EX-99.1 2 tti8k-20141107_exx01.htm EXHIBIT 99.1 tti8k-20141107_ex - 01


EXHIBIT 99.1

FOR IMMEDIATE RELEASE



TETRA TECHNOLOGIES, INC.
ANNOUNCES THIRD QUARTER 2014 RESULTS
AND UPDATES 2014 EARNINGS GUIDANCE

The Woodlands, Texas (November 7, 2014) - TETRA Technologies, Inc. (TETRA or the Company) (NYSE:TTI) today announced third quarter 2014 results from continuing operations attributable to TETRA stockholders of a net loss of $(0.13) per share compared to earnings of $0.15 per share reported in the third quarter of 2013. These third quarter 2014 results include a pretax loss by the Maritech segment of $(23.0) million and pretax charges of $13.9 million primarily related to transaction costs that aggregate to a net loss after tax of approximately $0.25 per share. These results compare to a pretax loss by the Maritech segment of $(15.4) million that equates to a net loss after tax of approximately $(0.13) per share in the third quarter of 2013.

In addition, the Company announced that it is reducing its earnings guidance for the 2014 fiscal year to a range of $0.23 to $0.28 per fully diluted share, excluding the impact of the Maritech segment, transaction costs, and unusual items, primarily due to ongoing market challenges in the Offshore Services segment. Taking into account results for the first three quarters of 2014, this provides an earnings guidance range of $0.05 to $0.10 per fully diluted share for the fourth quarter, excluding the impact of Maritech, transaction costs and unusual items. Reconciliations of the earnings guidance to revised earnings guidance excluding Maritech, transaction costs, and unusual items is included at the end of this press release.

Highlights of the 2014 third quarter include:
•
successful completion of the acquisition of Compressor Systems, Inc. (CSI) on August 4, 2014, facilitated by Compressco Partners raising of over $1 billion in new capital;
•
a post-acquisition performance from the Compression Division that was consistent with our internal performance expectations, and is anticipated to remain in-line with those expectations going forward;
•
significant sequential improvement in profitability in the Production Testing Division, driven by both U.S. and international activity; and
•
a continued strong performance in a majority of the Fluids Division’s core businesses, including its Gulf of Mexico, onshore U.S., chemical, and international operations.

During the third quarter, on August 4, 2014, the Company’s Compressco segment successfully completed the acquisition of CSI. Accordingly, beginning with financial results reported for the third quarter of 2014, the Company has modified its reporting structure to reflect the significantly increased size of its compression services operations. Financial results discussed herein and in future periods will continue to be reported for five operating segments that are now grouped into four divisions: Fluids Division, Production Testing Division, Compression Division, and Offshore Division, which consists of the Offshore Services and Maritech segments. Certain previously reported financial information has been reclassified to conform to the current year period’s presentation. The impact of such reclassifications was not significant to the prior year period’s overall presentation. The CSI acquisition is expected to increase cash distributions from Compressco Partners, L.P. to TETRA, including expected payments to the general partner of Compressco Partners, L.P. pursuant to its incentive distribution rights, in spite of the Company’s aggregate interest in Compressco Partners being reduced from approximately 82% to approximately 44% as a result of the newly issued equity of Compressco Partners.

Consolidated revenues for the quarter ended September 30, 2014 were $306.4 million versus $254.3 million in the third quarter of 2013. Total gross profit was $34.7 million in the third quarter of 2014 versus $47.4 million in the third quarter of 2013. Net income (loss) was a loss of $(12.5) million in the third quarter of 2014 versus income of $12.9 million in the comparable period of 2013. Net income (loss) attributable to TETRA stockholders was a loss of $(10.5) million in 2014's third quarter versus income of $12.1 million in 2013's third quarter. The foregoing results include the impact of the Maritech segment. As discussed below, management believes that it is helpful to an understanding of the Company's business going forward to present financial results excluding the impact of Maritech. Such results, reconciled to the nearest GAAP financial measures, are included at the end of this press release.

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Consolidated results per share attributable to TETRA stockholders for the third quarter of 2014 were a net loss of $(0.13) with 78.7 million weighted average common shares outstanding versus $0.15 with 79.0 million weighted average common diluted shares outstanding in the third quarter of 2013. As of September 30, 2014, total debt was $940.2 million and cash was $36.2 million.

