tetra technologies, inc. csi compressco...
TRANSCRIPT
March 2018
TETRA Technologies, Inc.CSI Compressco LP
Forward Looking Statements and Non-GAAP Measures
2
Forward-Looking Statements:
This presentation includes certain statements that are or may be deemed to be forward-looking statements. Generally, the use ofwords 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 securitieslaws. These forward-looking statements include statements concerning expected results of operational business segments for2018, anticipated benefits from our acquisitions of assets and businesses, including TETRA Technologies’ acquisition ofSwiftWater Energy Services, LLC and disposition of its Offshore Services and Maritech operations, estimated earnings, earningsper share, and statements regarding our beliefs, expectations, plans, goals, future events and performance, and other statementsthat are not purely historical. These forward-looking statements are based on certain assumptions and analyses made in light ofour experience and our perception of historical trends, current conditions, expected future developments and other factors webelieve are appropriate in the circumstances. Such statements are subject to a number of risks and uncertainties, many of whichare beyond our control. Investors are cautioned that any such statements are not guarantees of future performance or results andthat actual results or developments may differ materially from those projected in the forward-looking statements. Some of thefactors that could affect actual results are described in the section titled “Risk Factors” contained in our Annual Report on Form10-K for the year ended December 31, 2017, as well as other risks identified from time to time in our reports on Form 10-Q andForm 8-K filed with the Securities and Exchange Commission.
Further Disclosure Regarding the Use of Non-GAAP Measures:
This presentation includes non-GAAP financial measures, Adjusted EBITDA, Adjusted EBITDA margin, enterprise value,distributable cash flow, free cash flow, liquidity and distributable coverage ratio. Please see the Appendix to this presentation forfurther information concerning non-GAAP financial measures including reconciliation of such non-GAAP financial measures to thenearest GAAP financial measures.
Listing and Ticker Symbol NYSE: TTI NASDAQ: CCLP
Recent Share Price(1) $3.79 $7.50
Market Capitalization(1) $475.8M $291.7M
Enterprise Value(1) $593.4M $874.1M
Number of Shares/Units Outstanding(2) 125.5M 38.9M
Average Daily Trading volume (last 3 months) (1) 918,738 160,473
Distribution (3) $0.75
Distribution Yield(1) 10.0%
% of Ownership Interest by TTI(4) 40%
Headquarters The Woodlands, TX
Corporate Profiles
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(1) As of 3/22/18 (2) As of 3/1/2018 for TTI and 2/27/2018 for CCLP (3) Q4-2017 Annualized (4) As of 2/27/2018
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Repositioning For Growth
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Simplified structure with less seasonality
Focused on North America shale play, GoM and offshore international
Strong balance sheet for TTI and ample liquidity for CCLP with no maintenance covenants
Focus on core competencies and leverage vertical integrated Fluids and Compression businesses
Focused StrategyExpand Fluids and Compression – leverage shale plays
Acquisition of SwiftWater
• Increased focus on North America’s onshore completion services
• Permian Basin expansion, most active North America shale play
Divestiture of Offshore Decommissioning & Maritech
• Divested cyclical, volatile and competitive Offshore Decommissioning segment
• $47M of ARO liabilities assumed and bonded by buyer
StrengthenedManagement Team
• Brady Murphy, President and Chief Operating Officer of TETRA
• Owen Serjeant, President of CSI Compressco LP
Refinanced CCLP’sBalance Sheet
• Extended maturity date & added over $100M of cash to invest in growth
• Debt structure has no maintenance covenants
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TETRA’s Evolution
5
(1) Excludes Maritech and Eliminations(2) Pro Forma for TOS and MRI divestiture
Driving focus towards Fluids, Water Management and Compression
2007 Revenue(1) ($Mil)
Fluids$282 28%
PT$92 9%
Compression$84 8%
Offshore Services
$341 34%
Maritech$214 21%
2017 Revenue(1) ($Mil)
Fluids$335 41%
PT$94
11%
Compression$296 36%
Offshore Services
$97 12%
Maritech$1
0%
2017 Revenue(1,2)($Mil)(Pro-Forma)
Fluids$335 46%
PT$94
13%
Compression$296 41%
Compression and Completion Fluids Segments Have Demonstrated More Capital and Pricing Discipline
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Business Segments
