PR Newswire | Aug 4, 2020 07:01AM EDT

08/04 06:00 CDT

TETRA Technologies, Inc. Announces Second Quarter 2020 ResultsGENERATES $38 MILLION OF CASH FROM OPERATING ACTIVITIES THE WOODLANDS, Texas, Aug. 4, 2020

THE WOODLANDS, Texas, Aug. 4, 2020 /PRNewswire/ -- TETRA Technologies, Inc. ("TETRA" or the "Company") (NYSE:TTI) today announced second quarter 2020 results.

Second quarter 2020 revenue of $192 million, decreased 14% from the first quarter of 2020 compared to a 64% decline in US onshore rig activity and a 26% decline in international rig activity. Net loss before discontinued operations for the second quarter was $34.3 million, inclusive of $18.1 million of non-recurring charges and expenses. This compares to a net loss before discontinued operations of $10.2 million in the first quarter of 2020, inclusive of $8.1 million of non-recurring charges and expenses. Net loss per share attributable to TETRA stockholders in the second quarter was $0.15. Excluding the non-recurring charges and expenses, the net loss per share attributable to TETRA stockholders was $0.09. Consolidated Adjusted EBITDA before discontinued operations was $35.3 million and compares to $47.8 million in the first quarter. Consolidated cash provided by operating activities in the second quarter was $38 million, compared to $22 million in the first quarter of 2020. TETRA only cash from operating activities was $33 million, while TETRA only adjusted free cash flow from continuing operations was $31 million, compared to $4.7 million in the first quarter of 2020. The improvements in consolidated cash provided by operating activities and TETRA only adjusted free cash flow reflects monetization of working capital.

Financial Highlights

* Completion Fluids & Products income before taxes was $16.0 million, or 22.4% of revenue, while Adjusted EBITDA was $18.3 million, or 25.7% of revenue. * Water & Flowback Services loss before taxes was $8.4 million, while Adjusted EBITDA remained positive at $400,000 despite a 57% sequential decline in revenue and a 64% decline in the US onshore rig count. * TETRA only adjusted free cash flow from continuing operations was $31.2 million in the second quarter, an improvement of $26.8 million from the first quarter of 2020 reflecting improvements in working capital. * Consolidated cash from operating activities was $60 million in the first half of the year while TETRA only adjusted free cash flow from continuing operations through the first half of 2020 was $36 million, a year-over-year improvement of $68 million compared to the first half of 2019.

This press release includes the following financial measures that are not presented in accordance with generally accepted accounting principles in the United States ("GAAP"): Adjusted earnings per share attributable to TETRA stockholders, Adjusted EBITDA, and Adjusted EBITDA Margin (Adjusted EBITDA as a percent of revenue) on consolidated and segment basis, Adjusted income (loss) before tax, TETRA-only adjusted free cash flow from continuing operations, and net debt. Please see Schedules E-K for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures.

Brady Murphy, TETRA's Chief Executive Officer, stated, "Our second quarter results reflect exceptional execution by our management team and employees. By working safely under extraordinary conditions due to the COVID-19 pandemic and while continuing to service our customer's requirements, we were also able to deliver strong financial results given the historical decline in drilling and completion activity during the quarter. On a consolidated basis we were able to improve Adjusted EBITDA margins compared to the second quarter of last year while also generating stronger free cash flows. Our Completion Fluids and Products segment and Compression Segment maintained strong Adjusted EBITDA margins relative to the first quarter while both improved year on year. Water Management and Flowback Services maintained slightly positive Adjusted EBITDA. Despite the rapid decline in activity, the financial stress that our customers are encountering, and restructuring costs that we incurred, we generated $38 million of consolidated cash from operations and $31 million of TETRA only adjusted free cash flow from operating activities, both very significant improvements over the first quarter of this year and second quarter of last year.

"Completion Fluids & Products segment second quarter income before tax margin was 22.4% while Adjusted EBITDA margin was 25.7%. This is the fifth consecutive quarter that Adjusted EBITDA margins for this segment have exceeded our internal management target of 20% despite very difficult market conditions. We continue to see the benefit from our market diversification as approximately half of the second quarter revenue came from industrial chemicals. Our European Chemicals business ended the quarter with its highest Adjusted EBITDA since the second quarter of 2015. Revenue for this segment declined by only 5% in contrast to the dramatic decline in overall operator spend and activity during the quarter, reflecting the resiliency of our revenue stream. The second quarter also benefited from strong Gulf of Mexico completion fluids activity, which was up sequentially and from the same quarter of last year.

