0001564590-18-020747.txt : 20180809 0001564590-18-020747.hdr.sgml : 20180809 20180809073747 ACCESSION NUMBER: 0001564590-18-020747 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20180809 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20180809 DATE AS OF CHANGE: 20180809 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: 181003431 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 tti-8k_20180809.htm 8-K tti-8k_20180809.htm

 

 

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): August 9, 2018

 

TETRA Technologies, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

1-13455

 

74-2148293

(State or other jurisdiction

of incorporation)

 

(Commission File Number)

 

(IRS Employer

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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On August 9, 2018, TETRA Technologies, Inc., a Delaware corporation (the “Company”), issued a news release announcing its financial results for the second quarter, 2018. The news 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, 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.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

 

 

 

 

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

 

 

Chief Executive Officer

 

 

 

Date: August 9, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 EX-99.1 2 tti-ex991_36.htm EX-99.1 tti-ex991_36.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

 

 

 

 

 

TETRA TECHNOLOGIES, INC. ANNOUNCES SECOND QUARTER

RESULTS AND PROVIDES UPDATE TO TOTAL YEAR GUIDANCE

 

THE WOODLANDS, Texas, August 9, 2018 / PR Newswire / - TETRA Technologies, Inc. (“TETRA”) (NYSE:TTI) today announced consolidated second quarter 2018 net loss per share before discontinued operations attributable to TETRA stockholders of $0.05.  This compares to consolidated net loss of $0.10 per share before discontinued operations attributable to TETRA stockholders in the first quarter of 2018, and a net loss per share before discontinued operations attributable to TETRA stockholders of $0.04 in the second quarter of 2017.

 

TETRA's adjusted per share results attributable to TETRA stockholders for the second quarter of 2018, before discontinued operations excluding special items, were earnings per share of $0.03.  This compares to adjusted loss per share of $0.06 in the first quarter of 2018 and adjusted earnings per share of $0.02 in the second quarter of 2017 before discontinued operations, which exclude special items detailed later in this press release.

 

Second quarter 2018 revenue before discontinued operations was $260 million, an increase of 30% from the first quarter of 2018 and an increase of 45% from the second quarter of last year.  

 

(Adjusted earnings/loss per share is a non-GAAP financial measure that is reconciled to the nearest GAAP measure in the accompanying schedules.)

Second Quarter 2018 Results

 

Three Months Ended

 

June 30, 2018

 

March 31, 2018

 

June 30, 2017

 

(In Thousands, Except per Share Amounts)

Revenue before discontinued operations

$

260,072

 

 

$

199,381

 

 

$

179,931

 

Loss before discontinued operations

(12,132

)

 

(21,057

)

 

(7,966

)

Adjusted EBITDA before discontinued operations (1)

46,285

 

 

26,222

 

 

28,865

 

GAAP EPS before discontinued operations attributable to TETRA stockholders

(0.05

)

 

(0.10

)

 

(0.04

)

Adjusted EPS attributable to TETRA stockholders(1)

0.03

 

 

(0.06

)

 

0.02

 

GAAP net cash provided (used) by operating activities

19,134

 

 

(31,261

)

 

19,977

 

TETRA only adjusted free cash flow before discontinued operations (1)

18,018

 

(29,917)

 

11,327

 

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

 

Second Quarter Highlights include:

 

 

•

Adjusted EBITDA was 17.8% of revenue and increased $20 million (77%) from the first quarter of this year reflecting strong contributions from the recent SwiftWater acquisition, better pricing across the onshore segments, returns from recent capital investments and the benefit of seasonality in our Europe fluids business.  Profit before taxes was a loss of $9.7 million.

 

•

Water & Flowback Services adjusted EBITDA increased 74% from the first quarter of 2018 to $20 million driven by a full quarter from the SwiftWater acquisition, continued improvements in the water management and flow back operations in multiple basins aided by higher pricing and incremental investments.  Profit before taxes was $8.3 million, 9.9% of revenue.  

 

•

Completion Fluids & Products adjusted EBITDA increased 122% from the first quarter of 2018 to $13.7 million, driven by the seasonal nature of our Europe Chemicals business and stronger U.S. activity.  Profit before taxes was $10.0 million, 13% of revenue.

 

 

 

•

Compression Services adjusted EBITDA increased 19% from the first quarter of 2018 to $22.4 million on higher equipment sales and price increases on the compression services fleet.  Loss before taxes was $8.7 million, an improvement from a $14 million loss in the first quarter of 2018. New equipment orders during the second quarter were $25 million.  In July of 2018 an additional order of $18 million was secured.  These orders reflect the strong demand for incremental compression equipment to gather, move and process associated gas in the Permian Basin.

