Tetra Technologies, Inc.
Tetra Technologies, Inc. Announces Third Quarter Results And Provides Update To Total Year Guidance

THE WOODLANDS, Texas, Nov. 8, 2018 /PRNewswire/ -- TETRA Technologies, Inc. ("TETRA") (NYSE:TTI) today announced consolidated third quarter 2018 net loss per share before discontinued operations attributable to TETRA stockholders of $0.06.  This compares to consolidated net loss of $0.05 per share before discontinued operations attributable to TETRA stockholders in the second quarter of 2018, and earnings per share before discontinued operations attributable to TETRA stockholders of $0.03 in the third quarter of 2017.

TETRA's adjusted per share results attributable to TETRA stockholders for the third quarter of 2018, before discontinued operations excluding special items, were net loss per share of $0.02.  This compares to adjusted earnings per share of $0.03 in the second quarter of 2018 and adjusted earnings per share of $0.04 in the third quarter of 2017, both before discontinued operations, which exclude special items detailed later in this news release.

Third quarter 2018 revenue before discontinued operations was $256.9 million, a decrease of 1% from the second quarter of 2018 and an increase of 40% from the third 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.)


Third Quarter 2018 Results


Three Months Ended


September 30,
2018


June 30,
2018


September 30,
2017


(In Thousands, Except per Share Amounts)

Revenue

$

256,851



$

260,072



$

183,677


Loss before discontinued operations

(12,852)



(12,132)



(857)


Adjusted EBITDA before discontinued operations(1)

41,803



46,285



41,710


GAAP EPS before discontinued operations attributable to TETRA stockholders

(0.06)



(0.05)



0.03


Adjusted EPS attributable to TETRA stockholders(1)

(0.02)



0.03



0.04


GAAP net cash provided by operating activities

13,760



19,134



37,395


TETRA only adjusted free cash flow from continuing operations(1)

(558)



18,018



17,268



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

Third Quarter Highlights include:

  • Consolidated Adjusted EBITDA before discontinued operations of $41.8 million (16.3% of revenue) decreased sequentially by $4.5 million due to the benefit in the second quarter of an early production facility sale and seasonal Northern Europe industrial chemical sales. Profit before taxes from continuing operations was a loss of $12.9 million.
  • Water & Flowback Services Adjusted EBITDA of $15.9 million declined from $20.1 million in the second quarter primarily reflecting the benefit in the second quarter of an early production facility sale overseas. Revenue increased sequentially in the Company's US Water & Flowback Services business and generated Adjusted EBITDA margins above the segment margins. The Company continues to see strength in the Rockies, MidCon and Marcellus/Utica markets. Profit before taxes was $5.8 million, 7.4% of revenue.
  • Completion Fluids & Products Adjusted EBITDA of $12.5 million compares to $13.7 million in the second quarter. Improved offshore profitability (Gulf of Mexico and international) was offset by the decline following the second quarter peak activity levels of industrial chemical sales in Northern Europe. Profit before taxes was $8.7 million, 13.8% of revenue.
  • Compression Services Adjusted EBITDA increased to $24.6 million from $22.4 million in the second quarter due to higher equipment sales and stronger after-market activity. Loss before taxes was $7.8 million. The compression segment continues to see improving activity levels from equipment being deployed into gathering systems, new equipment orders and backlog and higher demand for aftermarket services. New equipment orders during the third quarter were $71 million, increasing the backlog to $140 million. Utilization of the service fleet increased from 85.0% in the second quarter to 86.3% in the third quarter.

Stuart M. Brightman, TETRA's Chief Executive Officer, stated, "In the third quarter we saw several of our segments perform at or above our expectations.  Water & Flowback Services revenue in the United States increased sequentially on the back of stronger activity outside the Permian Basin and with the traction we are gaining with our integrated water management offering.  Offshore completion fluids revenue increased significantly from the second quarter with stronger activity levels in the Gulf of Mexico and internationally. Compression revenue increased sequentially by 15% on higher equipment sales and stronger aftermarket services.  These improvements only partially offset the strong second quarter that included an early production facility sale overseas and the benefit of the seasonally strong North Europe industrial chemical sales.

