TETRA TECHNOLOGIES, INC. SECURES THREE WELL TETRA CS NEPTUNE FLUIDS DEEPWATER GULF OF MEXICO PROJECT AND ANNOUNCES SECOND QUARTER 2024 FINANCIAL RESULTS
TETRA Technologies announced securing a three-well deepwater TETRA CS Neptune fluids project in the Gulf of Mexico, starting late Q4 2024. For Q2 2024, TETRA reported revenue of $172 million, a 14% increase sequentially, but a 2% decrease YoY. Net income was $7.6 million, with EPS at $0.06 and adjusted EPS at $0.07.
Adjusted EBITDA stood at $30.2 million, up 32% sequentially despite $1.1 million in forex losses. The Completion Fluids & Products Division saw a 29% sequential revenue increase to $100 million. Water & Flowback Services had a 2% revenue decline, but margins rose by 560 basis points.
The company achieved net cash from operations of $24.8 million and total adjusted free cash flow of $9.4 million. Investments in Arkansas bromine and lithium projects totaled $9.8 million. Long-term debt was $180 million, with net debt at $142 million and a net leverage ratio of 1.6X.
TETRA Technologies ha annunciato di aver garantito un progetto di fluidi TETRA CS Neptune in acque profonde con tre pozzi nel Golfo del Messico, che inizierà a fine Q4 2024. Per il Q2 2024, TETRA ha riportato entrate pari a 172 milioni di dollari, con un aumento del 14% rispetto al trimestre precedente, ma una diminuzione del 2% rispetto all'anno scorso. Il reddito netto è stato di 7,6 milioni di dollari, con un EPS di 0,06 dollari e un EPS rettificato di 0,07 dollari.
L'EBITDA rettificato si è attestato a 30,2 milioni di dollari, in aumento del 32% rispetto al trimestre precedente, nonostante perdite valutarie per 1,1 milioni di dollari. La Divisione Fluidi e Prodotti di Completamento ha avuto un incremento del 29% delle entrate sequenziali, arrivando a 100 milioni di dollari. I Servizi di Acqua e Flusso hanno registrato una diminuzione delle entrate del 2%, ma i margini sono aumentati di 560 punti base.
L'azienda ha registrato un flusso di cassa netto dalle operazioni di 24,8 milioni di dollari e un flusso di cassa libero rettificato totale di 9,4 milioni di dollari. Gli investimenti nei progetti di bromo e litio in Arkansas hanno raggiunto i 9,8 milioni di dollari. Il debito a lungo termine ammontava a 180 milioni di dollari, con un debito netto di 142 milioni di dollari e un rapporto di leva finanziaria netta di 1,6X.
TETRA Technologies anunció la obtención de un proyecto de fluidos TETRA CS Neptune en aguas profundas de tres pozos en el Golfo de México, que comenzará a finales del cuarto trimestre de 2024. Para el segundo trimestre de 2024, TETRA reportó ingresos de 172 millones de dólares, un aumento del 14% secuencialmente, pero una disminución del 2% interanual. El ingreso neto fue de 7,6 millones de dólares, con un EPS de 0,06 dólares y un EPS ajustado de 0,07 dólares.
El EBITDA ajustado se situó en 30,2 millones de dólares, un aumento del 32% secuencialmente a pesar de pérdidas de 1,1 millones de dólares por cambios de divisas. La División de Fluidos y Productos de Completación experimentó un incremento secuencial del 29% en los ingresos, alcanzando los 100 millones de dólares. Los Servicios de Agua y Flujo tuvieron una disminución del 2% en los ingresos, pero los márgenes aumentaron en 560 puntos base.
La empresa logró un flujo de caja operativo neto de 24,8 millones de dólares y un flujo de caja libre ajustado total de 9,4 millones de dólares. Las inversiones en proyectos de bromo y litio en Arkansas sumaron 9,8 millones de dólares. La deuda a largo plazo fue de 180 millones de dólares, con una deuda neta de 142 millones de dólares y un ratio de apalancamiento neto de 1,6X.
