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TETRA Technologies, Inc. Announces Second Quarter 2016 Results
PR Newswire
THE WOODLANDS, Texas

THE WOODLANDS, Texas, Aug. 8, 2016 /PRNewswire/ -- TETRA Technologies, Inc. (NYSE:TTI) (TETRA or the Company) today announced a consolidated second quarter 2016 net loss per share attributable to TETRA stockholders of $(0.32), which compares to earnings of $0.19 in the second quarter of 2015.

TETRA's adjusted per share results attributable to TETRA stockholders for the second quarter of 2016, excluding Maritech and other charges, were a loss of $(0.15), which compares to adjusted diluted earnings per share attributable to TETRA stockholders of $0.17 in the second quarter of 2015, also excluding Maritech and other charges. Second quarter 2016 revenue of $175.7 million declined 44% from the second quarter of 2015 primarily as a result of a 50% reduction in the North American 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.)

Second Quarter 2016 Results


Three Months Ended


June 30, 2016


March 31, 2016


June 30, 2015


(In Thousands, Except per Share Amounts)

Revenue

$

175,660



$

169,329



$

316,319


Net income (loss) attributable to TETRA stockholders

(26,574)



(88,325)



14,925


Adjusted EBITDA(1)

32,949



19,424



74,542


Diluted EPS attributable to TETRA stockholders

(0.32)



(1.11)



0.19


Adjusted diluted EPS attributable to TETRA stockholders(1)

(0.15)



(0.24)



0.17


Consolidated net cash provided by operating activities

8,336



25,261



54,347


TETRA only adjusted free cash flow(1)

$

(8,773)



$

18,488



$

42,868




(1)

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

 

Highlights of the 2016 second quarter include:

  • Completion of public equity offering, raising $60 million in net proceeds to repay outstanding debt.
  • Amendment of credit facility and debt agreements, providing enhanced financial flexibility.
  • For our Compression Division, net cash provided by operating activities was $20.5 million, loss before tax was $(4.0) million, and adjusted EBITDA(1) was $24.7 million.
  • A growing backlog in our Offshore Services segment as we exited the second quarter.
  • Continued aggressive reduction of expenses across the company, including salary reductions and reduced workweek schedules.

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

Analysis of Second Quarter Results

Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, "During the second quarter of 2016, most of our markets continued to experience a decline in activity and high levels of competitiveness. Even with this unfavorable environment, our results improved sequentially, compared to the first quarter of 2016, as a result of seasonal improvements in several of our businesses combined with the ongoing positive impact of cost reductions.

"Also during the second quarter we completed a public equity offering, raising $60 million in net proceeds that were used primarily to repay outstanding debt, and we successfully negotiated the amendment of our primary debt agreements, providing us with enhanced financial flexibility. These two actions represent important steps for our long-term success, as they strengthen our balance sheet, provide additional liquidity, and better position us to respond rapidly when activity levels rebound.  

"Our Fluids Division's revenues for the second quarter of 2016 were $60.8 million compared to $123.0 million in the second quarter of 2015. Similar to what we saw in the first quarter of this year, the decrease was predominately the result of continued lower demand in North America, a lack of major projects in the Gulf of Mexico, and continued pricing pressure in many international markets. Our seasonal increase in activity in the European chemical business somewhat mitigated this trend. Overall, this resulted in pretax income of $0.4 million and adjusted pretax income of $1.0 million for the Fluids Division in the second quarter of 2016, compared to pretax income of $32.6 million and adjusted pretax income of $32.8 million in the second quarter of 2015. Going forward into the second half of this year, our expectations for the Fluids Division are that we will see slightly improved activity in North America and an increase in offshore activity associated with projects currently in our backlog.

"Second quarter 2016 results for our Production Testing Division represent a sequential decrease from the first quarter of 2016, with a pretax loss of $(4.3) million and an adjusted pretax loss of $(4.2) million in this year's second quarter compared to a pretax loss of $(19.3) million and an adjusted pretax loss of $(2.3) million in this year's first quarter. Similar to the Fluids Division, this was driven primarily by a continued reduction in activity in North America and in certain international markets. Also similar to the Fluids Division, we expect to see a slight increase in activity for Production Testing in the second half of this year with a modest increase in completions activity.

