TETRA Technologies, Inc. Announces Fourth Quarter And Full Year 2018 Results
THE WOODLANDS, Texas, Feb. 28, 2019 /PRNewswire/ -- TETRA Technologies, Inc. ("TETRA" or the "Company") (NYSE:TTI) today announced consolidated fourth quarter 2018 earnings per share before discontinued operations attributable to TETRA stockholders of $0.04. This compares to a consolidated net loss of $0.06 per share before discontinued operations attributable to TETRA stockholders in the third quarter of 2018, and a consolidated net loss per share before discontinued operations attributable to TETRA stockholders of $0.22 in the fourth quarter of 2017.
TETRA's adjusted per share results attributable to TETRA stockholders for the fourth quarter of 2018((1)), before discontinued operations and excluding special items, was a net loss per share of $0.01. This compares to an adjusted loss per share of $0.02 in the third quarter of 2018((1)) and adjusted loss per share of $0.03 in the fourth quarter of 2017((1)), before discontinued operations and excluding special items.
Fourth quarter 2018 revenue before discontinued operations was $282 million, an increase of 10% over the third quarter of 2018 and 41% over the fourth quarter of last year.
Total year 2018 revenue before discontinued operations was $999 million, an increase of 38% over 2017.
(1) Adjusted earnings/loss per share
is not a generally accepted
accounting principle in the United
States ("GAAP"). Please see
Schedule F for the reconciliations
of these non-GAAP financial
measures to the most directly
comparable GAAP measure.)
Fourth Quarter 2018 Results
Three Months Ended
December 31, 2018 September 30,
2018 December 31, 2017
(In Thousands, Except per Share Amounts)
Revenue before
discontinued
operations $
282,471 $
256,851 $
200,081
Income (Loss)
before
discontinued
operations 3,316 (12,852) (31,726)
Adjusted EBITDA
before
discontinued
operations(2) 46,609 41,803 29,635
GAAP EPS before
discontinued
operations
attributable to
TETRA
stockholders 0.04 (0.06) (0.22)
Adjusted EPS
attributable to
TETRA
stockholders(2) (0.01) (0.02) (0.03)
GAAP net cash
provided by
operating
activities 44,953 13,760 27,761
TETRA only
adjusted free
cash flow from
continuing
operations(2) $
15,598 $
(558) $
4,361
---
Total 2018 Results
Twelve Months Ended
December 31, 2018 December 31, 2017
(In Thousands, Except per Share
Amounts)
Revenue before
discontinued
operations $
998,775 $
723,098
Net loss before
discontinued
operations (42,725) (44,794)
Adjusted EBITDA
before
discontinued
operations(2) 160,918 122,066
GAAP EPS before
discontinued
operations
attributable to
TETRA
stockholders (0.16) (0.19)
Adjusted EPS
attributable to
TETRA
stockholders(2) (0.05) (0.14)
GAAP net cash
provided by
operating
activities 46,586 64,595
TETRA only
adjusted free
cash flow from
continuing
operations(2) $
3,101 $
24,455
---
(2) These measures are not presented in
accordance with GAAP. Please see
the accompanying schedules for the
reconciliations of these non-GAAP
financial measures to the most
directly comparable GAAP measures.
Fourth Quarter Highlights include:
-- Consolidated profit before taxes and before discontinued operations was
$6.1 million, a $19.1 million sequential improvement. Consolidated
Adjusted EBITDA before discontinued operations of $46.6 million (16.5%
of revenue) increased sequentially by $4.8 million primarily due to much
stronger results in our Compression segment, which benefitted from one
of the strongest new equipment sales quarters in its history.
-- Water & Flowback Services profit before taxes was $8.0 million, 10.1% of
revenue. Adjusted EBITDA of $15.9 million was unchanged from the third
quarter despite a year-end slowdown in activity by many operators.
Revenue increased sequentially by $1.2 million. Adjusted EBITDA margins
were 19.9% in the fourth quarter compared to 20.3% in the third quarter
2018.
-- Completion Fluids & Products profit before taxes was $9.5 million, 14.7%
of revenue. Adjusted EBITDA of $13.0 million compares to $12.5 million
in the third quarter, driven by strong Gulf of Mexico and international
offshore activity.
