TETRA TECHNOLOGIES, INC. ANNOUNCES BRAZIL DEEPWATER COMPLETION FLUIDS AWARD AND THIRD QUARTER 2024 FINANCIAL RESULTS
TETRA Technologies (NYSE:TTI) reported third-quarter 2024 financial results with revenue of $142 million, down 6% year-over-year and 18% sequentially. The company achieved GAAP income before taxes of $7.6 million, with EPS from continuing operations of $0.02. Adjusted EBITDA was $23.5 million with net cash from operations of $19.9 million.
The company secured a significant multi-well, multi-year deepwater completion fluids contract in Brazil, establishing itself as the market leader in Brazil's high-density offshore completion fluids. Despite challenges from Gulf of Mexico hurricanes and weaker U.S. onshore activity, Completion Fluids & Products achieved 31.7% Adjusted EBITDA margins, while Water & Flowback Services reached 14.6%.
TETRA Technologies (NYSE:TTI) ha riportato i risultati finanziari del terzo trimestre del 2024 con un fatturato di 142 milioni di dollari, in calo del 6% rispetto all'anno precedente e del 18% rispetto al trimestre precedente. L'azienda ha registrato un reddito GAAP prima delle tasse di 7,6 milioni di dollari, con un utile per azione (EPS) dalle operazioni continuative pari a 0,02 dollari. EBITDA rettificato è stato di 23,5 milioni di dollari con un flusso di cassa netto dalle operazioni di 19,9 milioni di dollari.
L'azienda ha ottenuto un importante contratto per fluidi di completamento in acque profonde, multi-pozzo e pluriennale in Brasile, affermandosi come leader del mercato nei fluidi di completamento offshore ad alta densità in Brasile. Nonostante le sfide delle tempeste nel Golfo del Messico e l'attività terrestre più debole negli Stati Uniti, i Fluidi di Completamento e Prodotti hanno raggiunto un margine EBITDA rettificato del 31,7%, mentre i Servizi di Acqua e Ritorno hanno raggiunto il 14,6%.
TETRA Technologies (NYSE:TTI) reportó los resultados financieros del tercer trimestre de 2024 con ingresos de 142 millones de dólares, una caída del 6% en comparación con el año anterior y del 18% en comparación con el trimestre anterior. La compañía logró un ingreso GAAP antes de impuestos de 7,6 millones de dólares, con una utilidad por acción (EPS) de las operaciones continuas de 0,02 dólares. EBITDA ajustado fue de 23,5 millones de dólares con un flujo de caja neto de operaciones de 19,9 millones de dólares.
La compañía aseguró un importante contrato plurianual y multipozos para fluidos de completación en aguas profundas en Brasil, estableciéndose como líder del mercado en fluidos de completación offshore de alta densidad en Brasil. A pesar de los desafíos de los huracanes del Golfo de México y de una actividad terrestre más débil en los Estados Unidos, los Fluidos de Completación y Productos lograron márgenes EBITDA ajustados del 31,7%, mientras que los Servicios de Agua y Retorno alcanzaron el 14,6%.
TETRA Technologies (NYSE:TTI)는 2024년 3분기 재무 결과를 발표했으며, 수익은 1억 4200만 달러로, 전년 대비 6% 감소하고, 전 분기 대비 18% 감소했습니다. 회사는 세금 공제 전 GAAP 수익을 760만 달러 달성했으며, 계속 운영에서의 주당 순이익(EPS)은 0.02달러였습니다. 조정된 EBITDA는 2350만 달러였고, 운영에서의 순 현금 흐름은 1990만 달러였습니다.
회사는 브라질에서 다수의 우물 및 다년간의 심해 완공유 계약을 확보하여 브라질의 고밀도 해양 완공유 시장에서 시장 리더로 자리매김했습니다. 멕시코 만의 허리케인과 미국 내 육상 활동의 약세에도 불구하고, 완공유 및 제품 부문은 31.7%의 조정 EBITDA 마진을 기록했으며, 물 및 흐름 서비스는 14.6%에 도달했습니다.
TETRA Technologies (NYSE:TTI) a annoncé les résultats financiers du troisième trimestre 2024, avec des revenus de 142 millions de dollars, en baisse de 6 % par rapport à l'année précédente et de 18 % par rapport au trimestre précédent. L'entreprise a réalisé un revenu GAAP avant impôts de 7,6 millions de dollars, avec un bénéfice par action (EPS) des opérations continues de 0,02 dollar. EBITDA ajusté s'élevait à 23,5 millions de dollars, avec un flux de trésorerie net d'exploitation de 19,9 millions de dollars.
