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 TETRA Technologies, Inc. Announces Fourth Quarter and Full Year 2016 Results
   Wednesday, March 01, 2017 7:15:00 AM ET

TETRA Technologies, Inc. ("TETRA" or the "Company") (TTI ) today announced a consolidated fourth quarter 2016 net loss per share attributable to TETRA stockholders of $0.33, which compares to a net loss per share of $0.16 in the third quarter of 2016 and net loss per share of $1.84 in the fourth quarter of 2015.

TETRA’s adjusted per share results attributable to TETRA stockholders for the fourth quarter of 2016, excluding Maritech and special items, were a loss of $0.16, which compares to adjusted loss per share of $0.05 in the third quarter of 2016 and adjusted earnings per share of $0.01 in the fourth quarter of 2015, also excluding Maritech and special items. Fourth quarter 2016 revenue of $173 million decreased 2% from the third quarter of 2016. Compared to the fourth quarter of 2015 revenue declined 33% primarily as a result of reduced activity levels in the Gulf of Mexico and the lower rig count. (Adjusted diluted earnings/(loss) per share is a non-GAAP financial measure that is reconciled to the nearest GAAP measure in the accompanying schedules.)

Fourth Quarter 2016 Results
                                                              Three Months Ended
                                                              December 31, 2016  September 30, 2016  December 31, 2015
                                                              (In Thousands, Except per Share Amounts)
Revenue                                                       $     173,222      $      176,553      $     257,590
Net income (loss) attributable to TETRA stockholders          (31,554)           (15,009)            (146,415)
Adjusted EBITDA(1)                                            14,946             36,927              55,486
EPS attributable to TETRA stockholders                        (0.33)             (0.16)              (1.84)
Adjusted diluted EPS attributable to TETRA stockholders(1)    (0.16)             (0.05)              0.01
Consolidated net cash provided (used) by operating activities 28,316             (7,933)             77,724
TETRA only adjusted free cash flow(1)                         $     16,028       $      (13,924)     $     52,448
(1)    Non-GAAP financial measures are reconciled to GAAP in the schedules below.

Highlights of the 2016 fourth quarter include:

-- Fluids revenue increased sequentially by 2% despite the deferral of a significant Gulf of Mexico TETRA CS Neptune? completion fluids project from the fourth quarter to the first half of 2017. The sequential increase was driven by strong U.S. onshore activity and improved international offshore volumes.

-- Compression activity is reflecting signs of a recovery with quarter end utilization increasing sequentially by 120 basis points to 76.4%, operating horsepower in service increasing sequentially by 3,368 horsepower, and with the receipt of $20 million in orders for new equipment, the highest since late 2014.

-- Compression results were negatively impacted by $2.6 million of cost overruns on a third party equipment project that was completed in the fourth quarter, the first such cost overrun for Compression in recent years.

-- Including CSI Compressco, the carrying value of consolidated long-term debt at the end of 2016 was $624 million compared to $738 million as of September 30, 2016. In December, TETRA completed a $115 million equity offering to reduce debt. TETRA’s net debt was reduced from $233 million to $111 million from the equity proceeds and cash from operating activities over the same time period. (See Schedule H for the reconciliation of TETRA net debt to GAAP.)

-- Consolidated net cash provided by operating activities for the fourth quarter of 2016 was $28 million and for full year 2016 was $54 million. TETRA only adjusted free cash flow in the fourth quarter was $16 million. TETRA only adjusted free cash flow for the full year was $12 million, at the upper end of the $5 million to $15 million guidance previously provided. (See Schedule G for the reconciliation of TETRA only free cash flow to GAAP.)

2016 Results
                                                           Twelve months ended
                                                           December 31, 2016  December 31, 2015
                                                           (In Thousands, Except per Share Amounts)
Revenue                                                    $     694,764      $     1,130,145
Net income (loss) attributable to TETRA stockholders       (161,462)          (126,183)
Adjusted EBITDA(1)                                         104,243            257,740
EPS attributable to TETRA stockholders                     (1.85)             (1.59)
Adjusted diluted EPS attributable to TETRA stockholders(1) (0.60)             0.32
Consolidated net cash provided by operating activities     53,980             195,951
TETRA only adjusted free cash flow(1)                      $     11,821       $     119,753
(1)   Non-GAAP financial measures are reconciled to GAAP in the schedules below.

