TETRA Technologies, Inc. Announces Third Quarter 2019 Results
THE WOODLANDS, Texas, Nov. 7, 2019 /PRNewswire/ -- TETRA Technologies, Inc. ("TETRA") (NYSE:TTI) announced consolidated third quarter net loss before discontinued operations of $9.1 million, compared to a net loss before discontinued operations of $8.2 million in the second quarter of 2019 and $12.9 million in the same quarter of last year. Net loss per share before discontinued operations attributable to TETRA shareholders during the third quarter was $0.06, unchanged from the second quarter of 2019 and from the third quarter of 2018. Adjusted per share((1)) loss before discontinued operations and excluding special items, was $0.02 in the third quarter, unchanged from the second quarter of this year and the third quarter of 2018.
Brady M. Murphy, TETRA's Chief Executive Officer, stated, "Despite a challenging North America onshore market that is experiencing a significant pullback in activity, I'm pleased with our third quarter performance. We continue to focus on differentiated offerings in each of our segments and on generating free cash flow. Our third quarter results reflect great progress on these objectives. Consolidated revenue from continuing operations was $246 million in the third quarter, down 15% sequentially and down 4% from last year. During the quarter, consolidated cash provided by operations was $46.6 million and TETRA only adjusted free cash flow from continuing operations((1)) was $9.7 million, which was a significant improvement over the second quarter of this year and the third quarter of last year. Adjusted EBITDA((1)) on a consolidated basis was $46 million, down from $50 million in the second quarter primarily as a result of the seasonal decline in our northern Europe industrial chemicals business, while Adjusted EBITDA as a percentage of revenue((1)) improved sequentially across all three divisions. The TETRA CS Neptune® completion fluids project that we were expecting to be materially completed in the third quarter has been delayed and is now anticipated to be completed in the fourth quarter. Despite the delay in TETRA CS Neptune® completion fluids activity, our Completion Fluids & Products Division achieved income before taxes as a percentage of revenue of 19.1% and delivered solid Adjusted EBITDA as a percentage of revenue((1)) of 23.7%, which is the highest Adjusted EBITDA as a percentage of revenue((1)) without the benefit of TETRA CS Neptune® completion fluids sales since the fourth quarter of 2015. Our Compression Division again achieved record high gross margins and utilization for our compression services equipment. Water & Flowback Services Division income before taxes and Adjusted EBITDA((1)) showed resiliency in a difficult market with income before taxes of $2.6 million and Adjusted EBITDA((1)) increasing sequentially by $0.3 million to $11.2 million, outperforming the macro market indicators.
"Our Completion Fluids & Products Division continues to experience high demand for our services and products in domestic and most international offshore markets, with favorable product mix and pricing improvements that is reflected in the Division's income before taxes of $11.3 million. In the second quarter of this year we signed a contract to provide TETRA CS Neptune® completion fluids for an ultra-deepwater Gulf of Mexico project that was expected to be materially completed towards the end of the third quarter. This project was delayed and is now expected to be completed during the fourth quarter. These type of projects are complex, ultra-deepwater wells that are prone to unforeseen challenges, making the predictability on the timing of completing the well very difficult. During the third quarter we also launched the TETRA CS Neptune® completion fluids monovalent family of products at the Society of Petroleum Engineering (SPE) Europe conference. Monovalent completion fluids are more compatible with certain reservoirs and can also provide lower corrosion rates in some applications. Feedback to-date has been very positive, and we believe that this new technology will open more opportunities to deploy our highly differentiated portfolio of TETRA CS Neptune® completion fluids. Highlighting our progress with technology differentiation, TETRA was a finalist for World Oil's Magazine's Best Oilfield Fluids and Chemicals Award for the TETRA Advanced Displacement System (TADS). Outside the oilfield services market, our industrial chemicals business remains strong and meaningfully contributed to our strong Completion Fluids & Products Division results and helps offset some of the volatility in our North America oilfield onshore business.
