Tetra Technologies, Inc.
TETRA Technologies, Inc. Announces Fourth Quarter and Full Year 2016 Results
TETRA Technologies, Inc. Announces Fourth Quarter and Full Year 2016 Results

THE WOODLANDS, TexasMarch 1, 2017 /PRNewswire/ -- TETRA Technologies, Inc. ("TETRA" or the "Company") (NYSE: TTI) today announced a consolidated fourth quarter 2016 net loss per share attributable to TETRA stockholders of $0.33, which compares to a net loss per share of $0.16 in the third quarter of 2016 and net loss per share of $1.84 in the fourth quarter of 2015.

TETRA's adjusted per share results attributable to TETRA stockholders for the fourth quarter of 2016, excluding Maritech and special items, were a loss of $0.16, which compares to adjusted loss per share of $0.05 in the third quarter of 2016 and adjusted earnings per share of $0.01 in the fourth quarter of 2015, also excluding Maritech and special items. Fourth quarter 2016 revenue of $173 million decreased 2% from the third quarter of 2016.  Compared to the fourth quarter of 2015 revenue declined 33% primarily as a result of reduced activity levels in the Gulf of Mexico and the lower rig count.  (Adjusted diluted earnings/(loss) per share is a non-GAAP financial measure that is reconciled to the nearest GAAP measure in the accompanying schedules.)

Fourth Quarter 2016 Results

 

Three Months Ended

 

December 31, 2016

 

September 30, 2016

 

December 31, 2015

 

(In Thousands, Except per Share Amounts)

Revenue

$

173,222

   

$

176,553

   

$

257,590

 

Net income (loss) attributable to TETRA stockholders

(31,554)

   

(15,009)

   

(146,415)

 

Adjusted EBITDA(1)

14,946

   

36,927

   

55,486

 

EPS attributable to TETRA stockholders

(0.33)

   

(0.16)

   

(1.84)

 

Adjusted diluted EPS attributable to TETRA stockholders(1)

(0.16)

   

(0.05)

   

0.01

 

Consolidated net cash provided (used) by operating activities

28,316

   

(7,933)

   

77,724

 

TETRA only adjusted free cash flow(1)

$

16,028

   

$

(13,924)

   

$

52,448

 
                 

(1)

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

 

 

Highlights of the 2016 fourth quarter include:

  • Fluids revenue increased sequentially by 2% despite the deferral of a significant Gulf of Mexico TETRA CS Neptune® completion fluids project from the fourth quarter to the first half of 2017.  The sequential increase was driven by strong U.S. onshore activity and improved international offshore volumes. 
  • Compression activity is reflecting signs of a recovery with quarter end utilization increasing sequentially by 120 basis points to 76.4%, operating horsepower in service increasing sequentially by 3,368 horsepower, and with the receipt of $20 million in orders for new equipment, the highest since late 2014. 
  • Compression results were negatively impacted by $2.6 million of cost overruns on a third party equipment project that was completed in the fourth quarter, the first such cost overrun for Compression in recent years.
  • Including CSI Compressco, the carrying value of consolidated long-term debt at the end of 2016 was $624 million compared to $738 million as of September 30, 2016.  In December, TETRA completed a $115 million equity offering to reduce debt. TETRA's net debt was reduced from $233 million to $111 million from the equity proceeds and cash from operating activities over the same time period.  (See Schedule H for the reconciliation of TETRA net debt to GAAP.)
  • Consolidated net cash provided by operating activities for the fourth quarter of 2016 was $28 million and for full year 2016 was $54 million.  TETRA only adjusted free cash flow in the fourth quarter was $16 million.  TETRA only adjusted free cash flow for the full year was $12 million, at the upper end of the $5 million to $15 million guidance previously provided.  (See Schedule G for the reconciliation of TETRA only free cash flow to GAAP.)

