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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.