"Water & Flowback Services segment second quarter revenue of $24.7 million decreased 57% sequentially compared to an estimated 80% reduction in active frac crews. We were able to maintain a slightly positive Adjusted EBITDA through exceptional cost management, market share gains and customer adoption of our latest technology. In the second quarter, our revenue per active frac crew has more than doubled in the two years since we first deployed our Integrated Water Management strategy. Our BlueLinxTM automation solution, which allows us to remotely and efficiently deliver services to our customers with less field staff, is now deployed on all of our Integrated Water management projects. We also maintained full utilization of our SandStormTM sand separation technology through most of the quarter.

"Second quarter 2020 Compression segment performance exceeded internal expectations with a loss before taxes of $23 million and Adjusted EBITDA of $26.3 million, up 1% from the first quarter. Compression Services margins improved sequentially by 300 basis points to 54.9% - the highest in CSI Compressco's history driven by aggressive cost reductions. Utilization declined from 86.5% at the end of the first quarter of 2020 to 82.1% at the end of the second quarter. Approximately 15% of our US domestic fleet was on standby during the quarter as customers shut in production given the low oil prices. The majority of the shut-ins were from two of our largest customers, both supermajors, that have the balance sheet to shut in production in anticipation of higher oil prices. Starting August 1st, we began returning to service most of units on standby with one of those two customers. CSI Compressco announced yesterday that the Midland fabrication real estate and buildings had been sold for gross proceeds of $17 million in early July. Additionally, CSI Compressco announced that it expects to receive $9 million in cash proceeds in the third quarter from the sale of idle compressor units. This $26 million of gross proceeds will further strengthen CSI Compressco's balance sheet.

"Going in to this historic downturn, we knew that by executing the strategies we have worked on for the past two years and by taking quick and decisive cost reduction actions beginning at the executive management level and then throughout the organization, that we would come out the other side of this pandemic very well positioned. I'm very pleased to say that we are on track to achieve that objective. Strong execution and the diversity of our end markets, including industrial chemicals, offshore, international and a technology differentiated North America water and flowback business, has allowed us to keep Adjusted EBITDA positive and to generate free cash flow in a very difficult environment.

A summary of key financial metrics for the second quarter are as follows:

Second Quarter 2020 Results

Three Months Ended

June 30, March 31, June 30, 2020 2020 2019

(In Thousands, Except per Share Amounts)

Revenue $ 192,441 $ 222,942 $ 288,796

Loss before discontinued operations (34,330) (10,231) (8,201)

Adjusted EBITDA before discontinued 35,259 47,809 50,084operations

GAAP EPS before discontinued operations (0.15) (0.01) (0.06)attributable to TETRA stockholders

Adjusted EPS attributable to TETRA (0.09) 0.02 (0.02)stockholders

GAAP net cash provided by operating 38,211 22,176 30,965activities

TETRA only adjusted free cash flow from $ 31,187 $ 4,651 $ 3,117continuing operations

Operating Segments

Completion Fluids & Products DivisionCompletion Fluids & Products revenue was $71.3 million in the second quarter of 2020, a decrease of 5% from the first quarter of 2020, primarily driven by decreased international activity. Completion Fluids & Products income before taxes was $16.0 million in the second quarter (22.4% of revenue). Completion Fluids & Products adjusted income before taxes was $16.5 million (23.1% of revenue). Adjusted EBITDA of $18.3 million (25.7% of revenue - a 300 basis point sequential decline) decreased by $3.3 million sequentially. Excluding the CS Neptune(c) sale in the second quarter of 2019, our Completion Fluids & Products business Adjusted EBITDA margins in the second quarter of 2020 outperformed the second quarter of 2019 by over 500 basis points.

Water & Flowback Services DivisionWater & Flowback Services second quarter 2020 revenue of $24.7 million decreased 57% from the first quarter of 2020, driven by the drastic reduction in U.S. land activity. Water & Flowback Services loss before tax was $8.4 million, primarily due to disruptions in several basins as customers have drastically reduced spending. Adjusted EBITDA decreased $6.4 million sequentially to $400,000. The Division's Adjusted EBITDA remained positive despite the significant reduction in revenue. Our investments and focus on technology and automation and our move towards integrated projects strategies is helping us increase market share and maintain activity with our customers in a rapidly changing market.

Compression DivisionSecond quarter Compression revenue increased 7% from the first quarter of 2020 driven by higher equipment sales. Compression Services gross margins were 54.9%, a 300 basis points increase from the first quarter of 2020. Overall fleet utilization was 82.1%, down from 86.5% at the end of the first quarter. As of June 30, 2020, total active operating horsepower was 967,505, a sequential decrease of 65,751 horsepower. Net loss before taxes was $23.0 million, $10.2 million worse than the first quarter. The second quarter loss included $15.7 million of non-recurring or unusual items, primarily related to impairment of idle compression assets and related inventory, costs related to the closure of our Midland fabrication facility, and expenses related to the unsecured bonds exchange that was completed in the second quarter. Second quarter 2020 Adjusted EBITDA of $26.3 million increased 1% from the first quarter of 2020 primarily due to strong aftermarket services margins.

