Tetra Technologies, Inc. · NYSE:TTI
Tetra Technologies — IPO Roadshow (December 2016)
38 slides from Tetra Technologies's IPO roadshow presentation, Dec 8, 2016
Slide 1: December 2016 Investor Presentation
December 2016 Investor Presentation
Slide 2: Forward Looking Statements
Forward Looking Statements Forward-Looking Statements: This presentation includes certain statements that are or may be deemed to be forward-looking statements. Generally, the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “projects,” “anticipate,” “believe,” “assume,” “could,”
Slide 3: Corporate Profiles
Listing and Ticker Symbol NYSE: TTI NASDAQ: CCLP Recent Share Price(1) $5.88 $10.00 Market Capitalization(1) $545.0M $332.6M Enterprise Value(1) $787.3M $909.2M Number of Shares/ Units Outstanding(2) 92.7M 33.2M Average Daily Trading volume (last 3 months) (1) 812,687 32,465 Distribution Annualized(
Slide 4: Current Events
Current Events Positive broad oil and gas market trends Continued increases in the US onshore drilling activity and completion of previously uncompleted wells (DUCs)` OPEC announcement on production cut backs BP indication of $9 billion investment for ultra deep water GoM project TETRA seeing positi
Slide 5: Sources and Uses and Pro Forma Capitalization
Sources and Uses and Pro Forma Capitalization Sources ($mm) Sources $mm Equity private placement 100 Total sources 100 Uses ($mm) Uses $mm Repay revolver 95 Transaction fees and expenses 5 Total sources 100 TETRA capitalization $mm As of 9/30/16 Pro forma Cash 9 9 Borrowing capacity1 25 92 Liquidity
Slide 6: Business Segments
Business Segments $134M Revenue(1) Production Testing The largest North America production testing company Fluids Services Only vertically integrated completion fluids based company for the oil & gas market CSI Compressco Full service compression: well head, gathering, midstream, processing and tran
Slide 7: Transformation and Evolution
Transformation and Evolution 2015 Compression, Fluids and PT represent 89% of revenue
Slide 8: TETRA Earnings Trend
TETRA Earnings Trend TETRA Only Adjusted EBITDA(1) + CSI Compressco Distributions Trailing Twelve Months - Millions See appendix for reconciliation Cumulative Impact of Many Actions Mitigating Lower Rig Count
Slide 9: TETRA's Credit Profile
TETRA’s Credit Profile TETRA excluding CCLP liquidity is sum of borrowing capacity and unrestricted cash. See appendix for reconciliation to GAAP. TETRA’s leverage ratio is defined in its credit and debt agreements as the ratio of debt and letters of credit outstanding to EBITDA as defined therein.
Slide 10: No Debt Maturities Until 2019
No Debt Maturities Until 2019 Revolver Senior Notes Strong Balance Sheet For “Lower For Longer” Market No Maturities Until 2019
Slide 11: Fluids
Fluids
Slide 12: Fluids
Fluids Chemicals/Completion Fluids Only vertically integrated service provider globally Seamless supply channel from manufacturing plants to clear brine fluid (CBF) blending facilities Significant infrastructure Strong global competitor Introducing new technology, products and services Advantaged co
Slide 13: Fluids – Financial Overview
Fluids – Financial Overview Revenue (In $ Millions) Adjusted EBITDA (In Millions) and Margins(1) 2015 Revenue Profile See appendix for reconciliation to nearest GAAP measures
Slide 14: CSI Compressco LP
CSI Compressco LP
Slide 15: Q3 2016 Highlights
Q3 2016 Highlights Positive Net Cash from Operations in Challenging Business Climate Q3 2016 Revenue of $70.7M Q3 2016 Net loss of $16.0M [1] Q3 2016 adjusted EBITDA [2] of $24.0M Q3 2016 adjusted EBITDA margin [2] of 34% 1,380 Hp Compression Service Field Gathering Midland County, TX Net loss inclu
Slide 16: CCLP Business Model – Vertically Integrated
CCLP Business Model – Vertically Integrated Q3 2016 Results. Gross Margin is defined as revenues less cost of revenues excluding depreciation and amortization expense Revenue and Gross Margin by Product Line is shown as the portion of total Revenue and total Gross Margin that is attributable to the
Slide 17: Compression Services Stability
Compression Services Stability Most Profitable Product Line is also Most Stable Product Line Natural gas consumption in the U.S. continues to increase Compression fleet utilization down ~13% approximately 24 months into severe market downturn Diverse geographic deployment of compression fleet Real-t
Slide 18: Compression Services Geographic Diversity
Compression Services Geographic Diversity 26% of Compression Fleet Deployed in the Permian Basin Eagle Ford Marcellus Utica Permian Barnett Haynesville Bakken Niobrara Monterey San Juan Woodford CSI Compressco fleet geography as of September 30, 2016 HP Distribution by CCLP Region [1] Operating Unit
Slide 19: Financial Overview
Financial Overview Predictable Cash Flow not as Susceptible to Commodity Price Downturns Compared to many Other OFS Revenue by Product Line Adj. EBITDA [1],[2],[3] and Adj. EBITDA Margin [1],[2],[3] Compression services revenues have been relatively resilient despite ~75% decline in drilling activit
