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TETRA Technologies, Inc. Announces Second Quarter 2015 Results
PR Newswire
THE WOODLANDS, Texas

THE WOODLANDS, Texas, Aug. 7, 2015 /PRNewswire/ -- TETRA Technologies, Inc. (NYSE:TTI) today announced  second quarter 2015 earnings per share of $0.16, excluding Maritech and other charges, which compares to earnings of $0.10 per share in the second quarter of 2014, also excluding Maritech and other charges. Second quarter 2015 revenue excluding Maritech of $315.9 million increased 31% from the second quarter of 2014 primarily as a result of the acquisition of Compressor Systems, Inc. ("CSI") on August 4, 2014 by CSI Compressco LP.

Consolidated GAAP second quarter 2015 earnings per share attributable to TETRA stockholders including Maritech and other charges were earnings of $0.19, which compares to a loss of $(0.03) in the second quarter of 2014.

Highlights include:

  • Record second quarter 2015 revenue, 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).
  • Second quarter free cash flow of $43 million(1), excluding the impact of $4 million of Maritech asset retirement obligation expenditures.
  • A $38 million reduction in TETRA net debt(2) compared to the end of the first quarter of 2015, and an improvement in debt leverage ratio to 2.38x(3), marking the third consecutive quarter of debt improvements.
  • The successful launch and completion of the first commercial application of our heavy zinc-free completion fluid.
  • All TETRA Divisions excluding Maritech were profitable at the pretax income level in 2Q 2015, excluding the impact of a reserve for bad debts in Production Testing.
  • DSOs improved by 13 days from 68 days at the end of March 2015.
  • Continued reduction in operating expenses through staff reductions, multiple cost management initiatives including supplier consolidations and price reductions, and efficiency improvements driven by recent systems implementation initiatives.

(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.

 

Second Quarter 2015 Results, Excluding Unusual Charges and Maritech

   
           
 

Three Months Ended

 

Change

 

June 30, 2015

 

June 30, 2014

 

2015 vs. 2014

 

(In Thousands, Except per Share Amounts)

   

Revenue

$

315,925

   

$

240,942

   

31%

Income before taxes(1)

18,741

   

12,792

   

47%

Net income attributable to TETRA shareholders(2)

12,654

   

8,356

   

51%

Diluted EPS attributable to TETRA shareholders(3)

$

0.16

   

$

0.10

   

60%

Adjusted pretax operating margin

5.9%

   

5.3%

   

62 bps

Adjusted EBITDA

$

72,463

   

$

40,783

   

78%

   

(1)

Income before taxes, including unusual charges and Maritech was $18.1 million in the second quarter of 2015 and a loss of $(2.5) million in the second quarter of 2014. 

(2)

Net income attributable to TETRA shareholders, including unusual charges and Maritech was $14.9 million in the second quarter of 2015, and a loss of $(2.5) million in the second quarter of 2014. 

(3)

Diluted EPS, including unusual charges and Maritech, was $0.19 in the second quarter of 2015, and a loss of $(0.03) in the second quarter of 2014. See Schedule E  for details.

Analysis of Second Quarter 2015 Results

Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, "Our second quarter results were clearly exceptional in a very challenging market environment. I attribute these results to our diversification of our customer base and introduction of new products into the market, as well as our continued focus on cost reductions across the organization.

"Revenues in our Fluids Division for the second quarter of 2015 increased 23.9% sequentially, and 5.4% compared to the second quarter of 2014. Adjusted pretax margins for the Division improved sequentially on pretax profits of $32.8 million in the second quarter of 2015. Similar to the first quarter of this year, the exceptional second quarter improvement was driven by completion products and services in the Gulf of Mexico, continued strength in our U.S. land operations, and strength in our chemicals manufacturing segment sales, as well as the Division's international operations. Our Gulf of Mexico fluids business benefitted in the second quarter from the expansion of our customer base, sales of new products, and the accelerated timing of a couple of projects. All of these items contributed to a record quarter for the Fluids Division in both revenues and pretax profits, despite the challenging market environment for our water management business. Second quarter results for this Division were also favorably impacted by a $2.6 million insurance settlement.

"Excluding the impact of an adjustment for bad debt, our Production Testing Division's second quarter 2015 pretax earnings represent a modest sequential improvement over the first quarter of this year, in an even more challenging market. This improvement was driven by ongoing cost reductions, profitable new business, and the strength of our international business. We expect Production Testing to continue to operate in a challenging domestic market environment for the balance of 2015. We will continue to take necessary cost actions as required to manage this impact.