TETRA 기술는 3개의 깊은 해양 TETRA CS 네프튠 유체 프로젝트를 멕시코 만에서 확보했다고 발표했으며, 이는 2024년 4분기 후반에 시작될 예정입니다. 2024년 2분기 동안 TETRA는 172백만 달러의 수익을 보고했으며, 이는 전분기 대비 14% 증가했지만 지난해 대비 2% 감소했습니다. 순이익은 760만 달러였고, 주당순이익(EPS)은 0.06달러, 조정 EPS는 0.07달러였습니다.
조정된 EBITDA는 3020만 달러로 전분기 대비 32% 증가했으며, 환율 손실로 110만 달러가 발생했습니다. 완공 유체 및 제품 부문의 수익은 전분기 대비 29% 증가하여 1억 달러에 도달했습니다. 수원 및 플로우백 서비스는 수익이 2% 감소했지만 마진이 560 베이시스 포인트 상승했습니다.
회사는 운영에서 순 현금 2480만 달러를 달성했으며, 총 조정 자유 현금 흐름은 940만 달러였습니다. 아칸소의 브로민 및 리튬 프로젝트에 대한 투자는 980만 달러에 달했습니다. 장기 부채는 1억 8천만 달러였으며, 순 부채는 1억 4200만 달러였고, 순 레버리지 비율은 1.6배였습니다.
TETRA Technologies a annoncé avoir sécurisé un projet de fluides TETRA CS Neptune en eau profonde avec trois puits dans le golfe du Mexique, débutant fin Q4 2024. Pour le Q2 2024, TETRA a déclaré des recettes de 172 millions de dollars, soit une augmentation de 14 % par rapport au trimestre précédent, mais une diminution de 2 % par rapport à l'année précédente. Le revenu net s'élevait à 7,6 millions de dollars, avec un BPA de 0,06 dollar et un BPA ajusté de 0,07 dollar.
Le EBITDA ajusté s’élevait à 30,2 millions de dollars, en hausse de 32 % par rapport au trimestre précédent malgré des pertes de change de 1,1 million de dollars. La Division des Fluides et Produits de Complétion a connu une augmentation séquentielle des revenus de 29 % pour atteindre 100 millions de dollars. Les Services d'Eau et de Flux ont enregistré une baisse de 2 % de leurs revenus, mais les marges ont augmenté de 560 points de base.
L'entreprise a réalisé un flux de trésorerie net d'exploitation de 24,8 millions de dollars et un flux de trésorerie libre ajusté total de 9,4 millions de dollars. Les investissements dans les projets de brome et de lithium en Arkansas ont totalisé 9,8 millions de dollars. La dette à long terme était de 180 millions de dollars, avec une dette nette de 142 millions de dollars et un ratio d'endettement net de 1,6X.
TETRA Technologies hat die Sicherstellung eines Drei-Brunnen-Tiefsee-TETRA CS Neptune-Fluidsprojekts im Golf von Mexiko angekündigt, das Ende des vierten Quartals 2024 beginnen wird. Für das zweite Quartal 2024 berichtete TETRA über Einnahmen von 172 Millionen Dollar, was einem Anstieg von 14 % im Vergleich zum Vorquartal entspricht, jedoch einem Rückgang von 2 % im Jahresvergleich. Der Nettogewinn betrug 7,6 Millionen Dollar, mit einem EPS von 0,06 Dollar und einem ajustierten EPS von 0,07 Dollar.
Das bereinigte EBITDA lag bei 30,2 Millionen Dollar, was einem Anstieg von 32 % im Vergleich zum Vorquartal entspricht, trotz eines Verlustes von 1,1 Millionen Dollar aufgrund von Währungsabwertungen. Die Abteilung für Abschlussflüssigkeiten und Produkte verzeichnete einen Anstieg der Einnahmen um 29 % im Vergleich zum Vorquartal auf 100 Millionen Dollar. Wasser- und Rückflussdienste hatten einen Rückgang der Einnahmen um 2 %, jedoch stiegen die Margen um 560 Basispunkte.
