Tetra Technologies, Inc. · NYSE:TTI
Tetra Technologies — Investor Presentation (December 2016)
39 slides from Tetra Technologies's investor presentation, Dec 6, 2016
Slide 1: TETRA Technologies, Inc. and CSI Compressco LP
December 2016 TETRA Technologies, Inc. CSI Compressco LP
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: Stock Market
Stock Market 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 Trading volume (last 3 months) (1) 812,687 32,465 Distribution Annualized(3) $1.51 (0%)(4) Di
Slide 4: Recent Highlights
Recent Highlights Strong third quarter adjusted EBITDA margins for CSI Compressco 33.9% Fluids 26.2% Offshore Services 16.0% Signs of a recovering US Onshore market, strong Water Management activity Compression equipment utilization levels appear to be bottoming out Completed equity offerings for TE
Slide 5: Transformation and Evolution
Transformation and Evolution 2015 Compression, Fluids and PT represent 89% of revenue
Slide 6: Fluids
Fluids
Slide 7: Fluids: Chemicals/Completion Fluids and Water Management
Fluids Chemicals/Completion Fluids Only vertically integrated service provider globally Seamless supply channel from manufacturing plants to CBF blending facilities Significant infrastructure Strong global competitor Introducing new technology, products and services Advantaged cost position in non-o
Slide 8: Fluids – Financial Overview
Fluids – Financial Overview Revenue (In $ Millions) Adjusted EBITDA (In Millions) and Margins(1) 2015 Revenue Profile 2015 represented record margins See appendix for reconciliation to nearest GAAP measures
Slide 9: CSI Compressco LP
CSI Compressco LP
Slide 10: 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 11: 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 12: 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 13: 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 14: 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 15: Amended Credit Facility Leverage Covenants
Amended Credit Facility Leverage Covenants to Provide Additional Flexibility 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 [1],[3
Slide 16: Production Testing
Production Testing
Slide 17: Production Testing Services
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 18: 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 19: Offshore Services
Offshore Services
Slide 20: Offshore Service Business Model
Offshore Service 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 21: 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 22: Financial Overview
Financial Overview
Slide 23: 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 24: Two Distinct & Separate Capital Structures
Two Distinct & Separate Capital Structures Borrowing capacity is the lesser of the amount available under the credit agreement or the amount of additional borrowings allowed per the applicable financial covenants. Liquidity is sum of borrowing capacity and unrestricted cash. See appendix for reconci
Slide 25: TETRA's Credit Profile
TETRA’s Credit Profile 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. $60M equity offering
Slide 26: 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 27: TETRA Technologies, Inc. and CSI Compressco LP
December 2016 TETRA Technologies, Inc. CSI Compressco LP
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 SEC 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 SEC accounting changes. Numbers are adjusted to reflect this change.
Slide 31: Liquidity
Liquidity = S1S18 $1419 $1285 $1368 «S408 SISESS16BS $1648) 1407 S156 S710 Long Term Debt 3050 3050-3050 «305.0 «305028502650 ©2700 © 2600» 1200 ©1200 9 credit iacityoutstanding 528 7421280 900 829A 229 208 10271278 <1 amortization offnancing fees Discount on Long Term Debt - - - - - 2 2 50 50 50 50
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations (Capital Expenditures net cfs ls proceeds Free Cash Fow before ARO setierents Senonsten, net cfs les proceeds Free Free Cash Flow Reconciliation Cay ad ata a6 at a6 os aie aie ae S 13S S07 $ 17 S 278.5 3S 2615 777 § 1989S 2535 835 (79) ws 230. 0 28 08 51 2 z 04 03 eu 0) aye)
Slide 33: Adjusted EBITDA Reconciliation
Income (Loss) Before Taxes S185 Interest Income/Expense ($0.0) Dog sr. Stock Option expense e Special tems (923) EBITDA Margin 229% 4 Income (Loss) Before Taxes ($28) Interest Income/Expense ($0.0) Dog v7. Stock Option expense - Special tems st EBITDA Margin Income (Loss) Before Taxes ($8.0) Interes
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
Slide 39: TETRA Technologies, Inc. and CSI Compressco LP
December 2016 TETRA Technologies, Inc. CSI Compressco LP
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