"For the second quarter of 2016 our Compression Division reported a pretax loss of $(4.0) million and an adjusted pretax loss of $(3.1) million compared to a pretax loss of $(104.7) million and an adjusted pretax loss of $(4.3) million in the first quarter of 2016. During the second quarter, the Division experienced a continued decrease in utilization of our compression services and a continued reduction in equipment sales. Adjusted EBITDA of $24.7 million for the second quarter of this year represented an improvement over adjusted EBITDA of $23.6 million in the first quarter of this year, primarily due to the continued benefit of cost reduction actions. On July 22, 2016, CSI Compressco LP declared a distribution attributable to the second quarter of 2016 of $0.3775 per unit, unchanged from the distribution attributable to the first quarter of this year. This distribution resulted in a coverage ratio of 1.19x for the second quarter of 2016.

"Our Offshore Service segment reported pretax income of $37,000 and adjusted pretax income of $93,000 in the second quarter of 2016 compared to pretax income of $2.1 million in the second quarter of 2015. The segment's improvement on a sequential basis, compared to the pretax loss of $(7.7) million reported in the first quarter of 2016, is due to the normal seasonal activity of the second quarter. In addition, the backlog for our major assets continued to firm-up during the second quarter, and we expect the third quarter to show a typical seasonal improvement over the second quarter, sequentially."

Special Charges and Maritech

Maritech reported a pre-tax loss of $(3.4) million in the second quarter of 2016. The primary contributor to this loss was the write-off of a receivable of $2.8 million associated with the uncertainty of our ability to collect future reimbursements for P&A work performed on certain Maritech properties. 

Financial Guidance

Given the operating environment and expectations of a prolonged downturn, the management team remains focused on adjusted free cash flow. The forecast for full year 2016 TETRA only adjusted free cash flow is a range of $30 to $50 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 second quarter 2016 results today, August 8, 2016, 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: 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 (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 2016, 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, 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
 June 30,


Six Months Ended
 June 30,


2016


2015


2016


2015


(In Thousands)

Revenues

$

175,660



$

316,319



$

344,989



$

567,411










Cost of sales, services, and rentals

125,593



207,391



246,034



374,054


Depreciation, amortization, and accretion

33,538



39,067



67,145



77,410


Impairments of long-lived assets

257





10,927




Total cost of revenues

159,388



246,458



324,106



451,464


Gross profit

16,272



69,861



20,883



115,947










General and administrative expense

27,181



37,472



60,792



72,741


Goodwill impairment





106,205




Interest expense, net

14,335



13,319



28,974



27,035


Other (income) expense, net

2,210



962



1,506



118


Income (loss) before taxes

(27,454)



18,108



(176,594)



16,053


Provision (benefit) for income taxes

1,770



2,741



361



4,310


Net income (loss)

(29,224)



15,367



(176,955)



11,743


Net (income) loss attributable to noncontrolling interest

2,650



(442)



62,056



(1,266)


Net income (loss) attributable to TETRA stockholders

$

(26,574)



$

14,925



$

(114,899)



$

10,477










Basic per share information:








Net income (loss) attributable to TETRA stockholders

$

(0.32)



$

0.19



$

(1.42)



$

0.13


Weighted average shares outstanding

81,842



79,165



80,631



79,037










Diluted per share information:








Net income (loss) attributable to TETRA stockholders

$

(0.32)



$

0.19



$

(1.42)



$

0.13


Weighted average shares outstanding

81,842



79,915



80,631



79,506


 

Schedule B: Financial Results By Segment (Unaudited)



Three Months Ended
 June 30,


Six Months Ended
June 30,


2016


2015


2016


2015


(In Thousands)

Revenues by segment:








