TTI
$3.81
Tetra Technologies
($.07)
(1.80%)
Earnings Details
4th Quarter December 2016
Wednesday, March 01, 2017 7:15:00 AM
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Summary

Tetra Technologies (TTI) Recent Earnings

Tetra Technologies (TTI) reported a 4th Quarter December 2016 loss of $0.16 per share on revenue of $173.2 million. The consensus estimate was a loss of $0.11 per share on revenue of $174.0 million. Revenue fell 32.8% compared to the same quarter a year ago.

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
($0.16)
Earnings Whisper
-
Consensus Estimate
($0.11)
Reported Revenue
$173.2 Mil
Revenue Estimate
$174.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

TETRA Technologies, Inc. Announces Fourth Quarter and Full Year 2016 Results

TETRA Technologies, Inc. ("TETRA" or the "Company") (TTI) today announced a consolidated fourth quarter 2016 net loss per share attributable to TETRA stockholders of $0.33, which compares to a net loss per share of $0.16 in the third quarter of 2016 and net loss per share of $1.84 in the fourth quarter of 2015.

TETRA’s adjusted per share results attributable to TETRA stockholders for the fourth quarter of 2016, excluding Maritech and special items, were a loss of $0.16, which compares to adjusted loss per share of $0.05 in the third quarter of 2016 and adjusted earnings per share of $0.01 in the fourth quarter of 2015, also excluding Maritech and special items. Fourth quarter 2016 revenue of $173 million decreased 2% from the third quarter of 2016. Compared to the fourth quarter of 2015 revenue declined 33% primarily as a result of reduced activity levels in the Gulf of Mexico and the lower rig count. (Adjusted diluted earnings/(loss) per share is a non-GAAP financial measure that is reconciled to the nearest GAAP measure in the accompanying schedules.)

Fourth Quarter 2016 Results
Three Months Ended
December 31, 2016
September 30, 2016
December 31, 2015
(In Thousands, Except per Share Amounts)
Revenue
$
173,222
$
176,553
$
257,590
Net income (loss) attributable to TETRA stockholders
(31,554)
(15,009)
(146,415)
Adjusted EBITDA(1)
14,946
36,927
55,486
EPS attributable to TETRA stockholders
(0.33)
(0.16)
(1.84)
Adjusted diluted EPS attributable to TETRA stockholders(1)
(0.16)
(0.05)
0.01
Consolidated net cash provided (used) by operating activities 28,316
(7,933)
77,724
TETRA only adjusted free cash flow(1)
$
16,028
$
(13,924)
$
52,448
(1)
Non-GAAP financial measures are reconciled to GAAP in the schedules below.

Highlights of the 2016 fourth quarter include:

Fluids revenue increased sequentially by 2% despite the deferral of a significant Gulf of Mexico TETRA CS Neptune? completion fluids project from the fourth quarter to the first half of 2017. The sequential increase was driven by strong U.S. onshore activity and improved international offshore volumes.

Compression activity is reflecting signs of a recovery with quarter end utilization increasing sequentially by 120 basis points to 76.4%, operating horsepower in service increasing sequentially by 3,368 horsepower, and with the receipt of $20 million in orders for new equipment, the highest since late 2014.

Compression results were negatively impacted by $2.6 million of cost overruns on a third party equipment project that was completed in the fourth quarter, the first such cost overrun for Compression in recent years.

Including CSI Compressco, the carrying value of consolidated long-term debt at the end of 2016 was $624 million compared to $738 million as of September 30, 2016. In December, TETRA completed a $115 million equity offering to reduce debt. TETRA’s net debt was reduced from $233 million to $111 million from the equity proceeds and cash from operating activities over the same time period. (See Schedule H for the reconciliation of TETRA net debt to GAAP.)

Consolidated net cash provided by operating activities for the fourth quarter of 2016 was $28 million and for full year 2016 was $54 million. TETRA only adjusted free cash flow in the fourth quarter was $16 million. TETRA only adjusted free cash flow for the full year was $12 million, at the upper end of the $5 million to $15 million guidance previously provided. (See Schedule G for the reconciliation of TETRA only free cash flow to GAAP.)

