Tetra Technologies, Inc.
TETRA Technologies, Inc. Announces Fourth Quarter And Full Year 2017 Results

THE WOODLANDS, Texas, Feb. 28, 2018 /PRNewswire/ -- TETRA Technologies, Inc. ("TETRA" or the "Company") (NYSE:TTI) announced consolidated fourth quarter 2017 net loss per share attributable to TETRA stockholders of $0.25, which compares to consolidated earnings of $0.03 per share attributable to TETRA stockholders in the third quarter of 2017 and net loss per share of $0.33 in the fourth quarter of 2016.

TETRA's adjusted per share results attributable to TETRA stockholders for the fourth quarter of 2017, excluding Maritech and special items, were a loss per share of $0.04, which compares to adjusted earnings per share of $0.04 in the third quarter of 2017 and adjusted loss of $0.16 in the fourth quarter of 2016, also excluding Maritech and special items. Fourth quarter 2017 revenue of $228 million increased 5% from the third quarter of 2017 and 31% from the fourth 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.)

Fourth Quarter 2017 Results


Three Months Ended


December 31,
2017


September 30,
2017


December 31,
2016


(In Thousands, Except per Share Amounts)

Revenue

$

227,644



$

216,364



$

173,222


Net income (loss)

(34,974)



(1,338)



(38,410)


Net income (loss) attributable to TETRA stockholders

(28,739)



3,145



(31,554)


Adjusted EBITDA excluding Maritech(1)

30,197



45,054



14,946


EPS attributable to TETRA stockholders

(0.25)



0.03



(0.33)


Adjusted diluted EPS attributable to TETRA stockholders(1)

(0.04)



0.04



(0.16)


Consolidated net cash provided (used) by operating activities

27,761



37,395



28,316


TETRA only adjusted free cash flow(1)

$

4,338



$

17,818



$

16,028



  (1) Non-GAAP financial measures are reconciled to GAAP in the schedules below.

Highlights include:

  • Announced on February 14 an agreement to expand our Permian Basin water management operations with the acquisition of SwiftWater Energy Services. This acquisition is expected to be immediately accretive to cash flow and EBITDA and we expect to close this transaction this week.
  • Announced additions to the executive team with the appointment on February 12, 2018 of Brady Murphy as TETRA's President and Chief Operating Officer and the appointment on November 20, 2017 of Owen Serjeant as CSI Compressco's President. Our new executives will support TETRA and CSI Compressco in their efforts to take advantage of a recovering market.
  • Production Testing revenue doubled in the fourth quarter from the third quarter, increasing to $37.8 million on the sale of an early production facility and stronger US onshore shale related activity. Loss before tax was $10.9 million, inclusive of a $14.6 million non-cash write-off of intangible assets. Loss before tax was $10.9 million including an impairment charge of $14.3 million for intangible assets. Excluding unusual charges, adjusted EBITDA improved from $1.1 million in the third quarter to $6.6 million in the fourth quarter, to 17.5% of revenue.
  • Fluids revenue of $79.8 million declined 14.5% from the third quarter, as the fourth quarter included the final part of a significant CS Neptune project that started in the third quarter. Profit before tax in the fourth quarter was $7.6 million (9.5% of revenue), while adjusted EBITDA was $13.6 million (17.1% of revenue). Water management revenue in North America was the highest since the third quarter of 2014, reflecting stronger fracking activity.
  • Compression Division revenues increased 16% from the third quarter, reflecting higher new equipment sales and improved utilization of the service compression fleet. Early in January, CSI Compressco secured a $67 million order, the largest in the CSI Compressco's history, to fabricate and sell 45 large compressors to a midstream operator in the Permian Basin.

