0000844965-16-000132.txt : 20160509 0000844965-16-000132.hdr.sgml : 20160509 20160509084956 ACCESSION NUMBER: 0000844965-16-000132 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20160509 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20160509 DATE AS OF CHANGE: 20160509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TETRA TECHNOLOGIES INC CENTRAL INDEX KEY: 0000844965 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 742148293 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13455 FILM NUMBER: 161630044 BUSINESS ADDRESS: STREET 1: 24955 INTERSTATE 45 NORTH CITY: THE WOODLANDS STATE: TX ZIP: 77380 BUSINESS PHONE: 2813671983 MAIL ADDRESS: STREET 1: 24955 INTERSTATE 45 NORTH CITY: THE WOODLANDS STATE: TX ZIP: 77380 8-K 1 tti8k-20160509.htm 8-K 8-K



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549




FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (date of earliest event reported): May 9, 2016


TETRA Technologies, Inc.
(Exact name of registrant as specified in its charter)

Delaware
1-13455
74-2148293
(State or other jurisdiction
(Commission File Number)
(IRS Employer
of incorporation)
 
Identification No.)
 
 
 
24955 Interstate 45 North
The Woodlands, Texas 77380
(Address of Principal Executive Offices and Zip Code)
 
 
 
Registrant’s telephone number, including area code: (281) 367-1983


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.02. Results of Operations and Financial Condition.

On May 9, 2016, TETRA Technologies, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2016. The press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

The information furnished in this Item 2.02 and in Exhibit 99.1 to this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Use of Non-GAAP Financial Information

In addition to the quarterly and year-to-date financial information determined in accordance with generally accepted accounting principles (GAAP) that are included in the attached press release, the press release includes certain non-GAAP financial measures. Management believes that these non-GAAP financial measures are helpful in understanding the Company’s past financial performance and future financial performance. The attached press release includes the following non-GAAP financial measures:
•
Consolidated and Segment adjusted income before taxes, excluding the Company’s Maritech segment and special charges. 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 TETRA’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 EBITDA. Adjusted EBITDA is defined as adjusted earnings before interest, taxes, depreciation, amortization and equity compensation expenses. Adjusted EBITDA may be presented on a consolidated and segment basis. Management uses Adjusted EBITDA as a supplemental financial measure to assess the financial performance of the Company’s assets, without regard to financing methods, capital structure or cost basis, and to assess the Company’s ability to incur and service debt and fund capital expenditures.
•
Net Debt. Net Debt is defined as the sum of long-term and short-term debt on the Company’s consolidated balance sheet less cash, excluding restricted cash on the consolidated balance sheet and excluding the debt and cash of CSI Compressco LP. Management believes that Net Debt provides information concerning the Company’s ability to reduce debt, add to cash balances, pay dividends, repurchase stock, and fund investing and financing activities.
•
Adjusted free cash flow. Adjusted free cash flow is cash from operations, excluding cash settlements of Maritech’s asset retirement obligations, less capital expenditures net of sales proceeds, and including cash distributions to TETRA from CSI Compressco LP. Management believes this is an important supplemental financial measure because it allows management to assess the Company’s ability to retire debt, and evaluate the capacity to further invest and grow.

The methods the Company uses to produce these non-GAAP financial measures may differ from methods used by other companies. The foregoing 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. Reconciliations to the nearest GAAP financial measure of each non-GAAP financial measure is included in the press release attached hereto as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.
Exhibit Number
 
Description
99.1
 
Press Release, dated May 9, 2016, issued by TETRA Technologies, Inc.


1


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
TETRA Technologies, Inc.
 
 
By:
/s/Stuart M. Brightman
 
Stuart M. Brightman
 
President & Chief Executive Officer
Date: May 9, 2016
 






2


EXHIBIT INDEX

Exhibit Number
 
Description
99.1
 
Press Release, dated May 9, 2016, issued by TETRA Technologies, Inc.