 

•

Entered into a global joint marketing and development agreement with Halliburton for the sale and distribution of TETRA's proprietary family of TETRA CS Neptune® completion fluids. The collaborative agreement also fosters and drives further development of other oil and gas drilling and completion fluids based on their respective technologies and resource capabilities.

 

Stuart M. Brightman, TETRA’s Chief Executive Officer, stated, “We are very pleased with the accelerated rate of improvement as each segment saw a material sequential improvement in revenue and adjusted EBITDA.  Our strong presence in the US onshore markets, aided by the recent acquisition of SwiftWater, is meaningfully impacting our results.  We are seeing better pricing and stronger equipment utilization in each of our segments.  We are also seeing preliminary signs of an international recovery and new offshore projects being initiated, including a significant deepwater Gulf of Mexico completion fluids project for 2019.  Our vertically integrated completion fluids network positions us well to capitalize on this recovery.

 

“We announced earlier in the quarter the agreement with Halliburton to further capitalize on this expected recovery by jointly marketing our innovative industry leading TETRA CS Neptune® completion fluids technology.  We are very pleased to have this agreement in place with a leading global fluids provider such as Halliburton.  TETRA CS Neptune©  completion fluids are unique zinc-free, clear brine completion fluids that have significant potential for growth through global applications and as base fluids for other applications, such as packer and reservoir drill-in fluids.  We look forward to working with Halliburton to expand sales and jointly develop new offerings and expect this to be a great relationship for years to come, especially as deepwater drilling activity comes back.

 

“Water & Flowback Services second quarter 2018 revenue increased 37% sequentially to $83.6 million led by a full quarter of SwiftWater operations and overall significantly stronger activity in the U.S. shale plays.  In the second quarter of 2018, SwiftWater generated $28.6 million of revenue and $5.2 million profit before taxes, inclusive of $1.6 million of depreciation expense. The financial results of this acquisition are outperforming our acquisition expectations.  We have been able to successfully cross sell our TETRA Steel™ 1200 proprietary lay-flat hose technology.  We continue to see significant opportunities in this division and have increased our projected investments in capital given the strong returns from high utilization and better pricing as customers continue to deal with high volumes of water to complete fracking operations and handle high volumes of flow back sand and produced water.  In addition to the Permian market, we are experiencing continued strong financial results in the Rockies, MidCon, Northeast and most recently also in South Texas.  Water & Flowback Services profit before taxes was $8.3 million (9.9% of revenue), while adjusted EBITDA was $20.1 million (24.1% of revenue).

 

“Completion Fluids & Products revenue was $76.6 million for the second quarter of 2018, an increase of 44% from the first quarter of 2018.  We are working with two major customers on the timing for TETRA CS Neptune® opportunities.  We expect both opportunities to materialize by year-end.  Completion Fluids & Products Division profit before taxes was $10.0 million (13.0% of revenue), while adjusted EBITDA was $13.7 million (17.9% of revenue).”

 

“Second quarter 2018 Compression revenue increased 17% sequentially to $99.9 million.  Compression Services gross margin excluding depreciation improved to 46.2% in the second quarter from 41.6% in the first quarter of 2018.  New equipment orders of $25 million were received in the second quarter and another $18 million order was received in late July, reflecting our customers’ continued strong demand for compression to move associated gas.  Our backlog was $102 million at the end of the second quarter.  Compression loss before tax for the second quarter of 2018 was $8.7 million compared to a $14.0 million loss for the first quarter of 2018 and $6.2 million loss for the second quarter of 2017.  Adjusted EBITDA was $22.4 million in the second quarter, compared to $18.9 million in the first quarter.  On July 20, 2018, CSI Compressco LP declared a cash distribution attributable to the second quarter of 2018 of $0.1875 per outstanding common unit, which will be paid on August 14, 2018 to common unitholders of record as of the close of business on August 1, 2018.  The distribution coverage ratio for the second quarter of 2018 was 0.65X.”

 


 

 

Free Cash Flow and Balance Sheet

 

Consolidated net cash from operating activities for the second quarter of 2018 was $19.1 million, compared to a net use of cash of $31.3 million in the first quarter of 2018.  TETRA only adjusted free cash flow in the second quarter was positive $18.0 million.  Consolidated net debt was $741 million, while TETRA only net debt was $159 million.  At the end of the second quarter TETRA only cash on hand was $18.8 million.  With a strong balance sheet, TETRA remains positioned to invest opportunistically into the recovering market.

