Tetra Technologies, Inc.
TETRA Technologies, Inc. Announces Third Quarter 2016 Results And Updates Financial Guidance
TETRA Technologies, Inc. Announces Third Quarter 2016 Results And Updates Financial Guidance

THE WOODLANDS, TexasNov. 7, 2016 /PRNewswire/ -- TETRA Technologies, Inc. (NYSE:TTI) (TETRA or the Company) today announced a consolidated third quarter 2016 net loss per share attributable to TETRA stockholders of $0.16, which compares to a net loss per share of $0.32 in the second quarter of 2016 and earnings per share of $0.12 in the third quarter of 2015.

TETRA's adjusted per share results attributable to TETRA stockholders for the third quarter of 2016, excluding Maritech and other charges, were a loss of $0.05, which compares to adjusted loss per share of $0.15 in the second quarter of 2016 and adjusted earnings per share of $0.17 in the third quarter of 2015, also excluding Maritech and other charges. Third quarter 2016 revenue of $176.6 million increased by 1% sequentially and declined 42% from the third quarter of 2015 primarily as a result of 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.)

Third Quarter 2016 Results

 

Three Months Ended

 

September 30, 2016

 

June 30, 2016

 

September 30, 2015

 

(In Thousands, Except per Share Amounts)

Revenue

$

176,553

   

$

175,660

   

$

305,144

 

Net income (loss) attributable to TETRA stockholders

(15,009)

   

(26,574)

   

9,755

 

Adjusted EBITDA(1)

36,927

   

32,949

   

76,421

 

Diluted EPS attributable to TETRA stockholders

(0.16)

   

(0.32)

   

0.12

 

Adjusted diluted EPS attributable to TETRA stockholders(1)

(0.05)

   

(0.15)

   

0.17

 

Consolidated net cash provided (used) by operating activities

(7,933)

   

8,336

   

36,065

 

TETRA only adjusted free cash flow(1)

$

(13,924)

   

$

(8,773)

   

$

30,176

 
 
   

(1)

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

 

Highlights of the 2016 third quarter include:

  • Fluids operating margin improved sequentially to 14.1% from 0.7%, with income before tax improving to $8.8 million.  Adjusted EBITDA margins improved sequentially to 26.2% from 13.6%, with adjusted EBITDA doubling to $16.4 million.
  • Offshore Services operating margin improved sequentially to 6.4% from 0.1%, with income before tax improving to $1.9 million.  Adjusted EBITDA margins improved sequentially to 16.0% from 11.3%, with adjusted EBITDA improving by 58% to $4.7 million.
  • Production Testing revenues increased sequentially by 13% driven by North America land activity.  Production Testing loss before tax was reduced to $4.2 million while Adjusted EBITDA loss was $452,000.
  • Compression operating margin deteriorated sequentially to a loss of 22.3% from a loss of 5.3%, with loss before tax deteriorating to $15.8 million primarily due to expenses from the recent equity offering and a non-cash charge from a revaluation of the convertible preferred notes.  Adjusted EBITDA margins of 32.7% improved sequentially by 30 basis points.
  • CSI Compressco completed a convertible preferred equity offering for a total of $80 million and further amended its credit facility leverage covenants (to 5.95X through June, 2018) to provide incremental financial flexibility to manage through this downturn, converting their credit facility to an asset-based facility and reducing the amount of the credit facility from $340 million to $315 million.
  • TETRA only adjusted free cash flow was a use of cash of $13.9 million as customers delayed payments into the fourth quarter.

(1)

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

 

Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, "Despite a continued challenging market environment we saw sequential adjusted EBITDA margin improvements in Fluids, Compression and Offshore Services, reflecting our market position in each of these segments. We also experienced sequential revenue improvements in Production Testing (up 13%), Offshore Services (up 12%) and Fluids (up 3%). Our Fluids division executed one TETRA CS Neptune® deep water Gulf of Mexico project during the third quarter, and expects to start another in the fourth quarter. While we are seeing improvements in activity on the U.S. onshore side that are benefiting our production testing, calcium chloride sales, water management and wellhead compression, we believe the offshore markets will continue to be challenging.