Das Unternehmen erzielte einen Nettokassenfluss aus der Betriebstätigkeit von 24,8 Millionen Dollar und einen gesamten bereinigten freien Cashflow von 9,4 Millionen Dollar. Die Investitionen in die Brom- und Lithiumprojekte in Arkansas beliefen sich auf 9,8 Millionen Dollar. Die langfristigen Schulden betrugen 180 Millionen Dollar, bei einem Nettoschuldenstand von 142 Millionen Dollar und einem Nettoverschuldungsverhältnis von 1,6X.
- Secured three-well deepwater TETRA CS Neptune fluids project in Gulf of Mexico.
- Q2 2024 revenue increased 14% sequentially to $172 million.
- Net income of $7.6 million and adjusted EPS of $0.07.
- Adjusted EBITDA rose 32% sequentially to $30.2 million.
- Net cash from operating activities was $24.8 million.
- Completion Fluids & Products revenue up 29% sequentially to $100 million.
- Water & Flowback Services margins improved by 560 basis points.
- Q2 2024 revenue decreased 2% YoY.
- Net income decreased from $18.2 million in Q2 2023.
- Total adjusted free cash flow decreased from $17.7 million in Q2 2023.
- Long-term debt stands at $180 million.
Insights
TETRA Technologies' Q2 2024 results show mixed performance with some positive trends:
- Revenue of
$172 million increased14% sequentially, though down2% year-over-year. - Net income of
$7.6 million improved from$0.9 million in Q1, but decreased from$18.2 million in Q2 2023. - Adjusted EBITDA of
$30.2 million increased32% sequentially. - Operating cash flow was strong at
$24.8 million , with base business adjusted free cash flow of$19.2 million .
The Completion Fluids & Products division performed well, with
The company's net leverage ratio of 1.6X and liquidity of
Overall, while facing some headwinds, TETRA shows resilience and potential for growth in key segments.
TETRA's Q2 results reflect the current dynamics in the oil and gas sector:
- The company's performance improved despite lower US onshore completions activity, showcasing its ability to navigate market fluctuations.
- The secured three-well deepwater Gulf of Mexico project with a super major operator is a significant win. It marks TETRA's re-entry into the Gulf of Mexico TETRA CS Neptune fluids market after a hiatus since Q4 2019.
- The focus on automated technologies in the Water & Flowback Services segment, including TETRA BlueLinx, SandStorm and Automated Drillout Systems, is driving efficiency and margin improvements.
TETRA's strategic initiatives, particularly in Arkansas for bromine and lithium projects, position the company for future growth in emerging markets like long-duration energy storage. The
The company's efforts in produced water desalination for beneficial re-use align with the industry's increasing focus on sustainability. Expanding discussions with operators across various regions indicate growing market interest in this solution.
While facing some regulatory delays and market challenges, TETRA's strategic positioning and technological focus suggest potential for long-term growth in both traditional and emerging energy markets.
