EXHIBIT 99.1
FOR IMMEDIATE RELEASE
TETRA TECHNOLOGIES, INC.
ANNOUNCES SECOND QUARTER 2012 RESULTS
AND UPDATES GUIDANCE
The Woodlands, Texas (August 8, 2012) – TETRA Technologies, Inc. (TETRA or the Company) (NYSE:TTI) today announced second quarter 2012 net income from continuing operations attributable to TETRA stockholders of $0.15 per fully diluted share compared to $0.39 per fully diluted share reported in the second quarter of 2011. Such results for the second quarter of 2012 include $1.1 million of acquisition related transaction costs and a pretax loss by the Maritech segment of $(8.6) million that aggregate to a net charge of approximately $(0.08) per share after tax, compared to special charges and credits that aggregate to a net credit of approximately $0.21 per share after tax in the second quarter of 2011. In addition, the Company announced that it is lowering its earnings guidance range for the 2012 fiscal year to $0.60 to $0.70 per fully diluted share, excluding the impact of the Maritech segment and acquisition related transaction costs.
Consolidated revenues for the quarter ended June 30, 2012 were $234.9 million versus $235.1 million in the second quarter of 2011. Total gross profit was $53.1 million in the second quarter of 2012 versus $35.8 million in the second quarter of 2011. Income before discontinued operations was $12.2 million in the second quarter of 2012 versus $30.5 million in the comparable period of 2011. Net income attributable to TETRA stockholders was $11.6 million in 2012’s second quarter versus $30.4 million in 2011’s second quarter. The foregoing results include the impact of the Maritech segment. As discussed below, management believes that it is helpful to an understanding of the Company’s business going forward to present financial results excluding the impact of Maritech. Such results, reconciled to the nearest GAAP financial measures, are included at the end of this press release.
Consolidated results per share from continuing operations attributable to TETRA stockholders for the second quarter of 2012 were net income of $0.15 with 79.0 million weighted average diluted common shares outstanding versus $0.39 with 78.3 million weighted average diluted common shares outstanding in the second quarter of 2011. As of June 30, 2012, total debt, including the current portion of long-term debt, was $305.0 million and cash was $49.2 million.
Divisional pretax earnings (loss) from continuing operations in the second quarter of 2012 versus the second quarter of 2011 were: Fluids Division – $14.0 million in 2Q 2012 and $11.5 million in 2Q 2011; Production Testing – $11.2 million in 2Q 2012 and $6.0 million in 2Q 2011; Compressco – $4.6 million in 2Q 2012 and $3.8 million in 2Q 2011; Offshore Services – $11.8 million in 2Q 2012 and $13.6 million in 2Q 2011; and, Maritech – $(8.6) million in 2Q 2012 and $38.5 million, including a $56.6 million gain on the sale of certain oil and gas producing properties, in 2Q 2011.
Financial data comparing the three and six month periods ended June 30, 2012 to the prior year’s periods is available in the financial tables set forth below.
Stuart M. Brightman, TETRA’s President and Chief Executive Officer, stated, “During the first seven months of 2012, we have successfully completed three acquisitions: Optima Solutions Holdings Limited (Optima), Eastern Reservoir Services (ERS), and Greywolf Production Systems (Greywolf). These three acquisitions, in the aggregate, have broadened our well completion and production testing service capabilities and significantly increased our geographic footprint, both in North America, and internationally. The integration of our first two acquisitions, Optima and ERS, is proceeding very smoothly, and we believe that we are on track with the integration of Greywolf.
“We are very optimistic regarding the potential for increased earnings related to each of these three investments. However, given that our earnings for the first half of this year, primarily from our Offshore Services segment, did not reach the levels we anticipated when we announced our 2012 guidance in January, and acknowledging that we do not anticipate an improvement in the operating
conditions for Offshore Services through the remainder of this year, we believe that it is necessary to lower our full-year 2012 earnings guidance to $0.60 to $0.70 per fully diluted share, excluding Maritech, and excluding acquisition related transaction costs.
“The Fluids Division reported a sequential improvement in profitability during the second quarter, due to a number of factors. Our European calcium chloride business experienced strong seasonal demand during the quarter, although earnings for this business were negatively impacted by the need for unplanned equipment repairs, which are expected to be completed during the third quarter. Revenues from our offshore Gulf of Mexico operations were down slightly in the second quarter due to specific customer projects being postponed. However, we continue to see a positive trend in the offshore Gulf of Mexico completion fluids market, and we remain optimistic that this improvement will benefit our Fluids Division’s results during the second half of 2012. Our onshore fluids business had a good quarter, as we were able to take advantage of activity in certain liquid-focused areas. We intend to continue to focus our onshore domestic operations in these liquid-rich areas. Internationally, our Eastern Hemisphere fluids business reported another strong quarter, and we expect this trend to continue through the balance of the year.