Stuart M. Brightman, TETRA’s President and Chief Executive Officer, stated, "We believe we are seeing the initial impact of a recovering U.S. onshore market with another strong sequential quarterly improvement in the Fluids Division’s water management operations, improving utilization of the compression services fleet, particularly at the higher horsepower equipment size coupled with related favorable pricing trends and higher orders for new compression equipment. Based on feedback from our customers, we anticipate that a recovery in the deep water Gulf of Mexico will lag the onshore recovery. We are entering 2017 with one significant TETRA CS Neptune fluid project scheduled for the first half of 2017 and expect to complete another such project that was started in 2016.

"Fluids Division revenue for the fourth quarter of 2016 was $64 million compared to $62.6 million in the third quarter of 2016. The strong sequential improvement in U.S. onshore activity, the second consecutive strong quarterly sequential improvement, was driven by organic water management and onshore fluids distribution facilities investments, in addition to stronger international offshore fluids activity. This improvement offset the lack of a TETRA CS Neptune fluid project that was expected in the fourth quarter but was deferred into the first half of 2017. The improving activity levels in the U.S. onshore water management business are occurring throughout several of the shale basins, but are led primarily by the Permian Basin and MidCon markets. Fluids Division income before taxes was $1.5 million while adjusted EBITDA was $8.6 million. Income before taxes as a percentage of revenue was 2.3% while adjusted EBITDA as a percentage of revenues was 13.4%, without the benefit of a TETRA CS Neptune fluids project.

"Fourth quarter 2016 Compression Division revenue increased sequentially 17% to $83 million, mainly as a result of higher equipment sales. Compression Division income before taxes was a loss of $11.8 million while adjusted EBITDA was $17.7 million, which was negatively impacted by $2.6 million of unusual costs related to equipment sales on a third party equipment project and a $0.7 million inventory adjustment. Quarter end utilization was 76.4%, compared to 75.2% in the third quarter, and reflected the first sequential improvement in utilization since the first quarter of 2015. Large horsepower equipment (greater than 800 HP) utilization increased from 84.4% in the third quarter to 87.5% in the fourth quarter. New equipment orders were $20 million, the highest quarterly new equipment orders received since late 2014, and we believe the level of orders reflect signs of a recovering compression market. On January 20, 2017, CSI Compressco LP declared cash distributions attributable to the fourth quarter of 2016 of $0.3775 per common unit, unchanged from the distribution attributable to the third quarter of 2016. This distribution resulted in a coverage ratio of 0.68x for the fourth quarter of 2016.

"Fourth quarter 2016 revenue for the Production Testing Division improved sequentially by 2% to $15.3 million, led by stronger activity levels in Canada and Saudi Arabia. Production Testing loss before taxes was $7.5 million while adjusted EBITDA was a loss of $0.5 million. Going into 2017 we expect to see additional improvements in activity in North America and internationally and hope to be able to better manage pricing levels in the second half of 2017.

"Our Offshore Service segment reported revenue of $12 million. Loss before taxes was $6.2 million while adjusted EBITDA was a loss of $2.3 million, reflecting the seasonal fourth quarter ramp down of activity. We are currently bidding on many decommissioning projects for the upcoming season and believe the preliminary customer inquiries and the committed backlog trends for 2017 are encouraging."

Free Cash Flow and Balance Sheet

TETRA only adjusted free cash flow in the fourth quarter of 2016 was $16 million, reflecting the seasonality in working capital. Consolidated net cash provided by operating activities for 2016 was $54 million. Total year TETRA only adjusted free cash flow, excluding Maritech and reflecting the distributions received from CSI Compressco, was $12 million and was at the upper end of our previously communicated guidance of $5 million to $15 million. TETRA only days sales outstanding (excluding CSI Compressco LP) improved from 73 days at the end of the third quarter to 70 days at the end of December despite the continued financial challenges from our customers and their attempts to defer payments to manage their working capital.