- Secured a three-well deepwater TETRA CS Neptune fluids project in the Gulf of
Mexico with a super major operator that is scheduled to begin late in the fourth quarter of 2024. - Second quarter revenue of
$172 million 14% sequentially. - Second quarter net income of
$7.6 million - Second quarter net income per share was
$0.06 $0.07 - Adjusted EBITDA of
$30.2 million 32% sequentially, despite$1.1 million - Second quarter net cash provided by operating activities of
$24.8 million $9.4 million $19.2 million
Brady
Second quarter 2024 revenue of
"Second-quarter cash flow provided by operating activities was
"Completion Fluids & Products experienced a strong quarter with revenue of
"We are very pleased to have secured a three-well deepwater Gulf of Mexico TETRA CS Neptune fluids project for a super major oil and gas operator. This multi-well award is a great milestone for the Company as it represents the second super major deepwater operator in the Gulf of
"Water & Flowback Services revenue of
(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
Second Quarter Results and Highlights
A summary of key financial metrics for the second quarter are as follows:
Three Months Ended | |||||
June 30, | March 31, | June 30, | |||
(in thousands, except per share amounts) | |||||
Revenue | $ 171,935 | $ 150,972 | $ 175,463 | ||
Net income | 7,640 | 915 | 18,197 | ||
Adjusted EBITDA | 30,234 | 22,840 | 36,046 | ||
Net income per share attributable to TETRA stockholders | 0.06 | 0.01 | 0.14 | ||
Adjusted net income per share | 0.07 | 0.05 | 0.13 | ||
Net cash provided by (used in) operating activities | 24,831 | (13,816) | 28,372 | ||
Total adjusted free cash flow(1) | $ 9,369 | $ (29,617) | $ 17,711 | ||
(1) | For the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, total adjusted free cash flow includes |
Strategic Initiatives Update
Brady
Free Cash Flow, Balance Sheet and Income Taxes
Cash provided by operating activities was
Non-recurring Charges and Expenses
Non-recurring credits, charges and expenses are reflected on Schedule E and include the following:
$1.4 million $0.4 million
Unrealized gains on investments totaling
Conference Call
TETRA will host a conference call to discuss these results tomorrow, August 1, 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 03425#, 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 Lithium 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 Brine 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 Brine 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 Brine 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 | |||||
June 30, | March 31, | June 30, | |||
(in thousands, except per share amounts) | |||||
Revenues | $ 171,935 | $ 150,972 | $ 175,463 | ||
Cost of sales, services, and rentals | 119,908 | 111,114 | 117,074 | ||
Depreciation, amortization, and accretion | 8,774 | 8,756 | 8,457 | ||
Impairments and other charges | — | — | 777 | ||
Total cost of revenues | 128,682 | 119,870 | 126,308 | ||
Gross profit | 43,253 | 31,102 | 49,155 | ||
Exploration and pre-development costs | — | — | 2,341 | ||
General and administrative expense | 22,137 | 22,298 | 26,225 | ||
Interest expense, net | 6,185 | 5,952 | 5,944 | ||
Loss on debt extinguishment | — | 5,535 | — | ||
Other income (expense), net | 2,452 | (3,978) | (6,435) | ||
Income before taxes and discontinued operations | 12,479 | 1,295 | 21,080 | ||
Provision for income taxes | 4,839 | 380 | 2,875 | ||
Income before discontinued operations | 7,640 | 915 | 18,205 | ||
Discontinued operations: | |||||
