TETRA Technologies, Inc. Announces Fourth Quarter And Full Year 2015 Results

26 Feb, 2016, 07:30 ET from TETRA Technologies, Inc.

THE WOODLANDS, Texas, Feb. 26, 2016 /PRNewswire/ -- TETRA Technologies, Inc. (NYSE: TTI) today announced fourth quarter 2015 adjusted earnings per share of $0.01, excluding Maritech and other charges, which compares to $0.09 per share in the fourth quarter of 2014, also excluding Maritech and other charges.  Fourth quarter 2015 revenue of $258 million declined 18% from the fourth quarter of 2014 primarily as a result of a 61% reduction in the North American rig count.

Consolidated GAAP fourth quarter 2015 earnings per share attributable to TETRA stockholders including Maritech and other charges was a loss of $(1.84), which compares to a loss of $(1.90) in the fourth quarter of 2014. (Adjusted earnings per share is a non-GAAP financial measure that is reconciled to the nearest GAAP measure in the schedule.)

Highlights of the 2015 fourth quarter include:

  • TETRA fourth quarter free cash flow(1) of $52 million, excluding CSI Compressco and $5 million of Maritech asset retirement obligation (ARO) expenditures, and $3 million of costs associated with the issuance of $125 million of 11% Senior Notes completed in the fourth quarter. For the full year ending December 31, 2015, TETRA free cash flow(1) was $120 million, excluding CSI Compressco and $10 million of Maritech ARO expenditures, and $3 million of costs associated with the note issuance.
  • During 2015, TETRA reduced total debt outstanding by $102 million and improved its debt to EBITDA leverage ratio(3) from a high of 3.38x in 2014 to 1.86x at year-end 2015.
  • Continued strength in our Fluids Division driven by offshore activities and the continued success of our zinc-free heavy completion fluid.
  • Adjusted EBITDA(2) of $28.4 million for CSI Compressco LP, demonstrating continued profitability in the current environment.
  • Continued reduction in operating expenses across all of our businesses.
  • Robust earnings in our Offshore Services segment during what is typically a seasonally slow quarter.

(1)

Non-GAAP financial measure that is reconciled to GAAP in Schedule G.

(2)

Adjusted EBITDA is a non-GAAP financial measure that is reconciled to GAAP in Schedule F.

(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.

 

Adjusted Fourth Quarter 2015 Results, Excluding Special Charges and Maritech

(Non-GAAP financial measures are reconciled to GAAP in the schedules below)

Three Months Ended

Change

Dec. 31, 2015

Dec. 31, 2014

2015 vs. 2014

(In Thousands, Except per Share Amounts)

Adjusted revenue

$

257,527

$

315,092

(18)%

Adjusted income before taxes(1)

658

14,203

(95)%

Adjusted net income attributable to TETRA shareholders(2)

950

7,047

(87)%

Adjusted diluted EPS attributable to TETRA shareholders(3)

$

0.01

$

0.09

(87)%

Adjusted free cash flow

$

52,448

$

57,042

(8)%

Adjusted pretax operating margin

0.3%

4.5%

-418 bps

Adjusted EBITDA

$

54,306

$

67,566

(20)%

(1)

Income before taxes, including special charges and Maritech was a loss of $(233) million in the fourth quarter of 2015 and a loss of $(120) million in the fourth quarter of 2014. 

(2)

Net income attributable to TETRA shareholders, including special charges and Maritech was a loss of $(146) million in the fourth quarter of 2015, and a loss of $(150) million in the fourth quarter of 2014. 

(3)

Diluted EPS, including special charges and Maritech, was a loss of $(1.84) in the fourth quarter of 2015, and a loss of $(1.90) in the fourth quarter of 2014. See Schedule E  for details.

Analysis of Fourth Quarter Results

Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, "The markets we serve became increasingly challenging as we exited the fourth quarter of 2015 and moved into 2016. Despite this unfavorable environment, in the fourth quarter we were able to generate adjusted earnings per share of $0.01 and adjusted free cash flow of $52 million (see schedule G for a reconciliation of free cash flow to GAAP cash from operations). We continue to take the actions necessary to ensure the long-term health of the company and continue to generate free cash flow.

