TTI - Earnings call transcript Q4 2017 | TETRA Technologies, Inc.

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Operator

Good morning and welcome to TETRA Technologies' fourth quarter 2017 results conference call. The speakers for today's call are Stuart M. Brightman, Chief Executive Officer and Elijio Serrano, Chief Financial Officer for TETRA Technologies Inc. Also in attendance is Brady Murphy, President and Chief Operating Officer. All participants will be in listen-only mode. Instructions]. [Operator there opportunity presentation, ask be will today's to an questions. After Instructions]. [Operator this Please recorded. is being note, event will I the turn now Mr. conference over to Brightman. Please ahead. go

Stuart Brightman

be it you in Serrano, the earnings Thank followed forward-looking statements control are President certain and and to fourth that are contain Officer, statements many our you and by morning Welcome that statements assumptions for XXXX our are Operating of based These are quarter risks also subject provide on of a statements. will Brady additional made TETRA remind These will TETRA and fourth results, analysis which Murphy, conference by in questions. certain of quarter your on turn this be are your Chief be the Elijio available our be I Technologies' and Elijio Chief to first I or a number conference over number factors. then to which based may details, turn the must to overview this some of Financial address of call may uncertainties, of company. questions. attendance a are and Officer call. to any deemed then Austin. brief beyond

that that forward-looking cautioned statements. statements actual are from such of projected and guarantees the in You results are materially future performance not those may differ

debt, our These free news or are should in Please earnings with adjusted to for a period. for measures. in the not of within website addition, complete adjusted or other reconciliations this and financial of financial flow, we may course cash the public of financial to results information nearest morning's the financial GAAP considered In GAAP net for adjusted context to measures measures. reconciliations the refer non-GAAP our prepared be accordance substitute the backlog tax to profit refer EBITDA, share, per or release before call, non-GAAP

on update are provide positive I we November. the lot of call, since to several developments a There key in During an want areas. early spoke

is to like we would leadership I made additions the team. to have topic senior First address our

significant this the We have added through that's Murphy bandwidth proven two and robust within mature occurring go a Operating privately and recently executives includes weeks XX global record which that manufacturing Chief provide engineering, than as joined the recovery He in held and more leadership senior a experience has we sales market. we Officer. serve. ago unconventional in track President operations, areas business to company several CEO markets industry years us fields as Brady of and experience the European-based energy focused was Brady industry, deepwater, of a variety assets. on development, and energy of upstream with

of the graduate elevate working being Business the the in next to customer and know performance. Program. as President Development Brady of position Marketing. oriented us Global brings Product global positions Europe/Sub-Saharan very Director, Vice the Sales. growth I in for President has previous us. Brady Before speak Vice and Brady Harvard President Africa, Sperry I that Business a a team help that, Systems, Halliburton executive excited a at part he growth entire His Halliburton of level will Advanced engineering chemical Senior background management Services, Manufacturing in degree team of served of believe with Supply School's of Management Senior is of Vice and Vice President Management and the Chain executive included and I President and Drilling Vice with

in Group Group Global team Serjeant. Compressco. Vice management served of during to XXXX. at addition XX President marketing of years and acquisition Cameron, the been his Schlumberger Owen Cameron by in to November he levels in joined other with President of Schlumberger operations, each Cameron, responsibility. sales Support previously The a is position, series increasing our Vice of of Owen's was He as a CSI time President Operational engineering, us the prior Owen of Company. at

as One of operating proven Compression Cooper also record in with years a energy Owen Energy Division. people positions Owen at a an President the of capital a the executing space. addition strong improved as Owen recovery a timely the MBA. of a strong growth, these degree strong additions Services. of gentlemen into team. solid strong the to move services robust and his level, and on on to relations Cameron in brings engineering the knowledge be XX manufacturing is spent very Group was addition Systems customer of team great profitable returns last of engineering, of track that skills. has compression knowledge at Both and we at with depth and the Owen industry mechanical focused compression a will is the

would couple of I topic announced of like to the signature the a second ago. The weeks is planned We SwiftWater. talk about addition

much teams weeks. very couple over had hand-in-hand the have working of last We integration the

We the have continued the water years. look management to over several space at last

on immediately to $XX shale the organically annual bring client very of is to space. strong basis our They significant We Basin, continue we to have abilities With we our the add cash and delivering EBITDA in the to focus that have an a $XX market And industry. SwiftWater in team on entirely to reinforce believe TETRA. to focused strongest management basis. SwiftWater, customers portion will XXX million by in of we on from This of base, in this a flow of support incremental continued strengthening be XXXX a marquee and accretive our acquisition deploying over the our employees, North business plays. growth this the expected growth strong on is Permian want capital execution million American to results. EBITDA

acquisition and will testing this largest service water combining make the believe and managed be The in the by operations us operations the SwiftWater's Permian CEO. strongest will management will testing one group TETRA's SwiftWater's Basin. Basin. management companies of with We flowback Morris, Permian in water production We be and Hunter