Loss from discontinued operations, net of taxes | — | — | (8) | ||
Net income | 7,640 | 915 | 18,197 | ||
Loss attributable to noncontrolling interest | 3 | — | 18 | ||
Net income attributable to TETRA stockholders | $ 7,643 | $ 915 | $ 18,215 | ||
Basic per share information: | |||||
Net income attributable to TETRA stockholders | $ 0.06 | $ 0.01 | $ 0.14 | ||
Weighted average shares outstanding | 131,263 | 130,453 | 129,460 | ||
Diluted per share information: | |||||
Net income attributable to TETRA stockholders | $ 0.06 | $ 0.01 | $ 0.14 | ||
Weighted average shares outstanding | 132,169 | 132,123 | 129,925 | ||
Schedule B: Condensed Consolidated Balance Sheet (Unaudited) | |||
June 30, | December 31, | ||
(in thousands) | |||
(unaudited) | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 37,713 | $ 52,485 | |
Restricted cash | 5,039 | — | |
Trade accounts receivable | 140,805 | 111,798 | |
Inventories | 82,780 | 96,536 | |
Prepaid expenses and other current assets | 23,284 | 21,196 | |
Total current assets | 289,621 | 282,015 | |
Property, plant, and equipment, net | 121,584 | 107,716 | |
Other intangible assets, net | 27,026 | 29,132 | |
Operating lease right-of-use assets | 30,217 | 31,915 | |
Investments | 20,427 | 17,354 | |
Other assets | 10,850 | 10,829 | |
Total long-term assets | 210,104 | 196,946 | |
Total assets | $ 499,725 | $ 478,961 | |
LIABILITIES AND EQUITY | |||
Current liabilities: | |||
Trade accounts payable | $ 53,069 | $ 52,290 | |
Compensation and employee benefits | 17,111 | 26,918 | |
Operating lease liabilities, current portion | 8,595 | 9,101 | |
Accrued taxes | 13,977 | 10,350 | |
Accrued liabilities and other | 27,584 | 27,303 | |
Total current liabilities | 120,336 | 125,962 | |
Long-term debt, net | 179,670 | 157,505 | |
Operating lease liabilities | 25,957 | 27,538 | |
Asset retirement obligations | 14,772 | 14,199 | |
Deferred income taxes | 2,284 | 2,279 | |
Other liabilities | 3,128 | 4,144 | |
Total long-term liabilities | 225,811 | 205,665 | |
Commitments and contingencies | |||
TETRA stockholders' equity | 154,838 | 148,591 | |
Noncontrolling interests | (1,260) | (1,257) | |
Total equity | 153,578 | 147,334 | |
Total liabilities and equity | $ 499,725 | $ 478,961 | |
Schedule C: Consolidated Statements of Cash Flows (Unaudited) | |||||
Three Months Ended | |||||
June 30, 2024 | March 31, 2024 | June 30, 2023 | |||
(in thousands) | |||||
Operating activities: | |||||
Net income | $ 7,640 | $ 915 | $ 18,197 | ||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||
Depreciation, amortization, and accretion | 8,775 | 8,755 | 8,457 | ||
Impairments and other charges | — | — | 777 | ||
Gain on investments | (46) | (2,795) | (908) | ||
Equity-based compensation expense | 1,800 | 1,623 | 1,492 | ||
Provision for (recovery of) credit losses | (52) | (115) | 741 | ||
Amortization and expense of financing costs | 504 | 380 | 897 | ||
Loss on debt extinguishment | — | 5,535 | — | ||
Gain on sale of assets | (38) | (29) | (111) | ||
Other non-cash credits | (133) | (553) | (637) | ||
Changes in operating assets and liabilities: | |||||
Accounts receivable | (4,020) | (19,605) | (13,140) | ||
Inventories | 10,453 | 1,542 | 2,764 | ||
Prepaid expenses and other current assets | 758 | (3,918) | (2,254) | ||
Trade accounts payable and accrued expenses | (913) | (5,577) | 11,622 | ||
Other | 103 | 26 | 475 | ||
Net cash provided by (used in) operating activities | 24,831 | (13,816) | 28,372 | ||
Investing activities: | |||||
Purchases of property, plant, and equipment, net | (15,392) | (15,827) | (10,490) | ||
