THE WOODLANDS, Texas,
Nov. 6, 2015 /PRNewswire/
-- TETRA Technologies, Inc. (NYSE:TTI) today announced
third quarter 2015 adjusted earnings per share of $0.17, excluding Maritech and other charges,
which compares to adjusted earnings of $0.13 per share in the third quarter of 2014,
also excluding Maritech, transaction costs, and other charges.
Consolidated GAAP third quarter 2015 earnings per share
attributable to TETRA stockholders including Maritech and other
charges were earnings of $0.12, which
compares to a loss of $(0.13) in the
third quarter of 2014.
Highlights include:
- Record third quarter 2015 adjusted EBITDA and operating income
for the Fluids Division (adjusted EBITDA is a non-GAAP financial
measure that is reconciled to the nearest GAAP measure in Schedule
F).
- TETRA third quarter free cash flow of $30.2 million(1), excluding
$0.8 million of Maritech asset
retirement obligation (ARO) expenditures. For the nine months
ending September 30, 2015, TETRA free
cash flow was $67.3 million,
excluding $5.2 million of Maritech
ARO expenditures.
- A $56.8 million reduction in
TETRA net debt(2) compared to December 31, 2014, and an improvement in leverage
ratio to 2.02x(3), marking the fourth consecutive
quarter of improvements.
- Days sales outstanding of 61, reflecting the Company's focus on
managing working capital.
- The continued success of our zinc-free heavy completion
fluid.
- Continued reduction in operating expenses through staff
reductions and multiple cost management initiatives, including
supplier consolidations and price reductions.
(1)
|
Refer to Schedule G
for reconciliation.
|
(2)
|
Refer to Schedule H
for reconciliation.
|
(3)
|
Leverage ratio is
defined by TETRA's credit agreement as outstanding debt plus
letters of credit, divided by trailing twelve-month EBITDA
excluding unusual charges, Maritech losses, and CSI Compressco
distributions.
|
Third Quarter
2015 Results, Excluding Unusual Charges and
Maritech
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Change
|
|
Sept. 30,
2015
|
|
Sept. 30,
2014
|
|
2015 vs.
2014
|
|
(In Thousands, Except
per Share Amounts)
|
|
|
Revenue
|
$
|
304,669
|
|
|
$
|
305,330
|
|
|
—%
|
Income before
taxes(1)
|
21,117
|
|
|
12,092
|
|
|
75%
|
Net income
attributable to TETRA shareholders(2)
|
13,829
|
|
|
9,932
|
|
|
39%
|
Diluted EPS
attributable to TETRA shareholders(3)
|
$
|
0.17
|
|
|
$
|
0.13
|
|
|
31%
|
Free cash flow –
TETRA
|
$
|
30,176
|
|
|
$
|
4,204
|
|
|
619%
|
Adjusted pretax
operating margin
|
6.9%
|
|
|
4.0%
|
|
|
291 bps
|
Adjusted
EBITDA
|
$
|
75,426
|
|
|
$
|
56,688
|
|
|
33%
|
|
|
(1)
|
Income before taxes,
including unusual charges and Maritech was $15.4 million in the
third quarter of 2015 and a loss of $(24.8) million in the third
quarter of 2014.
|
(2)
|
Net income
attributable to TETRA shareholders, including unusual charges and
Maritech was $9.8 million in the third quarter of 2015, and a loss
of $(10.5) million in the third quarter of 2014.
|
(3)
|
Diluted EPS,
including unusual charges and Maritech, was $0.12 in the third
quarter of 2015, and a loss of $(0.13) in the third quarter of
2014. See Schedule E for details.
|
Analysis of Third Quarter 2015 Results
Stuart M. Brightman, TETRA's
President and Chief Executive Officer, stated, "Our third quarter
results were exceptional, following a very strong second quarter,
but in an increasingly more challenging market environment. I
attribute these results to the continued diversification of our
customer base, the introduction of new products into the market, as
well as additional actions taken across the organization to react
to market conditions.
"Revenues in our Fluids Division for the third quarter of 2015
increased $5.3 million compared to
the third quarter of 2014. Adjusted pretax margins for the Division
improved $17.0 million versus the
third quarter of 2014. These third quarter results are similar to
the results of the Division's second quarter of this year. The
number of significant completion fluids-related projects in the
third quarter was a major driver of the Division's outstanding
results, and we also saw continued strength in our manufacturing
operations, as well as the Division's international operations.