2016 Results
Twelve months ended
December 31, 2016
December 31, 2015
(In Thousands, Except per Share Amounts)
Revenue
$
694,764
$
1,130,145
Net income (loss) attributable to TETRA stockholders
(161,462)
(126,183)
Adjusted EBITDA(1)
104,243
257,740
EPS attributable to TETRA stockholders
(1.85)
(1.59)
Adjusted diluted EPS attributable to TETRA stockholders(1) (0.60)
0.32
Consolidated net cash provided by operating activities
53,980
195,951
TETRA only adjusted free cash flow(1)
$
11,821
$
119,753
(1)
Non-GAAP financial measures are reconciled to GAAP in the schedules below.

Stuart M. Brightman, TETRA’s President and Chief Executive Officer, stated, "We believe we are seeing the initial impact of a recovering U.S. onshore market with another strong sequential quarterly improvement in the Fluids Division’s water management operations, improving utilization of the compression services fleet, particularly at the higher horsepower equipment size coupled with related favorable pricing trends and higher orders for new compression equipment. Based on feedback from our customers, we anticipate that a recovery in the deep water Gulf of Mexico will lag the onshore recovery. We are entering 2017 with one significant TETRA CS Neptune fluid project scheduled for the first half of 2017 and expect to complete another such project that was started in 2016.

"Fluids Division revenue for the fourth quarter of 2016 was $64 million compared to $62.6 million in the third quarter of 2016. The strong sequential improvement in U.S. onshore activity, the second consecutive strong quarterly sequential improvement, was driven by organic water management and onshore fluids distribution facilities investments, in addition to stronger international offshore fluids activity. This improvement offset the lack of a TETRA CS Neptune fluid project that was expected in the fourth quarter but was deferred into the first half of 2017. The improving activity levels in the U.S. onshore water management business are occurring throughout several of the shale basins, but are led primarily by the Permian Basin and MidCon markets. Fluids Division income before taxes was $1.5 million while adjusted EBITDA was $8.6 million. Income before taxes as a percentage of revenue was 2.3% while adjusted EBITDA as a percentage of revenues was 13.4%, without the benefit of a TETRA CS Neptune fluids project.

"Fourth quarter 2016 Compression Division revenue increased sequentially 17% to $83 million, mainly as a result of higher equipment sales. Compression Division income before taxes was a loss of $11.8 million while adjusted EBITDA was $17.7 million, which was negatively impacted by $2.6 million of unusual costs related to equipment sales on a third party equipment project and a $0.7 million inventory adjustment. Quarter end utilization was 76.4%, compared to 75.2% in the third quarter, and reflected the first sequential improvement in utilization since the first quarter of 2015. Large horsepower equipment (greater than 800 HP) utilization increased from 84.4% in the third quarter to 87.5% in the fourth quarter. New equipment orders were $20 million, the highest quarterly new equipment orders received since late 2014, and we believe the level of orders reflect signs of a recovering compression market. On January 20, 2017, CSI Compressco LP declared cash distributions attributable to the fourth quarter of 2016 of $0.3775 per common unit, unchanged from the distribution attributable to the third quarter of 2016. This distribution resulted in a coverage ratio of 0.68x for the fourth quarter of 2016.

"Fourth quarter 2016 revenue for the Production Testing Division improved sequentially by 2% to $15.3 million, led by stronger activity levels in Canada and Saudi Arabia. Production Testing loss before taxes was $7.5 million while adjusted EBITDA was a loss of $0.5 million. Going into 2017 we expect to see additional improvements in activity in North America and internationally and hope to be able to better manage pricing levels in the second half of 2017.

"Our Offshore Service segment reported revenue of $12 million. Loss before taxes was $6.2 million while adjusted EBITDA was a loss of $2.3 million, reflecting the seasonal fourth quarter ramp down of activity. We are currently bidding on many decommissioning projects for the upcoming season and believe the preliminary customer inquiries and the committed backlog trends for 2017 are encouraging."

Free Cash Flow and Balance Sheet

TETRA only adjusted free cash flow in the fourth quarter of 2016 was $16 million, reflecting the seasonality in working capital. Consolidated net cash provided by operating activities for 2016 was $54 million. Total year TETRA only adjusted free cash flow, excluding Maritech and reflecting the distributions received from CSI Compressco, was $12 million and was at the upper end of our previously communicated guidance of $5 million to $15 million. TETRA only days sales outstanding (excluding CSI Compressco LP) improved from 73 days at the end of the third quarter to 70 days at the end of December despite the continued financial challenges from our customers and their attempts to defer payments to manage their working capital.

