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TETRA Technologies, Inc. Announces Third Quarter 2015 Results And Provides Future Financial Guidance
PR Newswire
THE WOODLANDS, Texas

THE WOODLANDS, Texas, Nov. 6, 2015 /PRNewswire/ -- TETRA Technologies, Inc. (NYSE:TTI) today announced  third quarter 2015 adjusted earnings per share of $0.17, excluding Maritech and other charges, which compares to adjusted earnings of $0.13 per share in the third quarter of 2014, also excluding Maritech, transaction costs, and other charges.

Consolidated GAAP third quarter 2015 earnings per share attributable to TETRA stockholders including Maritech and other charges were earnings of $0.12, which compares to a loss of $(0.13) in the third quarter of 2014.

Highlights include:

  • Record third quarter 2015 adjusted EBITDA and operating income for the Fluids Division (adjusted EBITDA is a non-GAAP financial measure that is reconciled to the nearest GAAP measure in Schedule F).
  • TETRA third quarter free cash flow of $30.2 million(1), excluding $0.8 million of Maritech asset retirement obligation (ARO) expenditures. For the nine months ending September 30, 2015, TETRA free cash flow was $67.3 million, excluding $5.2 million of Maritech ARO expenditures.
  • A $56.8 million reduction in TETRA net debt(2) compared to December 31, 2014, and an improvement in leverage ratio to 2.02x(3), marking the fourth consecutive quarter of improvements.
  • Days sales outstanding of 61, reflecting the Company's focus on managing working capital.
  • The continued success of our zinc-free heavy completion fluid.
  • Continued reduction in operating expenses through staff reductions and multiple cost management initiatives, including supplier consolidations and price reductions.

 

(1)

Refer to Schedule G for reconciliation.

(2)

Refer to Schedule H for reconciliation.

(3)

Leverage ratio is defined by TETRA's credit agreement as outstanding debt plus letters of credit, divided by trailing twelve-month EBITDA excluding unusual charges, Maritech losses, and CSI Compressco distributions.

 

Third Quarter 2015 Results, Excluding Unusual Charges and Maritech

   
           
 

Three Months Ended

 

Change

 

Sept. 30, 2015

 

Sept. 30, 2014

 

2015 vs. 2014

 

(In Thousands, Except per Share Amounts)

   

Revenue

$

304,669

   

$

305,330

   

—%

Income before taxes(1)

21,117

   

12,092

   

75%

Net income attributable to TETRA shareholders(2)

13,829

   

9,932

   

39%

Diluted EPS attributable to TETRA shareholders(3)

$

0.17

   

$

0.13

   

31%

Free cash flow – TETRA

$

30,176

   

$

4,204

   

619%

Adjusted pretax operating margin

6.9%

   

4.0%

   

291 bps

Adjusted EBITDA

$

75,426

   

$

56,688

   

33%

   

(1)

Income before taxes, including unusual charges and Maritech was $15.4 million in the third quarter of 2015 and a loss of $(24.8) million in the third quarter of 2014. 

(2)

Net income attributable to TETRA shareholders, including unusual charges and Maritech was $9.8 million in the third quarter of 2015, and a loss of $(10.5) million in the third quarter of 2014. 

(3)

Diluted EPS, including unusual charges and Maritech, was $0.12 in the third quarter of 2015, and a loss of $(0.13) in the third quarter of 2014. See Schedule E  for details.

Analysis of Third Quarter 2015 Results

Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, "Our third quarter results were exceptional, following a very strong second quarter, but in an increasingly more challenging market environment. I attribute these results to the continued diversification of our customer base, the introduction of new products into the market, as well as additional actions taken across the organization to react to market conditions.

"Revenues in our Fluids Division for the third quarter of 2015 increased $5.3 million compared to the third quarter of 2014. Adjusted pretax margins for the Division improved $17.0 million versus the third quarter of 2014. These third quarter results are similar to the results of the Division's second quarter of this year. The number of significant completion fluids-related projects in the third quarter was a major driver of the Division's outstanding results, and we also saw continued strength in our manufacturing operations, as well as the Division's international operations. During the quarter, our Gulf of Mexico completion fluids business continued to benefit significantly from the introduction of new products, as well as the acceleration in timing of several projects. Overall, this was a record quarter for the Division in both revenues and profits.

