TETRA Technologies, Inc. Announces Second Quarter 2017 Results

THE WOODLANDS, Texas, Aug. 9, 2017

TETRA's adjusted per share results attributable to TETRA stockholders for the second quarter of 2017, excluding Maritech and special items, were a loss of $0.04, which compares to adjusted losses per share of $0.10 in the first quarter of 2017 and $0.15 in the second quarter of 2016, also excluding Maritech and special items. Second quarter 2017 revenue of $208 million increased 24% from the first quarter of 2017 and 19% from the second quarter of last year, primarily as a result of stronger activity in our Fluids Division water management and product sales in the Gulf of Mexico. 

(Adjusted earnings/loss per share is a non-GAAP financial measure that is reconciled to the nearest GAAP measure in the accompanying schedules.)

Second Quarter 2017 Results
	Three Months Ended
	June 30, 2017				March 31, 2017 ARIVA.DE Börsen-Geflüster Kurse CSI Compressco LP 2,40 $ 0,00% Tetra Techs 4,31 $ -0,69%				June 30, 2016
	(In Thousands, Except per Share Amounts)
Revenue	$	208,369			$	168,001			$	175,660
Net loss attributable to TETRA stockholders	(10,991)				(2,463)				(26,574)
Adjusted EBITDA(1)	28,537				18,275				32,949
GAAP EPS attributable to TETRA stockholders	(0.10)				(0.02)				(0.32)
Adjusted EPS attributable to TETRA stockholders(1)	(0.04)				(0.10)				(0.15)
Consolidated net cash provided (used) by operating activities	19,977				(20,538)				9,795
TETRA only adjusted free cash flow(1)	$	6,090			$	(13,847)			$	(7,314)

Highlights include:

• Fluids Division revenues increased 22% sequentially and 47% compared to the second quarter of 2016 due to the start, late in the second quarter, of a significant Gulf of Mexico TETRA CS Neptune™ completion fluids project that is expected to be completed in the third quarter and the traditional ramp-up in fluids sales in Northern Europe.
• Compression Division revenues increased 15% over the first quarter as the business continues to see signs of a recovery. Compression fleet utilization improved 190 basis points to 78.9% compared to the first quarter, the third consecutive quarter of improved utilization driven largely by demand for large horsepower equipment.
• On August 1, the Compression Division launched its new, fully automated ERP system that enables real-time field data capture, enhances cash flow processes, provides the sales and operations team with customer-centric data to facilitate prompt and effective services on the fleet of equipment, and streamlines our back office and field organization with expected annual savings in excess of $4.0 million.
• Consolidated net cash provided by operating activities was $20 million, an improvement of $40.5 million over the first quarter of 2017. TETRA only adjusted free cash flow was $6.1 million, an improvement of $20 million over the first quarter. (See Schedule G for the reconciliation of TETRA only adjusted free cash flow to GAAP.)

Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, "The second quarter was favorably impacted by the start of a TETRA CS Neptune completion fluids project in the Gulf of Mexico.  This project started late in the second quarter and has continued to run into the third quarter.  The rebound with US Onshore shale activity is favorably impacting demand for our water management, fluids, production testing, and compression products and services, particularly in West Texas and the Mid-Con regions.  We are adding additional distribution centers for our fluids in West Texas and have added additional lay flat hose to respond to increasing water management demands.

"Fluids Division revenue for the second quarter of 2017 was $89.1 million compared to $72.9 million in the first quarter of 2017, reflecting the start of the TETRA CS Neptune completion fluids project in the Gulf of Mexico, higher Northern Europe fluids sales and stronger water management activity.  Fluids Division income before taxes was $15.8 million, while Adjusted EBITDA was $21.7 million.  Income before tax and adjusted EBITDA were 17.7% and 24.3% of revenue, respectively, in the second quarter of 2017.

