of this year reflecting strong contributions from
the recent SwiftWater acquisition, better pricing across the onshore
segments, returns from recent capital investments and the benefit of
seasonality in our Europe fluids business. Profit before taxes was a
loss of $9.7 million.
-- Water & Flowback Services adjusted EBITDA increased 74% from the first
quarter of 2018 to $20 million driven by a full quarter from the
SwiftWater acquisition, continued improvements in the water management
and flow back operations in multiple basins aided by higher pricing and
incremental investments. Profit before taxes was $8.3 million, 9.9% of
revenue.
-- Completion Fluids & Products adjusted EBITDA increased 122% from the
first quarter of 2018 to $13.7 million, driven by the seasonal nature of
our Europe Chemicals business and stronger U.S. activity. Profit before
taxes was $10.0 million, 13% of revenue.
-- Compression Services adjusted EBITDA increased 19% from the first
quarter of 2018 to $22.4 million on higher equipment sales and price
increases on the compression services fleet. Loss before taxes was $8.7
million, an improvement from a $14 million loss in the first quarter of
2018. New equipment orders during the second quarter were $25 million.
In July of 2018 an additional order of $18 million was secured. These
orders reflect the strong demand for incremental compression equipment
to gather, move and process associated gas in the Permian Basin.
-- Entered into a global joint marketing and development agreement with
Halliburton for the sale and distribution of TETRA's proprietary family
of TETRA CS Neptune(®) completion fluids. The collaborative agreement
also fosters and drives further development of other oil and gas
drilling and completion fluids based on their respective technologies
and resource capabilities.
Stuart M. Brightman, TETRA's Chief Executive Officer, stated, "We are very pleased with the accelerated rate of improvement as each segment saw a material sequential improvement in revenue and adjusted EBITDA. Our strong presence in the US onshore markets, aided by the recent acquisition of SwiftWater, is meaningfully impacting our results. We are seeing better pricing and stronger equipment utilization in each of our segments. We are also seeing preliminary signs of an international recovery and new offshore projects being initiated, including a significant deepwater Gulf of Mexico completion fluids project for 2019. Our vertically integrated completion fluids network positions us well to capitalize on this recovery.
"We announced earlier in the quarter the agreement with Halliburton to further capitalize on this expected recovery by jointly marketing our innovative industry leading TETRA CS Neptune(®) completion fluids technology. We are very pleased to have this agreement in place with a leading global fluids provider such as Halliburton. TETRA CS Neptune(®) completion fluids are unique zinc-free, clear brine completion fluids that have significant potential for growth through global applications and as base fluids for other applications, such as packer and reservoir drill-in fluids. We look forward to working with Halliburton to expand sales and jointly develop new offerings and expect this to be a great relationship for years to come, especially as deepwater drilling activity comes back.
"Water & Flowback Services second quarter 2018 revenue increased 37% sequentially to $83.6 million led by a full quarter of SwiftWater operations and overall significantly stronger activity in the U.S. shale plays. In the second quarter of 2018, SwiftWater generated $28.6 million of revenue and $5.2 million profit before taxes, inclusive of $1.6 million of depreciation expense. The financial results of this acquisition are outperforming our acquisition expectations. We have been able to successfully cross sell our TETRA Steel(TM) 1200 proprietary lay-flat hose technology. We continue to see significant opportunities in this division and have increased our projected investments in capital given the strong returns from high utilization and better pricing as customers continue to deal with high volumes of water to complete fracking operations and handle high volumes of flow back sand and produced water. In addition to the Permian market, we are experiencing continued strong financial results in the Rockies, MidCon, Northeast and most recently also in South Texas. Water & Flowback Services profit before taxes was $8.3 million (9.9% of revenue), while adjusted EBITDA was $20.1 million (24.1% of revenue).
"Completion Fluids & Products revenue was $76.6 million for the second quarter of 2018, an increase of 44% from the first quarter of 2018. We are working with two major customers on the timing for TETRA CS Neptune(®) opportunities. We expect both opportunities to materialize by year-end. Completion Fluids & Products Division profit before taxes was $10.0 million (13.0% of revenue), while adjusted EBITDA was $13.7 million (17.9% of revenue).