3
 EX-99.1 2 tti8k-20160509_ex99.htm EXHIBIT 99.1 Exhibit


EXHIBIT 99.1
FOR IMMEDIATE RELEASE


TETRA TECHNOLOGIES, INC.
ANNOUNCES FIRST QUARTER 2016 RESULTS

The Woodlands, Texas (May 9, 2016) - TETRA Technologies, Inc. (NYSE:TTI) today announced first quarter 2016 adjusted loss per share of $(0.24), excluding Maritech and other charges, which compares to $(0.03) per share in the first quarter of 2015, also excluding Maritech and other charges. First quarter 2016 revenue of $169.3 million declined 34.3% from the fourth quarter of 2015 primarily as a result of a 36% reduction in the North American rig count.

Consolidated GAAP first quarter 2016 earnings per share attributable to TETRA stockholders including Maritech and other charges was a loss of $(1.11), which compares to a loss of $(0.06) in the first quarter of 2015. (Adjusted diluted earnings (loss) per share is a non-GAAP financial measure that is reconciled to the nearest GAAP measure in the schedule.)

Highlights of the 2016 first quarter include:
•
TETRA first quarter adjusted free cash flow(1) of $18.5 million.
•
During the first quarter, TETRA reduced total debt outstanding by $11.7 million, which resulted in an EBITDA leverage ratio(2) of 2.08x.
•
First quarter 2016 adjusted EBITDA(3) of $23.6 million for our Compression Division.
•
A growing backlog in our Offshore Services segment as we enter the favorable season for offshore activity.
•
Continued aggressive reduction of expenses across the company, including salary reductions and reduced workweek schedules.
(1)
Non-GAAP financial measure that is reconciled to GAAP in Schedule G.
(2)
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.
(3)
Adjusted EBITDA is a non-GAAP financial measure that is reconciled to GAAP in Schedule F.

Adjusted First Quarter 2016 Results, Excluding Special Charges and Maritech
 
 
(Non-GAAP financial measures are reconciled to GAAP in the schedules below)

 
 
 
Three Months Ended
 
Change
 
March 31, 2016
 
March 31, 2015
 
2016 vs. 2015
 
(In Thousands, Except per Share Amounts)
 
 
Adjusted revenue
$
169,240

 
$
249,586

 
(32)%
Adjusted income (loss) before taxes(1)
(30,890
)
 
(2,078
)
 
 
Adjusted net income (loss) attributable to TETRA shareholders(2)
(19,233
)
 
(2,390
)
 
(705)%
Adjusted diluted EPS attributable to TETRA shareholders(3)
(0.24
)
 
(0.03
)
 
(700)%
Adjusted free cash flow
18,488

 
(5,739
)
 
422%
Adjusted pretax operating margin
(18.3
)%
 
(0.8
)%
 
 
Adjusted EBITDA
$
19,424

 
$
51,392

 
(62)%
(1)
Income before taxes, including special charges and Maritech was a loss of $(149.1) million in the first quarter of 2016 and a loss of $(2.1) million in the first quarter of 2015.
(2)
Net income attributable to TETRA shareholders, including special charges and Maritech was a loss of $(88.3) million in the first quarter of 2016, and a loss of $(4.4) million in the first quarter of 2015.
(3)
Diluted EPS, including special charges and Maritech, was a loss of $(1.11) in the first quarter of 2016, and a loss of $(0.06) in the first quarter of 2015. See Schedule E for details.


1


Analysis of First Quarter Results
    
Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, “During the first quarter of 2016, most of the markets in which we operate continued to experience a severe decline in activity and high levels of competitiveness. Despite this unfavorable environment, we were able to generate adjusted free cash flow of $18.5 million in the first quarter. We also took additional actions in the first quarter to reduce our cost structure.