"Our Fluids Division's revenues for the third quarter of 2016 were $62.6 million compared to $60.8 million in the second quarter of 2016. The traditional seasonal decline in Northern Europe chemical sales was more than offset by a TETRA CS Neptune project in the Gulf of Mexico and a strong rebound of water management activity in U.S. onshore markets, mainly in the Permian and Midcontinent Basins. Sequentially, water management revenue improved significantly, as onshore completions activity continues to rebound in these areas. This mix resulted in adjusted EBITDA margins improving to 26.2% in the third quarter compared to 13.6% in the second quarter. Going into the end of this year and early into next year, our expectations for the Fluids Division are that we will see increasing activity in the onshore North America markets but weaker deep water Gulf of Mexico activity.

"Third quarter 2016 revenue for our Production Testing Division improved 13% over the second quarter led by stronger activity levels in North America land and Saudi Arabia with the North America improvements reflecting the higher rig count and completions activity. Adjusted EBITDA was a loss of $452,000 compared to an adjusted EBITDA loss of $164,000 in the second quarter reflecting continued pricing pressures. We expect going into next year that we will continue to see improving activity in North America land, mainly in the Permian Basin, and internationally in Saudi Arabia.

"For the third quarter of 2016 our Compression Division reported adjusted EBITDA of $23.1 million, at 32.7% of revenue, compared to the second quarter of $24.7 million, or 32.4% of revenue. Utilization was 75.2%, compared to 75.8% in the second quarter, as the rate of decline in utilization appears to be slowing down given stronger activity levels in the Permian Basin. On October 21, 2016CSI Compressco LP declared a cash distribution attributable to the third quarter of 2016 of $0.3775 per common unit, unchanged from the distribution attributable to the second quarter of this year. This distribution resulted in a coverage ratio of 0.99x for the third quarter of 2016.

"Our Offshore Service segment reported adjusted EBITDA of $4.7 million, or 16.0% of revenue, a 58% sequential improvement of $1.7 million over the second quarter and reflecting the seasonal peak of decommissioning activity in the Gulf of Mexico. We expect the fourth quarter of this year and the first quarter of next year to be weaker reflecting the weakness in customer spend during this downturn and the seasonal low of this market."

Free Cash Flow and Balance Sheet

TETRA only adjusted free cash flow in the third quarter was a use of cash of $13.9 million primarily as a result of delayed payments by a significant customer at quarter-end (which has been subsequently collected).  TETRA only day's sales outstanding increased from 61 days at the end of the second quarter to 73 days at the end of September.

During the third quarter, CSI Compressco completed offerings of its Series A Convertible Preferred Units for an aggregate of $80 million. This $80 million is reflected as a liability for U.S. GAAP reporting purposes although it is considered equity for reporting compliance with CSI Compressco's revolving credit agreement.

CSI Compressco announced on November 4, 2016 an additional amendment to its credit facility whereby, among other changes, the leverage covenant has been increased from 5.75X to 5.95X through June, 2018 and to 5.75X through December 31, 2018 and the credit facility was changed to an asset-based facility. The credit limit was also reduced to $315 million from $340 million.

Special Charges and Maritech

Maritech reported a pre-tax loss of $0.6 million in the third quarter of 2016.

Special charges were $10.5 million in the quarter, which included the following:

  • $9.3 million related to the recent offerings by CSI Compressco of its Series A Convertible Preferred units (transaction related expenses of $3.0 million and a non-cash charge of $6.3 million for a mark to market valuation of the related liability).
  • $1.4 million of bad debt expenses and increased bad debt reserves to reflect the deteriorating financial conditions of some of our customers.

Financial Guidance

The forecast for full year 2016 TETRA only adjusted free cash flow will be impacted by the timing of year-end collections from some large projects that will negatively impact working capital as these projects are being pushed towards the end of the quarter.  Partially as a result of these potential deferred collections, total year projected free cash flow is expected to be between $5 million and $15 million.

No reconciliation of the forecasted range of adjusted free cash flow for the full year 2016 is included in this release because the reconciliation would require presenting forecasted information for CSI Compressco that is not publicly disclosed.