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Focused on higher margin and more stable segments
Fluids
Only vertically integrated completion fluids based company
for the oil & gas market
Growing Water Management business
2017 Revenue: $335M2017 Adjusted EBITDA(1): $80M
Production Testing
Focused on North Americashale plays driven by more
intense fracking activity
2017 Revenue: $94M2017 Adjusted EBITDA(1): $8M
Compression
Largest vertically integrated Compression company with 3rd
highest operating Hp
Largest concentration of assets in Permian Basin
2017 Revenue: $296M2017 Adjusted EBITDA(1): $75M
(1) See appendix for reconciliation to nearest GAAP measures
Fluids
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Chemicals Manufacturing
Completion Fluids and Services
• Only vertically integrated service provider of Clear Brine Fluids
• Seamless supply from manufacturing plants to CBFs blending facilities with long term bromine supply agreement
• Technology leader, including completion fluid TETRA CS Neptune ®
• Global infrastructure
• Strong position in deepwater Gulf of Mexico
• Footprint in all North American unconventional basins with emphasis on Permian Basin
Expanding organically, through acquisitions and by investing in product development
Water Management
$99
$123 $111
$91
$59 $61 $63 $64 $73 $89 $93
$80
-
500
1,000
1,500
$0
$50
$100
$150
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017Revenue US Rigcount
Fluids
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Revenue (In $ Millions)
Adjusted EBITDA (In Millions) and Margins(1)
2017 Revenue Profile
(1) See appendix for reconciliation to nearest GAAP measures(2) Source: Baker Hughes
(2)
International29%
United States71%
Offshore34%
Onshore66%
Revenue and Adjusted EBITDA remained resilient during the downturn
27%34%
38%
28%
12% 14%
26%
13%19%
24%
33%
17%
-5%
5%
15%
25%
35%
45%
$0
$10
$20
$30
$40
$50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017
Adj. EBITDA Adj. EBITDA Margin
Compression
Compression Services
• Largest vertically integrated compression provider
• Over 1.1M hp fleet ranging from 46 hp - 2,900 hp supported by over 350 mechanics
• Successive quarters of improved utilization
• Large Hp equipment >90% utilized
• Equipment sales backlog of $117M as of January 31, 2018, largest since March, 2015
• CCLP debt structure with no maintenance covenants and extended maturities
• Successfully implemented new ERP system with anticipated annualized savings of $4M
Focused on the most robust market – Permian and Delaware Basins
Equipment and Part Sales
After Market Services
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Compression Services Footprint30% of compression fleet deployed in the Permian Basin
(1) CSI Compressco fleet geography as of December 31, 2017
HP Distribution by CCLP Region (1)
Gas Jack® unit on Well Head Service
Gas Jack® unit on Wellhead Service
BasinsShale PlaysProspective Shale Plays
Operating Units
South Texas20%
Permian30%West
11%
Mid-Con18%
East11%
International5%
N. Rockies4%
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CSI Compressco’s State of the Art Operating System
• Field data capture
• Automation Capabilities:• Resource assignment and
dispatch• Preventive maintenance
scheduling • Parts distribution module to
minimize working capital
• Immediate access to pricing and inventory levels
• Real time reporting capability with electronic dashboard
• $4M of projected annual cost savings
Creates operational efficiencies and improves margins while reducing working capital and lead times
$103$126$129
$99$82 $76 $71
$83$66 $75 $72
$83
-
500
1,000
1,500
$0
$50
$100
$150
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017Compression Services Equipment Sales
Aftermarket Services US Land Rigcount
14%
17%
70%
Compression
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Revenue (In $ Millions)
Adjusted EBITDA (In Millions) and Margins(1)
2017 Revenue & Gross Margin By Product Line(2)
(1) See appendix for reconciliation to nearest GAAP measures(2) 2017 Results. Gross Margin is defined as revenues less cost of revenues excluding depreciation and amortization expense(3) Revenue and Gross Margin by Product Line is shown as the portion of total Revenue and total Gross Margin that is attributable to the given product line(4) CSI Compressco utilized Hp, composition, and fleet application as of December 31, 2017 (5) Source: Baker Hughes
Service Fleet Utilization and Composition(4)
Portion of Total
Revenue (3)
Portion of Total Gross Margin (3)
Compression and Related Services
Equipment Sales
Aftermarket Services
(5)
8%5%
87%
0-100 Hp