During the quarter, our Gulf of
Mexico completion fluids business continued to benefit
significantly from the introduction of new products, as well as the
acceleration in timing of several projects. Overall, this was a
record quarter for the Division in both revenues and profits.
"Excluding the impact of an adjustment for bad debts of
$2 million, and VAT charges of
$0.9 million in Brazil, our Production Testing Division's
third quarter 2015 pretax earnings were a slight loss. Going
forward, we expect the challenging market for Production Testing in
the U.S. to continue, and we are continuing to expand our customer
base and take the necessary cost actions to minimize the
impact.
"For the third quarter of 2015 our Compression Division reported
adjusted pretax earnings of $2.1
million, a decrease from the $6.6
million of adjusted pretax earnings reported in the third
quarter of 2014. Utilization for compression services trended down
during the third quarter, reflecting lower oil and gas
wellhead-related activity mainly in lower horsepower applications.
On October 20, 2015, CSI Compressco
LP declared a distribution of $0.5025
per unit attributable to the third quarter, an increase of 9.2%
over the third quarter 2014 distribution.
"Our Offshore Services segment reported adjusted pretax earnings
of $5.1 million for the third quarter
of 2015. This compares favorably to adjusted earnings of
$0.6 million in the third quarter of
2014. In the very challenging offshore Gulf of Mexico market environment, our ability
to achieve profitability in the third quarter was almost
exclusively driven by the impact of ongoing cost reductions.
"During the third quarter TETRA, excluding the operations of CSI
Compressco, had $30.2 million of free
cash flow, which includes distributions from CSI Compressco but
excludes $0.8 million spent on
Maritech asset retirement obligations (see schedule G for a
reconciliation to GAAP cash from operations). This result was
driven by our cash earnings, as well as minimal capital
expenditures during the third quarter of 2015. The third quarter
represents our fourth consecutive quarter of improved leverage
ratios."
Divisional revenues, adjusted pretax earnings/(loss), adjusted
pretax margins, and adjusted EBITDA for the three months ended
September 30, 2015 and September 30, 2014 are summarized in the table
below:
Segment
Results
|
Three Months
Ended
|
|
September 30,
2015
|
|
September 30,
2014
|
|
Revenue
|
Income Before
Taxes(1)
|
Pretax
Margin(2)
|
Adjusted
EBITDA(3)
|
|
Revenue
|
Income Before
Taxes(1)
|
Pretax
Margin(2)
|
Adjusted
EBITDA(3)
|
|
(In
Thousands)
|
Fluids
Division
|
$
|
110,587
|
|
$
|
33,575
|
|
30.4%
|
|
$
|
42,295
|
|
|
$
|
105,296
|
|
$
|
16,541
|
|
15.7%
|
|
$
|
24,872
|
|
Production Testing
Division
|
28,942
|
|
(1,404)
|
|
(4.9)%
|
|
4,599
|
|
|
50,177
|
|
3,426
|
|
6.8%
|
|
10,889
|
|
Compression
Division
|
128,926
|
|
10,314
|
|
8.0%
|
|
31,417
|
|
|
95,897
|
|
11,640
|
|
12.1%
|
|
25,655
|
|
Offshore Services
segment
|
37,882
|
|
5,083
|
|
13.4%
|
|
7,962
|
|
|
61,505
|
|
601
|
|
1.0%
|
|
3,977
|
|
Eliminations and
other
|
(1,668)
|
|
5
|
|
(0.3)%
|
|
4
|
|
|
(7,545)
|
|
3
|
|
—
|
|
—
|
|
Subtotal
|
304,669
|
|
47,573
|
|
15.6%
|
|
86,277
|
|
|
305,330
|
|
32,211
|
|
10.5%
|
|
65,393
|
|
Corporate and
other
|
—
|
|
(14,243)
|
|
|
(10,850)
|
|
|
—
|
|
(10,154)
|
|
|
(8,705)
|
|
Interest expense, net
- Compression Division
|
—
|
|
(8,201)
|
|
|
—
|
|
|
—
|
|
(4,998)
|
|
|
—
|
|
Interest expense, net
- TTI, excluding Compression Division
|
—
|
|
(4,011)
|
|
|
—
|
|
|
—
|
|
(4,969)
|
|
|
—
|
|
Unusual charges and
Maritech(4)
|
475
|
|
(5,695)
|
|
|
—
|
|
|
1,041
|
|
(36,917)
|
|
|
—
|
|
As
reported
|
305,144
|
|
15,423
|
|
5.1%
|
|
75,427
|
|
|
306,371
|
|
(24,827)
|
|
(8.1)%
|
|
56,688
|
|
|
|
(1)
|
Segment Income Before
Taxes are adjusted. Refer to Schedule F for
reconciliation.
