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 TETRA Technologies, Inc. Announces Fourth Quarter And Full Year 2015 Results
   Friday, February 26, 2016 7:30:00 AM ET

TETRA Technologies, Inc. (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     Adjusted   Adjusted      Revenue       Adjusted     Adjusted   Adjusted
                                                                        (Loss)       Income     EBITDA(3)                   Income       Income     EBITDA(3)
                                                                        Income       (Loss)                                 Before       (Loss)
                                                                        Before       Before                                 Taxes(1)     Before
                                                                        Taxes(1)     Taxes as a                                          Taxes as a
                                                                                     Percent of                                          Percent of
                                                                                     Revenue(2)                                          Revenue(2)
                                                            (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                Twelve Months Ended
                                                          December 31,                      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                Twelve Months Ended
                                       December 31, 2015                 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        Provision     Noncont.  Net Income   Diluted EPS
                                                                                  (Loss) Before (Benefit) for Interest  Attributable
                                                                                  Tax           Tax                     to TETRA
                                                                                                                        Stockholders
                                                                                  (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        Provision     Noncont.  Net Income   Diluted EPS
                                                                                  (Loss) Before (Benefit) for Interest  Attributable
                                                                                  Tax           Tax                     to TETRA
                                                                                                                        Stockholders
                                                                                  (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        Provision     Noncont.  Net Income   Diluted EPS
                                                                                  (Loss) Before (Benefit) for Interest  Attributable
                                                                                  Tax           Tax                     to TETRA
                                                                                                                        Stockholders
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        Provision     Noncont. Net Income   Diluted EPS
                                                                                  (Loss) Before (Benefit) for Interest Attributable
                                                                                  Tax           Tax                    to TETRA
                                                                                                                       Stockholders
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          Impairments  Adjusted       Interest    Depreciation Equity    Adjusted
                            (Loss)          & Special    Income         Expense,    &            Comp.     EBITDA
                            Before Tax,     Charges      Before Tax     Net         Amortization Expense
                            as Reported
                            (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          Impairments  Adjusted       Interest    Depreciation Equity    Adjusted
                            (Loss)          & Special    Income         Expense,    &            Comp.     EBITDA
                            Before Tax,     Charges      Before Tax     Net         Amortization Expense
                            as Reported
                            (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          Impairments  Adjusted       Interest    Depreciation  Equity      Adjusted
                            (Loss)          & Special    Income         Expense,    &             Comp.       EBITDA
                            Before Tax,     Charges      Before Tax     Net         Amortization  Expense
                            as Reported
                            (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          Impairments  Adjusted       Interest    Depreciation  Equity      Adjusted
                            (Loss)          & Special    Income         Expense,    &             Comp.       EBITDA
                            Before Tax,     Charges      Before Tax     Net         Amortization  Expense
                            as Reported
                            (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          Twelve Months Ended
                                                                                               December 31,                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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