"Water & Flowback Services Division income before taxes was $2.6 million. The Division had income before taxes as a percentage of revenue of 3.5% and Adjusted EBITDA as a percent of revenue((1)) of 15.4% on slightly lower revenue from the second quarter of 2019, as we continue to focus on integrated projects utilizing our automation capabilities. We finished the quarter with 20 integrated projects with 13 customers. Four of the projects were with either new customers or in new basins. To support our closed loop water management capability, we released our new TETRA BlueLinx(TM) Automated Control System, which provides remote control and monitoring for nearly every aspect of our integrated water management services. In the third quarter, our automation efforts and cost cutting initiatives helped us successfully navigate through this challenging market. We also made progress commercializing our TETRA Advanced Cyclone System (TACS), which is achieving proven sand recovery efficiency greater than 95%, compared to traditional cyclones which typically have closer to 50% sand recovery efficiency. We signed a take-or-pay contract with a major E&P operator in the Permian Basin, who was the first to run extensive trials with TACS, for multiple units to displace their current technology. We have also been awarded a contract for multiple test separators in Argentina, our first Latin American contract for this type of equipment. TETRA was also a finalist for two World Oil Magazine Best Water Management Technology Awards, one for its TETRA SwiftWater Automated Treatment (SWAT(TM)) System, and the other for TETRA Lowest Cost Per Barrel Water Management Solution. We were the only company that had two technology solutions in the finals.
"Compression Division revenue decreased sequentially to $114 million from $136 million on lower new equipment sales while compression services and aftermarket services revenue both increased. Compression services gross margins were once again at record highs driven by price increases that we continue to achieve, record high utilization of equipment, cost actions and the deployment of new equipment at higher pricing. While we have seen some of our customers slow down the need for additional compression services going into 2020, the overall fundamentals for the compression services business have not changed and this segment remains one of the strongest in the oil and gas industry. We continue to see centralized gas lift as a growing trend to increase liquid production, and it, combined with our increased focus on surface artificial lift methods with solutions such as the Gas Assisted Plunger Lift (GAPL) and Backside Auto Injection Systems (BAIS) technology, has resulted in a fourfold increase since the beginning of the year in the number of GasJack® units we have working for these unconventional applications. We are extremely pleased with the amount of interest and demand these new applications are creating for GasJack® units."
Operating Segments
Completion Fluids & Products Division
Completion Fluids & Products revenue was $59.3 million in the third quarter of 2019, a decrease of 26% from the second quarter of 2019 following the seasonal high industrial chemicals activity in Northern Europe. Completion Fluids & Products income before taxes was $11.3 million, or 19.1% of revenue. Adjusted EBITDA((1)) of $14.0 million decreased by $3.8 million sequentially and was 23.7% of revenue, a 130 basis point improvement sequentially. We did not have the benefit of an expected TETRA CS Neptune® completion fluids project in this quarter.
Water & Flowback Services Division
Water & Flowback Services third quarter 2019 revenue decreased 0.4% sequentially to $72.8 million. Income before taxes was $2.6 million, or 3.5% of revenue. Adjusted EBITDA((1)) increased 3% sequentially to $11.2 million, despite the sequential revenue drop. Results in this division held up well across most North America basins, despite the headwinds the industry is facing. Adjusted EBITDA as a percent of revenue((1)) improved to 15.4% in the third quarter of 2019 from 14.9% in the second quarter driven by our transition towards integrated projects with automation and cost cutting efforts.
Compression Division
Third quarter Compression revenue decreased 16% from the second quarter of 2019 due to the timing on the shipment of new equipment, to $114 million, and was 1% below the third quarter of last year. Compression services gross margins were 53.2%, up 50 basis points from the second quarter of 2019 and overall fleet utilization was 90.1%, both of which are the highest since the acquisition of Compressor Systems, Inc. in 2014. As of September 30, 2019, total active operating horsepower was 1,043,384, a sequential improvement of over 14,000 horsepower. Compression Division net loss before taxes was $3.5 million, in-line with the net loss in the second quarter of 2019. Third quarter 2019 Adjusted EBITDA((1)) of $31.3 million decreased 5% from the second quarter of 2019 primarily due to lower new equipment sales. We received net new equipment orders of $29 million in the third quarter of 2019, up from $18 million in the second quarter of this year. New equipment sales backlog increased to $63 million at September 30, 2019 from $60 million at the end of the previous quarter.