L'entreprise a sécurisé un important contrat de fluides de complétion en mer profonde, multi-puits et pluriannuel au Brésil, s'établissant comme le leader du marché des fluides de complétion offshore à haute densité au Brésil. Malgré les défis posés par les ouragans du Golfe du Mexique et une activité terrestre plus faible aux États-Unis, les Fluides de Complétion et Produits ont atteint des marges EBITDA ajustées de 31,7 %, tandis que les Services d'Eau et de Récupération ont atteint 14,6 %.
TETRA Technologies (NYSE:TTI) hat die Finanzzahlen für das dritte Quartal 2024 veröffentlicht, mit einem Umsatz von 142 Millionen Dollar, was einem Rückgang von 6% im Jahresvergleich und von 18% im Vergleich zum Vorquartal entspricht. Das Unternehmen erzielte einen GAAP-Einkommen vor Steuern von 7,6 Millionen Dollar, mit einem Gewinn pro Aktie (EPS) aus fortlaufenden Aktivitäten von 0,02 Dollar. Bereinigtes EBITDA betrug 23,5 Millionen Dollar, und der Nettocashflow aus dem operativen Geschäft belief sich auf 19,9 Millionen Dollar.
Das Unternehmen sicherte sich einen bedeutenden Mehrjahresvertrag über Tiefseeflussmittel in mehreren Brunnen in Brasilien und etablierte sich als Marktführer bei hochdichten Offshore-Abschlussmitteln in Brasilien. Trotz der Herausforderungen durch Hurrikane im Golf von Mexiko und einer schwächeren Onshore-Aktivität in den USA erzielte die Sparte Abschlussmittel und Produkte eine bereinigte EBITDA-Marge von 31,7%, während die Wasser- und Rückflusssparten 14,6% erreichten.
- Secured major multi-year deepwater completion fluids contract in Brazil
- Strong Completion Fluids & Products EBITDA margins at 31.7%
- Generated $16 million base business adjusted free cash flow
- Record volumes of produced water recycled for frac re-use
- Strong liquidity position of $196 million
- Revenue decreased 6% year-over-year to $142 million
- Net loss of $3.0 million, including $5.8 million charge for decommissioning obligations
- Weaker U.S. onshore activity affecting performance
- Hurricane disruptions causing project delays into 2025
- 6.5% reduction in global SG&A headcount due to market conditions
Insights
The Q3 2024 results show mixed performance with some concerning trends. Revenue declined
The new Brazil deepwater contract win is strategically important, positioning TTI as a market leader there. However, project delays pushing work into 2025 and ongoing US onshore weakness prompted cost-cutting measures including a
The balance sheet remains stable with
The strategic positioning in deepwater completion fluids and water treatment technology shows promise but faces near-term execution challenges. The Brazil contract win helps diversify geographic exposure beyond the Gulf of Mexico, where hurricane disruptions highlight concentration risk.
The record produced water recycling volumes and automation initiatives in Water & Flowback Services demonstrate operational progress. However, the weaker US onshore market outlook through Q4 2024 and into 2025 creates revenue pressure that automation efficiencies may only partially offset.
The bromine project investments and zinc bromide battery electrolyte opportunity provide future growth vectors, but meaningful revenue contribution likely starts in 2025. Current market conditions require careful capital allocation between growth investments and maintaining operational flexibility.
- Third-quarter revenue of
$142 million - GAAP income before taxes and discontinued operations of
$7.6 million $0.02 - Adjusted EBITDA of
$23.5 million $0.03 - Net cash provided by operating activities of
$19.9 million $7.4 million $16.0 million
Brady
We continue to build our backlog of deepwater projects by securing a significant multi-well, multi-year deep water completion fluids contract in
We continue to deploy automation technology across all of our water and flowback services, which is even more important in this softer environment, and we are very encouraged with customer adoption. In the third quarter, we set an all-time new record for volumes of produced water recycled for frac re-use and we expect the fourth quarter volumes to materially surpass the third quarter treatment of recycled produced water volumes. Our progress on produced water treatment and desalination for beneficial re-use continues with seven customer non-disclosure agreements ("NDAs") in place and two additional NDAs with major oil and gas operators under negotiation.
It is anticipated that US onshore activity will remain slower throughout the fourth quarter and flattish into 2025, and as a result we initiated a series of cost reduction actions in the third quarter, including a
Third-Quarter Results
Third-quarter 2024 revenue of
Third-quarter cash flow provided by operating activities was
Completion Fluids & Products third quarter of 2024 Adjusted EBITDA margins were
Water & Flowback Services revenue of
During the quarter, we completed an equity investment in KMX Technologies for treating produced water from oil and gas wells for beneficial re-use. The extensive testing of the KMX vacuum membrane technology ("VMD") and the Hyrec Holdings Company W.L.L. osmotic assisted reverse osmosis ("OARO") technology, along with our proprietary pre-treatment technology and know-how, is meeting the challenge to address all variabilities of produced water as an effective industry solution. In addition to the benefits TETRA brings as a service provider, we are taking a minority equity position in KMX that affords TETRA shareholders an opportunity to also benefit from the value creation we will bring to KMX as we commercialize this revolutionary technology.