"Our Fluids Division generated $17.2 million of adjusted income before taxes in the fourth quarter of 2015 compared to $19.1 million in the fourth quarter of 2014. The Division's results for 2015's fourth quarter included a $3.5 million favorable benefit from the resolution of a completion fluids project completed in the third quarter of 2015. We continue to benefit from positive results for our completion fluids business in the Gulf of Mexico, driven by the introduction of our zinc-free heavy completion fluids. Our chemicals business continues to be an area of strength due to the diversity of our end-user markets. On a sequential basis, compared to the third quarter of 2015, our onshore completion fluids businesses continued to suffer from decreased demand in a very challenging market. Certain areas of our international operations in the Fluids Division began to evidence the impact of market pressures in the fourth quarter, and we expect this to be a more challenging environment in 2016.

"Our Production Testing Division's fourth quarter results were a sequential improvement over the third quarter of 2015, with an adjusted pretax loss of $(0.9) million compared to an adjusted pretax loss of $(1.4) million in the third quarter of 2015. Our U.S. activity continued to decrease and the market continued to be more challenging in the fourth quarter. Despite this, we were able to generate sequentially improved results due to several international projects that occurred during the fourth quarter. We expect this business to continue to experience reduced demand during the first half of 2016, and we will continue to focus on offsetting the impact with our international operations.

"For the fourth quarter of 2015, our Compression Division reported an adjusted pretax loss of $(0.9) million, compared to adjusted income before taxes of $2.1 million in the third quarter of 2015. During the fourth quarter of 2015, the Division benefited from spot sales of compression equipment as well as continued demand for our large horsepower compression services. Adjusted EBITDA of $28.4 million for the fourth quarter of 2015 is slightly below adjusted EBITDA of $31.4 million for the third quarter of 2015. Aggressive cost actions have been taken in areas of reduced demand, most notably, resources associated with our fabrication business. On January 22, 2016, CSI Compressco LP declared a decreased distribution of $0.3775 attributable to the fourth quarter of 2015. This proactive decision to decrease the distribution was taken to provide a buffer against anticipated lower activity levels over the course of 2016.

"Our Offshore Services segment reported adjusted income before taxes of $2.6 million for the fourth quarter of 2015, compared to an adjusted pretax loss of $(3.1) million in the fourth quarter of 2014. This significant improvement was driven by benefits from ongoing cost actions and the execution of several small projects during the quarter. Our responsiveness to our customers enabled us to secure this business during a season in which activity is typically reduced.

"During the fourth quarter TETRA, excluding the operations of CSI Compressco, had $52 million of free cash flow, which includes distributions from CSI Compressco but excludes $5 million spent on Maritech asset retirement obligations (see schedule G for a reconciliation to GAAP cash from operations). For the full year 2015, such free cash flow was $120 million. As we noted throughout 2015, our ability to generate cash in this very challenging environment was driven by earnings, our minimization of capital expenditures, and continued improvements in working capital. We exited 2015 with a leverage ratio of 1.86x, representing our fifth consecutive quarter of improvement in the leverage ratio."

Divisional revenues, adjusted income (loss) before taxes, adjusted income (loss) before taxes as a percent of revenue, and adjusted EBITDA (all of which are non-GAAP financial measures that are reconciled to GAAP in the schedules below) for the three months ended December 31, 2015 and December 31, 2014 are summarized in the table below:

Segment Results

Three Months Ended

December 31, 2015

December 31, 2014

Revenue

Adjusted (Loss) Income Before Taxes(1)

Adjusted Income (Loss) Before Taxes as a Percent of Revenue(2)

Adjusted EBITDA(3)

Revenue

Adjusted Income Before Taxes(1)

Adjusted Income (Loss) Before Taxes as a Percent of Revenue(2)

Adjusted EBITDA(3)

(In Thousands)

Fluids Division

$

91,194

$

17,213

18.9%

$

25,911

$

110,271

$

19,109

17.3%

$

27,523

Production Testing Division

33,017

(866)