“Our Production Testing segment benefitted greatly during the second quarter from the Optima and ERS acquisitions. As noted above, the integration of these two acquisitions has proceeded very smoothly, and the returns on these investments through the end of the second quarter have exceeded our expectations. In fact, much of the current quarter’s sequential improvement is attributable to Optima and ERS, and to our continued expansion in several international markets. Our other domestic operations continue to be impacted by weakness in markets focused on dry gas. We intend to continue to address this weakness by reducing costs and redeploying assets and personnel to more active areas, whenever possible. Results for our domestic Production Testing operations were also negatively impacted during the second quarter by $1.1 million of transaction related charges.
“Our Compressco segment’s profitability in the second quarter increased sequentially compared to the first quarter of this year, primarily due to the benefits of our capital investment growth strategy in international markets, particularly Latin America, and in the unconventional liquids plays in the U.S. In addition, our ongoing cost reduction efforts, inclusive of headcount reductions taken earlier this year, continue to support the segment’s profitability in a challenging natural gas price environment.
“During the second quarter, our Offshore Services segment was severely impacted by Tropical Storm Debby. We estimate that this storm had a negative impact on pretax earnings of approximately $3 million for the quarter. Despite overall higher utilization in the second quarter, Offshore Services continues to operate in a very competitive market that continues to be affected by the ongoing challenges of extended federal permitting times for abandonment and decommissioning work. We anticipate similar demand through the third quarter, although we expect that we will continue to face competitive and permitting challenges for the foreseeable future.
“Our Maritech segment continued to reduce its abandonment and decommissioning liabilities in the second quarter, spending $26.9 million on these activities. As previously noted, we expect that our total spending on these activities during 2012 will aggregate to approximately $70 to $80 million. Our objective is to substantially extinguish the remaining liabilities in 2013. As a result of excess decommissioning expenses incurred to date, we now expect a pretax loss for the Maritech segment of approximately $13.2 million for the full year.
“Our cash balance as of June 30, 2012 was $49.2 million. Excluding restricted cash and $7.4 million of cash attributable to Compressco Partners, net debt as of June 30, 2012 was $263.2 million (net debt is a non-GAAP financial measure that is reconciled to the nearest GAAP financial measure below). At the end of July, we drew-down approximately $50 million under our $278 million revolving credit facility to fund a portion of the Greywolf acquisition and for general corporate purposes. Following this draw-down, we have approximately $228 million of borrowing capacity still available, and we remain comfortable that we have retained the financial flexibility necessary to address additional growth opportunities, should they arise,” concluded Brightman.
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As a result of Maritech’s sale of essentially all of its oil and gas properties during 2011 and 2012, the Company believes it will be helpful to provide adjusted financial results that exclude the impact of Maritech. These results are intended to show TETRA’s historical results of operations on a basis that is consistent with expected operations going forward. Set forth below in this press release under “Reconciliation of Non-GAAP Financial Measures” is a presentation of TETRA’s consolidated revenues excluding Maritech, consolidated gross profit excluding Maritech, and consolidated income before taxes and discontinued operations excluding Maritech and oil and gas derivative ineffectiveness, all of which are non-GAAP financial measures that are reconciled to the nearest GAAP measures.
TETRA will host a conference call to discuss second quarter 2012 results today, August 8, 2012, at 10:30 am ET. Stuart M. Brightman, TETRA’s President and Chief Executive Officer, and Elijio V. Serrano, TETRA’s Chief Financial Officer, will host the call. The phone number for the call is 800/860-2442. The conference will also be available by live audio webcast and may be accessed through TETRA’s website at www.tetratec.com.
TETRA is a geographically diversified oil and gas services company focused on completion fluids and associated products and services, after-frac flow back, production well testing and associated services, wellhead compression, and selected offshore services including well plugging and abandonment, decommissioning, and diving.