|
(2)
|
GAAP pre-tax margins
for third quarter 2015 are: Fluids Division, 30.0%; Production
Testing Division, (15.6)%; Compression Division, 1.6%; and,
Offshore Services segment, 12.1%. GAAP pretax margins for third
quarter 2014 are: Fluids Division, 15.7%; Production Testing
Division, 6.8%; Compression Division, (6.8)%; and, Offshore
Services segment, 1.0%. Refer to Schedule B for GAAP dollar
amounts.
|
(3)
|
Adjusted EBITDA is a
non-GAAP financial measure that is defined and reconciled to the
nearest GAAP financial measure in Schedule F.
|
(4)
|
Refer to Schedule E
for unusual charges and reconciliations.
|
Unusual and Other Charges and Maritech
During the third quarter of 2015, TETRA incurred $0.4 million of severance expense as staffing
levels were adjusted to reflect lower activity levels.
Additionally, the Company recorded $2.5
million of allowances for bad debts ($0.5 million for the Offshore Services segment
and $2.0 million for the Production
Testing Division), and $1.1 million
of VAT expenses in Brazil.
Maritech reported a pre-tax loss of $1.6
million in the third quarter of 2015.
Net Debt
At September 30, 2015, the cash
and debt positions of TETRA and CSI Compressco LP 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:
|
As of September
30, 2015
|
|
TETRA
|
|
CSI Compressco
LP
|
|
(In
Millions)
|
Non-restricted
cash
|
$
|
7.2
|
|
|
$
|
18.3
|
|
|
|
|
|
Revolver debt
outstanding
|
65.7
|
|
|
243.0
|
|
Current portion of
long-term debt
|
90.4
|
|
|
—
|
|
Senior Notes
outstanding
|
175.0
|
|
|
345.3
|
|
Net debt
|
$
|
323.9
|
|
|
$
|
570.0
|
|
Future Financial Guidance
Total 2015 free cash flow for TETRA (excluding CSI Compressco
but including CSI Compressco distributions) is expected to be in
excess of $80.0
million(1), or $1.00 per share, reflecting the Company's focus
on managing working capital, reducing costs, and generating revenue
from a broad, diversified customer base. We are expecting GAAP
earnings per share for the fourth quarter of 2015 and the first
quarter of 2016 to each be a slight loss, reflecting our normal
seasonal slowdown in activity and an expected early year-end
curtailment of activity by our customers. However, we expect
the Gulf of Mexico projects we
benefited from in the second and third quarters of this year to
resume in the second quarter of 2016.
(1)
|
Refer to Schedule G
for a reconciliation of free cash flow as of September 30, 2015, to
the nearest GAAP measure.
|
Conference Call
TETRA will host a conference call to discuss third quarter 2015
results today, November 6, 2015, at
10:30 am ET. The phone number for the
call is (888) 347-5303. The conference will also be available by
live audio webcast and may be accessed through TETRA's website at
www.tetratec.com.
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: Third Quarter Unusual Charges
Schedule F: Non-GAAP Reconciliation to GAAP Financials
Schedule G: Non-GAAP Reconciliation to Free Cash Flow
Schedule H: Reconciliation of TETRA Net Debt
Company Overview and Forward Looking Statements
TETRA is a geographically diversified oil and gas services
company, focused on completion fluids and associated products and
services, water management, frac flowback, production well testing,
offshore rig cooling, compression services and equipment, and
selected offshore services including well plugging and abandonment,
decommissioning, and diving. TETRA owns an equity interest,
including all of the general partner interest, in CSI Compressco LP
(NADAQ:CCLP), a master limited partnership.