(1) Base business adjusted free cash flow is defined as total adjusted free cash flow prior to TETRA's investments in the
This press release includes the following financial measures that are not presented in accordance with generally accepted accounting principles in
Third Quarter Results and Highlights
A summary of key financial metrics for the third quarter are as follows:
Three Months Ended | ||||||
September 30, | June 30, 2024 | September 30, | ||||
(in thousands, except per share amounts) | ||||||
Revenue | $ 141,700 | $ 171,935 | $ 151,464 | |||
Income before discontinued operations | 2,762 | 7,640 | 5,468 | |||
Net income (loss) | (2,998) | 7,640 | 5,420 | |||
Adjusted EBITDA | 23,501 | 30,234 | 26,059 | |||
Net income per share from continuing operations | $ 0.02 | $ 0.06 | $ 0.04 | |||
Net income (loss) per share attributable to TETRA stockholders | $ (0.02) | $ 0.06 | $ 0.04 | |||
Adjusted net income per share | $ 0.03 | $ 0.07 | $ 0.07 | |||
Net cash provided by operating activities | 19,870 | 24,831 | 13,974 | |||
Total adjusted free cash flow(1) | $ 7,352 | $ 9,369 | $ 7,073 | |||
(1) | For the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, total adjusted free cash flow includes |
Strategic Initiatives Update
Brady
We are prioritizing our strategic initiatives on projects that can immediately impact our near-term results, with a focus on TETRA CS Neptune fluids in the Gulf of
Free Cash Flow, Balance Sheet and Income Taxes
Cash provided by operating activities was
TETRA's return on net capital employed was
Non-recurring Charges and Expenses
Non-recurring credits, charges and expenses are reflected on Schedule E and include the following:
$0.6 million $0.2 million $0.1 million
Unrealized gains on investments totaling
Conference Call
TETRA will host a conference call to discuss these results on October 30, 2024 at 10:30 a.m. Eastern Time. The phone number for the call is 1-800-836-8184. The conference call will also be available by live audio webcast. A replay of the conference call will be available at 1-888-660-6345 conference number 57089#, for one week following the conference call and the archived webcast will be available through the Company's website for thirty days following the conference call.
Investor Contact
For further information, please contact Elijio Serrano, CFO, TETRA Technologies, Inc. at (281) 367-1983 or via email at eserrano@onetetra.com.
Financial Statements, Schedules and Non-GAAP Reconciliation Schedules (Unaudited)
Schedule A: Consolidated Income Statement
Schedule B: Condensed Consolidated Balance Sheet
Schedule C: Consolidated Statements of Cash Flows
Schedule D: Statement Regarding Use of Non-GAAP Financial Measures
Schedule E: Non-GAAP Reconciliation of Adjusted Net Income
Schedule F: Non-GAAP Reconciliation of Adjusted EBITDA
Schedule G: Non-GAAP Reconciliation of Net Debt
Schedule H: Non-GAAP Reconciliation to Total Adjusted Free Cash Flow and
Base Business Adjusted Free Cash Flow
Schedule I: Non-GAAP Reconciliation to Net Leverage Ratio
Schedule J: Non-GAAP Reconciliation to Return on Net Capital Employed
Company Overview
TETRA Technologies, Inc. is an energy services and solutions company focused on developing environmentally conscious services and solutions that help make people's lives better. With operations on six continents, the Company's portfolio consists of Energy Services, Industrial Chemicals, and Low Carbon Ventures. In addition to providing products and services to the oil and gas industry and calcium chloride for diverse applications, TETRA is expanding into the low-carbon energy market with chemistry expertise, key mineral acreage, and global infrastructure, helping to meet the demand for sustainable energy in the twenty-first century. Visit the Company's website at www.onetetra.com for more information.