During the fourth quarter, TETRA completed an equity offering that resulted in gross proceeds of $115 million. As a result of this equity offering and from the free cash flow generated during the quarter, TETRA only outstanding net debt was reduced from $233 million to $111 million. Additionally, during December, 2016 TETRA amended the leverage covenant on its revolving credit facility from 4.0X to 5.0X through December 31, 2017.

Special items and Maritech

Maritech reported pre-tax income of $2.8 million in the fourth quarter of 2016 due to the receipt of escrowed funds held from prior sales of properties with abandonment obligations.

Consolidated special items incurred in the fourth quarter were $8.7 million, of which only $1.5 million were cash charges. Special items include:

$1.8 million net gain primarily reflecting a fair value adjustment of the CSI Compressco Series A Convertible Preferred units

-- $1.0 million of expenses related to the December TETRA equity issuance

-- $2.1 million charge reflecting a fair value adjustment of the outstanding warrants

$7.2 million of asset impairments related to damaged CSI Compressco compressor equipment, certain Offshore Services cutting tools and obsolete assets in Production Testing

-- $0.3 million net gain from other debt related items

-- $0.5 million of other special charges

Financial Guidance

Based on TETRA’s anticipation of a continued recovery in the U.S. Onshore markets and a delayed recovery in the offshore markets, we expect total year TETRA only free cash flow to improve from $12 million in 2016 to between $30 million and $50 million in 2017.

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.

On December 16, 2016 an arbitration panel in Houston, Texas issued a ruling in favor of TETRA for TETRA’s claims against an engineering company related to TETRA’s El Dorado, Arkansas calcium chloride manufacturing facility. Cash proceeds of $12.8 million for the ruling were received by TETRA in January, 2017 and will be reflected in TETRA’s first quarter 2017 results.

Conference Call

TETRA will host a conference call to discuss these results today, March 1 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.