Proceeds from sale of property, plant, and equipment | 121 | 251 | 208 | ||
Purchase of investments | — | — | (250) | ||
Other investing activities | (22) | (172) | (275) | ||
Net cash used in investing activities | (15,293) | (15,748) | (10,807) | ||
Financing activities: | |||||
Proceeds from credit agreements and long-term debt | 157 | 184,456 | 44,413 | ||
Principal payments on credit agreements and long-term debt | (157) | (163,215) | (50,875) | ||
Payments on financing lease obligations | (363) | (277) | (431) | ||
Debt issuance costs | (679) | (5,277) | — | ||
Shares withheld for taxes on equity-based compensation | (48) | (2,339) | — | ||
Other financing activities | (1,280) | — | — | ||
Net cash provided by (used in) financing activities | (2,370) | 13,348 | (6,893) | ||
Effect of exchange rate changes on cash | (355) | (330) | 320 | ||
Increase (decrease) in cash and cash equivalents | 6,813 | (16,546) | 10,992 | ||
Cash and cash equivalents at beginning of period | 35,939 | 52,485 | 16,683 | ||
Cash, cash equivalents and restricted cash at end of period | $ 42,752 | $ 35,939 | $ 27,675 | ||
Supplemental cash flow information: | |||||
Interest paid | $ 5,424 | $ 5,406 | $ 4,899 | ||
Income taxes paid | $ 2,558 | $ 433 | $ 654 | ||
Accrued capital expenditures at end of period | $ 8,073 | $ 3,908 | $ 3,142 | ||
Schedule D: Statement Regarding Use of Non-GAAP Financial Measures
In addition to financial results determined in accordance with U.S. GAAP, this press release may include the following non-GAAP financial measures for the Company: adjusted net income per share, consolidated and segment Adjusted EBITDA, segment Adjusted EBITDA as a percent of revenue ("Adjusted EBITDA margin"), adjusted net income, total adjusted free cash flow, base business adjusted free cash flow, net debt, net leverage ratio, and return on net capital employed. The following schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable
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 | |||||
June 30, 2024 | March 31, 2024 | June 30, 2023 | |||
(in thousands, except per share amounts) | |||||
Income before taxes and discontinued operations | $ 12,479 | $ 1,295 | $ 21,080 | ||
Provision for income taxes | 4,839 | 380 | 2,875 | ||
Loss attributed to noncontrolling interest | 3 | — | 18 | ||
Income from continuing operations | 7,643 | 915 | 18,223 | ||
Insurance recoveries | — | — | (5) | ||
Impairments and other charges | — | — | 777 | ||
Exploration and pre-development costs | — | — | 2,341 | ||
Adjustment to long-term incentives | — | — | 322 | ||
Former CEO stock appreciation right credit | (428) | (186) | 329 | ||
Transaction, legal, and other expenses | 37 | (135) | 57 | ||
Loss on debt extinguishment | — | 5,535 | — | ||
Income from collaborative arrangements | — | — | (4,749) | ||
Unusual foreign exchange loss | 1,387 | — | — | ||
Adjusted net income | $ 8,639 | $ 6,129 | $ 17,295 | ||
Diluted per share information | |||||
Net income attributable to TETRA stockholders | $ 0.06 | $ 0.01 | $ 0.14 | ||
Adjusted net income | $ 0.07 | $ 0.05 | $ 0.13 | ||
Diluted weighted average shares outstanding | 132,169 | 132,123 | 129,925 | ||
Schedule F: Non-GAAP Reconciliation of Adjusted EBITDA (Unaudited) | |||||||||
Three Months Ended June 30, 2024 | |||||||||
Completion Fluids & | Water & Flowback | 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 March 31, 2024 | |||||||||
Completion Fluids & | Water & Flowback | Corporate SG&A | Corporate Other | Total | |||||
(in thousands, except percents) | |||||||||