(1) These financial measures are
not in accordance with generally
accepted accounting principles in
the United States ("GAAP"). Please
see Schedules E, F, G, H. I, J and
K for reconciliations of these
non-GAAP financial measures to
the most directly comparable GAAP
measures.
A summary of key financial metrics for the second quarter is as follows:
Third Quarter 2019 Results
Three Months Ended
Sep 30, 2019 Jun 30, 2019 Sep 30, 2018
(In Thousands, Except per Share Amounts)
Revenue $
245,947 $
288,796 $
256,851
Loss before
discontinued
operations (9,079) (8,201) (12,852)
Adjusted EBITDA
before
discontinued
operations(2) 46,157 50,084 41,803
GAAP EPS before
discontinued
operations
attributable to
TETRA
stockholders (0.06) (0.06) (0.06)
Adjusted EPS
attributable to
TETRA
stockholders(2) (0.02) (0.02) (0.02)
GAAP net cash
provided (used)
by operating
activities 46,605 30,965 13,760
TETRA only
adjusted free
cash flow from
continuing
operations(2) $9,749 $
3,117 $
(558)
---
Free Cash Flow and Balance Sheet
Consolidated cash provided from operating activities for the third quarter was $46.6 million. TETRA only adjusted free cash flow from continuing operations((2)) in the third quarter was $9.7 million and compares to $3.1 million in the second quarter of 2019. We have historically consumed cash in the first half of the year and generated cash in the second half of the year, reflecting the seasonality of some of our businesses. We continue to forecast that TETRA only adjusted free cash flow from continuing operations will be positive for the full year and above last year's levels. Consolidated total debt((2)) was $858 million while consolidated net debt(([2])) was $822 million, with TETRA only net debt of $192 million (see Schedule H for a reconciliation of these non-GAAP financial measures). At the end of the third quarter of 2019, TETRA only non-restricted cash was $21 million.
(2) These financial measures are not
in accordance with generally
accepted accounting principles in
the United States ("GAAP"). Please
see Schedules E, F, G, H. I, J and
K for reconciliations of these non-
GAAP financial measures to the most
directly comparable GAAP measures.
Special items
Special items in the third quarter, including Discontinued Operations, are detailed on Schedule F, and include the following:
-- $1.8 million expense for bad debt expenses, related to customers that
filed for bankruptcy
-- $0.8 million expense for asset impairments for a compression unit
destroyed by fire
-- $0.1 million non-cash income for TETRA stock warrant fair value
adjustment
-- $0.3 million expense related to the final cash redemption of CSI
Compressco's Series A Convertible Preferred Units
-- $0.4 million expense in severance and other charges (credits)
Loss from discontinued operations of $9.1 million in the third quarter includes the impact of a reserve for a promissory note and other receivables from the counterparty on the sale of our Offshore Decommissioning to the buyer that filed for bankruptcy.
Additionally, the Provision (Benefit) for Tax on Schedule F reflects a normalized tax rate of 21%.