Total 2017 Results


Twelve months ended


December 31,
2017


December 31,
2016


(In Thousands, Except per Share Amounts)

Revenue

$

820,378



$

694,764


Net income (loss)

(62,183)



(239,393)


Net income (loss) attributable to TETRA stockholders

(39,048)



(161,462)


Adjusted EBITDA excluding Maritech(1)

121,941



104,243


EPS attributable to TETRA stockholders

(0.34)



(1.85)


Adjusted diluted EPS attributable to TETRA stockholders(1)

(0.21)



(0.60)


Consolidated net cash provided (used) by operating activities

64,595



55,659


TETRA only adjusted free cash flow(1)

$

14,399



$

13,500



  (1) Non-GAAP financial measures are reconciled to GAAP in the schedules below.

Stuart M. Brightman, TETRA's Chief Executive Officer, stated, "Over the past 90 days we have taken a series of actions to ensure we take advantage of a recovering market.  We announced the acquisition of SwiftWater Energy Services to expand our Permian Basin water management operations and to add incremental resources and services offerings.  We have also added two strong executives to the management team."

"We were pleased with our fourth quarter results, with consolidated adjusted EBITDA of $30.2 million and cash flow provided from operating activities of $27.8 million.  We continue to see a strong rebound in the US North America shale plays that is driving better results for our services compression fleet for gathering systems, gas lift and aftermarket services; from water management and flowback testing reflecting the intensity of fracking operations, and from fluids to support stronger drilling activity." 

"Fluids Division reported revenue of $79.8 million for the fourth quarter of 2017, up 24.7% from the same quarter of 2016.  During the fourth quarter we completed a Gulf of Mexico CS Neptune® project that was started in the third quarter.  We continue to advance work on securing the next CS Neptune completion fluids projects while working with several operators on the timing for projects in from multiple international markets.  Our US onshore water management activity increased to its highest revenue levels since the third quarter of 2014.  The addition of SwiftWater in the Permian Basin will make us one of the largest water management companies in that region and will significantly expand our headcount and water transfer capabilities, in addition to adding incremental service offerings.  We expect to continue to invest growth capital in this area and look for additional acquisition opportunities to capitalize on the demands from our customers.  Fluids Division profit before taxes was $7.6 million (9.5% of revenue), while adjusted EBITDA was $13.6 million (17.1% of revenue)."

"Fourth quarter 2017 Compression Division revenue increased 16% sequentially to $83 million.  Overall utilization of our service fleet improved sequentially by 180 basis points to 82.3%. Utilization of our larger horsepower equipment (greater than 800 HP, which are typically deployed on gathering systems) was 92.3%, up from 90.1% at the end of the third quarter of 2017. New equipment orders were $16 million, resulting in a backlog of $47.5 million at the end of the year.  In early January, we received an order to fabricate and sell 45 large horsepower compressors to a midstream operator in the Permian Basin.  This order, the largest in CSI Compressco's history, is expected to be delivered in the second half of 2018 and the first half of 2019 and reflects increasing demand from the industry to build gathering systems and gas processing facilities.  Compression Division loss before taxes was $9.7 million, compared to a loss of $7 million in the third quarter of 2017.  Adjusted EBITDA was $19.2 million, compared to $20.9 million in the third quarter of 2017.  On January 22, 2018, CSI Compressco LP declared a cash distribution attributable to the fourth quarter of 2017 of $0.1875 per outstanding common unit.  The distribution coverage ratio was 0.73X for the fourth quarter of 2017."

"Fourth quarter 2017 revenue for the Production Testing Division doubled sequentially to $37.8 million, and was 147% above the same quarter of 2016, led by the sale of early production facilities overseas and significantly stronger activity in the US shale plays.  Production Testing loss before taxes was $10.9 million (which includes a $14.6 million intangible asset impairment from our international operations), while adjusted EBITDA was $6.6 million (17.5% of revenue)."

"Our Offshore Services segment reported revenue of $27.5 million, up 130% compared to the prior year quarter, with a loss before taxes of $2.4 million.  Adjusted EBITDA was $0.6 million, reflecting the seasonal fourth quarter ramp down of activity, inclement weather conditions and customer delays of certain projects into 2018."   

