TTI
$4.05
Tetra Technologies
$.20
5.19%
Earnings Details
3rd Quarter September 2017
Thursday, November 09, 2017 7:00:00 AM
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Summary

Tetra Technologies (TTI) Recent Earnings

Tetra Technologies (TTI) reported 3rd Quarter September 2017 earnings of $0.04 per share on revenue of $216.4 million. The consensus estimate was a loss of $0.02 per share on revenue of $223.7 million. Revenue grew 22.5% on a year-over-year basis.

Tetra Technologies Inc together with its subsidiaries provides oil and gas services. The Company' business segments are Fluids, Production Testing, Compression, Offshore Services and Maritech.

Results
Reported Earnings
$0.04
Earnings Whisper
-
Consensus Estimate
($0.02)
Reported Revenue
$216.4 Mil
Revenue Estimate
$223.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

TETRA Technologies, Inc. Announces Third Quarter 2017 Results And Provides Updated Total Year 2017 Guidance

TETRA Technologies, Inc. ("TETRA" or the "Company") (TTI) announced consolidated third quarter 2017 earnings per share attributable to TETRA stockholders of $0.03, which compares to consolidated losses of $0.10 per share attributable to TETRA stockholders in the second quarter of 2017 and $0.16 per share in the third quarter of 2016.

TETRA’s adjusted per share results attributable to TETRA stockholders for the third quarter of 2017, excluding Maritech and special items, were earnings per share of $0.04, which compares to adjusted losses per share of $0.04 in the second quarter of 2017 and $0.05 in the third quarter of 2016, also excluding Maritech and special items. Third quarter 2017 revenue of $216 million increased 4% from the second quarter of 2017 and 23% from the third quarter of last year. The sequential improvement in revenue was driven by stronger offshore and onshore Fluids Division and Production Testing Division activity.

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

Third Quarter 2017 Results
Three Months Ended
September 30,
June 30,
September 30,
2017
2017
2016
(In Thousands, Except per Share Amounts)
Revenue
$
216,364
$
208,369
$
176,553
Net income (loss) attributable to TETRA stockholders
3,145
(10,991)
(15,009)
Adjusted EBITDA(1)
45,079
28,537
36,927
GAAP EPS attributable to TETRA stockholders
0.03
(0.10)
(0.16)
Adjusted EPS attributable to TETRA stockholders(1)
0.04
(0.04)
(0.05)
Consolidated net cash provided (used) by operating activities 37,395
19,977
(7,830)
TETRA only adjusted free cash flow(1)
$
17,818
$
6,090
$
(13,821)
(1) Non-GAAP financial measures are reconciled to GAAP in the schedules below.

Highlights include:

Fluids Division revenue increased 5% sequentially and 49% compared to the third quarter of 2016 reflecting the completion of a significant Gulf of Mexico CS Neptune? completion fluids project that started late in the second quarter of 2017. Additionally, stronger US onshore fracking activity resulted in a 46% sequential increase in water management revenue, which was double compared to the same quarter a year ago.

Compression Division revenues decreased 5% over the second quarter reflecting the timing in the shipment of new equipment sales. Overall service fleet utilization improved sequentially by 250 basis points to 81.4%; new equipment orders were $37 million (compared to $12 million in the second quarter of 2017); and the backlog for new equipment sales increased to $53.6 million, the highest since the start of the downturn.

Consolidated net cash provided by operating activities was $37.4 million in the third quarter compared to $20 million in the second quarter of 2017. TETRA only adjusted free cash flow was $17.8 million, an improvement of $11.7 million over the second quarter. (See Schedule G for the reconciliation of TETRA only adjusted free cash flow to GAAP.)

Stuart M. Brightman, TETRA’s President and Chief Executive Officer, stated, "We saw strong positive momentum across all divisions in the third quarter, especially with offshore completion fluids, onshore water management services, production testing and contract compressions services. All our divisions reported improved adjusted EBITDA compared to the second quarter of 2017. GAAP EPS attributable to TETRA stockholders for the quarter was $0.03, a significant improvement sequentially and compared to a year ago.