This press release includes certain statements that are deemed
to be forward-looking statements. Generally, the use of words such
as "may," "expect," "intend," "estimate," "projects," "anticipate,"
"believe," "assume," "could," "should," "plans," "targets" or
similar expressions that convey the uncertainty of future events,
activities, expectations or outcomes identify forward-looking
statements that the Company intends to be included within the safe
harbor protections provided by the federal securities laws. These
forward-looking statements include statements concerning expected
results of operational business segments for 2015, anticipated
benefits from CSI Compressco following the acquisition of CSI in
2014, including increases in cash distributions per unit,
projections concerning the Company's business activities, financial
guidance, estimated earnings, earnings per share, and statements
regarding the Company's beliefs, expectations, plans, goals, future
events and performance, and other statements that are not purely
historical. These forward-looking statements are based on certain
assumptions and analyses made by the Company in light of its
experience and its perception of historical trends, current
conditions, expected future developments and other factors it
believes are appropriate in the circumstances. Such statements are
subject to a number of risks and uncertainties, many of which are
beyond the control of the Company, including the ability of CSI
Compressco to successfully integrate the operations of CSI and
recognize the anticipated benefits of the acquisition. Investors
are cautioned that any such statements are not guarantees of future
performances or results and that actual results or developments may
differ materially from those projected in the forward-looking
statements. Some of the factors that could affect actual results
are described in the section titled "Risk Factors" contained in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2014, 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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(In
Thousands)
|
Revenues
|
$
|
305,144
|
|
|
$
|
306,371
|
|
|
$
|
872,555
|
|
|
$
|
761,717
|
|
|
|
|
|
|
|
|
|
Cost of sales,
services, and rentals
|
195,701
|
|
|
238,393
|
|
|
569,755
|
|
|
588,367
|
|
Depreciation,
amortization, and accretion
|
38,909
|
|
|
33,234
|
|
|
116,319
|
|
|
78,281
|
|
Total cost of
revenues
|
234,610
|
|
|
271,627
|
|
|
686,074
|
|
|
666,648
|
|
Gross profit
|
70,534
|
|
|
34,744
|
|
|
186,481
|
|
|
95,069
|
|
|
|
|
|
|
|
|
|
General and
administrative expense
|
40,910
|
|
|
37,099
|
|
|
113,651
|
|
|
102,789
|
|
Interest expense,
net
|
12,201
|
|
|
9,878
|
|
|
37,427
|
|
|
19,193
|
|
Other (income)
expense, net
|
2,000
|
|
|
12,594
|
|
|
3,927
|
|
|
11,091
|
|
Income (loss) before
taxes and discontinued operations
|
15,423
|
|
|
(24,827)
|
|
|
31,476
|
|
|
(38,004)
|
|
Provision (benefit)
for income taxes
|
4,687
|
|
|
(12,360)
|
|
|
8,997
|
|
|
(17,897)
|
|
Net income
(loss)
|
10,736
|
|
|
(12,467)
|
|
|
22,479
|
|
|
(20,107)
|
|
Less: net (income) loss
attributable to noncontrolling interest
|
(981)
|
|
|
1,930
|
|
|
(2,247)
|
|
|
179
|
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
9,755
|
|
|
$
|
(10,537)
|
|
|
$
|
20,232
|
|
|
$
|
(19,928)
|
|
|
|
|
|
|
|
|
|
Basic per share
information:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
0.12
|
|
|
$
|
(0.13)
|
|
|
$
|
0.26
|
|
|
$
|
(0.25)
|
|
Weighted average shares
outstanding
|
79,219
|
|
|
78,683
|
|
|
79,098
|
|
|
78,506
|
|
|
|
|
|
|
|
|
|
Diluted per share
information:
|
|
|
|
|
|
|
|
Net income (loss)
attributable to TETRA stockholders
|
$
|
0.12
|
|
|
$
|
(0.13)
|
|
|
$
|
0.25
|
|
|
$
|
(0.25)
|
|
Weighted average shares