(2.6)%

4,679

56,633

8,790

15.5%

15,499

Compression Division

99,369

7,234

7.3%

28,382

124,829

13,812

11.1%

34,492

Offshore Services segment

36,798

2,577

7.0%

5,505

42,296

(3,059)

(7.2)%

92

Eliminations and other

(1,108)

4

(0.4)%

(1,392)

3

Subtotal

259,270

26,162

10.1%

64,477

332,637

38,655

11.6%

77,606

Corporate and other

(1,743)

(12,164)

(10,171)

(17,545)

(11,631)

(10,040)

Interest expense, net - Compression Division

(8,110)

(7,662)

Interest expense, net - TTI, excluding Compression Division

(5,230)

(5,159)

Special charges and Maritech(4)

63

(233,897)

758

(134,070)

As reported

257,590

(233,239)

(90.5)%

54,306

315,850

(119,867)

(38.0)%

67,566

(1)

See Schedule F for reconciliation.

(2)

GAAP income (loss) before taxes as a percent of revenue for fourth quarter 2015 are: Fluids Division, 3.0%; Production Testing Division, (153.7)%; Compression Division, (153.7)%; and, Offshore Services segment, 4.8%. GAAP income (loss) before taxes as a percent of revenue for fourth quarter 2014 are: Fluids Division, 11.5%; Production Testing Division, (117.5)%; Compression Division, 2.6%; and, Offshore Services segment, 49.0%. Refer to Schedule B for GAAP dollar amounts.

(3)

Adjusted income before taxes and adjusted EBITDA are non-GAAP financial measures that are defined and reconciled to the nearest GAAP financial measures in Schedule F.

(4)

See Schedule E for special charges and reconciliations.

Debt, Cost, and Cash Actions

Given the uncertain market environment and despite our strong 2015 cash generation and improvements in our capital structure, over the past 90 days the Company has implemented an incremental series of actions to ensure we remain strong through a prolonged downturn.  These actions have included:

  • During the fourth quarter we secured $125.0 million of 11% senior notes maturing in seven years. The proceeds from this transaction were used to pay down $115.0 million of senior notes due from April 2016 through December 2020, and associated transaction fees. Following this transaction, TETRA has $46.9 of outstanding debt maturing in December 2017, with no subsequent maturities until 2019. The strength of our balance sheet and ongoing actions to support it continue to be a primary focus for our management group.
  • Since October 1, 2015, we have reduced headcount by 9.5% for TETRA, and 16% for CSI Compressco. In addition, we have recently implemented salary reductions in North America that approximate 5% of annual base pay, to counter continued pricing pressures.
  • A 25% reduction in CSI Compressco LP's distribution attributable to the fourth quarter of 2015, and a reduction of total capital expenditures from $95 million in 2015 to $20 to $30 million in 2016. Given the pricing pressures in our industry, we remain focused on capital returns and will resume investments in growth capital when market pricing supports appropriate returns.

Special Charges and Maritech

During the fourth quarter of 2015, due to changes in the current market environment, the fair value of certain of our identified assets and goodwill has decreased. As a result, we recorded $231 million of impairments and other charges, primarily for our Compression and Production Testing Divisions.

Maritech reported a pre-tax loss of $(2.8) million in the fourth quarter of 2015.

First Quarter Financial Guidance

Given the continued weakness in commodity prices and the seasonality of our operations, we expect a first quarter GAAP loss attributable to TETRA stockholders of between $0.21 to $0.29 per share and first quarter adjusted EPS to be a loss of between $0.15 to $0.20 per share reflecting a normalized tax rate of 30%.  Additionally, we expect first quarter TETRA only free cash flow of between break-even and $10 million (TETRA only cash flow from operations of $1 million to $11 million, less anticipated TETRA only capital expenditures of $6 million, plus $5 million of distributions from CSI Compressco LP) as the first quarter has historically been TETRA's weakest quarter given the seasonality of our operations.