Forward Looking Statements
This press release includes certain statements that are deemed to be forward-looking statements. Generally, the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “projects,” “anticipate,” “believe,” “assume,” “could,” “should,” “plans,” “targets” or similar expressions that convey the uncertainty of future events, activities, expectations or outcomes identify forward-looking statements that the Company intends to be included within the safe harbor protections provided by the federal securities laws. These forward-looking statements include statements concerning expected results of operational business segments for 2012, anticipated benefits from the Company’s acquisitions of assets and businesses, projections concerning the Company’s business activities in the Gulf of Mexico, including potential future benefits from increased regulatory oversight of well abandonment and decommissioning activities, financial guidance, estimated earnings, earnings per share, and statements regarding the Company’s beliefs, expectations, plans, goals, future events and performance, and other statements that are not purely historical. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of risks and uncertainties, many of which are beyond the control of the Company. Investors are cautioned that any such statements are not guarantees of future performances or results and that actual results or developments may differ materially from those projected in the forward-looking statements. Some of the factors that could affect actual results are described in the section titled “Risk Factors” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, as well as other risks identified from time to time in its reports on Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.
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| Financial Data (unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (In Thousands) | ||||||||||||||||
| Revenues | $ | 234,909 | $ | 235,114 | $ | 415,705 | $ | 457,659 | ||||||||
| Gross profit | 53,108 | 35,813 | 85,503 | 62,177 | ||||||||||||
| General and administrative expense | 31,466 | 29,006 | 62,357 | 56,768 | ||||||||||||
| Interest expense, net | 4,084 | 4,085 | 8,235 | 8,276 | ||||||||||||
| (Gain) loss on sale of assets | 703 | (59,577 | ) | (3,264 | ) | (60,309 | ) | |||||||||
| Other (income) expense | (1,585 | ) | 14,745 | (2,017 | ) | 13,929 | ||||||||||
| Income before taxes and discontinued operations | 18,440 | 47,554 | 20,192 | 43,513 | ||||||||||||
| Provision for income taxes | 6,262 | 17,031 | 6,866 | 15,502 | ||||||||||||
| Income before discontinued operations | 12,178 | 30,523 | 13,326 | 28,011 | ||||||||||||
| Income (loss) from discontinued operations, | ||||||||||||||||
| net of taxes | 3 | (54 | ) | 2 | (57 | ) | ||||||||||
| Net income | 12,181 | 30,469 | 13,328 | 27,954 | ||||||||||||
| Net (income) attributable to noncontrolling interest | (607 | ) | (95 | ) | (1,073 | ) | (95 | ) | ||||||||
| Net income attributable to TETRA stockholders | $ | 11,574 | $ | 30,374 | $ | 12,255 | $ | 27,859 | ||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (In Thousands, Except Per Share Amounts) | ||||||||||||||||
| Basic per share information: | ||||||||||||||||
| Income before discontinued operations | ||||||||||||||||
| attributable to TETRA stockholders | $ | 0.15 | $ | 0.40 | $ | 0.16 | $ | 0.36 | ||||||||
| Loss from discontinued operations attributable | ||||||||||||||||
| to TETRA stockholders | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | ||||||||||
| Net income attributable to TETRA stockholders | $ | 0.15 | $ | 0.40 | $ | 0.16 | $ | 0.36 | ||||||||
| Weighted average shares outstanding | 77,278 | 76,579 | 77,174 | 76,415 | ||||||||||||
| Diluted per share information: | ||||||||||||||||
| Income before discontinued operations | ||||||||||||||||
| attributable to TETRA stockholders | $ | 0.15 | $ | 0.39 | $ | 0.16 | $ | 0.36 | ||||||||
| Loss from discontinued operations attributable | ||||||||||||||||
| to TETRA stockholders | 0.00 | (0.00 | ) | 0.00 | (0.00 | ) | ||||||||||
| Net income attributable to TETRA stockholders | $ | 0.15 | $ | 0.39 | $ | 0.16 | $ | 0.36 | ||||||||
| Weighted average shares outstanding | 78,998 | 78,315 | 78,640 | 77,985 | ||||||||||||
| Depreciation, depletion and amortization (A) | $ | 19,221 | $ | 36,937 | $ | 36,554 | $ | 74,329 | ||||||||
(A) DD&A information for 2011 includes asset impairments under successful efforts accounting.