-- Compression net loss before taxes was $3.3 million. Adjusted EBITDA
increased to $29.2 million from $24.6 million in the third quarter due
to one of the highest new equipment sales quarters in the segment's
history and stronger after-market activity. The Compression segment
continues to see improving activity levels from service equipment being
deployed into gathering and centralized gas lift systems and higher
demand for aftermarket services. Utilization of the service fleet
increased from 86.3% at the end of the third quarter to 86.6% at the end
of the fourth quarter.
-- Completed an acquisition in the Water & Flowback segment in the
Appalachian region to increase our water management offerings and
balance out our production testing business there, further boosting our
integrated projects strategy.
Stuart M. Brightman, TETRA's Chief Executive Officer, stated, "In the fourth quarter we saw several of our segments perform at or above our expectations, which was encouraging given the challenges our industry experienced as oil prices declined to the low $40s/bbl range and from Permian Basin take away constraints. Water & Flowback Services revenue in the United States increased sequentially led by strong Permian and Mid-Con activity. We continue to make progress and gain traction with our integrated water management offerings and are very pleased with the traction we are gaining by bundling our multiple service offerings with automation. US offshore completion fluids revenue increased significantly and had the strongest quarter of the year. Compression revenue increased sequentially by 20% on higher new equipment sales and stronger aftermarket services. We do not expect new equipment sales to continue early in 2019 at the fourth quarter levels, but given the lead time necessary to fabricate new equipment, we already have in the backlog the vast majority of new equipment sales that we expect to recognize in 2019.
"Water & Flowback Services fourth quarter 2018 revenue increased 1.5% sequentially to $79.8 million primarily due to strong Permian and Mid-Con activity, while the rest of the lower 48 slightly declined as customers exhausted their budgets or scaled back activity for the holidays. Although quarter on quarter the rig count was only up modestly, the inventory of drilled but uncompleted wells (DUC's) continued to increase at a faster pace, especially in the Permian where they increased 18% since September 2018 according to the EIA. While some customers scaled back in December for the holidays, others continued through the end of the year and into January. Despite the slower completion activity in the fourth quarter, we continue to gain momentum and market share by integrating and automating our water management solutions. We are now providing more than 16 different integrated solution projects across multiple basins, up from 11 that we reported in the prior quarter. These integrated solutions are allowing us to differentiate ourselves and to provide more cost effective and efficient solutions to our customers. When fully implemented, these systems can reduce wellsite personnel requirements by up to 40%. In the fourth quarter, we expanded these offerings into a fourth region and had at least one integrated project in each of the Permian, Appalachian, Mid-Con and the Rockies regions. In December, we completed an acquisition in this segment that broadens our footprint in the Appalachian region and is expected to provide our customers an enhanced, more efficient, diverse and strategically positioned portfolio of integrated water management services in the Marcellus and Utica basins. That acquisition was almost completely integrated within two months of closing and has already generated revenue and earnings above our initial expectations. The purchase price included $7.7 million at closing, funded from cash on hand and a $1.5 million earn-out to be paid in 2019 upon the attainment of certain financial targets.
"Completion Fluids & Products revenue was $64.7 million for the fourth quarter of 2018, an increase of 2.5% from the third quarter of 2018 driven by strong offshore fluids sales. During the fourth quarter, we experienced stronger completion fluid sales volumes in the Gulf of Mexico and internationally offshore than in previous quarters in 2018. On our conference call last quarter, we reported that the TETRA CS Neptune(®) completion fluid projects anticipated for the fourth quarter of 2018 were pushed into 2019. One of the anticipated projects was not completed by our customer as the customer decided to cancel the completion phase of the well. The drilling phase of the second project continues but usage of the TETRA CS Neptune(®) fluids will be dependent on the formation pressures encountered and the completion would likely not be before the second half of 2019. We are also currently in advanced discussions for a Gulf of Mexico project scheduled for this year and believe that the downhole pressures will require TETRA CS Neptune(®) completion fluid as the solution. Beyond 2019 we are in discussions with two other major Gulf of Mexico deepwater operators for their lower tertiary development projects. These lower tertiary development projects will likely require our generation three TETRA CS Neptune(®) fluid, capable of achieving a density of
17 lbs/gallon. The third generation technology is increasing the number of TETRA CS Neptune(®) completion fluid applications by significantly widening the downhole pressure window and we continue to make strides in the development of this solution as well as in testing it with our customers.
"Our overall pipeline for the TETRA CS Neptune(®) completion fluid projects continues to build and our relationship with Halliburton to identify additional TETRA CS Neptune(®) completion fluid opportunities continues to gain traction.