"Second quarter 2018 Compression revenue increased 17% sequentially to $99.9 million. Compression Services gross margin excluding depreciation improved to 46.2% in the second quarter from 41.6% in the first quarter of 2018. New equipment orders of $25 million were received in the second quarter and another $18 million order was received in late July, reflecting our customers' continued strong demand for compression to move associated gas. Our backlog was $102 million at the end of the second quarter. Compression loss before tax for the second quarter of 2018 was $8.7 million compared to a $14.0 million loss for the first quarter of 2018 and $6.2 million loss for the second quarter of 2017. Adjusted EBITDA was $22.4 million in the second quarter, compared to $18.9 million in the first quarter. On July 20, 2018, CSI Compressco LP declared a cash distribution attributable to the second quarter of 2018 of $0.1875 per outstanding common unit, which will be paid on August 14, 2018 to common unitholders of record as of the close of business on August 1, 2018. The distribution coverage ratio for the second quarter of 2018 was 0.65X."
Free Cash Flow and Balance Sheet
Consolidated net cash from operating activities for the second quarter of 2018 was $19.1 million, compared to a net use of cash of $31.3 million in the first quarter of 2018. TETRA only adjusted free cash flow in the second quarter was positive $18.0 million. Consolidated net debt was $741 million, while TETRA only net debt was $159 million. At the end of the second quarter TETRA only cash on hand was $18.8 million. With a strong balance sheet, TETRA remains positioned to invest opportunistically into the recovering market.
Special items
Special items, including Discontinued Operations, incurred in the second quarter, as detailed on Schedule E, include the following:
-- $4.3 million non-cash expense for a fair value adjustment of SwiftWater
earn-out obligation given the stronger than expected results of the
acquisition.
-- $2.2 million non-cash expense on stock warrant fair value adjustments
-- $0.5 million non-cash gain for a fair value adjustment of the CSI
Compressco Series A Convertible Preferred units
-- $0.1 million in expenses from severance and transaction costs
Additionally, a normalized tax rate of 21% is reflected in Adjusted Net Income, as shown on Schedule E.
Total Year 2018 Guidance Update
We expect total year 2018 revenue from continuing operations to be between $965 million and $1.005 billion, up from the prior guidance of $945 million and $985 million. We expected consolidated adjusted EBITDA of between $170 million and $190 million, up from the prior guidance of $168 million and $188 million. The increased revenue and adjusted EBITDA is reflecting the higher new equipment sales for CSI Compressco. Total year projected loss before taxes is expected to be between $16.9 million and $35.9 million, compared to the prior guidance of $7.5 and $27.5 million, reflecting the second quarter non-cash expenses partially offset by the higher CSI Compressco equipment sales EBITDA. Total year projected loss before taxes includes special items year to date of $9.9 million.
Projected total year capital expenditures for TETRA only are expected to be between $45 million and $55 million. CSI Compressco capital expenditures are expected to be between $110 million and $120 million inclusive of maintenance capital expenditures of between $18 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, August 9, 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 10115962, for one week following the conference call and the archived webcast call will be available through the Company's website for 30 days following the conference call.
Investor Contact
TETRA Technologies, Inc., The Woodlands, Texas
Stuart M. Brightman
Ph: 281-367-1983
www.tetratec.com
Financial Statements, Schedules and Non-GAAP Reconciliation Schedules (Unaudited)
Schedule A: Consolidated Income Statement (unaudited)
Schedule B: Financial Results By Segment (unaudited)
Schedule C: Consolidated Balance Sheet (unaudited)
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 Projected 2018 Adjusted EBITDA
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, 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 Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
(In Thousands, Except per Share Amounts)
Revenues $260,072 $179,931 $459,453 $339,340
Cost of sales,
services, and rentals 183,292 124,612 328,249 237,843
Depreciation,
amortization, and
accretion 28,979 25,784 55,420 52,308
------ ------ ------ ------