Free Cash Flow and Balance SheetDuring the second quarter of 2020, consolidated cash provided by operations was $38 million, a $16 million improvement sequentially. TETRA only adjusted free cash flow from continuing operations was $31 million, a $27 million improvement over the first quarter of 2020 and a $28 million improvement over the second quarter of 2019. Cash generation was due to improvements in working capital. TETRA only liquidity at the end of second quarter 2020 improved $29 million from the same period last year, positioning the Company to safely maneuver through this downturn. TETRA only liquidity is defined as unrestricted cash on hand plus availability under our revolving credit facility.

Consolidated total debt was $858 million while consolidated net debt was $787 million, with TETRA only net debt of $156 million. At the end of the second quarter TETRA Only non-restricted cash was $50 million. Schedules D and H distinguish consolidated cash and debt for TETRA and for TETRA excluding CSI Compressco. TETRA's debt agreements do not include any cross defaults or cross guarantees for CSI Compressco's debt.

Non-recurring charges and expenses itemsNon-recurring charges and expenses, including discontinued operations, incurred in the second quarter, as detailed on Schedule F, include the following:

* $9.0 million non-cash impairment expense for compression fixed assets and inventory * $4.8 million of debt financing fees on the recently completed CSI Compressco bond exchange * $3.4 million of restructuring expenses and severance * $0.9 million of other expenses

Historically the Company has used a normalized 21% effective tax rate to reflect normalized EPS and normalized net income on Schedule F. Given TETRA's net operating losses of over $350 million, management does not believe TETRA will incur U.S. income taxes in the near future and has discontinued the use of that adjustment to report normalized earnings.

Conference CallTETRA will host a conference call to discuss these results today, August 4, 2020, at 9:30 a.m. Eastern Time. The phone number for the call is 1-888-347-5303. The conference call will also be available by live audio webcast and may be accessed through the Company's website at www.tetratec.com. A replay of the conference call will be available at 1-877-344-7529 conference number 10138625, for one week following the conference call and the archived webcast will be available through the Company's website for thirty days following the conference call.

Investor ContactFor further information: Elijio Serrano, CFO, TETRA Technologies, Inc., The Woodlands, Texas, Phone: 281.367.1983, www.tetratec.com

Financial Statements, Schedules and Non-GAAP Reconciliation Schedules (Unaudited)Schedule A: Consolidated Income StatementSchedule B: Financial Results By SegmentSchedule C: Consolidated Balance SheetSchedule D: Long-Term DebtSchedule E: Statement Regarding Use of Non-GAAP Financial MeasuresSchedule F: Special ItemsSchedule G: Non-GAAP Reconciliation to GAAP FinancialsSchedule H: Non-GAAP Reconciliation of TETRA Net DebtSchedule I: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash FlowSchedule J: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow From Continuing OperationsSchedule K: Non-GAAP Reconciliation to TETRA Adjusted EBITDA Margins and Adjusted Income (Loss) Before Tax Margins

Company Overview and Forward-Looking StatementsTETRA Technologies, Inc. is a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, water management, frac flowback, production well testing, and compression services and equipment. TETRA owns an equity interest, including all of the general partner interest, in CSI Compressco LP (NASDAQ:CCLP), a master limited partnership.

Cautionary Statement Regarding Forward Looking StatementsThis news release includes certain statements that are deemed to be forward-looking statements. Generally, the use of words such as "may," "see," "expectation," "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 economic and operating conditions that are outside of our control, including the trading price of our common stock; the current significant surplus in the supply of oil and the ability of the OPEC and other oil producing nations to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently, which is negatively impacting our business; the availability of adequate sources of capital to us; expected customer drilling activity, resumption of shut-in oil production and capital spending for 2020 and 2021, the planned sale of idle compression equipment; the availability of raw materials and labor at reasonable prices; risks related to acquisitions and our growth strategy; restrictions under our debt agreements and the consequences of any failure to comply with debt covenants; the effect and results of litigation, regulatory matters, settlements, audits, assessments, and contingencies; risks related to our foreign operations; information technology risks including the risk of cyber attacks; the severity and duration of the COVID-19 pandemic and related economic repercussions and the resulting negative impact on the demand for oil and gas; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts, and supply chain disruptions; other global or national health concerns; and projections concerning the Company's business 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 Reports on Form 10-K, 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.