During the fourth quarter, TETRA completed an equity offering that resulted in gross proceeds of $115 million. As a result of this equity offering and from the free cash flow generated during the quarter, TETRA only outstanding net debt was reduced from $233 million to $111 million. Additionally, during December, 2016 TETRA amended the leverage covenant on its revolving credit facility from 4.0X to 5.0X through December 31, 2017.

Special items and Maritech

Maritech reported pre-tax income of $2.8 million in the fourth quarter of 2016 due to the receipt of escrowed funds held from prior sales of properties with abandonment obligations.

Consolidated special items incurred in the fourth quarter were $8.7 million, of which only $1.5 million were cash charges. Special items include:

-- $1.8 million net gain primarily reflecting a fair value adjustment of the CSI Compressco Series A Convertible Preferred units

-- $1.0 million of expenses related to the December TETRA equity issuance

-- $2.1 million charge reflecting a fair value adjustment of the outstanding warrants

-- $7.2 million of asset impairments related to damaged CSI Compressco compressor equipment, certain Offshore Services cutting tools and obsolete assets in Production Testing

-- $0.3 million net gain from other debt related items

-- $0.5 million of other special charges

Financial Guidance

Based on TETRA’s anticipation of a continued recovery in the U.S. Onshore markets and a delayed recovery in the offshore markets, we expect total year TETRA only free cash flow to improve from $12 million in 2016 to between $30 million and $50 million in 2017.

No reconciliation of the forecasted range of TETRA only adjusted free cash flow for the full year 2017 to the nearest GAAP measure is included in this release because the reconciliation would require presenting forecasted information for CSI Compressco that is not publicly disclosed.

On December 16, 2016 an arbitration panel in Houston, Texas issued a ruling in favor of TETRA for TETRA’s claims against an engineering company related to TETRA’s El Dorado, Arkansas calcium chloride manufacturing facility. Cash proceeds of $12.8 million for the ruling were received by TETRA in January, 2017 and will be reflected in TETRA’s first quarter 2017 results.