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| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (In Thousands) | ||||||||||||||||
| Revenues by segment: | ||||||||||||||||
| Fluids Division | $ | 89,847 | $ | 88,829 | $ | 169,180 | $ | 166,173 | ||||||||
| Production Enhancement Division | ||||||||||||||||
| Production Testing | 50,329 | 31,739 | 88,612 | 64,949 | ||||||||||||
| Compressco | 25,258 | 22,326 | 47,940 | 44,210 | ||||||||||||
| Production Enhancement Division total | 75,587 | 54,065 | 136,552 | 109,159 | ||||||||||||
| Offshore Division | ||||||||||||||||
| Offshore Services | 80,676 | 87,255 | 125,771 | 138,970 | ||||||||||||
| Maritech | 1,179 | 33,382 | 3,794 | 77,404 | ||||||||||||
| Intersegment eliminations | (12,403 | ) | (28,421 | ) | (19,715 | ) | (34,037 | ) | ||||||||
| Offshore Division total | 69,452 | 92,216 | 109,850 | 182,337 | ||||||||||||
| Corporate overhead | 125 | 42 | 250 | 42 | ||||||||||||
| Eliminations and other | (102 | ) | (38 | ) | (127 | ) | (52 | ) | ||||||||
| Total revenues | $ | 234,909 | $ | 235,114 | $ | 415,705 | $ | 457,659 | ||||||||
| Gross profit by segment: | ||||||||||||||||
| Fluids Division | $ | 21,327 | $ | 18,778 | $ | 39,247 | $ | 32,385 | ||||||||
| Production Enhancement Division | ||||||||||||||||
| Production Testing | 15,420 | 9,065 | 25,355 | 21,057 | ||||||||||||
| Compressco | 9,241 | 6,925 | 17,122 | 13,544 | ||||||||||||
| Production Enhancement Division total | 24,661 | 15,990 | 42,477 | 34,601 | ||||||||||||
| Offshore Division | ||||||||||||||||
| Offshore Services | 15,124 | 16,433 | 14,019 | 15,770 | ||||||||||||
| Maritech | (7,263 | ) | (14,737 | ) | (8,757 | ) | (19,314 | ) | ||||||||
| Intersegment eliminations | - | 37 | - | 108 | ||||||||||||
| Offshore Division total | 7,861 | 1,733 | 5,262 | (3,436 | ) | |||||||||||
| Eliminations and other | (741 | ) | (688 | ) | (1,483 | ) | (1,373 | ) | ||||||||
| Total gross profit | $ | 53,108 | $ | 35,813 | $ | 85,503 | $ | 62,177 | ||||||||
Income before taxes and discontinued operations by segment: | ||||||||||||||||
| Fluids Division | $ | 13,959 | $ | 11,545 | $ | 25,424 | $ | 18,794 | ||||||||
| Production Enhancement Division | ||||||||||||||||
| Production Testing | 11,170 | 5,988 | 16,847 | 15,071 | ||||||||||||
| Compressco | 4,645 | 3,809 | 8,155 | 7,814 | ||||||||||||
| Production Enhancement Division total | 15,815 | 9,797 | 25,002 | 22,885 | ||||||||||||
| Offshore Division | ||||||||||||||||
| Offshore Services | 11,764 | 13,577 | 10,731 | 9,201 | ||||||||||||
| Maritech | (8,626 | ) | 38,523 | (10,707 | ) | 34,003 | ||||||||||
| Intersegment eliminations | - | 1,588 | - | 1,747 | ||||||||||||
| Offshore Division total | 3,138 | 53,688 | 24 | 44,951 | ||||||||||||
| Corporate overhead | (14,472 | ) | (27,476 | ) | (30,258 | ) | (43,117 | ) | ||||||||
| Total income before taxes and | ||||||||||||||||
| discontinued operations | $ | 18,440 | $ | 47,554 | $ | 20,192 | $ | 43,513 | ||||||||
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| June 30, 2012 | December 31, 2011 | |||||||
| (In Thousands) | ||||||||
| Balance Sheet: | ||||||||
| Cash (excluding restricted cash) | $ | 49,212 | $ | 204,412 | ||||
| Accounts receivable, net | 183,841 | 141,537 | ||||||
| Inventories | 98,236 | 99,985 | ||||||
| Other current assets | 59,396 | 82,567 | ||||||
| PP&E, net | 579,221 | 529,301 | ||||||
| Other assets | 228,864 | 145,508 | ||||||
| Total assets | $ | 1,198,770 | $ | 1,203,310 | ||||
| Current portion of decommissioning liabilities | $ | 75,537 | $ | 105,008 | ||||
| Other current liabilities | 174,874 | 127,357 | ||||||
| Long-term debt | 270,000 | 305,000 | ||||||
| Long-term portion of decommissioning liabilities | 37,601 | 34,827 | ||||||
| Other long-term liabilities | 58,635 | 62,030 | ||||||
| Equity | 582,123 | 569,088 | ||||||
| Total liabilities and equity | $ | 1,198,770 | $ | 1,203,310 | ||||
Reconciliation of Non-GAAP Financial Measures
This press release refers to net debt, revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness, all of which are financial measures not derived in accordance with generally accepted accounting principles, or “GAAP.”