 

Special items

 

Special items, including Discontinued Operations, incurred in the second quarter, as detailed on Schedule E, include the following:

 

 

•

$4.3 million non-cash expense for a fair value adjustment of SwiftWater earn-out obligation given the stronger than expected results of the acquisition.

 

•

$2.2 million non-cash expense on stock warrant fair value adjustments

 

•

$0.5 million non-cash gain for a fair value adjustment of the CSI Compressco Series A Convertible Preferred units

 

•

$0.1 million in expenses from severance and transaction costs

 

Additionally, a normalized tax rate of 21% is reflected in Adjusted Net Income, as shown on Schedule E.

 

Total Year 2018 Guidance Update

 

We expect total year 2018 revenue from continuing operations to be between $965 million and $1.005 billion, up from the prior guidance of $945 million and $985 million.  We expected consolidated adjusted EBITDA of between $170 million and $190 million, up from the prior guidance of $168 million and $188 million. The increased revenue and adjusted EBITDA is reflecting the higher new equipment sales for CSI Compressco.  Total year projected loss before taxes is expected to be between $16.9 million and $35.9 million, compared to the prior guidance of $7.5 and $27.5 million, reflecting the second quarter non-cash expenses partially offset by the higher CSI Compressco equipment sales EBITDA. Total year projected loss before taxes includes special items year to date of $9.9 million.

 

Projected total year capital expenditures for TETRA only are expected to be between $45 million and $55 million. CSI Compressco capital expenditures are expected to be between $110 million and $120 million inclusive of maintenance capital expenditures of between $18 million and $20 million.

 

Projected total year TETRA only free cash flow is expected to be between $15 million and $25 million inclusive of distributions from CSI Compressco.

 

Schedule J reconciles projected adjusted EBITDA to profit before taxes.

 

 

Conference Call

 

TETRA will host a conference call to discuss these results today, August 9, 2018, at 10:30 a.m. ET. The phone number for the call is 888-347-5303. The conference will also be available by live audio webcast and may be accessed through TETRA's website at www.tetratec.com. A replay of the conference call will be available at 1-877-344-7529, conference number 10115962, for one week following the conference call and the archived webcast call will be available through the Company’s website for 30 days following the conference call.

 

Investor Contact

TETRA Technologies, Inc., The Woodlands, Texas

Stuart M. Brightman

Ph: 281-367-1983

www.tetratec.com

 

 

Financial Statements, Schedules and Non-GAAP Reconciliation Schedules (Unaudited)

 

Schedule A: Consolidated Income Statement (unaudited)

Schedule B: Financial Results By Segment (unaudited)

Schedule C: Consolidated Balance Sheet (unaudited)

Schedule D: Long-Term Debt

Schedule E: Special Items

Schedule F: Non-GAAP Reconciliation to GAAP Financials

Schedule G: Non-GAAP Reconciliation of TETRA Net Debt

Schedule H: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow

Schedule I: Non-GAAP Reconciliation to TETRA Only Adjusted Cash Flow From Continuing Operations

Schedule J: Non-GAAP Reconciliation to Projected 2018 Adjusted EBITDA

 


 

 

Company Overview and Forward-Looking Statements

 

TETRA Technologies, Inc. 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, and compression services and equipment.  TETRA owns an equity interest, including all of the general partner interest, in CSI Compressco LP (NASDAQ:CCLP), a master limited partnership.

 

 

This news 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 the anticipated recovery of the oil and gas industry, expected benefits from the acquisition of SwiftWater Energy Services and expected results of operational business segments for 2018, including levels of 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. 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, 2017, 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,

 

2018

 

2017

 

2018

 

2017

 

(In Thousands, Except per Share Amounts)

Revenues

$

260,072

 

 

$

179,931

 

 

$

459,453

 

 

$

339,340

 

 

 

 

 

 

 

 

 

Cost of sales, services, and rentals

183,292

 

 

124,612

 

 

328,249

 

 

237,843

 

Depreciation, amortization, and accretion

28,979

 

 

25,784

 

 

55,420

 

 

52,308

 

Total cost of revenues

212,271

 

 

150,396

 

 

383,669

 

 

290,151

 

Gross profit

47,801

 

 

29,535

 

 

75,784

 

 