"Water & Flowback Services third quarter 2018 revenue decreased 6.1% sequentially to $78.6 million primarily due to an early production facility sale in the second quarter.  Although rig count in the Permian was up only 4% quarter on quarter,  DUC's increased 19% and we experienced some shifting of customer completion schedules which impacted our utilization for the quarter while also ramping up for Integrated projects well ahead of schedule.  Our initiative to automate and integrate the water management requirements of our customers has gained traction following the acquisition of SwiftWater.  During the third and fourth quarter, we have or will be providing an integrated solution on 11 different projects across three different basins. These integrated solutions are allowing us to differentiate ourselves and to provide more cost effective and efficient solutions to our customers.  In preparation for these activities, we incurred costs in the third quarter to position us to capitalize on these integrated opportunities, which is contributing to the early part of the fourth quarter running at stronger levels than early in the third quarter. In the fourth quarter we are estimating that approximately 25% of our Permian Basin revenue will be from integrated projects.

"Completion Fluids & Products revenue was $63.1 million for the third quarter of 2018, a decrease of 17.6% from the second quarter of 2018 following the industrial chemical sales seasonal peak in Northern Europe.  During the third quarter we experienced stronger offshore volumes in the Gulf of Mexico and internationally than in the second quarter.  The TETRA CS Neptune® completion fluid projects that were expected for the fourth quarter have been delayed as the associated drilling programs have extended longer than anticipated by our customers as well as their decision to batch drill and then complete.  Our efforts working with Halliburton to identify additional TETRA CS Neptune® completion fluid opportunities continues to gain traction by expanding the pipeline of opportunities. Since last quarter two new joint Halliburton projects have moved into the customer testing and qualification phase for their projects.

"Third quarter 2018 Compression revenue increased 15% sequentially to $115.3 million and continues to show a strong market environment.  Compression Services gross margin, which excludes depreciation, improved to 47.2% in the third quarter from 46.2% in the second quarter of 2018.  New equipment orders of $71 million were received in the third quarter reflecting our customers' continued strong demand for compression to move associated gas.  Our backlog was $140 million at the end of the third quarter, up $38 million from the end of the second quarter.   Compression loss before taxes for the third quarter of 2018 was $7.8 million compared to an $8.7 million loss for the second quarter of 2018.  Adjusted EBITDA was $24.6 million in the third quarter, compared to $22.4 million in the second quarter.  On October 20, 2018, CSI Compressco LP declared a cash distribution attributable to the third quarter of 2018 of $0.1875 per outstanding common unit, which will be paid on November 14, 2018 to common unitholders of record as of the close of business on November 1, 2018.  The distribution coverage ratio for the third quarter of 2018 was 1.07X."

Free Cash Flow and Balance Sheet

Consolidated net cash from operating activities for the third quarter of 2018 was $13.8 million.  TETRA only adjusted free cash flow in the third quarter was a use of $558,000.  Consolidated net debt was $769 million, while TETRA only net debt was $162.7 million.  At the end of the third quarter TETRA only cash on hand was $28 million.  

Special items

Special items, including Discontinued Operations, incurred in the third quarter, as detailed on Schedule E, include the following:

  • $2.9 million non-cash asset impairment expense
  • $1.0 million financing costs charged to expense
  • $0.6 million non-cash gain for a fair value adjustment of the SwiftWater earn-out obligation.
  • $0.2 million non-cash gain for stock warrant fair value adjustments
  • $0.5 million non-cash expense for the fair value adjustment of the CSI Compressco Series A Convertible Preferred units
  • $0.4 million of other expenses

Additionally, a normalized tax rate of 21% is reflected in Adjusted Net Income, as shown on Schedule E.

Total Year 2018 Guidance Update

We expect total year 2018 revenue from continuing operations to be between $975 million and $1.0 billion.  We further expect consolidated Adjusted EBITDA of between $155 million and $165 million, down from the prior guidance of $170 million and $190 million. The updated Adjusted EBITDA reflects the delay of the TETRA CS Neptune® completion fluid projects that were previously anticipated to occur in the fourth quarter of this year and the weaker third quarter.  Total year 2018 projected loss before taxes is expected to be between $45 million and $53 million, compared to the prior guidance of $16.9 and $35.9 million. Total year 2018 projected loss before taxes includes impairments and special charges of $14.1 million.