“Our Fluids Division’s revenues for the first quarter of 2016 were $59.1 million compared to $99.3 million in the first quarter of 2015. This decrease was predominately a result of significantly reduced activity and product volumes in the Gulf of Mexico and North America. A portion of this is due to multiple unexpected dry wells related to projects for our customers in addition to the overall decline in demand. The first quarter decline in the Division’s revenues was further exacerbated by a lack of cold weather that impacted industrial sales of our chemical products. This reduction in activity led to an adjusted loss before taxes of $(244) thousand in the first quarter of 2016 compared to adjusted income before taxes of $17.8 million in the first quarter of 2015. While we have continued to see decreased activity for the Division in the second quarter, we expect the second half of 2016 to improve based on specific projects in our backlog as well as an anticipated slight improvement in activity in North America.

“Our Production Testing Division’s first quarter 2016 results represent a sequential decrease from the fourth quarter of 2015 with an adjusted loss before taxes of $(2.3) million compared to an adjusted loss before taxes of $(0.9) in the fourth quarter of last year. This was driven primarily by reduced activity in North America and in certain international markets, as well as pricing pressure in certain international markets. We expect to see similar challenges for this Division in the second quarter, and we anticipate a slight improvement in activity in the second half of the year.

“For the first quarter of 2016 our Compression Division reported an adjusted loss before taxes of $(4.3) million compared to an adjusted loss before taxes of $(0.9) million in the fourth quarter of 2015. A decrease in utilization and equipment sales negatively impacted first quarter results. Adjusted EBITDA for the Division of $23.6 million for the first quarter was slightly below $28.4 million of adjusted EBITDA for the fourth quarter of 2015. We continue to take aggressive cost actions across the business, in both fabrication and compression services. On April 19, 2016, CSI Compressco LP declared a distribution of $0.3775 per outstanding unit attributable to the first quarter of 2016, unchanged from the distribution amount declared for the fourth quarter of 2015. This distribution resulted in a coverage ratio of 1.11x for the first quarter of 2016.

“Our Offshore Services segment reported an adjusted loss before taxes of $(7.7) million in the first quarter of 2016 compared to an adjusted loss before taxes of $(8.6) million for the first quarter of 2015. This loss was due to the normal seasonal activity of the first quarter in which very little work is typically done, as well as the dry-docking of the TETRA Hedron. The dry-docking was concluded in April. Over the past month, we have seen our backlog increase significantly, and we expect this segment’s performance to improve during the second and third quarters.


2


Divisional revenues, adjusted income (loss) before taxes, adjusted income (loss) before taxes as a percent of revenue, and adjusted EBITDA (all of which are non-GAAP financial measures that are reconciled to GAAP in the schedules below) for the three months ended March 31, 2016 and March 31, 2015 are summarized in the table below:
Segment Results

Three Months Ended
 
March 31, 2016
 
March 31, 2015
 
Revenue
Adjusted Income (Loss) Before Taxes(1)
Adjusted Income (Loss) Before Taxes as a Percent of Revenue(2)
Adjusted EBITDA(3)
 
Revenue
Adjusted Income (Loss) Before Taxes(1)
Adjusted Income (Loss) Before Taxes as a Percent of Revenue(2)
Adjusted EBITDA(3)
 
(In Thousands)
Fluids Division
$
59,113

$
(244
)
(0.4
)%
$
7,126

 
$
99,286

$
17,849

18.0
 %
$
26,560

Production Testing Division
19,871

(2,301
)
(11.6
)%
2,102

 
37,101

425

1.1
 %
6,679

Compression Division
81,695

4,545

5.6
 %
23,645

 
102,889

11,490

11.2
 %
32,012

Offshore Services segment
10,246

(7,708
)
(75.2
)%
(4,969
)
 
11,783

(8,638
)
(73.3
)%
(5,834
)
Eliminations and other
(1,685
)
4

(0.2
)%
—

 
(1,473
)
3

—

—

Subtotal
169,240

(5,704
)
(3.4
)%
27,904

 
249,586

21,129

8.5
 %
59,417

Corporate and other
—

(10,332
)
 
(8,480
)
 
—

(9,397
)
 
(8,025
)
Interest expense, net - Compression Division
—

(8,802
)
 