"For the second quarter of 2015 our Compression Division reported adjusted pretax earnings of $1.5 million, a decrease from the $6.4 million of adjusted pretax earnings reported in the second quarter of 2014. During the current year's quarter our equipment and parts sales revenues increased to $49.0 million, a 170% increase sequentially over the first quarter of this year. Utilization for compression services trended down during the second quarter, reflecting lower oil-related activity, mainly in lower horsepower applications. On July 21, we declared a distribution of $0.50 per unit attributable to the second quarter of 2015, an increase of 10.5% over the second quarter 2014 distribution.

"Our Offshore Services segment reported an adjusted pretax profit of $2.1 million for the second quarter of 2015. This sequential improvement is typical of the second quarter compared to the seasonally-slower first quarter. However, in a continuing very challenging market environment with weak demand, and despite second quarter 2015 revenues that were 36.5% lower than revenues for the comparable quarter of 2014, we have been able to report a modest profit almost entirely due to the cumulative beneficial impact of cost reductions.

"During the second quarter we had $42.9 million of consolidated free cash flow, which includes distributions from CSI Compressco but excludes amounts spent on Maritech asset retirement obligations (see schedule G for a reconciliation to GAAP cash from operations). This result was driven by improvement in our cash earnings and continued reductions in capital expenditures, as well as a cash expense of only $3.8 million on Maritech abandonment and decommissioning projects during the second quarter of 2015. We continue to be focused on generation of free cash flow and reduction of our debt. Both of these metrics continue to improve in a challenging market due to the effectiveness of our customer diversification and cost reductions, as well as increased revenues from new products."      

Divisional revenues, adjusted pretax earnings/(loss), adjusted pretax margins, and adjusted EBITDA for the three months ended June 30, 2015 and June 30, 2014 are summarized in the table below:

Segment Results

 

Three Months Ended

 

June 30, 2015

 

June 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

$

122,973

 

$

32,754

 

26.6%

 

$

41,491

   

$

116,650

 

$

17,082

 

14.6%

 

$

24,185

 

Production Testing Division

34,842

 

(425)

 

(1.2)%

 

5,757

   

42,377

 

(238)

 

(0.6)%

 

6,839

 

Compression Division

126,456

 

9,504

 

7.5%

 

30,917

   

32,015

 

6,527

 

20.4%

 

10,550

 

Offshore Services segment

35,731

 

2,127

 

6.0%

 

5,015

   

56,241

 

3,929

 

7.0%

 

7,255

 

Eliminations and other

(4,077)

 

(12)

 

0.3%

 

(14)

   

(6,341)

 

3

 

 

 

Subtotal

315,925

 

43,948

 

13.9%

 

83,166

   

240,942

 

27,303

 

11.3%

 

48,829

 

Corporate and other

 

(12,831)

 

 

(10,703)

   

 

(9,756)

 

 

(8,046)

 

Interest expense, net - Compression Division

 

(7,961)

 

 

   

 

(145)

 

 

 

Interest expense, net - TTI, excluding Compression Division

 

(4,415)

 

 

   

 

(4,610)

 

 

 

Unusual charges and Maritech(4)

394

 

(633)

 

 

   

1,547

 

(15,286)

 

 

 

As reported

316,319

 

18,108

 

5.7%

 

72,463

   

242,489

 

(2,494)

 

(1.0)%

 

40,783

 
   

(1)

Segment Income Before Taxes are adjusted.  Refer to Schedule F for reconciliation.

(2)

GAAP pre-tax margins for second quarter 2015 are: Fluids Division, 26.5%; Production Testing Division, (1.4)%; Compression Division, 1.2%; and, Offshore Services segment, 5.9%. GAAP pretax margins for second quarter 2014 are: Fluids Division, 14.6%; Production Testing Division, (0.6)%; Compression Division, 17.1%; and, Offshore Services segment, 3.3%. 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 second quarter of 2015, TETRA incurred $320,000 of severance expense as staffing levels were adjusted to reflect the lower activity levels. From June a year ago to June this year and excluding CSI Compressco, the total number of TETRA employees was reduced by 24%.

Second quarter 2015 earnings were favorably impacted by approximately $2.8 million related to the valuation allowance on U.S. deferred tax assets for predominately U.S. income tax loss carry-forwards that impacted earnings per share by $0.03. The Company remains in a position to utilize its carry-forwards to offset future cash taxes.