"Excluding the impact of an adjustment for bad debts of $2 million, and VAT charges of $0.9 million in Brazil, our Production Testing Division's third quarter 2015 pretax earnings were a slight loss. Going forward, we expect the challenging market for Production Testing in the U.S. to continue, and we are continuing to expand our customer base and take the necessary cost actions to minimize the impact.

"For the third quarter of 2015 our Compression Division reported adjusted pretax earnings of $2.1 million, a decrease from the $6.6 million of adjusted pretax earnings reported in the third quarter of 2014. Utilization for compression services trended down during the third quarter, reflecting lower oil and gas wellhead-related activity mainly in lower horsepower applications. On October 20, 2015, CSI Compressco LP declared a distribution of $0.5025 per unit attributable to the third quarter, an increase of 9.2% over the third quarter 2014 distribution.

"Our Offshore Services segment reported adjusted pretax earnings of $5.1 million for the third quarter of 2015. This compares favorably to adjusted earnings of $0.6 million in the third quarter of 2014. In the very challenging offshore Gulf of Mexico market environment, our ability to achieve profitability in the third quarter was almost exclusively driven by the impact of ongoing cost reductions.

"During the third quarter TETRA, excluding the operations of CSI Compressco, had $30.2 million of free cash flow, which includes distributions from CSI Compressco but excludes $0.8 million spent on Maritech asset retirement obligations (see schedule G for a reconciliation to GAAP cash from operations). This result was driven by our cash earnings, as well as minimal capital expenditures during the third quarter of 2015. The third quarter represents our fourth consecutive quarter of improved leverage ratios."      

Divisional revenues, adjusted pretax earnings/(loss), adjusted pretax margins, and adjusted EBITDA for the three months ended September 30, 2015 and September 30, 2014 are summarized in the table below:

Segment Results

 

Three Months Ended

 

September 30, 2015

 

September 30, 2014

 

Revenue

Income Before Taxes(1)

Pretax Margin(2)

Adjusted EBITDA(3)

 

Revenue

Income Before Taxes(1)

Pretax Margin(2)

Adjusted EBITDA(3)

 

(In Thousands)

Fluids Division

$

110,587

 

$

33,575

 

30.4%

 

$

42,295

   

$

105,296

 

$

16,541

 

15.7%

 

$

24,872

 

Production Testing Division

28,942

 

(1,404)

 

(4.9)%

 

4,599

   

50,177

 

3,426

 

6.8%

 

10,889

 

Compression Division

128,926

 

10,314

 

8.0%

 

31,417

   

95,897

 

11,640

 

12.1%

 

25,655

 

Offshore Services segment

37,882

 

5,083

 

13.4%

 

7,962

   

61,505

 

601

 

1.0%

 

3,977

 

Eliminations and other

(1,668)

 

5

 

(0.3)%

 

4

   

(7,545)

 

3

 

 

 

Subtotal

304,669

 

47,573

 

15.6%

 

86,277

   

305,330

 

32,211

 

10.5%

 

65,393

 

Corporate and other

 

(14,243)

   

(10,850)

   

 

(10,154)

   

(8,705)

 

Interest expense, net - Compression Division

 

(8,201)

   

   

 

(4,998)

   

 

Interest expense, net - TTI, excluding Compression Division

 

(4,011)

   

   

 

(4,969)

   

 

Unusual charges and Maritech(4)

475

 

(5,695)

   

   

1,041

 

(36,917)

   

 

As reported

305,144

 

15,423

 

5.1%

 

75,427

   

306,371

 

(24,827)

 

(8.1)%

 

56,688

 
   

(1)

Segment Income Before Taxes are adjusted.  Refer to Schedule F for reconciliation.

