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TETRA Technologies, Inc. Announces Second Quarter 2012 Results And Updates Guidance

August 8, 2012

THE WOODLANDS, Texas, Aug. 8, 2012 /PRNewswire/ — TETRA Technologies, Inc. (TETRA or the Company) (NYSE:TTI) today announced second quarter 2012 net income from continuing operations attributable to TETRA stockholders of $0.15 per fully diluted share compared to $0.39 per fully diluted share reported in the second quarter of 2011. Such results for the second quarter of 2012 include $1.1 million of acquisition related transaction costs and a pretax loss by the Maritech segment of $(8.6) million that aggregate to a net charge of approximately $(0.08) per share after tax, compared to special charges and credits that aggregate to a net credit of approximately $0.21 per share after tax in the second quarter of 2011. In addition, the Company announced that it is lowering its earnings guidance range for the 2012 fiscal year to $0.60 to $0.70 per fully diluted share, excluding the impact of the Maritech segment and acquisition related transaction costs.

Consolidated revenues for the quarter ended June 30, 2012 were $234.9 million versus $235.1 million in the second quarter of 2011. Total gross profit was $53.1 million in the second quarter of 2012 versus $35.8 million in the second quarter of 2011. Income before discontinued operations was $12.2 million in the second quarter of 2012 versus $30.5 million in the comparable period of 2011. Net income attributable to TETRA stockholders was $11.6 million in 2012′s second quarter versus $30.4 million in 2011′s second quarter. The foregoing results include the impact of the Maritech segment. As discussed below, management believes that it is helpful to an understanding of the Company’s business going forward to present financial results excluding the impact of Maritech. Such results, reconciled to the nearest GAAP financial measures, are included at the end of this press release.

Consolidated results per share from continuing operations attributable to TETRA stockholders for the second quarter of 2012 were net income of $0.15 with 79.0 million weighted average diluted common shares outstanding versus $0.39 with 78.3 million weighted average diluted common shares outstanding in the second quarter of 2011. As of June 30, 2012, total debt, including the current portion of long-term debt, was $305.0 million and cash was $49.2 million.

Divisional pretax earnings (loss) from continuing operations in the second quarter of 2012 versus the second quarter of 2011 were: Fluids Division – $14.0 million in 2Q 2012 and $11.5 million in 2Q 2011; Production Testing – $11.2 million in 2Q 2012 and $6.0 million in 2Q 2011; Compressco – $4.6 million in 2Q 2012 and $3.8 million in 2Q 2011; Offshore Services – $11.8 million in 2Q 2012 and $13.6 million in 2Q 2011; and, Maritech – $(8.6) million in 2Q 2012 and $38.5 million, including a $56.6 million gain on the sale of certain oil and gas producing properties, in 2Q 2011.

Financial data comparing the three and six month periods ended June 30, 2012 to the prior year’s periods is available in the financial tables set forth below.

Stuart M. Brightman, TETRA’s President and Chief Executive Officer, stated, “During the first seven months of 2012, we have successfully completed three acquisitions: Optima Solutions Holdings Limited (Optima), Eastern Reservoir Services (ERS), and Greywolf Production Systems (Greywolf). These three acquisitions, in the aggregate, have broadened our well completion and production testing service capabilities and significantly increased our geographic footprint, both in North America, and internationally. The integration of our first two acquisitions, Optima and ERS, is proceeding very smoothly, and we believe that we are on track with the integration of Greywolf.

“We are very optimistic regarding the potential for increased earnings related to each of these three investments. However, given that our earnings for the first half of this year, primarily from our Offshore Services segment, did not reach the levels we anticipated when we announced our 2012 guidance in January, and acknowledging that we do not anticipate an improvement in the operating conditions for Offshore Services through the remainder of this year, we believe that it is necessary to lower our full-year 2012 earnings guidance to $0.60 to $0.70 per fully diluted share, excluding Maritech, and excluding acquisition related transaction costs.