"Fourth quarter 2018 Compression revenue increased 19.8% sequentially to $138.1 million, reflecting a strong market environment. Compression and related services gross margin was 43.6%. Compression and related services gross margins excluding the impact of a tax contingency of $2.1 million was 47.1% (see Schedule K for reconciliation of this non-GAAP financial measure), which decreased slightly from the third quarter due to slightly higher labor and inventory-related costs. New equipment orders of $18.0 million were received in the fourth quarter while total orders received in 2018 were $188 million. Our new equipment sales backlog was $105.2 million at the end of the fourth quarter, a decrease of $35 million from the end of the third quarter, which is primarily a function of strong equipment sales in the fourth quarter. We expect to deliver all of the backlog by year-end 2019. Compression loss before taxes for the fourth quarter of 2018 was $3.3 million compared to a $7.8 million loss for the third quarter of 2018. Adjusted EBITDA was $29.2 million in the fourth quarter, compared to $24.6 million in the third quarter. On December 20, 2018, CSI Compressco LP, a partially owned subsidiary (the "Partnership"), announced plans to reduce the quarterly common unit distribution for the fourth quarter from the $0.1875 per unit ($0.75 per unit per year) previously paid to $0.01 per unit ($0.04 per unit per year) for up to the following four quarters. The Partnership's intention is to review this reduction in the distribution in the second half of 2019. The Partnership intends to use the savings from the reduced distributions to cash redeem the remaining outstanding Series A Convertible Preferred Units to avoid diluting the Partnership's existing common unit holders as a result of the low trading price of the common units despite a strong earnings environment and outlook. On January 22, 2019, the Partnership declared a cash distribution attributable to the fourth quarter of 2018 of $0.01 per outstanding common unit, which was paid on February 14, 2019 to common unitholders of record as of the close of business on February 1, 2019. The distribution coverage ratio for the fourth quarter of 2018 was 28x.The Partnership's goal as stated at the May 31, 2018 investor conference in New York City continues to be to improve its EBITDA leverage ratio from the current levels to 4.5x or below and it believes it is making progress towards that goal."
Free Cash Flow and Balance Sheet
Consolidated net cash from operating activities for the fourth quarter of 2018 was $45.0 million. TETRA only adjusted free cash flow in the fourth quarter was $15.3 million. Consolidated net debt was $775.5 million, while TETRA only net debt was $158.3 million (see Schedules H and I for reconciliations of these non-GAAP financial measures). At the end of the fourth quarter TETRA only non-restricted cash was $24.2 million.
Special items
Special items, including Discontinued Operations, incurred in the fourth quarter, as detailed on Schedule F, include the following:
-- $11.2 million non-cash gain for TETRA stock warrant fair value
adjustment
-- $2.1 million non-cash gain for the fair value adjustment of CSI
Compressco's Series A Convertible Preferred Units
-- $0.8 million of transaction expenses related to acquisition activities
-- $0.3 million non-cash expense for a fair value adjustment of the
SwiftWater earn-out obligation
-- $2.1 million expense for CSI Compressco non-income tax contingency
-- $0.7 million non-cash expense for fixed assets/intangible impairment and
other charges
Additionally, a normalized tax rate of 21% is reflected in Adjusted Net Income, as shown on Schedule F.