outstanding
|
79,792
|
|
|
78,683
|
|
|
79,455
|
|
|
78,506
|
|
Schedule B: Financial Results By Segment (Unaudited)
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(In
Thousands)
|
Revenues by
segment:
|
|
|
|
|
|
|
|
Fluids
Division
|
$
|
110,587
|
|
|
$
|
105,296
|
|
|
$
|
332,850
|
|
|
$
|
327,090
|
|
Production Testing
Division
|
28,942
|
|
|
50,177
|
|
|
100,885
|
|
|
136,191
|
|
Compression
Division
|
128,926
|
|
|
95,897
|
|
|
358,270
|
|
|
157,676
|
|
Offshore
Division
|
|
|
|
|
|
|
|
Offshore
Services
|
37,882
|
|
|
61,505
|
|
|
85,396
|
|
|
153,076
|
|
Maritech
|
475
|
|
|
1,041
|
|
|
2,375
|
|
|
3,965
|
|
Intersegment
eliminations
|
(429)
|
|
|
(6,332)
|
|
|
(3,609)
|
|
|
(13,053)
|
|
Offshore Division
total
|
37,928
|
|
|
56,214
|
|
|
84,162
|
|
|
143,988
|
|
Eliminations and
other
|
(1,239)
|
|
|
(1,213)
|
|
|
(3,612)
|
|
|
(3,229)
|
|
Total
revenues
|
$
|
305,144
|
|
|
$
|
306,371
|
|
|
$
|
872,555
|
|
|
$
|
761,717
|
|
|
|
|
|
|
|
|
|
Gross profit
(loss) by segment:
|
|
|
|
|
|
|
|
Fluids
Division
|
$
|
41,704
|
|
|
$
|
25,981
|
|
|
$
|
107,424
|
|
|
$
|
76,645
|
|
Production Testing
Division
|
926
|
|
|
8,194
|
|
|
7,703
|
|
|
14,569
|
|
Compression
Division
|
22,163
|
|
|
19,871
|
|
|
66,100
|
|
|
40,921
|
|
Offshore
Division
|
|
|
|
|
|
|
|
Offshore
Services
|
7,296
|
|
|
3,833
|
|
|
6,017
|
|
|
3,629
|
|
Maritech
|
(1,331)
|
|
|
(22,743)
|
|
|
(30)
|
|
|
(39,227)
|
|
Intersegment
eliminations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Offshore Division
total
|
5,965
|
|
|
(18,910)
|
|
|
5,987
|
|
|
(35,598)
|
|
Corporate overhead and
eliminations
|
(224)
|
|
|
(392)
|
|
|
(733)
|
|
|
(1,468)
|
|
Total gross
profit
|
$
|
70,534
|
|
|
$
|
34,744
|
|
|
$
|
186,481
|
|
|
$
|
95,069
|
|
|
|
|
|
|
|
|
|
Income (loss)
before taxes by segment:
|
|
|
|
|
|
|
|
Fluids
Division
|
$
|
33,215
|
|
|
$
|
16,541
|
|
|
$
|
83,535
|
|
|
$
|
52,077
|
|
Production Testing
Division
|
(4,528)
|
|
|
3,426
|
|
|
(4,961)
|
|
|
379
|
|
Compression
Division
|
2,070
|
|
|
(6,562)
|
|
|
5,974
|
|
|
4,102
|
|
Offshore
Division
|
|
|
|
|
|
|
|
Offshore
Services
|
4,576
|
|
|
601
|
|
|
(1,977)
|
|
|
(5,538)
|
|
Maritech
|
(1,649)
|
|
|
(22,969)
|
|
|
(987)
|
|
|
(40,206)
|
|
Intersegment
eliminations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Offshore Division
total
|
2,927
|
|
|
(22,368)
|
|
|
(2,964)
|
|
|
(45,744)
|
|
Corporate overhead and
eliminations
|
(18,261)
|
|
|
(15,864)
|
|
|
(50,108)
|
|
|
(48,818)
|
|
Total income (loss)
before taxes
|
$
|
15,423
|
|
|
$
|
(24,827)
|
|
|
$
|
31,476
|
|
|
$
|
(38,004)
|
|
Please note that the above results by Segment are inclusive of
the unusual charges and expenses. Please see Schedule E for details
of those unusual charges and expenses.
Schedule C: Consolidated Balance Sheet (Unaudited)
|
September 30,
2015
|
|
December 31,
2014
|
|
(In
Thousands)
|
Balance
Sheet:
|
|
|
|
Cash (excluding
restricted cash)
|
$
|
25,478
|
|
|
$
|
48,384
|
|
Accounts receivable,
net
|
203,768
|
|
|
226,966
|
|
Inventories
|
145,457
|
|
|
189,357
|
|
Other current
assets
|
36,322
|
|
|
36,144
|
|
PP&E,
net
|
1,105,810
|
|
|
1,124,192
|
|
Other
assets
|
424,478
|
|
|
443,790
|
|
Total
assets
|
$
|
1,941,313
|
|
|
$
|
2,068,833
|
|
|
|
|
|
Current portion of
decommissioning liabilities
|
$
|
17,912
|
|
|
$
|
12,758
|
|
Other current
liabilities
|
270,123
|
|
|
366,883
|
|
Long-term
debt
|
829,049
|
|
|
844,961
|
|
Long-term portion of
decommissioning liabilities
|
42,064
|
|
|
49,983
|
|
Other long-term
liabilities
|
28,969
|
|
|
28,647
|
|
Equity
|
753,196
|
|
|
765,601
|
|
Total liabilities and
equity
|
$
|
1,941,313
|
|
|
$
|
2,068,833
|
|
|
Note: Please
see Schedule D for the individual debt obligations of TETRA and CSI
Compressco LP.