—

 
—

(8,679
)
 
—

Interest expense, net - TTI, excluding Compression Division
—

(6,052
)
 
—

 
—

(5,131
)
 
—

Special charges and Maritech(4)
89

(118,250
)
 
—

 
1,506

24

 
—

As reported
169,329

(149,140
)
(88.1
)%
19,424

 
251,092

(2,054
)
(0.8
)%
51,392

(1)
See Schedule F for reconciliation.
(2)
GAAP income (loss) before taxes as a percent of revenue for first quarter 2016 are: Fluids Division, (0.6)%; Production Testing Division, (97.5)%; Compression Division, (128.2)%; and, Offshore Services segment, (75.2)%. GAAP income (loss) before taxes as a percent of revenue for first quarter 2015 are: Fluids Division, 17.9%; Production Testing Division, 0.1%; Compression Division, 2.3%; and, Offshore Services segment, (73.4)%. Refer to Schedule B for GAAP dollar amounts.
(3)
Adjusted income before taxes and adjusted EBITDA are non-GAAP financial measures that are defined and reconciled to the nearest GAAP financial measures in Schedule F.
(4)
See Schedule E for special charges and reconciliations.

Balance Sheet Actions

Given the challenging market environment, we are continuing to focus on free cash flow. Adjusted free cash flow of $18.5 million in the first quarter of 2016 was driven by the timing of project-related cash receipts, working capital efficiencies, and continued focus on cost reductions and minimized capital expenditures.

Special Charges and Maritech

During the first quarter of 2016, due to changes in the current market environment, the fair value of certain of our identified assets and goodwill has decreased. As a result, we recorded $116.9 million of impairments and other charges, primarily for our Compression and Production Testing Divisions. Additionally, we incurred $0.8 million of severance costs during the quarter.

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

Financial Guidance

Given the operating environment and expectations of a prolonged downturn, the management team remains keenly focused on adjusted free cash flow. The forecast for full year 2016 adjusted free cash flow is a range of $30 to $50 million.


3


Conference Call

TETRA will host a conference call to discuss first quarter 2016 results today, May 9, 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.

Investor Contacts

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





4


Schedule A: Consolidated Income Statement (Unaudited)
 
Three Months Ended 
 March 31,
 
2016
 
2015
 
(In Thousands)
Revenues
$
169,329

 
$
251,092

 
 
 
 
Cost of sales, services, and rentals
120,441

 
166,663

Depreciation, amortization, and accretion
33,607

 
38,342

Impairments of long-lived assets
10,670

 
—

Total cost of revenues
164,718

 
205,005

Gross profit
4,611

 
46,087

 
 
 
 
General and administrative expense
33,611

 
35,269

Goodwill impairment
106,205

 
—

Interest expense, net
14,639

 
13,793

Other (income) expense, net
(704
)
 
(921
)
Income (loss) before taxes
(149,140
)
 
(2,054
)
Provision (benefit) for income taxes
(1,409
)
 
1,568

Net income (loss)
(147,731
)
 
(3,622
)
Net (income) loss attributable to noncontrolling interest
59,406

 
(825
)
Net income (loss) attributable to TETRA stockholders
$
(88,325
)
 
$
(4,447
)
 
 
 
 
Basic per share information:
 
 
 
Net income (loss) attributable to TETRA stockholders
$
(1.11
)
 
$
(0.06
)
Weighted average shares outstanding
79,421
 
78,907
 
 
 
 
Diluted per share information:
 
 
 
Net income (loss) attributable to TETRA stockholders
$
(1.11
)
 
$
(0.06
)
Weighted average shares outstanding
79,421

 
78,907

5


Schedule B: Financial Results By Segment (Unaudited)

 
Three Months Ended 
 March 31,
 
2016
 
2015
 
(In Thousands)
Revenues by segment:
 
 
 
Fluids Division
$
59,113

 
$
99,286

Production Testing Division
19,871

 
37,101

Compression Division
81,695

 
102,889

Offshore Division
 
 
 