Conference Call

TETRA will host a conference call to discuss these results today, March 1 2017, at 10:30 a.m. 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: Special Items Schedule F: Non-GAAP Reconciliation to GAAP Financials Schedule G: Non-GAAP Reconciliation to TETRA Only Adjusted 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 (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 the anticipated recovery of the oil and gas industry, expected results of operational business segments for 2017, anticipated benefits from CSI Compressco following the acquisition of CSI Compressco 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 Compressco 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, 2015 (and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 when it is filed on or about the date hereof), 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,
                                                          2016            2015             2016             2015
                                                          (In Thousands, Except per Share Amounts)
Revenues                                                  $    173,222    $    257,590     $    694,764     $    1,130,145
Cost of sales, services, and rentals                      133,598         171,981          495,580          741,736
Depreciation, amortization, and accretion                 30,598          38,696           129,595          155,015
Impairments of long-lived assets                          7,245           44,158           18,172           44,158
Total cost of revenues                                    171,441         254,835          643,347          940,909
Gross profit                                              1,781           2,755            51,417           189,236
General and administrative expense                        26,583          44,161           115,964          157,812
Goodwill impairment                                       --              177,006          106,205          177,006
Interest expense, net                                     15,327          14,244           58,626           54,475
Warrants fair value adjustment                            2,106           --               2,106            --
CCLP Series A Preferred fair value adjustment             (1,891)         --               4,404            --
Other (income) expense, net                               (2,433)         583              1,202            1,706
Income (loss) before taxes                                (37,911)        (233,239)        (237,090)        (201,763)
Provision (benefit) for income taxes                      499             (1,293)          2,303            7,704
Net income (loss)                                         (38,410)        (231,946)        (239,393)        (209,467)
Net (income) loss attributable to noncontrolling interest 6,856           85,531           77,931           83,284
Net income (loss) attributable to TETRA stockholders      $    (31,554)   $    (146,415)   $    (161,462)   $    (126,183)
Basic per share information:
Net income (loss) attributable to TETRA stockholders      $    (0.33)     $    (1.84)      $    (1.85)      $    (1.59)
Weighted average shares outstanding                       95,992          79,380           87,286           79,169
Diluted per share information:
Net income (loss) attributable to TETRA stockholders      $    (0.33)     $    (1.84)      $    (1.85)      $    (1.59)
Weighted average shares outstanding                       95,992          79,380           87,286           79,169
Schedule B: Financial Results By Segment (Unaudited)
                                       Three Months Ended                     Twelve Months Ended
                                       December 31,                           December 31,
                                       2016               2015                2016                2015
                                       (In Thousands)
Revenues by segment:
Fluids Division                        $       64,039     $       91,194      $       246,595     $       424,044
Production Testing Division            15,298             33,017              63,618              133,904
Compression Division                   82,870             99,369              311,374             457,639
Offshore Division
Offshore Services                      11,921             36,798              77,525              122,194
Maritech                               176                63                  751                 2,438
Intersegment eliminations              (90)               (1,108)             (903)               (5,128)
Offshore Division total                12,007             35,753              77,373              119,504
Eliminations and other                 (992)              (1,743)             (4,196)             (4,946)
Total revenues                         $       173,222    $       257,590     $       694,764     $       1,130,145
Gross profit (loss) by segment:
Fluids Division                        $       7,443      $       4,545       $       36,888      $       111,969
Production Testing Division            (5,263)            (10,749)            (13,317)            (3,046)
Compression Division                   4,646              7,035               37,681              73,135
Offshore Division
Offshore Services                      (4,811)            4,585               (5,574)             10,602
Maritech                               (138)              (2,493)             (3,847)             (2,523)
Intersegment eliminations              --                 --                  --                  --
Offshore Division total                (4,949)            2,092               (9,421)             8,079
Corporate overhead and eliminations    (96)               (168)               (414)               (901)
Total gross profit                     $       1,781      $       2,755       $       51,417      $       189,236
Income (loss) before taxes by segment:
Fluids Division                        $       1,499      $       (2,746)     $       10,430      $       80,789
Production Testing Division            (7,547)            (50,759)            (35,471)            (55,720)
Compression Division                   (11,821)           (152,772)           (136,327)           (146,798)
Offshore Division
Offshore Services                      (6,233)            1,782               (12,025)            (195)
Maritech                               2,823              (2,846)             (1,841)             (3,833)
Intersegment eliminations              --                 --                  --                  --
Offshore Division total                (3,410)            (1,064)             (13,866)            (4,028)
Corporate overhead and eliminations    (16,632)           (25,898)            (61,856)            (76,006)
Total income (loss) before taxes       $       (37,911)   $       (233,239)   $       (237,090)   $       (201,763)
Please note that the above results by segment include special items. Please see Schedule E for details of those special items.
Schedule C: Consolidated Balance Sheet (Unaudited)
                                                 December 31, 2016 December 31, 2015
                                                 (In Thousands)
Balance Sheet:
Cash (excluding restricted cash)                 $     29,840      $     23,057
Accounts receivable, net                         114,284           184,172
Inventories                                      106,546           117,009
Other current assets                             25,121            29,791
PP&E, net                                        945,451           1,048,004
Other assets                                     94,298            234,169
Total assets                                     $     1,315,540   $     1,636,202
Current portion of decommissioning liabilities   $     1,451       $     14,570
Other current liabilities                        115,434           170,676
Long-term debt (1)                               623,730           853,228
Long-term portion of decommissioning liabilities 54,027            42,879
CCLP Series A Preferred                          77,062            --
Warrant liability                                18,503            --
Other long-term liabilities                      24,867            40,669
Equity                                           400,466           514,180
Total liabilities and equity                     $     1,315,540   $     1,636,202
(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, other than 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. Amounts presented are net of deferred financing costs.
                                                     December 31, 2016                                              December 31, 2015
                                                     (In Thousands)
TETRA
Bank revolving line of credit facility               $                                                    3,229     $                                                    21,572
TETRA Senior Notes at various rates                  116,411                                                        264,998
Other debt                                           --                                                             50
TETRA total debt                                     119,640                                                        286,620
Less current portion                                 --                                                             (50)
TETRA total long-term debt                           $                                                    119,640   $                                                    286,570
CSI Compressco LP
CCLP Bank Credit Facility                            $                                                    217,467   $                                                    229,555
CCLP 7.25% Senior Notes                              286,623                                                        337,103
CCLP total debt                                      504,090                                                        566,658
Less current portion                                 --                                                             --
CCLP total long-term debt                            $                                                    504,090   $                                                    566,658
Consolidated total long-term debt                    $                                                    623,730   $                                                    853,228

