TETRA Technologies, Inc. Announces Fourth Quarter And Full Year 2012 Results

28 Feb, 2013, 07:00 ET from TETRA Technologies, Inc.

THE WOODLANDS, Texas, Feb. 28, 2013 /PRNewswire/ -- TETRA Technologies, Inc. (TETRA or the Company) (NYSE: TTI) today announced fourth quarter 2012 net income (loss) from continuing operations attributable to TETRA stockholders of $(0.05) per fully diluted share compared to $(0.33) per fully diluted share reported in the fourth quarter of 2011. Such results for the fourth quarter of 2012 include $(6.2) million of net pretax special charges and a pretax loss by the Maritech segment of $(22.9) million that aggregate to approximately $(0.26) per share after tax, compared to pretax special charges of $(1.2) million and a pretax loss by the Maritech segment of $(44.7) million that aggregated to approximately $(0.39) per share after tax in the fourth quarter of 2011.

Highlights of the 2012 fourth quarter and current outlook include:

  • adjusted fourth quarter 2012 earnings per fully diluted share attributable to TETRA stockholders of $0.21 (excluding Maritech's loss and special charges totaling $(0.26) per share) exceeded the estimated range provided on February 1, 2013;
  • significantly improved the Company's balance sheet by generating $87.1 million of cash during the fourth quarter of 2012 from the sale of certain assets and accounts receivable improvements; and
  • reconfirming first quarter 2013 earnings expectations of $0.09 to $0.12 per fully diluted share excluding Maritech.

Consolidated revenues for the quarter ended December 31, 2012 were $231.1 million, an increase of 24% over the $186.2 million reported in the fourth quarter of 2011. Total gross profit was $32.5 million in the fourth quarter of 2012 versus a loss of $(7.3) million in the fourth quarter of 2011. Net income (loss) attributable to TETRA stockholders was $(4.0) million in 2012's fourth quarter versus $(25.1) million in 2011's fourth quarter. The foregoing results include the impact of the Maritech segment. As discussed below, management believes that it is helpful to an understanding of the Company's business going forward to present financial results excluding the impact of Maritech. Such results, as well as adjusted fourth quarter earnings, are reconciled to the nearest GAAP financial measures at the end of this press release.  

Consolidated results per share from continuing operations attributable to TETRA stockholders for the fourth quarter of 2012 were a loss of $(0.05) with 77.5 million weighted average common shares outstanding versus a loss of $(0.33) with 76.9 million weighted average common shares outstanding in the fourth quarter of 2011. As of December 31, 2012, total debt, including the current portion of long-term debt, was $366.7 million and cash was $74.0 million.

Divisional pretax earnings (loss) from continuing operations in the fourth quarter of 2012 versus the fourth quarter of 2011 were: Fluids Division – $16.9 million in 4Q 2012 and $8.2 million in 4Q 2011; Production Testing – $11.9 million in 4Q 2012 and $11.3 million in 4Q 2011; Compressco – $6.1 million in 4Q 2012 and $4.1 million in 4Q 2011; Offshore Services – a loss of $(1.1)  million in 4Q 2012 and a loss of $(4.2) million in 4Q 2011; and, Maritech – a loss of $(22.9) million in 4Q 2012 and a loss of $(44.7) million in 4Q 2011.

Financial data comparing the fourth quarter and full year 2012 to prior quarterly and annual periods is available in the financial tables set forth below.

Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, "Our adjusted fourth quarter 2012 earnings of $0.21 per share are slightly above the range noted in our estimated fourth quarter earnings as announced on February 1.

"Our Fluids Division's profitability increased significantly in the fourth quarter of 2012, both sequentially and compared to the fourth quarter of 2011, primarily due to a continued increase in completions activity offshore in the Gulf of Mexico and continued growth in our water management business onshore in the U.S. In addition, our international completion fluids business was a positive contributor to the sequential earnings growth for the Division.

"For the Production Testing segment, fourth quarter 2012 earnings were slightly improved on a sequential basis, despite the negative impact from continued weakness in the North American gas drilling market that particularly affected our Canadian operations. As we look forward, we expect to see this market environment improve during the second half of 2013. In addition, we expect to benefit from ongoing opportunities for our international operations.

"Our Compressco segment's profitability increased during the fourth quarter of 2012 compared to the prior year's fourth quarter, driven primarily by international growth, particularly in Mexico.