Projected total year 2018 capital expenditures for TETRA only are expected to be between $40 million and $50 million. Total year 2018 CSI Compressco capital expenditures are expected to be between $110 million and $120 million inclusive of maintenance capital expenditures of between $18 million and $20 million.

Projected total year TETRA only free cash flow is expected to be between break-even and $5 million inclusive of distributions from CSI Compressco.

Schedule J reconciles projected adjusted EBITDA to profit before taxes.

Conference Call

TETRA will host a conference call to discuss these results today, November 8, 2018, at 10:30 a.m. ET. The phone number for the call is 1-888-347-5303. The conference will also be available by live audio webcast and may be accessed through TETRA's website at www.tetratec.com. A replay of the conference call will be available at 1-877-344-7529, conference number 10115964, for one week following the conference call and the archived webcast call will be available through the Company's website for 30 days following the conference call.

Investor Contact
TETRA Technologies, Inc., The Woodlands, Texas
Stuart M. Brightman
Ph: 281-367-1983
www.tetratec.com

Financial Statements, Schedules and Non-GAAP Reconciliation Schedules (Unaudited)

Schedule A: Consolidated Income Statement (unaudited)
Schedule B: Financial Results By Segment (unaudited)
Schedule C: Consolidated Balance Sheet (unaudited)
Schedule D: Long-Term Debt
Schedule E: Special Items
Schedule F: Non-GAAP Reconciliation to GAAP Financials
Schedule G: Non-GAAP Reconciliation of TETRA Net Debt
Schedule H: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow
Schedule I: Non-GAAP Reconciliation to TETRA Only Adjusted Cash Flow From Continuing Operations
Schedule J: Non-GAAP Reconciliation to Projected 2018 Adjusted EBITDA

Company Overview and Forward-Looking Statements

TETRA Technologies, Inc. is a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, water management, frac flowback, production well testing, and compression services and equipment.  TETRA owns an equity interest, including all of the general partner interest, in CSI Compressco LP (NASDAQ:CCLP), a master limited partnership.

This news release includes certain statements that are deemed to be forward-looking statements. Generally, the use of words such as "may," "expect," "intend," "estimate," "projects," "anticipate," "believe," "assume," "could," "should," "plans," "targets" or similar expressions that convey the uncertainty of future events, activities, expectations or outcomes identify forward-looking statements that the Company intends to be included within the safe harbor protections provided by the federal securities laws. These forward-looking statements include statements concerning the anticipated recovery of the oil and gas industry, expected benefits from the acquisition of SwiftWater Energy Services and expected results of operational business segments for 2018, including levels of cash distributions per unit, projections concerning the Company's business activities, financial guidance, estimated earnings, earnings per share, and statements regarding the Company's beliefs, expectations, plans, goals, future events and performance, and other statements that are not purely historical. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of risks and uncertainties, many of which are beyond the control of the Company. Investors are cautioned that any such statements are not guarantees of future performances or results and that actual results or developments may differ materially from those projected in the forward-looking statements. Some of the factors that could affect actual results are described in the section titled "Risk Factors" contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, as well as other risks identified from time to time in its reports on Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.

Schedule A: Consolidated Income Statement (Unaudited)



Three Months Ended
September 30,


Nine Months Ended
September 30,


2018


2017


2018


2017


(In Thousands, Except per Share Amounts)

Revenues

$

256,851



$

183,677



$

716,304



$

523,017










Cost of sales, services, and rentals

183,121



117,436



511,370



355,279


Depreciation, amortization, and accretion

29,460



25,942



84,880



78,250


Impairments of long-lived assets

2,940





2,940




Insurance recoveries



(2,352)





(2,352)


Total cost of revenues

215,521



141,026



599,190



431,177


Gross profit

41,330



42,651



117,114



91,840










General and administrative expense

34,446



29,685



98,866



85,896


Interest expense, net

18,894



14,654



52,246



42,749


Warrants fair value adjustment (income) expense

(179)



(47)



22



(11,568)


CCLP Series A Preferred Units fair value adjustment (income) expense

498



(1,137)