Schedule A: Consolidated Income Statement (Unaudited)

Three Months Ended Six Months Ended

Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2020 2020 2019 2020 2019

(In Thousands, Except per Share Amounts)

Revenues $ 192,441 $ 222,942 $ 288,796 $ 415,383 $ 532,524

Cost of sales,services, and 133,892 148,694 206,302 282,586 383,046rentals

Depreciation,amortization, and 29,842 29,460 31,817 59,302 62,445accretion

Impairments and 8,977 5,371 2,311 14,348 2,457other charges

Insurance (591) - - (591) -recoveries

Total cost of 172,120 183,525 240,430 355,645 447,948revenues

Gross profit 20,321 39,417 48,366 59,738 84,576

General andadministrative 31,214 30,537 36,295 61,751 70,572expense

Interest expense, 17,586 17,856 18,529 35,442 36,908net

Warrants fairvalue adjustment 11 (338) (1,520) (327) (1,113)(income) expense

CCLP Series APreferred Unitsfair value - - 146 - 1,309adjustment(income) expense

Other (income) 3,839 439 627 4,278 (324)expense, net

Loss before taxesand discontinued (32,329) (9,077) (5,711) (41,406) (22,776)operations

Provision for 2,001 1,154 2,490 3,155 4,099income taxes

Loss beforediscontinued (34,330) (10,231) (8,201) (44,561) (26,875)operations

Discontinuedoperations:

Loss fromdiscontinued 163 (145) (345) 18 (771)operations, netof taxes

Net loss (34,167) (10,376) (8,546) (44,543) (27,646)

Less: lossattributable to 15,712 8,825 1,633 24,537 9,895noncontrollinginterest

Net lossattributable to $ (18,455) $ (1,551) $ (6,913) $ (20,006) $ (17,751)TETRAstockholders

Basic per shareinformation:

Loss beforediscontinuedoperations $ (0.15) $ (0.01) $ (0.06) $ (0.16) $ (0.13)attributable toTETRAstockholders

Income (loss)from discontinuedoperations $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ (0.01)attributable toTETRAstockholders

Net lossattributable to $ (0.15) $ (0.01) $ (0.06) $ (0.16) $ (0.14)TETRAstockholders

Weighted averageshares 125,886 125,587 125,612 125,736 125,646outstanding

Diluted per shareinformation:

Loss beforediscontinuedoperations $ (0.15) $ (0.01) $ (0.06) $ (0.16) $ (0.13)attributable toTETRAstockholders

Income (loss)from discontinuedoperations $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ (0.01)attributable toTETRAstockholders

Net lossattributable to $ (0.15) $ (0.01) $ (0.06) $ (0.16) $ (0.14)TETRAstockholders

Weighted averageshares 125,886 125,587 125,612 125,736 125,646outstanding

Schedule B: Financial Results By Segment (Unaudited)

Three Months Ended Six Months Ended

Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2020 2020 2019 2020 2019

(In Thousands)

Revenues bysegment:

Completion Fluids& Products $ 71,346 $ 75,237 $ 79,767 $ 146,583 $ 141,348Division

Water & Flowback 24,723 57,467 73,124 82,190 151,802Services Division

Compression 96,372 90,238 135,905 186,610 239,374Division

Eliminations and - - - - -other

Total revenues $ 192,441 $ 222,942 $ 288,796 $ 415,383 $ 532,524

Gross profit(loss) bysegment:

Completion Fluids& Products $ 20,819 $ 25,964 $ 19,809 $ 46,783 $ 30,472Division

Water & Flowback (4,836) 3,267 7,490 (1,569) 16,341Services Division

Compression 4,511 10,380 21,235 14,890 38,094Division

Corporateoverhead and (173) (194) (168) (366) (331)eliminations

Total gross $ 20,321 $ 39,417 $ 48,366 $ 59,738 $ 84,576profit

Income (loss)before taxes bysegment:

Completion Fluids& Products $ 16,002 $ 19,396 $ 14,614 $ 35,398 $ 20,800Division

Water & Flowback (8,418) (2,244) 2,460 (10,662) 4,691Services Division

Compression (23,006) (12,790) (3,483) (35,796) (11,284)Division

Corporateoverhead and (16,907) (13,439) (19,302) (30,346) (36,983)eliminations

Total income(loss) before $ (32,329) $ (9,077) $ (5,711) $ (41,406) $ (22,776)taxes

Please note that the above results by Segment include special charges andexpenses. Please see Schedule F for details of those special charges andexpenses.