“The Fluids Division reported a sequential improvement in profitability during the second quarter, due to a number of factors. Our European calcium chloride business experienced strong seasonal demand during the quarter, although earnings for this business were negatively impacted by the need for unplanned equipment repairs, which are expected to be completed during the third quarter. Revenues from our offshore Gulf of Mexico operations were down slightly in the second quarter due to specific customer projects being postponed. However, we continue to see a positive trend in the offshore Gulf of Mexico completion fluids market, and we remain optimistic that this improvement will benefit our Fluids Division’s results during the second half of 2012. Our onshore fluids business had a good quarter, as we were able to take advantage of activity in certain liquid-focused areas. We intend to continue to focus our onshore domestic operations in these liquid-rich areas. Internationally, our Eastern Hemisphere fluids business reported another strong quarter, and we expect this trend to continue through the balance of the year.

“Our Production Testing segment benefitted greatly during the second quarter from the Optima and ERS acquisitions. As noted above, the integration of these two acquisitions has proceeded very smoothly, and the returns on these investments through the end of the second quarter have exceeded our expectations. In fact, much of the current quarter’s sequential improvement is attributable to Optima and ERS, and to our continued expansion in several international markets. Our other domestic operations continue to be impacted by weakness in markets focused on dry gas. We intend to continue to address this weakness by reducing costs and redeploying assets and personnel to more active areas, whenever possible. Results for our domestic Production Testing operations were also negatively impacted during the second quarter by $1.1 million of transaction related charges.

“Our Compressco segment’s profitability in the second quarter increased sequentially compared to the first quarter of this year, primarily due to the benefits of our capital investment growth strategy in international markets, particularly Latin America, and in the unconventional liquids plays in the U.S. In addition, our ongoing cost reduction efforts, inclusive of headcount reductions taken earlier this year, continue to support the segment’s profitability in a challenging natural gas price environment.

“During the second quarter, our Offshore Services segment was severely impacted by Tropical Storm Debby. We estimate that this storm had a negative impact on pretax earnings of approximately $3 million for the quarter. Despite overall higher utilization in the second quarter, Offshore Services continues to operate in a very competitive market that continues to be affected by the ongoing challenges of extended federal permitting times for abandonment and decommissioning work. We anticipate similar demand through the third quarter, although we expect that we will continue to face competitive and permitting challenges for the foreseeable future.

“Our Maritech segment continued to reduce its abandonment and decommissioning liabilities in the second quarter, spending $26.9 million on these activities. As previously noted, we expect that our total spending on these activities during 2012 will aggregate to approximately $70 to $80 million. Our objective is to substantially extinguish the remaining liabilities in 2013. As a result of excess decommissioning expenses incurred to date, we now expect a pretax loss for the Maritech segment of approximately $13.2 million for the full year.

“Our cash balance as of June 30, 2012 was $49.2 million. Excluding restricted cash and $7.4 million of cash attributable to Compressco Partners, net debt as of June 30, 2012 was $263.2 million (net debt is a non-GAAP financial measure that is reconciled to the nearest GAAP financial measure below). At the end of July, we drew-down approximately $50 million under our $278 million revolving credit facility to fund a portion of the Greywolf acquisition and for general corporate purposes. Following this draw-down, we have approximately $228 million of borrowing capacity still available, and we remain comfortable that we have retained the financial flexibility necessary to address additional growth opportunities, should they arise,” concluded Brightman.

As a result of Maritech’s sale of essentially all of its oil and gas properties during 2011 and 2012, the Company believes it will be helpful to provide adjusted financial results that exclude the impact of Maritech. These results are intended to show TETRA’s historical results of operations on a basis that is consistent with expected operations going forward. Set forth below in this press release under “Reconciliation of Non-GAAP Financial Measures” is a presentation of TETRA’s consolidated revenues excluding Maritech, consolidated gross profit excluding Maritech, and consolidated income before taxes and discontinued operations excluding Maritech and oil and gas derivative ineffectiveness, all of which are non-GAAP financial measures that are reconciled to the nearest GAAP measures.