(2)

GAAP pre-tax margins for third quarter 2015 are: Fluids Division, 30.0%; Production Testing Division, (15.6)%; Compression Division, 1.6%; and, Offshore Services segment, 12.1%. GAAP pretax margins for third quarter 2014 are: Fluids Division, 15.7%; Production Testing Division, 6.8%; Compression Division, (6.8)%; and, Offshore Services segment, 1.0%. Refer to Schedule B for GAAP dollar amounts.

(3)

Adjusted EBITDA is a non-GAAP financial measure that is defined and reconciled to the nearest GAAP financial measure in Schedule F.

(4)

Refer to Schedule E for unusual charges and reconciliations.

Unusual and Other Charges and Maritech

During the third quarter of 2015, TETRA incurred $0.4 million of severance expense as staffing levels were adjusted to reflect lower activity levels. Additionally, the Company recorded $2.5 million of allowances for bad debts ($0.5 million for the Offshore Services segment and $2.0 million for the Production Testing Division), and $1.1 million of VAT expenses in Brazil.

Maritech reported a pre-tax loss of $1.6 million in the third quarter of 2015.

Net Debt

At September 30, 2015, the cash and debt positions of TETRA and CSI Compressco LP 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:

 

As of September 30, 2015

 

TETRA

 

CSI Compressco LP

 

(In Millions)

Non-restricted cash

$

7.2

   

$

18.3

 
       

Revolver debt outstanding

65.7

   

243.0

 

Current portion of long-term debt

90.4

   

 

Senior Notes outstanding

175.0

   

345.3

 

Net debt

$

323.9

   

$

570.0

 

Future Financial Guidance

Total 2015 free cash flow for TETRA (excluding CSI Compressco but including CSI Compressco distributions) is expected to be in excess of $80.0 million(1), or $1.00 per share, reflecting the Company's focus on managing working capital, reducing costs, and generating revenue from a broad, diversified customer base. We are expecting GAAP earnings per share for the fourth quarter of 2015 and the first quarter of 2016 to each be a slight loss, reflecting our normal seasonal slowdown in activity and an expected early year-end curtailment of activity by our customers.  However, we expect the Gulf of Mexico projects we benefited from in the second and third quarters of this year to resume in the second quarter of 2016.

(1)

Refer to Schedule G for a reconciliation of free cash flow as of September 30, 2015, to the nearest GAAP measure. 

Conference Call

TETRA will host a conference call to discuss third quarter 2015 results today, November 6, 2015, at 10:30 am 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: Third Quarter Unusual Charges
Schedule F: Non-GAAP Reconciliation to GAAP Financials
Schedule G: Non-GAAP Reconciliation to Free Cash Flow
Schedule H: 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 (NADAQ: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 2015, anticipated benefits from CSI Compressco following the acquisition of CSI 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 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, 2014, 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,

 

2015

 

2014

 

2015

 

2014

 

(In Thousands)

Revenues

$

305,144

   

$

306,371

   

$

872,555

   

$

761,717

 
               

Cost of sales, services, and rentals

195,701

   

238,393

   

569,755

   

588,367

 

Depreciation, amortization, and accretion

38,909

   

33,234

   

116,319

   

78,281

 

Total cost of revenues

234,610

   

271,627

   

686,074

   

666,648

 

Gross profit

70,534

   

34,744

   

186,481

   

95,069

 
               

General and administrative expense

40,910

   

37,099

   

113,651

   

102,789

 

Interest expense, net

12,201

   

9,878

   

37,427

   

19,193

 

Other (income) expense, net

2,000

   

12,594

   

3,927

   

11,091

 

Income (loss) before taxes and discontinued operations

15,423

   

(24,827)

   

31,476

   

(38,004)

 

Provision (benefit) for income taxes

4,687

   

(12,360)

   

8,997

   

(17,897)

 

Net income (loss)

10,736

   

(12,467)

   

22,479

   

(20,107)

 

Less: net (income) loss attributable to noncontrolling interest

(981)

   

1,930

   

(2,247)

   

179

 

Net income (loss) attributable to TETRA stockholders

$

9,755

   

$

(10,537)

   

$

20,232

   

$

(19,928)

 
               

Basic per share information:

             

Net income (loss) attributable to TETRA stockholders

$

0.12

   

$

(0.13)

   