Total cost of revenues 212,271 150,396 383,669 290,151
------- ------- ------- -------
Gross profit 47,801 29,535 75,784 49,189
General and
administrative
expense 33,617 29,460 64,420 56,211
Interest expense, net 18,379 14,328 33,352 28,095
Warrants fair value
adjustment (income)
expense 2,195 (5,545) 201 (11,521)
CCLP Series A
Preferred Units fair
value adjustment
(income) expense (512) (4,834) 846 (3,203)
Litigation arbitration
award income - - - (12,816)
Other expense, net 3,808 775 6,584 1,236
----- --- ----- -----
Loss before taxes and
discontinued
operations (9,686) (4,649) (29,619) (8,813)
Provision for income
taxes 2,446 3,317 3,570 3,398
----- ----- ----- -----
Loss before
discontinued
operations (12,132) (7,966) (33,189) (12,211)
Discontinued
operations:
Loss from discontinued
operations (including
2018 loss on disposal
of $33.8 million),
net of taxes (21) (6,653) (41,727) (13,660)
--- ------ ------- -------
Net loss (12,153) (14,619) (74,916) (25,871)
Loss attributable to
noncontrolling
interest 6,188 3,628 15,303 12,417
----- ----- ------ ------
Loss attributable to
TETRA stockholders $(5,965) $(10,991) $(59,613) $(13,454)
======= ======== ======== ========
Basic per share
information:
---------------
Income (loss) before
discontinued
operations
attributable to TETRA
stockholders $(0.05) $(0.04) $(0.14) $0.00
Loss from discontinued
operations
attributable to TETRA
stockholders $0.00 $(0.06) $(0.33) $(0.12)
----- ------ ------ ------
Net loss attributable
to TETRA stockholders $(0.05) $(0.10) $(0.47) $(0.12)
====== ====== ====== ======
Weighted average
shares outstanding 122,474 114,534 125,553 114,375
======= ======= ======= =======
Diluted per share
information:
-----------------
Income (loss) before
discontinued
operations
attributable to TETRA
stockholders $(0.05) $(0.04) $(0.14) $0.00
Loss from discontinued
operations
attributable to TETRA
stockholders $0.00 $(0.06) $(0.33) $(0.12)
----- ------ ------ ------
Net loss attributable
to TETRA stockholders $(0.05) $(0.10) $(0.47) $(0.12)
====== ====== ====== ======
Weighted average
shares outstanding 122,474 114,534 125,553 114,375
======= ======= ======= =======
Schedule B: Financial Results By Segment (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
(In Thousands)
Revenues by segment:
--------------------
Completion Fluids &
Products Division $76,556 $73,995 $129,660 $130,223
Water & Flowback
Services Division 83,646 31,086 144,721 69,265
Compression Division 99,924 75,312 185,346 140,871
Eliminations and
other (54) (462) (274) (1,019)
--- ---- ---- ------
Total revenues $260,072 $179,931 $459,453 $339,340
======== ======== ======== ========
Gross profit (loss)
by segment:
-------------------
Completion Fluids &
Products Division $14,396 $22,358 $21,082 $33,688
Water & Flowback
Services Division 18,631 (245) 30,035 2,003
Compression Division 14,933 7,533 24,973 13,698
Corporate overhead
and eliminations (159) (111) (306) (200)
---- ----
Total gross profit $47,801 $29,535 $75,784 $49,189
======= ======= ======= =======
Income (loss) before
taxes by segment:
--------------------
Completion Fluids &
Products Division $9,981 $16,616 $12,430 $36,088
Water & Flowback
Services Division 8,311 (3,920) 14,859 (5,186)
Compression Division (8,655) (6,180) (22,673) (20,513)
Corporate overhead
and eliminations (19,323) (11,165) (34,235) (19,202)
------- ------- ------- -------
Total income (loss)
before taxes $(9,686) $(4,649) $(29,619) $(8,813)
======= ======= ======== =======
Please note that the above results by Segment include special charges and expenses. Please see Schedule E for details of those special charges and expenses.
Schedule C: Consolidated Balance Sheet (Unaudited)
June 30, 2018 December 31, 2017
------------- -----------------
(In Thousands)
Balance Sheet:
--------------
Cash (excluding restricted
cash) $70,157 $26,128
Accounts receivable, net 181,454 144,051
Inventories 133,367 115,438
Assets of discontinued
operations 1,538 121,134
Other current assets 23,730 17,858
PP&E, net 833,078 809,432
Other assets 136,295 74,573
------- ------
Total assets $1,379,619 $1,308,614
========== ==========
Liabilities of discontinued
operations $8,343 $73,913
Other current liabilities 158,839 148,026
Long-term debt (1) 810,739 629,855
Long-term portion of
decommissioning
liabilities 12,073 11,738
CCLP Series A Preferred 45,644 61,436
Warrant liability 13,403 13,202
Other long-term liabilities 19,516 17,883
Equity 311,062 352,561
------- -------
Total liabilities and
equity $1,379,619 $1,308,614
========== ==========
(1) Please see Schedule D for
the individual debt obligations
of TETRA and CSI Compressco LP.