101-800 Hp
801+ Hp 42%
Composition Utilization
41%
17%
92%
81%
65% Total Fleet Utilization83.2%
with~900,000 operating
Hp
31%25% 25%
29% 29%32% 33%
22%27%
23%29%
23%
-5%
5%
15%
25%
35%
45%
$0
$10
$20
$30
$40
$50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017
Adj. EBITDA Adj. EBITDA Margin
Compression Services revenue and margins were the least impacted during this downturn
Production Testing
13(1) See appendix for reconciliation to nearest GAAP measures(2) Source: Baker Hughes
• Strong rebound in revenue and adjusted EBITDA
• Increased fracking driving activity levels
• Footprint in all North America shale basins
• Early Production Facilities provide additional sources of profit
Revenue (In $ Millions)
Adjusted EBITDA (1) (In Millions) and Margins(1)
(2)
$37 $35 $29
$33
$20 $13 $15 $15
$22 $16 $19
$38
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300
600
900
1,200
1,500
$0
$10
$20
$30
$40
$50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017Revenue US Land Rigcount
18% 20% 16% 14%11%
-1% -3% -3%
5%
-4%
6%
18%
-10%-5%0%5%10%15%20%
-$2
$0
$2
$4
$6
$8
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017
Adj. EBITDA Adj. EBITDA Margin
Revenue doubled from 2017-Q3 to 2017-Q4
Financial Overview
Consolidated TETRA, excluding Offshore Division
Revenue (In $ Millions)(1)
Adjusted EBITDA (In Millions) and Margins(1,2)
2017 Revenue Profile(1)
(1) Excludes Offshore division(2) See appendix for reconciliation to nearest GAAP measures
(2)
$238 $283 $267
$222
$160 $149 $147 $161 $159 $180 $184 $200
(300)
-
300
600
900
1,200
1,500
$0
$50
$100
$150
$200
$250
$300
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017Revenue US Rigcount
24% 25% 26%22%
15%20% 22%
11%
14% 16%23%
15%
-10%
0%
10%
20%
30%
$0
$20
$40
$60
$80
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017
Adj. EBITDA Adj. EBITDA Margin
International24%
United States76%
Offshore17%
Onshore83%
Adjusted EBITDA remained positive during 3 year downturn
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Two Distinct & Separate Capital Structures
Revolver Senior Notes
TETRA Only CSI Compressco Only
Both TTI and CCLP have strong balance sheet with ample liquidity
• Completed $350M senior secured notes offering in March,2018
• No maintenance covenants• No near-term maturities• Over $100M of cash available for capital
investments
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$0
$50
$100
$150
$200
$250
$300
$350
$400
2018 2019 2020 2021 2022
In $
Mill
ions
$0
$50
$100
$150
$200
$250
$300
$350
$400
2018 2019 2020 2021 2022 2023 2024 2025
In $
Mill
ions
• TETRA 1.66x leverage ratio as of 12/31/2017 with liquidity of $214M
• Ample iquidity to capitalize on acquisitions and growth capital opportunities
• No amount drawn on revolver at 12/31/2017
Debt Maturity Debt Maturity
Strong Free Cash Flow Business Model TETRA and CSI Compressco were both free cash flow(1,2) positive during the downturn
TETRA Only – 2015-2017 Period CCLP – 2015-2017 Period
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Free Cash Flow(1,3)
$149M
Adjusted EBITDA$195M
CAPEX$53M
Interest Expense
$54M
Working Capital & Other
$6M
CCLP Distributions
$67M
Cash Inflows
Cash Outflows
Free Cash Flow(2,3)
$71M
CCLP Adjusted EBITDA$308M
CAPEX$131M
Interest Expense$116M
Working Capital & Other$11M
Cash Inflows
Cash Outflows
(1) Free cash flow is defined as cash flow from operations – CAPEX + Distributions from CCLP(2) Free cash flow is defined as cash flow from operations – CAPEX(3) See appendix for reconciliation to nearest GAAP measures
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March 2018
TETRA Technologies, Inc.CSI Compressco LP
Non-GAAP Financial Measures
This presentation includes non-GAAP financial measures, Adjusted EBITDA, Adjusted EBITDA margin, enterprise value, adjusted free cash flow, liquidity, consolidatedresults for TETRA, excluding the offshore division, distribution coverage ratio and debt to Adjusted EBITDA. Adjusted EBITDA is used as a supplemental financialmeasure by the management to:
• evaluate the financial performance of assets without regard to financing methods, capital structure or historical cost basis;
• determine the ability to incur and service debt and fund capital expenditures.; and
• With respect to CSI Compressco LP (“CCLP”), asses the ability to generate available cash sufficient to make distributions
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, impairments and special items, equity compensation, and allocated corporateTETRA’s overhead charges to our CSI Compressco LP subsidiary, pursuant to our Omnibus Agreement, which were reimbursed with CSI Compressco LP(CCLP)common units.
Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue.
CCLP Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, and before certain non-cash charges consisting of impairments, baddebt expense attributable to bankruptcy of customer, non-cash costs of compressors sold, equity compensation, fair value adjustments of our Preferred Units, gain onextinguishment of debt, administrative expenses under the Omnibus Agreement paid in equity using common units and excluding acquisition and transaction costs, andseverance expense.
Enterprise value is defined as market capitalization plus the sum of long-term and short-term debt, less cash, excluding restricted cash. Management uses enterprisevalue as a measure of the market value of the company if it were free of debt.
Liquidity is defined as the availability under the Credit Agreement (consisting of maximum credit commitment, less balance outstanding) plus the sum of unrestrictedcash. Management views liquidity as a measure of the Company’s ability to fund investing and financing activities.
TETRA only adjusted free cash flow is a non-GAAP measure that TETRA defines as cash from TETRA's operations, excluding cash settlements of Maritech AROs, lesscapital expenditures net of sales proceeds, and including cash distributions to TETRA from CSI Compressco LP.
CCLP adjusted free cash flow is a non-GAAP measure that CCLP defines as cash from CCLP’s operations, less capital expenditures net of sales proceeds.
These non-GAAP financial measures should not be considered an alternative to net income, operating income, cash flows from operating activities or any other measureof financial performance presented in accordance with GAAP. These non-GAAP financial measures may not be comparable to EBITDA, distributable cash flow or othersimilarly titled measures of other entities, as other entities may not calculate these non-GAAP financial measures in the same manner. Management compensates for thelimitation of these non-GAAP financial measures as an analytical tool by reviewing the comparable GAAP measures, understanding the differences between themeasures and incorporating this knowledge into management's decision making process. Furthermore, these non-GAAP measures should not be viewed as indicative ofthe actual amount of cash that is available for distributions or planned distribution for a given period, nor should they be equated to available cash as defined in CCLP'spartnership agreement.
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Non-GAAP Reconciliations
21
Fluids - Adjusted EBITDA Reconciliation '($ in Millions)Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Income (Loss) Before Taxes $17.7 $32.6 $33.2 ($2.7) ($0.4) $0.5 $8.8 $1.5 $20.3 $15.8 $24.9 $7.6
Interest Income/Expense ($0.0) ($0.1) ($0.0) ($0.2) ($0.0) $0.0 $0.0 $0.0 $0.0 $0.0 ($0.0) ($0.1)
