Tetra Technologies, Inc. · NYSE:TTI
Tetra Technologies — Investor Presentation (December 2019)
39 slides from Tetra Technologies's investor presentation, Dec 10, 2019
Slide 1: Investor Presentation December 2019
Investor Presentation December 2019 Exhibit 99.2
Slide 2: Forward Looking Statements & Non-GAAP Measures
Forward Looking Statements & Non-GAAP Measures 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,”
Slide 3: Corporate Profiles
Corporate Profiles Listing and Ticker Symbol NYSE: TTI NASDAQ: CCLP Recent Share Price(1) $1.29 $2.24 Market Capitalization(1) $162M $105M Enterprise Value(1,5) $375M $751M Number of Shares/ Units Outstanding(2) 125.5M 47.1M Average Daily Trading volume (last 3 months) (1) 653,333 95,004 Distributio
Slide 4: Business Segments
Business Segments Focused on high growth, higher margin segments Differentiated offerings for produced water, automation, and sand management Leading position in the Permian Basin Compelling integrated water solutions offerings Industry leaders, >30% market share* for high density fluids Cost and de
Slide 5: Q3-2019 Highlights
Q3-2019 Highlights $46.2 million of Adjusted EBITDA before discontinued operations (1) 2nd consecutive quarter with sequential Adjusted EBITDA margin(1) improvement across all three segments Completion Fluids & Products Division delivered Adjusted EBITDA margin(1) of 23.7% - the highest without the
Slide 6: Current Update
Current Update TETRA CS Neptune® Completion Fluids project in the GoM expected to be completed in Q4-19 Technically qualified or are in the process of qualifying with six major operators for other potential future projects Restructuring support functions to reduce SG&A expenses at the corporate leve
Slide 7: Sustainability
Sustainability Communities Engage in philanthropic efforts in health, education and community enrichment Support employees as they give back to their communities Environmental Recycling and re-use of produced water through Integrated water management solution TETRA CS Neptune® Completion Fluids are
Slide 8: Completion Fluids & Products
Completion Fluids & Products
Slide 9: TETRA Worldwide Operations
TETRA Worldwide Operations Corporate Headquarters & Technology Center Locations CBF Manufacturing Locations Clear Brine Fluids Facilities All North America Shale Basins Brazil Deep Water Argentina Vaca Muerta West Africa Deep Water North Sea & Europe Middle East NOTE: Shaded region indicates TETRA’s
Slide 10: Traditional $1.5B Completion & Drill-in Fluids Market
Traditional $1.5B Completion & Drill-in Fluids Market 19.5 19.0 18.5 18.0 17.5 17.0 16.5 16.0 15.5 15.0 14.5 14.0 13.5 13.0 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.0 8.5 8.0 Sodium Chloride Sodium Chloride /Sodium Bromide Monovalent Brines Divalent Brines Sodium Formate Potassium Formate Primarily Cesiu
Slide 11: TETRA CS Neptune – Attractive Option to Zinc & Expensive Cesium Fluids
TETRA CS Neptune® – Attractive Option to Zinc & Expensive Cesium Fluids 19.5 19.0 18.5 18.0 17.5 17.0 16.5 16.0 15.5 15.0 14.5 14.0 13.5 13.0 12.5 12.0 11.5 11.0 10.5 10.0 9.5 9.0 8.5 8.0 NaCI NaBr / NaCI Monovalent Brines Divalent Brines Na Formate K Formate Cs/K Formate ZnBr / CaBr / CaCl CaCl / C
Slide 12: TETRA CS Neptune Completion Fluids GoM Market Opportunities
TETRA CS Neptune® Completion Fluids GoM Market Opportunities 125 deepwater GoM explored blocks are in the TETRA CS Neptune ® Completion Fluids pressure and temperature range Initial TETRA CS Neptune ® Completion Fluids GoM project was Generation I and was used in just 1 of the 125 blocks The new Hig