Revenues | $ 77,282 | $ 73,690 | $ — | $ — | $ 150,972 | ||||
Net income (loss) before taxes and discontinued operations | 19,792 | 721 | (11,101) | (8,117) | 1,295 | ||||
Former CEO stock appreciation right credit | — | — | (186) | — | (186) | ||||
Transaction, restructuring, and other expenses | (159) | — | 24 | — | (135) | ||||
Loss on debt extinguishment | — | — | — | 5,535 | 5,535 | ||||
Interest (income) expense, net | (269) | 76 | — | 6,145 | 5,952 | ||||
Depreciation, amortization, and accretion | 2,387 | 6,288 | — | 81 | 8,756 | ||||
Equity-based compensation expense | — | — | 1,623 | — | 1,623 | ||||
Adjusted EBITDA | $ 21,751 | $ 7,085 | $ (9,640) | $ 3,644 | $ 22,840 | ||||
Adjusted EBITDA as a % of revenue | 28.1 % | 9.6 % | 15.1 % | ||||||
Three Months Ended June 30, 2023 | |||||||||
Completion Fluids & | Water & Flowback | Corporate SG&A | Corporate Other | Total | |||||
(in thousands, except percents) | |||||||||
Revenues | $ 98,222 | $ 77,241 | $ — | $ — | $ 175,463 | ||||
Net income (loss) before taxes and discontinued operations | 31,956 | 8,014 | (12,595) | (6,295) | 21,080 | ||||
Insurance recoveries | (5) | — | — | — | (5) | ||||
Impairments and other charges | — | — | 777 | — | 777 | ||||
Exploration and pre-development costs, and collaborative arrangements | (2,408) | — | — | — | (2,408) | ||||
Adjustment to long-term incentives | — | — | 322 | — | 322 | ||||
Former CEO stock appreciation right credit | — | — | 329 | — | 329 | ||||
Transaction, restructuring, and other expenses | — | — | 57 | — | 57 | ||||
Interest (income) expense, net | 104 | 27 | — | 5,813 | 5,944 | ||||
Depreciation, amortization, and accretion | 2,193 | 6,172 | — | 93 | 8,458 | ||||
Equity-based compensation expense | — | — | 1,492 | — | 1,492 | ||||
Adjusted EBITDA | $ 31,840 | $ 14,213 | $ (9,618) | $ (389) | $ 36,046 | ||||
Adjusted EBITDA as a % of revenue | 32.4 % | 18.4 % | 20.5 % | ||||||
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. | |||
June 30, 2024 | December 31, 2023 | ||
(in thousands) | |||
Unrestricted Cash | $ 37,713 | $ 52,485 | |
Term Credit Agreement | $ 179,670 | $ 157,505 | |
Net debt | $ 141,957 | $ 105,020 | |
Schedule H: Non-GAAP Reconciliation to Total Adjusted Free Cash Flow and Base Business Adjusted Free Cash Flow (Unaudited) | |||||||||
Three Months Ended | Six Months Ended | ||||||||
June 30, 2024 | March 31, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||
(in thousands) | |||||||||
Net cash provided by (used in) operating activities | $ 24,831 | $ (13,816) | $ 28,372 | $ 11,015 | $ 37,357 | ||||
Capital expenditures, net of proceeds from asset sales | (15,271) | (15,576) | (10,282) | (30,847) | (22,777) | ||||
Payments on financing lease obligations | (363) | (277) | (431) | (640) | (689) | ||||
Distributions from investments | 172 | 52 | 52 | 224 | 104 | ||||
Total Adjusted Free Cash Flow | $ 9,369 | $ (29,617) | $ 17,711 | $ (20,248) | $ 13,995 | ||||
Total Adjusted Free Cash Flow | $ 9,369 | $ (29,617) | $ 17,711 | $ (20,248) | $ 13,995 | ||||
Less Investments in | (9,829) | (4,103) | (2,341) | (13,932) | (3,175) | ||||
Base Business Adjusted Free Cash Flow | $ 19,198 | $ (25,514) | $ 20,052 | $ (6,316) | $ 17,170 | ||||
Schedule I: Non-GAAP Reconciliation to Net Leverage Ratio (Unaudited) | |||||||||
Three Months Ended | Twelve Months Ended | ||||||||
June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2024 | |||||
(in thousands) | |||||||||
Net income (loss) before taxes and discontinued operations | 12,479 | $ 1,295 | $ (3,631) | $ 6,716 | $ 16,859 | ||||