Divisional pretax earnings (loss) from continuing operations in the third quarter of 2014 versus the third quarter of 2013 were as follows:
 
3Q 2014
 
3Q 2013
 
(In Millions)
Fluids Division
$
16.5

 
$
20.9

Production Testing Division
3.4

 
2.8

Compression Division (A)
(6.5
)
 
5.4

Offshore Services
0.6

 
20.6

Maritech
(23.0
)
 
(15.4
)
(A) 3Q 2014 results for the Compression Division include $13.2 million of transaction costs related to the CSI acquisition and unusual items.

Additional financial data comparing the three and nine month periods ended September 30, 2014 to the corresponding prior year periods is available in the financial tables set forth below.

Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, “Our Fluids Division’s profitability decreased slightly in the third quarter compared to the second quarter of 2014 due to the typically better seasonal performance of the European chemicals business in the second quarter. However, activity for our Gulf of Mexico fluids business increased sequentially during the current year’s quarter despite continuing delays on certain projects in the Gulf of Mexico. The decrease in the Fluids Division’s overall profitability compared to the third quarter of 2013 is attributable to a lack of major projects in the current year period. Overall, we expect the Division’s fourth quarter results to be similar to the third quarter.

“The Production Testing Division’s results improved sequentially during the third quarter, as we had expected, and also reflected an improvement compared to the third quarter of 2013. This was driven by an improvement in our North American operations due to the cumulative impact of cost reductions, redeployment of assets to more favorable basins, and continued customer expansion. In addition, the Division’s international results improved sequentially in the third quarter. Revenues for the Production Testing Division increased 18% sequentially while profit before taxes as a percentage of revenue increased by 7.4% to 6.8% of revenue. We expect this positive trend in our U.S. and international markets to continue into the fourth quarter and beyond.

“Compressco Partners successfully closed the acquisition of CSI during the third quarter. In our first several months of ownership, we have been extremely pleased with the integration process and the positive response from our customer base and we remain confident in our ability to achieve the results we expected from this transaction. Results for the third quarter associated with the acquisition are consistent with our expectations. Included in the Compression Division’s results are transaction costs and unusual items of $13.2 million. Excluding these transaction costs and unusual items, the Compression Division’s results for the third quarter were $6.6 million in pretax earnings. Our Compression Division includes the results of Compressco Partners, L.P. and its general partner, which is a wholly-owned subsidiary of TETRA.

“Our Offshore Services segment performed significantly below our expectations during the third quarter. The primary reason for this shortfall was a significant reduction in market demand during the latter portion of the quarter for both P&A and diving projects. In addition, we saw increased competition across all of the segment’s businesses in the Gulf of Mexico. We have taken the necessary cost management actions, and we anticipate that this challenging environment will persist through the remainder of 2014. We do, however, anticipate that our customer base will revert to an improved activity level during 2015.

“Maritech completed several of its remaining abandonment and decommissioning projects during the third quarter. However, overall activity was lower than anticipated due to an increase in project scope on several wells following a reevaluation of work required. In addition to moving the remaining Maritech work into 2015, our estimate of the cost of the incremental work required a significant increase in Maritech’s abandonment and decommissioning

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liabilities during the third quarter. During November, we plan to remove the platform associated with one of the remaining operated properties, and the remaining two properties will be addressed in 2015.”

As a result of Maritech's sale of essentially all of its oil and gas properties during 2011 and 2012, the Company believes it will be helpful to provide adjusted financial results that exclude the impact of Maritech. These results are intended to show TETRA's historical results of operations on a basis that is consistent with expected operations going forward. Set forth below in this press release under “Reconciliation of Non-GAAP Financial Measures” is a presentation of TETRA's consolidated free cash flow excluding Maritech, consolidated revenues excluding Maritech, consolidated gross profit excluding Maritech, and consolidated income before taxes and discontinued operations excluding Maritech, all of which are non-GAAP financial measures that are reconciled to the nearest GAAP measures.