49,189

 

 

 

 

 

 

 

 

 

General and administrative expense

33,617

 

 

29,460

 

 

64,420

 

 

56,211

 

Interest expense, net

18,379

 

 

14,328

 

 

33,352

 

 

28,095

 

Warrants fair value adjustment (income) expense

2,195

 

 

(5,545

)

 

201

 

 

(11,521

)

CCLP Series A Preferred Units fair value adjustment (income) expense

(512

)

 

(4,834

)

 

846

 

 

(3,203

)

Litigation arbitration award income

—

 

 

—

 

 

—

 

 

(12,816

)

Other expense, net

3,808

 

 

775

 

 

6,584

 

 

1,236

 

Loss before taxes and discontinued operations

(9,686

)

 

(4,649

)

 

(29,619

)

 

(8,813

)

Provision for income taxes

2,446

 

 

3,317

 

 

3,570

 

 

3,398

 

Loss before discontinued operations

(12,132

)

 

(7,966

)

 

(33,189

)

 

(12,211

)

Discontinued operations:

 

 

 

 

 

 

 

Loss from discontinued operations (including 2018 loss on disposal of $33.8 million), net of taxes

(21

)

 

(6,653

)

 

(41,727

)

 

(13,660

)

Net loss

(12,153

)

 

(14,619

)

 

(74,916

)

 

(25,871

)

Loss attributable to noncontrolling interest

6,188

 

 

3,628

 

 

15,303

 

 

12,417

 

Loss attributable to TETRA stockholders

$

(5,965

)

 

$

(10,991

)

 

$

(59,613

)

 

$

(13,454

)

 

 

 

 

 

 

 

 

Basic per share information:

 

 

 

 

 

 

 

Income (loss) before discontinued operations attributable to TETRA stockholders

$

(0.05

)

 

$

(0.04

)

 

$

(0.14

)

 

$

0.00

 

Loss from discontinued operations attributable to TETRA stockholders

$

0.00

 

 

$

(0.06

)

 

$

(0.33

)

 

$

(0.12

)

Net loss attributable to TETRA stockholders

$

(0.05

)

 

$

(0.10

)

 

$

(0.47

)

 

$

(0.12

)

Weighted average shares outstanding

122,474

 

114,534

 

125,553

 

114,375

 

 

 

 

 

 

 

 

Diluted per share information:

 

 

 

 

 

 

 

Income (loss) before discontinued operations attributable to TETRA stockholders

$

(0.05

)

 

$

(0.04

)

 

$

(0.14

)

 

$

0.00

 

Loss from discontinued operations attributable to TETRA stockholders

$

0.00

 

 

$

(0.06

)

 

$

(0.33

)

 

$

(0.12

)

Net loss attributable to TETRA stockholders

$

(0.05

)

 

$

(0.10

)

 

$

(0.47

)

 

$

(0.12

)

Weighted average shares outstanding

122,474

 

 

114,534

 

125,553

 

 

114,375

 

 

 

 

 

 

Schedule B: Financial Results By Segment (Unaudited)

 

 

Three Months Ended
 June 30,

 

Six Months Ended
 June 30,

 

2018

 

2017

 

2018

 

2017

 

(In Thousands)

Revenues by segment:

 

 

 

 

 

 

 

Completion Fluids & Products Division

$

76,556

 

 

$

73,995

 

 

$

129,660

 

 

$

130,223

 

Water & Flowback Services Division

83,646

 

 

31,086

 

 

144,721

 

 

69,265

 

Compression Division

99,924

 

 

75,312

 

 

185,346

 

 

140,871

 

Eliminations and other

(54

)

 

(462

)

 

(274

)

 

(1,019

)

Total revenues

$

260,072

 

 

$

179,931

 

 

$

459,453

 

 

$

339,340

 

 

 

 

 

 

 

 

 

Gross profit (loss) by segment:

 

 

 

 

 

 

 

Completion Fluids & Products Division

$

14,396

 

 

$

22,358

 

 

$

21,082

 

 

$

33,688

 

Water & Flowback Services Division

18,631

 

 

(245

)

 

30,035

 

 

2,003

 

Compression Division

14,933

 

 

7,533

 

 

24,973

 

 

13,698

 

Corporate overhead and eliminations

(159

)

 

(111

)

 

(306

)

 

(200

)

Total gross profit

$

47,801

 

 

$

29,535

 

 

$

75,784

 

 

$

49,189

 

 

 

 

 

 

 

 

 