Conference Call

TETRA will host a conference call to discuss fourth quarter 2015 results today, February 26, 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: Fourth Quarter Special Charges Schedule F: Non-GAAP Reconciliation to GAAP Financials Schedule G: Non-GAAP Reconciliation to 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 (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 December 31,

Twelve Months Ended December 31,

2015

2014

2015

2014

(In Thousands)

Revenues

$

257,590

$

315,850

$

1,130,145

$

1,077,567

Cost of sales, services, and rentals

171,981

242,402

741,736

830,769

Depreciation, amortization, and accretion

38,696

38,631

155,015

116,912

Impairments of long-lived assets

44,158

34,842

44,158

34,842

Total cost of revenues

254,835

315,875

940,909

982,523

Gross profit (loss)

2,755

(25)

189,236

95,044

General and administrative expense

44,161

39,900

157,812

142,689

Goodwill impairment

177,006

64,295

177,006

64,295

Interest expense, net

13,087

12,805

50,514

31,998

Other (income) expense, net

1,740

2,842

5,667

13,933

Income (loss) before taxes

(233,239)

(119,867)

(201,763)

(157,871)

Provision (benefit) for income taxes

(1,293)

27,601

7,704

9,704

Net income (loss)

(231,946)

(147,468)

(209,467)

(167,575)

Net income (loss) attributable to noncontrolling interest

85,531

(2,282)

83,284

(2,103)

Net income (loss) attributable to TETRA stockholders

$

(146,415)

$

(149,750)

$

(126,183)

$

(169,678)

Basic per share information:

Net income (loss) attributable to TETRA stockholders

$

(1.84)

$

(1.90)

$

(1.59)

$

(2.16)

Weighted average shares outstanding

79,380

78,877

79,169

78,600

Diluted per share information:

Net income (loss) attributable to TETRA stockholders

$

(1.84)

$

(1.90)

$

(1.59)

$

(2.16)

Weighted average shares outstanding

79,380

78,877

79,169

78,600

Schedule B: Financial Results By Segment (Unaudited)

Three Months Ended December 31, 2015

Twelve Months Ended December 31, 2015

2015

2014

2015

2014

(In Thousands)

Revenues by segment:

Fluids Division

$

91,194

$

110,271

$

424,044

$

437,362

Production Testing Division

33,017

56,633

133,904

192,824

Compression Division

99,369

124,829

457,639

282,505

Offshore Division

Offshore Services

36,798

42,296

122,194

195,372

Maritech

63

758

2,438

4,722

Intersegment eliminations

(1,108)

(17,542)

(4,669)

(30,595)

Offshore Division total

35,753

25,512

119,963

169,499

Eliminations and other

(1,743)

(1,395)

(5,405)

(4,623)

Total revenues

$

257,590

$

315,850

$

1,130,145

$

1,077,567

Gross profit (loss) by segment:

Fluids Division

$

4,545

$

21,161

$

111,969

$

97,806

Production Testing Division

(10,749)

(1,959)

(3,046)

12,610

Compression Division

7,035

25,606

73,135

66,527

Offshore Division

Offshore Services

4,585

(13,943)

10,602

(10,314)

Maritech

(2,493)

(30,634)

(2,523)

(69,861)

Intersegment eliminations

Offshore Division total

2,092

(44,577)

8,079

(80,175)

Corporate overhead and eliminations

(168)

(256)

(901)

(1,724)

Total gross profit

$

2,755

$

(25)

$

189,236

$

95,044

Income (loss) before taxes by segment:

Fluids Division

$

(2,746)

$

12,628

$

80,789

$

64,705

Production Testing Division

(50,759)

(66,547)

(55,720)

(66,156)

Compression Division

(152,772)

3,237

(146,798)

7,340

Offshore Division

Offshore Services

1,782

(20,713)

(195)

(26,251)

Maritech

(2,846)

(30,948)

(3,833)

(71,154)

Intersegment eliminations

Offshore Division total

(1,064)

(51,661)

(4,028)

(97,405)

Corporate overhead and eliminations

(25,898)

(17,524)

(76,005)

(66,355)

Total income (loss) before taxes

$

(233,239)

$

(119,867)

$

(201,763)

$

(157,871)

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

Schedule C: Consolidated Balance Sheet (Unaudited)