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 (loss) before taxes, excluding the Maritech segment and special items; consolidated and segment adjusted EBITDA; and TETRA only adjusted 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 items 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 (loss) before taxes (and adjusted income (loss) before taxes as a percent of revenue) is defined as the Company’s (or the Segment’s) income (loss) before taxes excluding certain special or other charges (or credits). Adjusted income (loss) before taxes (and adjusted income (loss) 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 (loss) per share is defined as the Company’s diluted earnings (loss) per share excluding certain special or other charges (or credits) and using a normalized effective income tax rate. Adjusted diluted earnings (loss) 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 (and Adjusted EBITDA as a percent of revenue) is defined as earnings before interest, taxes, depreciation, amortization, impairments and special items, equity compensation, and allocated corporate overhead charges to our CSI Compressco LP subsidiary, pursuant to our Omnibus Agreement, which were reimbursed with CSI Compressco LP common units. Adjusted EBITDA (and Adjusted EBITDA as a percent of revenue) 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.

TETRA only adjusted free cash flow is a non-GAAP measure that the Company defines as cash from TETRA’s operations, excluding cash settlements of Maritech AROs, less capital expenditures net of sales proceeds, and including cash distributions to TETRA from CSI Compressco LP and debt restructuring costs. 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 only adjusted 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 the carrying value 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 TETRA 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: Special Items
                                                                                         Three Months Ended
                                                                                         December 31, 2016
                                                                                         Income            Provision       Noncont.       Net Income         EPS
                                                                                         (Loss) Before     (Benefit) for   Interest       Attributable to
                                                                                         Tax               Tax                            TETRA
                                                                                                                                          Stockholders
                                                                                         (In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech $      (32,000)   $      (9,599)  $    (7,012)   $       (15,389)   $   (0.16)
Asset impairments, including inventory adjustments                                       (7,245)           (2,174)         (1,373)        (3,698)            (0.04)
Non-Maritech ARO adjustment                                                              (282)             (85)            --             (197)              0.00
Severance expense                                                                        (179)             (54)            --             (125)              0.00
Debt refinancing gain, net                                                               346               104             319            (77)               0.00
Convertible Series A Preferred offering cost and fair value adjustments                  1,806             542             1,210          54                 0.00
Common stock warrants issuance cost and fair value adjustments                           (3,061)           (918)           --             (2,143)            (0.02)
Allowance for doubtful accounts for significant bankruptcies                             (119)             (36)            --             (83)               0.00
Effect of deferred tax valuation allowance and other related tax adj.                    --                12,719          --             (12,719)           (0.14)
Maritech profit (loss)                                                                   2,823             --              --             2,823              0.03
Net Income (loss) attributable to TETRA stockholders, as reported                        $      (37,911)   $      499      $    (6,856)   $       (31,554)   $   (0.33)
                                                                                         December 31, 2015
                                                                                         Income            Provision       Noncont.       Net Income         EPS
                                                                                         (Loss) Before     (Benefit) for   Interest       Attributable to
                                                                                         Tax               Tax                            TETRA
                                                                                                                                          Stockholders
                                                                                         (In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech $      658        $      199      $    (491)     $       950        $   0.01
Asset impairment, including inventory adjustments                                        (44,182)          (13,255)        (6,612)        (24,315)           (0.30)
Goodwill writeoff                                                                        (177,006)         (53,102)        (78,151)       (45,753)           (0.57)
Effect of deferred tax valuation allowance and other related tax adj.                    --                67,824          --             (67,824)           (0.84)
Allowance for doubtful accounts for significant bankruptcies                             (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)
                                                                                         Twelve Months Ended
                                                                                         December 31, 2016
                                                                                         Income          Provision      Noncont.       Net Income       EPS
                                                                                         (Loss)          (Benefit) for  Interest       Attributable to
                                                                                         Before Tax      Tax                           TETRA
                                                                                                                                       Stockholders