Income (loss) before taxes by segment:

 

 

 

 

 

 

 

Completion Fluids & Products Division

$

9,981

 

 

$

16,616

 

 

$

12,430

 

 

$

36,088

 

Water & Flowback Services Division

8,311

 

 

(3,920

)

 

14,859

 

 

(5,186

)

Compression Division

(8,655

)

 

(6,180

)

 

(22,673

)

 

(20,513

)

Corporate overhead and eliminations

(19,323

)

 

(11,165

)

 

(34,235

)

 

(19,202

)

Total income (loss) before taxes

$

(9,686

)

 

$

(4,649

)

 

$

(29,619

)

 

$

(8,813

)

 

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

 

 

 

 

Schedule C: Consolidated Balance Sheet (Unaudited)

 

June 30, 2018

 

December 31, 2017

 

(In Thousands)

Balance Sheet:

 

 

 

Cash (excluding restricted cash)

$

70,157

 

 

$

26,128

 

Accounts receivable, net

181,454

 

 

144,051

 

Inventories

133,367

 

 

115,438

 

Assets of discontinued operations

1,538

 

 

121,134

 

Other current assets

23,730

 

 

17,858

 

PP&E, net

833,078

 

 

809,432

 

Other assets

136,295

 

 

74,573

 

Total assets

$

1,379,619

 

 

$

1,308,614

 

 

 

 

 

Liabilities of discontinued operations

$

8,343

 

 

$

73,913

 

Other current liabilities

158,839

 

 

148,026

 

Long-term debt (1)

810,739

 

 

629,855

 

Long-term portion of decommissioning liabilities

12,073

 

 

11,738

 

CCLP Series A Preferred

45,644

 

 

61,436

 

Warrant liability

13,403

 

 

13,202

 

Other long-term liabilities

19,516

 

 

17,883

 

Equity

311,062

 

 

352,561

 

Total liabilities and equity

$

1,379,619

 

 

$

1,308,614

 

 

(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, other than 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, 2018

 

December 31, 2017

 

(In Thousands)

TETRA

 

 

 

Bank revolving line of credit facility

$

59,906

 

 

$

—

 

TETRA 11% Senior Note

118,341

 

 

117,679

 

TETRA total debt

178,247

 

 

117,679

 

Less current portion

—

 

 

—

 

TETRA total long-term debt

$

178,247

 

 

$

117,679

 

 

 

 

 

CSI Compressco LP

 

 

 

Bank Credit Facility

$

—

 

 

$

223,985

 

New ABL Credit Agreement

—

 

 

—

 

7.25% Senior Notes

288,989

 

 

288,191

 

7.50% Senior Notes

343,503

 

 

—

 

Total debt

632,492

 

 

512,176

 

Less current portion

—

 

 

—

 

CCLP total long-term debt

$

632,492

 

 

$

512,176

 

Consolidated total long-term debt

$

810,739

 

 

$

629,855

 

 

 

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, and special charges; consolidated and segment adjusted EBITDA; and TETRA only adjusted free cash flow and TETRA only free cash flow from continuing operations. 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 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 the Segment’s) 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.

 

9

 

 

Adjusted EBITDA (and Adjusted EBITDA as a percent of revenue) is defined as earnings before interest, taxes, depreciation, amortization, impairments and special charges, equity compensation, and allocated corporate overhead charges to our CSI Compressco LP subsidiary, pursuant to our Omnibus Agreement, which were reimbursed with CSI Compressco LP common units. Adjusted EBITDA (and Adjusted EBITDA as a percent of revenue) is used by management as a supplemental financial measure to assess the financial performance of the Company’s assets, without regard to financing methods, capital structure or historical cost basis and to assess the Company’s ability to incur and service debt and fund capital expenditures.

 

TETRA only adjusted free cash flow is a non-GAAP measure that the Company defines as cash from TETRA’s operations, excluding cash settlements of Maritech AROs, less capital expenditures net of sales proceeds and cost of equipment sold, and including cash distributions to TETRA from CSI Compressco LP. TETRA only adjusted free cash flow from continuing operations is defined as TETRA only adjusted free cash flow less discontinued operations EBITDA and discontinued operations 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.