$

0.26

   

$

(0.25)

 

Weighted average shares outstanding

79,219

   

78,683

   

79,098

   

78,506

 
               

Diluted per share information:

             

Net income (loss) attributable to TETRA stockholders

$

0.12

   

$

(0.13)

   

$

0.25

   

$

(0.25)

 

Weighted average shares outstanding

79,792

   

78,683

   

79,455

   

78,506

 

 

Schedule B: Financial Results By Segment (Unaudited)

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2015

 

2014

 

2015

 

2014

 

(In Thousands)

Revenues by segment:

             

Fluids Division

$

110,587

   

$

105,296

   

$

332,850

   

$

327,090

 

Production Testing Division

28,942

   

50,177

   

100,885

   

136,191

 

Compression Division

128,926

   

95,897

   

358,270

   

157,676

 

Offshore Division

             

Offshore Services

37,882

   

61,505

   

85,396

   

153,076

 

Maritech

475

   

1,041

   

2,375

   

3,965

 

Intersegment eliminations

(429)

   

(6,332)

   

(3,609)

   

(13,053)

 

Offshore Division total

37,928

   

56,214

   

84,162

   

143,988

 

Eliminations and other

(1,239)

   

(1,213)

   

(3,612)

   

(3,229)

 

Total revenues

$

305,144

   

$

306,371

   

$

872,555

   

$

761,717

 
               

Gross profit (loss) by segment:

             

Fluids Division

$

41,704

   

$

25,981

   

$

107,424

   

$

76,645

 

Production Testing Division

926

   

8,194

   

7,703

   

14,569

 

Compression Division

22,163

   

19,871

   

66,100

   

40,921

 

Offshore Division

             

Offshore Services

7,296

   

3,833

   

6,017

   

3,629

 

Maritech

(1,331)

   

(22,743)

   

(30)

   

(39,227)

 

Intersegment eliminations

   

   

   

 

Offshore Division total

5,965

   

(18,910)

   

5,987

   

(35,598)

 

Corporate overhead and eliminations

(224)

   

(392)

   

(733)

   

(1,468)

 

Total gross profit

$

70,534

   

$

34,744

   

$

186,481

   

$

95,069

 
               

Income (loss) before taxes by segment:

             

Fluids Division

$

33,215

   

$

16,541

   

$

83,535

   

$

52,077

 

Production Testing Division

(4,528)

   

3,426

   

(4,961)

   

379

 

Compression Division

2,070

   

(6,562)

   

5,974

   

4,102

 

Offshore Division

             

Offshore Services

4,576

   

601

   

(1,977)

   

(5,538)

 

Maritech

(1,649)

   

(22,969)

   

(987)

   

(40,206)

 

Intersegment eliminations

   

   

   

 

Offshore Division total

2,927

   

(22,368)

   

(2,964)

   

(45,744)

 

Corporate overhead and eliminations

(18,261)

   

(15,864)

   

(50,108)

   

(48,818)

 

Total income (loss) before taxes

$

15,423

   

$

(24,827)

   

$

31,476

   

$

(38,004)

 

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

Schedule C: Consolidated Balance Sheet (Unaudited)

 

September 30, 2015

 

December 31, 2014

 

(In Thousands)

Balance Sheet:

     

Cash (excluding restricted cash)

$

25,478

   

$

48,384

 

Accounts receivable, net

203,768

   

226,966

 

Inventories

145,457

   

189,357

 

Other current assets

36,322

   

36,144

 

PP&E, net

1,105,810

   

1,124,192

 

Other assets

424,478

   

443,790

 

Total assets

$

1,941,313

   

$

2,068,833

 
       

Current portion of decommissioning liabilities

$

17,912

   

$

12,758

 

Other current liabilities

270,123

   

366,883

 

Long-term debt

829,049

   

844,961

 

Long-term portion of decommissioning liabilities

42,064

   

49,983

 

Other long-term liabilities

28,969

   

28,647

 

Equity

753,196

   

765,601

 

Total liabilities and equity

$

1,941,313

   

$

2,068,833

 
 

Note:  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.

