TETRA TECHNOLOGIES INC - FORM 8-K/A - EX-99.1 - February 4, 2021

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8-K/A - 8-K/A - TETRA TECHNOLOGIES INCtti-8ka_20210129.htm

Exhibit 99.1

TETRA Technologies, Inc.

Introduction to the Unaudited Pro Forma Consolidated Financial Statements

 

 

On January 29, 2021, Tetra Technologies, Inc. (the “Company”) sold (i) 10,952,478 common units representing limited partner interests of CSI Compressco LP (the “Partnership”) and (ii) all of the outstanding membership interests in CSI Compressco GP LLC, the general partner of the Partnership, to Spartan Energy Partners LP (“Spartan”) (the “GP Sale”). In December 2020, the Company received cash proceeds of $14.2 million from the sale to Spartan of 15 large compressors that are subject to a lease agreement with the Partnership (the “Compressor sale”). The sale of common units, the GP Sale and Compressor sale are collectively referred to as the “CSI Compressco Transactions.” The Company will continue to own 5,237,970 common units of the Partnership.

 

The following unaudited pro forma consolidated financial statements are based on the Company’s historical consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2019 and the Quarterly Report filed on Form 10-Q for the quarter ended September 30, 2020. The Company’s historic financial statements are adjusted to give effect to the CSI Compressco Transactions as if they had occurred at the beginning of each reporting period. The unaudited pro forma consolidated balance sheet as of September 30, 2020 gives effect to the CSI Compressco Transactions as if they had occurred on September 30, 2020.

 

The pro forma adjustments are based upon available information and certain assumptions that Company’s management believes are reasonable under the circumstances. The unaudited pro forma consolidated financial statements presented do not necessarily reflect the operating results or the financial position of the Company if the transactions occurred on the dates presented and is not intended to be indicative of future operating results or financial position.

 

The unaudited pro forma financial information, including notes thereto, should be read in conjunction with the historical financial statements of the Company included in our Annual Report on Form 10-K for the year ended December 31, 2019 and the Quarterly Report filed on Form 10-Q for the quarter ended September 30, 2020.

 

 

 

 

 

 

 

TETRA Technologies, Inc. and Subsidiaries

Unaudited Pro Forma Consolidated Statements of Operations

Nine Months Ended September 30, 2020

(In Thousands, Except Per Share Amounts)

 

 

 

 

 

 

 

 

 


As Reported

 

Discontinued Operations

 

Pro Forma Adjustments

 


Pro Forma

Revenues:

 

 

 

 

 

 

 

Product sales

$     252,016

 

$     (42,761)

 

$             -  

 

$     209,255

Services

       315,968

 

      (222,965)

 

                -  

 

         93,003

Total revenues

       567,984

 

      (265,726)

 

                -  

 

       302,258

Cost of revenues:

 

 

 

 

 

 

 

Cost of product sales

       184,512

 

        (43,630)

 

                -  

 

       140,882

Cost of services

       201,056

 

      (123,329)

 

                -  

 

         77,727

Depreciation, amortization, and accretion

         88,906

 

        (59,972)

 

                -  

 

         28,934

Impairments and other charges

         14,445

 

        (14,348)

 

                -  

 

                97

Insurance recoveries

             (643)

 

              517

 

                -  

 

             (126)

Total cost of revenues

       488,276

 

      (240,762)

 

                -  

 

       247,514

Gross profit

         79,708

 

        (24,964)

 

                -  

 

         54,744

General and administrative expense

         89,807

 

        (29,517)

 

                -  

 

         60,290

Interest expense, net

         53,073

 

        (38,841)

 

          (1,087)

(A)

         13,145

Warrants fair value adjustment income

             (327)

 

                -  

 

                -  

 

             (327)

Other expense, net

           2,141

 

          (3,449)

 

           9,376

(B)

           8,068

Loss before taxes and discontinued operations

        (64,986)

 

         46,843

 

          (8,289)

 

        (26,432)

Provision for income taxes

           3,800

 

          (1,967)

 

             (802)

(C)

           1,031

Loss before discontinued operations

        (68,786)

 

         48,810

 

          (7,487)

 

        (27,463)

Discontinued operations:

                  

 

                  

 

 

 

                  

Loss from discontinued operations, net of taxes

             (155)

 

                -  

 

                -  

 

             (155)

Net loss

        (68,941)

 

         48,810

 

          (7,487)

 

        (27,618)

Loss (income) attributable to noncontrolling interest

         32,833

 

        (32,957)

 

                -  

 

             (124)

Net loss attributable to TETRA stockholders

$     (36,108)

 

$      15,853

 

$       (7,487)

 

$     (27,742)

Basic and diluted net loss per common share:

 

 

 

 

 

 

 

Loss before discontinued operations attributable to TETRA stockholders

$         (0.29)

 

 

 

 

 

$        (0.22)