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 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 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 CSI Compressco 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 Compressco 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 (and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 when it is filed on or about the date hereof), 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
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
(In Thousands, Except per Share Amounts)
Revenues
$
173,222
$
257,590
$
694,764
$
1,130,145
Cost of sales, services, and rentals
133,598
171,981
495,580
741,736
Depreciation, amortization, and accretion
30,598
38,696
129,595
155,015
Impairments of long-lived assets
7,245
44,158
18,172
44,158
Total cost of revenues
171,441
254,835
643,347
940,909
Gross profit
1,781
2,755
51,417
189,236
General and administrative expense
26,583
44,161
115,964
157,812
Goodwill impairment
--
177,006
106,205
177,006
Interest expense, net
15,327
14,244
58,626
54,475
Warrants fair value adjustment
2,106
--
2,106
--
CCLP Series A Preferred fair value adjustment
(1,891)
--
4,404
--
Other (income) expense, net
(2,433)
583
1,202
1,706
Income (loss) before taxes
(37,911)
(233,239)
(237,090)
(201,763)
Provision (benefit) for income taxes
499
(1,293)
2,303
7,704
Net income (loss)
(38,410)
(231,946)
(239,393)
(209,467)
Net (income) loss attributable to noncontrolling interest 6,856
85,531
77,931
83,284
Net income (loss) attributable to TETRA stockholders
$
(31,554)
$
(146,415)
$
(161,462)
$
(126,183)
Basic per share information:
Net income (loss) attributable to TETRA stockholders
$
(0.33)
$
(1.84)
$
(1.85)
$
(1.59)
Weighted average shares outstanding
95,992
79,380
87,286
79,169
Diluted per share information:
Net income (loss) attributable to TETRA stockholders
$
(0.33)
$
(1.84)
$
(1.85)
$
(1.59)
Weighted average shares outstanding
95,992
79,380
87,286
79,169
Schedule B: Financial Results By Segment (Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2016
2015
2016
2015
(In Thousands)
Revenues by segment:
Fluids Division
$
64,039
$
91,194
$
246,595
$
424,044
Production Testing Division
15,298
33,017
63,618
133,904
Compression Division
82,870
99,369
311,374
457,639
Offshore Division
Offshore Services
11,921
36,798
77,525
122,194
Maritech
176
63
751
2,438
Intersegment eliminations
(90)
(1,108)
(903)
(5,128)
Offshore Division total
12,007
35,753
77,373
119,504
Eliminations and other
(992)
(1,743)
(4,196)
(4,946)
Total revenues
$
173,222
$
257,590
$
694,764
$
1,130,145
Gross profit (loss) by segment:
Fluids Division
$
7,443
$
4,545
$
36,888
$
111,969
Production Testing Division
(5,263)
(10,749)
(13,317)
(3,046)
Compression Division
4,646
7,035
37,681
73,135
Offshore Division
Offshore Services
(4,811)
4,585
(5,574)
10,602
Maritech
(138)
(2,493)
(3,847)
(2,523)
Intersegment eliminations
--
--
--
--
Offshore Division total
(4,949)
2,092
(9,421)
8,079
Corporate overhead and eliminations
(96)
(168)
(414)
(901)
Total gross profit
$
1,781
$
2,755
$
51,417
$
189,236
Income (loss) before taxes by segment:
Fluids Division
$
1,499
$
(2,746)
$
10,430
$
80,789
Production Testing Division
(7,547)
(50,759)
(35,471)
(55,720)
Compression Division
(11,821)
(152,772)
(136,327)
(146,798)
Offshore Division
Offshore Services
(6,233)
1,782
(12,025)
(195)
Maritech
2,823
(2,846)
(1,841)
(3,833)
Intersegment eliminations
--
--
--
--
Offshore Division total
(3,410)
(1,064)
(13,866)
(4,028)
Corporate overhead and eliminations
(16,632)
(25,898)
(61,856)
(76,006)
Total income (loss) before taxes
$
(37,911)
$
(233,239)
$
(237,090)
$
(201,763)
Please note that the above results by segment include special items. Please see Schedule E for details of those special items.
Schedule C: Consolidated Balance Sheet (Unaudited)
December 31, 2016 December 31, 2015
(In Thousands)
Balance Sheet:
Cash (excluding restricted cash)
$
29,840
$
23,057
Accounts receivable, net
114,284
184,172
Inventories
106,546
117,009
Other current assets
25,121
29,791
PP&E, net
945,451
1,048,004
Other assets
94,298
234,169
Total assets
$
1,315,540
$
1,636,202
Current portion of decommissioning liabilities
$
1,451
$
14,570
Other current liabilities
115,434
170,676
Long-term debt (1)
623,730
853,228
Long-term portion of decommissioning liabilities 54,027
42,879
CCLP Series A Preferred
77,062
--
Warrant liability
18,503
--
Other long-term liabilities
24,867
40,669
Equity
400,466
514,180
Total liabilities and equity
$
1,315,540
$
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, 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.
December 31, 2016
December 31, 2015
(In Thousands)
TETRA
Bank revolving line of credit facility
$
3,229
$
21,572
TETRA Senior Notes at various rates
116,411
264,998
Other debt
--
50
TETRA total debt
119,640
286,620
Less current portion
--
(50)
TETRA total long-term debt
$
119,640
$
286,570
CSI Compressco LP
CCLP Bank Credit Facility
$
217,467
$
229,555
CCLP 7.25% Senior Notes
286,623
337,103
CCLP total debt
504,090
566,658
Less current portion
--
--
CCLP total long-term debt
$
504,090
$
566,658
Consolidated total long-term debt
$
623,730
$
853,228