TETRA will host a conference call to discuss third quarter 2014 results today, November 7, 2014, at 10:30 am ET. Stuart M. Brightman, TETRA's President and Chief Executive Officer, and Elijio V. Serrano, TETRA's Chief Financial Officer, will host the call. 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.

TETRA is a geographically diversified oil and gas services company focused on completion fluids and associated products and services, water management, after-frac flow back, production well testing, offshore rig cooling, compression services and equipment, and selected offshore services, including well plugging and abandonment, decommissioning, and diving.

Forward Looking Statements

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 2014, anticipated benefits from Compressco Partners following the CSI acquisition, 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 Compressco Partners 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, 2013, 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.




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Financial Data (unaudited)
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
 
(In Thousands)
Revenues
$
306,371

 
$
254,303

 
$
761,717

 
$
683,963

Gross profit
34,744

 
47,442

 
95,069

 
116,851

 
 
 
 
 
 
 
 
General and administrative expense
37,099

 
31,776

 
102,789

 
99,032

Interest expense, net
9,878

 
4,207

 
19,193

 
12,585

Other (income) expense
12,594

 
(7,243
)
 
11,091

 
(12,284
)
Income before taxes and discontinued operations
(24,827
)
 
18,702

 
(38,004
)
 
17,518

Provision (benefit) for income taxes
(12,360
)
 
5,848

 
(17,897
)
 
5,072

Net income (loss)
(12,467
)
 
12,854

 
(20,107
)
 
12,446

Net (income) attributable to noncontrolling interest
1,930

 
(744
)
 
179

 
(1,964
)
Net income (loss) attributable to TETRA stockholders
$
(10,537
)
 
$
12,110

 
$
(19,928
)
 
$
10,482

 
 
 
 
 
 
 
 
Basic per share information:
 
 
 
 
 
 
 
Net income (loss) attributable to TETRA stockholders
$
(0.13
)
 
$
0.16

 
$
(0.25
)
 
$
0.13

Weighted average shares outstanding
78,683

 
78,030

 
78,506

 
77,867

 
 
 
 
 
 
 
 
Diluted per share information:
 
 
 
 
 
 
 
Net income (loss) attributable to TETRA stockholders
$
(0.13
)
 
$
0.15

 
$
(0.25
)
 
$
0.13

Weighted average shares outstanding
78,683

 
78,963

 
78,506

 
78,719

 
 
 
 
 
 
 
 
Depreciation and amortization
$
33,234

 
$
20,751

 
$
78,281

 
$
60,498





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Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
 
(In Thousands)
Revenues by segment:
 
 
 
 
 
 
 
Fluids Division
$
105,296

 
$
99,615

 
$
327,091

 
$
293,881

Production Testing Division
50,177

 
47,380

 
136,192

 
149,420

Compression Division
95,897

 
29,767

 
157,676

 
88,573

Offshore Division
 
 
 
 
 
 
 
Offshore Services
61,505

 
86,435

 
153,076

 
188,539

Maritech
1,042

 
1,349

 
3,965

 
4,193

Intersegment eliminations
(6,332
)
 
(9,951
)
 
(13,053
)
 
(39,738
)
Offshore Division total
56,215

 
77,833

 
143,988

 
152,994

Eliminations and other
(1,214
)
 
(292
)
 
(3,230
)
 
(905
)
Total revenues
$
306,371

 
$
254,303

 
$
761,717

 
$
683,963

 
 
 
 
 
 
 
 
Gross profit (loss) by segment:
 
 
 
 
 
 
 
Fluids Division
$
25,981

 
$
28,682

 
$
76,645

 
$
78,902

Production Testing Division
8,194

 
5,794

 
14,569

 
23,684

Compression Division
19,871

 
10,201

 
40,921

 
27,380

Offshore Division
 
 
 
 
 
 
 
Offshore Services
3,833

 
23,829

 
3,629

 
35,426

Maritech
(22,743
)
 
(20,483
)
 
(39,227
)
 
(46,800
)
Intersegment eliminations
—

 
—

 
—

 
—

Offshore Division total
(18,910
)
 
3,346

 
(35,598
)
 
(11,374
)
Corporate overhead and eliminations
(392
)
 