 

TETRA only adjusted free cash flow and TETRA only adjusted free cash flow from continuing operations 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 the carrying value 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: Special Items

 

 

Three Months Ended

 

 

June 30, 2018

 

 

Income (loss) before taxes and discontinued operations

Provision (Benefit) for Tax

Noncont. Interest

Net Income (Loss) Attributable to TETRA Stockholders

Diluted EPS

 

 

(In Thousands, Except per Share Amounts)

Income (loss) attributable to TETRA stockholders, excluding special items and discontinued operations

 

$

(3,620

)

$

(343

)

$

(6,593

)

$

3,316

 

$

0.03

 

Severance expense

 

(43

)

(9

)

(9

)

(25

)

0.00

 

Stock warrant fair value adjustment

 

(2,195

)

(461

)

—

 

(1,734

)

(0.01

)

Convertible Series A preferred fair value adjustments

 

      512

 

108

 

414

 

(10

)

0.00

 

Transaction costs

 

(40

)

(8

)

—

 

(32

)

0.00

 

Swiftwater Earnout Adjustment

 

(4,300

)

(903

)

—

 

(3,397

)

(0.03

)

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

 

—

 

4,062

 

—

 

(4,062

)

(0.03

)

Net income (loss) before discontinued operations

 

(9,686

)

2,446

 

(6,188

)

(5,944

)

(0.05

)

Loss from discontinued operations

 

 

 

 

(21

)

0.00

 

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

 

 

 

 

$

(5,965

)

$

(0.05

)

 

 

 

Three Months Ended

 

March 31, 2018

 

Income (loss) before taxes and discontinued operations

Provision (Benefit) for Tax

Noncont. Interest

Net Income (Loss) Attributable to TETRA Stockholders

Diluted EPS

 

(In Thousands, Except per Share Amounts)

Income (loss) attributable to TETRA stockholders, excluding special items and discontinued operations

$

(16,067

)

$

(3,375

)

$

(5,896

)

$

(6,796

)

$

(0.06

)

Severance expense

(73

)

(15

)

—

 

(58

)

0.00

 

Stock warrant fair value adjustment

1,994

 

419

 

—

 

1,575

 

0.01

 

Convertible Series A preferred fair value adjustments

(1,358

)

(285

)

(981

)

(92

)

0.00

 

Prior debt issuance cost

(3,541

)

(744

)

(2,238

)

(559

)

0.00

 

Transaction costs

(888

)

(186

)

—

 

(702

)

(0.01

)

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

—

 

5,310

 

—

 

(5,310

)

(0.05

)

Net income (loss) before discontinued operations

(19,933

)

1,124

 

(9,115

)

(11,942

)

(0.10

)

Loss from discontinued operations

 

 

 

(41,706

)

(0.36

)

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

 

 

 

$

(53,648

)

$

(0.46

)

 

 

 

 

 

Three Months Ended

 

June 30, 2017

 

Income (loss) before taxes and discontinued operations

Provision (Benefit) for Tax

Noncont. Interest

Net Income (Loss) Attributable to TETRA Stockholders

Diluted EPS

 

(In Thousands, Except per Share Amounts)

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

$

(14,247

)

$

(9,541

)

$

(6,983

)

$

2,277

 

$

0.02

 

Severance expense

(585

)

(176

)

—

 

(409

)

0.00

 

Stock warrant fair value adjustment

5,545

 

1,663

 

—

 

3,882

 

0.03

 

Convertible Series A preferred offering cost and fair value adjustments

4,834

 

1,450

 

3,478

 

(94

)

0.00

 

Software writeoff

(196

)

(59

)

(123

)

(14

)

0.00

 

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

—

 

9,980

 

—

 

(9,980

)

(0.09

)

Net income (loss) before discontinued operations

(4,649

)

3,317

 

(3,628

)

(4,338

)

(0.04

)

Loss from discontinued operations

 

 

 

(6,653

)

(0.06

)

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

 

 

 

$           (10,991

)

$

(0.10

)

 

 

 

 

 

 

Schedule F: Non-GAAP Reconciliation to GAAP Financials

 

Three Months Ended

 

 

June 30, 2018

 

 

Net Income (Loss), as reported

Tax Provision

Income (Loss) Before Tax, as Reported

Impairments & Special Charges

Adjusted Income (Loss) Before Tax

Interest Expense

Adjusted
Depreciation & Amortization

Equity Comp. Expense

Adjusted EBITDA

 

(In Thousands)

 

Completion Fluids & Products Division

 

 

$

9,981

 

$

—

 

$

9,981

 

$

(131

)

$

3,875

 

$

—

 

$

13,725

 

Water & Flowback Services Division

 

 

8,311

 

4,330

 

12,641

 

(1

)

7,497

 