Loss from discontinued operations attributable to TETRA stockholders

            ─

 

 

 

 

 

            ─

Net loss attributable to TETRA stockholders

$         (0.29)

 

 

 

 

 

$         (0.22)

Average basic and diluted shares outstanding

125,789

 

 

 

 

 

       125,789

 


 

 

TETRA Technologies, Inc. and Subsidiaries

Unaudited Pro Forma Consolidated Statements of Operations

Year Ended December 31, 2019

(In Thousands, Except Per Share Amounts)

 


As Reported

 

Discontinued Operations

 

Pro Forma Adjustments

 


Pro Forma

Revenues:

 

 

 

 

 

 

 

Product sales

$        435,768

 

$    (142,568)

 

$                    -  

 

$       293,200

Services

         602,165

 

       (334,109)

 

                      -  

 

         268,056

Total revenues

       1,037,933

 

      (476,677)

 

                      -  

 

          561,256

Cost of revenues:

 

 

                        

 

 

 

 

Cost of product sales

          335,325

 

       (128,734)

 

                      -  

 

        206,591

Cost of services

          393,158

 

       (188,547)

 

                      -  

 

        204,611

Depreciation, amortization, and accretion

          124,226

 

         (76,663)

 

                      -  

 

           47,563

Impairments and other charges

            95,196

 

           (3,160)

 

                      -  

 

           92,036

Insurance recoveries

           (1,771)

 

                 555

 

                      -  

 

          (1,216)

Total cost of revenues

          946,134

 

       (396,549)

 

                      -  

 

         549,585

Gross profit

            91,799

 

         (80,128)

 

                      -  

 

           11,671

General and administrative expense

          139,747

 

         (43,123)

 

                      -  

 

           96,624

Goodwill impairment

            25,784

 

                     -  

 

                      -  

 

            25,784

Interest expense, net

            73,230

 

         (51,974)

 

           (1,600)

(D)

            19,656

Gain on Sale of Assets

           (2,333)

 

                      -  

 

                      -  

 

           (2,333)

Warrants fair value adjustment income

           (1,624)

 

                      -  

 

                      -  

 

           (1,624)

CCLP Series A Preferred Units fair value adjustment expense

              1,309

 

           (1,309)

 

                      -  

 

                      -  

Other (income) expense, net

              (191)

 

                556

 

           (2,252)

(B)

           (1,887)

Loss before taxes and discontinued operations

       (144,123)

 

           15,722

 

             3,852

 

       (124,549)

Provision (benefit) for income taxes

            6,164

 

           (3,529)

 

                 87

(E)

             2,722

Loss before discontinued operations

       (150,287)

 

19,251

 

              3,765

 

       (127,271)

Discontinued operations:

 

 

 

 

 

 

                    

Loss from discontinued operations, net of taxes

         (10,213)

 

                      -  

 

- 

 

         (10,213)

Net loss

       (160,500)

 

            19,251

 

              3,765

 

       (137,484)

Loss (income) attributable to noncontrolling interest

           13,087

 

         (13,538)

 

                      -  

 

              (451)

Net loss attributable to TETRA stockholders

$    (147,413)

 

$           5,713

 

$           3,765

 

$     (137,935)

Basic and diluted net loss per common share:

 

 

 

 

 

 

 

Loss before discontinued operations attributable to TETRA stockholders

$           (1.09)

 

 

 

 

 

$           (1.02)

Loss from discontinued operations attributable to TETRA stockholders

(0.08)

 

 

 

 

 

(0.08)

Net loss attributable to TETRA stockholders

$           (1.17)

 

 

 

 

 

$           (1.10)

Average basic and diluted shares outstanding

125,600

 

 

 

 

 

125,600


 

 

TETRA Technologies, Inc. and Subsidiaries

Unaudited Pro Forma Consolidated Balance Sheet

September 30, 2020

(In Thousands)

 

 

 

 

 

 

 

 

 


As Reported

 

Discontinued Operations

 

Pro Forma Adjustments

 


Pro Forma

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$         75,165

 

$       (16,699)

 

$       9,047

(F)

$        67,513

Restricted cash

                    59

 

                     -  

 

                     -  

 

                    59

Trade accounts receivable, net of allowances

          108,222

 

          (56,521)

 

                       -

 

            51,701

Inventories

          113,020

 

          (33,981)

 

                     -  

 

            79,039

Prepaid expenses and other current assets

            21,176

 

             (6,584)

 

                     -  

 

            14,592

Total current assets

          317,642

 

        (113,785)

 

              9,047

 

          212,904

Property, plant, and equipment:

 

 

 

 

 

 

 

Land and building

            39,534

 

          (13,259)

 

                     -  

 

            26,275

Machinery and equipment

       1,341,905

 

        (978,422)

 

                     -  

 

          363,483

Automobiles and trucks

            26,581

 

             (7,904)

 

                     -  

 

