TETRA Technologies (NYSE: TTI) reported Q4 EPS of ($0.01), $0.01 better than the analyst estimate of ($0.02). Revenue for the quarter came in at $282.47 million versus the consensus estimate of $264.63 million.

• Consolidated profit before taxes and before discontinued operations was $6.1 million, a $19.1 million sequential improvement. Consolidated Adjusted EBITDA before discontinued operations of $46.6 million (16.5% of revenue) increased sequentially by $4.8 million primarily due to much stronger results in our Compression segment, which benefitted from one of the strongest new equipment sales quarters in its history.
• Water & Flowback Services profit before taxes was $8.0 million, 10.1% of revenue. Adjusted EBITDA of $15.9 million was unchanged from the third quarter despite a year-end slowdown in activity by many operators. Revenue increased sequentially by $1.2 million. Adjusted EBITDA margins were 19.9% in the fourth quarter compared to 20.3% in the third quarter 2018.
• Completion Fluids & Products profit before taxes was $9.5 million, 14.7% of revenue. Adjusted EBITDA of $13.0 million compares to $12.5 million in the third quarter, driven by strong Gulf of Mexico and international offshore activity.
• Compression net loss before taxes was $3.3 million. Adjusted EBITDA increased to $29.2 million from $24.6 million in the third quarter due to one of the highest new equipment sales quarters in the segment's history and stronger after-market activity. The Compression segment continues to see improving activity levels from service equipment being deployed into gathering and centralized gas lift systems and higher demand for aftermarket services. Utilization of the service fleet increased from 86.3% at the end of the third quarter to 86.6% at the end of the fourth quarter.
• Completed an acquisition in the Water & Flowback segment in the Appalachian region to increase our water management offerings and balance out our production testing business there, further boosting our integrated projects strategy.

Stuart M. Brightman, TETRA's Chief Executive Officer, stated, "In the fourth quarter we saw several of our segments perform at or above our expectations, which was encouraging given the challenges our industry experienced as oil prices declined to the low $40s/bbl range and from Permian Basin take away constraints. Water & Flowback Services revenue in the United States increased sequentially led by strong Permian and Mid-Con activity. We continue to make progress and gain traction with our integrated water management offerings and are very pleased with the traction we are gaining by bundling our multiple service offerings with automation. US offshore completion fluids revenue increased significantly and had the strongest quarter of the year. Compression revenue increased sequentially by 20% on higher new equipment sales and stronger aftermarket services. We do not expect new equipment sales to continue early in 2019 at the fourth quarter levels, but given the lead time necessary to fabricate new equipment, we already have in the backlog the vast majority of new equipment sales that we expect to recognize in 2019.

"Water & Flowback Services fourth quarter 2018 revenue increased 1.5% sequentially to $79.8 million primarily due to strong Permian and Mid-Con activity, while the rest of the lower 48 slightly declined as customers exhausted their budgets or scaled back activity for the holidays. Although quarter on quarter the rig count was only up modestly, the inventory of drilled but uncompleted wells (DUC's) continued to increase at a faster pace, especially in the Permian where they increased 18% since September 2018 according to the EIA. While some customers scaled back in December for the holidays, others continued through the end of the year and into January. Despite the slower completion activity in the fourth quarter, we continue to gain momentum and market share by integrating and automating our water management solutions. We are now providing more than 16 different integrated solution projects across multiple basins, up from 11 that we reported in the prior quarter. These integrated solutions are allowing us to differentiate ourselves and to provide more cost effective and efficient solutions to our customers. When fully implemented, these systems can reduce wellsite personnel requirements by up to 40%. In the fourth quarter, we expanded these offerings into a fourth region and had at least one integrated project in each of the Permian, Appalachian, Mid-Con and the Rockies regions. In December, we completed an acquisition in this segment that broadens our footprint in the Appalachian region and is expected to provide our customers an enhanced, more efficient, diverse and strategically positioned portfolio of integrated water management services in the Marcellus and Utica basins. That acquisition was almost completely integrated within two months of closing and has already generated revenue and earnings above our initial expectations. The purchase price included $7.7 million at closing, funded from cash on hand and a $1.5 million earn-out to be paid in 2019 upon the attainment of certain financial targets.