Fluids Division

$

60,833



$

122,974



$

119,946



$

222,263


Production Testing Division

13,384



34,842



33,255



71,943


Compression Division

76,091



126,455



157,786



229,344


Offshore Division








Offshore Services

26,119



35,731



36,365



47,514


Maritech

248



394



337



1,900


Intersegment eliminations

7



(2,909)



(516)



(3,180)


Offshore Division total

26,374



33,216



36,186



46,234


Eliminations and other

(1,022)



(1,168)



(2,184)



(2,373)


Total revenues

$

175,660



$

316,319



$

344,989



$

567,411










Gross profit (loss) by segment:








Fluids Division

$

6,585



$

40,355



$

14,076



$

65,720


Production Testing Division

(2,598)



3,918



(6,022)



6,777


Compression Division

13,727



21,150



20,682



43,937


Offshore Division








Offshore Services

1,767



4,691



(4,222)



(1,279)


Maritech

(3,097)



2



(3,412)



1,301


Intersegment eliminations








Offshore Division total

(1,330)



4,693



(7,634)



22


Corporate overhead and eliminations

(112)



(255)



(219)



(509)


Total gross profit

$

16,272



$

69,861



$

20,883



$

115,947










Income (loss) before taxes by segment:








Fluids Division

$

454



$

32,583



$

96



$

50,320


Production Testing Division

(4,328)



(472)



(23,702)



(433)


Compression Division

(4,040)



1,498



(108,740)



3,904


Offshore Division








Offshore Services

37



2,095



(7,671)



(6,553)


Maritech

(3,401)



(313)



(4,021)



662


Intersegment eliminations








Offshore Division total

(3,364)



1,782



(11,692)



(5,891)


Corporate overhead and eliminations

(16,176)



(17,283)



(32,556)



(31,847)


Total income (loss) before taxes

$

(27,454)



$

18,108



$

(176,594)



$

16,053



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)



June 30, 2016


December 31, 2015


(In Thousands)

Balance Sheet:




Cash (excluding restricted cash)

$

23,917



$

23,057


Accounts receivable, net

110,685



184,172


Inventories

124,315



117,009


Other current assets

28,753



29,791


PP&E, net

1,000,169



1,048,004


Other assets

98,584



234,169


Total assets

$

1,386,423



$

1,636,202






Current portion of decommissioning liabilities

$

3,291



$

14,570


Other current liabilities

128,139



170,676


Long-term debt (1)

788,222



853,228


Long-term portion of decommissioning liabilities

51,732



42,879


Other long-term liabilities

27,255



40,669


Equity

387,784



514,180


Total liabilities and equity

$

1,386,423



$

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.



June 30, 2016


December 31, 2015


(In Thousands)

TETRA




Bank revolving line of credit facility

$

101,604



$

21,572


TETRA Senior Notes at various rates

117,446



264,998


Other debt



50


TETRA total debt

219,050



286,620


Less current portion



(50)


TETRA total long-term debt

$

219,050



$

286,570






CSI Compressco LP




CCLP Bank Credit Facility

$

231,171



$

229,555


CCLP 7.25% Senior Notes

338,001



337,103


CCLP total debt

569,172



566,658


Less current portion




CCLP total long-term debt

$

569,172



$

566,658


Consolidated total long-term debt

$

788,222



$

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 is defined as adjusted income before interest, taxes, depreciation, amortization, impairments and special charges, 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.

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: Second Quarter Special Charges



Three Months Ended


June 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

$

(20,511)


$

(6,154)


$

(2,011)


$

(12,346)


$

(0.15)


Asset impairments and writeoffs

(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)









March 31, 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

$

(30,890)


$

(9,266)


$

(2,391)


$

(19,233)


$

(0.24)


Asset impairments and writeoffs

(10,670)


(3,201)


(4,465)


(3,004)


(0.04)


Severance expense

(755)


(226)


(138)


(391)


0.00


Goodwill writeoff

(106,205)


(31,862)


(52,412)


(21,931)


(0.28)