(1) Excludes discontinued operations

Schedule C: Consolidated Balance Sheet (June 30, 2020 Unaudited)

June 30, December 31, 2019 2020

(In Thousands)

Balance Sheet:

Cash (excluding restricted cash) $ 56,722 $ 17,704

Accounts receivable, net 117,106 175,918

Inventories 115,506 136,510

Other current assets 22,453 21,222

PP&E, net 713,584 758,637

Operating lease right-of-use assets 75,524 68,131

Other assets 90,499 93,800

Total assets $ 1,191,394 $ 1,271,922

Liabilities of discontinued operations $ 1,873 $ 2,098

Other current liabilities 145,454 186,625

Long-term debt ^(1) 843,292 842,871

Long-term portion of asset retirement 12,862 12,762obligations

Warrants liability 123 449

Operating lease liabilities 60,693 53,919

Other long-term liabilities 11,611 10,372

Equity 115,486 162,826

Total liabilities and equity $ 1,191,394 $ 1,271,922

(1) Please see Schedule D for the individual debt obligations of TETRA and CSI Compressco LP.

Schedule D: Long-Term Debt (Unaudited)

TETRA Technologies Inc. and its subsidiaries, other than CSI Compressco LP and its subsidiaries, are obligated under an asset-based bank credit agreement and a term credit agreement, neither of which are obligations of CSI Compressco LP and its subsidiaries. CSI Compressco LP and its subsidiaries are obligated under a separate asset-based bank credit agreement and two series of senior notes, neither of which are obligations of TETRA and its other subsidiaries. Amounts presented exclude deferred financing costs.

June 30, 2020 December 31, June 30, 2019 2019

(In Thousands)

TETRA

Asset-Based Credit Agreement $ - $ 1,000 $ 20,000

Term Credit Agreement 220,500 220,500 220,500

TETRA total debt 220,500 221,500 240,500

Less current portion - - -

TETRA total long-term debt $ 220,500 $ 221,500 $ 240,500

CSI Compressco LP

CCLP Credit Agreement 1,477 3,500 -

7.25% Senior Notes 80,722 295,930 295,930

7.50% Senior Notes 400,000 350,000 350,000

Second Lien Notes 155,529 - -

Total debt 637,728 649,430 645,930

Less current portion - - -

CCLP total long-term debt $ 637,728 $ 649,430 $ 645,930

Consolidated total long-term $ 858,228 $ 870,930 $ 886,430debt

Schedule E: Statement Regarding Use of Non-GAAP Financial Measures

In addition to financial results determined in accordance with GAAP, this press release may include the following non-GAAP financial measures for the Company: net debt; adjusted consolidated and segment income (loss) before taxes and special charges; adjusted diluted earnings (loss) per share before discontinued operations; consolidated and segment adjusted EBITDA; net income (loss) before taxes, Adjusted income (loss) before tax, Adjusted income (loss) before tax as a % of revenue, TETRA only adjusted free cash flow and TETRA only free cash flow from continuing operations; and segment adjusted EBITDA as a percent of revenue ("Adjusted EBITDA margin"). The following schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures. The non-GAAP financial measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP, as more fully discussed in the Company's financial statements and filings with the Securities and Exchange Commission.

Management believes that the exclusion of the special charges from the historical results of operations enables management to evaluate more effectively the Company's operations over the prior periods and to identify operating trends that could be obscured by the excluded items.

Adjusted income (loss) before taxes (and adjusted income (loss) before taxes as a percent of revenue) is defined as the Company's (or the Segment's) income (loss) before taxes excluding certain special or other charges (or credits). Adjusted income (loss) before taxes (and adjusted income (loss) before taxes as a percent of revenue) is used by management as a supplemental financial measure to assess financial performance, without regard to charges or credits that are considered by management to be outside of its normal operations.

Adjusted diluted earnings (loss) per share before discontinued operations is defined as the Company's diluted earnings (loss) per share excluding certain special or other charges (or credits). Adjusted diluted earnings (loss) per share is used by management as a supplemental financial measure to assess financial performance, without regard to charges or credits that are considered by management to be outside of its normal operations.

Adjusted EBITDA before discontinued operations (and Adjusted EBITDA before discontinued operations as a percent of revenue) is defined as earnings before interest, taxes, depreciation, amortization, impairments and certain non-cash charges and non-recurring adjustments. Adjusted EBITDA before discontinued operations (and Adjusted EBITDA margin) is used by management as a supplemental financial measure to assess the financial performance of the Company's assets, without regard to financing methods, capital structure or historical cost basis and to assess the Company's ability to incur and service debt and fund capital expenditures.