"Fluids Division revenue for the third quarter of 2017 exceeded $90 million for the first time since the fourth quarter of 2015. Revenue of $93.4 million increased 5% sequentially and 49% compared to the same quarter of 2016. We completed our latest Gulf of Mexico CS Neptune? completion fluid project during the third quarter, and immediately mobilized to the next project, also in the Gulf of Mexico. This project is expected to be completed during November. We also saw a step change increase in water management revenue led by stronger activity in the Permian and the Delaware and MidCon markets. As a result of this significant increase in activity, as well as improved pricing, we have accelerated investments of additional lay flat hose to take advantage of the strong market. International offshore completion fluids sales were also very strong, led by higher activity in the Middle East, and led to the highest revenue for this business since the first quarter of 2014. Fluids Division income before taxes was $24.9 million (26.6% of revenue), while Adjusted EBITDA was $30.8 million (33.0% of revenue).

"Third quarter 2017 Compression Division revenue declined sequentially 5% to $71.6 million, reflecting the timing on the shipment of new equipment. During the quarter, utilization of our service fleet improved sequentially by 250 basis points to 81.4%. Utilization of our larger horsepower equipment (greater than 800 HP, which are typically deployed on gathering systems) was 90.1%, up from 89.6% at the end of the second quarter of 2017. New equipment orders were $37 million, resulting in a book to bill ratio of 4.9 times and a backlog of $53.6 million. All these indicators reflect the growing demand from our customers to build out gathering systems in the Delaware Basin and to add capacity to existing systems, particularly in the Permian Basin. We are also seeing an improving pricing environment. As a result, we have initiated orders for additional large horsepower compressors targeted for gathering systems. Compression Division loss before taxes was $7.0 million (including a favorable $1.3 million non-cash adjustment to the fair market value of the CCLP Series A Preferred units and a $3.0 million favorable insurance settlement for equipment previously damaged), compared to a loss of $6.2 million in the second quarter of 2017. Adjusted EBITDA was $20.9 million (compared to $17.5 million in the second quarter of 2017). On October 19, 2017, CSI Compressco LP declared a cash distribution attributable to the third quarter of 2017 of $0.1875 per outstanding common unit. The distribution coverage ratio was 1.56X for the third quarter of 2017.

"Third quarter 2017 revenue for the Production Testing Division increased sequentially by 19%, to $18.9 million, and by 26% compared to the same quarter of 2016, led by stronger activity for both domestic and international. Production Testing loss before taxes was $1.4 million, while Adjusted EBITDA was positive at $1.1 million (5.6% of revenue). The improvement of third quarter Adjusted EBITDA represented 56% of the incremental revenue over the second quarter, and 39% of the incremental revenue over the same quarter of 2016.

"Our Offshore Services segment revenue improved 12% to $32.7 million compared to the prior year quarter on stronger activity levels and by 16% sequentially, reflecting the seasonality of the business. Profit before taxes was $0.5 million, while Adjusted EBITDA was $3.3 million. Adjusted EBITDA was negatively impacted by approximately $2 million as a result of Hurricane Harvey in the third quarter."

Free Cash Flow and Balance Sheet

Consolidated net cash provided by operating activities for the third quarter of 2017 was $37.4 million, compared to $20 million in the second quarter of 2017. TETRA only adjusted free cash flow in the third quarter of 2017 was $17.8 million, an improvement of $11.7 million from the second quarter of 2017. Consolidated debt was $624 million and TETRA only debt was $117 million, an improvement in TETRA only debt of $20.2 million compared to the end of the second quarter of 2017. As a result of the improved earnings and free cash flow, no amounts were outstanding on TETRA’s revolving credit facility at the end of September. Cash on hand for TETRA only was $13.5 million. With no amounts outstanding on TETRA’s revolving credit facility and $13.5 million of cash on hand, TETRA is positioned to invest opportunistically into the recovering market.

Special items and Maritech

Consolidated third quarter GAAP pre-tax earnings included a favorable impact from non-cash items of $1.2 million (primarily the fair value adjustment of the CSI Compressco Series A Convertible Preferred Units) and $3.0 million insurance recovery for CSI Compressco during the quarter.

Special items, including Maritech, that were excluded to arrive at Adjusted EBITDA for the third quarter, as detailed on Schedule E, include the following:

-- Maritech pre-tax loss of $0.9 million

$1.1 million non-cash income for a fair value adjustment of the CSI Compressco Series A Convertible Preferred units

-- $0.6 million of software implementation training expense for CSI Compressco

-- $0.1 million of other special charges

Additionally, a normalized tax rate of 30% is reflected in Adjusted Net Income, as shown on Schedule E.