Cautionary Statement Regarding Forward Looking Statements
This news release includes certain statements that are deemed to be forward-looking statements. Generally, the use of words such as "may," "see," "expectation," "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 economic and operating conditions that are outside of our control, including statements concerning recovery of the oil and gas industry; customer delays for international completion fluids related to global shipping and logistics issues; potential revenue associated with prospective energy storage projects; measured, indicated and inferred mineral resources of lithium and/or bromine, the potential extraction of lithium and bromine from our Evergreen Unit and other leased acreage, the economic viability thereof, the demand for such resources, the timing and costs of such activities, and the expected revenues, profits and returns from such activities; the accuracy of our resources report, feasibility study and economic assessment regarding our lithium and bromine acreage; projections or forecasts concerning the Company's business activities, profitability, 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. With respect to the Company's disclosures of measured, indicated and inferred mineral resources, including bromine and lithium carbonate equivalent concentrations, it is uncertain if all such resources will ever be economically developed. Investors are cautioned that mineral resources do not have demonstrated economic value and further exploration may not result in the estimation of a mineral reserve. Further, there are a number of uncertainties related to processing lithium, which is an inherently difficult process. Therefore, you are cautioned not to assume that all or any part of our resources can be economically or legally commercialized. 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 several risks and uncertainties, many of which are beyond the control of the Company. With respect to the Company's disclosures regarding the potential joint venture for the Evergreen Unit, it is uncertain about the ability of the parties to successfully negotiate one or more definitive agreements, the future relationship between the parties, and the ability to successfully and economically produce lithium and bromine from the Evergreen Unit. Investors are cautioned that any such statements are not guarantees of future performance 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 Reports on Form 10-K, 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. Investors should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement, and the Company undertakes no obligation to update or revise any forward-looking statements, except as may be required by law.
Schedule A: Consolidated Income Statement (Unaudited)
| ||||||
Three Months Ended | ||||||
September 30, | June 30, 2024 | September 30, | ||||
(in thousands, except per share amounts) | ||||||
Revenues | $ 141,700 | $ 171,935 | $ 151,464 | |||
Cost of sales, services, and rentals | 98,391 | 119,908 | 104,962 | |||
Depreciation, amortization, and accretion | 8,837 | 8,774 | 8,578 | |||
Impairments and other charges | 109 | — | — | |||
Total cost of revenues | 107,337 | 128,682 | 113,540 | |||
Gross profit | 34,363 | 43,253 | 37,924 | |||
Exploration and pre-development costs | — | — | 3,775 | |||
General and administrative expense | 22,406 | 22,137 | 23,838 | |||
Interest expense, net | 5,096 | 6,185 | 5,636 | |||
Other income (expense), net | (715) | 2,452 | (2,041) | |||
Income before taxes and discontinued operations | 7,576 | 12,479 | 6,716 | |||
Provision for income taxes | 4,744 | 4,839 | 1,248 | |||
Income before discontinued operations | 2,832 | 7,640 | 5,468 | |||
Discontinued operations: | ||||||
Loss from discontinued operations, net of taxes | (5,830) | — | (48) | |||
Net income (loss) | (2,998) | 7,640 | 5,420 | |||
Loss attributable to noncontrolling interest | — | 3 | — | |||
Net income (loss) attributable to TETRA stockholders | $ (2,998) | $ 7,643 | $ 5,420 | |||
Basic per share information: | ||||||
Income from continuing operations | $ 0.02 | $ 0.06 | $ 0.04 | |||
Income (loss) from discontinued operations | $ (0.04) | $ 0.00 | $ 0.00 | |||
Net income (loss) attributable to TETRA stockholders | $ (0.02) | $ 0.06 | $ 0.04 | |||
Weighted average shares outstanding | 131,579 | 131,263 | 129,777 | |||
Diluted per share information: | ||||||
Income from continuing operations | $ 0.02 | $ 0.06 | $ 0.04 | |||
Income (loss) from discontinued operations | $ (0.04) | $ 0.00 | $ 0.00 | |||
Net income (loss) attributable to TETRA stockholders | $ (0.02) | $ 0.06 | $ 0.04 | |||
Weighted average shares outstanding | 132,029 | 132,169 | 132,089 | |||
Schedule B: Condensed Consolidated Balance Sheet (Unaudited)
| |||
September 30, | December 31, | ||
(in thousands) | |||
(unaudited) | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 48,355 | $ 52,485 | |
Restricted cash | 658 | — | |
Trade accounts receivable | 110,050 | 111,798 | |