"Results for our Offshore Services segment benefited from better than anticipated utilization of our major assets during the first part of the fourth quarter, which also helped to offset challenging weather conditions in the Gulf of Mexico during December. Fourth quarter results for this segment also reflect the benefit of cost reductions initiated during the second half of 2012. We observed improvement in the speed of issuance of federal permits for the decommissioning of platforms during the fourth quarter of 2012, and we have also seen increased bid activity during the current quarter. Based on these observations and expected gains from previously initiated and ongoing cost efforts, we expect more robust results for this segment in 2013. Included in the quarterly results for the Offshore Services segment are special charges of $7.2 million for the impairment of certain assets, primarily a heavy lift barge, net of a gain on the sale of a non-core business.

"During the fourth quarter, we continued to aggressively work to reduce the Maritech segment's abandonment and decommissioning liabilities, spending $28.3 million on such activities. As previously discussed, we have attempted to accelerate these activities, with the objective of completing the remaining work by the end of the third quarter. Primarily due to weather conditions in December that disrupted work in progress, implementation of the accelerated timeline for completing the remaining work, and several problem wells, we increased Maritech's remaining abandonment and decommissioning liabilities by $21.6 million at year-end 2012.

"Our cash flows during the fourth quarter were significantly improved due to the sale of certain assets and accounts receivable improvements. As a result of these actions, we closed the year with net debt of $295.6, excluding restricted cash and $13.0 million of cash and $10.1 million of long-term debt attributable to Compressco Partners (net debt is a non-GAAP financial measure that is reconciled to the nearest GAAP financial measure below). Our strong year-end balance sheet and our expectation of additional working capital improvements in 2013 give us confidence in our ability to execute our growth strategies," concluded Brightman. 

As a result of Maritech's sale of essentially all of its oil and gas properties during 2011 and 2012, the Company believes it will be helpful to provide adjusted financial results that exclude the impact of Maritech. These results are intended to show TETRA's historical results of operations on a basis that is consistent with expected operations going forward. Set forth below in this press release under "Reconciliation of Non-GAAP Financial Measures" is a presentation of TETRA's consolidated revenues excluding Maritech, consolidated gross profit excluding Maritech, and consolidated income before taxes and discontinued operations excluding Maritech and oil and gas derivative ineffectiveness, all of which are non-GAAP financial measures that are reconciled to the nearest GAAP measures.

TETRA will host a conference call to discuss fourth quarter 2012 results today, February 28, 2013, at 10:30 am ET. Stuart M. Brightman, TETRA's President and Chief Executive Officer, and Elijio V. Serrano, TETRA's Chief Financial Officer, will host the call. The phone number for the call is 800/860-2442. The conference will also be available by live audio webcast and may be accessed through TETRA's website at www.tetratec.com.

TETRA is a geographically diversified oil and gas services company focused on completion fluids and associated products and services, water management, after-frac flow back, production well testing, rig cooling, compression-based production enhancement, and selected offshore services including well plugging and abandonment, decommissioning, and diving.

Forward Looking Statements

This press release includes certain statements that are deemed to be forward-looking statements. Generally, the use of words such as "may," "will," "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 2013, anticipated benefits from the Company's acquisitions of assets and businesses, projections concerning the Company's business activities in the Gulf of Mexico, including potential future benefits from increased regulatory oversight of well abandonment and decommissioning activities, financial guidance, estimated earnings, earnings per share, and statements regarding the Company's beliefs, expectations, plans, goals, future events and performance, and other statements that are not purely historical. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of risks and uncertainties, many of which are beyond the control of the Company. Investors are cautioned that any such statements are not guarantees of future performances or results and that actual results or developments may differ materially from those projected in the forward-looking statements. Some of the factors that could affect actual results are described in the section titled "Risk Factors" contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, 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.