Conference Call
TETRA will host a conference call to discuss these results today, November 7, 2019, at 10:30 a.m. EST. 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 10127861, 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
For further information: Elijio Serrano, CFO, TETRA Technologies, Inc., The Woodlands, Texas, Phone: 281.367.1983, Fax: 281.364.4346, 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 Free Cash Flow From Continuing Operations
Schedule K: Non-GAAP Reconciliation to TETRA Adjusted EBITDA as a Percentage of Revenue
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," "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 the anticipated recovery of the oil and gas industry, 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 Nine Months Ended
September 30,
September 30,
2019 2018 2019 2018
---
(In Thousands, Except per Share Amounts)
Revenues $
245,947 $
256,851 $
778,471 $
716,304
Cost of sales,
services, and rentals 170,313 183,121 553,709 511,370
Depreciation,
amortization, and
accretion 30,867 29,460 93,312 84,880
Impairments and other
charges 849 2,940 3,306 2,940
Insurance recoveries
(credits) (1,042) (1,392)
Total cost of revenues 200,987 215,521 648,935 599,190
Gross profit 44,960 41,330 129,536 117,114
General and
administrative
expense 34,926 34,446 105,498 98,866
Interest expense, net 18,146 18,894 55,054 52,246
Warrants fair value
adjustment (income)
expense 78 (179) (1,035) 22
CCLP Series A
Preferred Units fair
value adjustment
(income) expense - 498 1,309 1,344
Other (income)
expense, net (690) 619 (1,014) 7,203
Loss (benefit) before
taxes and
discontinued
operations (7,500) (12,948) (30,276) (42,567)
Provision (benefit)
for income taxes 1,579 (96) 5,678 3,474
Loss before
discontinued
operations (9,079) (12,852) (35,954) (46,041)
Discontinued operations:
Loss from discontinued
operations, net of
taxes (9,130) 796 (9,901) (40,931)
Net loss (18,209) (12,056) (45,855) (86,972)
Less: loss
attributable to
noncontrolling
interest 2,378 5,120 12,273 20,423
Net loss attributable
to TETRA stockholders $
(15,831) $
(6,936) $
(33,582) $
(66,549)
Basic per share information:
---
Loss before
discontinued
operations
attributable to TETRA
stockholders $
(0.06) $
(0.06) $
(0.19) $
(0.21)
Loss from discontinued
operations
attributable to TETRA
stockholders $
(0.07) $
0.00 $
(0.08) $
(0.33)
Net loss attributable
to TETRA stockholders $
(0.13) $
(0.06) $
(0.27) $
(0.54)
Weighted average
shares outstanding 125,568 125,689 125,620 123,557
===
Diluted per share information:
---
Loss before
discontinued
operations
attributable to TETRA
stockholders $
(0.06) $
(0.06) $
(0.19) $
(0.21)
Loss from discontinued
operations
attributable to TETRA
stockholders $
(0.07) $
0.00 $
(0.08) $
(0.33)
Net loss attributable
to TETRA stockholders $
(0.13) $
(0.06) $
(0.27) $
(0.54)
Weighted average
shares outstanding 125,568 125,689 125,620 123,557
Schedule B: Financial Results By Segment (Unaudited)(1)
Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
---
(In Thousands)
Revenues by segment:
---
Completion Fluids &
Products Division $
59,340 $
63,073 $
200,688 $
192,733
Water & Flowback
Services Division 72,841 78,568 224,643 223,289
Compression Division 113,766 115,261 353,140 300,607
Eliminations and
other - (51) (325)
Total revenues $
245,947 $
256,851 $
778,471 $
716,304
Gross profit (loss) by segment:
---
Completion Fluids &
Products Division $
16,181 $
13,129 $
46,653 $
34,211
Water & Flowback
Services Division 8,236 11,522 24,577 41,556
Compression Division 20,710 16,847 58,804 41,820
Corporate overhead
and eliminations (167) (168) (498) (473)
Total gross profit $
44,960 $
41,330 $
129,536 $
117,114
Income (loss) before taxes by segment:
---
Completion Fluids &
Products Division $
11,318 $
8,713 $
32,118 $
21,143
Water & Flowback
Services Division 2,578 5,809 7,269 20,668
Compression Division (3,464) (7,844) (14,748) (30,517)
Corporate overhead
and eliminations (17,932) (19,626) (54,915) (53,861)
Total income (loss)
before taxes $
(7,500) $
(12,948) $
(30,276) $
(42,567)
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.