DD&A $8.7 $8.8 $8.7 $28.7 $7.4 $7.6 $6.9 $7.0 $6.1 $5.9 $5.9 $5.9
Stock Option expense - - - - - - - - - - - -
Special Items $0.1 $0.2 $0.4 $0.1 $0.1 $0.2 $0.7 $0.1 ($12.8) - $0.0 $0.2
Adjusted EBITDA $26.6 $41.5 $42.3 $25.9 $7.1 $8.3 $16.4 $8.6 $13.6 $21.7 $30.8 $13.6
Revenue $99.3 $123.0 $110.6 $91.2 $59.1 $60.8 $62.6 $64.0 $72.9 $89.1 $93.4 $79.8
EBITDA Margin 26.8% 33.7% 38.2% 28.4% 12.1% 13.6% 26.2% 13.4% 18.6% 24.3% 33.0% 17.1%
Production Testing - Adjusted EBITDA Reconciliation '($ in Millions)Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Income (Loss) Before Taxes $0.0 ($0.5) ($4.5) ($50.8) ($19.4) ($4.3) ($4.2) ($7.5) ($2.1) ($3.1) ($1.4) ($10.9)
Interest Income/Expense ($0.0) $0.0 $0.0 ($0.1) ($0.2) ($0.1) ($0.1) ($0.1) ($0.1) ($0.1) ($0.0) ($0.0)
DD&A $6.3 $6.2 $6.0 $18.0 $7.4 $4.2 $3.9 $7.2 $3.1 $2.6 $2.5 $17.3
Stock Option expense - - - - - - - - - - - -
Special Items $0.4 $1.1 $3.1 $37.6 $14.3 $0.1 $0.0 $0.0 $0.3 $0.0 - $0.2
Adjusted EBITDA $6.7 $6.9 $4.6 $4.7 $2.1 ($0.2) ($0.5) ($0.5) $1.2 ($0.6) $1.1 $6.6
Revenue $37.1 $34.8 $28.9 $33.0 $19.9 $13.4 $15.1 $15.3 $21.5 $15.9 $18.9 $37.8
EBITDA Margin 18.0% 19.7% 15.9% 14.2% 10.6% -1.2% -3.0% -3.2% 5.4% -3.8% 5.6% 17.5%
Compression - Adjusted EBITDA Reconciliation '($ in Millions)Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Income (Loss) Before Taxes $2.4 $1.5 $2.1 ($152.8) ($104.7) ($4.0) ($15.8) ($10.8) ($14.3) ($6.2) ($7.0) ($9.7)
Interest Income/Expense $8.6 $8.7 $8.9 $8.8 $8.8 $8.9 $9.8 $10.2 $10.1 $10.2 $10.8 $11.0
DD&A $20.0 $20.7 $20.7 $32.6 $26.3 $18.8 $17.8 $19.5 $17.3 $17.2 $17.4 $17.3
Stock Option expense $0.5 $0.7 $0.5 $0.5 $0.6 $0.8 $0.8 $2.4 $2.7 $0.9 $0.3 ($0.9)
Special items $0.4 $0.0 $0.0 $139.9 $92.6 $0.3 $10.5 ($2.9) $1.7 ($4.6) ($0.5) $1.6
Adjusted EBITDA $31.9 $31.6 $32.1 $29.1 $23.6 $24.7 $23.1 $18.3 $17.5 $17.5 $20.9 $19.2
Revenue $102.9 $126.5 $128.9 $99.4 $81.7 $76.1 $70.7 $82.9 $65.6 $75.3 $71.6 $83.1
EBITDA Margin 31.0% 25.0% 24.9% 29.3% 28.9% 32.4% 32.7% 22.1% 26.7% 23.2% 29.1% 23.1%
Non-GAAP Reconciliations
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TETRA Consolidated - Adjusted EBITDA Reconciliation '($ in Millions)Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Net Income (Loss) ($3.6) $15.4 $10.7 ($231.9) ($147.7) ($29.2) ($24.0) ($38.4) ($11.3) ($14.6) ($1.3) ($35.0)
Income Taxes ($1.6) ($2.7) ($4.7) $1.3 $1.4 ($1.8) ($1.4) ($0.5) ($0.1) ($3.4) ($0.8) $3.1
Income (Loss) Before Taxes ($2.1) $18.1 $15.4 ($233.2) ($149.1) ($27.5) ($22.6) ($37.9) ($11.2) ($11.2) ($0.5) ($38.1)
Interest Income/Expense $13.7 $13.3 $13.2 $14.2 $14.6 $14.3 $14.3 $15.3 $13.8 $14.3 $14.7 $14.5
DD&A $38.3 $39.1 $38.9 $82.9 $44.3 $33.8 $31.9 $37.8 $29.5 $28.6 $29.2 $43.7
Equity Compensation Expense $1.6 $2.6 $3.6 $9.1 $2.4 $6.6 $2.5 $2.2 $2.5 $3.0 $1.8 $0.5
Special Items $1.0 $1.4 $4.0 $180.1 $107.0 $2.6 $10.5 $0.7 ($16.6) ($5.9) ($0.6) $9.4