Conference Call
TETRA will host a conference call to discuss these results today, February 28, 2018, at 10:30 a.m. ET. The phone number for the call is 1-888-347-5303. 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 10127858, 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
Schedule B: Financial Results By Segment
Schedule C: Consolidated Balance Sheet
Schedule D: Long-Term Debt
Schedule E: Statement Regarding Use of Non-GAAP Financial Measures
Schedule F: Special Items
Schedule G: Non-GAAP Reconciliation to GAAP Financials
Schedule H: Non-GAAP Reconciliation of TETRA Net Debt
Schedule I: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow
Schedule J: Non-GAAP Reconciliation to TETRA Only Adjusted Cash Flow From Continuing Operations
Schedule K: Non-GAAP Reconciliation to Compression and Related Services Gross Profit and Gross Margin Excluding the Impact of Tax Contingency
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 2019, including levels of CSI Compressco's 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 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 Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
(In Thousands, Except per Share Amounts)
Revenues $
282,471 $
200,081 $
998,775 $
723,098
Cost of sales,
services, and rentals 206,561 142,852 717,931 498,131
Depreciation,
amortization, and
accretion 30,045 25,803 114,925 104,053
Impairments and other
charges 681 14,876 3,621 14,876
Insurance recoveries (2,352)
Total cost of revenues 237,287 183,531 836,477 614,708
Gross profit 45,184 16,550 162,298 108,390
General and
administrative
expense 33,580 29,518 132,446 115,414
Interest expense, net 18,700 14,497 70,946 57,246
Warrants fair value
adjustment (income)
expense (11,151) 6,267 (11,129) (5,301)
CCLP Series A
Preferred fair value
adjustment (2,077) 1,365 (733) (2,975)
Litigation arbitration
award (income) (12,816)
Other (income)
expense, net (9) 54 7,194 865
Income (loss) before
taxes and
discontinued
operations 6,141 (35,151) (36,426) (44,043)
Provision for income
taxes 2,825 (3,425) 6,299 751
Income (Loss) before
discontinued
operations 3,316 (31,726) (42,725) (44,794)
Discontinued
operations:
Loss from discontinued
operations, net of
taxes (584) (3,248) (41,515) (17,389)
Net income (loss) 2,732 (34,974) (84,240) (62,183)
Net (income) loss
attributable to
noncontrolling
interest 2,200 6,235 22,623 23,135
Net income (loss)
attributable to TETRA
stockholders $
4,932 $
(28,739) $
(61,617) $
(39,048)
Basic per share
information:
---
Net income (loss)
attributable to TETRA
stockholders $
0.04 $
(0.25) $
(0.50) $
(0.34)
Weighted average
shares outstanding 125,717 114,696 124,101 114,499
Diluted per share
information:
---
Net income (loss)
attributable to TETRA
stockholders $
0.04 $
(0.25) $
(0.50) $
(0.34)
Weighted average
shares outstanding 125,789 114,696 124,101 114,499
Schedule B: Financial Results By Segment (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2018 2017 2018 2017
(In Thousands)
Revenues by segment:
---
Completion Fluids &
Products $
64,675 $
56,305 $
257,408 $
257,851
Water & Flowback
Services 79,783 61,308 303,072 171,621
Compression 138,066 83,105 438,673 295,587
Eliminations and
other (53) (637) (378) (1,961)
Total revenues $
282,471 $
200,081 $
998,775 $
723,098
Gross profit (loss)
by segment:
---
Completion Fluids &
Products $
14,464 $
10,918 $
48,675 $
71,022
Water & Flowback
Services 13,691 (5,031) 55,247 2,319
Compression 17,197 10,403 59,017 35,114
Eliminations and
other (168) 260 (641) (65)
Total gross profit $
45,184 $
16,550 $
162,298 $
108,390
Income (loss) before
taxes and
discontinued
operations by
segment:
---
Completion Fluids &
Products $
9,480 $
6,406 $
30,623 $
63,891
Water & Flowback
Services 8,044 (9,718) 28,712 (12,816)
Compression (3,280) (9,719) (33,797) (37,246)
Eliminations and
other (8,103) (22,120) (61,964) (57,872)
Total income (loss)
before taxes and
discontinued
operations $
6,141 $
(35,151) $
(36,426) $
(44,043)
Please note that the above results by Segment include special charges and expenses. Please see Schedule F for details of those special charges and expenses.
Schedule C: Consolidated Balance Sheet (Unaudited)
December 31, 2018 December 31, 2017
(In Thousands)
Balance Sheet:
---
Cash (excluding
restricted cash) $
40,038 $
26,128
Accounts
receivable, net 187,592 144,051
Inventories 143,571 115,438
Assets of
discontinued
operations 1,354 34,879
Note receivable,
including
accrued interest 7,544
Other current
assets 20,592 17,858
PP&E, net 853,931 809,432
Long-term assets
of discontinued
operations 86,255
Other assets 130,905 74,573
Total assets $
1,385,527 $
1,308,614
Liabilities of
discontinued
operations $
4,145 $
25,688
Other current
liabilities 196,206 148,026
Long-term debt
(1) 815,560 629,855
Long-term
portion of asset
retirement
obligations 12,202 11,738
CCLP Series A
Preferred 27,019 61,436
Warrants
liability 2,073 13,202
Long-term
liability of
discontinued
operations 48,225
Other long-term
liabilities 15,573 17,883
Equity 312,749 352,561
Total liabilities
and equity $
1,385,527 $
1,308,614
(1) Please see Schedule D for
the individual debt obligations
of TETRA and CSI Compressco LP.