Conference Call

TETRA will host a conference call to discuss third quarter 2016 results today, November 7, 2016, 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: Second Quarter Special Charges 
Schedule F: Non-GAAP Reconciliation to GAAP Financials 
Schedule G: Non-GAAP Reconciliation to 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 expected results of operational business segments for 2016, 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, 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,

 

2016

 

2015

 

2016

 

2015

 

(In Thousands)

Revenues

$

176,553

 

$

305,144

 

$

521,542

 

$

872,555

               

Cost of sales, services, and rentals

115,948

 

195,701

 

361,982

 

569,755

Depreciation, amortization, and accretion

31,852

 

38,909

 

98,997

 

116,319

Impairments of long-lived assets

 

 

10,927

 

Total cost of revenues

147,800

 

234,610

 

471,906

 

686,074

Gross profit

28,753

 

70,534

 

49,636

 

186,481

               

General and administrative expense

28,589

 

40,910

 

89,381

 

113,651

Goodwill impairment

 

 

106,205

 

Interest expense, net

14,325

 

13,196

 

43,299

 

40,231

Other (income) expense, net

8,424

 

1,005

 

9,930

 

1,123

Income (loss) before taxes

(22,585)

 

15,423

 

(199,179)

 

31,476

Provision (benefit) for income taxes

1,443

 

4,687

 

1,804

 

8,997

Net income (loss)

(24,028)

 

10,736

 

(200,983)

 

22,479

Net (income) loss attributable to noncontrolling interest

9,019

 

(981)

 

71,075

 

(2,247)

Net income (loss) attributable to TETRA stockholders

$

(15,009)

 

$

9,755

 

$

(129,908)

 

$

20,232

               

Basic per share information:

             

Net income (loss) attributable to TETRA stockholders

$

(0.16)

 

$

0.12

 

$

(1.53)

 

$

0.26

Weighted average shares outstanding

91,746

 

79,219

 

85,093

 

79,098

               

Diluted per share information:

             

Net income (loss) attributable to TETRA stockholders

$

(0.16)

 

$

0.12

 

$

(1.53)

 

$

0.25

Weighted average shares outstanding

91,746

 

79,792

 

85,093

 

79,455

 

 

Schedule B: Financial Results By Segment (Unaudited)

 
 

Three months ended 
September 30, 2016

 

Nine months ended 
September 30, 2016

 

2016

 

2015

 

2016

 

2015

 

(In Thousands)

Revenues by segment:

             

Fluids Division

$

62,610

   

$

110,587

   

$

182,556

   

$

332,850

 

Production Testing Division

15,065

   

28,942

   

48,320

   

100,885

 

Compression Division

70,718

   

128,926

   

228,504

   

358,270

 

Offshore Division

             

Offshore Services

29,239

   

37,882

   

65,604

   

85,396

 

Maritech

238

   

475

   

575

   

2,375

 

Intersegment eliminations

(297)

   

(429)

   

(813)

   

(3,609)

 

Offshore Division total

29,180

   

37,928

   

65,366

   

84,162

 

Eliminations and other

(1,020)

   

(1,239)

   

(3,204)

   

(3,612)

 

Total revenues

$

176,553

   

$

305,144

   

$

521,542

   

$

872,555

 
               

Gross profit (loss) by segment:

             

Fluids Division

$

15,369

   

$

41,704

   

$

29,445

   

$

107,424

 

Production Testing Division

(2,032)

   

926

   

(8,054)

   

7,703

 

Compression Division

12,353

   

22,163

   

33,035

   

66,100

 

Offshore Division

             

Offshore Services

3,459

   

7,296

   

(763)

   

6,017

 

Maritech

(297)

   

(1,331)

   

(3,709)

   

(30)

 

Intersegment eliminations

   

   

   

 

Offshore Division total

3,162

   

5,965

   

(4,472)

   

5,987

 

Corporate overhead and eliminations

(99)

   

(224)

   

(318)

   

(733)

 

Total gross profit

$

28,753

   

$

70,534

   

$

49,636

   

$

186,481

 
               

Income (loss) before taxes by segment:

             

Fluids Division

$

8,835

   

$

33,215

   

$

8,931

   

$

83,535

 

Production Testing Division

(4,222)