Schedule D: Long-Term Debt
TETRA Technologies Inc. and its subsidiaries, other than CSI Compressco LP and its subsidiaries, are obligated under a bank credit agreement and senior notes, neither of which are obligations of CSI Compressco LP and its subsidiaries. CSI Compressco LP and its subsidiaries are obligated under a separate bank credit agreement and senior notes, neither of which are obligations of TETRA and its other subsidiaries. Amounts presented are net of deferred financing costs.
June 30, 2018 December 31, 2017
------------- -----------------
(In Thousands)
TETRA
-----
Bank
revolving
line of
credit
facility $59,906 $ -
TETRA 11%
Senior Note 118,341 117,679
TETRA total
debt 178,247 117,679
Less current
portion - -
TETRA total
long-term
debt $178,247 $117,679
-------- --------
CSI
Compressco
LP
-----------
Bank Credit
Facility $ - $223,985
New ABL
Credit
Agreement - -
7.25% Senior
Notes 288,989 288,191
7.50% Senior
Notes 343,503 -
------- ---
Total debt 632,492 512,176
Less current
portion - -
--- ---
CCLP total
long-term
debt $632,492 $512,176
-------- --------
Consolidated
total long-
term debt $810,739 $629,855
======== ========
Non-GAAP Financial Measures
In addition to financial results determined in accordance with GAAP, this press release includes the following non-GAAP financial measures for the Company: net debt, adjusted consolidated and segment income (loss) before taxes, and 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, 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 a non-GAAP measure that the Company defines as cash from TETRA's operations, excluding cash settlements of Maritech AROs, less capital expenditures net of sales proceeds and 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 discontinued operations EBITDA and discontinued operations capital expenditures. Management uses this supplemental financial measure to:
-- assess the Company's ability to retire debt;
-- evaluate the capacity of the Company to further invest and grow; and
-- to measure the performance of the Company as compared to its peer group
of companies.
TETRA only adjusted free cash flow 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
------------------
June 30, 2018
Income (loss) Provision Noncont. Net Income Diluted EPS
before taxes (Benefit) for Interest (Loss)
and Tax Attributable
discontinued to TETRA
operations Stockholders
---------- ------------
(In Thousands, Except per Share Amounts)
Income (loss)
attributable to TETRA
stockholders,
excluding special
items and discontinued
operations $(3,620) $(343) $(6,593) $3,316 $0.03
Severance expense (43) (9) (9) (25) 0.00
Stock warrant fair
value adjustment (2,195) (461) - (1,734) (0.01)
Convertible Series A
preferred fair value
adjustments 512 108 414 (10) 0.00
Transaction costs (40) (8) - (32) 0.00
SwiftWater Earnout
Adjustment (4,300) (903) - (3,397) (0.03)
Effect of deferred tax
valuation allowance
and other related tax
adj. - 4,062 - (4,062) (0.03)
--- ----- --- ------ -----
Net income (loss)
before discontinued
operations (9,686) 2,446 (6,188) (5,944) (0.05)
------ ----- ------ ------ -----
Loss from discontinued operations (21) 0.00
--- ----
Net Income (loss) attributable to TETRA
stockholders, as reported $(5,965) $(0.05)
Three Months Ended
------------------
March 31, 2018
Income (loss) Provision Noncont. Net Income Diluted EPS
before taxes (Benefit) for Interest (Loss)
and Tax Attributable
discontinued to TETRA
operations Stockholders
---------- ------------
(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
------------------
June 30, 2017
Income (loss) Provision Noncont. Net Income (Loss) Diluted EPS
before taxes Interest
and (Benefit) for Attributable