TETRA will host a conference call to discuss second quarter 2012 results today, August 8, 2012, at 10:30 am ET. Stuart M. Brightman, TETRA’s President and Chief Executive Officer, and Elijio V. Serrano, TETRA’s Chief Financial Officer, will host the call. The phone number for the call is 800/860-2442. The conference will also be available by live audio webcast and may be accessed through TETRA’s website at www.tetratec.com.

TETRA is a geographically diversified oil and gas services company focused on completion fluids and associated products and services, after-frac flow back, production well testing and associated services, wellhead compression, and selected offshore services including well plugging and abandonment, decommissioning, and diving.

Forward Looking Statements

This press release includes certain statements that are deemed to be forward-looking statements. Generally, the use of words such as “may,” “will,” “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 2012, anticipated benefits from the Company’s acquisitions of assets and businesses, projections concerning the Company’s business activities in the Gulf of Mexico, including potential future benefits from increased regulatory oversight of well abandonment and decommissioning 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. 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, 2011, 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.

    Financial Data
     (unaudited)
                           Three Months Ended       Six Months Ended
                                June 30,                June 30,
                                --------                --------
                                              2012                    2011      2012      2011
                                              ----                    ----      ----      ----
                                   (In Thousands)
    Revenues                              $234,909                $235,114  $415,705  $457,659

    Gross profit                            53,108                  35,813    85,503    62,177

    General and
     administrative
     expense                                31,466                  29,006    62,357    56,768
    Interest expense, net                    4,084                   4,085     8,235     8,276
    (Gain) loss on sale
     of assets                                 703                 (59,577)   (3,264)  (60,309)
    Other (income)
     expense                                (1,585)                 14,745    (2,017)   13,929
                                            ------                  ------    ------    ------
       Income before taxes
        and discontinued
        operations                          18,440                  47,554    20,192    43,513
    Provision for income
     taxes                                   6,262                  17,031     6,866    15,502
                                             -----                  ------     -----    ------
       Income before
        discontinued
        operations                          12,178                  30,523    13,326    28,011
                                                 3                     (54)        2       (57)
    Income (loss) from
     discontinued
     operations, net of
     taxes

       Net income                           12,181                  30,469    13,328    27,954
                                            ------                  ------    ------    ------
    Net (income)
     attributable to
     noncontrolling
     interest                                 (607)                    (95)   (1,073)      (95)
                                              ----                     ---    ------       ---
    Net income
     attributable to
     TETRA stockholders                    $11,574                 $30,374   $12,255   $27,859
                                           =======                 =======   =======   =======

                                                                                                  Three Months Ended                Six Months Ended
                                                                                                        June 30,                        June 30,
                                                                                                        --------                        --------
                                                                                                      2012                2011               2012       2011
                                                                                                      ----                ----               ----       ----
                                                                                                       (In Thousands, Except Per Share Amounts)
    Basic per share information:
    ----------------------------
    Income before discontinued operations
      attributable to
       TETRA stockholders                                                                            $0.15               $0.40              $0.16      $0.36
    Loss from discontinued operations
     attributable
      to TETRA
       stockholders                                                                                   0.00               (0.00)              0.00      (0.00)
                                                                                                      ----               -----               ----      -----
    Net income
     attributable to
     TETRA stockholders                                                                              $0.15               $0.40              $0.16      $0.36
                                                                                                     =====               =====              =====      =====
    Weighted average
     shares outstanding                                                                             77,278              76,579             77,174     76,415
                                                                                                    ======              ======             ======     ======

    Diluted per share information:
    ------------------------------
    Income before discontinued operations
      attributable to
       TETRA stockholders                                                                            $0.15               $0.39              $0.16      $0.36
    Loss from discontinued operations
     attributable
      to TETRA
       stockholders                                                                                   0.00               (0.00)              0.00      (0.00)
                                                                                                      ----               -----               ----      -----
    Net income
     attributable to
     TETRA stockholders                                                                              $0.15               $0.39              $0.16      $0.36
                                                                                                     =====               =====              =====      =====
    Weighted average
     shares outstanding                                                                             78,998              78,315             78,640     77,985
                                                                                                    ======              ======             ======     ======