Inventories | 97,704 | 96,536 | |
Prepaid expenses and other current assets | 21,763 | 21,196 | |
Total current assets | 278,530 | 282,015 | |
Property, plant, and equipment, net | 129,257 | 107,716 | |
Other intangible assets, net | 26,027 | 29,132 | |
Operating lease right-of-use assets | 30,181 | 31,915 | |
Investments | 22,754 | 17,354 | |
Other assets | 14,408 | 10,829 | |
Total long-term assets | 222,627 | 196,946 | |
Total assets | $ 501,157 | $ 478,961 | |
LIABILITIES AND EQUITY | |||
Current liabilities: | |||
Trade accounts payable | $ 48,434 | $ 52,290 | |
Compensation and employee benefits | 21,613 | 26,918 | |
Operating lease liabilities, current portion | 8,741 | 9,101 | |
Accrued taxes | 14,149 | 10,350 | |
Accrued liabilities and other | 20,645 | 27,303 | |
Current liabilities associated with discontinued operations | 5,830 | — | |
Total current liabilities | 119,412 | 125,962 | |
Long-term debt, net | 179,709 | 157,505 | |
Operating lease liabilities | 25,862 | 27,538 | |
Asset retirement obligations | 14,600 | 14,199 | |
Deferred income taxes | 3,461 | 2,279 | |
Other liabilities | 2,701 | 4,144 | |
Total long-term liabilities | 226,333 | 205,665 | |
Commitments and contingencies | |||
TETRA stockholders' equity | 156,672 | 148,591 | |
Noncontrolling interests | (1,260) | (1,257) | |
Total equity | 155,412 | 147,334 | |
Total liabilities and equity | $ 501,157 | $ 478,961 | |
Schedule C: Consolidated Statements of Cash Flows (Unaudited)
| |||||
Three Months Ended | |||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||
(in thousands) | |||||
Operating activities: | |||||
Net income (loss) | $ (2,998) | $ 7,640 | $ 5,420 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||
Depreciation, amortization, and accretion | 8,837 | 8,775 | 8,578 | ||
Impairments and other charges | 109 | — | — | ||
(Gain) loss on investments | (750) | (46) | 560 | ||
Equity-based compensation expense | 1,481 | 1,800 | 1,431 | ||
Provision for (recovery of) credit losses | 130 | (52) | (530) | ||
Amortization and expense of financing costs | 239 | 504 | 926 | ||
Gain on sale of assets | (75) | (38) | (151) | ||
Other non-cash charges (credits) | 993 | (133) | (984) | ||
Changes in operating assets and liabilities: | |||||
Accounts receivable | 26,634 | (4,020) | 8,114 | ||
Inventories | (13,953) | 10,453 | (11,441) | ||
Prepaid expenses and other current assets | 1,930 | 758 | (929) | ||
Trade accounts payable and accrued expenses | 606 | (913) | 2,450 | ||
Other | (3,313) | 103 | 530 | ||
Net cash provided by operating activities | 19,870 | 24,831 | 13,974 | ||
Investing activities: | |||||
Purchases of property, plant, and equipment, net | (14,573) | (15,392) | (6,966) | ||
Proceeds from sale of property, plant, and equipment | 2,284 | 121 | 161 | ||
Purchase of investments | (1,021) | — | (100) | ||
Other investing activities | (93) | (22) | (9) | ||
Net cash used in investing activities | (13,403) | (15,293) | (6,914) | ||
Financing activities: | |||||
Proceeds from credit agreements and long-term debt | 109 | 157 | 215 | ||
Principal payments on credit agreements and long-term debt | (109) | (157) | (204) | ||
Payments on financing lease obligations | (414) | (363) | (148) | ||
Debt issuance costs | — | (679) | — | ||
Shares withheld for taxes on equity-based compensation | (566) | (48) | — | ||
Other financing activities | — | (1,280) | — | ||
Net cash used in financing activities | (980) | (2,370) | (137) | ||
Effect of exchange rate changes on cash | 774 | (355) | (772) | ||
Increase in cash and cash equivalents | 6,261 | 6,813 | 6,151 | ||
Cash, cash equivalents, and restricted cash at beginning of period | 42,752 | 35,939 | 27,675 | ||
Cash, cash equivalents, and restricted cash at end of period | $ 49,013 | $ 42,752 | $ 33,826 | ||
Supplemental cash flow information: | |||||
Interest paid | $ 5,607 | $ 5,424 | $ 4,870 | ||
Income taxes paid | $ 1,876 | $ 2,558 | $ 1,906 | ||
Accrued capital expenditures at end of period | $ 5,252 | $ 8,073 | $ 1,271 | ||
Schedule D: Statement Regarding Use of Non-GAAP Financial Measures
In addition to financial results determined in accordance with
Management believes that the exclusion of the special charges and credits 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 net income is defined as the Company's income (loss) before noncontrolling interests and discontinued operations, excluding certain special or other charges (or credits), and including noncontrolling interest attributable to continued operations. Adjusted net income 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 net income per share is defined as the Company's diluted net income per share attributable to TETRA stockholders excluding certain special or other charges (or credits). Adjusted net income per share is used by management as a supplemental financial measure to assess financial performance, without regard to charges or credits that are considered by management to be outside of its normal operations.