Adjusted EBITDA $52.6 $74.5 $75.2 $53.1 $19.1 $29.9 $36.7 $18.1 $18.0 $28.8 $44.5 $30.0
Revenue $251.1 $316.3 $305.1 $257.6 $169.3 $175.7 $176.6 $173.2 $168.0 $208.4 $216.4 $227.6
Offshore Division - Adjusted EBITDA Reconciliation '($ in Millions)Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Income (Loss) Before Taxes ($7.7) $1.8 $2.9 ($1.1) ($8.3) ($3.4) $1.2 ($3.4) ($7.0) ($6.6) ($0.5) ($2.9)
Interest Income/Expense - $0.0 ($0.0) $0.0 - $0.0 $0.0 ($0.0) - - - -
DD&A $3.1 $3.1 $3.3 $3.4 $3.0 $3.2 $3.2 $4.1 $3.0 $2.8 $3.3 $3.1
Equity Compensation Expense - - - - - - - - - - - -
Special Items $0.0 $0.0 $0.5 $0.8 - $0.1 $0.0 $0.1 $0.2 $3.7 $0.0 $0.3
Adjusted EBITDA ($4.6) $5.0 $6.7 $3.1 ($5.3) ($0.1) $4.4 $0.9 ($3.8) ($0.1) $2.8 $0.4
Revenue $13.0 $33.2 $37.9 $35.3 $9.8 $26.4 $29.2 $12.0 $8.6 $28.4 $32.7 $27.6
TETRA excl. Offshore Division - Adjusted EBITDA Reconciliation '($ in Millions)Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Income (Loss) Before Taxes $5.6 $16.3 $12.5 ($232.2) ($140.8) ($24.1) ($23.8) ($34.5) ($4.2) ($4.6) ($0.1) ($35.2)
Interest Income/Expense $13.7 $13.3 $13.2 $14.2 $14.6 $14.3 $14.3 $15.3 $13.8 $14.3 $14.7 $14.5
DD&A $35.3 $35.9 $35.6 $79.5 $41.2 $30.6 $28.7 $33.7 $26.5 $25.8 $25.9 $40.7
Equity Compensation Expense $1.6 $2.6 $3.6 $9.1 $2.4 $6.6 $2.5 $2.2 $2.5 $3.0 $1.8 $0.5
Special Items $0.9 $1.4 $3.5 $179.3 $107.0 $2.5 $10.5 $0.6 ($16.8) ($9.6) ($0.6) $9.1
Adjusted EBITDA $57.1 $69.5 $68.5 $50.0 $24.4 $30.0 $32.2 $17.3 $21.9 $28.9 $41.7 $29.6
Revenue $238.1 $283.1 $267.2 $222.2 $159.5 $149.3 $147.4 $161.2 $159.4 $179.9 $183.7 $200.1
Free Cash Flow Reconciliation
23(1) TETRA only cash from operating activities and capital expenditures, net of sales proceeds, for the twelve months ended December 31, 2017, includes the elimination of an intercompany equipment sale of $2.0 million
Free Cash Flow Reconciliation (IN $ Millions)2015 2016 2017 2015-2017 Period
TTI ConsolidatedCash from operations $ 197.0 $ 55.7 $ 64.6 $ 317.3 ARO Settlements 10.3 4.0 0.6 14.9 Capital Expenditures, net of sales proceeds (113.4) (17.7) (51.1) (182.2)
Free Cash Flow before ARO settlements 93.9 42.0 14.1 150.0
CSI CompresscoCash from operations 101.9 61.4 39.1 202.4 Capital Expenditures, net of sales proceeds (95.2) (10.7) (25.1) (131.0)
CCLP's Free Cash Flow 6.6 50.8 13.9 71.4
TTI OnlyCash from operations(1) 95.2 (5.8) 27.6 116.9 ARO Settlements 10.3 4.0 0.6 14.9 Capital Expenditures, net of sales proceeds(1) (18.2) (7.1) (28.0) (53.2)
Free Cash Flow before ARO settlements 87.2 (8.8) 0.2 78.6 Distributions from CCLP 30.6 22.3 14.2 67.2 Debt restructuring expenses 3.0 - - 3.0
TTI's Free Cash Flow $120.9 $13.5 $14.4 $148.8
Non-GAAP Reconciliations
24
CSI Compressco - CCLP Adjusted EBITDA Reconciliation '($ in Millions)2015 2016 2017 2015-2017 Period