2016 Results

 

Twelve months ended

 

December 31, 2016

 

December 31, 2015

 

(In Thousands, Except per Share Amounts)

Revenue

$

694,764

   

$

1,130,145

 

Net income (loss) attributable to TETRA stockholders

(161,462)

   

(126,183)

 

Adjusted EBITDA(1)

104,243

   

257,740

 

EPS attributable to TETRA stockholders

(1.85)

   

(1.59)

 

Adjusted diluted EPS attributable to TETRA stockholders(1)

(0.60)

   

0.32

 

Consolidated net cash provided by operating activities

53,980

   

195,951

 

TETRA only adjusted free cash flow(1)

$

11,821

   

$

119,753

 
                           

(1)

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

 

 

Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, "We believe we are seeing the initial impact of a recovering U.S. onshore market with another strong sequential quarterly improvement in the Fluids Division's water management operations, improving utilization of the compression services fleet, particularly at the higher horsepower equipment size coupled with related favorable pricing trends and higher orders for new compression equipment.  Based on feedback from our customers, we anticipate that a recovery in the deep water Gulf of Mexico will lag the onshore recovery.  We are entering 2017 with one significant TETRA CS Neptune fluid project scheduled for the first half of 2017 and expect to complete another such project that was started in 2016.

"Fluids Division revenue for the fourth quarter of 2016 was $64 million compared to $62.6 million in the third quarter of 2016. The strong sequential improvement in U.S. onshore activity, the second consecutive strong quarterly sequential improvement, was driven by organic water management and onshore fluids distribution facilities investments, in addition to stronger international offshore fluids activity.  This improvement offset the lack of a TETRA CS Neptune fluid project that was expected in the fourth quarter but was deferred into the first half of 2017.  The improving activity levels in the U.S. onshore water management business are occurring throughout several of the shale basins, but are led primarily by the Permian Basin and MidCon markets.  Fluids Division income before taxes was $1.5 million while adjusted EBITDA was $8.6 million.  Income before taxes as a percentage of revenue was 2.3% while adjusted EBITDA as a percentage of revenues was 13.4%, without the benefit of a TETRA CS Neptune fluids project. 

"Fourth quarter 2016 Compression Division revenue increased sequentially 17% to $83 million, mainly as a result of higher equipment sales. Compression Division income before taxes was a loss of $11.8 million while adjusted EBITDA was $17.7 million, which was negatively impacted by $2.6 million of unusual costs related to equipment sales on a third party equipment project and a $0.7 million inventory adjustment.  Quarter end utilization was 76.4%, compared to 75.2% in the third quarter, and reflected the first sequential improvement in utilization since the first quarter of 2015.  Large horsepower equipment (greater than 800 HP) utilization increased from 84.4% in the third quarter to 87.5% in the fourth quarter.  New equipment orders were $20 million, the highest quarterly new equipment orders received since late 2014, and we believe the level of orders reflect signs of a recovering compression market.  On January 20, 2017CSI Compressco LP declared cash distributions attributable to the fourth quarter of 2016 of $0.3775 per common unit, unchanged from the distribution attributable to the third quarter of 2016. This distribution resulted in a coverage ratio of 0.68x for the fourth quarter of 2016.

"Fourth quarter 2016 revenue for the Production Testing Division improved sequentially by 2% to $15.3 million, led by stronger activity levels in Canada and Saudi Arabia.  Production Testing loss before taxes was $7.5 million while adjusted EBITDA was a loss of $0.5 million.  Going into 2017 we expect to see additional improvements in activity in North America and internationally and hope to be able to better manage pricing levels in the second half of 2017.

"Our Offshore Service segment reported revenue of $12 million.  Loss before taxes was $6.2 million while adjusted EBITDA was a loss of $2.3 million, reflecting the seasonal fourth quarter ramp down of activity.  We are currently bidding on many decommissioning projects for the upcoming season and believe the preliminary customer inquiries and the committed backlog trends for 2017 are encouraging."