|
Schedule D: Long-Term Debt
TETRA Technologies Inc. and its subsidiaries, excluding CSI
Compressco LP and its subsidiaries, are obligated under a bank
credit agreement and senior notes, neither of which are obligations
of CSI Compressco LP and its subsidiaries. CSI Compressco LP
and its subsidiaries are obligated under a separate bank credit
agreement and senior notes, neither of which are obligations of
TETRA and its other subsidiaries.
|
September 30,
2015
|
|
December 31,
2014
|
|
(In
Thousands)
|
TETRA
|
|
|
|
Bank revolving line
of credit facility
|
$
|
65,700
|
|
|
$
|
90,000
|
|
TETRA Senior Notes at
various rates
|
265,000
|
|
|
305,000
|
|
Other debt
|
425
|
|
|
74
|
|
TETRA total
debt
|
331,125
|
|
|
395,074
|
|
Less current
portion
|
(90,425)
|
|
|
(90,074)
|
|
TETRA total
long-term debt
|
$
|
240,700
|
|
|
$
|
305,000
|
|
|
|
|
|
CSI Compressco
LP
|
|
|
|
CCLP Bank Credit
Facility
|
$
|
243,000
|
|
|
$
|
195,000
|
|
CCLP 7.25% Senior
Notes
|
345,349
|
|
|
344,961
|
|
CCLP total
debt
|
588,349
|
|
|
539,961
|
|
Less current
portion
|
—
|
|
|
—
|
|
CCLP total
long-term debt
|
$
|
588,349
|
|
|
$
|
539,961
|
|
Consolidated total
long-term debt
|
$
|
829,049
|
|
|
$
|
844,961
|
|
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, consolidated and segment income
before taxes, excluding the Maritech segment and unusual charges;
Adjusted EBITDA; and 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 unusual charges from the historical results of operations
enables management to evaluate more effectively the Company's
operations over the prior periods and to identify operating trends
that could be obscured by the excluded items.
Adjusted EBITDA is defined as the Company's adjusted income
before interest, taxes, depreciation, amortization and equity
compensation. Adjusted EBITDA is used by management as a
supplemental financial measure to assess the financial performance
of the Company's assets, without regard to financing methods,
capital structure or historical cost basis and to assess the
Company's ability to incur and service debt and fund capital
expenditures.
Free Cash Flow is a non-GAAP measure that the Company defines as
cash from operations, excluding cash settlements of Maritech ARO,
less 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.
Schedule E: Third Quarter Unusual Charges
|
Three Months
Ended
|
|
September 30,
2015
|
|
Income
Before
Tax
|
Tax
|
Noncont.
Interest
|
Net
Income
|
Diluted
EPS
|
|
(In Thousands, Except
per Share Amounts)
|
Adjusted
|
$
|
21,117
|
|
$
|
6,328
|
|
$
|
960
|
|
$
|
13,829
|
|
$
|
0.17
|
|
Transaction related
costs
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Severance
expense
|
(375)
|
|
(106)
|
|
21
|
|
(290)
|
|
—
|
|
Allowance for bad
debt
|
(2,570)
|
|
(771)
|
|
—
|
|
(1,799)
|
|
(0.02)
|
|
Brazil VAT
audit
|
(1,100)
|
|
(330)
|
|
—
|
|
(770)
|
|
(0.01)
|
|
Deferred tax
valuation allowance and other related tax adj.
|
—
|
|
(434)
|
|
—
|
|
434
|
|
0.00
|
|
Maritech profit
(loss)
|
(1,649)
|
|
—
|
|
—
|
|
(1,649)
|
|
(0.02)
|
|
As
reported
|
$
|
15,423
|
|
$
|
4,687
|
|
$
|
981
|
|
$
|
9,755
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
September 30,
2014
|
|
Income (Loss)
Before Tax
|
Tax
|
Noncont.
