• Adjusted EBITDA: Record $32.3 million, with margins of 20.5%.
• Total Revenue: $157 million, up 17% sequentially and 4% year-over-year.
• Completion Fluids and Products Revenue: $93 million, increased 35% sequentially.
• Completion Fluids and Products Adjusted EBITDA: $33.2 million, up 77% sequentially, with margins of 35.7%.
• Water and Flowback Services Revenue: $64 million, decreased 2% sequentially, but up 13% year-over-year.
• Water and Flowback Services Adjusted EBITDA: $8.3 million, increased $1.2 million year-over-year.
• Free Cash Flow: $4.2 million, with $15.4 million from the base business.
• Capital Expenditures: $18 million in Q1, including $11 million for Arkansas bromine plant expansion.
• Liquidity: Approximately $219 million, including $75 million available for the bromine project.
• Net Leverage Ratio: Improved to 1.5 times from 1.8 times at the end of the previous year.

• Warning! GuruFocus has detected 6 Warning Signs with TTI.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tetra Technologies Inc (NYSE:TTI) reported a record first quarter adjusted EBITDA of $32.3 million with margins of 20.5%, driven by strong performance in the completion fluids and product segment.
• Total revenue increased by 17% sequentially and 4% year-over-year, indicating solid growth.
• The company successfully completed the first of three scheduled Tetra CS Neptune wells and made significant progress on the second well.
• Tetra Technologies Inc (NYSE:TTI) saw a 60% increase in offshore deepwater operations, reflecting a steady increase in the deepwater market.
• The company generated strong free cash flow in the first quarter, with a year-over-year improvement of $41 million, including proceeds from the sale of Kodiak shares.

Negative Points

• Revenue for the water and flowback services segment declined by 2% sequentially, despite outperforming the US frac activity decline of approximately 10%.
• Margins on water and flowback services were down slightly from the fourth quarter, indicating some pressure in this segment.
• The current oil price environment creates uncertainty for US land activity, which could impact future performance.
• The deepwater market's lumpiness due to the timing of well completions can lead to variability in business results.
• There is uncertainty regarding the timing of future deepwater projects, which could be affected by prolonged lower oil prices.

Q & A Highlights

Q: What is the biggest hold-up for customers in adopting the Oasis technology for commercial use? A: Brady Murphy, CEO, explained that customers need to become comfortable with the technology and the evolving environmental framework. Regulatory and legislative developments are moving in a positive direction, particularly in Texas and Mexico. The company expects multiple pilot projects this year and anticipates commercial projects to start being negotiated in 2026, with potential acceleration in this timeline.

Q: Can you provide specifics on the regulatory support for beneficial reuse of produced water? A: Brady Murphy, CEO, mentioned that Tetra is heavily engaged with the Texas Railroad Commission and TCEQ regarding the permitting process. Several legislative pieces are moving through the Texas House and Senate to support the surface discharge and beneficial reuse of produced water, which was previously prohibited.

Q: How does Tetra plan to manage the timing of drilling and production for the Evergreen unit? A: Brady Murphy, CEO, stated that they will drill and complete the first well, then put it on standby until the bromine processing facility is ready. They plan to announce the timing for subsequent wells as the year progresses. Elijio Serrano, CFO, added that costs for upstream work are shared with a partner proportional to ownership in the Evergreen Unit.

Q: What are the expectations for the desalination program in the Permian Basin compared to South Texas? A: Brady Murphy, CEO, explained that in South Texas, they achieved a 92% recovery of desalinated water. In the Permian, with higher total dissolved solids, they aim for a 60% yield. Commercially, they are ahead of schedule, with ongoing discussions for commercial-scale units.

Q: How does the current deepwater market outlook compare to earlier this year, and how does it affect project development? A: Brady Murphy, CEO, noted that deepwater projects are long-cycle and have not seen changes in scheduling for this year despite market uncertainty. While lower oil prices could delay future projects, current projects are expected to proceed as planned. Kurt Hallead, VP of Investor Relations, added that recent announcements from offshore drillers indicate no pause in deepwater drilling programs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.