Free Cash Flow and Balance Sheet

TETRA only adjusted free cash flow in the fourth quarter of 2016 was $16 million, reflecting the seasonality in working capital.  Consolidated net cash provided by operating activities for 2016 was $54 million.  Total year TETRA only adjusted free cash flow, excluding Maritech and reflecting the distributions received from CSI Compressco, was $12 million and was at the upper end of our previously communicated guidance of $5 million to $15 million.  TETRA only days sales outstanding (excluding CSI Compressco LP) improved from 73 days at the end of the third quarter to 70 days at the end of December despite the continued financial challenges from our customers and their attempts to defer payments to manage their working capital.

During the fourth quarter, TETRA completed an equity offering that resulted in gross proceeds of $115 million.  As a result of this equity offering and from the free cash flow generated during the quarter, TETRA only outstanding net debt was reduced from $233 million to $111 million.  Additionally, during December, 2016 TETRA amended the leverage covenant on its revolving credit facility from 4.0X to 5.0X through December 31, 2017.

Special items and Maritech

Maritech reported pre-tax income of $2.8 million in the fourth quarter of 2016 due to the receipt of escrowed funds held from prior sales of properties with abandonment obligations.

Consolidated special items incurred in the fourth quarter were $8.7 million, of which only $1.5 million were cash charges.  Special items include:

  • $1.8 million net gain primarily reflecting a fair value adjustment of the CSI Compressco Series A Convertible Preferred units
  • $1.0 million of expenses related to the December TETRA equity issuance
  • $2.1 million charge reflecting a fair value adjustment of the outstanding warrants
  • $7.2 million of asset impairments related to damaged CSI Compressco compressor equipment, certain Offshore Services cutting tools and obsolete assets in Production Testing
  • $0.3 million net gain from other debt related items
  • $0.5 million of other special charges

Financial Guidance

Based on TETRA's anticipation of a continued recovery in the U.S. Onshore markets and a delayed recovery in the offshore markets, we expect total year TETRA only free cash flow to improve from $12 million in 2016 to between $30 million and $50 million in 2017.

No reconciliation of the forecasted range of TETRA only adjusted free cash flow for the full year 2017 to the nearest GAAP measure is included in this release because the reconciliation would require presenting forecasted information for CSI Compressco that is not publicly disclosed.

On December 16, 2016 an arbitration panel in Houston, Texas issued a ruling in favor of TETRA for TETRA's claims against an engineering company related to TETRA's El Dorado, Arkansas calcium chloride manufacturing facility.  Cash proceeds of $12.8 million for the ruling were received by TETRA in January, 2017 and will be reflected in TETRA's first quarter 2017 results.

Conference Call

TETRA will host a conference call to discuss these results today, March 1 2017, 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.

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, frac flowback, production well testing, offshore rig cooling, compression services and equipment, and selected offshore services including well plugging and abandonment, decommissioning, and diving. TETRA owns an equity interest, including all of the general partner interest, in CSI Compressco LP (NASDAQ: CCLP), a master limited partnership.

This press 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 results of operational business segments for 2017, anticipated benefits from CSI Compressco following the acquisition of CSI Compressco in 2014, including increases in 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, including the ability of CSI Compressco to successfully integrate the operations of CSI Compressco and recognize the anticipated benefits of the acquisition. 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, 2015 (and in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 when it is filed on or about the date hereof), 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,

 

2016

 

2015

 

2016

 

2015

 

(In Thousands, Except per Share Amounts)

Revenues

$

173,222

   

$

257,590

   

$

694,764

   

$

1,130,145

 
               

Cost of sales, services, and rentals

133,598

   

171,981

   

495,580

   

741,736

 

Depreciation, amortization, and accretion

30,598

   

38,696

   

129,595

   

155,015

 

Impairments of long-lived assets

7,245

   

44,158

   

18,172

   

44,158

 

Total cost of revenues

171,441

   

254,835

   

643,347

   

940,909

 

Gross profit

1,781

   

2,755

   

51,417

   

189,236

 
               

General and administrative expense

26,583

   

44,161

   

115,964

   

157,812

 

Goodwill impairment

   

177,006

   

106,205

   

177,006

 

Interest expense, net

15,327

   

14,244

   

58,626

   

54,475

 

Warrants fair value adjustment

2,106

   

   

2,106

   

 