1,344



(4,340)


Litigation arbitration award income







(12,816)


Other (income) expense, net

619



(425)



7,203



811


Loss before taxes and discontinued operations

(12,948)



(79)



(42,567)



(8,892)


Provision (benefit) for income taxes

(96)



778



3,474



4,176


Loss before discontinued operations

(12,852)



(857)



(46,041)



(13,068)


Discontinued operations:








Income (loss) from discontinued operations (including 2018 loss on disposal of $33.8 million), net of taxes

796



(481)



(40,931)



(14,141)


Net loss

(12,056)



(1,338)



(86,972)



(27,209)


Loss attributable to noncontrolling interest

5,120



4,483



20,423



16,900


Income (loss) attributable to TETRA stockholders

$

(6,936)



$

3,145



$

(66,549)



$

(10,309)










Basic per share information:








Income (loss) before discontinued operations attributable to TETRA stockholders

$

(0.06)



$

0.03



$

(0.21)



$

0.03


Income (loss) from discontinued operations attributable to TETRA stockholders

$

0.00



$

0.00



$

(0.33)



$

(0.12)


Net income (loss) attributable to TETRA stockholders

$

(0.06)



$

0.03



$

(0.54)



$

(0.09)


Weighted average shares outstanding

125,689


114,563


123,557


114,375









Diluted per share information:








Income (loss) before discontinued operations attributable to TETRA stockholders

$

(0.06)



$

0.03



$

(0.21)



$

0.03


Income (loss) from discontinued operations attributable to TETRA stockholders

$

0.00



$

0.00



$

(0.33)



$

(0.12)


Net income (loss) attributable to TETRA stockholders

$

(0.06)



$

0.03



$

(0.54)



$

(0.09)


Weighted average shares outstanding

125,689



114,569


123,557



114,375


 

Schedule B: Financial Results By Segment (Unaudited)



Three Months Ended
September 30,


Nine Months Ended
September 30,


2018


2017


2018


2017


(In Thousands)

Revenues by segment:








Completion Fluids & Products Division

$

63,073



$

71,323



$

192,733



$

201,546


Water & Flowback Services Division

78,568



41,048



223,289



110,313


Compression Division

115,261



71,611



300,607



212,482


Eliminations and other

(51)



(305)



(325)



(1,324)


Total revenues

$

256,851



$

183,677



$

716,304



$

523,017










Gross profit (loss) by segment:








Completion Fluids & Products Division

$

13,129



$

26,415



$

34,211



$

60,104


Water & Flowback Services Division

11,522



5,348



41,556



7,350


Compression Division

16,847



11,015



41,820



24,711


Corporate overhead and eliminations

(168)



(127)



(473)



(325)


Total gross profit

$

41,330



$

42,651



$

117,114



$

91,840










Income (loss) before taxes by segment:








Completion Fluids & Products Division

$

8,713



$

21,398



$

21,143



$

57,486


Water & Flowback Services Division

5,809



2,088



20,668



(3,098)


Compression Division

(7,844)



(7,014)



(30,517)



(27,527)


Corporate overhead and eliminations

(19,626)



(16,551)



(53,861)



(35,753)


Total income (loss) before taxes

$

(12,948)



$

(79)



$

(42,567)



$

(8,892)



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

 

Schedule C: Consolidated Balance Sheet (Unaudited)



September 30, 2018


December 31, 2017


(In Thousands)

Balance Sheet:




Cash (excluding restricted cash)

$

53,899



$

26,128


Accounts receivable, net

188,830



144,051


Inventories

150,638



115,438


Assets of discontinued operations

1,301



34,879


Other current assets

19,794



17,858


PP&E, net

845,181



809,432


Long-term assets of discontinued operations



86,255


Other assets

132,596



74,573


Total assets

$

1,392,239



$

1,308,614






Liabilities of discontinued operations

$

3,570



$

25,688


Other current liabilities

178,886



148,026


Long-term debt (1)

822,905



629,855


Asset retirement obligations, net of current portion

12,014



11,738


CCLP Series A Preferred

36,944



61,436


Warrant liability

13,224



13,202


Long-term liability of discontinued operations



48,225


Other long-term liabilities

18,507



17,883


Equity

306,189



352,561


Total liabilities and equity

$

1,392,239



$

1,308,614



(1) Please see Schedule D for the individual debt obligations of TETRA and CSI Compressco LP.