Schedule D: Long-Term Debt (Unaudited)
TETRA Technologies Inc. and its subsidiaries, other than CSI Compressco LP and its subsidiaries, are obligated under an asset-based bank credit agreement and term credit agreement, neither of which are obligations of CSI Compressco LP and its subsidiaries. CSI Compressco LP and its subsidiaries are obligated under a separate asset-based bank credit agreement and two series of senior notes, neither of which are obligations of TETRA and its other subsidiaries. Amounts presented are net of deferred financing costs.
December 31, December 31,
2018 2017
(In Thousands)
TETRA
---
Term credit
agreement $182,547
$ -
TETRA asset-based
credit agreement
TETRA 11% Senior
Note 117,679
TETRA total debt 182,547 117,679
Less current portion
TETRA total long-
term debt $
182,547 $
117,679
CSI Compressco LP
---
CCLP Prior Credit
Facility
$ $
223,985
CCLP asset-based
credit agreement
7.25% Senior Notes 289,797 288,191
7.50% Senior Secured
Notes 343,216
CCLP total debt 633,013 512,176
Less current portion
CCLP total long-
term debt $
633,013 $
512,176
Consolidated total
long-term debt $
815,560 $
629,855
Schedule E: Statement Regarding Use of 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 before discontinued operations 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 before discontinued operations (and Adjusted EBITDA before discontinued operations as a percent of revenue) is defined as earnings before interest, taxes, depreciation, amortization, impairments and certain non-cash charges and non-recurring adjustments. Adjusted EBITDA before discontinued operations (and Adjusted EBITDA before discontinued operations 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.
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 F: Special Items (Unaudited)
Three Months Ended
December 31, 2018
Income (Loss) Provision Noncont. Net Income
Before Tax (Benefit) for Interest Attributable to
Tax TETRA
Stockholders EPS
(In Thousands, Except per Share Amounts)
Loss attributable to
TETRA stockholders,
excluding special
items and discontinued
operations $
(3,822) $
(803) $
(1,909) $
(1,110) $
(0.01)
Stock Warrant fair
value adjustment 11,150 2,342 8,808 0.07
Convertible Series A
preferred fair value
adjustments 2,077 436 1,662 (21) 0.00
Other costs and
expenses (773) (162) (611) 0.00
Earnout adjustment 300 63 237 0.00
Non-income tax
contingency (2,110) (443) (1,476) (191) 0.00
Impairments and other
charges (681) (143) (477) (61) 0.00
Effect of deferred tax
valuation allowance
and other related tax
adjustments 1,535 (1,535) (0.01)
Net income (loss)
before discontinued
operations 6,141 2,825 (2,200) 5,516 0.04
Loss from discontinued
operations (584) 0.00
Net Income (loss)
attributable to TETRA
stockholders, as
reported $
4,932 $
0.04
Three Months Ended
September 30, 2018
Income (Loss) Provision Noncont. Net Income
Before Tax (Benefit) for Interest Attributable to
Tax TETRA
Stockholders EPS
(In Thousands, Except per Share Amounts)
Loss attributable to
TETRA stockholders,
excluding special
items and discontinued
operations $
(8,823) $
(1,854) $
(4,646) $
(2,323) $
(0.02)
Stock warrant fair
value adjustment 179 38 141 0.00
Convertible Series A
preferred fair value
adjustments (498) (105) (362) (31) 0.00
Other costs and
expenses (426) (89) (112) (225) 0.00
Earnout adjustment 600 126 474 0.00
Financing costs (1,040) (218) (822) (0.01)
Impairments and other
charges (2,940) (617) (2,323) (0.02)
Effect of deferred tax
valuation allowance
and other related tax
adjustments 2,623 (2,623) (0.02)
Net income (loss)
before discontinued
operations (12,948) (96) (5,120) (7,732) (0.06)
Loss from discontinued
operations 796 0.00
Net Income (loss)
attributable to TETRA
stockholders, as
reported $
(6,936) $
(0.06)
Three Months Ended
December 31, 2017
Income (Loss) Provision Noncont. Net Income
Before Tax (Benefit) for Interest Attributable to
Tax TETRA
Stockholders EPS
(In Thousands, Except per Share Amounts)
Loss attributable to
TETRA stockholders,
excluding special
items and discontinued
operations $
(11,474) $