"Second quarter 2017 Compression Division revenue improved 15% to $75.3 million, mainly as a result of stronger equipment sales. Compression Division loss before taxes was $6.2 million, while adjusted EBITDA was $17.5 million, (8.2)% and 23.2% of revenue, respectively.  Overall quarter-end service fleet utilization was 78.9%, compared to 77.0% at the end of the first quarter. Large horsepower equipment (greater than 800 HP) utilization was 89.6% at the end of the second quarter. New equipment orders were $12 million. On July 21, 2017, CSI Compressco LP declared cash distributions attributable to the second quarter of 2017 of $0.1875 per outstanding common unit. This distribution resulted in a coverage ratio of .85x for the second quarter of 2017.

"Second quarter 2017 revenue for the Production Testing Division decreased sequentially by 26%, to $15.9 million, as the first quarter of 2017 included a significant equipment sale in South America. Production Testing loss before taxes was $3.1 million, while adjusted EBITDA was slightly below breakeven at a loss of $0.6 million.

"Our Offshore Services segment revenue improved 8% to $28.3 million compared to the prior year quarter on stronger activity levels and by 238% sequentially reflecting the seasonality of the business.   Loss before taxes was $6.4 million, while adjusted EBITDA was a slight loss of $0.3 million (adjusted EBITDA improved by $3.2 million from the first quarter).  Inclement weather conditions negatively impacted the results and resulted in projects being delayed into the backend of 2017." 

Free Cash Flow and Balance Sheet

TETRA only adjusted free cash flow in the second quarter of 2017 was $6 million, an improvement of $20 million from the first quarter of 2017.  Historically, the first two quarters of the year have traditionally represented our weakest free cash flow generation quarters and the last two quarters have been the strongest.  The third and fourth quarters of 2017 are expected to reflect the benefit from our TETRA CS Neptune completion fluids projects and the collection of receivables from the peak summer and fall decommissioning in the Gulf of Mexico.  Consolidated net cash provided by operating activities for the second quarter of 2017 was $20 million, compared to a use of $21 million in the first quarter of 2017.  TETRA only days sales outstanding (excluding CSI Compressco LP) improved from 76 days at the end of the first quarter to 68 days at the end of June.  TETRA only debt was $137.7 million and net debt was $119.5 million at June 30, a decrease of $5.7 million from the end of the first quarter.

Special items and Maritech

Maritech reported a pre-tax loss of $0.1 million in the second quarter of 2017.

Consolidated second quarter pre-tax earnings included income from non-cash items of $10.3 million, partially offset by $4.4 million of expected cash charges.  In addition to reflecting a normalized tax benefit of 30%, special items include:

• $5.5 million of non-cash income from a fair value adjustment of the outstanding TETRA warrants
• $4.8 million non-cash income for a fair value adjustment of the CSI Compressco Series A Convertible Preferred units
• $3.3 million for an unfavorable arbitration ruling based on a 2014 early termination of a charter agreement by Offshore Services, which the Company intends to challenge.
• $0.6 million of cash severance expense
• $0.5 million of other special charges.

Financial Guidance

We expect total year TETRA only adjusted free cash flow to be between $20 million and $40 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.

Conference Call

TETRA will host a conference call to discuss these results today, August 9, 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. A replay of the conference call will be available at 1-877-344-7529, conference number 10101592, for one week following the conference call and the archived web call will be available through the Company's website for thirty days following the conference call.

Investor Contact

TETRA Technologies, Inc., The Woodlands, Texas
Stuart M. Brightman, 281-367-1983
Fax: 281-364-4346
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 (NASDAQ:CCLP), a master limited partnership.

This news 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 Compressor Systems, Inc. (CSI) in 2014, including levels of 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, 2016, 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 June 30,								Six months ended June 30,
	2017				2016				2017				2016
	(In Thousands, Except per Share Amounts)
Revenues	$	208,369			$	175,660			$	376,370			$	344,989
Cost of sales, services and rentals	152,861				125,593				277,119				246,034
Depreciation, amortization and accretion	28,620				33,538				58,098				67,145
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