Maritech reported a pre-tax loss of $313,000 in the second quarter of 2015.

Net Debt

At June 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 as noted below:

 

As of June 30, 2015

 

TETRA

 

CSI Compressco LP

 

(In Millions)

Non-restricted cash

$

8.7

   

$

33.3

 
       

Revolver debt outstanding

92.9

   

233.0

 

Current portion of long-term debt

90.0

   

 

Senior Notes outstanding

175.0

   

345.2

 

Net debt

$

349.2

   

$

544.9

 

Third Quarter 2015 Guidance

TETRA expects third quarter 2015 earnings to be within a range of $0.07 to $0.09 per share.

Conference Call

TETRA will host a conference call to discuss second quarter 2015 results today, August 7, 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

Schedule A: Consolidated Income Statement (Unaudited)
Schedule B: Financial Results By Segment (Unaudited)
Schedule C: Consolidated Balance Sheet (Unaudited)
Schedule D: Long-Term Debt
Schedule E: Second Quarter and YTD 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.

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 CSI acquisition, 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

June 30,

 

Six Months Ended

June 30,

 

2015

 

2014

 

2015

 

2014

 

(In Thousands)

Revenues

$

316,319

   

$

242,489

   

$

567,411

   

$

455,346

 
               

Cost of sales, services, and rentals

207,391

   

185,007

   

374,054

   

349,974

 

Depreciation, amortization, and accretion

39,067

   

22,007

   

77,410

   

45,047

 

Total cost of revenues

246,458

   

207,014

   

451,464

   

395,021

 

Gross profit

69,861

   

35,475

   

115,947

   

60,325

 
               

General and administrative expense

37,472

   

32,270

   

72,741

   

65,690

 

Interest expense, net

12,340

   

4,604

   

25,226

   

9,315

 

Other (income) expense, net

1,941

   

1,095

   

1,927

   

(1,503)

 

Income (loss) before taxes and discontinued operations

18,108

   

(2,494)

   

16,053

   

(13,177)

 

Provision (benefit) for income taxes

2,741

   

(944)

   

4,310

   

(5,537)

 

Net income (loss)

15,367

   

(1,550)

   

11,743

   

(7,640)

 

Less: Net income attributable to noncontrolling interest

(442)

   

(907)

   

(1,266)

   

(1,751)

 

Net income (loss) attributable to TETRA stockholders

$

14,925

   

$

(2,457)

   

$

10,477

   

$

(9,391)

 
               

Basic per share information:

             

Net income (loss) attributable to TETRA stockholders

$

0.19

   

$

(0.03)

   

$

0.13

   

$

(0.12)

 

Weighted average shares outstanding

79,165

   

78,525

   

79,037

   

78,416

 
               

Diluted per share information:

             

Net income (loss) attributable to TETRA stockholders

$

0.19

   

$

(0.03)

   

$

0.13

   

$

(0.12)

 

Weighted average shares outstanding

79,915

   

78,525

   

79,506

   

78,416

 

 

Schedule B: Financial Results By Segment (Unaudited)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2015

 

2014

 

2015

 

2014

 

(In Thousands)

Revenues by segment:

             

Fluids Division

$

122,973

   

$

116,650

   

$

222,261

   

$

221,795

 

Production Testing Division

34,842

   

42,377

   

71,944

   

86,015

 

Compression Division

126,456

   

32,015

   

229,344

   

61,779

 

Offshore Division

             

Offshore Services

35,731

   

56,241

   

47,515

   

91,571

 

Maritech

394

   

1,547

   

1,900

   

2,923

 

Intersegment eliminations

(2,909)

   

(4,934)

   

(3,180)

   

(6,721)

 

Offshore Division total

33,216

   

52,854

   

46,235

   

87,773

 

Eliminations and other

(1,168)

   

(1,407)

   

(2,373)

   

(2,016)

 

Total revenues

$

316,319

   

$

242,489

   

$

567,411

   

$

455,346

 
               

Gross profit (loss) by segment:

             

Fluids Division

$

40,354

   

$

26,273

   

$

65,720

   

$

50,664

 

Production Testing Division

3,918

   

4,221

   

6,777

   

6,375

 

Compression Division

21,150

   

11,085

   

43,937

   

21,050

 

Offshore Division

             

Offshore Services

4,690

   

4,780

   

(1,279)

   

(204)

 

Maritech

3

   

(10,358)

   

1,301

   

(16,484)

 

Intersegment eliminations

   