(3,442) $
(5,150) $
(2,882) $
(0.03)
Impairments and other
charges, including
inventory adjustments (14,784) (4,435) (10,349) (0.09)
Severance expense (87) (26) (61) 0.00
Stock Warrant fair
value adjustment (6,266) (1,880) (4,386) (0.04)
Bad debt expense from
customer bankruptcies (100) (30) (70) 0.00
CCLP series A Preferred
fair value adjustment (1,365) (410) (965) 10 0.00
Software implementation (194) (58) (120) (16) 0.00
Transaction costs (881) (264) (617) (0.01)
Effect of deferred tax
valuation allowance
and other related tax
adjustments 7,120 (7,120) (0.06)
Net income (loss)
before discontinued
operations (35,151) (3,425) (6,235) (25,491) (0.22)
Loss from discontinued
operations (3,248) (0.03)
Net Income (loss)
attributable to TETRA
stockholders, as
reported $
(28,739) $
(0.25)
Twelve Months Ended
December 31, 2018
Income (Loss) Provision Noncont. Interest Net Income
Before Tax (Benefit) for Attributable to
Tax TETRA
Stockholders EPS
(In Thousands, Except per Share Amounts)
Loss attributable to
TETRA stockholders,
excluding special
items and discontinued
operations $
(32,334) $
(6,734) $
(19,044) $
(6,556) $
(0.05)
Severance expense (116) (24) (9) (83) 0.00
Stock Warrant fair
value adjustment 11,129 2,338 1,662 7,129 0.06
Convertible Series A
preferred fair value
adjustments 733 154 (929) 1,508 0.01
Prior debt issuance
costs (3,541) (744) (2,238) (559) 0.00
Other costs and
expenses (2,126) (445) (112) (1,569) (0.01)
Earnout adjustment (3,400) (714) (2,686) (0.02)
Financing costs (1,040) (218) (822) (0.01)
Non-income tax
contingency (2,110) (443) (1,476) (191) 0.00
Impairments and other
charges (3,621) (760) (477) (2,384) (0.02)
Effect of Deferred Tax
Valuation Allowance
and other related tax
adjustments 13,889 (13,889) (0.11)
Net Income (loss)
before discontinued
operations (36,426) 6,299 (22,623) (20,102) (0.16)
Loss from discontinued
operations (41,515) (0.34)
Net Income (loss)
attributable to TETRA
stockholders, as
reported $
(61,617) $
(0.50)
Twelve Months Ended
December 31, 2017
Income (Loss) Provision Noncont. Interest Net Income
Before Tax (Benefit) for Attributable to
Tax TETRA
Stockholders EPS
(In Thousands, Except per Share Amounts)
Loss attributable to
TETRA stockholders,
excluding special
items and
discontinued
operations $
(46,564) $
(13,969) $
(16,237) $
(16,358) $
(0.14)
Impairments and other
charges, including
inventory adjustments (14,784) (4,435) (10,349) (0.09)
Severance expense (1,036) (311) (38) (687) (0.01)
Stock Warrant fair
value adjustment 5,301 1,591 3,710 0.03
Bad debt expense from
customer bankruptcies (203) (61) (142) 0.00
CCLP series A
Preferred fair value
adjustment 2,975 893 (5,307) 7,389 0.06
Legal Award 12,879 3,864 9,015 0.08
Software
implementation (974) (292) (1,553) 871 0.01
Transaction costs (1,637) (491) (1,146) (0.01)
Effect of deferred tax
valuation allowance
and other related tax
adjustments 13,962 (13,962) (0.12)
Net Income (loss)
before discontinued
operations (44,043) 751 (23,135) (21,659) (0.19)
Loss from discontinued
operations (17,389) (0.15)
Net Income (loss)
attributable to TETRA
stockholders, as
reported $
(39,048) $
(0.34)
Schedule G: Non-GAAP Reconciliation to GAAP Financials (Unaudited)
Three Months Ended
December 31, 2018
Net Income Tax Provision Income (Loss) Impairments & Adjusted Income Interest Equity Comp.
(Loss), as Before Tax, as Special Charges (Loss) Before Expense, Net Expense
reported Reported Tax Adjusted EBITDA
Depreciation &
Amortization
(In Thousands)
Completion Fluids &
Products $
9,480
$ $
9,480 $
(164) $
3,723
$ $
13,039
Water & Flowback
Services 8,043 (300) 7,743 10 8,151 15,904
Compression (3,282) 714 (2,568) 13,367 18,004 380 29,183
Eliminations and other 4 4 (4)
Subtotal 14,245 414 14,659 13,213 29,874 380 58,126
Corporate and other (8,104) (10,377) (18,481) 5,487 171 1,306 (11,517)
TETRA excluding
Discontinued
Operations $
3,316 $
2,825 $
6,141 $
(9,963) $
(3,822) $
18,700 $
30,045 $
1,686 $
46,609
Three Months Ended
September 30, 2018
Net Income Tax Provision Income (Loss) Impairments & Adjusted Income Equity Comp.