Adjusted income before tax is defined as earnings (loss) before interest, taxes, impairments and certain non-cash charges and non-recurring adjustments. Adjusted income before tax (and Adjusted income before tax as a percent of revenue or Adjusted income before tax margin which is Adjusted income before tax divided by revenue) is used by management as a supplemental financial measure to assess the financial performance of the Company's normalized profitability while excluding any unusual, non-recurring items and tax benefits or detriment.

TETRA only adjusted free cash flow is a non-GAAP measure that the Company defines as cash from TETRA's operations, less capital expenditures net of sales proceeds and cost of equipment sold and including cash distributions to TETRA from CSI Compressco LP. TETRA only adjusted free cash flow from continuing operations is defined as TETRA only adjusted free cash flow less discontinued operations EBITDA and discontinued operations capital expenditures. Management uses this supplemental financial measure to:

* assess the Company's ability to retire debt; * evaluate the capacity of the Company to further invest and grow; and * to measure the performance of the Company as compared to its peer group.

TETRA only adjusted free cash flow and TETRA only adjusted free cash flow from continuing operations do not necessarily imply residual cash flow available for discretionary expenditures, as they exclude cash requirements for debt service or other non-discretionary expenditures that are not deducted.

TETRA net debt is defined as the sum of the carrying value 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 CSI Compressco LP. Management views TETRA 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.

Schedule F: Special Items (Unaudited)

Three Months Ended

June 30, 2020

Income (loss) Provision Net Income before taxes (Benefit) Non-cont. Attributable Diluted and for Tax Interest to TETRA EPS discontinued Stockholders operations

(In Thousands, Except per Share Amounts)

Income (loss)attributable to TETRAstockholders, $ (14,258) $ 2,001 $ (5,171) $ (11,088) $ (0.09)excluding specialitems and discontinuedoperations

Stock Warrant fair (11) - - (11) 0.00value adjustment

Transaction and other (895) - (475) (420) 0.00expenses

Impairments and other T(8,922) - (5,977) (2,945) (0.02)charges

Restructuring charges (486) - (179) (307) 0.00

Debt Refinancing (4,754) - (3,184) (1,570) (0.01)

Severance (3,003) - (726) (2,277) (0.02)

Net income (loss)before discontinued (32,329) 2,001 (15,712) (18,618) (0.15)operations

Loss from discontinued 163 0.00operations

Net Income (loss)attributable to TETRA $ (18,455) $ (0.15)stockholders, asreported

Three Months Ended

March 31, 2020

Income (loss) Provision Net Income before taxes (Benefit) Non-cont. Attributable Diluted and Interest to TETRA EPS discontinued for Tax Stockholders operations

(In Thousands, Except per Share Amounts)

Income (loss)attributable to TETRAstockholders, $ (976) $ 1,154 $ (4,892) $ 2,762 $ 0.02excluding specialitems and discontinuedoperations

Stock Warrant fair 338 - - 338 0.00value adjustment

Transaction and other (457) - (216) (241) 0.00expenses

Impairments and other (5,371) - (3,538) (1,833) (0.01)charges

Restructuring charges (259) - - (259) 0.00

Severance (1,334) - (179) (1,155) (0.01)

Bad debt (1,018) - - (1,018) (0.01)

Net income (loss)before discontinued (9,077) 1,154 (8,825) (1,406) (0.01)operations

Loss from discontinued (145) 0.00operations

Net Income (loss)attributable to TETRA $ (1,551) $ (0.01)stockholders, asreported

Three Months Ended

June 30, 2019

Income (loss) Provision Net Income before taxes (Benefit) Non-cont. Attributable Diluted and for Tax Interest to TETRA EPS discontinued Stockholders operations

(In Thousands, Except per Share Amounts)

Income (loss)attributable to TETRAstockholders, $ (2,545) $ (530) $ (11) $ (2,004) $ (0.02)excluding unusualcharges

Stock warrant fair 1,520 319 - 1,201 0.01value adjustment

Convertible Series Apreferred fair value (146) (35) (74) (37) 0.00adjustments

5% Cash Redemption onCCLP Series A (546) (115) (278) (153) 0.00Preferred

Earnout Adjustment 400 84 - 316 0.00

Lee Plant Facility 289 61 - 228 0.00Expenses

CEO Retirement (1,843) (387) - (1,456) (0.01)

Transaction Expense (376) (79) (168) (129) 0.00

Inventory Adjustment (153) (32) (68) (53) 0.00

Impairments and other (2,311) (485) (1,034) (792) (0.01)charges

Effect of deferred taxvaluation allowance - 3,689 - (3,689) (0.03)and other related taxadjustments

Net income (loss)before discontinued (5,711) 2,490 (1,633) (6,568) (0.06)operations

Loss from discontinued (345) 0.00operations

Net Income (loss) $ attributable to TETRA $ (0.06)stockholders, as (6,913)reported