Financial Guidance

We expect total year TETRA only adjusted free cash flow to be between $15 million and $30 million in 2017 as we are accelerating investments in lay flat hose to take advantage of strong demand for water transfer services.

No reconciliation of the forecasted range of TETRA only adjusted free cash flow for the full year 2017 to the nearest GAAP measure is included in this release because the reconciliation would require presenting forecasted information for CSI Compressco that is not publicly disclosed.

Conference Call

TETRA will host a conference call to discuss these results today, November 9, 2017, 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 10101596, for one week following the conference call and the archived web call will be available through the Company’s website for thirty days following the conference call.

Investor Contact

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: Special Items Schedule F: Non-GAAP Reconciliation to GAAP Financials Schedule G: Non-GAAP Reconciliation to TETRA Only 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 (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 results of operational business segments for 2017, anticipated benefits from CSI Compressco following the acquisition of Compressor Systems, Inc. (CSI) in 2014, 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, 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, 2016, 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
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
(In Thousands, Except per Share Amounts)
Revenue
$
216,364
$
176,553
$
592,734
$
521,542
Cost of sales, services, and rentals
146,009
115,948
423,128
361,982
Depreciation, amortization, and accretion
29,200
31,852
87,298
98,997
Impairments of long-lived assets
--
--
--
10,927
Insurance Recoveries
(2,352)
--
(2,352)
--
Total cost of revenues
172,857
147,800
508,074
471,906
Gross profit
43,507
28,753
84,660
49,636
General and administrative expense
31,208
28,589
90,896
89,381
Goodwill impairment
--
--
--
106,205
Interest expense, net
14,654
14,325
42,749
43,299
Warrants fair value adjustment income
(47)
--
(11,568)
--
CCLP Series A Preferred fair value adjustment
(1,137)
6,294
(4,340)
6,294
Litigation arbitration award expense (income), net
38
--
(10,064)
--
Other (income) expense, net
(668)
2,130
(94)
3,636
Income (loss) before taxes
(541)
(22,585)
(22,919)
(199,179)
Provision (benefit) for income taxes
797
1,443
4,290
1,804
Net income (loss)
(1,338)
(24,028)
(27,209)
(200,983)
(Income) loss attributable to noncontrolling interest 4,483
9,019
16,900
71,075
Net income (loss) attributable to TETRA stockholders
$
3,145
$
(15,009)
$
(10,309)
$
(129,908)
Basic per share information:
Net income (loss) attributable to TETRA stockholders
$
0.03
$
(0.16)
$
(0.09)
$
(1.53)
Weighted average shares outstanding
114,563
91,746
114,435
85,093
Diluted per share information:
Net income (loss) attributable to TETRA stockholders
$
0.03
$
(0.16)
$
(0.09)
$
(1.53)
Weighted average shares outstanding
114,569
91,746
114,435
85,093

Schedule B: Financial Results By Segment (Unaudited)

Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
(In Thousands)
Revenue by segment:
Fluids Division
$
93,442
$
62,610
$
255,483
$
182,556
Production Testing Division
18,927
15,065
56,376
48,320
Compression Division
71,611
70,718
212,482
228,504
Offshore Division
Offshore Services
32,668
29,239
69,290
65,604
Maritech
21
238
427
575
Intersegment eliminations
--
(297)
--
(813)
Offshore Division total
32,689
29,180
69,717
65,366
Eliminations and other
(305)
(1,020)
(1,324)
(3,204)
Total revenues
$
216,364
$
176,553
$
592,734
$
521,542
Gross profit (loss) by segment:
Fluids Division
$
31,359
$
15,369
$
67,828
$
29,445
Production Testing Division
404
(2,032)
(374)
(8,054)
Compression Division
11,015
12,353
24,711
33,035
Offshore Division
Offshore Services
1,592
3,459
(5,504)
(763)
Maritech
(737)
(297)
(1,675)
(3,709)
Intersegment eliminations
--
--
--
--
Offshore Division total
855
3,162
(7,179)
(4,472)
Corporate overhead and eliminations
(126)
(99)
(326)
(318)
Total gross profit
$
43,507
$
28,753
$
84,660
$
49,636
Income (loss) before taxes by segment:
Fluids Division
$
24,891
$
8,835
$
60,953
$
8,931
Production Testing Division
(1,405)
(4,222)
(6,565)
(27,924)
Compression Division
(7,014)
(14,862)
(27,527)
(123,602)
Offshore Division
Offshore Services
452
1,879
(12,328)
(5,792)
Maritech
(914)
(643)
(1,698)
(4,664)
Intersegment eliminations
--
--
--
--
Offshore Division total
(462)
1,236
(14,026)
(10,456)
Corporate overhead and eliminations
(16,551)
(13,572)
(35,754)
(46,128)
Total income (loss) before taxes
$
(541)
$
(22,585)
$
(22,919)
$
(199,179)