December 31, 2015

December 31, 2014

(In Thousands)

Balance Sheet:

Cash (excluding restricted cash)

$

23,057

$

48,384

Accounts receivable, net

182,343

226,966

Inventories

117,009

189,357

Other current assets

31,166

35,752

PP&E, net

1,048,004

1,124,192

Other assets

239,413

444,182

Total assets

$

1,640,992

$

2,068,833

Current portion of decommissioning liabilities

$

14,570

$

12,758

Other current liabilities

168,847

365,702

Long-term debt (1)

873,402

844,961

Long-term portion of decommissioning liabilities

42,879

49,983

Other long-term liabilities

27,114

29,828

Equity

514,180

765,601

Total liabilities and equity

$

1,640,992

$

2,068,833

(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, 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.

December 31, 2015

December 31, 2014

(In Thousands)

TETRA

Bank revolving line of credit facility

$

22,850

$

90,000

TETRA Senior Notes at various rates

270,071

305,000

Other debt

50

74

TETRA total debt

292,971

395,074

Less current portion

(50)

(90,074)

TETRA total long-term debt

$

292,921

$

305,000

CSI Compressco LP

CCLP Bank Credit Facility

$

235,000

$

195,000

CCLP 7.25% Senior Notes

345,481

344,961

CCLP total debt

580,481

539,961

Less current portion

CCLP total long-term debt

$

580,481

$

539,961

Consolidated total long-term debt

$

873,402

$

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, adjusted consolidated and segment income before taxes, excluding the Maritech segment and special 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 special charges from the historical results of operations enables management to evaluate more effectively the Company's operations over the prior periods and to identify operating trends that could be obscured by the excluded items.

Adjusted income before taxes (and adjusted income before taxes as a percent of revenue) is defined as the Company's (or its Segments') income before taxes excluding certain special or other charges (or credits). Adjusted income before taxes (and adjusted income 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 per share is defined as the Company's diluted earnings per share excluding certain special or other charges (or credits) and using a normalized effective income tax rate. Adjusted diluted earnings 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 is defined as 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.

TETRA 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 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.

Schedule E: Fourth Quarter Special Charges

Three Months Ended

December 31, 2015

Income (Loss) Before Tax

Provision (Benefit) for Tax

Noncont. Interest

Net Income Attributable to TETRA Stockholders

Diluted EPS

(In Thousands, Except per Share Amounts)

Income attributable to TETRA stockholders, excluding special charges and Maritech

658

199

(491)

950

0.01

Transaction related costs

Asset impairment, including inventory adjustments

(44,182)

(13,255)

(6,612)

(24,315)

(0.30)

Goodwill impairment

(177,006)

(53,102)

(78,151)

(45,753)

(0.57)

Effect of deferred tax valuation allowance and other related tax adjustment

67,824

(67,824)

(0.84)

Other charges

(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)

December 31, 2014

Income (Loss) Before Tax

Provision (Benefit) for Tax

Noncont. Interest

Net Income Attributable to TETRA Stockholders

 Diluted EPS

(In Thousands, Except per Share Amounts)

Income attributable to TETRA stockholders, excluding Special charges and Maritech

14,203

4,324

2,832

7,047

0.09

Transaction related costs

(1,687)

(597)

(550)

(540)

(0.01)

Asset impairment, including inventory adjustments

(37,140)

(12,784)

(24,356)

(0.31)

Goodwill impairment

(64,295)

(15,682)

(48,613)

(0.62)

Effect of deferred tax valuation allowance and other related adjustments

63,172

(63,172)

(0.79)

Maritech loss

(30,948)

(10,832)

(20,116)

(0.26)

Net income (loss) attributable to TETRA stockholders, as reported

(119,867)

27,601

2,282

(149,750)

(1.90)

Twelve Months Ended

December 31, 2015

Income (Loss) Before Tax

Provision (Benefit) for Tax

Noncont. Interest

Net Income Attributable to TETRA Stockholders

Diluted EPS

Income attributable to TETRA stockholders, excluding Special charges and Maritech

39,512

11,802

1,962

25,748

0.32

Transaction related costs

(208)