discontinued Tax to TETRA
operations Stockholders
---------- ------------
(In Thousands, Except per Share Amounts)
Income (loss)
attributable to TETRA
stockholders,
excluding unusual
charges $(14,247) $(9,541) $(6,983) $2,277 $0.02
Severance expense (585) (176) - (409) 0.00
Stock warrant fair
value adjustment 5,545 1,663 - 3,882 0.03
Convertible Series A
preferred offering
cost and fair value
adjustments 4,834 1,450 3,478 (94) 0.00
Software writeoff (196) (59) (123) (14) 0.00
Effect of deferred tax
valuation allowance
and other related tax
adj. - 9,980 - (9,980) (0.09)
--- ----- --- ------ -----
Net income (loss)
before discontinued
operations (4,649) 3,317 (3,628) (4,338) (0.04)
Loss from discontinued operations (6,653) (0.06)
------ -----
Net Income (loss) attributable to TETRA
stockholders, as reported $(10,991) $(0.10)
Schedule F: Non-GAAP Reconciliation to GAAP Financials
Three Months Ended
------------------
June 30, 2018
-------------
Net Tax Income Impairments Adjusted Interest Adjusted Equity Adjusted
Income Provision & Special Income Expense Depreciation Comp. EBITDA
(Loss) Charges (Loss) & Expense
(Loss), Before Before Amortization
as Tax, as Tax
reported Reported
-------- --------
(In Thousands)
Completion Fluids & Products Division $9,981 $ - $9,981 $(131) $3,875 $ - $13,725
Water & Flowback Services Division 8,311 4,330 12,641 (1) 7,497 - 20,137
Compression Division (8,655) (499) (9,154) 13,634 17,448 496 22,424
Eliminations and other 4 - 4 - (5) - (1)
--- --- --- --- --- --- ---
Subtotal 9,641 3,831 13,472 13,502 28,815 496 56,285
Corporate and other (19,327) 2,236 (17,091) 4,877 164 2,050 (10,000)
------- ----- ------- ----- --- ----- -------
TETRA excluding
Discontinued
Operations $(12,132) $2,446 $(9,686) $6,067 $(3,619) $18,379 $28,979 $2,546 $46,285
March 31, 2018
--------------
Net Tax Income Impairments Adjusted Adjusted Adjusted Equity Adjusted
Income Provision (Loss) & Special Income Interest Depreciation Comp. EBITDA
(Loss), Before (Loss) Expense, & Expense
as Tax, as Charges Before Net Amortization
reported Reported Tax
-------- -------- ---
(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) $14,973 $26,441 $876 $26,222
Three Months Ended
------------------
June 30, 2017
-------------
Net Tax Income Impairments Adjusted Adjusted Adjusted Equity Adjusted
Provision (Loss) & Special Income Interest Depreciation & Comp. EBITDA
Income Charges (Loss) Expense, Amortization Expense
(Loss), Before Before Net
as Tax, as Tax
reported Reported
-------- --------
(In Thousands)
Completion Fluids & Products Division $16,616 $ - $16,616 $27 $4,107 $ - $20,750
Water & Flowback Services Division (3,920) 5 (3,915) (125) 4,362 - 322
Compression Division (6,180) (4,638) (10,818) 10,184 17,204 935 17,505
Eliminations and other 4 - 4 - (5) - (1)
--- --- --- --- --- --- ---
Subtotal 6,520 (4,633) 1,887 10,086 25,668 935 38,576
Corporate and other (11,169) (4,966) (16,135) 4,242 117 2,065 (9,711)
------- ------ ------- ----- --- ----- ------
TETRA excluding
Discontinued
Operations $(7,966) $3,317 $(4,649) $(9,599) $(14,248) $14,328 $25,784 $3,000 $28,865
Schedule G: Non-GAAP Reconciliation of TETRA Net Debt
The cash and debt positions of TETRA and CSI Compressco LP as of June 30, 2018, are shown below. TETRA and CSI Compressco LP's debt agreements are distinct and separate with no cross default provisions, no cross collateral provisions and no cross guarantees. Management believes that the most appropriate method to analyze the debt positions of each company is to view them separately, as noted below.
The following reconciliation of net debt is presented as a supplement to financial results prepared in accordance with GAAP.