   

(4,528)

   

(27,924)

   

(4,961)

 

Compression Division

(15,766)

   

2,070

   

(124,506)

   

5,974

 

Offshore Division

             

Offshore Services

1,879

   

4,576

   

(5,792)

   

(1,977)

 

Maritech

(643)

   

(1,649)

   

(4,664)

   

(987)

 

Intersegment eliminations

   

   

   

 

Offshore Division total

1,236

   

2,927

   

(10,456)

   

(2,964)

 

Corporate overhead and eliminations

(12,668)

   

(18,261)

   

(45,224)

   

(50,108)

 

Total income (loss) before taxes

$

(22,585)

   

$

15,423

   

$

(199,179)

   

$

31,476

 
 
 

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

 

 

Schedule C: Consolidated Balance Sheet (Unaudited)

 
 

September 30, 2016

 

December 31, 2015

 

(In Thousands)

Balance Sheet:

     

Cash (excluding restricted cash)

$

22,210

   

$

23,057

 

Accounts receivable, net

120,175

   

184,172

 

Inventories

128,405

   

117,009

 

Other current assets

26,649

   

29,791

 

PP&E, net

977,455

   

1,048,004

 

Other assets

97,156

   

234,169

 

Total assets

$

1,372,050

   

$

1,636,202

 
       

Current portion of decommissioning liabilities

$

376

   

$

14,570

 

Other current liabilities

114,526

   

170,676

 

Long-term debt (1)

738,032

   

853,228

 

Long-term portion of decommissioning liabilities

54,962

   

42,879

 

CCLP Series A Preferred

77,018

   

 

Other long-term liabilities

29,902

   

40,669

 

Equity

357,234

   

514,180

 

Total liabilities and equity

$

1,372,050

   

$

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, excluding 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.

 
 
 

September 30, 2016

 

December 31, 2015

 

(In Thousands)

TETRA

     

Bank revolving line of credit facility

$

125,849

   

$

21,572

 

TETRA Senior Notes at various rates

116,492

   

264,998

 

Other debt

   

50

 

TETRA total debt

242,341

   

286,620

 

Less current portion

   

(50)

 

TETRA total long-term debt

$

242,341

   

$

286,570

 
       

CSI Compressco LP

     

CCLP Bank Credit Facility

$

176,567

   

$

229,555

 

CCLP 7.25% Senior Notes

319,124

   

337,103

 

CCLP total debt

495,691

   

566,658

 

Less current portion

   

 

CCLP total long-term debt

$

495,691

   

$

566,658

 

Consolidated total long-term debt

$

738,032

   

$

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 charges; adjusted EBITDA; and 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 its Segments') 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 before interest, taxes, depreciation, amortization, impairments and special charges, and equity compensation. 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. 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 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: Third Quarter Special Charges

 
 

Three Months Ended

 

September 30, 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

$

(11,428)

 

$

(3,428)

 

$

(3,019)

 

$

(4,981)

 

$

(0.05)

 

Severance expense

(210)

 

(63)

 

(33)

 

(114)

 

0.00

 

Debt refinancing gain on early retirement

397

 

119

 

309

 

(31)

 

0.00

 

Allowance for doubtful accounts

(1,361)

 

(408)

 

(416)

 

(537)

 

(0.01)

 

Equity related expenses

(9,340)

 

(2,802)

 

(5,860)

 

(678)

 

(0.01)

 

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

 

8,025

 

 

(8,025)

 

(0.09)

 

Maritech profit (loss)

(643)

 

 

 

(643)

 

(0.01)

 

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

$

(22,585)

 

$

1,443

 

$

(9,019)

 

$

(15,009)

 

$

(0.16)

 
           
 

June 30, 2016

 

Income 
(Loss) Before 
Tax

Provision 
(Benefit) for 
Tax

Noncont. 
Interest

Net Income 
Attributable to 
TETRA 
Stockholders

EPS

   

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

$

(20,511)

 

$

(6,154)

 

$

(2,011)

 

$

(12,346)

 

$

(0.15)

 

Asset impairments

(365)

 

(109)

 

 

(256)

 

0.00

 

Severance expense

(595)

 

(179)