Adjusted EBITDA is defined as net income (loss) before taxes and discontinued operations, excluding impairments, exploration and pre-development costs, certain special, non-recurring or other charges (or credits), including loss on debt extinguishment, interest, depreciation and amortization, income from collaborative arrangement and certain non-cash items such as equity-based compensation expense. The most directly comparable GAAP financial measure is net income (loss) before taxes and discontinued operations. Exploration and pre-development costs represent expenditures incurred to evaluate potential future development of TETRA's lithium and bromine properties in
Total adjusted free cash flow is defined as cash from operations less capital expenditures net of sales proceeds and cost of equipment sold, less payments on financing lease obligations and including cash distributions to TETRA from investments and cash from sales of investments. Base business adjusted free cash flow is defined as Total adjusted free cash flow excluding TETRA's investments in the
- 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.
Total adjusted free cash flow does not necessarily imply residual cash flow available for discretionary expenditures, as they exclude cash requirements for debt service or other non-discretionary expenditures that are not deducted.
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 balance sheet. 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.
Net leverage ratio is defined as debt excluding financing fees & discount on term loan and including letters of credit and guarantees, less cash divided by trailing twelve months adjusted EBITDA for credit facilities. Adjusted EBITDA for credit facilities consists of adjusted EBITDA described above, less non-cash (gain) loss on sale of investments, (gain) loss on sales of assets and excluding certain special or other charges (or credits). Management primarily uses this metric to assess TETRA's ability to borrow, reduce debt, add to cash balances, pay distributions, and fund investing and financing activities.
Return on net capital employed is defined as Adjusted EBIT divided by average net capital employed. Adjusted EBIT is defined as net income (loss) before taxes and discontinued operations, interest, and certain non-cash charges, and non-recurring adjustments. Net capital employed is defined as assets, excluding assets associated with discontinued operations, plus impaired assets, less cash and cash equivalents and restricted cash, and less current liabilities, excluding current liabilities associated with discontinued operations. Average net capital employed is calculated as the average of the beginning and ending net capital employed for the respective periods. Return on net capital employed is used by management as a supplemental financial measure to assess the financial performance of the Company relative to assets, without regard to financing methods or capital structure.
Schedule E: Non-GAAP Reconciliation of Adjusted Net Income (Unaudited)
| |||||
Three Months Ended | |||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | |||
(in thousands, except per share amounts) | |||||
Income before taxes and discontinued operations | $ 7,576 | $ 12,479 | $ 6,716 | ||
Provision for income taxes | 4,744 | 4,839 | 1,248 | ||
Loss attributed to noncontrolling interest | — | 3 | — | ||
Income from continuing operations | 2,832 | 7,643 | 5,468 | ||
Insurance recoveries | — | — | 174 | ||
Impairments and other charges | 109 | — | — | ||
Exploration, pre-development costs and collaborative arrangements | — | — | 1,842 | ||
Adjustment to long-term incentives | — | — | 500 | ||
Former CEO stock appreciation right (credit) expense | (190) | (428) | 1,074 | ||
Transaction, legal, and other expenses | 592 | 37 | 108 | ||
Unusual foreign exchange loss | — | 1,387 | — | ||
Adjusted net income | $ 3,343 | $ 8,639 | $ 9,166 | ||
Diluted per share information | |||||
Net income from continuing operations | $ 0.02 | $ 0.06 | $ 0.04 | ||
Adjusted net income | $ 0.03 | $ 0.07 | $ 0.07 | ||
Diluted weighted average shares outstanding | 132,029 | 132,169 | 132,089 | ||
Schedule F: Non-GAAP Reconciliation of Adjusted EBITDA (Unaudited)