Financial Data (unaudited)

Three Months Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

(In Thousands)

Revenues

$

231,140

$

186,182

$

880,831

$

845,275

Gross profit

32,483

(7,335)

168,869

90,510

General and administrative expense

36,571

28,999

133,138

113,273

Interest expense, net

4,587

4,078

17,080

16,439

(Gain) loss on sale of assets

(1,781)

1,110

(4,916)

(58,674)

Other (income) expense

(1,809)

(1,412)

(4,616)

13,239

Income before taxes and discontinued operations

(5,085)

(40,110)

28,183

6,233

Provision (benefit) for income taxes

(1,912)

(15,621)

9,429

751

Income (loss) before discontinued operations

(3,173)

(24,489)

18,754

5,482

Income (loss) from discontinued operations, net of taxes

(1)

3

(64)

Net income (loss)

(3,173)

(24,490)

18,757

5,418

Net (income) attributable to noncontrolling interest

(835)

(609)

(2,797)

(1,271)

Net income (loss) attributable to TETRA stockholders

$

(4,008)

$

(25,099)

$

15,960

$

4,147

 

Three Months Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

(In Thousands, Except Per Share Amounts)

Basic per share information:

Income before discontinued operations

attributable to TETRA stockholders

$

(0.05)

$

(0.33)

$

0.21

$

0.05

Income (loss) from discontinued operations

attributable to TETRA stockholders

Net income attributable to TETRA stockholders

$

(0.05)

$

(0.33)

$

0.21

$

0.05

Weighted average shares outstanding

77,491

76,911

77,293

76,616

Diluted per share information:

Income before discontinued operations

attributable to TETRA stockholders

$

(0.05)

$

(0.33)

$

0.20

$

0.05

Income (loss) from discontinued operations

attributable to TETRA stockholders

Net income attributable to TETRA stockholders

$

(0.05)

$

(0.33)

$

0.20

$

0.05

Weighted average shares outstanding

77,491

76,911

77,963

77,991

Depreciation, depletion and amortization (A)

$

27,321

$

20,022

$

84,107

$

110,577

 (A) DD&A information for 2011 and 2012 includes asset impairments.

 

Three Months Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

(In Thousands)

Revenues by segment:

Fluids Division

$

90,147

$

72,948

$

334,548

$

304,536

Production Enhancement Division

Production Testing

63,339

37,747

207,984

139,756

Compressco

32,595

26,558

109,466

95,768

Intersegment eliminations

(1,730)

(2,354)

Production Enhancement Division total

94,204

64,305

315,096

235,524

Offshore Division

Offshore Services

61,370

59,795

265,943

287,300

Maritech

1,059

3,391

6,158

82,740

Intersegment eliminations

(15,720)

(14,380)

(41,199)

(65,036)

Offshore Division total

46,709

48,806

230,902

305,004

Corporate overhead

84

126

417

292

Eliminations and other

(4)

(3)

(132)

(81)

Total revenues

$

231,140

$

186,182

$

880,831

$

845,275

Gross profit by segment:

Fluids Division

$

24,585

$

13,772

$

79,454

$

57,470

Production Enhancement Division

Production Testing

16,993

12,939

58,009

46,889

Compressco

11,551

8,703

40,479

31,035

Intersegment eliminations

Production Enhancement Division total

28,544

21,642

98,488

77,924

Offshore Division

Offshore Services

1,761

(45)

33,272

33,394

Maritech

(21,713)

(42,079)

(39,397)

(75,762)

Intersegment eliminations

110

Offshore Division total

(19,952)

(42,124)

(6,125)

(42,258)

Eliminations and other

(694)

(625)

(2,948)

(2,626)

Total gross profit

$

32,483

$

(7,335)

$

168,869

$

90,510

 

Three Months Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

(In Thousands)

Income before taxes and discontinued operations

by segment:

Fluids Division

$

16,946

$

8,155

$

50,830

$

32,076

Production Enhancement Division

Production Testing

11,886

11,295

39,847

35,969

Compressco

6,087

4,110

20,598

15,799

Intersegment eliminations

Production Enhancement Division total

17,973

15,405

60,445

51,768

Offshore Division

Offshore Services

(1,133)

(4,212)

21,706

18,455

Maritech

(22,852)

(44,673)

(42,790)

(26,275)

Intersegment eliminations

55

1,802

Offshore Division total

(23,985)

(48,830)

(21,084)

(6,018)

Corporate overhead

(16,019)

(14,840)

(62,008)

(71,593)

Total income before taxes and

discontinued operations

$

(5,085)

$

(40,110)

$

28,183

$

6,233

 

December 31, 2012

December 31, 2011

(In Thousands)

Balance Sheet:

Cash (excluding restricted cash)