CCLP Series A Preferred fair value adjustment

(1,891)

   

   

4,404

   

 

Other (income) expense, net

(2,433)

   

583

   

1,202

   

1,706

 

Income (loss) before taxes

(37,911)

   

(233,239)

   

(237,090)

   

(201,763)

 

Provision (benefit) for income taxes

499

   

(1,293)

   

2,303

   

7,704

 

Net income (loss)

(38,410)

   

(231,946)

   

(239,393)

   

(209,467)

 

Net (income) loss attributable to noncontrolling interest

6,856

   

85,531

   

77,931

   

83,284

 

Net income (loss) attributable to TETRA stockholders

$

(31,554)

   

$

(146,415)

   

$

(161,462)

   

$

(126,183)

 
               

Basic per share information:

             

Net income (loss) attributable to TETRA stockholders

$

(0.33)

   

$

(1.84)

   

$

(1.85)

   

$

(1.59)

 

Weighted average shares outstanding

95,992

   

79,380

   

87,286

   

79,169

 
               

Diluted per share information:

             

Net income (loss) attributable to TETRA stockholders

$

(0.33)

   

$

(1.84)

   

$

(1.85)

   

$

(1.59)

 

Weighted average shares outstanding

95,992

   

79,380

   

87,286

   

79,169

 
 

 

Schedule B: Financial Results By Segment (Unaudited)

 
 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

 

2016

 

2015

 

2016

 

2015

 

(In Thousands)

Revenues by segment:

             

Fluids Division

$

64,039

   

$

91,194

   

$

246,595

   

$

424,044

 

Production Testing Division

15,298

   

33,017

   

63,618

   

133,904

 

Compression Division

82,870

   

99,369

   

311,374

   

457,639

 

Offshore Division

             

Offshore Services

11,921

   

36,798

   

77,525

   

122,194

 

Maritech

176

   

63

   

751

   

2,438

 

Intersegment eliminations

(90)

   

(1,108)

   

(903)

   

(5,128)

 

Offshore Division total

12,007

   

35,753

   

77,373

   

119,504

 

Eliminations and other

(992)

   

(1,743)

   

(4,196)

   

(4,946)

 

Total revenues

$

173,222

   

$

257,590

   

$

694,764

   

$

1,130,145

 
               

Gross profit (loss) by segment:

             

Fluids Division

$

7,443

   

$

4,545

   

$

36,888

   

$

111,969

 

Production Testing Division

(5,263)

   

(10,749)

   

(13,317)

   

(3,046)

 

Compression Division

4,646

   

7,035

   

37,681

   

73,135

 

Offshore Division

             

Offshore Services

(4,811)

   

4,585

   

(5,574)

   

10,602

 

Maritech

(138)

   

(2,493)

   

(3,847)

   

(2,523)

 

Intersegment eliminations

   

   

   

 

Offshore Division total

(4,949)

   

2,092

   

(9,421)

   

8,079

 

Corporate overhead and eliminations

(96)

   

(168)

   

(414)

   

(901)

 

Total gross profit

$

1,781

   

$

2,755

   

$

51,417

   

$

189,236

 
               

Income (loss) before taxes by segment:

             

Fluids Division

$

1,499

   

$

(2,746)

   

$

10,430

   

$

80,789

 

Production Testing Division

(7,547)

   

(50,759)

   

(35,471)

   

(55,720)

 

Compression Division

(11,821)

   

(152,772)

   

(136,327)

   

(146,798)

 

Offshore Division

             

Offshore Services

(6,233)

   

1,782

   

(12,025)

   

(195)

 

Maritech

2,823

   

(2,846)

   

(1,841)

   

(3,833)

 

Intersegment eliminations

   

   

 

 

Offshore Division total

(3,410)

   

(1,064)

   

(13,866)

   

(4,028)

 

Corporate overhead and eliminations

(16,632)

   

(25,898)

   

(61,856)

   

(76,006)

 

Total income (loss) before taxes

$

(37,911)

   

$

(233,239)

   

$

(237,090)

   

$

(201,763)

 
 

Please note that the above results by segment include special items. Please see Schedule E for details of those special items.