            18,677

Chemical plants

            60,195

 

                     -  

 

                     -  

 

            60,195

Construction in progress

            10,819

 

             (8,817)

 

                     -  

 

              2,002

Total property, plant, and equipment

       1,479,034

 

     (1,008,402)

 

                     -  

 

          470,632

Less accumulated depreciation

        (804,466)

 

          435,902

 

                     -  

 

        (368,564)

Net property, plant, and equipment

          674,568

 

        (572,500)

 

                     -  

 

          102,068

Other assets:

 

 

 

 

 

 

 

Patents, trademarks and other intangible assets, net of accumulated amortization

            68,350

 

          (25,797)

 

                     -  

 

            42,553

Deferred tax assets

                    24

 

                  (24)

 

                     -  

 

                     -  

Operating lease right-of-use assets

            78,867

 

          (34,680)

 

                     -  

 

            44,187

Other assets

            22,089

 

             (4,638)

 

              4,662

(G)

            22,113

Total other assets

          169,330

 

          (65,139)

 

              4,662

 

          108,853

Total assets

$     1,161,540

 

  $      (751,424)

 

$       13,709

 

  $      423,825

 

 


 

 

TETRA Technologies, Inc. and Subsidiaries

Unaudited Pro Forma Consolidated Balance Sheet

September 30, 2020

(In Thousands)

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$         42,406

 

$        (19,404)

 

   $                  -  

 

     $       23,002

Unearned income

              7,310

 

             (6,463)

 

                     -  

 

                  847

Accrued liabilities

            80,500

 

          (44,750)

 

                     -  

 

            35,750

Current liabilities of discontinued operations

              1,852

 

                     -  

 

                     -  

 

              1,852

Total current liabilities

          132,068

 

          (70,617)

 

                     -  

 

            61,451

Long-term debt, net

          843,216

 

        (636,943)

 

          (19,100)

(H)

          187,173

Deferred income taxes

              3,421

 

             (1,620)

 

                     331  

(I)

              2,132

Asset retirement obligation

            12,973

 

                     -  

 

                     -  

 

            12,973

Warrants liability

                  123

 

                     -  

 

                     -  

 

                  123

Operating lease liabilities

            64,200

 

          (25,896)

 

                     -  

 

            38,304

Other liabilities

            10,364

 

                  (17)

 

                     -  

 

            10,347

Total long-term liabilities

          934,297

 

        (664,476)

 

          (18,769)

 

          251,052

Equity:

 

 

 

 

 

 

 

TETRA stockholders' equity

 

 

 

 

 

 

 

Common stock

              1,289

 

                     -  

 

                     -  

 

              1,289

Additional paid-in capital

          471,146

 

                     -  

 

                     -  

 

          471,146

Treasury stock, at cost

          (19,484)

 

                     -  

 

                     -  

 

          (19,484)

Accumulated other comprehensive income loss

          (54,634)

 

                     -  

 

                     -  

 

          (54,634)

Retained deficit

        (398,630)

 

            78,719

 

            32,478

(J)

        (287,433)

Total TETRA stockholders' equity

                (313)

 

            78,719

 

            32,478

 

          110,884

Non-controlling interests

            95,488

 

          (95,050)

 

                     -  

 

              438

Total equity

            95,175

 

          (16,331)

 

            32,478

 

          111,322

Total liabilities and equity

$    1,161,540

 

$     (751,424)

 

$         13,709

 

$       423,825

 


 

 

 

Pro Forma Adjustments

 

 

(A)

Reflects the interest savings from the assumed repayment of the Senior Term loan by $19.1 million based on an average rate of 7.6% for the period.

 

 

(B)

Reflects the change in fair value of and distributions from the retained units of the Partnership.

 

 

(C)

Reflects the income tax effect of pro forma adjustments based on the effective tax rate of 9.7% after considering the impact of the proforma adjustments on existing valuation allowances.

 

 

(D)

Reflects the interest savings from the assumed repayment of the Senior Term loan by $19.1 million based on an average rate of 8.4% for the period.

 

 

(E)

Reflects the income tax effect of pro forma adjustments based on the effective tax rate of 2.3% after considering the impact of the proforma adjustments on existing valuation allowances.

 

 

(F)

Reflects the increase in cash from sale proceeds of $28.1 million, less $19.1 million of assumed proceeds used for debt repayment.

 

 

(G)

Reflects the fair value of the retained common units of the Partnership as of September 30, 2020.

 

 

(H)

Reflects the decrease in long-term debt from the assumed repayment of the Senior Term loan with the $19.1 million of cash proceeds.

 

 

(I)

Reflects the increase in deferred tax liabilities related to the retained units of the Partnership after considering the impact of pro forma adjustments on existing valuation allowances.

 

 

(J)

Reflects the impact to the Company’s retained earnings from pro forma adjustments described in notes (F), (G), (H) and (I) above.

 

 

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