Income (Loss) Before Taxes ($146.7) ($136.3) ($37.7) ($320.7)Interest Income/Expense $35.0 $38.1 $43.1 $116.2 DD&A $93.6 $82.3 $69.1 $245.1 Equity Compensation Expense $2.2 $4.6 $3.0 $9.8 Special Items $140.4 $100.4 ($2.4) $238.4
Adjusted EBITDA $124.5 $89.1 $75.2 $288.8 Non Cash Cost of Compressors Sold $3.4 $6.8 $8.5 $18.7
CCLP Adjusted EBITDA $127.9 $95.9 $83.7 $307.5
TETRA Consolidated - Adjusted EBITDA Reconciliation '($ in Millions)2015 2016 2017 2015-2017 Period
Net Income (Loss) ($209.5) ($239.4) ($62.2) ($511.0)Income Taxes ($7.7) ($2.3) ($1.2) ($11.2)
Income (Loss) Before Taxes ($201.8) ($237.1) ($61.0) ($499.8)Interest Income/Expense $54.5 $58.6 $57.2 $170.3 DD&A $199.2 $147.8 $131.0 $478.0 Equity Compensation Expense $16.9 $13.7 $7.6 $38.3 Special Items $186.5 $120.7 ($13.8) $293.5
Adjusted EBITDA $255.3 $103.8 $121.2 $480.3
Maritech - Adjusted EBITDA Reconciliation '($ in Millions)2015 2016 2017 2015-2017 Period
Income (Loss) Before Taxes ($3.8) ($1.8) ($2.2) ($7.8)Interest Income/Expense $0.0 $0.0 - $0.0 DD&A $1.4 $1.4 $1.4 $4.2 Equity Compensation Expense - - - -Special Items - ($0.0) - ($0.0)
Adjusted EBITDA ($2.4) ($0.5) ($0.7) ($3.6)
TETRA excl. Maritech - Adjusted EBITDA Reconciliation '($ in Millions)2015 2016 2017 2015-2017 Period
Income (Loss) Before Taxes ($197.9) ($235.2) ($58.8) ($492.0)Interest Income/Expense $54.4 $58.6 $57.2 $170.3 DD&A $197.8 $146.4 $129.6 $473.8 Equity Compensation Expense $16.9 $13.7 $7.6 $38.3 Special Items $186.5 $120.7 ($13.8) $293.5
Adjusted EBITDA $257.7 $104.2 $121.9 $483.9
CSI Compressco - Adjusted EBITDA Reconciliation '($ in Millions)2015 2016 2017 2015-2017 Period
Income (Loss) Before Taxes ($146.7) ($136.3) ($37.7) ($320.7)Interest Income/Expense $35.0 $38.1 $43.1 $116.2 DD&A $93.6 $82.3 $69.1 $245.1 Equity Compensation Expense $2.2 $4.6 $3.0 $9.8 Special Items $140.4 $100.4 ($2.4) $238.4
Adjusted EBITDA $124.5 $89.1 $75.2 $288.8
TETRA excl. Maritech & CSI Compressco - Adjusted EBITDA Reconciliation '($ in Millions)2015 2016 2017 2015-2017 Period
Income (Loss) Before Taxes ($51.2) ($99.0) ($21.1) ($171.3)Interest Income/Expense $19.5 $20.6 $14.1 $54.2 DD&A $104.2 $64.1 $60.5 $228.7 Equity Compensation Expense $14.7 $9.1 $4.6 $28.5 Special Items $46.1 $20.3 ($11.4) $55.0
Adjusted EBITDA $133.3 $15.1 $46.7 $195.1
TTI Only Working Capital and Others (In $ Millions)2015 2016 2017 2015-2017 Period
TTI Cash From Operations $ 95.2 $ (5.8) $ 27.6 $ 116.9 TTI EBITDA excluding Maritech and CSI Compressco (133.3) (15.1) (46.7) (195.1)TTI Conolidated Interest Income/Expense 54.5 58.6 57.2 170.3 CCLP Interest Income/Expense (35.0) (38.1) (43.1) (116.2)ARO Settlements 10.3 4.0 0.6 14.9 Debt restructuring expenses 3.0 - - 3.0
TTI Only Working Capital & Others ($5.3) $3.7 ($4.4) ($6.0)
CSI Compressco Working Capital and Others (In $ Millions)2015 2016 2017 2015-2017 Period