(Loss), as Before Tax, as Special (Loss) Before Expense
reported Reported Charges Tax Interest Expense Adjusted EBITDA
Depreciation &
Amortization
(In Thousands)
Completion Fluids &
Products $
8,713
$ $
8,713 $
(70) $
3,846
$ $
12,489
Water & Flowback
Services 5,809 2,340 8,149 5 7,765 15,919
Compression (7,844) 675 (7,169) 13,690 17,682 367 24,570
Eliminations and other 5 5 1 (5) 1
Subtotal 6,683 3,015 9,698 13,626 29,288 367 52,979
Corporate and other (19,631) 1,111 (18,520) 5,268 172 1,904 (11,176)
TETRA excluding
Discontinued
Operations $
(12,852) $
(96) $
(12,948) $
4,126 $
(8,822) $
18,894 $
29,460 $
2,271 $
41,803
Three Months Ended
December 31, 2017
Net Income Tax Provision Income (Loss) Impairments & Adjusted Income Interest Depreciation & Adjusted
(Loss), as Before Tax, as Special Charges (Loss) Before Expense, Net Amortization Equity
reported Reported Tax Comp.
Expense Adjusted EBITDA
(In Thousands)
Completion Fluids &
Products $
6,407 $
83 $
6,490 $
(85) $
4,019
$ $
10,424
Water & Flowback
Services (9,718) 15,212 5,494 (3) 4,327 9,818
Compression (9,719) 1,559 (8,160) 10,985 17,280 (934) 19,171
Eliminations and other 5 5 (5)
Subtotal (13,025) 16,854 3,829 10,897 25,621 (934) 39,413
Corporate and other (22,126) 7,147 (14,979) 3,600 182 1,419 (9,778)
TETRA excluding
Discontinued
Operations $
(31,726) $
(3,425) $
(35,151) $
24,001 $
(11,150) $
14,497 $
25,803 $485 $
29,635
Twelve Months Ended
December 31, 2018
Net Income Tax Provision Income (Loss) Impairments & Adjusted Income Interest Equity Comp. Omnibus
(Loss), as Before Tax, as Special Charges (Loss) Before Expense, Net Expense Equity
reported Reported Tax Adjusted EBITDA
Depreciation &
Amortization
(In Thousands)
Completion Fluids &
Products $
30,623 $
70 $
30,693 $
(599) $
15,345
$
$ $
45,439
Water & Flowback
Services 28,712 6,373 35,085 28,439 63,524
Compression (33,797) 5,788 (28,009) 51,905 70,500 639 95,035
Eliminations and other 11 11 (17) (6)
Subtotal 25,549 12,231 37,780 51,306 114,267 639 203,992
Corporate and other (61,975) (8,137) (70,112) 19,640 658 6,740 (43,074)
TETRA excluding
Discontinued
Operations $
(42,725) $
6,299 $
(36,426) $
4,094 $
(32,332) $
70,946 $
114,925 $
7,379
$ $
160,918
Twelve Months Ended
---
December 31, 2017
Net Income Tax Provision Income (Loss) Impairments & Adjusted Income Interest Depreciation & Adjusted Equity Omnibus
(Loss), as Before Tax, as Special Charges (Loss) Before Expense, Net Amortization Comp. Expense Equity
reported Reported Tax Adjusted EBITDA
(In Thousands)
Completion Fluids &
Products $
63,891 $
(12,657) $
51,234 $
(53) $
16,298
$
$ $
67,479
Water & Flowback
Services (12,816) 15,482 2,666 (296) 18,092 20,462
Compression (37,246) (1,937) (39,183) 42,082 69,142 1,255 1,745 75,041
Eliminations and other (151) (151) (151)
Subtotal 13,678 888 14,566 41,733 103,532 1,255 1,745 162,831
Corporate and other (57,721) (3,841) (61,562) 15,513 521 6,508 (1,745) (40,765)
TETRA excluding
Discontinued
Operations $
(44,794) $
751 $
(44,043) $
(2,953) $
(46,996) $
57,246 $
104,053 $
7,763
$ $
122,066
Schedule H: Non-GAAP Reconciliation of TETRA Net Debt (Unaudited)
The cash and debt positions of TETRA and CSI Compressco LP as of December 31, 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.