 

 

Schedule C: Consolidated Balance Sheet (Unaudited)

 
 

December 31, 2016

 

December 31, 2015

 

(In Thousands)

Balance Sheet:

     

Cash (excluding restricted cash)

$

29,840

   

$

23,057

 

Accounts receivable, net

114,284

   

184,172

 

Inventories

106,546

   

117,009

 

Other current assets

25,121

   

29,791

 

PP&E, net

945,451

   

1,048,004

 

Other assets

94,298

   

234,169

 

Total assets

$

1,315,540

   

$

1,636,202

 
       

Current portion of decommissioning liabilities

$

1,451

   

$

14,570

 

Other current liabilities

115,434

   

170,676

 

Long-term debt (1)

623,730

   

853,228

 

Long-term portion of decommissioning liabilities

54,027

   

42,879

 

CCLP Series A Preferred

77,062

   

 

Warrant liability

18,503

   

 

Other long-term liabilities

24,867

   

40,669

 

Equity

400,466

   

514,180

 

Total liabilities and equity

$

1,315,540

   

$

1,636,202

 
                 

(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 credit agreement and senior notes, 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, 2016

 

December 31, 2015

 

(In Thousands)

TETRA

     

Bank revolving line of credit facility

$

3,229

   

$

21,572

 

TETRA Senior Notes at various rates

116,411

   

264,998

 

Other debt

   

50

 

TETRA total debt

119,640

   

286,620

 

Less current portion

   

(50)

 

TETRA total long-term debt

$

119,640

   

$

286,570

 
       

CSI Compressco LP

     

CCLP Bank Credit Facility

$

217,467

   

$

229,555

 

CCLP 7.25% Senior Notes

286,623

   

337,103

 

CCLP total debt

504,090

   

566,658

 

Less current portion

   

 

CCLP total long-term debt

$

504,090

   

$

566,658

 

Consolidated total long-term debt

$

623,730

   

$

853,228

 
 

 

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, excluding the Maritech segment and special items; 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 items 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 items, 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 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 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

 
 

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 gain, 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 for significant bankruptcies

(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)

 
           
 

December 31, 2015

 

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

$

658

 

$

199

 

$

(491)

 

$

950

 

$

0.01

 

Asset impairment, including inventory adjustments

(44,182)

 

(13,255)

 

(6,612)

 

(24,315)

 

(0.30)

 

Goodwill writeoff

(177,006)

 

(53,102)

 

(78,151)

 

(45,753)

 

(0.57)

 

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

 

67,824

 

 

(67,824)

 

(0.84)

 

Allowance for doubtful accounts for significant bankruptcies

(9,862)

 

(2,959)

 

(277)

 

(6,626)

 

(0.10)

 

Maritech profit (loss)

(2,847)

 

 

 

(2,847)

 

(0.04)

 

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

$

(233,239)

 

$

(1,293)

 

$

(85,531)

 

$

(146,415)

 

$

(1.84)

 
 

 

   
 

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 writeoff

(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 for significant bankruptcies

(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)

 
           
 

December 31, 2015

 

Income 
(Loss) 
Before Tax

Provision 
(Benefit) for 
Tax

Noncont. 
Interest

Net Income 
Attributable to 
TETRA 
Stockholders

EPS

 

(In Thousands, Except per Share Amounts)

Income attributable to TETRA stockholders, excluding unusual charges & Maritech

$

39,513

 

$

11,802

 

$

1,962

 

$

25,749

 

$

0.32

 

Transaction related costs

(208)

 

(62)

 

(73)

 

(73)

 

0.00

 

Asset Impairment, including inventory adjustments

(44,158)

 

(13,247)

 

(6,612)

 

(24,299)

 

(0.30)

 

Goodwill writeoff

(177,006)

 

(53,102)

 

(78,193)

 

(45,711)

 

(0.57)

 

Effect of Deferred Tax Valuation Allowance and other related tax adj

 

67,082

 

 

(67,082)

 

(0.85)

 