Free Cash Flow and Balance Sheet

Consolidated net cash provided by operating activities for the fourth quarter of 2017 was $27.8 million, compared to $37.4 million in the third quarter of 2017.  TETRA only adjusted free cash flow in the fourth quarter was $4.3 million, a decrease of $13.5 million from the third quarter.  Consolidated debt was $629.9 million and TETRA only debt was $117.7 million.  At the end of the fourth quarter, no amounts were outstanding on TETRA's revolving credit facility and TETRA only cash on hand was $18.5 million.  With a strong balance sheet, TETRA is positioned to invest opportunistically into the recovering market.  

Special items and Maritech

Special items, including Maritech, that were incurred in the fourth quarter, as detailed on Schedule E, include the following:

  • A non-cash expense of $14.6 million for the impairment of intangible assets
  • A $6.3 million non-cash expense for a fair value adjustment of the outstanding TETRA warrants
  • A $1.4 million non-cash expense for a fair value adjustment of the CSI Compressco Series A Convertible Preferred units
  • A $1.6 million charge for transaction related expenses and other special charges
  • A Maritech pre-tax loss of $0.5 million

Additionally, a normalized tax rate of 30% is reflected in Adjusted Net Income, as shown on Schedule E.

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 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 10115719, for one week following the conference call and the archived web call will be available through the Company's website for thirty days following the conference call.

Investor Contact

TETRA Technologies, Inc., The Woodlands, Texas
Stuart M. Brightman, 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: Special Items
Schedule F: Non-GAAP Reconciliation to GAAP Financials
Schedule G: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow
Schedule H: Non-GAAP Reconciliation of TETRA Net Debt

Company Overview and Forward-Looking Statements

TETRA is a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, water management, frack flowback, production well testing, offshore rig cooling, offshore decommissioning 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, 2016, 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
 December 31,


Twelve Months Ended
 December 31,


2017


2016


2017


2016


(In Thousands, Except per Share Amounts)

Revenues

$

227,644



$

173,222



$

820,378



$

694,764










Cost of sales, services, and rentals

168,743



133,598



591,871



495,580


Depreciation, amortization, and accretion

28,861



30,598



116,159



129,595


Impairments of long-lived assets

14,876



7,245



14,876



18,172


Insurance Recoveries





(2,352)




Total cost of revenues

212,480



171,441



720,554



643,347


Gross profit

15,164



1,781



99,824



51,417










General and administrative expense

31,009



26,583



121,905



115,964


Goodwill impairment







106,205


Interest expense, net

14,497



15,327



57,246



58,626


(Gain) loss on sales of assets

(69)



(115)



(674)



(2,357)


Warrants fair value adjustment

6,267



2,106



(5,301)



2,106


CCLP Series A Preferred fair value adjustment

1,365



(1,891)



(2,975)



4,404


Litigation arbitration award expense (income), net

37





(10,027)




Other (income) expense, net

122



(2,318)



633



3,559


Loss before taxes

(38,064)



(37,911)



(60,983)



(237,090)


Provision (benefit) for income taxes

(3,090)



499



1,200



2,303


Net loss

(34,974)



(38,410)



(62,183)



(239,393)


Net (income) loss attributable to non-controlling interest

6,235



6,856



23,135



77,931


Net loss attributable to TETRA stockholders

$

(28,739)



$

(31,554)



$

(39,048)



$

(161,462)










Basic per share information:








Net loss attributable to TETRA stockholders

$

(0.25)



$

(0.33)



$

(0.34)



$

(1.85)


Weighted average shares outstanding

114,696



95,992



114,499



87,286










Diluted per share information:








Net loss attributable to TETRA stockholders

$

(0.25)



$

(0.33)



$

(0.34)



$

(1.85)


Weighted average shares outstanding

114,696



95,992



114,499



87,286


 

Schedule B: Financial Results By Segment (Unaudited)



Three Months Ended
 December 31,


Twelve Months Ended
 December 31,


2017


2016


2017


2016


(In Thousands)

Revenues by segment:








Fluids Division

$

79,848



$

64,039



$

335,331



$

246,595


Production Testing Division

37,766



15,298



94,142



63,618


Compression Division

83,105



82,870



295,587



311,374


Offshore Division








Offshore Services

27,451



11,921



96,741



77,525


Maritech

111



176



538



751


Intersegment eliminations



(90)