   

   

 

Offshore Division total

4,693

   

(5,578)

   

22

   

(16,688)

 

Corporate overhead and eliminations

(254)

   

(526)

   

(509)

   

(1,076)

 

Total gross profit

$

69,861

   

$

35,475

   

$

115,947

   

$

60,325

 
               

Income (loss) before taxes by segment:

             

Fluids Division

$

32,583

   

$

17,059

   

$

50,320

   

$

35,536

 

Production Testing Division

(472)

   

(249)

   

(433)

   

(3,047)

 

Compression Division

1,498

   

5,477

   

3,904

   

10,664

 

Offshore Division

             

Offshore Services

2,095

   

1,833

   

(6,553)

   

(6,139)

 

Maritech

(313)

   

(10,698)

   

662

   

(17,237)

 

Intersegment eliminations

   

   

   

 

Offshore Division total

1,782

   

(8,865)

   

(5,891)

   

(23,376)

 

Corporate overhead and eliminations

(17,283)

   

(15,916)

   

(31,847)

   

(32,954)

 

Total income (loss) before taxes

$

18,108

   

$

(2,494)

   

$

16,053

   

$

(13,177)

 

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)

 

June 30, 2015

 

December 31, 2014

 

(In Thousands)

Balance Sheet:

     

Cash (excluding restricted cash)

$

41,941

   

$

48,384

 

Accounts receivable, net

190,908

   

226,966

 

Inventories

181,942

   

189,357

 

Other current assets

36,682

   

36,144

 

PP&E, net

1,120,814

   

1,124,192

 

Other assets

431,358

   

442,590

 

Total assets

$

2,003,645

   

$

2,067,633

 
       

Current portion of decommissioning liabilities

$

11,521

   

$

12,758

 

Other current liabilities

315,590

   

365,683

 

Long-term debt

846,112

   

844,961

 

Long-term portion of decommissioning liabilities

47,887

   

49,983

 

Other long-term liabilities

27,491

   

28,647

 

Equity

755,044

   

765,601

 

Total liabilities and equity

$

2,003,645

   

$

2,067,633

 
 

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.

 

June 30, 2015

 

December 31, 2014

 

(In Thousands)

TETRA

     

Bank revolving line of credit facility

$

92,900

   

$

90,000

 

TETRA Senior Notes at various rates

265,000

   

305,000

 

Other debt

   

74

 

TETRA total debt

357,900

   

395,074

 

Less current portion

(90,000)

   

(90,074)

 

TETRA total long-term debt

$

267,900

   

$

305,000

 
       

CSI Compressco LP

     

CCLP Bank Credit Facility

$

233,000

   

$

195,000

 

CCLP 7.25% Senior Notes

345,212

   

344,961

 

CCLP total debt

578,212

   

539,961

 

Less current portion

   

 

CCLP total long-term debt

$

578,212

   

$

539,961

 

Consolidated total long-term debt

$

846,112

   

$

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;
  • to measure the performance of the Company as compared to its peer group of companies; and
  • to determine the ability of the Company to pay dividends to shareholders.

Schedule E: Second Quarter and YTD Unusual Charges

 

Three Months Ended

 

June 30, 2015

 

Income Before Tax

Tax

Noncont. Interest

Net Income

Diluted EPS

 

(In Thousands, Except per Share Amounts)

Adjusted

$

18,741

 

$

5,623

 

$

464

 

$

12,654

 

$

0.16

 

Transaction related costs

 

 

 

 

 

Severance expense

(320)

 

(40)

 

(22)

 

(258)

 

 

Deferred tax valuation allowance and other related tax adj.

 

(2,842)

 

 

2,842

 

0.03

 

Maritech profit (loss)

(313)

 

 

 

(313)

 

 

As reported

$

18,108

 

$

2,741

 

$

442

 

$

14,925

 

$

0.19

 
           
 

June 30, 2014

 

Income (Loss) Before Tax

 Tax

Noncont. Interest

Net Income (Loss)

 Diluted EPS

 

(In Thousands, Except per Share Amounts)

Adjusted

$

12,792

 

$

3,194

 

$

1,242

 

$

8,356

 

$

0.10

 

Transaction related costs

(2,048)

 

(175)

 

(257)

 

(1,616)

 

(0.02)

 

Severance expense

(115)

 

(10)

 

 

(105)

 

 

Maritech profit (loss)

(10,698)

 

(3,745)

 

 

(6,953)

 

(0.09)

 