Offshore Services
10,246

 
11,783

Maritech
89

 
1,506

Intersegment eliminations
(523
)
 
(271
)
Offshore Division total
9,812

 
13,018

Eliminations and other
(1,162
)
 
(1,202
)
Total revenues
$
169,329

 
$
251,092

 
 
 
 
Gross profit (loss) by segment:
 
 
 
Fluids Division
$
7,491

 
$
25,365

Production Testing Division
(3,417
)
 
2,859

Compression Division
6,955

 
22,787

Offshore Division
 
 
 
Offshore Services
(5,989
)
 
(5,970
)
Maritech
(315
)
 
1,299

Intersegment eliminations
—

 
—

Offshore Division total
(6,304
)
 
(4,671
)
Corporate overhead and eliminations
(114
)
 
(253
)
Total gross profit
$
4,611

 
$
46,087

 
 
 
 
Income (loss) before taxes by segment:
 
 
 
Fluids Division
$
(358
)
 
$
17,736

Production Testing Division
(19,374
)
 
39

Compression Division
(104,700
)
 
2,404

Offshore Division
 

 
 
Offshore Services
(7,708
)
 
(8,648
)
Maritech
(620
)
 
975

Intersegment eliminations
—

 
—

Offshore Division total
(8,328
)
 
(7,673
)
Corporate overhead and eliminations
(16,380
)
 
(14,560
)
Total income (loss) before taxes
$
(149,140
)
 
$
(2,054
)

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.





6


Schedule C: Consolidated Balance Sheet (Unaudited)
 
March 31, 2016
 
December 31, 2015
 
(In Thousands)
Balance Sheet:
 
 
 
Cash (excluding restricted cash)
$
25,833

 
$
23,057

Accounts receivable, net
109,724

 
184,172

Inventories
126,682

 
117,009

Other current assets
32,074

 
29,791

PP&E, net
1,026,915

 
1,048,004

Other assets
116,076

 
234,169

Total assets
$
1,437,304

 
$
1,636,202

 
 
 
 
Current portion of decommissioning liabilities
$
3,716

 
$
14,570

Other current liabilities
138,518

 
170,676

Long-term debt (1)
841,366

 
853,228

Long-term portion of decommissioning liabilities
50,875

 
42,879

Other long-term liabilities
40,732

 
40,669

Equity
362,097

 
514,180

Total liabilities and equity
$
1,437,304

 
$
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.
 
March 31, 2016
 
December 31, 2015
 
(In Thousands)
TETRA
 
 
 
Bank revolving line of credit facility
$
19,363

 
$
21,572

TETRA Senior Notes at various rates
255,517

 
264,998

Other debt
—

 
50

TETRA total debt
274,880

 
286,620

Less current portion
—

 
(50
)
TETRA total long-term debt
$
274,880

 
$
286,570

 
 
 
 
CSI Compressco LP
 
 
 
CCLP Bank Credit Facility
$
228,933

 
$
229,555

CCLP 7.25% Senior Notes
337,552

 
337,103

CCLP total debt
566,485

 
566,658

Less current portion
—

 
—

CCLP total long-term debt
$
566,485

 
$
566,658

Consolidated total long-term debt
$
841,365

 
$
853,228





7


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.

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.

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.


8


Schedule E: Fourth Quarter Special Charges
 
Three Months Ended
 
March 31, 2016
 
Income (Loss) Before Tax
Provision (Benefit) for Tax
Noncont. Interest
Net Income Attributable to TETRA Stockholders
EPS
 
(In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech
$
(30,890
)
$
(9,266
)
$
(2,391
)
$
(19,233
)
$
(0.24
)
Asset impairments
(10,670
)
(3,201
)
(4,465
)
(3,004
)
(0.04
)
Severance expense
(755
)
(226
)
(138
)
(391
)
—

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
)
 
 
 
 
 
 
 