| |||||||||
Three Months Ended September 30, 2024 | |||||||||
Completion Fluids & Products | Water & Flowback Services | Corporate SG&A | Corporate Other | Total | |||||
(in thousands, except percents) | |||||||||
Revenues | $ 65,131 | $ 76,569 | $ — | $ — | $ 141,700 | ||||
Net income (loss) before taxes and discontinued operations | 19,119 | 4,674 | (10,779) | (5,438) | 7,576 | ||||
Impairments and other charges | — | — | 109 | — | 109 | ||||
Former CEO stock appreciation right credit | — | — | (190) | — | (190) | ||||
Transaction, restructuring, and other expenses | 39 | 203 | 350 | — | 592 | ||||
Interest (income) expense, net | (942) | (5) | — | 6,043 | 5,096 | ||||
Depreciation, amortization, and accretion | 2,416 | 6,328 | — | 93 | 8,837 | ||||
Equity-based compensation expense | — | — | 1,481 | — | 1,481 | ||||
Adjusted EBITDA | $ 20,632 | $ 11,200 | $ (9,029) | $ 698 | $ 23,501 | ||||
Adjusted EBITDA as a % of revenue | 31.7 % | 14.6 % | 16.6 % | ||||||
Three Months Ended June 30, 2024 | |||||||||
Completion Fluids & Products | Water & Flowback Services | Corporate SG&A | Corporate Other | Total | |||||
(in thousands, except percents) | |||||||||
Revenues | $ 100,019 | $ 71,916 | $ — | $ — | $ 171,935 | ||||
Net income (loss) before taxes and discontinued operations | 26,653 | 3,156 | (10,689) | (6,641) | 12,479 | ||||
Former CEO stock appreciation right credit | — | — | (428) | — | (428) | ||||
Transaction, restructuring, and other expenses | 37 | — | — | — | 37 | ||||
Unusual foreign exchange loss | — | 1,387 | — | — | 1,387 | ||||
Interest (income) expense, net | (135) | 68 | — | 6,252 | 6,185 | ||||
Depreciation, amortization, and accretion | 2,361 | 6,329 | — | 84 | 8,774 | ||||
Equity-based compensation expense | — | — | 1,800 | — | 1,800 | ||||
Adjusted EBITDA | $ 28,916 | $ 10,940 | $ (9,317) | $ (305) | $ 30,234 | ||||
Adjusted EBITDA as a % of revenue | 28.9 % | 15.2 % | 17.6 % | ||||||
Three Months Ended September 30, 2023 | |||||||||
Completion Fluids & Products | Water & Flowback Services | Corporate SG&A | Corporate Other | Total | |||||
(in thousands, except percents) | |||||||||
Revenues | $ 73,210 | $ 78,254 | $ — | $ — | $ 151,464 | ||||
Net income (loss) before taxes and discontinued operations | 16,932 | 8,475 | (13,552) | (5,139) | 6,716 | ||||
Insurance recoveries | 174 | — | — | — | 174 | ||||
Exploration, pre-development costs, and collaborative arrangements | 1,842 | — | — | — | 1,842 | ||||
Adjustment to long-term incentives | — | — | 500 | — | 500 | ||||
Former CEO stock appreciation right credit | — | — | 1,074 | — | 1,074 | ||||
Transaction, restructuring, and other expenses | — | — | 108 | — | 108 | ||||
Interest (income) expense, net | (309) | 190 | — | 5,755 | 5,636 | ||||
Depreciation, amortization, and accretion | 2,301 | 6,176 | — | 101 | 8,578 | ||||
Equity-based compensation expense | — | — | 1,431 | — | 1,431 | ||||
Adjusted EBITDA | $ 20,940 | $ 14,841 | $ (10,439) | $ 717 | $ 26,059 | ||||
Adjusted EBITDA as a % of revenue | 28.6 % | 19.0 % | 17.2 % | ||||||
Schedule G: Non-GAAP Reconciliation of Net Debt (Unaudited) The following reconciliation of net debt is presented as a supplement to financial results prepared in accordance with GAAP.
|
September 30, | December 31, | ||
(in thousands) | |||
Unrestricted Cash | $ 48,355 | $ 52,485 | |
Term Credit Agreement | $ 179,709 | $ 157,505 | |
Net debt | $ 131,354 | $ 105,020 | |
Schedule H: Non-GAAP Reconciliation to Total Adjusted Free Cash Flow and Base Business Adjusted Free Cash Flow (Unaudited)
| |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, 2024 | June 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||
(in thousands) | |||||||||
Net cash provided by operating activities | $ 19,870 | $ 24,831 | $ 13,974 | $ 30,885 | $ 51,331 | ||||
Capital expenditures, net of proceeds from asset sales | (12,289) | (15,271) | (6,805) | (43,136) | (29,582) | ||||
Payments on financing lease obligations | (414) | (363) | (148) | (1,054) | (837) | ||||
Distributions from investments | 185 | 172 | 52 | 410 | 157 | ||||
Total Adjusted Free Cash Flow | $ 7,352 | $ 9,369 | $ 7,073 | $ (12,895) | $ 21,069 | ||||