December 31, 2018
TETRA CCLP Consolidated
---
(In Millions)
Non-restricted
cash $
24.2 $
15.9 $
40.0
Carrying value of long-term
debt:
Term Credit
Agreement 182.5 182.5
Senior Notes
outstanding - 633.0 633.0
Net debt $
158.3 $
617.1 $
775.5
Schedule I: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow (Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2018 2017 2018 2017
(In Thousands)
Consolidated
Net cash provided by
operating activities $
44,953 $
27,761 $
46,586 $
64,595
ARO settlements 35 15 35 565
Capital expenditures,
net of sales proceeds (34,487) (23,260) (140,793) (51,061)
Consolidated adjusted
free cash flow 10,501 4,516 (94,172) 14,099
CSI Compressco LP
Net cash provided by
operating activities 23,605 14,496 30,121 39,068
Capital expenditures,
net of sales proceeds (25,325) (11,413) (103,489) (25,126)
CSI Compressco free
cash flow (1,720) 3,083 (73,368) 13,942
TETRA Only
Cash from operating
activities 21,348 13,265 16,465 27,559
ARO settlements 35 15 35 565
Capital expenditures,
net of sales proceeds (9,162) (11,847) (37,304) (27,967)
Free cash flow before
ARO settlements 12,221 1,433 (20,804) 157
Distributions from CSI
Compressco LP 3,087 2,905 12,070 14,242
Adjusted free cash
flow 15,308 4,338 (8,734) 14,399
* Includes the impact from
discontinued operations. See
schedule J to exclude the
impact from discontinued
operations.
Schedule J: Non-GAAP Reconciliation to TETRA Only Adjusted Cash Flow From Continuing Operations (Unaudited)
Three Months Ended Twelve Months Ended
Dec 31, 2018 Sep 30, 2018 Dec 31, 2017 Dec 31, 2018 Dec 31, 2017
(In Thousands)
TETRA Only
Cash from operating activities $21,348 $2,971 $13,265 $16,465 $27,559
Less: Discontinued operations operating activities (adjusted EBITDA)(1) (325) (1,704) 146 (10,184) (4,835)
Cash from continued operating activities 21,673 4,675 13,119 26,649 32,394
Less: Continuing operations capital expenditures(2) (9,162) (8,270) (11,663) (35,618) (22,181)
Plus: Distributions from
CSI Compressco LP 3,087 3,037 2,905 12,070 14,242
TETRA only adjusted free cash flow from continuing operations $15,598 $(558) $4,361 $3,101 $24,455
(1) Reconciled to loss from discontinued operations as follows:
Three Months Ended Twelve Months Ended
Dec 31, 2018 Sep 30, 2018 Dec 31, 2017 Dec 31, 2018 Dec 31, 2017
---
(In Thousands)
Loss from discontinued operations (325) 796 (3,248) (7,443) (17,389)
Plus: Income tax provision (benefit) - 335 (2,326) 448
Plus: Depreciation & amortization - 3,059 2,085 12,106
Less: non-recurring legal settlement payment - 2,500 2,500
---
Less: Discontinued operations adjusted EBITDA (325) (1,704) 146 (10,184) (4,835)
(2) Reconciled to TETRA only capital expenditures as follows:
Three Months Ended Twelve Months Ended
Dec 31, 2018 Sep 30, 2018 Dec 31, 2017 Dec 31, 2018 Dec 31, 2017
---
(In Thousands)
TETRA only capital expenditures (9,162) (8,270) (11,847) (37,304) (27,967)
Less: Discontinued operations capital expenditures - (184) (1,686) (5,786)
---
Plus: Continuing operations capital expenditures (9,162) (8,270) (11,663) (35,618) (22,181)
Schedule K - Non-GAAP Reconciliation to Compression and Related Services Gross Profit and Gross Margin Excluding the Impact of Tax Contingency (Unaudited)
Three Months Ended
Dec 31, 2018 Sep 30, 2018
Revenue of Compression and related services $60,582 $58,869
Cost of Compression and related services, excluding depreciation 34,165 31,074
Gross Profit of Compression and related services 26,417 27,795
Gross Margin 43.6% 47.2%
Non-income tax contingency 2,110
Gross Profit excluding the impact of tax contingency 28,527 27,795
Gross Margin excluding the impact of tax contingency 47.1% 47.2%
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SOURCE TETRA Technologies, Inc.