(1) Excludes discontinued operations
Schedule C: Consolidated Balance Sheet (Unaudited)
September 30,
2019 December 31, 2018
---
(In Thousands)
Balance Sheet:
---
Cash (excluding
restricted cash) $
35,918 $
40,038
Accounts
receivable, net 170,168 187,592
Inventories 142,406 143,571
Assets of
discontinued
operations 16 1,354
Note receivable,
including
accrued interest - 7,544
Other current
assets 22,624 20,592
PP&E, net 861,392 853,931
Operating lease
right-of-use
assets 57,848
Other assets 125,328 130,905
Total assets $
1,415,700 $
1,385,527
Liabilities of
discontinued
operations $
1,907 $
4,145
Other current
liabilities 211,165 196,206
Long-term debt
(1) 858,272 815,560
Long-term
portion of asset
retirement
obligations 12,603 12,202
CCLP Series A
Preferred - 27,019
Warrants
liability 1,038 2,073
Operating lease
liabilities 45,993
Other long-term
liabilities 11,194 15,573
Equity 273,528 312,749
Total liabilities
and equity $
1,415,700 $
1,385,527
(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.
September 30, December 31,
2019 2018
(In Thousands)
TETRA
---
Asset-Based Credit
Agreement $
8,585
$
Term Credit
Agreement 204,112 182,547
TETRA total debt 212,697 182,547
Less current portion
TETRA total long-
term debt $
212,697 $
182,547
CSI Compressco LP
---
CCLP Credit
Agreement 10,559
7.25% Senior Notes 291,028 289,797
7.50% Senior Notes 343,988 343,216
Total debt 645,575 633,013
Less current portion
CCLP total long-
term debt $
645,575 $
633,013
Consolidated total
long-term debt $
858,272 $
815,560
Schedule E: Statement Regarding Use of Non-GAAP Financial Measures
In addition to financial results determined in accordance with GAAP, this press release may include the following non-GAAP financial measures for the Company: net debt; adjusted consolidated and segment income (loss) before taxes and special charges; adjusted diluted earnings (loss) per share before discontinued operations; consolidated and segment adjusted EBITDA; TETRA only adjusted free cash flow and TETRA only free cash flow from continuing operations; and segment adjusted EBITDA as a percent of revenue. 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, 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 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.
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
September 30, 2019
Income (loss) Provision Noncont. Net Income Diluted EPS
before taxes (Benefit) for Interest Attributable
and Tax to TETRA
discontinued Stockholders
operations
---
(In Thousands, Except per Share Amounts)
Income (loss)
attributable to TETRA
stockholders,
excluding special
items and discontinued
operations $
(4,143) $
(871) $
(354) $
(2,918) $
(0.02)
Stock Warrant fair
value adjustment (78) (16) (62) 0.00
5% Cash Redemption on
CCLP Series A
Preferred (341) (72) (238) (31) 0.00
Lee Plant Facility
Vandalism 736 155 581 0.00
Transaction Expense (643) (135) (152) (356) 0.00
Asset Impairment (848) (178) (507) (163) (0.00)
Severance (339) (71) (70) (198) 0.00
Bad debt (1,844) (387) (1,057) (400) 0.00
Effect of deferred tax
valuation allowance
and other related tax
adjustments - 3,154 (3,154) (0.03)
Net income (loss)
before discontinued
operations (7,500) 1,579 (2,378) (6,701) (0.06)
Loss from discontinued operations (9,130) (0.07)
Net Income (loss) attributable to TETRA
stockholders, as reported $
(15,831) $
(0.13)
Three Months Ended
June 30, 2019
Income (loss) Provision Noncont. Net Income Diluted EPS
before taxes (Benefit) for Interest Attributable
and Tax to TETRA
discontinued Stockholders
operations
(In Thousands, Except per Share Amounts)
Income (loss)
attributable
to TETRA
stockholders,
excluding
special items
and
discontinued
operations $
(2,545) $
(530) $
(11) $
(2,004) $
(0.02)
Stock Warrant