March 31, 2015
 
Income (Loss) Before Tax
Provision (Benefit) for Tax
Noncont. Interest
Net Income Attributable to TETRA Stockholders
EPS
 
(In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech
$
(2,078
)
$
(676
)
$
988

$
(2,390
)
$
(0.03
)
Transaction related costs
(208
)
(78
)
(73
)
(57
)
—

Severance expense
(743
)
(155
)
(90
)
(498
)
(0.01
)
Effect of deferred tax valuation allowance and other related tax adj.
—

2,477

—

(2,477
)
(0.03
)
Maritech profit (loss)
975

—

—

975

0.01

Net Income (loss) attributable to TETRA stockholders, as reported
$
(2,054
)
$
1,568

$
825

$
(4,447
)
$
(0.06
)
 
 
 
 
 
 


9


Schedule F: Non-GAAP Reconciliation to GAAP Financials
 
Three Months Ended
 
March 31, 2016
 
Income (Loss) Before Tax, as Reported
Impairments & Special Charges
Adjusted Income (Loss) Before Tax
Interest Expense, Net
Depreciation & Amortization
Equity Comp. Expense
Adjusted EBITDA
 
(In Thousands)
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 excl Maritech
(148,520
)
117,630

(30,890
)
14,639

33,302

2,373

19,424

Maritech
(620
)
—

(620
)
—

305

—

(315
)
Consolidated
$
(149,140
)
$
117,630

$
(31,510
)
$
14,639

$
33,607

$
2,373

$
19,109

 
 
 
 
 
 
 
 
 
March 31, 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
 
(In Thousands)
Fluids Division
$
17,736

$
113

$
17,849

$
(8
)
$
8,719

$
—

$
26,560

Production Testing Division
39

386

425

(9
)
6,263

—

6,679

Compression Division
2,404

407

2,811

8,679

20,045

477

32,012

Offshore Services Segment
(8,648
)
10

(8,638
)
—

2,804

—

(5,834
)
Eliminations and other
3

—

3

—

(3
)
—

—

Subtotal
11,534

916

12,450

8,662

37,828

477

59,417

Corporate and other
(14,563
)
35

(14,528
)
5,131

253

1,119

(8,025
)
TETRA excl Maritech
(3,029
)
951

(2,078
)
13,793

38,081

1,596

51,392

Maritech
975

—

975

—

261

—

1,236

Consolidated
$
(2,054
)
$
951

$
(1,103
)
$
13,793

$
38,342

$
1,596

$
52,628







10


Schedule G: Non-GAAP Reconciliation to Free Cash Flow
 
Three Months Ended 
 March 31,
 
2016
 
2015
 
(In Thousands)
Consolidated
 
 
 
Cash from operating activities
$
25,261

 
$
27,815

ARO settlements
3,379

 
566

Capital expenditures, net of sales proceeds
(1,985
)
 
(46,138
)
Consolidated adjusted free cash flow
26,655

 
(17,757
)
 
 
 
 
CSI Compressco LP
 
 
 
Cash from operating activities
15,095

 
32,481

Capital expenditures, net of sales proceeds
(1,353
)
 
(37,158
)
  CSI Compressco free cash flow
13,742

 
(4,677
)
 
 
 
 
TETRA Only
 
 
 
Cash from operating activities
10,166

 
(4,666
)
ARO settlements
3,379

 
566

Capital expenditures, net of sales proceeds
(632
)
 
(8,980
)
Free cash flow before ARO settlements
12,913

 
(13,080
)
Distributions from CSI Compressco LP
5,575

 
7,341

Adjusted free cash flow
18,488

 
(5,739
)

Schedule H: Non-GAAP Reconciliation of TETRA Net Debt

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

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

 
March 31, 2016
 
TETRA
 
CCLP
 
(In Millions)
Non-restricted cash
$
15.5

 
$
10.3

 
 
 
 
Revolver debt outstanding
19.4

 
228.9

Senior Notes outstanding
255.5

 
337.6

Net debt
$
259.4

 
$
556.2



11