Slide 13: TETRA Chemicals – Industrial Market
TETRA Chemicals – Industrial Market TETRA’s Vertical Integration Advantage Long term raw material acid supply agreement to feed chemical calcium chloride reaction process production ~40% of TETRA’s Completion Fluids & Products revenue from stable and growing Industrial market segment
Slide 14: Completion Fluids & Products
Completion Fluids & Products Multiple opportunities to capture growing demand w/out incremental capital investment Key Financial Drivers Adjusted EBITDA margin(1) of 23.7%, the highest without the benefit of TETRA CS Neptune® completion fluids sales since Q4-2015 TETRA CS Neptune® Completion Fluids
Slide 15: Water & Flowback Services
Water & Flowback Services
Slide 16: Water and Flowback Services Focused on Key Markets
Water and Flowback Services Focused on Key Markets Balanced Customer Base Product and Service Offering Strong North American presence – operating in all US shale basins Market leader in the Permian Basin Presence in key international markets – North Sea, Middle East, Latin America Balanced customer
Slide 17: Water Management Services Market
Water Management Services Market Focused on value-added, differentiated, environmentally friendly offerings in the highest return on investment water market segments Water Services Market (2019) Source: Spears & Associates report on October 2019 Service Segment % of Total Market CAGR% 2019-2023 Disp
Slide 18: TETRA Integrated Water Management
Oil Recovery TETRA Integrated Water Management Sourcing Flowback Recycling Poly Pipe & Pipeline Temporary Transfer Blending Distribution Pit Lining Automation & Monitoring Storage TETRA BlueLinxTM Automated Control System
Slide 19: Segment's Highest Growth Rate Business: Recycling Produced Water
Segment’s Highest Growth Rate Business: Recycling Produced Water Automated Treatment & Recycling Facility Projected Permian Oil & Produced Water Growth Oil Water Million Barrels/day Midland Facility – recently scaled up to 100,000 bbls/day capacity for a super major oil client TPH Research Global Cr
Slide 20: Introducing New Technology - Flowback Sand Management
Introducing New Technology- Flowback Sand Management Multiple wells can be monitored by single employee Labor savings Assurance & reporting for client decision-making Connected to customer systems for monitoring Improved sand collection efficiency (95% vs 50%) Permian Field trials for Major Operator
Slide 21: Water & Flowback Services
Water & Flowback Services Integrated projects are steadier, have longer duration and higher margins Key Financial Drivers 20 integrated water management projects during the third quarter with 13 customers. Four of the projects were either new customer or new basins Released new TETRA BlueLinxTM Auto
Slide 22: Compression
Compression
Slide 23: U.S. Gas Macro – Gathering and Lift
U.S. Gas Macro – Gathering and Lift Jan 2019 EIA Annual Energy Report Natural gas Renewables Nuclear Coal Natural gas expands share of future Electricity Electricity Generation From Selected Fuels billion kilowatt-hours 6,000 5,000 4,000 3,000 2,000 1,000 0 2000 2010 2020 2030 2050 2040 2018 history
Slide 24: Compression Services Fleet and Growth
Compression Services Fleet and Growth Deployed HP & Utilization Trends 53% of deployed HP in high HP range >1,000HP utilization was above ~85% during the recent extended downturn Twelve consecutive quarters of improved utilization >1,000 HP 101-1,000 HP 0-100 HP Current HP Deployed By Size 97% Utili
Slide 25: Focused on Most Prolific Producing Basins in the U.S.