Non-GAAP Financial Measures

In addition to financial results determined in accordance with GAAP, this press release includes the following non-GAAP financial measures for the Company: net debt, adjusted consolidated and segment income (loss) before taxes, excluding the Maritech segment and special items; 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 items 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 items, 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 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
Three Months Ended
December 31, 2016
Income
Provision
Noncont.
Net Income
EPS
(Loss) Before
(Benefit) for
Interest
Attributable to
Tax
Tax
TETRA
Stockholders
(In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech $
(32,000)
$
(9,599)
$
(7,012)
$
(15,389)
$
(0.16)
Asset impairments, including inventory adjustments
(7,245)
(2,174)
(1,373)
(3,698)
(0.04)
Non-Maritech ARO adjustment
(282)
(85)
--
(197)
0.00
Severance expense
(179)
(54)
--
(125)
0.00
Debt refinancing gain, net
346
104
319
(77)
0.00
Convertible Series A Preferred offering cost and fair value adjustments
1,806
542
1,210
54
0.00
Common stock warrants issuance cost and fair value adjustments
(3,061)
(918)
--
(2,143)
(0.02)
Allowance for doubtful accounts for significant bankruptcies
(119)
(36)
--
(83)
0.00
Effect of deferred tax valuation allowance and other related tax adj.
--
12,719
--
(12,719)
(0.14)
Maritech profit (loss)
2,823
--
--
2,823
0.03
Net Income (loss) attributable to TETRA stockholders, as reported
$
(37,911)
$
499
$
(6,856)
$
(31,554)
$
(0.33)
December 31, 2015
Income
Provision
Noncont.
Net Income
EPS
(Loss) Before
(Benefit) for
Interest
Attributable to
Tax
Tax
TETRA
Stockholders
(In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech $
658
$
199
$
(491)
$
950
$
0.01
Asset impairment, including inventory adjustments
(44,182)
(13,255)
(6,612)
(24,315)
(0.30)
Goodwill writeoff
(177,006)
(53,102)
(78,151)
(45,753)
(0.57)
Effect of deferred tax valuation allowance and other related tax adj.
--
67,824
--
(67,824)
(0.84)
Allowance for doubtful accounts for significant bankruptcies
(9,862)
(2,959)
(277)
(6,626)
(0.10)
Maritech profit (loss)
(2,847)
--
--
(2,847)
(0.04)
Net Income (loss) attributable to TETRA stockholders, as reported
$
(233,239)
$
(1,293)
$
(85,531)
$
(146,415)
$
(1.84)
Twelve Months Ended
December 31, 2016
Income
Provision
Noncont.
Net Income
EPS
(Loss)
(Benefit) for
Interest
Attributable to
Before Tax
Tax
TETRA
Stockholders
(In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech $
(94,831)
$
(28,447)
$
(14,433)
$
(51,951)
$
(0.60)
Asset impairments, including inventory adjustments
(18,280)
(5,484)
(5,838)
(6,958)
(0.08)
Non-Maritech ARO adjustment
(282)
(85)
--
(197)
0.00
Severance expense
(1,737)
(521)
(341)
(875)
(0.01)
Goodwill writeoff
(106,205)
(31,862)
(52,412)
(21,931)
(0.25)
Debt refinancing cost, net
(1,839)
(552)
159
(1,446)
(0.02)
Convertible Series A Preferred offering cost and fair value adjustments
(7,534)
(2,260)
(4,650)
(624)
(0.01)
Common stock warrants issuance cost and fair value adjustments
(3,061)
(918)
--
(2,143)
(0.02)
Allowance for doubtful accounts for significant bankruptcies
(1,480)
(444)
(416)
(620)
(0.01)
Effect of deferred tax valuation allowance and other related tax adj.
--
72,876
--
(72,876)
(0.83)
Maritech profit (loss)
(1,841)
--
--
(1,841)
(0.02)
Net Income (loss) attributable to TETRA stockholders, as reported
$
(237,090)
$
2,303
$
(77,931)
$
(161,462)
$
(1.85)
December 31, 2015
Income
Provision
Noncont.
Net Income
EPS
(Loss)
(Benefit) for
Interest
Attributable to
Before Tax
Tax
TETRA
Stockholders
(In Thousands, Except per Share Amounts)
Income attributable to TETRA stockholders, excluding unusual charges & Maritech
$