CCLP Cash From Operations $ 101.9 $ 61.4 $ 39.1 $ 202.4 CCLP Adjusted EBITDA (127.9) (95.9) (83.7) (307.5)CCLP Interest Income/Expense $ 35.0 $ 38.1 $ 43.1 $ 116.2
CCLP Working Capital & Others $8.9 $3.6 ($1.5) $11.0
Market Capitalization & Enterprise Values
25
(thousands, except per share amounts)Market Capitalization: TTI
Market price per share on 3/22/2018 3.79$
Shares outstanding as of 3/1/2018 125,529
Market Capitalization 475,755$
Enterprise Value: TTI
Market capitalization based on 3/22/2018
Stock Price 475,755$
Total debt, excluding CSI Compressco LP
debt, as of 12/31/2017 117,679
Enterprise Value 593,433$
(thousands, except per share amounts)Market Capitalization: CCLP
Market price per unit on 3/22/2018 7.50$
Shares outstanding as of 2/24/2018 38,888
Market Capitalization 291,660$
Enterprise Value: CCLP
Market capitalization based on 3/22/2018
Stock Price 291,660$
Total debt, as of 12/31/2017 512,176
Series A Preferred, as of 12/31/2017 70,260
Enterprise Value 874,096$
TTI Only Liquidity & Leverage Ratio
Liquidity$ in millions Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
TTI excluding CSI Compressco TTM EBITDA per Bank Agreement
$142.0 $155.9 $168.9 $164.8 $140.7 $104.0 $71.0 $39.3 $57.6 $57.4 $66.5 $78.6
Long Term Debt excl. dicount & amortization of financing fees 305.0 265.0 265.0 275.0 265.0 125.0 125.0 125.0 125.0 125.0 125.0 125.0
Revolving credit facility outstanding excl.amortization of financing fees
91.7 92.9 66.1 22.9 20.5 102.7 127.8 5.6 17.9 22.5 - -
Letters of credit and surety bonds 12.0 10.3 9.4 7.6 7.6 8.1 5.4 5.3 5.0 5.0 4.4 5.1
Capital lease obligations 0.3 0.3 0.3 0.4 0.3 0.3 0.3 0.4 0.4 0.4 0.3 0.3
Total funded debt1 409.0 368.5 340.8 305.8 293.3 236.1 258.4 136.2 148.3 152.9 129.7 130.3
Revlolving credit facility, total 225.0 225.0 225.0 225.0 225.0 225.0 225.0 200.0 200.0 200.0 200.0 200.0
Amounts currently oustanding excl. amortization of financing fees
(91.7) (92.9) (66.1) (22.9) (20.5) (102.7) (127.8) (5.6) (17.9) (22.5) - -
Bank letters of credit (12.0) (10.3) (9.4) (7.6) (7.6) (8.1) (5.4) (5.3) (5.0) (5.0) (4.4) (5.1)
Revolving credit facility, available 121.3 121.8 149.5 194.6 196.9 114.2 91.8 189.2 177.0 172.5 195.6 194.9
Less:
Adjustment for leverage capacity1,2 33.4 - - - 68.2 - 66.4 128.9 37.5 38.3 - -
Plus:
Cash excluding restricted cash 9.0 8.7 7.7 12.4 15.5 7.2 8.9 8.9 7.4 18.1 13.5 18.5
Liquidity $ 97.0 $ 130.5 $ 157.2 $ 207.0 $ 144.3 $ 121.4 $ 34.3 $ 69.2 $ 147.0 $ 152.3 $ 209.1 $ 213.5
Leverage Ratio 2.88x 2.36x 2.02x 1.86x 2.08x 2.27x 3.64x 3.47x 2.58x 2.66x 1.95x 1.66x
Covenant 3.50x 3.50x 3.25x 3.25x 3.00x 4.00x 4.00x 5.00x 5.00x 5.00x 5.00x 5.00x(1) As defined by the bank covenants(2) No leverage covenant measurement required for 2016-Q4 period. Constraint on borrow ing capacity is based on 2017 leverage covenant
26
March 2018
TETRA Technologies, Inc.CSI Compressco LP