(62)

(73)

(73)

Asset impairment, including inventory adjustments

(44,158)

(13,247)

(6,612)

(24,299)

(0.30)

Goodwill impairment

(177,006)

(53,102)

(78,193)

(45,711)

(0.57)

Effect of deferred tax valuation allowance and other related tax adjustments

67,082

(67,082)

(0.85)

Other charges

(16,071)

(4,769)

(368)

(10,934)

(0.14)

Maritech profit (loss)

(3,832)

(3,832)

(0.05)

Net Income (loss) attributable to TETRA stockholders, as reported

(201,763)

7,704

(83,284)

(126,183)

(1.59)

December 31, 2014

Income (Loss) Before Tax

Provision (Benefit) for Tax

 Noncont. Interest

Net Income Attributable to TETRA Stockholders

 Diluted EPS

Income attributable to TETRA stockholders, excluding Special charges and Maritech

34,968

6,325

6,822

21,821

0.27

Transaction related costs

(15,060)

(5,389)

(4,719)

(4,952)

(0.06)

Asset impairment, including inventory adjustments

(37,140)

(12,784)

(24,356)

(0.31)

Goodwill impairment

(64,295)

(15,682)

(48,613)

(0.61)

Severance expense

(784)

(290)

(494)

(0.01)

Federal and State deferred tax valuation allowance and other related adjustments

60,500

(60,500)

(0.76)

Maritech loss

(71,154)

(21,346)

(49,808)

(0.63)

Other

(4,406)

(1,630)

(2,776)

(0.05)

Net Income (loss) attributable to TETRA stockholders, as reported

(157,871)

9,704

2,103

(169,678)

(2.16)

Schedule F: Non-GAAP Reconciliation to GAAP Financials   

Three Months Ended

December 31, 2015

Income (Loss) Before Tax, as Reported

Impairments & Special Charges

Adjusted Income Before Tax

Interest Expense, Net

Depreciation & Amortization

Equity Comp. Expense

Adjusted EBITDA

(In Thousands)

Fluids Division

$

(2,745)

$

19,958

$

17,213

$

(158)

$

8,856

$

$

25,911

Production Testing Division

(50,759)

49,893

(866)

(98)

5,643

4,679

Compression Division

(152,772)

151,896

(876)

8,110

20,643

505

28,382

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

7,854

38,066

505

64,477

Corporate and other

(25,902)

8,508

(17,394)

5,230

171

1,822

(10,171)

TETRA excl Maritech

(230,392)

231,050

658

13,084

38,237

2,327

54,306

Maritech

(2,847)

(2,847)

3

435

(2,409)

Consolidated

$

(233,239)

$

231,050

$

(2,189)

$

13,087

$

38,672

$

2,327

$

51,897

December 31, 2014

Income (Loss) Before Tax, as Reported

Impairments & Special Charges

Adjusted Income Before Tax

Interest Expense, Net

Depreciation & Amortization

Equity Comp. Expense

Adjusted EBITDA

(In Thousands)

Fluids Division

$

12,628

$

6,481

$

19,109

$

(14)

$

8,428

$

$

27,523

Production Testing Division

(66,547)

75,337

8,790

(2)

6,711

15,499

Compression Division

3,237

2,913

6,150

7,662

20,055

625

34,492

Offshore Services Segment

(20,713)

17,654

(3,059)

3,151

92

Eliminations and other

3

3

(3)

Subtotal

(71,392)

102,385

30,993

7,646

38,342

625

77,606

Corporate and other

(17,527)

737

(16,790)

5,159

250

1,341

(10,040)

TETRA excl Maritech

(88,919)

103,122

14,203

12,805

38,592

1,966

67,566

Maritech

(30,948)

(30,948)

39

(30,909)

Consolidated

$

(119,867)

$

103,122

$

(16,745)

$

12,805

$

38,631

$

1,966

$

36,657

Year Ended

December 31, 2015

Income (Loss) Before Tax, as Reported

Impairments & Special Charges

Adjusted Income Before Tax

Interest Expense, Net

Depreciation & Amortization

Equity Comp. Expense

Adjusted EBITDA

(In Thousands)