39,513
$
11,802
$
1,962
$
25,749
$
0.32
Transaction related costs
(208)
(62)
(73)
(73)
0.00
Asset Impairment, including inventory adjustments
(44,158)
(13,247)
(6,612)
(24,299)
(0.30)
Goodwill writeoff
(177,006)
(53,102)
(78,193)
(45,711)
(0.57)
Effect of Deferred Tax Valuation Allowance and other related tax adj
--
67,082
--
(67,082)
(0.85)
Allowance for doubtful accounts for significant bankruptcies
(16,071)
(4,769)
(368)
(10,934)
(0.14)
Maritech profit (loss)
(3,833)
--
--
(3,833)
(0.05)
Net Income (loss) attributable to TETRA stockholders, as reported
$
(201,763)
$
7,704
$
(83,284)
$
(126,183)
$
(1.59)
Schedule F: Non-GAAP Reconciliation to GAAP Financials
Three Months Ended
December 31, 2016
Net Income
Tax
Income
Impairments
Adjusted
Adjusted
Adjusted
Equity Comp. Omnibus
Adjusted
(Loss), as
Provision
(Loss)
& Special
Income
Interest
Depreciation
Expense
Equity (3)
EBITDA
reported
Before
Charges
(Loss)
Expense,
&
Tax, as
Before
Net(1)
Amortization (2)
Reported
Tax
(In Thousands)
Fluids Division
$
1,499
$
634
$
2,133
$
12
$
6,460
$
--
$
--
$
8,605
Production Testing Division
(7,547)
3,596
(3,951)
(115)
3,579
--
--
(487)
Compression Division
(11,821)
(268)
(12,089)
10,303
17,111
792
1,576
17,693
Offshore Services Segment
(6,233)
1,216
(5,017)
--
2,689
--
--
(2,328)
Eliminations and other
5
--
5
--
(5)
--
--
--
Subtotal
(24,097)
5,178
(18,919)
10,200
29,834
792
1,576
23,483
Corporate and other
(16,637)
3,558
(13,079)
4,609
103
1,406
(1,576)
(8,537)
TETRA excluding Maritech
(40,734)
8,736
(31,998)
14,809
29,937
2,198
--
14,946
Maritech
2,823
--
2,823
--
379
--
--
3,202
Total TETRA
$
(38,410)
$
499
$
(37,911)
$
8,736
$
(29,175)
$
14,809
$
30,316
$
2,198
$
--
$
18,148
December 31, 2015
Net Income
Tax
Income
Impairments
Adjusted
Interest
Depreciation
Adjusted
Omnibus
Adjusted
(Loss), as
Provision
(Loss)
& Special
Income
Expense,
&
Equity Comp. Equity
EBITDA
reported
Before Tax, as
Charges
(Loss)
Net
Amortization
Expense (4)
Reported
Before
Tax
(In Thousands)
Fluids Division
$
(2,745)
$
19,958
$
17,213
$
(158)
$
8,859
$
--
$
--
$
25,914
Production Testing Division
(50,759)
49,893
(866)
(98)
5,664
--
--
4,700
Compression Division
(152,772)
151,896
(876)
8,806
20,643
505
--
29,078
Offshore Services Segment
1,782
795
2,577
--
2,928
--
--
5,505
Eliminations and other
4
--
4
--
(4)
--
--
--
Subtotal
(204,490)
222,542
18,052
8,550
38,090
505
--
65,197
Corporate and other
(25,902)
8,508
(17,394)
5,691
171
1,821
--
(9,711)
TETRA excluding Maritech
(230,392)
231,050
658
14,241
38,261
--
--
55,486
Maritech
(2,847)
--
(2,847)
3
435
--
--
(2,409)
Total TETRA
$
(231,946)
$
(1,293)
$
(233,239)
$
231,050
$
(2,189)
$
14,244
$
38,696
$
2,326
$
--
$
53,077
(1)
Adjusted interest expense, net, for the three month period ended December 31, 2016, excludes $0.5 million of certain interest expense which is included as a special charge.
(2)
Adjusted depreciation & amortization, net, for the three month period ended December 31, 2016 excludes $0.3 million of certain accretion expense which is included as a special charge.
(3)
Reimbursement from CCLP under Omnibus Agreement for 2016 Q4 that was settled with common units.
(4)
Adjusted equity compensation expense, net for the three month period ended December 31, 2015, excludes $6.7 million one-time adjustment
Twelve Months Ended
December 31, 2016
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(1) Adjusted
Equity Comp. Expense
Omnibus Equity (3) Adjusted EBITDA
Depreciation & Amortization(2)
(In Thousands)
Fluids Division
$
10,430
$
1,950
$
12,380
$
(4)
$
28,056
$
--
$
--
$
40,432
Production Testing Division
(35,471)
20,826
(14,645)
(594)
16,238
--
--
999
Compression Division
(136,327)
111,656
(24,671)
37,016
72,159
3,028
1,576
89,108
Offshore Services Segment