(903)


Offshore Division total

27,562



12,007



97,279



77,373


Eliminations and other

(637)



(992)



(1,961)



(4,196)


Total revenues

$

227,644



$

173,222



$

820,378



$

694,764










Gross profit (loss) by segment:








Fluids Division

$

14,011



$

7,443



$

81,839



$

36,888


Production Testing Division

(8,124)



(5,263)



(8,498)



(13,317)


Compression Division

10,403



4,646



35,114



37,681


Offshore Division








Offshore Services

(1,108)



(4,811)



(6,612)



(5,574)


Maritech

(279)



(138)



(1,954)



(3,847)


Intersegment eliminations

1





1




Offshore Division total

(1,386)



(4,949)



(8,565)



(9,421)


Corporate overhead and eliminations

260



(96)



(66)



(414)


Total gross profit

$

15,164



$

1,781



$

99,824



$

51,417










Income (loss) before taxes by segment:








Fluids Division

$

7,587



$

1,499



$

68,540



$

10,430


Production Testing Division

(10,900)



(7,547)



(17,465)



(35,471)


Compression Division

(9,719)



(11,821)



(37,246)



(136,327)


Offshore Division








Offshore Services

(2,439)



(6,233)



(14,767)



(12,025)


Maritech

(474)



2,823



(2,172)



(1,841)


Intersegment eliminations








Offshore Division total

(2,913)



(3,410)



(16,939)



(13,866)


Corporate overhead and eliminations

(22,119)



(16,632)



(57,873)



(61,856)


Total loss before taxes

$

(38,064)



$

(37,911)



$

(60,983)



$

(237,090)


Please note that the above results by Segment include special charges and expenses. Please see Schedule E for details of those special items.

Schedule C: Consolidated Balance Sheet (Unaudited)



December 31, 2017


December 31, 2016


(In Thousands)

Balance Sheet:




Cash (excluding restricted cash)

$

26,128



$

29,840


Accounts receivable, net

172,977



114,284


Inventories

120,054



106,546


Other current assets

19,195



25,121


PP&E, net

895,305



945,451


Other assets

74,955



94,298


Total assets

$

1,308,614



$

1,315,540






Current portion of decommissioning liabilities

$

477



$

1,451


Other current liabilities

172,237



115,434


Long-term debt (1)

629,855



623,730


Long-term portion of decommissioning liabilities

57,925



54,027


CCLP Series A Preferred

61,436



77,062


Warrant liability

13,202



18,503


Other long-term liabilities

19,921



24,867


Equity

352,561



400,466


Total liabilities and equity

$

1,308,614



$

1,315,540



(1) Please see Schedule D for the separate 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 note, 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.


December 31, 2017


December 31, 2016


(In Thousands)

TETRA




Bank revolving line of credit facility

$



$

3,229


TETRA 11% Senior Note

117,679



116,411


TETRA total debt

117,679



119,640


Less current portion




TETRA total long-term debt

$

117,679



$

119,640






CSI Compressco LP




CCLP Bank Credit Facility

$

223,985



$

217,467


CCLP 7.25% Senior Notes

288,191



286,623


CCLP total debt

512,176



504,090


Less current portion




CCLP total long-term debt

$

512,176



$

504,090


Consolidated total long-term debt

$

629,855



$

623,730


Non-GAAP Financial Measures

In addition to financial results determined in accordance with GAAP, this news release includes the following non-GAAP financial measures for the Company: net debt, adjusted consolidated and segment income (loss) before taxes, excluding the Maritech segment and special charges; consolidated and segment adjusted EBITDA; and TETRA only adjusted free cash flow. 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 following the sale of essentially all of Maritech's oil and gas properties, it is helpful to show the Company's results, excluding the impact of the costs and charges relating to the decommissioning of Maritech's remaining properties, since these results will show the Company's historical results of operations on a basis consistent with expected future operations.  Management also 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 or credits, 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 defined 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 and debt restructuring costs. 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 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, including Maritech