(581
)
 
(1,468
)
 
(1,741
)
Total gross profit
$
34,744

 
$
47,442

 
$
95,069

 
$
116,851

 
 
 
 
 
 
 
 
Income (loss) before taxes by segment:
 
 
 
 
 
 
 
Fluids Division
$
16,541

 
$
20,851

 
$
52,077

 
$
55,703

Production Testing Division
3,426

 
2,807

 
379

 
13,422

Compression Division
(6,562
)
 
5,447

 
4,102

 
13,833

Offshore Division
 
 
 
 
 
 
 
Offshore Services
601

 
20,579

 
(5,538
)
 
25,064

Maritech
(22,969
)
 
(15,428
)
 
(40,206
)
 
(44,079
)
Intersegment eliminations
 
 
—

 
 
 
—

Offshore Division total
(22,368
)
 
5,151

 
(45,744
)
 
(19,015
)
Corporate overhead and eliminations
(15,864
)
 
(15,554
)
 
(48,818
)
 
(46,425
)
Total income (loss) before taxes
$
(24,827
)
 
$
18,702

 
$
(38,004
)
 
$
17,518



5


 
September 30, 2014
 
December 31, 2013
 
(In Thousands)
Balance Sheet:
 
 
 
Cash (excluding restricted cash)
$
36,215

 
$
38,754

Accounts receivable, net
233,827

 
180,659

Inventories
177,149

 
100,792

Other current assets
52,379

 
53,734

PP&E, net
1,151,828

 
572,616

Other assets
542,841

 
259,978

Total assets
$
2,194,239

 
$
1,206,533

 
 
 
 
Current portion of decommissioning liabilities
$
42,531

 
$
38,700

Other current liabilities
327,323

 
134,326

Long-term debt
849,881

 
387,727

Long-term portion of decommissioning liabilities
12,256

 
12,204

Other long-term liabilities
32,041

 
36,078

Equity
930,207

 
597,498

Total liabilities and equity
$
2,194,239

 
$
1,206,533


Long-Term Debt

TETRA Technologies Inc. and its subsidiaries, excluding Compressco Partners, L.P. and its subsidiaries, are obligated under a bank credit agreement and senior notes, neither of which are obligations of Compressco Partners, L.P. and its subsidiaries. Compressco Partners, L.P. 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, 2014
 
December 31, 2013
 
(In Thousands)
 
 
 
 
TETRA
 
 
 
Bank revolving line of credit facility
$
125,000

 
$
52,768

TETRA Senior Notes at various interest rates
305,000

 
305,000

Other debt
288

 
89

TETRA Total debt
430,288

 
357,857

Less current portion
(90,288
)
 
(89
)
TETRA Total long-term debt
$
340,000

 
$
357,768

 
 
 
 
Compressco Partners
 
 
 
Compressco Partners bank credit facility
$
165,000

 
$
29,959

Compressco Partners 7.25% Senior Notes
344,881

 
—

Compressco Partners total long-term debt
509,881

 
29,959

Consolidated total long-term debt
$
849,881

 
$
387,727


Reconciliation of Non-GAAP Financial Measures

This press release refers to net debt, consolidated revenues excluding Maritech, consolidated gross profit excluding Maritech, consolidated income before taxes excluding Maritech, transaction costs and unusual items, diluted per share information excluding Maritech, transaction costs and unusual items, adjusted third quarter 2014 income before taxes for the Compression Division, and earnings guidance excluding the impact of Maritech, transaction costs

6


and unusual items, all of which are financial measures not derived in accordance with generally accepted accounting principles, or “GAAP.”

As a supplement to financial results prepared in accordance with GAAP, the Company has provided the following tables, which contain results excluding the impact of Maritech. The tables also include reconciliations of consolidated revenues excluding Maritech, consolidated gross profit excluding Maritech, consolidated income before taxes excluding Maritech, transaction costs and unusual items, and net income per diluted share excluding Maritech, transaction costs and unusual items to the appropriate GAAP financial measures. The Company's management views these non-GAAP financial measures as appropriate measures to evaluate its results of operations following the sales of Maritech oil and gas producing properties that occurred during 2011 and 2012. These non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should not be used as a substitute for revenues, gross profit, income before taxes, earnings per share or other measures of financial performance presented in accordance with GAAP. Reconciliations of consolidated revenues excluding Maritech, consolidated gross profit excluding Maritech, consolidated income before taxes excluding Maritech, transaction costs and unusual items, and net income per diluted share excluding Maritech, transaction costs and unusual items for the three and nine month periods ended September 30, 2014 and September 30, 2013 are provided below.