Slide 20: Amended Credit Facility
Amended Credit Facility Leverage Covenants to Provide Additional Flexibility CCLP Covenants, Debt & Liquidity Issued $80M in convertible preferred equity in Q3-16 Proceeds used to retire $54.1M of senior notes at discount and reduce revolver borrowings Debt [1] and Liquidity [1],[2] Leverage Ratio [
Slide 21: Production Testing
Production Testing
Slide 22: Production Testing
Production Testing Frac Flowback Remove residual sand and debris to allow production to sales Optima Offshore Rig Cooling suppresses heat generated by high-rate flaring Early Production Facilities Deliver engineered customized process solutions Production Testing Access and evaluate well performance
Slide 23: Production Testing Financials
Production Testing Revenue (In $ Millions) Adjusted EBITDA (In $ Millions) & Margins(1) Balanced domestically and internationally Saudi Arabia and Permian Basin represent biggest areas of concentration Customer base is the better capitalized operators that value HSE&Q Focused on completions that wil
Slide 24: Offshore Services
Offshore Services
Slide 25: Offshore Services Business Model
Offshore Services Business Model Heavy Lift Downhole Services Diving Cutting Services Consulting Services Ability to reduce/flex costs #1 or #2 in all our key sectors Cash flow positive in the valley of the cycle Light asset approach with total investment of $101 million
Slide 26: Offshore Services Financial Performance
Offshore Services Financial Performance A strong culture of cost discipline with a variable cost model (1) See appendix for reconciliation to GAAP Revenue (In $ Millions) Adjusted EBITDA (In $ Millions) & Margins(1) Superior HSE&Q culture and operating performance Advanced engineering and project ma
Slide 27: Appendix
Appendix
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes non-GAAP financial measures, Adjusted EBITDA, Adjusted EBITDA margin, enterprise value, distributable cash flow, adjusted free cash flow, liquidity, distribution coverage ratio and debt to Adjusted EBITDA. Adjusted EBITDA is used as a supplement
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Note: Starting in 2016 Q1, amortization of financing costs has been included in interest expense due to the FASB accounting changes. Numbers are adjusted to reflect this change.
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Note: Starting in 2016 Q1, amortization of financing costs has been included in interest expense due to the FASB accounting changes. Numbers are adjusted to reflect this change.
Slide 31: Liquidity
Liquidity = Liquidity O4-14 pee SOE ECL ee S518 $1419 $1205 «$1388 $1408 $1559 $1689 «$1648 = S1407 $1058 = S710 Long Term Debt 3050 «30503050 30503050 28502650 «= 2700 © 2800 © 12001200 evolving credit facility outstanding 528 742 1250 900 17 929 66.1 29 25 1027 «©1278 ‘excl amortization of fnancin
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations = lation Consoidated ‘Cash fromoperations S315 46 $ 113 § S67 § 1007S 2785 53S 361 $ 777§ 1598 2535 835 (79) rents 133165105 80H it BSS 03 Capt Expenditures, nat of sales proc (249) (232) 1) 50) 1) 461) 232) sa) 2) 4) re 7 @2) (@2)—«T_—«STS (ITB) —«a8O~«A~—«ROBSCT—~CBT COST
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations _ Se, 15 03-15 _O418 Qt Income (Loss) Before Taxes S77 aro 6 $332 (S27) ($0.4) Interest ncome/Expense ( ($00) ($00) ($0.1) ($00) ($0.2) ($00) $00 $00 DD8A S78 S72 $143 $87 $88) S87 «$287 «= S74 STB (S89 st : > - Special tems ($23) $00 - $06 sot $02 $04 Sot sot $02 so7 Revenu
Slide 34: Market Capitalization & Enterprise Value
Market Capitalization & Enterprise Value
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Amortization of financing costs are included in interest expense Starting from Q1 2016, non-cash cost of compressors sold is included in adjusted EBITDA. Historical periods have been updated for this change Unusual items is primarily associated with non-recurring fees and ex
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Amortization of financing costs are included in interest expense Starting from Q1 2016, non-cash cost of compressors sold is included in adjusted EBITDA. Historical periods have been updated for this change Unusual items is primarily associated with non-recurring fees and ex
Slide 37: Non-GAAP Reconciliations
Non-GAAP Reconciliations Amortization of financing costs are included in interest expense Starting from Q1 2016, non-cash cost of compressors sold is included in adjusted EBITDA. Historical periods have been updated for this change Unusual items is primarily associated with non-recurring fees and ex
Slide 38: Non-GAAP Reconciliations
Non-GAAP Reconciliations Subsequent to September 30, 2016, CSI Compressco LP retired an additional $34.1M of Senior notes Adjustment for leverage capacity reflects the limitation of amounts available under the revolving credit facility in order to maintain compliance with the leverage ratio covenant