 

(170)

 

(246)

 

0.00

 

Debt refinancing cost

(2,582)

 

(775)

 

(469)

 

(1,338)

 

(0.02)

 

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

 

8,987

 

 

(8,987)

 

(0.11)

 

Maritech profit (loss)

(3,401)

 

 

 

(3,401)

 

(0.04)

 

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

$

(27,454)

 

$

1,770

 

$

(2,650)

 

$

(26,574)

 

$

(0.32)

 
           
 

September 30, 2015

 

Income 
(Loss) Before 
Tax

Provision 
(Benefit) for 
Tax

Noncont. 
Interest

Net Income 
Attributable to 
TETRA 
Stockholders

EPS

           

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

$

21,117

 

$

6,335

 

$

960

 

$

13,822

 

$

0.17

 

Severance expense

(375)

 

(113)

 

21

 

(283)

 

0.00

 

Allowance for bad debt

(2,570)

 

(771)

 

 

(1,799)

 

(0.02)

 

Brazil VAT audit

(1,100)

 

(330)

 

 

(770)

 

(0.01)

 

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

 

(434)

 

 

434

 

0.01

 

Maritech profit (loss)

(1,649)

 

 

 

(1,649)

 

(0.02)

 

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

$

15,423

 

$

4,687

 

$

981

 

$

9,755

 

$

0.12

 
 

 

Schedule F: Non-GAAP Reconciliation to GAAP Financials

 
 

Three Months Ended

 

September 30, 2016

 

Income 
(Loss) 
Before Tax, 
as Reported

Impairments 
& Special 
Charges

Adjusted 
Income 
(Loss) 
Before Tax

Adjusted 
Interest 
Expense, 
Net(1)

Depreciation 

Amortization

Equity 
Comp. 
Expense

Adjusted 
EBITDA

 

(In Thousands)

Fluids Division

$

8,835

 

$

701

 

$

9,536

 

$

8

 

$

6,873

 

$

 

$

16,417

 

Production Testing Division

(4,222)

 

26

 

(4,196)

 

(147)

 

3,891

 

 

(452)

 

Compression Division

(15,766)

 

10,497

 

(5,269)

 

9,763

 

17,830

 

774

 

23,098

 

Offshore Services Segment

1,879

 

11

 

1,890

 

 

2,793

 

 

4,683

 

Eliminations and other

(2)

 

 

(2)

 

 

(4)

 

 

(6)

 

Subtotal

(9,276)

 

11,235

 

1,959

 

9,624

 

31,383

 

774

 

43,740

 

Corporate and other

(12,666)

 

(721)

 

(13,387)

 

4,699

 

101

 

1,774

 

(6,813)

 

TETRA excluding Maritech

(21,942)

 

10,514

 

(11,428)

 

14,323

 

31,484

 

2,548

 

36,927

 

Maritech

(643)

 

 

(643)

 

2

 

368

 

 

(273)

 

Total TETRA

$

(22,585)

 

$

10,514

 

$

(12,071)

 

$

14,325

 

$

31,852

 

$

2,548

 

$

36,654

 
               
 

June 30, 2016

 

Income 
(Loss) 
Before Tax, 
as Reported

Impairments 
& Special 
Charges

Adjusted 
Income 
(Loss) 
Before Tax

Adjusted 
Interest Expense,
Net(1)

Depreciation 

Amortization

Equity 
Comp. 
Expense

Adjusted 
EBITDA

   

Fluids Division

$

454

 

$

501

 

$

955

 

$

2

 

$

7,326

 

$

 

$

8,283

 

Production Testing Division

(4,328)

 

131

 

(4,197)

 

(143)

 

4,176

 

 

(164)

 

Compression Division

(4,040)

 

984

 

(3,056)

 

8,148

 

18,753

 

825

 

24,670

 

Offshore Services Segment

37

 

56

 

93

 

 

2,865

 

 

2,958

 

Eliminations and other

3

 

 

3

 

 

(3)

 

 

 

Subtotal

(7,874)

 

1,672

 

(6,202)

 

8,007

 

33,117

 

825

 

35,747

 

Corporate and other

(16,179)

 

1,870

 

(14,309)