Focused on Most Prolific Producing Basins in the U.S. Focused on key shale oil plays with customers with strong balance sheets Permian Basin West Region East Region South Texas Mid Continent Northern Rockies HP Distribution by CCLP Region* *As of 9/30/2019 Eagle Ford Marcellus Utica Permian & Delawa
Slide 26: Growth From All Phases
Growth From All Phases Gas Lift replacing ESPs Gas Gathering Centralized Gas Lift Late Life Lift for Unconventionals 60% of high HP Demand 40% of high HP Demand 50% of low HP Demand directed to unconventionals
Slide 27: Move to Large HP and ERP System Yielding Higher Margins
Move to Large HP and ERP System Yielding Higher Margins in Compression Services Higher HP Gas lift/gathering applications Higher utilization and high switching costs Higher margins Concentration of units leading to lower operating costs >1,000 HP <1,000 HP 2015-Q1 2019-Q3 Margins improvement attribu
Slide 28: Compression Financial Summary
Compression Financial Summary Well positioned to capitalize on the growing compression market Strong revenue & adjusted EBITDA performance on stronger market environment Revenue ($M) Adjusted EBITDA(1,2) ($M) Guidance is based on CSI Compressco press release and not for compression division. There i
Slide 29: Financial Overview
Financial Overview
Slide 30: Financial Overview
Financial Overview Driving financial performance through technological improvements and disciplined capital allocation Key Financial Drivers Differentiating through technological improvements, which drive the improvement in margins ROIC of ~20%+ on new service compression investments Payback on incr
Slide 31: Capital Allocation Strategy
Capital Allocation Strategy TETRA Only CSI Compressco Only No near-term maturities with minimal maintenance covenants $296M, 7.25% unsecured notes due Aug 2022 S&P Rating – CCC+, Moody’s Rating – Caa2 $350M 7.5% senior secured notes due 2025 S&P Rating – B+, Moody’s Rating – B1 Targeting leverage ra
Slide 32: Investor Presentation December 2019
Investor Presentation December 2019
Slide 33: Appendix Reconciliation Tables
Appendix Reconciliation Tables
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes non-GAAP financial measures, such as adjusted EBITDA, adjusted EBITDA margin, enterprise value, TETRA only free cash flow from continuing operations, liquidity, consolidated results for TETRA, excluding discontinued operations, and debt to Adjus
Slide 35: Market Capitalization and Enterprise Values
Market Capitalization and Enterprise Values (thousands, except per share amounts) Market Capitalization: TTI Market price per share on 12/05/2019 $1.29 Shares outstanding as of 11/06/2019 125,541 Market Capitalization $161,947 Enterprise Value: TTI Market capitalization based on 12/05/2019 Stock Pri
Slide 36: Non-GAAP Reconciliation: Completion Fluids & Products and Water & Flowback
Non-GAAP Reconciliation Completion Fluids & Products - Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation '($ in Millions) Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Income (Loss) Before Taxes $19.5 $16.6 $21.4 $6.4 $2.4 $10.0 $8.7 $9.5 $6.2 $14.6 $11.3 Interest Income/
Slide 37: Non-GAAP Reconciliation: Compression
Non-GAAP Reconciliation Compression - Adjusted EBITDA Reconciliation '($ in Millions) Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Income (Loss) Before Taxes ($14.3) ($6.2) ($7.0) ($9.7) ($14.0) ($8.7) ($7.8) ($3.3) ($7.8) ($3.5) ($3.5) Interest Income/Expense $10.1 $10.2 $10.8
Slide 38: Non-GAAP Reconciliation: TTI Consolidated
Non-GAAP Reconciliation TTI Consolidated -Continued Operations - Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation '($ in Millions) 2014 2015 2016 2017 2018 Income (Loss) Before Taxes ($60.5) ($197.7) ($223.2) ($44.0) ($36.4) Interest Income/Expense $32.0 $54.4 $57.4 $57.2 $70.9 - DD&A $103.
Slide 39: Non-GAAP Reconciliation: TETRA only Adjusted Free Cash Flow
Non-GAAP Reconciliation TETRA only Adjusted Free Cash Flow Reconciliation From Continuing Operations (in $ Millions) 2019-Q3 TTI Consolidated Cash from operations $46.6 ARO Settlements 0.0 Capital Expenditures, net of sales proceeds (27.7) Free Cash Flow before ARO settlements 19.0 CSI Compressco Ca
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