 

September 30, 2015

 

December 31, 2014

 

(In Thousands)

TETRA

     

Bank revolving line of credit facility

$

65,700

   

$

90,000

 

TETRA Senior Notes at various rates

265,000

   

305,000

 

Other debt

425

   

74

 

TETRA total debt

331,125

   

395,074

 

Less current portion

(90,425)

   

(90,074)

 

TETRA total long-term debt

$

240,700

   

$

305,000

 
       

CSI Compressco LP

     

CCLP Bank Credit Facility

$

243,000

   

$

195,000

 

CCLP 7.25% Senior Notes

345,349

   

344,961

 

CCLP total debt

588,349

   

539,961

 

Less current portion

   

 

CCLP total long-term debt

$

588,349

   

$

539,961

 

Consolidated total long-term debt

$

829,049

   

$

844,961

 

 

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, consolidated and segment income before taxes, excluding the Maritech segment and unusual charges; Adjusted EBITDA; and 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 unusual 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 EBITDA is defined as the Company's adjusted income before interest, taxes, depreciation, amortization and equity compensation. Adjusted EBITDA 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.

Free Cash Flow is a non-GAAP measure that the Company defines as cash from operations, excluding cash settlements of Maritech ARO, less 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.

Schedule E: Third Quarter Unusual Charges

 

Three Months Ended

 

September 30, 2015

 

Income

Before Tax

Tax

Noncont. Interest

Net Income

Diluted EPS

 

(In Thousands, Except per Share Amounts)

Adjusted

$

21,117

 

$

6,328

 

$

960

 

$

13,829

 

$

0.17

 

Transaction related costs

 

 

 

 

 

Severance expense

(375)

 

(106)

 

21

 

(290)

 

 

Allowance for bad debt

(2,570)

 

(771)

 

 

(1,799)

 

(0.02)

 

Brazil VAT audit

(1,100)

 

(330)

 

 

(770)

 

(0.01)

 

Deferred tax valuation allowance and other related tax adj.

 

(434)

 

 

434

 

0.00

 

Maritech profit (loss)

(1,649)

 

 

 

(1,649)

 

(0.02)

 

As reported

$

15,423

 

$

4,687

 

$

981

 

$

9,755

 

$

0.12

 
           
 

September 30, 2014

 

Income (Loss) Before Tax

 Tax

Noncont. Interest

Net Income (Loss)

 Diluted EPS

 

(In Thousands, Except per Share Amounts)

Adjusted

$

12,092

 

$

177

 

$

1,982

 

$

9,933

 

$

0.13

 

Transaction related costs

(13,968)

 

(4,548)

 

(3,912)

 

(5,508)

 

(0.07)

 

Severance expense

 

(41)

 

 

41

 

 

Deferred tax valuation allowance and other related tax adj.

 

(2,672)

 

 

2,672

 

0.03

 

Maritech profit (loss)

(22,969)

 

(4,481)

 

 

(18,488)

 

(0.23)

 

Other

18

 

(795)

 

 

813

 

0.01

 

As reported

$

(24,827)

 

$

(12,360)

 

$

(1,930)

 

$

(10,537)

 

$

(0.13)

 

 

Schedule F: Non-GAAP Reconciliation to GAAP Financials

 

Three Months Ended

 

September 30, 2015

 

Income (Loss) Before Tax, as Reported

Impairments & Unusual Charges

Adjusted Income Before Tax

Interest Expense, Net

Depreciation & Amortization

Stock Option Expense

Adjusted EBITDA

 

(In Thousands)

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

 

8,201

 

20,648

 

455

 

31,417

 

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

 

8,190

 

38,260

 

455

 

86,277

 

Corporate and other

(18,266)

 

11

 

(18,255)

 

4,011

 

230

 

3,163

 

(10,851)

 

TETRA excl Maritech

17,072

 

4,045

 

21,117

 

12,201

 

38,490

 

3,618

 

75,426

 

Maritech

(1,649)

 

 

(1,649)

 

 

419

 

 

(1,230)

 

Total TETRA

$

15,423

 

$

4,045

 

$

19,468

 

$

12,201

 