As a supplement to financial results prepared in accordance with GAAP, the Company has provided the following tables, which contain results excluding the impact of Maritech. The tables also include reconciliations of revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness to the appropriate GAAP financial measures. The Company’s management views revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness as appropriate measures to evaluate its results of operations following the sales of Maritech oil and gas producing properties that occurred during 2011 and 2012. These non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should not be used as a substitute for revenues, gross profit, income before taxes, earnings per share or other measures of financial performance presented in accordance with GAAP. Reconciliations of revenues excluding Maritech, gross profit excluding Maritech, income before taxes excluding Maritech and oil and gas derivative ineffectiveness, and diluted per share information excluding Maritech and oil and gas derivative ineffectiveness for the three and six month periods ended June 30, 2012 and June 30, 2011 are provided below.
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| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (In Thousands, Except Per Share Amounts) | ||||||||||||||||
| Consolidated revenues | $ | 234,909 | $ | 235,114 | $ | 415,705 | $ | 457,659 | ||||||||
| Less: Maritech revenues | (1,179 | ) | (33,382 | ) | (3,794 | ) | (77,404 | ) | ||||||||
| Consolidated revenues excluding Maritech | $ | 233,730 | $ | 201,732 | $ | 411,911 | $ | 380,255 | ||||||||
| Consolidated gross profit | $ | 53,108 | $ | 35,813 | $ | 85,503 | $ | 62,177 | ||||||||
| Less: Maritech gross (profit) loss | 7,263 | 14,737 | 8,757 | 19,314 | ||||||||||||
| Consolidated gross profit excluding Maritech | $ | 60,371 | $ | 50,550 | $ | 94,260 | $ | 81,491 | ||||||||
| Consolidated income (loss) before taxes and | ||||||||||||||||
| discontinued operations | $ | 18,440 | $ | 47,554 | $ | 20,192 | $ | 43,513 | ||||||||
| Less: Maritech (income) loss before taxes | 8,626 | (38,523 | ) | 10,707 | (34,003 | ) | ||||||||||
| Less: Derivative ineffectiveness | - | 14,224 | - | 13,947 | ||||||||||||
| Consolidated income (loss) before taxes and | ||||||||||||||||
| discontinued operations excluding Maritech and | ||||||||||||||||
| derivative ineffectiveness | $ | 27,066 | $ | 23,255 | $ | 30,899 | $ | 23,457 | ||||||||
| Diluted per share information: | ||||||||||||||||
| Net income attributable to TETRA stockholders | $ | 0.15 | $ | 0.39 | $ | 0.16 | $ | 0.36 | ||||||||
| (Income) loss for Maritech | 0.07 | (0.31 | ) | 0.09 | (0.28 | ) | ||||||||||
| (Income) loss for derivative ineffectiveness | - | 0.11 | - | 0.11 | ||||||||||||
| Net income (loss) attributable to TETRA | ||||||||||||||||
| stockholders excluding Maritech and | ||||||||||||||||
| derivative ineffectiveness | $ | 0.22 | $ | 0.19 | $ | 0.25 | $ | 0.19 | ||||||||
The following reconciliation of net debt is also presented as a supplement to financial results prepared in accordance with GAAP. The Company defines net debt as the sum of long-term and short-term debt on its consolidated balance sheet, less cash, excluding restricted cash on the consolidated balance sheet and excluding the debt and cash of Compressco Partners, L.P. Management views net debt as a measure of TETRA’s ability to reduce debt, add to cash balances, pay dividends, repurchase stock, and fund investing and financing activities. A reconciliation of long-term debt to net debt as of June 30, 2012 and December 30, 2011 is provided below.
| June 30, 2012 | December 31, 2011 | |||||||
| (In Thousands) | ||||||||
| Net Debt: | ||||||||
| Long-term debt, including current portion | $ | 305,035 | $ | 305,035 | ||||
| Less: cash, excluding Compressco | ||||||||
| Partners' cash | (41,853 | ) | (186,936 | ) | ||||
| Net debt | $ | 263,182 | $ | 118,099 | ||||
These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of the complete financial results for the given period.
Contact:
TETRA Technologies, Inc., The Woodlands, Texas
Stuart M. Brightman, 281/367-1983
Fax: 281/364-4346
www.tetratec.com
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