Allowance for doubtful accounts for significant bankruptcies

(16,071)

 

(4,769)

 

(368)

 

(10,934)

 

(0.14)

 

Maritech profit (loss)

(3,833)

 

 

 

(3,833)

 

(0.05)

 

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

$

(201,763)

 

$

7,704

 

$

(83,284)

 

$

(126,183)

 

$

(1.59)

 
           
 

 

Schedule F: Non-GAAP Reconciliation to GAAP Financials

 
 

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)

Adjusted 
Depreciation 

Amortization (2)

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

                       
   
 

December 31, 2015

 

Net Income 
(Loss), as 
reported

Tax 
Provision

Income 
(Loss) 
Before Tax, as 
Reported

Impairments 
& Special 
Charges

Adjusted 
Income 
(Loss) 
Before 
Tax

Interest 
Expense, 
Net

Depreciation 

Amortization

Adjusted 
Equity Comp. 
Expense (4)

Omnibus 
Equity

Adjusted 
EBITDA

 

(In Thousands)

 

Fluids Division

           

$

(2,745)

 

$

19,958

 

$

17,213

 

$

(158)

 

$

8,859

 

$

 

$

 

$

25,914

 

Production Testing Division

       

(50,759)

 

49,893

 

(866)

 

(98)

 

5,664

 

 

 

4,700

 

Compression Division

       

(152,772)

 

151,896

 

(876)

 

8,806

 

20,643

 

505

 

 

29,078

 

Offshore Services Segment

       

1,782

 

795

 

2,577

 

 

2,928

 

 

 

5,505

 

Eliminations and other

       

4

 

 

4

 

 

(4)

 

 

 

 

Subtotal

       

(204,490)

 

222,542

 

18,052

 

8,550

 

38,090

 

505

 

 

65,197

 

Corporate and other

       

(25,902)

 

8,508

 

(17,394)

 

5,691

 

171

 

1,821

 

 

(9,711)

 

TETRA excluding Maritech

       

(230,392)

 

231,050

 

658

 

14,241

 

38,261

 

 

 

55,486

 

Maritech

       

(2,847)

 

 

(2,847)

 

3

 

435

 

 

 

(2,409)

 

Total TETRA

$

(231,946)

 

$

(1,293)

 

$

(233,239)

 

$

231,050

 

$

(2,189)

 

$

14,244

 

$

38,696

 

$

2,326

 

$

 

$

53,077

                                                             
 

(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.

 

(4)

Adjusted equity compensation expense, net for the three month period ended December 31, 2015, excludes $6.7 million one-time adjustment

 

 

 

Twelve 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)

Adjusted

Depreciation & Amortization(2)

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

       

7

 

 

7

 

 

(17)

 

 

 

(10)

 

Subtotal

       

(173,386)

 

135,715

 

(37,671)

 

36,418

 

127,522

 

3,028

 

1,576

 

130,873

 

Corporate and other

       

(61,863)

 

4,706

 

(57,157)

 

20,955

 

429

 

10,719

 

(1,576)

 

(26,630)

 

TETRA excluding Maritech

       

(235,249)

 

140,421

 

(94,828)

 

57,373

 

127,951

 

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

 
                     
 

December 31, 2015

 
 

Net Income (Loss), as reported

Tax Provision

Income (Loss) Before Tax, as Reported

Impairments & Special Charges

Adjusted Income (Loss) Before Tax

 Interest Expense, Net

Depreciation & Amortization

Adjusted Equity Comp. Expense (4)

Omnibus Equity

Adjusted EBITDA

 

(In Thousands)

 

Fluids Division

           

$

80,789

 

$

20,599

 

$

101,388

 

$

(258)

 

$

35,125

 

$

 

$

 

 

$

136,255

 

Production Testing Division

       

(55,720)

 

54,529

 

(1,191)

 

(89)

 

24,094

 

 

 

22,814

 

Compression Division

       

(146,798)

 

152,390

 

5,592

 

34,964

 

82,024

 

2,164

 

 

124,744

 

Offshore Services Segment

       