Schedule D: Long-Term Debt

TETRA Technologies Inc. and its subsidiaries, other than CSI Compressco LP and its subsidiaries, are obligated under a bank asset-based 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 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.


September 30, 2018


December 31, 2017


(In Thousands)

TETRA




Asset-Based Credit Agreement

$

8,301



$


Term Credit Agreement

182,124




Bank revolving line of credit facility




TETRA 11% Senior Note



117,679


TETRA total debt

190,425



117,679


Less current portion




TETRA total long-term debt

$

190,425



$

117,679






CSI Compressco LP




Bank Credit Facility

$



$

223,985


New Credit Agreement




7.25% Senior Notes

289,391



288,191


7.50% Senior Notes

343,089




Total debt

632,480



512,176


Less current portion




CCLP total long-term debt

$

632,480



$

512,176


Consolidated total long-term debt

$

822,905



$

629,855


Non-GAAP Financial Measures

In addition to financial results determined in accordance with GAAP, this press release includes the following non-GAAP financial measures for the Company: net debt, adjusted consolidated and segment income (loss) before taxes, and special charges; consolidated and segment adjusted EBITDA; and TETRA only adjusted free cash flow and TETRA only free cash flow from continuing operations. The following schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures. The non-GAAP financial measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP, as more fully discussed in the Company's financial statements and filings with the Securities and Exchange Commission.

Management believes that the exclusion of the special charges from the historical results of operations enables management to evaluate more effectively the Company's operations over the prior periods and to identify operating trends that could be obscured by the excluded items.

Adjusted income (loss) before taxes (and adjusted income (loss) before taxes as a percent of revenue) is defined as the Company's (or the Segment's) income (loss) before taxes excluding certain special or other charges (or credits). Adjusted income (loss) before taxes (and adjusted income (loss) before taxes as a percent of revenue) is used by management as a supplemental financial measure to assess financial performance, without regard to charges or credits that are considered by management to be outside of its normal operations.

Adjusted diluted earnings (loss) per share 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 special charges, equity compensation, and allocated corporate overhead charges to our CSI Compressco LP subsidiary, pursuant to our Omnibus Agreement, which were reimbursed with CSI Compressco LP common units. Adjusted EBITDA before discontinued operations (and Adjusted EBITDA before discontinued operations as a percent of revenue) is used by management as a supplemental financial measure to assess the financial performance of the Company's assets, without regard to financing methods, capital structure or historical cost basis and to assess the Company's ability to incur and service debt and fund capital expenditures.

TETRA only adjusted free cash flow is a non-GAAP measure that the Company defines as cash from TETRA's operations, excluding cash settlements of Maritech AROs, less capital expenditures net of sales proceeds and cost of equipment sold, and including cash distributions to TETRA from CSI Compressco LP. TETRA only adjusted free cash flow from continuing operations is defined as TETRA only adjusted free cash flow less discontinued operations EBITDA and discontinued operations capital expenditures. Management uses this supplemental financial measure to:

  • assess the Company's ability to retire debt;
  • evaluate the capacity of the Company to further invest and grow; and
  • to measure the performance of the Company as compared to its peer group of companies.

TETRA only adjusted free cash flow and TETRA only adjusted free cash flow from continuing operations does not necessarily imply residual cash flow available for discretionary expenditures, as it excludes cash requirements for debt service or other non-discretionary expenditures that are not deducted.

TETRA net debt is defined as the sum of the carrying value of long-term and short-term debt on its consolidated balance sheet, less cash, excluding restricted cash on the consolidated balance sheet and excluding the debt and cash of CSI Compressco LP. Management views TETRA net debt as a measure of TETRA's ability to reduce debt, add to cash balances, pay dividends, repurchase stock, and fund investing and financing activities.