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

Schedule C: Consolidated Balance Sheet (Unaudited)

September 30, 2017 December 31, 2016
(In Thousands)
Balance Sheet:
Cash (excluding restricted cash)
$
20,850
$
29,840
Accounts receivable, net
152,872
114,284
Inventories
122,045
106,546
Other current assets
19,664
25,121
PP&E, net
895,870
945,451
Other assets
90,109
94,298
Total assets
$
1,301,410
$
1,315,540
Current portion of decommissioning liabilities
$
492
$
1,451
Other current liabilities
140,106
115,434
Long-term debt (1)
624,126
623,730
Long-term portion of decommissioning liabilities 56,025
54,027
CCLP Series A Preferred
68,309
77,062
Warrant liability
6,936
18,503
Other long-term liabilities
22,906
24,867
Equity
382,510
400,466
Total liabilities and equity
$
1,301,410
$
1,315,540
(1) Please see Schedule D for the separate 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 note, 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.

September 30, 2017
December 31, 2016
(In Thousands)
TETRA
Bank revolving line of credit facility $
--
$
3,229
TETRA 11% Senior Note
117,355
116,411
TETRA total debt
117,355
119,640
Less current portion
--
--
TETRA total long-term debt
$
117,355
$
119,640
CSI Compressco LP
Bank Credit Facility
$
218,977
$
217,467
7.25% Senior Notes
287,794
286,623
Total debt
506,771
504,090
Less current portion
--
--
CCLP total long-term debt
$
506,771
$
504,090
Consolidated total long-term debt
$
624,126
$
623,730

Non-GAAP Financial Measures

In addition to financial results determined in accordance with GAAP, this news 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; consolidated and segment adjusted EBITDA; and TETRA only 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 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.

Adjusted EBITDA (and Adjusted EBITDA as a percent of revenue) is defined as earnings before interest, taxes, depreciation, amortization, impairments and special charges or credits, 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 defined 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 and debt restructuring costs. Management uses this supplemental financial measure to:

-- assess the Company’s ability to retire debt;

-- evaluate the capacity of the Company to further invest and grow; and

-- to measure the performance of the Company as compared to its peer group of companies.

TETRA only adjusted free cash flow does not necessarily imply residual cash flow available for discretionary expenditures, as it excludes cash requirements for debt service or other non-discretionary expenditures that are not deducted.

TETRA net debt is defined as the sum of 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, including Maritech