Three Months Ended


December 31, 2017


Income
(Loss) Before
Tax

Provision
(Benefit)
 for Tax

Noncont.
Interest

Net Income
Attributable to
TETRA Stockholders

EPS


(In Thousands, Except per Share Amounts)

Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech

$

(13,657)


$

(4,098)


$

(5,150)


$

(4,409)


$

(0.04)


Asset impairments, including inventory adjustments

(14,784)


(4,435)



(10,349)


(0.09)


Severance expense

(104)


(31)



(73)


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


Offshore Services arbitration ruling

(239)


(72)



(167)


0.00


Software implementation

(194)


(58)


(120)


(16)


0.00


Transaction Costs

(881)


(264)



(617)


(0.02)


Effect of Deferred Tax Valuation Allowance and other related tax adj.


8,188



(8,188)


(0.08)


Maritech profit (loss)

(474)




(474)


0.00


Net Income (loss) attributable to TETRA stockholders, as reported

$

(38,064)


$

(3,090)


$

(6,235)


$

(28,739)


$

(0.25)





Three Months Ended


September 30, 2017


Income
(Loss) Before Tax

Provision
(Benefit) for Tax

Noncont. Interest

Net Income
Attributable
to TETRA Stockholders

Diluted EPS


(In Thousands, Except per Share Amounts)

Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech

$

(204)


$

(60)


$

(4,934)


$

4,790


$

0.04


Severance expense

(24)


(7)


(5)


(12)


0.00


Stock warrant fair value adjustment

47


14



33


0.00


Convertible Series A preferred offering cost and fair value adjustments

1,137


341


827


(31)


0.00


Software Implementation

(583)


(175)


(371)


(37)


0.00


Effect of deferred tax valuation allowance and other related tax adj.


684



(684)


(0.01)


Maritech profit (loss)

(914)




(914)


(0.01)


Net Income (loss) attributable to TETRA stockholders, as reported

$

(541)


$

797


$

(4,483)


$

3,145


$

0.03











Three Months Ended


December 31, 2016


Income
(Loss) Before Tax

Provision
(Benefit) for Tax

Noncont. Interest

Net Income
Attributable to
TETRA Stockholders

EPS


(In Thousands, Except per Share Amounts)

Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech

$

(32,000)


$

(9,599)


$

(7,012)


$

(15,389)


$

(0.16)


Asset impairments, including inventory adjustments

(7,245)


(2,174)


(1,373)


(3,698)


(0.04)


Non-Maritech ARO adjustment

(282)


(85)



(197)


0.00


Severance expense

(179)


(54)



(125)


0.00


Debt refinancing cost, net

346


104


319


(77)


0.00


Convertible Series A Preferred offering cost and fair value adjustments

1,806


542


1,210


54


0.00


Common stock warrants issuance cost and fair value adjustments

(3,061)


(918)



(2,143)


(0.02)


Allowance for doubtful accounts

(119)


(36)



(83)


0.00


Effect of deferred tax valuation allowance and other related tax adj.


12,719



(12,719)


(0.14)


Maritech profit (loss)

2,823




2,823


0.03


Net Income (loss) attributable to TETRA stockholders, as reported

$

(37,911)


$

499


$

(6,856)


$

(31,554)


$

(0.33)





















Twelve Months Ended


December 31, 2017


Income
(Loss)
Before Tax

Provision
(Benefit) for
Tax

Noncont. Interest

Net Income
Attributable
to TETRA Stockholders

EPS


(In Thousands, Except per Share Amounts)

Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech

$

(57,533)


$

(17,261)


$

(16,237)


$

(24,035)


$

(0.21)


Asset impairments, including inventory adjustments

(14,784)


(4,435)



(10,349)


(0.09)


Severance expense

(1,126)


(338)


(38)


(750)


(0.01)


Stock Warrant Fair Value Adjustment

5,302


1,591



3,711


0.03


Bad debt expense from customer bankruptcies

(543)


(163)



(380)