"Completion Fluids & Products revenue was $64.7 million for the fourth quarter of 2018, an increase of 2.5% from the third quarter of 2018 driven by strong offshore fluids sales. During the fourth quarter, we experienced stronger completion fluid sales volumes in the Gulf of Mexico and internationally offshore than in previous quarters in 2018. On our conference call last quarter, we reported that the TETRA CS Neptune® completion fluid projects anticipated for the fourth quarter of 2018 were pushed into 2019. One of the anticipated projects was not completed by our customer as the customer decided to cancel the completion phase of the well. The drilling phase of the second project continues but usage of the TETRA CS Neptune® fluids will be dependent on the formation pressures encountered and the completion would likely not be before the second half of 2019. We are also currently in advanced discussions for a Gulf of Mexico project scheduled for this year and believe that the downhole pressures will require TETRA CS Neptune® completion fluid as the solution. Beyond 2019 we are in discussions with two other major Gulf of Mexico deepwater operators for their lower tertiary development projects. These lower tertiary development projects will likely require our generation three TETRA CS Neptune® fluid, capable of achieving a density of 17 lbs/gallon. The third generation technology is increasing the number of TETRA CS Neptune® completion fluid applications by significantly widening the downhole pressure window and we continue to make strides in the development of this solution as well as in testing it with our customers.

"Our overall pipeline for the TETRA CS Neptune® completion fluid projects continues to build and our relationship with Halliburton to identify additional TETRA CS Neptune® completion fluid opportunities continues to gain traction.

"Fourth quarter 2018 Compression revenue increased 19.8% sequentially to $138.1 million, reflecting a strong market environment. Compression and related services gross margin was 43.6%. Compression and related services gross margins excluding the impact of a tax contingency of $2.1 million was 47.1% (see Schedule K for reconciliation of this non-GAAP financial measure), which decreased slightly from the third quarter due to slightly higher labor and inventory-related costs. New equipment orders of $18.0 million were received in the fourth quarter while total orders received in 2018 were $188 million. Our new equipment sales backlog was $105.2 million at the end of the fourth quarter, a decrease of $35 million from the end of the third quarter, which is primarily a function of strong equipment sales in the fourth quarter. We expect to deliver all of the backlog by year-end 2019. Compression loss before taxes for the fourth quarter of 2018 was $3.3 million compared to a $7.8 million loss for the third quarter of 2018. Adjusted EBITDA was $29.2 million in the fourth quarter, compared to $24.6 million in the third quarter. On December 20, 2018, CSI Compressco LP, a partially owned subsidiary (the "Partnership"), announced plans to reduce the quarterly common unit distribution for the fourth quarter from the $0.1875 per unit ($0.75 per unit per year) previously paid to $0.01 per unit ($0.04 per unit per year) for up to the following four quarters. The Partnership's intention is to review this reduction in the distribution in the second half of 2019. The Partnership intends to use the savings from the reduced distributions to cash redeem the remaining outstanding Series A Convertible Preferred Units to avoid diluting the Partnership's existing common unit holders as a result of the low trading price of the common units despite a strong earnings environment and outlook. On January 22, 2019, the Partnership declared a cash distribution attributable to the fourth quarter of 2018 of $0.01 per outstanding common unit, which was paid on February 14, 2019 to common unitholders of record as of the close of business on February 1, 2019. The distribution coverage ratio for the fourth quarter of 2018 was 28x.The Partnership's goal as stated at the May 31, 2018 investor conference in New York City continues to be to improve its EBITDA leverage ratio from the current levels to 4.5x or below and it believes it is making progress towards that goal."

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