Schedule E: Special Items



Three Months Ended


September 30, 2018


Income (loss)
before taxes
and
discontinued
operations

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 special items and discontinued operations

$

(8,823)


$

(1,854)


$

(4,646)


$

(2,323)


$

(0.02)


Stock warrant fair value adjustment

179


38



141


0.00


Convertible Series A preferred fair value adjustments

(498)


(105)


(362)


(31)


0.00


Other costs and expenses

(426)


(89)


(112)


(225)


0.00


Earnout Adjustment

600


126



474


0.00


Financing costs

(1,040)


(218)



(822)


(0.01)


Asset Impairment

(2,940)


(617)



(2,323)


(0.02)


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


2,623



(2,623)


(0.02)


Net income (loss) before discontinued operations

(12,948)


(96)


(5,120)


(7,732)


(0.06)


Income from Discontinued operations




796


0.00


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




$

(6,936)


$

(0.06)




Three Months Ended


June 30, 2018


Income (loss)
before taxes
and
discontinued
operations

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 special items and discontinued operations

$

(3,620)


$

(343)


$

(6,593)


$

3,316


$

0.03


Severance expense

(43)


(9)


(9)


(25)


0.00


Stock warrant fair value adjustment

(2,195)


(461)



(1,734)


(0.01)


Convertible Series A preferred fair value adjustments

512


108


414


(10)


0.00


Other costs and expenses

(40)


(8)



(32)


0.00


Earnout Adjustment

(4,300)


(903)



(3,397)


(0.03)


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


4,062



(4,062)


(0.03)


Net income (loss) before discontinued operations

(9,686)


2,446


(6,188)


(5,944)


(0.05)


Loss from Discontinued operations




(21)


(0.00)


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




$

(5,965)


$

(0.05)




Three Months Ended


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

$

(656)


$

(79)


$

(4,931)


$

4,354


$

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


824


(28)


0.00


ERP implementation costs

(583)


(175)


(371)


(37)


0.00


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

684


(684)


(0.01)


Net income (loss) before discontinued operations

(79)


778


(4,483)


3,626


0.03


Loss from Discontinued Operations




(481)


0.00


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




$              3,145


$

0.03


 

Schedule F: Non-GAAP Reconciliation to GAAP Financials



Three Months Ended


September 30, 2018


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

Adjusted
EBITDA



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













Three Months Ended


June 30, 2018


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

Adjusted
EBITDA



Completion Fluids & Products Division



$

9,981


$


$

9,981


$

(131)


$

3,875


$


$

13,725


Water & Flowback Services Division



8,311


4,330


12,641


(1)


7,497



20,137


Compression Division



(8,655)


(499)


(9,154)


13,634


17,448


496


22,424


Eliminations and other



4



4



(5)



(1)


Subtotal



9,641


3,831


13,472


13,502


28,815


496


56,285


Corporate and other



(19,327)


2,236


(17,091)


4,877


164


2,050


(10,000)


TETRA excluding Discontinued Operations

$

(12,132)


$

2,446


$

(9,686)


$

6,067


$

(3,619)


$

18,379


$

28,979


$

2,546


$

46,285













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

Adjusted
EBITDA



Completion Fluids & Products Division



$

21,398


$

12


$

21,410


$

(8)


$

4,055


$


$

24,457


Water & Flowback Services Division



2,088



2,088


(47)


4,400



6,441


Compression Division



(7,014)


(545)


(7,559)


10,811


17,361


261


20,874


Eliminations and other







(4)



(4)


Subtotal



16,472


(533)


15,939


10,756


28,812


261


52,768


Corporate and other



(16,551)


(47)


(16,598)


3,898


130


1,512


(11,058)


TETRA excluding Discontinued Operations

$

(857)


$

778


$

(79)


$

(580)


$

(659)


$

14,654


$

25,942


$

1,773


$

41,710






























Schedule G: Non-GAAP Reconciliation of TETRA Net Debt

The cash and debt positions of TETRA and CSI Compressco LP as of September 30, 2018, are shown below. TETRA and CSI Compressco LP's debt agreements are distinct and separate with no cross default provisions, no cross collateral provisions and no cross guarantees. Management believes that the most appropriate method to analyze the debt positions of each company is to view them separately, as noted below.

The following reconciliation of net debt is presented as a supplement to financial results prepared in accordance with GAAP.