0.00


CCLP Series A Preferred fair value adjustment

2,975


893


(5,307)


7,389


0.06


Offshore Services arbitration ruling

(3,370)


(1,011)



(2,359)


(0.02)


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 adj


18,843



(18,843)


(0.16)


Maritech profit (loss)

(2,172)




(2,172)


(0.02)


Net Income (loss) attributable to TETRA stockholders, as reported

$

(60,983)


$

1,200


$

(23,135)


$

(39,048)


$

(0.34)











Twelve Months Ended


December 31, 2016


Income
(Loss)
Before Tax

Provision
(Benefit) for
Tax

Noncont.
Interest

Net Income
Attributable
to TETRA
Stockholders

EPS


(In Thousands, Except per Share Amounts)

Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech

$

(94,831)


$

(28,447)


$

(14,433)


$

(51,951)


$

(0.60)


Asset impairments, including inventory adjustments

(18,280)


(5,484)


(5,838)


(6,958)


(0.08)


Non-Maritech ARO adjustment

(282)


(85)



(197)


0.00


Severance expense

(1,737)


(521)


(341)


(875)


(0.01)


Goodwill write-off

(106,205)


(31,862)


(52,412)


(21,931)


(0.25)


Debt refinancing cost, net

(1,839)


(552)


159


(1,446)


(0.02)


Convertible Series A Preferred offering cost and fair value adjustments

(7,534)


(2,260)


(4,650)


(624)


(0.01)


Common stock warrants issuance cost and fair value adjustments

(3,061)


(918)



(2,143)


(0.02)


Allowance for doubtful accounts

(1,480)


(444)


(416)


(620)


(0.01)


Effect of deferred tax valuation allowance and other related tax adj.


72,876



(72,876)


(0.83)


Maritech profit (loss)

(1,841)




(1,841)


(0.02)


Net Income (loss) attributable to TETRA stockholders, as reported

$

(237,090)


$

2,303


$

(77,931)


$

(161,462)


$

(1.85)








 

Schedule F: Non-GAAP Reconciliation to GAAP Financials



Three Months Ended


December 31, 2017


Net
Income
(Loss), as reported

Tax
Provision

Income
(Loss)
Before
Tax, as
Reported

Impairments
& Special Charges

Adjusted
Income
(Loss)
Before
Tax

Adjusted
Interest Expense,
Net

Adjusted
Depreciation
&
Amortization(2)

Equity
Comp. Expense

Omnibus Equity

Adjusted EBITDA


(In Thousands)

Fluids Division



$

7,588


$

183


$

7,771


$

(85)


$

5,935


$



$

13,621


Production Testing Division



(10,900)


15,112


4,212


(3)


2,410




6,619


Compression Division



(9,719)


1,559


(8,160)


10,985


17,280


(934)



19,171


Offshore Services Segment



(2,438)


256


(2,182)



2,746




564


Eliminations and other



5



5



(5)





Subtotal



(15,464)


17,110


1,646


10,897


28,366


(934)



39,975


Corporate and other



(22,126)


7,147


(14,979)


3,600


182


1,419



(9,778)


TETRA excluding Maritech



(37,590)


24,257


(13,333)


14,497


28,548


485



30,197


Maritech



(474)



(474)



313




(161)


Total TETRA

$

(34,974)


$

(3,090)


$

(38,064)


$

24,257


$

(13,807)


$

14,497


$

28,861


$

485


$


$

30,036




































Three Months Ended


September 30, 2017


Net
Income
(Loss),

as
reported

Tax
Provision

Income
(Loss)
Before
Tax, as
Reported

Impairments
& Special Charges

Adjusted
Income
(Loss)
Before
Tax

Interest
Expense

Adjusted
Depreciation
&
Amortization

Equity
Comp.
Expense

Omnibus Equity

Adjusted EBITDA


(In Thousands)

Fluids Division



$

24,891


$

12


$

24,903


$

(8)


$

5,937


$


$


$

30,832


Production Testing Division



(1,405)



(1,405)


(47)


2,518




1,066


Compression Division



(7,014)