Fluids Division

$

80,789

$

20,599

$

101,388

$

(258)

$

35,125

$

$

136,255

Production Testing Division

(55,720)

54,530

(1,190)

(89)

24,094

22,815

Compression Division

(146,798)

152,390

5,592

32,178

82,024

2,164

121,958

Offshore Services Segment

(195)

1,344

1,149

11,500

12,649

Eliminations and other

(1)

(1)

(14)

(15)

Subtotal

(121,925)

228,863

106,938

31,831

152,729

2,164

293,662

Corporate and other

(76,005)

8,579

(67,426)

18,654

911

7,978

(39,883)

TETRA excl Maritech

(197,930)

237,442

39,512

50,485

153,640

10,142

253,779

Maritech

(3,833)

(3,833)

29

1,375

(2,429)

Consolidated

$

(201,763)

$

237,442

$

35,679

$

50,514

$

155,015

$

10,142

$

251,350

December 31, 2014

Income (Loss) Before Tax, as Reported

Impairments & Special Charges

Adjusted Income Before Tax

Interest Expense, Net

Depreciation & Amortization

Equity Comp. Expense

Adjusted EBITDA

(In Thousands)

Fluids Division

$

64,705

$

4,229

$

68,934

$

(250)

$

31,279

$

$

99,963

Production Testing Division

(66,168)

77,095

10,927

(31)

29,336

40,232

Compression Division

7,340

17,022

24,362

12,964

41,097

1,544

79,967

Offshore Services Segment

(26,251)

19,784

(6,467)

36

13,327

6,896

Eliminations and other

12

12

(12)

Subtotal

(20,362)

118,130

97,768

12,719

115,027

1,544

227,058

Corporate and other

(66,355)

3,554

(62,801)

19,268

1,725

5,231

(36,577)

TETRA excl Maritech

(86,717)

121,684

34,967

31,987

116,752

6,775

190,481

Maritech

(71,154)

(71,154)

11

160

(70,983)

Consolidated

$

(157,871)

$

121,684

$

(36,187)

$

31,998

$

116,912

$

6,775

$

119,498

Schedule G: Non-GAAP Reconciliation to Free Cash Flow

Three Months Ended December 31,

Twelve Months Ended December 31,

2015

2014

2015

2014

(In Thousands)

TETRA Consolidated

Cash from operations

$

77,724

$

56,708

$

195,951

$

108,645

ARO settlements

5,109

23,010

10,305

63,319

Capital expenditures, net of sales proceeds

(22,221)

(34,994)

(113,462)

(114,082)

Free cash flow before ARO settlements

60,612

44,724

92,794

57,882

CSI Compressco LP

Cash from operations

38,351

13,478

101,893

44,819

Capital expenditures, net of sales proceeds

(19,274)

(19,317)

(95,272)

(48,137)

Free cash flow

19,077

(5,839)

6,621

(3,318)

TTI Only

Cash from operations

39,373

43,230

94,058

63,826

ARO settlements

5,109

23,010

10,305

63,319

Capital expenditures, net of sales proceeds

(2,947)

(15,677)

(18,190)

(65,945)

Free cash flow before ARO settlements

41,535

50,563

86,173

61,200

Distributions from CSI Compressco LP

7,877

6,479

30,544

24,118

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

49,412

57,042

116,717

85,318

Debt restructuring costs

$

3,036

$

$

3,036

$

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

52,448

57,042

119,753

85,318

Schedule H: Non-GAAP Reconciliation of TETRA Net Debt

The cash and debt positions of TETRA and CSI Compressco LP as of December 31, 2015, 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. 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.

December 31, 2015

December 31, 2014

TETRA

CCLP

TETRA

CCLP

(In Millions)

Non-restricted cash

$

12.4

$

10.6

$

14.3

$

34.1

Revolver debt outstanding

22.9

235.0

90.0

195.0

Senior Notes outstanding

270.1

345.5

305.0

345.0

Net debt

$

280.6

$

569.9

$

380.7

$

505.9

 

 

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SOURCE TETRA Technologies, Inc.



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