fair value
adjustment 1,520 319 1,201 0.01
Convertible
Series A
preferred fair
value
adjustments (146) (35) (74) (37) 0.00
5% Cash
Redemption on
CCLP Series A
Preferred (546) (115) (278) (153) 0.00
SwiftWater
Earnout
adjustment 400 84 316 0.00
Lee Plant
Facility
Vandalism 289 61 228 0.00
CEO Retirement (1,843) (387) (1,456) (0.01)
Transaction
Expense (376) (79) (168) (129) 0.00
Inventory
Adjustment (153) (32) (68) (53) 0.00
Impairments and
other charges (2,311) (485) (1,034) (792) (0.01)
Effect of
deferred tax
valuation
allowance and
other related
tax
adjustments 3,689 (3,689) (0.03)
Net income
(loss) before
discontinued
operations (5,711) 2,490 (1,633) (6,568) (0.06)
Loss from
discontinued
operations (345) 0.00
Net Income
(loss)
attributable
to TETRA
stockholders,
as reported $
(6,913) $
(0.06)
Three Months Ended
September 30, 2018
Income (loss) Provision Noncont. Net Income Diluted EPS
before taxes (Benefit) for Interest Attributable
and Tax to TETRA
discontinued Stockholders
operations
(In Thousands, Except per Share Amounts)
Income (loss)
attributable to TETRA
stockholders,
excluding unusual
charges $
(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
Transaction Expense (426) (89) (112) (225) 0.00
SwiftWater Earnout
Adjustment 600 126 474 0.00
Bank Fees (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)
Schedule G: Non-GAAP Reconciliation to GAAP Financials (Unaudited)
*
Three Months Ended
September 30, 2019
Net
Tax
Income
Impairments
Adjusted
Interest Adjusted Equity
Adjusted
Income Provision (Loss) & Special Income Expense Depreciation Comp. EBITDA
(Loss), Before Charges (Loss) & Expense
as Tax, as Before Amortization
reported Reported Tax
(In Thousands)
Completion Fluids & Products Division $
11,318 $
(736) $
10,582 $
(216) $
3,676
$ $
14,042
Water & Flowback Services Division 2,578 76 2,654 (2) 8,568 11,220
Compression Division (3,464) 3,597 133 12,869 18,459 (211) 31,250
Eliminations and other (1) (1) (3) (4)
Subtotal 10,431 2,937 13,368 12,651 30,700 (211) 56,508
Corporate and other (17,931) 379 (17,552) 5,495 167 1,539 (10,351)
TETRA excluding Discontinued Operations $
(9,079) $
1,579 $
(7,500) $
3,316 $
(4,184) $
18,146 $
30,867 $
1,328 $
46,157
June 30, 2019
Net
Tax
Income
Impairments
Adjusted
Adjusted Adjusted Equity
Adjusted
Income Provision (Loss) & Special Income Interest Depreciation Comp. EBITDA
(Loss) Before Charges (Loss) Expense, & Expense
as Tax, as Before Net Amortization
reported Reported Tax
(In Thousands)
Completion Fluids & Products Division $
14,614 $
(289) $
14,325 $
(157) $
3,723
$ $
17,891
Water & Flowback Services Division 2,460 (400) 2,060 (8) 8,871 10,923
Compression Division (3,483) 3,607 124 12,998 19,054 590 32,766
Eliminations and other 1 1 (3) (2)
Subtotal 13,592 2,918 16,510 12,833 31,645 590 61,578
Corporate and other (19,303) 268 (19,035) 5,696 172 1,673 (11,494)
TETRA excluding Discontinued Operations $
(8,201) $
2,490 $
(5,711) $
3,186 $
(2,525) $
18,529 $
31,817 $
2,263 $
50,084
Three Months Ended
September 30, 2018
Net
Tax
Income
Impairments
Adjusted
Interest Adjusted Equity
Adjusted
Income Provision (Loss) & Special Income Expense Depreciation Comp. EBITDA
(Loss), Before Charges (Loss) & Expense
as Tax, as Before Amortization
reported Reported Tax
(In Thousands)
Completion Fluids & Products Division $
8,713
$ $
8,713 $
(70) $
3,846
$ $
12,489
Water & Flowback Services Division 5,809 2,340 8,149 5 7,765 15,919
Compression Division (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
* Excludes the impact from
discontinued operations.
Schedule H: Non-GAAP Reconciliation of TETRA Net Debt (Unaudited)
The cash and debt positions of TETRA and CSI Compressco LP as of September 30, 2019, 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.