(545)


(7,559)


10,811


17,361


261



20,874


Offshore Services Segment



452


4


456



2,886




3,342


Eliminations and other




2


2


(1)


(4)




(3)


Subtotal



16,924


(527)


16,397


10,755


28,698


261



56,111


Corporate and other



(16,551)


(46)


(16,597)


3,899


129


1,512



(11,032)


TETRA excluding Maritech



373


(573)


(200)


14,654


28,827


1,773



45,079


Maritech



(914)



(914)



373




(541)


Total TETRA

$

(1,338)


$

797


$

(541)


$

(573)


$

(1,114)


$

14,654


$

29,200


$

1,773


$


$

44,538













































Three Months Ended


December 31, 2016


Net
Income
(Loss), as reported

Tax
Provision

Income
(Loss)
Before
Tax, as
Reported

Impairments
& Special Charges

Adjusted
Income
(Loss)
Before
Tax

Adjusted
Interest Expense,
Net(1)

Depreciation
&
Amortization(2)

Adjusted
Equity
Comp.
Expense

Omnibus Equity(3)

Adjusted EBITDA


(In Thousands)

Fluids Division



$

1,499


$

634


$

2,133


$

12


$

6,460


$


$


$

8,605


Production Testing Division



(7,547)


3,596


(3,951)


(115)


3,579




(487)


Compression Division



(11,821)


(268)


(12,089)


10,303


17,111


792


1,576


17,693


Offshore Services Segment



(6,233)


1,216


(5,017)



2,689




(2,328)


Eliminations and other



5



5



(5)





Subtotal



(24,097)


5,178


(18,919)


10,200


29,834


792


1,576


23,483


Corporate and other



(16,637)


3,558


(13,079)


4,609


103


1,406


(1,576)


(8,537)


TETRA excluding Maritech



(40,734)


8,736


(31,998)


14,809


29,937


2,198



14,946


Maritech



2,823



2,823



379




3,202


Total TETRA

$

(38,410)


$

499


$

(37,911)


$

8,736


$

(29,175)


$

14,809


$

30,316


$

2,198


$


$

18,148













(1)

Adjusted interest expense, net, for the three month period ended December 31, 2016, excludes $0.5 million of certain interest expense which is included as a special charge.





(2)

Adjusted depreciation & amortization, net, for the three month period ended December 31, 2016 excludes $0.3 million of certain accretion expense which is included as a special charge.

(3)

Reimbursement from CCLP under Omnibus Agreement for 2016 Q4 that was settled with common units.






Twelve Months Ended


December 31, 2017


Net
Income
(Loss), as reported

Tax
Provision

Income
(Loss)
Before
Tax, as
Reported

Impairment
& Special Charges

Adjusted
Income
(Loss)
Before
Tax

Adjusted
Interest Expense,
Net

Adjusted
Depreciation & Amortization(2)

Equity
Comp.
Expense

Omnibus
Equity (3)

Adjusted
EBITDA


(In Thousands)

Fluids Division



$

68,540


$

(12,557)


$

55,983


$

(53)


$

23,797




$

79,727


Production Testing Division



(17,465)


15,382


(2,083)


(296)


10,612




8,233


Compression Division



(37,246)


(1,937)


(39,183)


42,082


69,142


1,255


1,745


75,041


Offshore Services Segment



(14,767)


4,124


(10,643)



10,678




35


Eliminations and other



(152)



(152)



(19)




(171)


Subtotal



(1,090)


5,012


3,922


41,733


114,210


1,255


1,745


162,865


Corporate and other



(57,721)


(3,841)


(61,562)


15,513


521


3,028


1,576


(40,924)


TETRA excluding Maritech



(58,811)


1,171


(57,640)


57,246


114,731


4,283


3,321


121,941


Maritech



(2,172)



(2,172)



1,428




(744)


Total TETRA

$

(62,183)


$

1,200


$

(60,983)


$

1,171


$

(59,812)