Three Months Ended
September 30, 2017
Income
Provision
Noncont.
Net Income
Diluted EPS
(Loss) Before
(Benefit) for Interest
Attributable
Tax
Tax
to TETRA
Stockholders
(In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech $
(204)
$
(60)
$
(4,934)
$
4,790
$
0.04
Severance expense
(24)
(7)
(5)
(12)
0.00
Stock warrant fair value adjustment
47
14
--
33
0.00
CCLP Series A Preferred fair value adjustment
1,137
341
827
(31)
0.00
Software Implementation
(583)
(175)
(371)
(37)
0.00
Effect of deferred tax valuation allowance and other related tax adj.
--
684
--
(684)
(0.01)
Maritech profit (loss)
(914)
--
--
(914)
(0.01)
Net Income (loss) attributable to TETRA stockholders, as reported
$
(541)
$
797
$
(4,483)
$
3,145
$
0.03
Three Months Ended
June 30, 2017
Income
Provision
Noncont.
Net Income
Diluted EPS
(Loss) Before
(Benefit) for Interest
(Loss)
Tax
Tax
Attributable
to TETRA
Stockholders
(In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech $
(17,036)
$
(5,110)
$
(6,983)
$
(4,943)
$
(0.04)
Severance expense
(589)
(176)
--
(413)
0.00
Stock warrant fair value adjustment
5,545
1,663
--
3,882
0.03
Allowance for bad debt
(198)
(59)
--
(139)
0.00
CCLP Series A Preferred fair value adjustment
4,834
1,450
3,478
(94)
0.00
Legal award
(3,255)
(977)
--
(2,278)
(0.02)
Insurance deductible
(200)
(60)
--
(140)
0.00
Software Implementation
(196)
(59)
(123)
(14)
0.00
Effect of deferred tax valuation allowance and other related tax adj.
--
6,731
--
(6,731)
(0.06)
Maritech profit (loss)
(121)
--
--
(121)
--
Net Income (loss) attributable to TETRA stockholders, as reported
$
(11,216)
$
3,403
$
(3,628)
$
(10,991)
$
(0.10)
Three Months Ended
September 30, 2016
Income
Provision
Noncont.
Net Income
Diluted EPS
(Loss) Before
(Benefit) for Interest
(Loss)
Tax
Tax
Attributable
to TETRA
Stockholders
(In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech $
(11,428)
$
(3,428)
$
(3,019)
$
(4,981)
$
(0.05)
Severance expense
(210)
(63)
(33)
(114)
--
Debt refinancing gain on early retirement
397
119
309
(31)
--
Allowance for doubtful accounts
(1,361)
(408)
(416)
(537)
(0.01)
Equity related expenses
(9,340)
(2,802)
(5,860)
(678)
(0.01)
Maritech profit (loss)
(643)
--
--
(643)
(0.01)
Net Income (loss) attributable to TETRA stockholders, as reported
$
(22,585)
$
1,443
$
(9,019)
(15,009)
$
(0.16)

Schedule F: Non-GAAP Reconciliation to GAAP Financials

Three Months Ended
September 30, 2017
Net
Tax
Income
Impairments
Adjusted
Interest
Adjusted
Equity
OmnibusAdjusted
Income
Provision
(Loss)
& Special
Income
Expense
Depreciation
Comp.
Equity EBITDA
(Loss),
Before
Items
(Loss)
&
Expense
as
Tax, as
Before
Amortization
reported
Reported
Tax
(In Thousands)
Fluids Division
$
24,891
$
12
$
24,903
$
(8)
$
5,937
$
--
$
--
$
30,832
Production Testing Division
(1,405)
--
(1,405)
(47)
2,518
--
--
1,066
Compression Division
(7,014)
(545)
(7,559)
10,811
17,361
261
--
20,874
Offshore Services Segment
452
4
456
--
2,886
--
--
3,342
Eliminations and other
--
2
2
(1)
(4)
--
--
(3)
Subtotal
16,924
(527)
16,397
10,755
28,698
261
--
56,111
Corporate and other
(16,551)
(46)
(16,597)
3,899
129
1,537
--
(11,032)
TETRA excluding Maritech
373
(573)
(200)
14,654
28,827
1,798
--
45,079
Maritech
(914)
--
(914)
--
373
--
--
(541)
Total TETRA
$
(1,338)
$
797
$
(541)
$
(573)
$
(1,114)
$
14,654
$
29,200
$
1,798
$
--
$
44,538
June 30, 2017
Net
Tax
Income
Impairments
Adjusted
Adjusted
Adjusted
Equity
OmnibusAdjusted
Income
Provision
(Loss)
& Special
Income
Interest
Depreciation
Comp.
Equity EBITDA
(Loss),
Before
Items
(Loss)
Expense,
&
Expense
as
Tax, as
Before
Net
Amortization
reported
Reported
Tax
(In Thousands)
Fluids Division
$
15,786
$
--
$
15,786
$
27
$
5,870
$
--
$
--
$
21,683
Production Testing Division
(3,091)
5
(3,086)
(125)
2,599
--
--
(612)
Compression Division
(6,180)
(4,638)
(10,818)
10,184
17,204
935
17,505
Offshore Services Segment
(6,445)
3,658
(2,787)
--
2,463
--
--
(324)
Eliminations and other
4
--
4
2
(7)
--
--
(1)
Subtotal
74
(975)
(901)
10,088
28,129
935
--
38,251
Corporate and other
(11,169)
(4,966)
(16,135)
4,240
118
2,063
--
(9,714)
TETRA excluding Maritech
(11,095)
(5,941)
(17,036)
14,328
28,247
2,998
--
28,537
Maritech
(121)
--
(121)
--
373
--
--
252
Total TETRA
$
(14,619)
$
3,403
$
(11,216)
$
(5,941)
$
(17,157)
$
14,328
$
28,620
$
2,998
$
--
$
28,789
Three Months Ended
September 30, 2016
Net
Tax
Income
Impairments
Adjusted
Adjusted
Depreciation
Equity
OmnibusAdjusted
Income
Provision
(Loss)
& Special
Income
Interest
&
Comp.
Equity EBITDA
(Loss),
Before
Items
(Loss)
Expense,
Amortization
Expense
as
Tax, as
Before
Net
reported
Reported
Tax
(In Thousands)
Fluids Division
$
8,835
$
701
$
9,536
$
8
$
6,873
$
--
$
--
$
16,417
Production Testing Division
(4,222)
26
(4,196)
(147)
3,891
--
--
(452)
Compression Division
(14,862)
10,497
(4,365)
9,763
17,830
774
--
24,002
Offshore Services Segment
1,879
11
1,890
--
2,793
--
--
4,683
Eliminations and other
(2)
--
(2)
--
(4)
--
--
(6)
Subtotal
(8,372)
11,235
2,863
9,624
31,383
774
--
44,644
Corporate and other
(13,570)
(721)
(14,291)
4,699
101
1,774
--
(7,717)
TETRA excluding Maritech
(21,942)
10,514
(11,428)
14,323
31,484
2,548
--
36,927
Maritech
(643)
--
(643)
2
368
--
--
(273)
Total TETRA
$
(24,028)
$
1,443
$
(22,585)
$
10,514
$
(12,071)
$
14,325
$
31,852
$
2,548
$
--
$
36,654