                                                                                         (In Thousands, Except per Share Amounts)
Income (loss) attributable to TETRA stockholders, excluding unusual charges and Maritech $    (94,831)   $    (28,447)  $    (14,433)  $     (51,951)   $   (0.60)
Asset impairments, including inventory adjustments                                       (18,280)        (5,484)        (5,838)        (6,958)          (0.08)
Non-Maritech ARO adjustment                                                              (282)           (85)           --             (197)            0.00
Severance expense                                                                        (1,737)         (521)          (341)          (875)            (0.01)
Goodwill writeoff                                                                        (106,205)       (31,862)       (52,412)       (21,931)         (0.25)
Debt refinancing cost, net                                                               (1,839)         (552)          159            (1,446)          (0.02)
Convertible Series A Preferred offering cost and fair value adjustments                  (7,534)         (2,260)        (4,650)        (624)            (0.01)
Common stock warrants issuance cost and fair value adjustments                           (3,061)         (918)          --             (2,143)          (0.02)
Allowance for doubtful accounts for significant bankruptcies                             (1,480)         (444)          (416)          (620)            (0.01)
Effect of deferred tax valuation allowance and other related tax adj.                    --              72,876         --             (72,876)         (0.83)
Maritech profit (loss)                                                                   (1,841)         --             --             (1,841)          (0.02)
Net Income (loss) attributable to TETRA stockholders, as reported                        $    (237,090)  $    2,303     $    (77,931)  $     (161,462)  $   (1.85)
                                                                                         December 31, 2015
                                                                                         Income          Provision      Noncont.       Net Income       EPS
                                                                                         (Loss)          (Benefit) for  Interest       Attributable to
                                                                                         Before Tax      Tax                           TETRA
                                                                                                                                       Stockholders
                                                                                         (In Thousands, Except per Share Amounts)
Income attributable to TETRA stockholders, excluding unusual charges & Maritech          $    39,513     $    11,802    $    1,962     $     25,749     $   0.32
Transaction related costs                                                                (208)           (62)           (73)           (73)             0.00
Asset Impairment, including inventory adjustments                                        (44,158)        (13,247)       (6,612)        (24,299)         (0.30)
Goodwill writeoff                                                                        (177,006)       (53,102)       (78,193)       (45,711)         (0.57)
Effect of Deferred Tax Valuation Allowance and other related tax adj                     --              67,082         --             (67,082)         (0.85)
Allowance for doubtful accounts for significant bankruptcies                             (16,071)        (4,769)        (368)          (10,934)         (0.14)
Maritech profit (loss)                                                                   (3,833)         --             --             (3,833)          (0.05)
Net Income (loss) attributable to TETRA stockholders, as reported                        $    (201,763)  $    7,704     $    (83,284)  $     (126,183)  $   (1.59)
Schedule F: Non-GAAP Reconciliation to GAAP Financials
                            Three Months Ended
                            December 31, 2016
                            Net Income       Tax            Income           Impairments    Adjusted        Adjusted      Adjusted         Equity Comp. Omnibus      Adjusted
                            (Loss), as       Provision      (Loss)           & Special      Income          Interest      Depreciation     Expense      Equity (3)   EBITDA
                            reported                        Before           Charges        (Loss)          Expense,      &
                                                            Tax, as                         Before          Net(1)        Amortization (2)
                                                            Reported                        Tax
                            (In Thousands)
Fluids Division                                             $     1,499      $     634      $     2,133     $     12      $     6,460      $     --     $     --     $     8,605
Production Testing Division                                 (7,547)          3,596          (3,951)         (115)         3,579            --           --           (487)
Compression Division                                        (11,821)         (268)          (12,089)        10,303        17,111           792          1,576        17,693
Offshore Services Segment                                   (6,233)          1,216          (5,017)         --            2,689            --           --           (2,328)
Eliminations and other                                      5                --             5               --            (5)              --           --           --
Subtotal                                                    (24,097)         5,178          (18,919)        10,200        29,834           792          1,576        23,483
Corporate and other                                         (16,637)         3,558          (13,079)        4,609         103              1,406        (1,576)      (8,537)
TETRA excluding Maritech                                    (40,734)         8,736          (31,998)        14,809        29,937           2,198        --           14,946
Maritech                                                    2,823            --             2,823           --            379              --           --           3,202
Total TETRA                 $     (38,410)   $     499      $     (37,911)   $     8,736    $     (29,175)  $     14,809  $     30,316     $     2,198  $     --     $     18,148
                            December 31, 2015
                            Net Income       Tax            Income           Impairments    Adjusted        Interest      Depreciation     Adjusted     Omnibus      Adjusted