—

 

20,137

 

Compression Division

 

 

(8,655

)

(499

)

(9,154

)

13,634

 

17,448

 

496

 

22,424

 

Eliminations and other

 

 

4

 

—

 

4

 

—

 

(5

)

—

 

(1

)

Subtotal

 

 

9,641

 

3,831

 

13,472

 

13,502

 

28,815

 

496

 

56,285

 

Corporate and other

 

 

(19,327

)

2,236

 

(17,091

)

4,877

 

164

 

2,050

 

(10,000

)

TETRA excluding Discontinued Operations

$

(12,132

)

$

2,446

 

$

(9,686

)

$

6,067

 

$

(3,619

)

$

18,379

 

$

28,979

 

$

2,546

 

$

46,285

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

 

 

Net Income (Loss), as reported

Tax Provision

Income (Loss) Before Tax, as Reported

Impairments & Special Charges

Adjusted Income (Loss) Before Tax

Adjusted Interest Expense, Net

Adjusted
Depreciation & Amortization

Equity Comp. Expense

Adjusted EBITDA

 

(In Thousands)

 

Completion Fluids & Products Division

 

 

$

2,449

 

$

70

 

$

2,519

 

$

(233

)

$

3,901

 

$

—

 

$

6,187

 

Water & Flowback Services Division

 

 

6,548

 

3

 

6,551

 

(15

)

5,027

 

—

 

11,563

 

Compression Division

 

 

(14,018

)

4,898

 

(9,120

)

11,214

 

17,367

 

(604

 

18,857

 

Eliminations and other

 

 

—

 

—

 

—

 

—

 

(5

)

—

 

(5

)

Subtotal

 

 

(5,021

)

4,971

 

(50

)

10,966

 

26,290

 

(604

 

36,602

 

Corporate and other

 

 

(14,912

)

(1,106

)

(16,018

)

4,007

 

151

 

1,480

 

(10,380

)

TETRA excluding Discontinued Operations

$

(21,057

)

$

1,124

 

$

(19,933

)

$

3,865

 

$

(16,068

)

$

14,973

 

$

26,441

 

$

876

 

$

26,222

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

June 30, 2017

 

Net Income (Loss), as reported

Tax Provision

Income (Loss) Before Tax, as Reported

Impairments & Special Charges

Adjusted Income (Loss) Before Tax

Adjusted Interest Expense, Net

Adjusted
Depreciation & Amortization

Equity Comp. Expense

Adjusted EBITDA

 

(In Thousands)

Completion Fluids & Products Division

 

 

$

16,616

 

$

—

 

$

16,616

 

$

27

 

$

4,107

 

$

—

 

$

20,750

 

Water & Flowback Services Division

 

 

(3,920

)

5

 

(3,915

)

(125

)

4,362

 

—

 

322

 

Compression Division

 

 

(6,180

)

(4,638

)

(10,818

)

10,184

 

17,204

 

935

 

17,505

 

Eliminations and other

 

 

4

 

—

 

4

 

—

 

(5

)

—

 

(1

)

Subtotal

 

 

6,520

 

(4,633

)

1,887

 

10,086

 

25,668

 

935

 

38,576

 

Corporate and other

 

 

(11,169

)

(4,966

)

(16,135

)

4,242

 

117

 

2,065

 

(9,711

)

TETRA excluding Discontinued Operations

$

(7,966

)

$

3,317

 

$

(4,649

)

$

(9,599

)

$

(14,248

)

$

14,328

 

$

25,784

 

$

3,000

 

$

28,865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule G: Non-GAAP Reconciliation of TETRA Net Debt

 

The cash and debt positions of TETRA and CSI Compressco LP as of June 30, 2018, 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.

 

 

June 30, 2018

 

TETRA

 

CCLP

 

Consolidated

 

(In Millions)

Non-restricted cash

$

18.8

 

 

$

51.4

 

 

$

70.2

 

 

 

 

 

 

 

Carrying value of long-term debt:

 

 

 

 

 

Revolver debt outstanding

59.9

 

 

—

 

 

59.9

 

Senior Notes outstanding

118.3

 

 

632.5

 

 

750.8

 

Net debt

 

$

159.4

 

 

$

581.1

 

 

$

740.5

 

 

 

 

 

 

Schedule H: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow

 

Three Months Ended

 

June 30, 2018

 

March 31, 2018

 

June 30, 2017

 

(In Thousands)

Consolidated

 

 

 

 

 