Total Adjusted Free Cash Flow | $ 7,352 | $ 9,369 | $ 7,073 | $ (12,895) | $ 21,069 | ||||
Less Investments in | (8,659) | (9,829) | (1,842) | (22,591) | (154) | ||||
Base Business Adjusted Free Cash Flow | $ 16,011 | $ 19,198 | $ 8,915 | $ 9,696 | $ 21,223 | ||||
Schedule I: Non-GAAP Reconciliation to Net Leverage Ratio (Unaudited)
| |||||||||
Three Months Ended | Twelve Months Ended | ||||||||
September 30, 2024 | June 30, 2024 | March 31, | December 31, 2023 | September 30, 2024 | |||||
(in thousands) | |||||||||
Net income (loss) before taxes and discontinued operations | 7,576 | $ 12,479 | $ 1,295 | $ (3,631) | $ 17,719 | ||||
Insurance recoveries | — | — | — | 3 | 3 | ||||
Impairments and other charges | 109 | — | — | 2,189 | 2,298 | ||||
Exploration, pre-development costs, and collaborative arrangements | — | — | — | 2,684 | 2,684 | ||||
Adjustment to long-term incentives | — | — | — | 281 | 281 | ||||
Former CEO stock appreciation right credit | (190) | (428) | (186) | (789) | (1,593) | ||||
Transaction, restructuring, and other expenses (credits) | 592 | 37 | (135) | 255 | 749 | ||||
Unusual foreign exchange loss | — | 1,387 | — | 2,444 | 3,831 | ||||
Loss on debt extinguishment | — | — | 5,535 | — | 5,535 | ||||
Interest expense, net | 5,096 | 6,185 | 5,952 | 5,677 | 22,910 | ||||
Depreciation, amortization, and accretion | 8,837 | 8,774 | 8,756 | 8,623 | 34,990 | ||||
Equity compensation expense | 1,481 | 1,800 | 1,623 | 6,406 | 11,310 | ||||
Unrealized gain on investments | (750) | (46) | (2,795) | (696) | (4,287) | ||||
Gain on sale of assets | (75) | (38) | (29) | (129) | (271) | ||||
Other debt covenant adjustments | 362 | 275 | 28 | 333 | 998 | ||||
Debt covenant adjusted EBITDA | $ 23,038 | $ 30,425 | $ 20,044 | $ 23,650 | $ 97,157 | ||||
September 30, 2024 | |||||||||
(in thousands, except ratio) | |||||||||
Term credit agreement | $ 190,000 | ||||||||
Capital lease obligations | 3,644 | ||||||||
Other obligations | 1,280 | ||||||||
Letters of credit and guarantees | 183 | ||||||||
Total debt and commitments | 195,107 | ||||||||
Unrestricted cash | 48,355 | ||||||||
Debt covenant net debt and commitments | $ 146,752 | ||||||||
Net leverage ratio | 1.5 | ||||||||
Schedule J: Non-GAAP Reconciliation to Return on Net Capital Employed
| |||||||||
Three Months Ended | Twelve Months Ended | ||||||||
September 30, 2024 | June 30, 2024 | March 31, | December 31, 2023 | September 30, 2024 | |||||
(in thousands) | |||||||||
Net income (loss) before taxes and discontinued operations | $ 7,576 | $ 12,479 | $ 1,295 | $ (3,631) | $ 17,719 | ||||
Insurance recoveries | — | — | — | 3 | 3 | ||||
Impairments and other charges | 109 | — | — | 2,189 | 2,298 | ||||
Exploration, pre-development costs, and collaborative arrangements | — | — | — | 2,684 | 2,684 | ||||
Adjustment to long-term incentives | — | — | — | 281 | 281 | ||||
Former CEO stock appreciation right credit | (190) | (428) | (186) | (789) | (1,593) | ||||
Transaction, restructuring, and other expenses (credits) | 592 | 37 | (135) | 255 | 749 | ||||
Loss on debt extinguishment | — | — | 5,535 | — | 5,535 | ||||
Unusual foreign exchange loss | — | 1,387 | — | 2,444 | 3,831 | ||||
Interest expense, net | 5,096 | 6,185 | 5,952 | 5,677 | 22,910 | ||||
Adjusted EBIT | $ 13,183 | $ 19,660 | $ 12,461 | $ 9,113 | $ 54,417 | ||||
September 30, 2024 | September 30, | ||||||||
(in thousands, except ratio) | |||||||||
Consolidated total assets | $ 501,157 | $ 472,419 | |||||||
Plus: assets impaired in last twelve months | 2,298 | 1,319 | |||||||
Less: cash, cash equivalents, and restricted cash | 49,013 | 33,826 | |||||||
Adjusted assets employed | $ 454,442 | $ 439,912 | |||||||
Consolidated current liabilities | $ 119,412 | $ 126,540 | |||||||
Less: current liabilities associated with discontinued operations | 5,830 | 414 | |||||||
Adjusted current liabilities | $ 113,582 | $ 126,126 | |||||||
Net capital employed | $ 340,860 | $ 313,786 | |||||||
Average net capital employed | $ 327,323 | ||||||||
Return on net capital employed for the twelve months ended September 30, 2024 | 16.6 % | ||||||||
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SOURCE TETRA Technologies, Inc.
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