$

57,246


$

116,159


$

4,283


$

3,321


$

121,197















































Twelve Months Ended


December 31, 2016


Net
Income
(Loss), as
reported

Tax
Provision

Income
(Loss)
Before
Tax, as
Reported

Impairment  
& Special Charges

Adjusted
Income
(Loss)
Before
Tax

Adjusted
Interest Expense,
Net(1)

Depreciation & Amortization(2)

Adjusted
Equity
Comp.
Expense

Omnibus Equity(3)

Adjusted
EBITDA


(In Thousands)

Fluids Division



$

10,430


$

1,950


$

12,380


$

(4)


$

28,056


$


$


$

40,432


Production Testing Division



(35,471)


20,826


(14,645)


(594)


16,238




999


Compression Division



(136,327)


111,656


(24,671)


37,016


72,159


3,028


1,576


89,108


Offshore Services Segment



(12,025)


1,283


(10,742)



11,086




344


Eliminations and other



8



8



(17)




(10)


Subtotal



(173,385)


135,715


(37,670)


36,418


127,522


3,028


1,576


130,874


Corporate and other



(61,864)


4,706


(57,158)


20,955


429


10,719


(1,576)


(26,631)


TETRA excluding Maritech



(235,249)


140,421


(94,828)


57,373


127,751


13,747



104,243


Maritech



(1,841)



(1,841)


12


1,362




(467)


Total TETRA

$

(239,393)


$

2,303


$

(237,090)


$

140,421


$

(96,669)


$

57,385


$

129,313


$

13,747


$


$

103,776














































(1)

Adjusted interest expense, net, for the twelve month period ended December 31, 2016, excludes $1.2 million of certain interest expense which is included as a special charge.

(2)

Adjusted depreciation & amortization, net, for the twelve month period ended December 31, 2016 excludes $0.3 million of certain accretion expense which is included as a special charge.

(3)

Reimbursement from CCLP under Omnibus Agreement for 2016 Q4 that was settled with common units.

 

Schedule G: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow










Three Months Ended


Twelve Months Ended



December 31,
2017


December 31,
2016


December 31,
2017


December 31,
2016



(In Thousands)


Consolidated









Net cash provided by operating activities


$

27,761


$

28,316


$

64,595


$

55,659


ARO settlements

15


271


565


4,040


Capital expenditures, net of sales proceeds

(23,260)


(5,268)


(51,061)


(17,712)


Consolidated adjusted free cash flow

4,516


23,319


14,099


41,987











CSI Compressco LP









Net cash provided by operating activities

14,496


15,922


39,068


61,444


Capital expenditures, net of sales proceeds

(11,413)


(3,057)


(25,126)


(10,659)


CSI Compressco free cash flow

3,083


12,865


13,942


50,785











TETRA Only









Cash from operating activities(1)

13,265


12,394


27,559


(5,785)


ARO settlements

15


271


565


4,040


Capital expenditures, net of sales proceeds(1)

(11,847)


(2,211)


(27,967)


(7,053)


Free cash flow before ARO settlements

1,433


10,454


157


(8,798)


Distributions from CSI Compressco LP

2,905


5,574


14,242


22,298


Adjusted free cash flow

4,338


16,028


14,399


13,500












































(1)

TETRA only cash from operating activities and capital expenditures, net of sales proceeds, for the twelve months ended December 31, 2017, includes the elimination of an intercompany equipment sale of $2.0 million.

Schedule H: Non-GAAP Reconciliation of TETRA Net Debt

The cash and debt positions of TETRA and CSI Compressco LP as of December 31, 2017, are shown below. TETRA and CSI Compressco LP's credit and 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, 2017


TETRA


CCLP


Consolidated


(In Millions)

Non-restricted cash

$

18.5



$

7.6



$

26.1








Carrying value of long-term debt:






Revolver debt outstanding



224.0



224.0


Senior Notes outstanding

117.7



288.2



405.9


Net debt

$

99.2



$

504.6



$

603.8


 

TETRA Technologies, Inc. logo. (PRNewsFoto/TETRA Technologies, Inc.)

 

SOURCE TETRA Technologies, Inc.