Interest
|
Net Income
(Loss)
|
Diluted
EPS
|
|
(In Thousands, Except
per Share Amounts)
|
Adjusted
|
$
|
12,092
|
|
$
|
177
|
|
$
|
1,982
|
|
$
|
9,933
|
|
$
|
0.13
|
|
Transaction related
costs
|
(13,968)
|
|
(4,548)
|
|
(3,912)
|
|
(5,508)
|
|
(0.07)
|
|
Severance
expense
|
—
|
|
(41)
|
|
—
|
|
41
|
|
—
|
|
Deferred tax
valuation allowance and other related tax adj.
|
—
|
|
(2,672)
|
|
—
|
|
2,672
|
|
0.03
|
|
Maritech profit
(loss)
|
(22,969)
|
|
(4,481)
|
|
—
|
|
(18,488)
|
|
(0.23)
|
|
Other
|
18
|
|
(795)
|
|
—
|
|
813
|
|
0.01
|
|
As
reported
|
$
|
(24,827)
|
|
$
|
(12,360)
|
|
$
|
(1,930)
|
|
$
|
(10,537)
|
|
$
|
(0.13)
|
|
Schedule F: Non-GAAP Reconciliation to GAAP
Financials
|
Three Months
Ended
|
|
September 30,
2015
|
|
Income (Loss) Before
Tax, as Reported
|
Impairments &
Unusual Charges
|
Adjusted Income
Before Tax
|
Interest Expense,
Net
|
Depreciation &
Amortization
|
Stock Option
Expense
|
Adjusted
EBITDA
|
|
(In
Thousands)
|
Fluids
Division
|
$
|
33,215
|
|
$
|
360
|
|
$
|
33,575
|
|
$
|
(15)
|
|
$
|
8,735
|
|
$
|
—
|
|
$
|
42,295
|
|
Production Testing
Division
|
(4,528)
|
|
3,124
|
|
(1,404)
|
|
4
|
|
5,999
|
|
—
|
|
4,599
|
|
Compression
Division
|
2,070
|
|
43
|
|
2,113
|
|
8,201
|
|
20,648
|
|
455
|
|
31,417
|
|
Offshore Services
Segment
|
4,576
|
|
507
|
|
5,083
|
|
—
|
|
2,879
|
|
—
|
|
7,962
|
|
Eliminations and
other
|
5
|
|
—
|
|
5
|
|
—
|
|
(1)
|
|
—
|
|
4
|
|
Subtotal
|
35,338
|
|
4,034
|
|
39,372
|
|
8,190
|
|
38,260
|
|
455
|
|
86,277
|
|
Corporate and
other
|
(18,266)
|
|
11
|
|
(18,255)
|
|
4,011
|
|
230
|
|
3,163
|
|
(10,851)
|
|
TETRA excl
Maritech
|
17,072
|
|
4,045
|
|
21,117
|
|
12,201
|
|
38,490
|
|
3,618
|
|
75,426
|
|
Maritech
|
(1,649)
|
|
—
|
|
(1,649)
|
|
—
|
|
419
|
|
—
|
|
(1,230)
|
|
Total
TETRA
|
$
|
15,423
|
|
$
|
4,045
|
|
$
|
19,468
|
|
$
|
12,201
|
|
$
|
38,909
|
|
$
|
3,618
|
|
$
|
74,196
|
|
|
|
|
|
|
|
|
|
|
September 30,
2014
|
|
Income (Loss) Before
Tax, As Reported
|
Impairments &
Unusual Charges
|
Adjusted Income
Before Tax
|
Interest Expense,
Net
|
Depreciation &
Amortization
|
Stock Option
Expense
|
Adjusted
EBITDA
|
|
(In
Thousands)
|
Fluids
Division
|
$
|
16,541
|
|
$
|
—
|
|
$
|
16,541
|
|
$
|
(129)
|
|
$
|
8,460
|
|
$
|
—
|
|
$
|
24,872
|
|
Production Testing
Division
|
3,426
|
|
—
|
|
3,426
|
|
29
|
|
7,434
|
|
—
|
|
10,889
|
|
Compression
Division
|
(6,562)
|
|
13,204
|
|
6,642
|
|
4,998
|
|
13,533
|
|
482
|
|
25,655
|
|
Offshore Services
Segment
|
601
|
|
—
|
|
601
|
|
—
|
|
3,376
|
|
—
|
|
3,977
|
|
Eliminations and
other
|
3
|
|
—
|
|
3
|
|
—
|
|
(3)
|
|
—
|
|
—
|
|
Subtotal
|
14,009
|
|
13,204
|
|
27,213
|
|
4,898
|
|
32,800
|
|
482
|
|
65,393
|
|
Corporate and
other
|
(15,867)
|
|
746
|
|
(15,121)
|
|
4,969
|
|
396
|
|
1,053
|
|
(8,703)
|
|
TETRA excl
Maritech
|
(1,858)
|
|
13,950
|
|
12,092
|
|
9,867
|
|
33,196
|
|
1,535
|
|
56,690
|
|
Maritech
|
(22,969)
|
|
—
|
|
(22,969)
|
|
11
|