June 30, 2018
TETRA CCLP Consolidated
----- ---- ------------
(In Millions)
Non-
restricted
cash $18.8 $51.4 $70.2
Carrying
value
of
long-
term
debt:
Revolver
debt
outstanding 59.9 - 59.9
Senior
Notes
outstanding 118.3 632.5 750.8
----- ----- -----
Net
debt $159.4 $581.1 $740.5
Schedule H: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow
Three Months Ended
June 30, 2018 March 31, 2018 June 30, 2017
------------- -------------- -------------
(In Thousands)
Consolidated
Net cash provided
(used) by operating
activities $19,134 $(31,261) $19,977
ARO settlements - - 23
Capital expenditures,
net of sales proceeds (38,318) (28,816) (11,451)
------- ------- -------
Consolidated adjusted
free cash flow (19,184) (60,077) 8,549
CSI Compressco LP
Net cash provided by
operating activities (3,908) (365) 9,533
Capital expenditures,
net of sales proceeds (30,223) (17,039) (4,262)
------- ------- ------
CSI Compressco free
cash flow (34,131) (17,404) 5,271
TETRA Only
Cash from operating
activities 23,042 (30,896) 10,444
ARO settlements - - 23
Capital expenditures,
net of sales proceeds (8,095) (11,777) (7,189)
------ ------- ------
Free cash flow before
ARO settlements 14,947 (42,673) 3,278
Distributions from CSI
Compressco LP 2,992 2,954 2,812
----- ----- -----
Adjusted TETRA only
free cash flow * 17,939 (39,719) 6,090
* Includes the impact from
discontinued operations. See
schedule I to exclude the
impact from discontinued
operations.
Schedule I: TETRA Only Adjusted Cash Flow From Continuing Operations
--------------------------------------------------------------------
Three Months Ended
------------------
June 30, March 31, June 30,
2018 2018 2017
---- ---- ----
(In Thousands)
TETRA Only
Cash from operating activities $23,042 $(30,896) $10,444
Less: Discontinued operations operating activities
(adjusted EBITDA)(1) (21) (8,176) (3,732)
Cash from continued operating activities 23,063 (22,720) 14,176
Less: Continuing operations capital expenditures(2) (8,037) (10,151) (5,661)
Plus: Distributions from CSI Compressco LP 2,992 2,954 2,812
TETRA only adjusted free cash flow from continuing
operations $18,018 $(29,917) $11,327
------- -------- -------
(1) Reconciled to loss from discontinued operations as follows: Three Months Ended
------------------
June 30, 2018 March 31, 2018 June 30, 2017
------------- -------------- -------------
(In Thousands)
Loss from discontinued operations (21) (41,706) (6,653)
Plus: Income tax provision (benefit) - (2,327) 86
Plus: Depreciation & amortization - 2,069 2,835
Plus: loss on disposal of discontinued operations - 33,788 -
--- ------ ---
Less: Discontinued operations adjusted EBITDA (21) (8,176) (3,732)
(2) Reconciled to TETRA only capital expenditures as follows: Three Months Ended
------------------
June 30, 2018 March 31, 2018 June 30, 2017
------------- -------------- -------------
(In Thousands)
TETRA only capital expenditures (8,095) (11,777) (7,189)
Less: Discontinued operations capital expenditures (58) (1,626) (1,528)
--- ------ ------
Plus: Continuing operations capital expenditures (8,037) (10,151) (5,661)
Schedule J: Non-GAAP Reconciliation to Projected 2018 Adjusted EBITDA
---------------------------------------------------------------------
EBITDA Reconciliation Table for adjusted EBITDA of $170 million
Adjusted EBITDA(1) Equity Comp Expense DD&A Interest Expense Adj Income Before Tax Impairments & Special Charges Income before Tax
----------------- ------------------- ---- ---------------- --------------------- ----------------------------- -----------------
(In Millions)
Total
Adjusted
EBITDA $170.0 $9.0 $112.5 $74.5 $(26.0) $9.9 $(35.9)
EBITDA Reconciliation Table for adjusted EBITDA of $190 million
Adjusted EBITDA(1) Equity Comp Expense DD&A Interest Expense Adj Income Before Tax Impairments & Special Charges Income before Tax
----------------- ------------------- ---- ---------------- --------------------- ----------------------------- -----------------
(In Millions)
Total
Adjusted
EBITDA $190.0 $9.0 $113.5 $74.5 $(7.0) $9.9 $(16.9)
(1) Does not include the
favorable impact to adjusted
EBITDA from approximately $2
million of used units cost of
goods sold from Compression.
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SOURCE TETRA Technologies, Inc.