Insurance recoveries | — | — | 3 | 174 | 177 | ||||
Impairments and other charges | — | — | 2,189 | — | 2,189 | ||||
Exploration, pre-development costs, and collaborative arrangements | — | — | 2,684 | 1,842 | 4,526 | ||||
Adjustment to long-term incentives | — | — | 281 | 501 | 782 | ||||
Former CEO stock appreciation right expense (credit) | (428) | (186) | (789) | 1,073 | (330) | ||||
Transaction, restructuring, and other expenses | 37 | (135) | 255 | 108 | 265 | ||||
Unusual foreign exchange loss | 1,387 | — | 2,444 | — | 3,831 | ||||
Loss on debt extinguishment | — | 5,535 | — | — | 5,535 | ||||
Interest expense, net | 6,185 | 5,952 | 5,677 | 5,636 | 23,450 | ||||
Depreciation, amortization, and accretion | 8,774 | 8,756 | 8,623 | 8,578 | 34,731 | ||||
Equity compensation expense | 1,800 | 1,623 | 6,406 | 1,431 | 11,260 | ||||
Unrealized (gain) loss on investments | (46) | (2,795) | (696) | 560 | (2,977) | ||||
Gain on sale of assets | (38) | (29) | (129) | (151) | (347) | ||||
Other debt covenant adjustments | 275 | 28 | 333 | (393) | 243 | ||||
Debt covenant adjusted EBITDA | $ 30,425 | $ 20,044 | $ 23,650 | $ 26,075 | $ 100,194 | ||||
June 30, 2024 | |||||||||
(in thousands, except ratio) | |||||||||
Term credit agreement | $ 190,000 | ||||||||
Capital lease obligations | 3,992 | ||||||||
Other obligations | 1,280 | ||||||||
Letters of credit and guarantees | 543 | ||||||||
Total debt and commitments | 195,815 | ||||||||
Unrestricted cash | 37,713 | ||||||||
Debt covenant net debt and commitments | $ 158,102 | ||||||||
Net leverage ratio | 1.6 | ||||||||
Schedule J: Non-GAAP Reconciliation to Return on Net Capital Employed | |||||||||
Three Months Ended | Twelve Months Ended | ||||||||
June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2024 | |||||
(in thousands) | |||||||||
Net income (loss) before taxes and discontinued operations | $ 12,479 | $ 1,295 | $ (3,631) | $ 6,716 | $ 16,859 | ||||
Insurance recoveries | — | — | 3 | 174 | 177 | ||||
Impairments and other charges | — | — | 2,189 | — | 2,189 | ||||
Exploration, pre-development costs, and collaborative arrangements | — | — | 2,684 | 1,842 | 4,526 | ||||
Adjustment to long-term incentives | — | — | 281 | 500 | 781 | ||||
Former CEO stock appreciation right expense (credit) | (428) | (186) | (789) | 1,074 | (329) | ||||
Transaction, restructuring, and other expenses | 37 | (135) | 255 | 108 | 265 | ||||
Loss on debt extinguishment | — | 5,535 | — | — | 5,535 | ||||
Unusual foreign exchange loss | 1,387 | — | 2,444 | — | 3,831 | ||||
Interest expense, net | 6,185 | 5,952 | 5,677 | 5,636 | 23,450 | ||||
Adjusted EBIT | $ 19,660 | $ 12,461 | $ 9,113 | $ 16,050 | $ 57,284 | ||||
June 30, 2024 | June 30, 2023 | ||||||||
(in thousands, except ratio) | |||||||||
Consolidated total assets | $ 499,725 | $ 469,992 | |||||||
Plus: assets impaired in last twelve months | 2,189 | 1,319 | |||||||
Less: cash, cash equivalents, and restricted cash | 42,752 | 27,675 | |||||||
Adjusted assets employed | $ 459,162 | $ 443,636 | |||||||
Consolidated current liabilities | $ 120,336 | $ 125,831 | |||||||
Less: current liabilities associated with discontinued operations | — | 414 | |||||||
Adjusted current liabilities | $ 120,336 | $ 125,417 | |||||||
Net capital employed | $ 338,826 | $ 318,219 | |||||||
Average net capital employed | $ 328,523 | ||||||||
Return on net capital employed for the twelve months ended June 30, 2024 | 17.4 % | ||||||||
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SOURCE TETRA Technologies, Inc.
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