|
38
|
|
—
|
|
(22,920)
|
|
Total
TETRA
|
$
|
(24,827)
|
|
$
|
13,950
|
|
$
|
(10,877)
|
|
$
|
9,878
|
|
$
|
33,234
|
|
$
|
1,535
|
|
$
|
33,770
|
|
Schedule G: Non-GAAP Reconciliation to Free Cash Flow
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(In
Thousands)
|
TETRA
Consolidated
|
|
|
|
|
|
|
|
Cash from
operations
|
$
|
36,065
|
|
|
$
|
11,317
|
|
|
$
|
118,227
|
|
|
$
|
51,937
|
|
ARO
settlements
|
785
|
|
|
10,543
|
|
|
5,196
|
|
|
40,309
|
|
Capital expenditures,
net of sales proceeds
|
(21,915)
|
|
|
(31,098)
|
|
|
(91,241)
|
|
|
(79,088)
|
|
Free cash flow before
ARO settlements
|
14,935
|
|
|
(9,238)
|
|
|
32,182
|
|
|
13,158
|
|
|
|
|
|
|
|
|
|
CSI Compressco
LP
|
|
|
|
|
|
|
|
Cash from
operations
|
11,340
|
|
|
10,385
|
|
|
63,542
|
|
|
31,341
|
|
Capital expenditures,
net of sales proceeds
|
(18,906)
|
|
|
(17,938)
|
|
|
(75,998)
|
|
|
(28,820)
|
|
Free cash
flow
|
(7,566)
|
|
|
(7,553)
|
|
|
(12,456)
|
|
|
2,521
|
|
|
|
|
|
|
|
|
|
TETRA
Only
|
|
|
|
|
|
|
|
Cash from
operations
|
24,725
|
|
|
932
|
|
|
54,685
|
|
|
20,596
|
|
ARO
settlements
|
785
|
|
|
10,543
|
|
|
5,196
|
|
|
40,309
|
|
Capital expenditures,
net of sales proceeds
|
(3,009)
|
|
|
(13,160)
|
|
|
(15,243)
|
|
|
(50,268)
|
|
Free cash flow before
ARO settlements
|
22,501
|
|
|
(1,685)
|
|
|
44,638
|
|
|
10,637
|
|
Distributions from CSI
Compressco LP
|
7,675
|
|
|
5,889
|
|
|
22,667
|
|
|
17,639
|
|
Free cash flow before
ARO settlements and after distributions from CSI Compressco
LP
|
$
|
30,176
|
|
|
$
|
4,204
|
|
|
$
|
67,305
|
|
|
$
|
28,276
|
|
TETRA only full year 2015 projected cash flow from operations of
$71 million less anticipated full
year 2015 TETRA only capital expenditures of $21 million plus $30
million of full year 2015 distributions from CSI Compressco
LP equals $80 million in projected
TETRA 2015 free cash flow.
Schedule H: Reconciliation of TETRA Net Debt
The following reconciliation of net debt is presented as a
supplement to financial results prepared in accordance with GAAP.
The Company defines net debt as the sum of long-term and short-term
debt on its consolidated balance sheet, less cash, excluding
restricted cash on the consolidated balance sheet and excluding the
debt and cash of CSI Compressco LP. Management views net debt as a
measure of TETRA's ability to reduce debt, add to cash balances,
pay dividends, repurchase stock, and fund investing and financing
activities. A reconciliation of total debt to net debt as of
September 30, 2015 and December 31, 2014 is provided below.
|
September 30,
2015
|
|
December 31,
2014
|
|
(In
Thousands)
|
TETRA Net
Debt:
|
|
|
|
Total debt, excluding
CSI Compressco LP debt
|
$
|
331,125
|
|
|
$
|
395,074
|
|
Less: cash, excluding
CSI Compressco LP cash
|
(7,173)
|
|
|
(14,318)
|
|
Net debt
|
$
|
323,952
|
|
|
$
|
380,756
|
|
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SOURCE TETRA Technologies, Inc.