                            (Loss), as       Provision      (Loss)           & Special      Income          Expense,      &                Equity Comp. Equity       EBITDA
                            reported                        Before Tax, as   Charges        (Loss)          Net           Amortization     Expense (4)
                                                            Reported                        Before
                                                                                            Tax
                            (In Thousands)
Fluids Division                                             $     (2,745)    $     19,958   $     17,213    $     (158)   $     8,859      $     --     $     --     $     25,914
Production Testing Division                                 (50,759)         49,893         (866)           (98)          5,664            --           --           4,700
Compression Division                                        (152,772)        151,896        (876)           8,806         20,643           505          --           29,078
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          8,550         38,090           505          --           65,197
Corporate and other                                         (25,902)         8,508          (17,394)        5,691         171              1,821        --           (9,711)
TETRA excluding Maritech                                    (230,392)        231,050        658             14,241        38,261           --           --           55,486
Maritech                                                    (2,847)          --             (2,847)         3             435              --           --           (2,409)
Total TETRA                 $     (231,946)  $     (1,293)  $     (233,239)  $     231,050  $     (2,189)   $     14,244  $     38,696     $     2,326  $     --     $     53,077
              (1)           Adjusted interest expense, net, for the three month period ended December 31, 2016, excludes $0.5 million of certain interest expense which is included as a special charge.
              (2)           Adjusted depreciation & amortization, net, for the three month period ended December 31, 2016 excludes $0.3 million of certain accretion expense which is included as a special charge.
              (3)           Reimbursement from CCLP under Omnibus Agreement for 2016 Q4 that was settled with common units.
              (4)           Adjusted equity compensation expense, net for the three month period ended December 31, 2015, excludes $6.7 million one-time adjustment
                            Twelve Months Ended
                            December 31, 2016
                            Net Income (Loss), as reported  Tax Provision  Income (Loss) Before Tax, as Reported Impairments & Special Charges Adjusted Income (Loss) Before Tax Adjusted Interest Expense, Net(1) Adjusted                       Equity Comp. Expense              Omnibus Equity (3) Adjusted EBITDA
                                                                                                                                                                                                                   Depreciation & Amortization(2)
                            (In Thousands)
Fluids Division                                                                      $         10,430            $         1,950               $           12,380                $           (4)                   $          28,056              $           --                    $      --          $     40,432
Production Testing Division                                                          (35,471)                    20,826                        (14,645)                          (594)                             16,238                         --                                --                 999
Compression Division                                                                 (136,327)                   111,656                       (24,671)                          37,016                            72,159                         3,028                             1,576              89,108
Offshore Services Segment                                                            (12,025)                    1,283                         (10,742)                          --                                11,086                         --                                --                 344
Eliminations and other                                                               7                           --                            7                                 --                                (17)                           --                                --                 (10)
Subtotal                                                                             (173,386)                   135,715                       (37,671)                          36,418                            127,522                        3,028                             1,576              130,873
Corporate and other                                                                  (61,863)                    4,706                         (57,157)                          20,955                            429                            10,719                            (1,576)            (26,630)
TETRA excluding Maritech                                                             (235,249)                   140,421                       (94,828)                          57,373                            127,951                        13,747                            --                 104,243
Maritech                                                                             (1,841)                     --                            (1,841)                           12                                1,362                          --                                --                 (467)
Total TETRA                 $               (239,393)             $  2,303           $         (237,090)         $         140,421             $           (96,669)              $           57,385                $          129,313             $           13,747                $      --          $     103,776
                            December 31, 2015
                            Net Income (Loss), as reported  Tax Provision  Income (Loss) Before Tax, as Reported Impairments & Special Charges Adjusted Income (Loss) Before Tax Interest Expense, Net             Depreciation & Amortization    Adjusted Equity Comp. Expense (4) Omnibus Equity     Adjusted EBITDA
                            (In Thousands)
Fluids Division                                                                      $         80,789            $         20,599              $           101,388               $           (258)                 $          35,125              $           --                    $      --          $     136,255