Schedule G: Non-GAAP Reconciliation to GAAP Financials (Unaudited)^*

Three Months Ended

June 30, 2020

Net Income Adjusted Adjusted Income Tax (Loss) Impairments Income Interest Depreciation Equity Adjusted (Loss), Provision Before & Special (Loss) Expense & Comp. EBITDA as Tax, as Charges Before Amortization Expense reported Reported Tax

(In Thousands)

CompletionFluids & $ 16,002 $ 510 $ 16,512 $ (143) $ 1,934 $ - $ 18,303ProductsDivision

Water &Flowback (8,418) 1,203 (7,215) (2) 7,617 - 400ServicesDivision

Compression (23,006) 15,736 (7,270) 12,982 20,116 488 26,316Division

Eliminations 2 - 2 - - - 2and other

Subtotal (15,420) 17,449 2,029 12,837 29,667 488 45,021

Corporate (16,909) 621 (16,288) 4,749 175 1,602 (9,762)and other

TETRAexcluding $ (34,330) $ 2,001 $ (32,329) $ 18,070 $ (14,259) $ 17,586 $ 29,842 $ 2,090 $ 35,259DiscontinuedOperations

March 31, 2020

Net Income Adjusted Adjusted Adjusted Income Tax (Loss) Impairments Income Interest Depreciation Equity Adjusted Provision Before & Special (Loss) Expense, & Comp. EBITDA (Loss), Tax, as Charges Before Net Amortization Expense as Reported Tax reported

(In Thousands)

CompletionFluids & $ 19,396 $ 450 $ 19,846 $ (154) $ 1,934 $ - $ 21,626ProductsDivision

Water &Flowback (2,244) 1,607 (637) (9) 7,425 - 6,779ServicesDivision

Compression (12,790) 5,971 (6,819) 12,564 19,908 324 25,977Division

Eliminations 5 - 5 - (4) - 1and other

Subtotal 4,367 8,028 12,395 12,401 29,263 324 54,383

Corporate (13,444) 73 (13,371) 5,455 197 1,145 (6,574)and other

TETRAexcluding $ (10,231) $ 1,154 $ (9,077) $ 8,101 $ (976) $ 17,856 $ 29,460 $ 1,469 $ 47,809DiscontinuedOperations

Three Months Ended

June 30, 2019

Net Income Adjusted Adjusted Income Tax (Loss) Impairments Income Interest Depreciation Equity Adjusted (Loss), Provision Before & Special (Loss) Expense & Comp. EBITDA as Tax, as Charges Before Amortization Expense reported Reported Tax

(In Thousands)

CompletionFluids & $ 14,614 $ (289) $ 14,325 $ (157) $ 3,723 $ - $ 17,891ProductsDivision

Water &Flowback 2,460 (400) 2,060 (8) 8,871 - 10,923ServicesDivision

Compression (3,483) 3,607 124 12,998 19,054 590 32,766Division

Eliminations 1 - 1 - (3) - (2)and other

Subtotal 13,592 2,918 16,510 12,833 31,645 590 61,578

Corporate (19,303) 268 (19,035) 5,696 172 1,673 (11,494)and other

TETRAexcluding $ (8,201) $ 2,490 $ (5,711) $ 3,186 $ (2,525) $ 18,529 $ 31,817 $ 2,263 $ 50,084DiscontinuedOperations

* Excludes the impact from discontinued operations.

Schedule H: Non-GAAP Reconciliation of TETRA Net Debt (Unaudited)

The cash and debt positions of TETRA and CSI Compressco LP as of June 30, 2020, are shown below. TETRA and CSI Compressco LP's debt agreements are distinct and separate with no cross-default provisions. Management believes that the most appropriate method to analyze the debt positions of each company is to view them separately, as noted below.

The following reconciliation of net debt is presented as a supplement to financial results prepared in accordance with GAAP. Amounts presented are net of deferred financing costs.

June 30, 2020

TETRA CCLP Consolidated

(In Millions)

Non-restricted cash $ 50.0 $ 6.8 $ 56.7

Carrying value of long-term debt:

Asset-Based Credit Agreement - 0.7 0.7

Term Credit Agreement 205.7 - 205.7

Senior Notes outstanding - 636.8 636.8

Net debt $ 155.7 $ 630.7 $ 786.5

Schedule I: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow(Unaudited)

Three Months Ended Six Months Ended

Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2020 2020 2019 2020 2019

(In Thousands)

Consolidated

Net cash provided (used) $ 38,211 $ 22,176 $ 30,965 $ 60,387 $ 38,377by operating activities

Capital expenditures, (3,332) (10,965) (27,345) (14,297) (59,390)net of sales proceeds