(195)

 

1,344

 

1,149

 

 

11,500

 

 

 

12,649

 

Eliminations and other

       

(1)

 

 

(1)

 

 

(14)

 

 

 

(15)

 

Subtotal

       

(121,925)

 

228,862

 

106,937

 

34,617

 

152,729

 

2,164

 

 

296,447

 

Corporate and other

       

(76,005)

 

8,580

 

(67,425)

 

19,829

 

911

 

7,978

 

 

(38,707)

 

TETRA excluding Maritech

       

(197,930)

 

237,442

 

39,512

 

54,446

 

153,640

 

10,142

 

 

257,740

 

Maritech

       

(3,833)

 

 

(3,833)

 

29

 

1,375

 

 

 

(2,429)

 

Total TETRA

$

(209,467)

 

$

7,704

 

$

(201,763)

 

$

237,442

 

$

35,679

 

$

54,475

 

$

155,015

 

$

10,142

 

$

 

 

$

255,311

 
                     
                                                               

(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.

(4)

Adjusted equity compensation expense, net for the three month period ended December 31, 2015, excludes $6.7 million one-time adjustment

 

 

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

 

Three Months Ended

 

Twelve Months Ended

 

December 31, 2016

 

December 31, 2015

 

December 31, 2016

 

December 31, 2015

 

(In Thousands)

Consolidated

             

Net cash provided by operating activities

$

28,316

   

$

77,724

   

$

53,980

   

$

195,951

 

ARO settlements

271

   

5,109

   

4,040

   

10,305

 

Capital expenditures, net of sales proceeds

(5,268)

   

(22,221)

   

(17,712)

   

(113,462)

 

Consolidated adjusted free cash flow

23,319

   

60,612

   

40,308

   

92,794

 
               

CSI Compressco LP

             

Net cash provided by operating activities

15,922

   

38,351

   

61,444

   

101,893

 

Capital expenditures, net of sales proceeds

(3,057)

   

(19,274)

   

(10,659)

   

(95,272)

 

CSI Compressco free cash flow

12,865

   

19,077

   

50,785

   

6,621

 
               

TETRA Only

             

Cash from operating activities

12,394

   

39,373

   

(7,464)

   

94,058

 

ARO settlements

271

   

5,109

   

4,040

   

10,305

 

Capital expenditures, net of sales proceeds

(2,211)

   

(2,947)

   

(7,053)

   

(18,190)

 

Free cash flow before ARO settlements

10,454

   

41,535

   

(10,477)

   

86,173

 

Distributions from CSI Compressco LP

5,574

   

7,877

   

22,298

   

30,544

 

Adjusted free cash flow

16,028

   

49,412

   

11,821

   

116,717

 

Debt restructuring cost

   

3,036

   

   

3,036

 
 

16,028

   

52,448

   

11,821

   

119,753

 
 

 

Schedule H: Non-GAAP Reconciliation of TETRA Net Debt

 

The cash and debt positions of TETRA and CSI Compressco LP as of December 31, 2016, are shown below. TETRA and CSI Compressco LP's debt agreements are distinct and separate with no cross default provisions, no cross collateral provisions and no cross guarantees. Management believes that the most appropriate method to analyze the debt positions of each company is to view them separately, as noted below.

 

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

 
 

December 31, 2016

 

TETRA

 

CCLP

 

Consolidated

 

(In Millions)

   

Non-restricted cash

$

9.0

   

$

20.8

   

$

29.8

 
           

Carrying value of long-term debt:

         

Revolver debt outstanding

3.2

   

217.5

   

220.7

 

Senior Notes outstanding

116.4

   

286.6

   

403.0

 

Net debt

$

110.6

   

$

483.3

   

$

593.9

 
 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/tetra-technologies-inc-announces-fourth-quarter-and-full-year-2016-results-300415815.html

SOURCE TETRA Technologies, Inc.

Investor Contact: TETRA Technologies, Inc., The Woodlands, Texas, Stuart M. Brightman, 281/367-1983, Fax: 281/364-4346, www.tetratec.com