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


43,146



(43,146)


(0.54)


Maritech profit (loss)

(620)




(620)


(0.01)


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

$

(149,140)


$

(1,409)


$

(59,406)


$

(88,325)


$

(1.11)









June 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

$

19,841


$

5,953


$

464


$

13,424


$

0.17


Severance expense

(320)


(96)


(22)


(202)


0.00


Allowance for bad debt

(1,100)


(330)



(770)


(0.01)


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


(2,786)



2,786


0.03


Maritech profit (loss)

(313)




(313)


0.00


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

$

18,108


$

2,741


$

442


$

14,925


$

0.19


 

Schedule F: Non-GAAP Reconciliation to GAAP Financials



Three Months Ended


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


(In Thousands)

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











March 31, 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

$

(358)


$

114


$

(244)


$

(26)


$

7,396


$


$

7,126


Production Testing Division

(19,374)


17,073


(2,301)


(189)


4,592



2,102


Compression Division

(104,700)


100,443


(4,257)


8,802


18,464


636


23,645


Offshore Services Segment

(7,708)



(7,708)



2,739



(4,969)


Eliminations and other

4



4



(4)




Subtotal

(132,136)


117,630


(14,506)


8,587


33,187


636


27,904


Corporate and other

(16,384)



(16,384)


6,052


115


1,737


(8,480)


TETRA excluding Maritech

(148,520)


117,630


(30,890)


14,639


33,302


2,373


19,424


Maritech

(620)



(620)



305



(315)


Total TETRA

$

(149,140)


$

117,630


$

(31,510)


$

14,639


$

33,607


$

2,373


$

19,109











June 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

$

32,583


$

171


$

32,754


$

(76)


$

8,813


$


$

41,491


Production Testing Division

(472)


1,147


675


14


6,168



6,857


Compression Division

1,498


45


1,543


8,658


20,686


727


31,614


Offshore Services Segment

2,095


32


2,127



2,888



5,015


Eliminations and other

(12)



(12)



(3)



(15)


Subtotal

35,692


1,395


37,087


8,596


38,552


727


84,962


Corporate and other

(17,271)


25


(17,246)


4,697


255


1,874


(10,420)


TETRA excluding Maritech

18,421


1,420


19,841


13,293


38,807


2,601


74,542


Maritech

(313)



(313)


26


260



(27)


Total TETRA

$

18,108


$

1,420


$

19,528


$

13,319


$

39,067


$

2,601


$

74,515




(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 Free Cash Flow



Three Months Ended


June 30, 2016


March 31, 2016


June 30, 2015


(In Thousands)

Consolidated






Net cash provided by operating activities

$

8,336



$

25,261



$

54,347


ARO settlements

64



3,379



3,845


Capital expenditures, net of sales proceeds

(4,732)



(1,985)



(23,188)


Consolidated adjusted free cash flow

3,668



26,655



35,004








CSI Compressco LP






Net cash provided by operating activities

20,469



15,095



19,721


Capital expenditures, net of sales proceeds

(2,453)



(1,353)



(19,934)


  CSI Compressco free cash flow

18,016



13,742



(213)








TETRA Only






Cash from operating activities

(12,133)



10,166



34,626


ARO settlements

64



3,379



3,845


Capital expenditures, net of sales proceeds

(2,279)



(632)



(3,254)


Free cash flow before ARO settlements

(14,348)



12,913



35,217


Distributions from CSI Compressco LP

5,575



5,575



7,651


Adjusted free cash flow

(8,773)



18,488



42,868


 

Schedule H: Non-GAAP Reconciliation of TETRA Net Debt 


The cash and debt positions of TETRA and CSI Compressco LP as of June 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. 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 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.



June 30, 2016


TETRA


CCLP


(In Millions)

Non-restricted cash

$

7.2



$

16.7






Revolver debt outstanding

101.6



231.2


Senior Notes outstanding

117.4



338.0


Net debt

$

211.8



$

552.5


 

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SOURCE TETRA Technologies, Inc.