Net cash provided (used) by operating activities

$

19,134

 

 

$

(31,261

)

 

$

19,977

 

ARO settlements

—

 

 

—

 

 

23

 

Capital expenditures, net of sales proceeds

(38,318

)

 

(28,816

)

 

(11,451

)

Consolidated adjusted free cash flow

(19,184

)

 

(60,077

)

 

8,549

 

 

 

 

 

 

 

CSI Compressco LP

 

 

 

 

 

Net cash provided by operating activities

(3,908

)

 

(365

)

 

9,533

 

Capital expenditures, net of sales proceeds

(30,223

)

 

(17,039

)

 

(4,262

)

CSI Compressco free cash flow

(34,131

)

 

(17,404

)

 

5,271

 

 

 

 

 

 

 

TETRA Only

 

 

 

 

 

Cash from operating activities

23,042

 

 

(30,896

)

 

10,444

 

ARO settlements

—

 

 

—

 

 

23

 

Capital expenditures, net of sales proceeds

(8,095

)

 

(11,777

)

 

(7,189

)

Free cash flow before ARO settlements

14,947

 

 

(42,673

)

 

3,278

 

Distributions from CSI Compressco LP

2,992

 

 

2,954

 

 

2,812

 

Adjusted TETRA only free cash flow *

17,939

 

 

(39,719

)

 

6,090

 

 

* Includes the impact from discontinued operations.  See schedule I to exclude the impact from discontinued operations.

 

 

 

Schedule I: TETRA Only Adjusted Cash Flow From Continuing Operations

 

Three Months Ended

 

June 30,   2018

 

March 31, 2018

 

June 30, 2017

 

(In Thousands)

TETRA Only

 

 

 

 

 

Cash from operating activities

$          23,042

 

$        (30,896)

 

$         10,444

Less: Discontinued operations operating activities (adjusted EBITDA)(1)

       (21)

 

(8,176)

 

(3,732)

Cash from continued operating activities

23,063

 

(22,720)

 

14,176

Less: Continuing operations capital expenditures(2)

(8,037)

 

(10,151)

 

(5,661)

Plus: Distributions from CSI Compressco LP

2,992

 

2,954

 

2,812

TETRA only adjusted free cash flow from continuing operations

$         18,018

 

$        (29,917)

 

$          11,327

 

 

(1) Reconciled to loss from discontinued operations as follows:

Three Months Ended

 

June 30, 2018

 

March 31, 2018

 

June 30, 2017

 

(In Thousands)

   Loss from discontinued operations

(21)

 

(41,706)

 

(6,653)

   Plus: Income tax provision (benefit)

—

 

(2,327)

 

86

   Plus: Depreciation & amortization

—

 

2,069

 

2,835

   Plus: loss on disposal of discontinued operations

—

 

33,788

 

—

   Less: Discontinued operations adjusted EBITDA

(21)

 

(8,176)

 

(3,732)

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Reconciled to TETRA only capital expenditures as follows:

Three Months Ended

 

June 30, 2018

 

March 31, 2018

 

June 30, 2017

 

(In Thousands)

   TETRA only capital expenditures

(8,095)

 

(11,777)

 

(7,189)

   Less: Discontinued operations capital expenditures

(58)

 

(1,626)

 

(1,528)

   Plus: Continuing operations capital expenditures

(8,037)

 

(10,151)

 

(5,661)

 

 

 

 

 

 

 


 

 

 

Schedule J: Non-GAAP Reconciliation to Projected 2018 Adjusted EBITDA

 

EBITDA Reconciliation Table for adjusted EBITDA of $170 million

 

Adjusted EBITDA(1)

Equity Comp Expense

DD&A

Interest Expense

Adj Income Before Tax

Impairments & Special Charges

Income before Tax

 

(In Millions)

Total Adjusted EBITDA

$   170.0

$          9.0

$   112.5

$         74.5

$          (26.0)

$              9.9

$          (35.9)

 

EBITDA Reconciliation Table for adjusted EBITDA of $190 million

 

Adjusted EBITDA(1)

Equity Comp Expense

DD&A

Interest Expense

Adj Income Before Tax

Impairments & Special Charges

Income before Tax

 

(In Millions)

Total Adjusted EBITDA

$   190.0

$          9.0

$   113.5

$         74.5

$            (7.0)

$             9.9

$          (16.9)

 

(1)  Does not include the favorable impact to adjusted EBITDA from approximately $2 million of used units cost of goods sold from Compression.

 

 

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