    Depreciation,
     depletion and
     amortization (A)                                                                              $19,221             $36,937            $36,554    $74,329
    (A) DD&A information for 2011 includes asset impairments under successful efforts accounting.
                                 Three Months Ended          Six Months Ended
                                      June 30,                   June 30,
                                      --------                   --------
                                     2012                 2011          2012      2011
                                     ----                 ----          ----      ----
                                                   (In Thousands)
    Revenues by segment:
    --------------------
        Fluids
        Division                  $89,847              $88,829      $169,180  $166,173
       Production Enhancement
        Division
          Production
          Testing                  50,329               31,739        88,612    64,949
         Compressco                25,258               22,326        47,940    44,210
                                   ------               ------        ------    ------
            Production
            Enhancement
            Division
            total                  75,587               54,065       136,552   109,159
       Offshore Division
          Offshore
          Services                 80,676               87,255       125,771   138,970
         Maritech                   1,179               33,382         3,794    77,404
          Intersegment
          eliminations            (12,403)             (28,421)      (19,715)  (34,037)
                                  -------              -------       -------   -------
            Offshore
            Division
            total                  69,452               92,216       109,850   182,337
        Corporate
        overhead                      125                   42           250        42
        Eliminations
        and
        other                        (102)                 (38)         (127)      (52)
                                     ----                  ---          ----       ---
        Total
        revenues                 $234,909             $235,114      $415,705  $457,659
                                 ========             ========      ========  ========

    Gross profit by segment:
    ------------------------
        Fluids
        Division                  $21,327              $18,778       $39,247   $32,385
       Production Enhancement
        Division
          Production
          Testing                  15,420                9,065        25,355    21,057
         Compressco                 9,241                6,925        17,122    13,544
                                    -----                -----        ------    ------
            Production
            Enhancement
            Division
            total                  24,661               15,990        42,477    34,601
       Offshore Division
          Offshore
          Services                 15,124               16,433        14,019    15,770
         Maritech                  (7,263)             (14,737)       (8,757)  (19,314)
          Intersegment
          eliminations                  -                   37             -       108
                                      ---                  ---           ---       ---
            Offshore
            Division
            total                   7,861                1,733         5,262    (3,436)
        Eliminations
        and
        other                        (741)                (688)       (1,483)   (1,373)
                                     ----                 ----        ------    ------
        Total
        gross
        profit                    $53,108              $35,813       $85,503   $62,177
                                  =======              =======       =======   =======

    Income before taxes and
     discontinued operations
    ------------------------
      by segment:
      -----------
        Fluids
        Division                  $13,959              $11,545       $25,424   $18,794
       Production Enhancement
        Division
          Production
          Testing                  11,170                5,988        16,847    15,071
         Compressco                 4,645                3,809         8,155     7,814
                                    -----                -----         -----     -----
            Production
            Enhancement
            Division
            total                  15,815                9,797        25,002    22,885
       Offshore Division
          Offshore
          Services                 11,764               13,577        10,731     9,201
         Maritech                  (8,626)              38,523       (10,707)   34,003
          Intersegment
          eliminations                  -                1,588             -     1,747
                                      ---                -----           ---     -----
            Offshore
            Division
            total                   3,138               53,688            24    44,951
         Corporate
         overhead                 (14,472)             (27,476)      (30,258)  (43,117)
                                  -------              -------       -------   -------
       Total income before taxes
        and
          discontinued
          operations              $18,440              $47,554       $20,192   $43,513
                                  =======              =======       =======   =======
                                     June 30, 2012         December 31, 2011
                                     -------------         -----------------
                                     (In Thousands)
    Balance Sheet:
    --------------
    Cash (excluding restricted cash)               $49,212                $204,412
    Accounts receivable, net                       183,841                 141,537
    Inventories                                     98,236                  99,985
    Other current assets                            59,396                  82,567
    PP&E, net                                      579,221                 529,301
    Other assets                                   228,864                 145,508
                                                   -------                 -------
       Total assets                             $1,198,770              $1,203,310
                                                ==========              ==========