 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
 
(In Thousands, Except Per Share Amounts)
 
 
 
 
 
 
 
 
Consolidated revenues
$
306,371

 
$
254,303

 
$
761,717

 
$
683,963

Less: Maritech revenues
(1,042
)
 
(1,349
)
 
(3,965
)
 
(4,193
)
Consolidated revenues excluding Maritech
$
305,329

 
$
252,954

 
$
757,752

 
$
679,770

 
 
 
 
 
 
 
 
Consolidated gross profit
$
34,744

 
$
47,442

 
$
95,069

 
$
116,851

Less: Maritech gross loss
22,743

 
20,483

 
39,227

 
46,800

Consolidated gross profit excluding Maritech
$
57,487

 
$
67,925

 
$
134,296

 
$
163,651

 
 
 
 
 
 
 
 
Consolidated income (loss) before taxes
$
(24,827
)
 
$
18,702

 
$
(38,004
)
 
$
17,518

Less: Maritech loss before taxes
22,969

 
15,428

 
40,206

 
44,079

Less: transaction costs and unusual items
13,948

 
—

 
18,536

 
2,000

Consolidated income before taxes excluding Maritech
$
12,090

 
$
34,130

 
$
20,738

 
$
63,597

 
 
 
 
 
 
 
 
Diluted per share information:
 
 
 
 
 
 
 
Net income (loss) attributable to TETRA stockholders
$
(0.13
)
 
$
0.15

 
$
(0.25
)
 
$
0.13

Loss for Maritech
0.19

 
0.13

 
0.33

 
0.37

Transaction costs and unusual items
0.06
 
0.00
 
0.10
 
0.02
Net income attributable to TETRA stockholders excluding Maritech
$
0.12

 
$
0.28

 
$
0.18

 
$
0.52


The Company’s management views the presentation of the Compression Division’s results excluding transaction costs and other unusual items to be an appropriate measure to evaluate the Division’s results of operations for the period covered. The following table reconciles Compression Division income (loss) before taxes to adjusted income before taxes for the three month period ended September 30, 2014:

 
Three Months Ended
 
September 30, 2014
 
(In Thousands)
Income (loss) before tax provision
$
(6,562
)
Transaction costs and unusual items
13,204

Adjusted income before taxes
$
6,642



7


The following table sets forth earnings per fully diluted share for the first three quarters of 2014, earnings guidance for the fourth quarter of 2014, and revised earnings guidance of the fiscal year 2014, and reconciles such amounts to results and guidance excluding the impact of Maritech, transaction costs, and unusual items.

 
Results Through September 30, 2014
 
Earnings Guidance, Q4 2014
 
Revised Earnings Guidance,
Fiscal Year 2014
Earnings per fully diluted share, as reported
$
(0.25
)
 
$ 0.04 - 0.09

 
$ (0.16) - (0.21)

Loss for Maritech
0.33

 
0.01

 
0.34

Transaction costs and unusual items
0.10

 
—

 
0.10

Adjusted per share earnings excluding Maritech, transaction costs and unusual items
$
0.18

 
$ 0.05 - 0.10

 
$ 0.23 - 0.28


The following reconciliation of net debt is also 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 Compressco Partners, L.P. 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 long-term debt to net debt as of September 30, 2014 and December 31, 2013 is provided below.

 
September 30, 2014
 
December 31, 2013
 
(In Thousands)
Net Debt:
 
 
 
Long-term debt, including current portion, excluding Compressco Partners' debt
$
430,288

 
$
357,857

Less: cash, excluding Compressco Partners' cash
(15,068
)
 
(29,277
)
Net debt
$
415,220

 
$
328,580


These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of the complete financial results for the given period.

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



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