Consolidated adjusted $ 34,879 $ 11,211 $ 3,620 46,090 (21,013)free cash flow

CSI Compressco LP

Net cash provided (used) $ 4,823 $ 13,357 $ 8,710 18,180 40,342by operating activities

Capital expenditures, (1,125) (6,483) (16,434) (7,608) (39,586)net of sales proceeds

CSI Compressco free cash $ 3,698 $ 6,874 $ (7,724) 10,572 756flow

TETRA Only

Cash from operating $ 33,388 $ 8,819 $ 22,255 42,207 (1,965)activities

Investment in CCLP - - (8,740) - (11,142)Compressors

Capital expenditures, (2,207) (4,482) (10,911) (6,689) (19,804)net of sales proceeds

Free cash flow 31,181 4,337 2,604 35,518 (32,911)

Distributions from CSI 169 169 168 338 337Compressco LP

TETRA Only Adjusted $ 31,350 $ 4,506 $ 2,772 35,856 (32,574)Free Cash Flow

Schedule J: Non-GAAP Reconciliation to TETRA Only Adjusted Free Cash Flow FromContinuing Operations (unaudited)

Three Months Ended Six Months Ended

Jun 30, Mar 31, Jun 30, Jun 30, Jun 30, 2020 2020 2019 2020 2019

(In Thousands)

TETRA Only

Cash from operating $ 33,388 $ 8,819 $ 22,255 $ 42,207 $ (1,965)activities

Less: Discontinuedoperations operating 163 (145) (345) 18 (771)activities (adjustedEBITDA)

Cash from continued 33,225 8,964 22,600 42,189 (1,194)operating activities

Less: Continuingoperations capital (2,207) (4,482) (10,911) (6,689) (19,804)expenditures

Less: Investment in - - (8,740) - (11,142)CCLP Compressors

Distributions from CSI 169 169 168 338 337Compressco LP

TETRA Only Adjusted FreeCash Flow From $ 31,187 $ 4,651 $ 3,117 $ 35,838 $ (31,803)Continuing Operations

Schedule K: Non-GAAP Reconciliation to TETRA Adjusted EBITDA Margins andAdjusted Income (Loss) before tax margins (Unaudited)

Three Months Ended

Jun 30, Mar 31, Jun 30, 2020 2020 2019

(In Thousands)

Consolidated

Revenue $ 192,441 $ 222,942 $ 288,796

Income (loss) before tax (32,329) (9,077) (5,711)

Adjusted income (loss) before tax (14,259) (976) (2,525)(Schedule G)

Adjusted EBITDA (Schedule G) 35,259 47,809 50,084

Income (Loss) Before Tax Margin (16.8) % (4.1) % (2.0) %

Adjusted Income (Loss) Before Tax Margin (7.4) % (0.4) % (0.9) %

Adjusted EBITDA Margin 18.3 % 21.4 % 17.3 %

Completion Fluids & Products

Revenue $ 71,346 $ 75,237 $ 79,767

Income (loss) before tax 16,002 19,396 14,614

Adjusted income (loss) before tax 16,512 19,846 14,325(Schedule G)

Adjusted EBITDA (Schedule G) 18,303 21,626 17,891

Income (Loss) Before Tax Margin 22.4 % 25.8 % 18.3 %

Adjusted Income (Loss) Before Tax Margin 23.1 % 26.4 % 18.0 %

Adjusted EBITDA Margin 25.7 % 28.7 % 22.4 %

Water & Flowback Services

Revenue $ 24,723 $ 57,467 $ 73,124

Income (loss) before tax (8,418) (2,244) 2,460

Adjusted income (loss) before tax (7,215) (637) 2,060(Schedule G)

Adjusted EBITDA (Schedule G) 400 6,779 10,923

Income (Loss) Before Tax Margin (34.0) % (3.9) % 3.4 %

Adjusted Income (Loss) Before Tax Margin (29.2) % (1.1) % 2.8 %

Adjusted EBITDA Margin 1.6 % 11.8 % 14.9 %

Compression

Revenue $ 96,372 $ 90,238 $ 135,905

Income (loss) before tax (23,006) (12,790) (3,483)

Adjusted income (loss) before tax (7,270) (6,819) 124(Schedule G)

Adjusted EBITDA (Schedule G) 26,316 25,977 32,766

Income (Loss) Before Tax Margin (23.9) % (14.2) % (2.6) %

Adjusted Income (Loss) Before Tax Margin (7.5) % (7.6) % 0.1 %

Adjusted EBITDA Margin 27.3 % 28.8 % 24.1 %

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SOURCE TETRA Technologies, Inc.