September 30, 2018


TETRA


CCLP


Consolidated


(In Millions)

Non-restricted cash

$

27.7



$

26.2



$

53.9








Carrying value of long-term debt:






Asset-Based Credit Agreement

8.3





8.3


Term Credit Agreement

182.1





182.1


Senior Notes outstanding



632.5



632.5


Net debt

$

162.7



$

606.3



$

769.0


 

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



Three Months Ended


September 30,
2018


June 30, 2018


September 30,
2017


(In Thousands)

Consolidated






Net cash provided by operating activities

$

13,760



$

19,134



$

37,395


ARO settlements





53


Capital expenditures, net of sales proceeds

(39,172)



(38,318)



(11,538)


Consolidated adjusted free cash flow

$           (25,412)



$             (19,184)



$             25,910








CSI Compressco LP






Net cash provided (used) by operating activities

$             10,789



$               (3,908)



$             13,218


Capital expenditures, net of sales proceeds

(30,902)



(30,223)



(2,236)


CSI Compressco free cash flow

$            (20,113)



$             (34,131)



$             10,982








TETRA Only






Cash from operating activities

$               2,971



$               23,042



$             24,177


ARO settlements





53


Capital expenditures, net of sales proceeds

(8,270)



(8,095)



(9,302)


Free cash flow before ARO settlements

(5,299)



14,947



14,928


Distributions from CSI Compressco LP

3,037



2,992



2,890


Adjusted TETRA only free cash flow

$             (2,262)



$               17,939



$             17,818



* Includes the impact from discontinued operations.  See schedule I to exclude the impact from discontinued operations.

 

Schedule I: TETRA Only Adjusted Cash Flow From Continuing Operations



Three Months Ended


September 30,
2018


June 30,
2018


September 30,
2017






(In Thousands)

TETRA Only






Cash from operating activities

$             2,971


$         23,042


$             24,177







Less: Discontinued operations operating activities (adjusted EBITDA)(1)

(1,704)


(21)


2,796













Cash from continued operating activities

4,675


23,063


21,381







Less: Continuing operations capital expenditures(2)

(8,270)


(8,037)


(7,003)







Plus: Distributions from CSI Compressco LP

3,037


2,992


2,890







TETRA only adjusted free cash flow from continuing operations

$         (558)


$         18,018


$           17,268

 


(1) Reconciled to loss from discontinued operations as follows:

Three Months Ended



September 30,
2018


June 30,
2018


September 30,
2017








(In Thousands)


Income (Loss) from discontinued operations

796


(21)


(481)


Plus: Income tax provision



19


Plus: Depreciation & amortization



3,258


Less: non recurring legal settlement payment

2,500




Less: Discontinued operations adjusted EBITDA

(1,704)


(21)


2,796
















(2) Reconciled to TETRA only capital expenditures as follows:

Three Months Ended



September 30,
2018


June 30,
2018


September 30,
2017








(In Thousands)









TETRA only capital expenditures

(8,270)


(8,095)


(9,302)


Less: Discontinued operations capital expenditures


(58)


(2,299)


Plus: Continuing operations capital expenditures

(8,270)


(8,037)


(7,003)

 

Schedule J: Non-GAAP Reconciliation to Projected 2018 Adjusted EBITDA


EBITDA Reconciliation Table for Adjusted EBITDA of $155 million


Adjusted
EBITDA

Equity
Comp
Expense

DD&A

Interest
Expense

Adj Income
Before Tax

Impairments
& Special
Charges

Income
(Loss)
Before Tax


(In Millions)

Total Adjusted EBITDA

$   155.0

$          9.0

$   110.5

$         74.5

$          (39.0)

$            14.1

$          (53.1)



EBITDA Reconciliation Table for Adjusted EBITDA of $165 million


Adjusted
EBITDA

Equity
Comp
Expense

DD&A

Interest
Expense

Adj Income
Before Tax

Impairments
& Special
Charges

Income
(Loss)
Before Tax


(In Millions)

Total Adjusted EBITDA

$   165.0

$          9.0

$   112.5

$         74.5

$          (31.0)

$            14.1

$          (45.1)

 

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

 

SOURCE TETRA Technologies, Inc.