(12,025)
1,283
(10,742)
--
11,086
--
--
344
Eliminations and other
7
--
7
--
(17)
--
--
(10)
Subtotal
(173,386)
135,715
(37,671)
36,418
127,522
3,028
1,576
130,873
Corporate and other
(61,863)
4,706
(57,157)
20,955
429
10,719
(1,576)
(26,630)
TETRA excluding Maritech
(235,249)
140,421
(94,828)
57,373
127,951
13,747
--
104,243
Maritech
(1,841)
--
(1,841)
12
1,362
--
--
(467)
Total TETRA
$
(239,393)
$
2,303
$
(237,090)
$
140,421
$
(96,669)
$
57,385
$
129,313
$
13,747
$
--
$
103,776
December 31, 2015
Net Income (Loss), as reported
Tax Provision
Income (Loss) Before Tax, as Reported Impairments & Special Charges Adjusted Income (Loss) Before Tax Interest Expense, Net
Depreciation & Amortization
Adjusted Equity Comp. Expense (4) Omnibus Equity
Adjusted EBITDA
(In Thousands)
Fluids Division
$
80,789
$
20,599
$
101,388
$
(258)
$
35,125
$
--
$
--
$
136,255
Production Testing Division
(55,720)
54,529
(1,191)
(89)
24,094
--
--
22,814
Compression Division
(146,798)
152,390
5,592
34,964
82,024
2,164
--
124,744
Offshore Services Segment
(195)
1,344
1,149
--
11,500
--
--
12,649
Eliminations and other
(1)
--
(1)
--
(14)
--
--
(15)
Subtotal
(121,925)
228,862
106,937
34,617
152,729
2,164
--
296,447
Corporate and other
(76,005)
8,580
(67,425)
19,829
911
7,978
--
(38,707)
TETRA excluding Maritech
(197,930)
237,442
39,512
54,446
153,640
10,142
--
257,740
Maritech
(3,833)
--
(3,833)
29
1,375
--
--
(2,429)
Total TETRA
$
(209,467)
$
7,704
$
(201,763)
$
237,442
$
35,679
$
54,475
$
155,015
$
10,142
$
--
$
255,311
(1)
Adjusted interest expense, net, for the twelve month period ended December 31, 2016, excludes $1.2 million of certain interest expense which is included as a special charge.
(2)
Adjusted depreciation & amortization, net, for the twelve month period ended December 31, 2016 excludes $0.3 million of certain accretion expense which is included as a special charge.
(3)
Reimbursement from CCLP under Omnibus Agreement for 2016 Q4 that was settled with common units.
(4)
Adjusted equity compensation expense, net for the three month period ended December 31, 2015, excludes $6.7 million one-time adjustment
Schedule G: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow
Three Months Ended
Twelve Months Ended
December 31, 2016
December 31, 2015
December 31, 2016
December 31, 2015
(In Thousands)
Consolidated
Net cash provided by operating activities
$
28,316
$
77,724
$
53,980
$
195,951
ARO settlements
271
5,109
4,040
10,305
Capital expenditures, net of sales proceeds
(5,268)
(22,221)
(17,712)
(113,462)
Consolidated adjusted free cash flow
23,319
60,612
40,308
92,794
CSI Compressco LP
Net cash provided by operating activities
15,922
38,351
61,444
101,893
Capital expenditures, net of sales proceeds
(3,057)
(19,274)
(10,659)
(95,272)
CSI Compressco free cash flow
12,865
19,077
50,785
6,621
TETRA Only
Cash from operating activities
12,394
39,373
(7,464)
94,058
ARO settlements
271
5,109
4,040
10,305
Capital expenditures, net of sales proceeds
(2,211)
(2,947)
(7,053)
(18,190)
Free cash flow before ARO settlements
10,454
41,535
(10,477)
86,173
Distributions from CSI Compressco LP
5,574
7,877
22,298
30,544
Adjusted free cash flow
16,028
49,412
11,821
116,717
Debt restructuring cost
--
3,036
--
3,036
16,028
52,448
11,821
119,753
Schedule H: Non-GAAP Reconciliation of TETRA Net Debt
The cash and debt positions of TETRA and CSI Compressco LP as of December 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.
December 31, 2016
TETRA
CCLP
Consolidated
(In Millions)
Non-restricted cash
$
9.0
$
20.8
$
29.8
Carrying value of long-term debt:
Revolver debt outstanding
3.2
217.5
220.7
Senior Notes outstanding
116.4
286.6
403.0
Net debt
$
110.6
$
483.3
$
593.9

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