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TETRA Technologies (TTI) Misses Q3 EPS by 4c, Revenues Miss

November 8, 2018 7:38 AM EST

TETRA Technologies (NYSE: TTI) reported Q3 EPS of ($0.02), $0.04 worse than the analyst estimate of $0.02. Revenue for the quarter came in at $256.85 million versus the consensus estimate of $260.1 million.

Stuart M. Brightman, TETRA's Chief Executive Officer, stated, "In the third quarter we saw several of our segments perform at or above our expectations. Water & Flowback Services revenue in the United States increased sequentially on the back of stronger activity outside the Permian Basin and with the traction we are gaining with our integrated water management offering. Offshore completion fluids revenue increased significantly from the second quarter with stronger activity levels in the Gulf of Mexico and internationally. Compression revenue increased sequentially by 15% on higher equipment sales and stronger aftermarket services. These improvements only partially offset the strong second quarter that included an early production facility sale overseas and the benefit of the seasonally strong North Europe industrial chemical sales.

"Water & Flowback Services third quarter 2018 revenue decreased 6.1% sequentially to $78.6 million primarily due to an early production facility sale in the second quarter. Although rig count in the Permian was up only 4% quarter on quarter, DUC's increased 19% and we experienced some shifting of customer completion schedules which impacted our utilization for the quarter while also ramping up for Integrated projects well ahead of schedule. Our initiative to automate and integrate the water management requirements of our customers has gained traction following the acquisition of SwiftWater. During the third and fourth quarter, we have or will be providing an integrated solution on 11 different projects across three different basins. These integrated solutions are allowing us to differentiate ourselves and to provide more cost effective and efficient solutions to our customers. In preparation for these activities, we incurred costs in the third quarter to position us to capitalize on these integrated opportunities, which is contributing to the early part of the fourth quarter running at stronger levels than early in the third quarter. In the fourth quarter we are estimating that approximately 25% of our Permian Basin revenue will be from integrated projects.

"Completion Fluids & Products revenue was $63.1 million for the third quarter of 2018, a decrease of 17.6% from the second quarter of 2018 following the industrial chemical sales seasonal peak in Northern Europe. During the third quarter we experienced stronger offshore volumes in the Gulf of Mexico and internationally than in the second quarter. The TETRA CS NeptuneĀ® completion fluid projects that were expected for the fourth quarter have been delayed as the associated drilling programs have extended longer than anticipated by our customers as well as their decision to batch drill and then complete. Our efforts working with Halliburton to identify additional TETRA CS NeptuneĀ® completion fluid opportunities continues to gain traction by expanding the pipeline of opportunities. Since last quarter two new joint Halliburton projects have moved into the customer testing and qualification phase for their projects.

"Third quarter 2018 Compression revenue increased 15% sequentially to $115.3 million and continues to show a strong market environment. Compression Services gross margin, which excludes depreciation, improved to 47.2% in the third quarter from 46.2% in the second quarter of 2018. New equipment orders of $71 million were received in the third quarter reflecting our customers' continued strong demand for compression to move associated gas. Our backlog was $140 million at the end of the third quarter, up $38 million from the end of the second quarter. Compression loss before taxes for the third quarter of 2018 was $7.8 million compared to an $8.7 million loss for the second quarter of 2018. Adjusted EBITDA was $24.6 million in the third quarter, compared to $22.4 million in the second quarter. On October 20, 2018, CSI Compressco LP declared a cash distribution attributable to the third quarter of 2018 of $0.1875 per outstanding common unit, which will be paid on November 14, 2018 to common unitholders of record as of the close of business on November 1, 2018. The distribution coverage ratio for the third quarter of 2018 was 1.07X."

For earnings history and earnings-related data on TETRA Technologies (TTI) click here.



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