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

Feb 26, 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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