Other

(2,425)

 

(208)

 

(78)

 

(2,139)

 

(0.02)

 

As reported

$

(2,494)

 

$

(944)

 

$

907

 

$

(2,457)

 

$

(0.03)

 
 
 
 

Six Months Ended

 

June 30, 2015

 

Income Before Tax

Tax

Noncont. Interest

Net Income

Diluted EPS

 

(In Thousands, Except per Share Amounts)

Adjusted

$

16,662

 

$

4,948

 

$

1,451

 

$

10,263

 

$

0.13

 

Transaction related costs

(208)

 

(78)

 

(73)

 

(57)

 

 

Severance expense

(1,063)

 

(195)

 

(112)

 

(756)

 

(0.01)

 

Effect of Deferred Tax Valuation Allowance and other related tax adj

 

(365)

 

 

365

 

 

Maritech profit (loss)

662

 

 

 

662

 

0.01

 

As reported

$

16,053

 

$

4,310

 

$

1,266

 

$

10,477

 

$

0.13

 
           
 

June 30, 2014

 

Income (Loss)Before Tax

 Tax

 Noncont. Interest

Net Income (Loss)

 Diluted EPS

 

(In Thousands, Except per Share Amounts)

Adjusted

$

8,673

 

$

1,824

 

$

2,008

 

$

4,841

 

$

0.06

 

Transaction related costs

595

 

(243)

 

(257)

 

1,095

 

0.01

 

Severance expense

(784)

 

(249)

 

 

(535)

 

(0.01)

 

Maritech profit (loss)

(17,237)

 

(6,033)

 

 

(11,204)

 

(0.14)

 

Other

(4,424)

 

(836)

 

 

(3,588)

 

(0.04)

 

As reported

$

(13,177)

 

$

(5,537)

 

$

1,751

 

$

(9,391)

 

$

(0.12)

 

 

 

 

Schedule F: Non-GAAP Reconciliation to GAAP Financials

 

Three Months Ended

 

June 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

$

32,583

 

$

171

 

$

32,754

 

$

(76)

 

$

8,813

 

$

 

$

41,491

 

Production Testing Division

(472)

 

47

 

(425)

 

14

 

6,168

 

 

5,757

 

Compression Division

1,498

 

45

 

1,543

 

7,961

 

20,686

 

727

 

30,917

 

Offshore Services Segment

2,095

 

32

 

2,127

 

 

2,888

 

 

5,015

 

Eliminations and other

(12)

 

 

(12)

 

 

(2)

 

 

(14)

 

Subtotal

35,692

 

295

 

35,987

 

7,899

 

38,553

 

727

 

83,166

 

Corporate and other

(17,271)

 

25

 

(17,246)

 

4,415

 

254

 

1,874

 

(10,703)

 

TETRA excl Maritech

18,421

 

320

 

18,741

 

12,314

 

38,807

 

2,601

 

72,463

 

Maritech

(313)

 

 

(313)

 

26

 

260

 

 

(27)

 

Total TETRA

$

18,108

 

$

320

 

$

18,428

 

$

12,340

 

$

39,067

 

$

2,601

 

$

72,436

 
               
 

June 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

$

17,059

 

$

23

 

$

17,082

 

$

(103)

 

$

7,206

 

$

 

$

24,185

 

Production Testing Division

(249)

 

11

 

(238)

 

(57)

 

7,134

 

 

6,839

 

Compression Division

5,477

 

905

 

6,382

 

145

 

3,788

 

235

 

10,550

 

Offshore Services Segment

1,833

 

2,096

 

3,929

 

9

 

3,317

 

 

7,255

 

Eliminations and other

3

 

 

3

 

 

(3)

 

 

 

Subtotal

24,123

 

3,035

 

27,158

 

(6)

 

21,442

 

235

 

48,829

 

Corporate and other

(15,919)

 

1,553

 

(14,366)

 

4,610

 

526

 

1,184

 

(8,046)

 

TETRA excl Maritech

8,204

 

4,588

 

12,792

 

4,604

 

21,968

 

1,419

 

40,783

 

Maritech

(10,698)

 

 

(10,698)

 

 

39

 

 

(10,659)

 

Total TETRA

$

(2,494)

 

$

4,588

 

$

2,094

 

$

4,604

 

$

22,007

 

$

1,419

 

$

30,124

 
 
 
 

Six Months Ended

 

June 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

$

50,320

 

$

284

 

$

50,604

 

$

(84)

 