 

5,596

 

112

 

5,803

 

(2,798)

 

TETRA excluding Maritech

(24,053)

 

3,542

 

(20,511)

 

13,603

 

33,229

 

6,628

 

32,949

 

Maritech

(3,401)

 

 

(3,401)

 

10

 

309

 

 

(3,082)

 

Total TETRA

$

(27,454)

 

$

3,542

 

$

(23,912)

 

$

13,613

 

$

33,538

 

$

6,628

 

$

29,867

 
               
 

September 30, 2015

 

Income 
(Loss) 
Before Tax, 
as Reported

Impairments 
& Special 
Charges

Adjusted 
Income 
(Loss) 
Before Tax

Interest 
Expense, 
Net

Depreciation 

Amortization

Equity 
Comp. 
Expense

Adjusted 
EBITDA

               

Fluids Division

$

33,215

 

$

360

 

$

33,575

 

$

(15)

 

$

8,735

 

$

 

$

42,295

 

Production Testing Division

(4,528)

 

3,124

 

(1,404)

 

4

 

5,999

 

 

4,599

 

Compression Division

2,070

 

43

 

2,113

 

8,897

 

20,648

 

455

 

32,113

 

Offshore Services Segment

4,576

 

507

 

5,083

 

 

2,879

 

 

7,962

 

Eliminations and other

5

 

 

5

 

 

(1)

 

 

4

 

Subtotal

35,338

 

4,034

 

39,372

 

8,886

 

38,260

 

455

 

86,973

 

Corporate and other

(18,266)

 

12

 

(18,255)

 

4,310

 

230

 

3,163

 

(10,551)

 

TETRA excluding Maritech

17,072

 

4,046

 

21,117

 

13,196

 

38,490

 

3,618

 

76,421

 

Maritech

(1,649)

 

 

(1,649)

 

 

419

 

 

(1,230)

 

Total TETRA

$

15,423

 

$

4,046

 

$

19,468

 

$

13,196

 

$

38,909

 

$

3,618

 

$

75,191

 
 
   

(1)

Adjusted interest expense, net, for the three month period ended June 30, 2016, excludes $0.7 million of interest expense related to CCLP debt refinancing.

 

 

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

 
 

Three Months Ended

 

September 30, 2016

 

June 30, 2016

 

September 30, 2015

 

(In Thousands)

Consolidated

         

Net cash provided by operating activities

$

(7,933)

   

$

8,336

   

$

36,065

 

ARO settlements

324

   

64

   

785

 

Capital expenditures, net of sales proceeds

(5,727)

   

(4,732)

   

(21,915)

 

Consolidated adjusted free cash flow

(13,336)

   

3,668

   

14,935

 
           

CSI Compressco LP

         

Net cash provided by operating activities

9,958

   

20,469

   

11,340

 

Capital expenditures, net of sales proceeds

(3,796)

   

(2,453)

   

(18,906)

 

CSI Compressco free cash flow

6,162

   

18,016

   

(7,566)

 
           

TETRA Only

         

Cash from operating activities

(17,891)

   

(12,133)

   

24,725

 

ARO settlements

324

   

64

   

785

 

Capital expenditures, net of sales proceeds

(1,931)

   

(2,279)

   

(3,009)

 

Free cash flow before ARO settlements

(19,498)

   

(14,348)

   

22,501

 

Distributions from CSI Compressco LP

5,574

   

5,575

   

7,675

 

Adjusted free cash flow

(13,924)

   

(8,773)

   

30,176

 
 

 

Schedule H: Non-GAAP Reconciliation of TETRA Net Debt

 

The cash and debt positions of TETRA and CSI Compressco LP as of September 30, 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.

 
 
 

September 30, 2016

 

TETRA

 

CCLP

 

Consolidated

 

(In Millions)

   

Non-restricted cash

$

8.8

   

$

13.4

   

$

22.2

 
           

Revolver debt outstanding

125.8

   

176.6

   

302.4

 

Senior Notes outstanding

116.5

   

319.1

   

435.6

 

Net Debt

$

233.5

   

$

482.3

   

$

715.8

 
 

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SOURCE TETRA Technologies, Inc.

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