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

Three Months Ended
Nine Months Ended
September
June
September
September
September
30, 2017
30, 2017
30, 2016
30, 2017
30, 2016
(In Thousands)
Consolidated
Net cash provided (used) by operating activities $
37,395
$
19,977
$
(7,830)
$
36,834
$
27,226
ARO settlements
53
23
324
550
3,769
Capital expenditures, net of sales proceeds
(11,538)
(11,451)
(5,727)
(27,801)
(12,444)
Consolidated adjusted free cash flow
25,910
8,549
(13,233)
9,583
18,551
CSI Compressco LP
Net cash provided by operating activities
13,218
9,533
9,958
24,572
45,522
Capital expenditures, net of sales proceeds
(2,236)
(4,262)
(3,796)
(13,713)
(7,602)
CSI Compressco free cash flow
10,982
5,271
6,162
10,859
37,920
TETRA Only
Cash provided (used) by operating activities (1) 24,177
10,444
(17,788)
14,294
(18,296)
ARO settlements
53
23
324
550
3,769
Capital expenditures, net of sales proceeds (1)
(9,302)
(7,189)
(1,931)
(16,120)
(4,842)
Free cash flow before ARO settlements
14,928
3,278
(19,395)
(1,276)
(19,369)
Distributions from CSI Compressco LP
2,890
2,812
5,574
11,337
16,724
TETRA only adjusted free cash flow
$
17,818
$
6,090
$
(13,821)
$
10,061
$
(2,645)
(1) TETRA only cash from operating activities and capital expenditures, net, for the nine months ended September 30, 2017, include the elimination of an intercompany equipment sale of $2.0 million.

Schedule H: Non-GAAP Reconciliation of TETRA Net Debt

The cash and debt positions of TETRA and CSI Compressco LP as of September 30, 2017, are shown below. TETRA and CSI Compressco LP’s credit and 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.

September 30, 2017
TETRA
CCLP
Consolidated
(In Millions)
Non-restricted cash
$
13.5
$
7.4
$
20.9
Carrying value of long-term debt:
Revolver debt outstanding
--
219.0
219.0
Senior Notes outstanding
117.4
287.8
405.2
Net debt
$
103.9
$
499.4
$
603.3

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SOURCE TETRA Technologies, Inc.

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