$

17,532

 

$

 

$

68,052

 

Production Testing Division

(433)

 

433

 

 

5

 

12,431

 

 

12,436

 

Compression Division

3,904

 

452

 

4,356

 

15,867

 

40,731

 

1,204

 

62,158

 

Offshore Services Segment

(6,553)

 

42

 

(6,511)

 

 

5,692

 

 

(819)

 

Eliminations and other

(10)

 

 

(10)

 

 

(9)

 

 

(9)

 

Subtotal

47,228

 

1,211

 

48,439

 

15,788

 

76,377

 

1,204

 

141,808

 

Corporate and other

(31,837)

 

60

 

(31,777)

 

9,412

 

512

 

2,993

 

(18,860)

 

TETRA excl Maritech

15,391

 

1,271

 

16,662

 

25,200

 

76,889

 

4,197

 

122,948

 

Maritech

662

 

 

662

 

26

 

521

 

 

1,209

 

Total TETRA

$

16,053

 

$

1,271

 

$

17,324

 

$

25,226

 

$

77,410

 

$

4,197

 

$

124,157

 
               
 

June 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

$

35,536

 

$

(2,252)

 

$

33,284

 

$

(107)

 

$

15,036

 

$

 

$

48,213

 

Production Testing Division

(3,047)

 

1,758

 

(1,289)

 

(59)

 

14,697

 

 

13,349

 

Compression Division

10,664

 

905

 

11,569

 

304

 

7,508

 

437

 

19,818

 

Offshore Services Segment

(6,139)

 

2,130

 

(4,009)

 

36

 

6,649

 

 

2,676

 

Eliminations and other

6

 

 

6

 

 

(6)

 

 

 

Subtotal

37,020

 

2,541

 

39,561

 

174

 

43,884

 

437

 

84,056

 

Corporate and other

(32,960)

 

2,072

 

(30,888)

 

9,141

 

1,080

 

2,836

 

(17,831)

 

TETRA excl Maritech

4,060

 

4,613

 

8,673

 

9,315

 

44,964

 

3,273

 

66,225

 

Maritech

(17,237)

 

 

(17,237)

 

 

83

 

 

(17,154)

 

Total TETRA

$

(13,177)

 

$

4,613

 

$

(8,564)

 

$

9,315

 

$

45,047

 

$

3,273

 

$

49,071

 

 

 

Schedule G: Non-GAAP Reconciliation to Free Cash Flow

 

Three Months Ended

 

Six Months Ended

 

June 30, 2015

 

June 30, 2014

 

June 30, 2015

 

June 30, 2014

 

(In Thousands)

TTI Consolidated

             

Cash from operations

$

54,347

   

$

4,551

   

$

82,162

   

$

40,620

 

ARO settlements

3,845

   

16,459

   

4,411

   

29,766

 

Capital expenditures, net of sales proceeds

(23,188)

   

(23,154)

   

(69,326)

   

(47,990)

 

Free cash flow before ARO settlements

35,004

   

(2,144)

   

17,247

   

22,396

 
               

CSI Compressco LP

             

Cash from operations

19,721

   

4,722

   

52,202

   

20,956

 

Capital expenditures, net of sales proceeds

(19,934)

   

(4,878)

   

(57,092)

   

(10,882)

 

Free cash flow

(213)

   

(156)

   

(4,890)

   

10,074

 
               

TTI Only

             

Cash from operations

34,626

   

(171)

   

29,960

   

19,665

 

ARO settlements

3,845

   

16,459

   

4,411

   

29,766

 

Capital expenditures, net of sales proceeds

(3,254)

   

(18,276)

   

(12,234)

   

(37,108)

 

Free cash flow before ARO settlements

35,217

   

(1,988)

   

22,137

   

12,323

 

Distributions from CSI Compressco LP

7,651

   

6,049

   

14,992

   

11,750

 

Free cash flow before ARO settlements and after distributions from CSI Compressco LP

$

42,868

   

$

4,061

   

$

37,129

   

$

24,073

 

 

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 June 30, 2015 and December 31, 2014 is provided below.

 

June 30, 2015

 

December 31, 2014

 

(In Thousands)

TETRA Net Debt:

     

Total debt, excluding CSI Compressco LP debt

$

357,900

   

$

395,074

 

Less: cash, excluding CSI Compressco LP cash

(8,662)

   

(14,318)

 

Net debt

$

349,238

   

$

380,756

 

 

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SOURCE TETRA Technologies, Inc.