$

38,909

 

$

3,618

 

$

74,196

 
               
 

September 30, 2014

 

Income (Loss) Before Tax, As Reported

Impairments & Unusual Charges

Adjusted Income Before Tax

Interest Expense, Net

Depreciation & Amortization

Stock Option Expense

Adjusted EBITDA

 

(In Thousands)

Fluids Division

$

16,541

 

$

 

$

16,541

 

$

(129)

 

$

8,460

 

$

 

$

24,872

 

Production Testing Division

3,426

 

 

3,426

 

29

 

7,434

 

 

10,889

 

Compression Division

(6,562)

 

13,204

 

6,642

 

4,998

 

13,533

 

482

 

25,655

 

Offshore Services Segment

601

 

 

601

 

 

3,376

 

 

3,977

 

Eliminations and other

3

 

 

3

 

 

(3)

 

 

 

Subtotal

14,009

 

13,204

 

27,213

 

4,898

 

32,800

 

482

 

65,393

 

Corporate and other

(15,867)

 

746

 

(15,121)

 

4,969

 

396

 

1,053

 

(8,703)

 

TETRA excl Maritech

(1,858)

 

13,950

 

12,092

 

9,867

 

33,196

 

1,535

 

56,690

 

Maritech

(22,969)

 

 

(22,969)

 

11

 

38

 

 

(22,920)

 

Total TETRA

$

(24,827)

 

$

13,950

 

$

(10,877)

 

$

9,878

 

$

33,234

 

$

1,535

 

$

33,770

 

 

Schedule G: Non-GAAP Reconciliation to Free Cash Flow

 

Three Months Ended September  30,

 

Nine Months Ended September 30,

 

2015

 

2014

 

2015

 

2014

 

(In Thousands)

TETRA Consolidated

             

Cash from operations

$

36,065

   

$

11,317

   

$

118,227

   

$

51,937

 

ARO settlements

785

   

10,543

   

5,196

   

40,309

 

Capital expenditures, net of sales proceeds

(21,915)

   

(31,098)

   

(91,241)

   

(79,088)

 

Free cash flow before ARO settlements

14,935

   

(9,238)

   

32,182

   

13,158

 
               

CSI Compressco LP

             

Cash from operations

11,340

   

10,385

   

63,542

   

31,341

 

Capital expenditures, net of sales proceeds

(18,906)

   

(17,938)

   

(75,998)

   

(28,820)

 

Free cash flow

(7,566)

   

(7,553)

   

(12,456)

   

2,521

 
               

TETRA Only

             

Cash from operations

24,725

   

932

   

54,685

   

20,596

 

ARO settlements

785

   

10,543

   

5,196

   

40,309

 

Capital expenditures, net of sales proceeds

(3,009)

   

(13,160)

   

(15,243)

   

(50,268)

 

Free cash flow before ARO settlements

22,501

   

(1,685)

   

44,638

   

10,637

 

Distributions from CSI Compressco LP

7,675

   

5,889

   

22,667

   

17,639

 

Free cash flow before ARO settlements and after distributions from CSI Compressco LP

$

30,176

   

$

4,204

   

$

67,305

   

$

28,276

 

 

TETRA only full year 2015 projected cash flow from operations of $71 million less anticipated full year 2015 TETRA only capital expenditures of $21 million plus $30 million of full year 2015 distributions from CSI Compressco LP equals $80 million in projected TETRA 2015 free cash flow.

Schedule H: Reconciliation of TETRA Net Debt

The following reconciliation of net debt is presented as a supplement to financial results prepared in accordance with GAAP. The Company defines net debt 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 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. A reconciliation of total debt to net debt as of September 30, 2015 and December 31, 2014 is provided below.

 

September 30, 2015

 

December 31, 2014

 

(In Thousands)

TETRA Net Debt:

     

Total debt, excluding CSI Compressco LP debt

$

331,125

   

$

395,074

 

Less: cash, excluding CSI Compressco LP cash

(7,173)

   

(14,318)

 

Net debt

$

323,952

   

$

380,756

 

 

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SOURCE TETRA Technologies, Inc.