September 30, 2019
TETRA CCLP Consolidated
(In Millions)
Non-restricted cash $
20.6 $
15.3 $
35.9
Carrying value of long-term debt:
Asset-Based Credit Agreement 8.6 10.6 19.2
Term Credit Agreement 204.1 204.1
Senior Notes outstanding 635.0 635.0
Net debt $
192.1 $
630.3 $
822.4
Schedule I: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow (Unaudited)
*
Three Months Ended
September 30, 2019 June 30, 2019 September 30, 2018
---
(In Thousands)
Consolidated
Net cash provided (used) by operating activities $
46,605 $
30,965 $
13,760
Capital expenditures, net of sales proceeds (27,650) (27,345) (39,172)
Consolidated adjusted free cash flow $
18,955 $
3,620 $
(25,412)
CSI Compressco LP
Net cash provided (used) by operating activities $
27,444 $
8,710 $
10,789
Capital expenditures, net of sales proceeds (20,867) (16,434) (30,902)
CSI Compressco free cash flow $
6,577 $
(7,724) $
(20,113)
TETRA Only
Cash from operating activities $
19,161 $
22,255 $
2,971
Investment in CCLP Compressors (2,830) (8,740)
Capital expenditures, net of sales proceeds (6,783) (10,911) (8,270)
Free cash flow 9,548 2,604 (5,299)
Distributions from CSI Compressco LP 169 168 3,037
Adjusted TETRA only free cash flow $
9,717 $
2,772 $
(2,262)
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 Free Cash Flow From Continuing
Operations (Unaudited)
Three Months Ended
Sep 30, 2019 Jun 30, 2019 Sep 30, 2018
---
(In Thousands)
TETRA Only
Cash from operating activities $19,161 $(22,255) $2,971
Less: Discontinued operations operating activities (adjusted EBITDA) (32) (345) (1,704)
Cash from continued operating activities 19,193 (22,600) 4,675
Less: Continuing operations capital expenditures (6,783) (10,911) (8,270)
Less: Investment in CCLP Compressors (2,830) (8,740)
__
Plus: Distributions from CSI Compressco LP 169 168 3,037
TETRA only adjusted free cash flow from continuing operations $9,749 $(3,117) $(558)
---
Schedule K: Non-GAAP Reconciliation to TETRA Adjusted EBITDA as a Percentage of Revenue (Unaudited)
Three Months Ended
September 30, 2019 June 30, 2019 September 30, 2018
(In Thousands)
Consolidated
Revenue $
245,947 $
288,796 $
256,851
Income Before Tax (7,500) (5,711) (12,948)
Adjusted EBITDA (Schedule G) 46,157 50,084 41,803
Income Before Tax as a % of Revenue (3.0) % (2.0) % (5.0) %
Adjusted EBITDA as a % of Revenue 18.8 % 17.3 % 16.3 %
Completion Fluids & Products
Revenue $
59,340 $
79,767 $
63,073
Income Before Tax 11,318 14,614 8,713
Adjusted EBITDA (Schedule G) 14,042 17,891 12,489
Income Before Tax as a % of Revenue 19.1 % 18.3 % 13.8 %
Adjusted EBITDA as a % of Revenue 23.7% 22.4% 19.8 %
Water & Flowback Services
Revenue $
72,841 $
73,124 $
78,568
Income Before Tax 2,578 2,460 5,809
Adjusted EBITDA (Schedule G) 11,220 10,923 15,919
Income Before Tax as a % of Revenue 3.5 % 3.4 % 7.4 %
Adjusted EBITDA as a % of Revenue 15.4 % 14.9 % 20.3 %
Compression
Revenue $
113,766 $
135,905 $
115,261
Income Before Tax (3,464) (3,483) (7,844)
Adjusted EBITDA (Schedule G) 31,250 32,766 24,570
Income Before Tax as a % of Revenue (3.0) % (2.6) % (6.8) %
Adjusted EBITDA as a % of Revenue 27.5 % 24.1 % 21.3 %
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SOURCE TETRA Technologies, Inc.