$

74,048

$

204,412

Accounts receivable, net

176,352

141,537

Inventories

103,041

99,985

Other current assets

81,668

82,567

PP&E, net

552,714

529,301

Other assets

273,995

145,508

Total assets

$

1,261,818

$

1,203,310

Current portion of decommissioning liabilities

$

80,667

$

105,008

Other current liabilities

176,148

127,357

Long-term debt, net of current portion

331,268

305,000

Decommissioning liabilities, net of current portion

14,254

34,827

Other long-term liabilities

66,173

62,030

Equity

593,308

569,088

Total liabilities and equity

$

1,261,818

$

1,203,310

Reconciliation of Non-GAAP Financial Measures

This press release refers to net debt and results excluding Maritech and special charges, both of which are financial measures not derived in accordance with generally accepted accounting principles, or "GAAP."

Results Excluding Maritech

As a supplement to financial results prepared in accordance with GAAP, the Company has provided the following tables, which contain results excluding the impact of Maritech. The tables also include reconciliations of revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness to the appropriate GAAP financial measures. The Company's management views revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness as appropriate measures to evaluate its results of operations following the sales of Maritech oil and gas producing properties that occurred during 2011 and 2012. These non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should not be used as a substitute for revenues, gross profit, income before taxes, earnings per share or other measures of financial performance presented in accordance with GAAP. Reconciliations of revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness for the three and twelve month periods ended December 31, 2012 and December 31, 2011 are provided below.

 

Three Months Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

(In Thousands, Except Per Share Amounts)

Consolidated revenues

$

231,140

$

186,182

$

880,831

$

845,275

Less: Maritech revenues

(1,059)

(3,391)

(6,158)

(82,740)

Consolidated revenues excluding Maritech

$

230,081

$

182,791

$

874,673

$

762,535

Consolidated gross profit (loss)

$

32,483

$

(7,335)

$

168,869

$

90,510

Less: Maritech gross (profit) loss

21,713

42,079

39,397

75,762

Consolidated gross profit excluding Maritech

$

54,196

$

34,744

$

208,266

$

166,272

Consolidated income (loss) before taxes and

discontinued operations

$

(5,085)

$

(40,110)

$

28,183

$

6,233

Less: Maritech (income) loss before taxes

22,852

44,673

42,790

26,275

Less: Derivative ineffectiveness

13,947

Consolidated income (loss) before taxes and

discontinued operations excluding Maritech and

derivative ineffectiveness

$

17,767

$

4,563

$

70,973

$

46,455

Diluted per share information:

Net income attributable to TETRA stockholders

$

(0.05)

$

(0.33)

$

0.20

$

0.05

(Income) loss for Maritech

0.20

0.38

0.36

0.22

(Income) loss for derivative ineffectiveness

0.12

Net income (loss) attributable to TETRA stockholders

excluding Maritech and derivative ineffectiveness

$

0.15

$

0.05

$

0.56

$

0.39

Results Excluding Maritech and Special Charges

The Company has provided the following table, which provides results for the fourth quarter of 2012 excluding the impact of Maritech and special charges. The Company's management views results excluding Maritech and special charges as an appropriate measure by which to evaluate results of ongoing core business operations. These non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should not be used as a substitute for financial performance presented in accordance with GAAP.

Three Months Ended December 31, 2012

Diluted Net Income

(Loss) Per Share

Income (Loss)

Attributable to

Before Tax

TETRA Stockholders

(In millions, except per share amounts)

Fourth quarter 2012 results

$

(5.1)

$

(0.05)

Maritech loss and net special charges

29.1

0.26

Fourth quarter 2012 results

excluding Maritech and net special charges

$

24.0

$

0.21

Net Debt

The following reconciliation of net debt is also 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 Compressco Partners, L.P. 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 long-term debt to net debt as of December 31, 2012 and December 30, 2011 is provided below.

December 31, 2012

December 31, 2011

(In Thousands)

Long-term debt, including current portion, less

Compressco Partners' debt

$

356,659

$

305,035

Less: cash, excluding Compressco

Partners' cash

(61,082)

(186,936)

Net debt

$

295,577

$

118,099

These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of the complete financial results for the given period.

(Logo: http://photos.prnewswire.com/prnh/20100917/TTLOGO)

 

 

SOURCE TETRA Technologies, Inc.



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