Production Testing Division                                                          (55,720)                    54,529                        (1,191)                           (89)                              24,094                         --                                --                 22,814
Compression Division                                                                 (146,798)                   152,390                       5,592                             34,964                            82,024                         2,164                             --                 124,744
Offshore Services Segment                                                            (195)                       1,344                         1,149                             --                                11,500                         --                                --                 12,649
Eliminations and other                                                               (1)                         --                            (1)                               --                                (14)                           --                                --                 (15)
Subtotal                                                                             (121,925)                   228,862                       106,937                           34,617                            152,729                        2,164                             --                 296,447
Corporate and other                                                                  (76,005)                    8,580                         (67,425)                          19,829                            911                            7,978                             --                 (38,707)
TETRA excluding Maritech                                                             (197,930)                   237,442                       39,512                            54,446                            153,640                        10,142                            --                 257,740
Maritech                                                                             (3,833)                     --                            (3,833)                           29                                1,375                          --                                --                 (2,429)
Total TETRA                 $               (209,467)             $  7,704           $         (201,763)         $         237,442             $           35,679                $           54,475                $          155,015             $           10,142                $      --          $     255,311
(1)                         Adjusted interest expense, net, for the twelve month period ended December 31, 2016, excludes $1.2 million of certain interest expense which is included as a special charge.
(2)                         Adjusted depreciation & amortization, net, for the twelve month period ended December 31, 2016 excludes $0.3 million of certain accretion expense which is included as a special charge.
(3)                         Reimbursement from CCLP under Omnibus Agreement for 2016 Q4 that was settled with common units.
(4)                         Adjusted equity compensation expense, net for the three month period ended December 31, 2015, excludes $6.7 million one-time adjustment
Schedule G: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow
                                                                          Three Months Ended                         Twelve Months Ended
                                                                          December 31, 2016     December 31, 2015    December 31, 2016     December 31, 2015
                                                                          (In Thousands)
Consolidated
Net cash provided by operating activities                                 $     28,316          $     77,724         $     53,980          $     195,951
ARO settlements                                                           271                   5,109                4,040                 10,305
Capital expenditures, net of sales proceeds                               (5,268)               (22,221)             (17,712)              (113,462)
Consolidated adjusted free cash flow                                      23,319                60,612               40,308                92,794
CSI Compressco LP
Net cash provided by operating activities                                 15,922                38,351               61,444                101,893
Capital expenditures, net of sales proceeds                               (3,057)               (19,274)             (10,659)              (95,272)
CSI Compressco free cash flow                                             12,865                19,077               50,785                6,621
TETRA Only
Cash from operating activities                                            12,394                39,373               (7,464)               94,058
ARO settlements                                                           271                   5,109                4,040                 10,305
Capital expenditures, net of sales proceeds                               (2,211)               (2,947)              (7,053)               (18,190)
Free cash flow before ARO settlements                                     10,454                41,535               (10,477)              86,173
Distributions from CSI Compressco LP                                      5,574                 7,877                22,298                30,544
Adjusted free cash flow                                                   16,028                49,412               11,821                116,717
Debt restructuring cost                                                   --                    3,036                --                    3,036
                                                                          16,028                52,448               11,821                119,753
Schedule H: Non-GAAP Reconciliation of TETRA Net Debt
The cash and debt positions of TETRA and CSI Compressco LP as of December 31, 2016, 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.
                                  December 31, 2016
                                  TETRA                                     CCLP          Consolidated
                                  (In Millions)
Non-restricted cash               $                                 9.0     $     20.8    $                                 29.8
Carrying value of long-term debt:
Revolver debt outstanding         3.2                                       217.5         220.7
Senior Notes outstanding          116.4                                     286.6         403.0
Net debt                          $                                 110.6   $     483.3   $                                 593.9

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SOURCE TETRA Technologies, Inc.

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