    Current portion of
     decommissioning liabilities                   $75,537                $105,008
    Other current liabilities                      174,874                 127,357
    Long-term debt                                 270,000                 305,000
    Long-term portion of
     decommissioning liabilities                    37,601                  34,827
    Other long-term liabilities                     58,635                  62,030
    Equity                                         582,123                 569,088
                                                   -------                 -------
       Total liabilities and equity             $1,198,770              $1,203,310
                                                ==========              ==========

Reconciliation of Non-GAAP Financial Measures

This press release refers to net debt, revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness, all of which are financial measures not derived in accordance with generally accepted accounting principles, or “GAAP.”

As a supplement to financial results prepared in accordance with GAAP, the Company has provided the following tables, which contain results excluding the impact of Maritech. The tables also include reconciliations of revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness to the appropriate GAAP financial measures. The Company’s management views revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness as appropriate measures to evaluate its results of operations following the sales of Maritech oil and gas producing properties that occurred during 2011 and 2012. These non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should not be used as a substitute for revenues, gross profit, income before taxes, earnings per share or other measures of financial performance presented in accordance with GAAP. Reconciliations of revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness for the three and six month periods ended June 30, 2012 and June 30, 2011 are provided below.

                                   Three Months Ended                    Six Months Ended
                                        June 30,                             June 30,
                                        --------                             --------
                                        2012                  2011                  2012      2011
                                        ----                  ----                  ----      ----
                                          (In Thousands, Except Per Share Amounts)

    Consolidated revenues           $234,909              $235,114              $415,705  $457,659
       Less: Maritech revenues        (1,179)              (33,382)               (3,794)  (77,404)
                                      ------               -------                ------   -------
       Consolidated revenues
        excluding Maritech          $233,730              $201,732              $411,911  $380,255
                                    ========              ========              ========  ========

    Consolidated gross
     profit                          $53,108               $35,813               $85,503   $62,177
       Less: Maritech gross
        (profit) loss                  7,263                14,737                 8,757    19,314
                                       -----                ------                 -----    ------
       Consolidated gross
        profit excluding
        Maritech                     $60,371               $50,550               $94,260   $81,491
                                     =======               =======               =======   =======

    Consolidated income
     (loss) before taxes and
     discontinued operations         $18,440               $47,554               $20,192   $43,513
       Less: Maritech (income)
        loss before taxes              8,626               (38,523)               10,707   (34,003)
       Less: Derivative
        ineffectiveness                    -                14,224                     -    13,947
                                         ---                ------                   ---    ------

       Consolidated income
        (loss) before taxes and
        discontinued operations
        excluding Maritech and
        derivative
        ineffectiveness              $27,066               $23,255               $30,899   $23,457
                                     =======               =======               =======   =======

    Diluted per share
     information:
    -----------------
       Net income attributable
        to TETRA stockholders          $0.15                 $0.39                 $0.16     $0.36
          (Income) loss for
           Maritech                     0.07                 (0.31)                 0.09     (0.28)
          (Income) loss for
           derivative
           ineffectiveness                 -                  0.11                     -      0.11
                                         ---                  ----                   ---      ----
          Net income (loss)
           attributable to TETRA
            stockholders excluding
             Maritech and
            derivative
             ineffectiveness           $0.22                 $0.19                 $0.25     $0.19
                                       =====                 =====                 =====     =====

The following reconciliation of net debt is also 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 Compressco Partners, L.P. 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. A reconciliation of long-term debt to net debt as of June 30, 2012 and December 30, 2011 is provided below.

                          June 30, 2012        December 31, 2011
                          -------------        -----------------
                          (In Thousands)
    Net Debt:
    ---------
    Long-term debt,
     including current
     portion                         $305,035                $305,035
    Less: cash, excluding
     Compressco
      Partners' cash                  (41,853)               (186,936)
                                      -------                --------
    Net debt                         $263,182                $118,099

These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of the complete financial results for the given period.

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SOURCE TETRA Technologies, Inc.


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