We expand that market heavily continue to invest to will continue do to and so.

the to revenue noted We synergies projections. previously earnings add expect to significant

this close expect We hit our week. from and Reception next ready very is The team customers running. energized, engaged been has the transaction the ground to to tremendous. within

Cash discuss a of provided our $XX.X basis stronger through Cash The items a the like I and in increased let results. production quality on other fourth the million will quarter earnings million operating of XX.X% testing topic was of $XX.X EBITDA, by would and is of to activities EBITDA indicator quarter. granular I compression go operating back few Elijio XX.X% the Revenue third go more X% or an was of from of of revenue. results. sequentially on adjusted consolidated activities of Adjusted revenue. through XX% was $XX by details. million the the

third Some we highlights fourth the would started the in during quarter like I talk Neptune CS about to that project we is, completed quarter. the

previously project fourth As of majority noted, a vast would the portion the in in be the that and third quarter. small quarter

now us when be and to opportunities network in by are timing with acceptance stage the expand continue for we deploy for received those customers international advance additional the We several on certain projects customers on and negotiations Technical might technology. of has working completion our work. been

as in in second optimistic that to that revenue be be business. this As we of of we revenue will would generated happen despite result late not very I to second XXXX. expect for half speak, say, that this previously the backlog and discussed, continue we half having

XXXX. business America, the highest the Our third to management a addition of since reached the in water level quarter SwiftWater revenue North prior of that was

amounts of significant added including miles incremental TETRA have We proprietary of more lay-flat our Steel XXXX. hose,

of and first event This half itself erosion That early quarter will quarter. on taken price given revenue a where, mix coming fourth an An the increase. element in having a with significant of is that second also the testing We the flowback certain from Elijio as our as up testing quarter, in demand We increase we will that the increases, first through is the detail slight fourth in are comment positively on advance had pushing the that production across activity area contributed margin. fracking year. business. through slowdown showed that get out strong the end the to activity. impact as fracking year quarter of regions view at We the play will more be also the

As management. the water lag commented testing previously, that our for we recovery the have business in the U.S.

We would that. had second the as always expected been that see testing. we We we domestic went through year, confident of on the progression half

seen and both margin. that We have in revenue

to a pricing, digit was has double We that compared first position the cost, we A that. EBITDA year, work business contributed asset in expansion which half have terms were to hard where lot of of of below in domestically breakeven. now deployment, customer into moved

to of internationally. facilities revenue production adjusted also from resulted from fourth the doubling the of third the early revenue. of sale these We combination improving EBITDA quarter two to XX.X% in benefit and The

see we noted, that domestically will increases and expect through activity I to to the go as evolve As year. we continue to begin in price

the utilization. larger horsepower our sized effectively equipment demand pushed XX%, of service On to compression the for utilization side, has incremental full over

result, realize aggressive now As increases. are price we a starting to

We to equipment are also demand. initiating orders meet new this for

this million year $XX existing stronger customers. to from CapEx back contracts million pricing to and add firm planning of on are We the $XX between our of

of equipment. for compressors fabricate Additionally, for In half order year. sell equipment second horsepower orders million last $XX million delivered half Compressco's to half we and is large $XX year, equipment the an largest of midstream In Permian we during order and history. second in Basin. increasing. to next the in will XX the of to is sales be the This of CSI the a first secured This received January, the demand in sell XXXX operator fabricate

multi-pad million, very sales the As of trends the for XXXX. the in being January, of since positive the higher in our gas commitments associated was All of highest these long-term the are business manner centralized backlog the this volumes $XXX gas quarter to to us third handle equipment and end our of from will lift represent production drilling done a programs. for enhance customers and

backlog are use in the and increasing shop adding outsourcing our earlier. fabrication We labor of meet to the proactively large referenced

very we So with summary, the are trends. in pleased

close more Elijio in remain fourth through progression commentary excited the on go to fluid we think margins year. will SwiftWater. on as this confident quarter I give Very but we

CSI Elijio growth the running. about will for also Compressco. our finance will on to ability thoughts the capital of ground talk our We hit some

balance the the Neptune comment to the to three I up this are throughout audience hand CSI I want items discussion. and to Elijio. make Compressco is margin think over we fluids the growth speed sheet on last for of it One progression, fully sure before

the turn We refine for guidance Elijio update our the weeks. over financial I done. I the opportunity previously guidance some over some call we on take producing close details. year we numbers full will to With next have that, will to then will want be provide the to SwiftWater, to several and as

Elijio Serrano

Thank compression Gulf and in that quarter morning Neptune from and was you activity the of completed sequentially quarter everybody. revenue of was much production by and third included the in the quarter project quarter. from Fluids fourth Stu third good services early increased water as testing, down management. levels the X% TETRA's from Mexico started the stronger revenue million third in $XXX

December, third sheet were basis a services margins at One was amounts hand loss basis, Cash Cash special items of to business. with activities end $X.XX items. also the revenue. profit the a the $XXX reflecting Additionally, per quarter, charges, TETRA very EBITDA end third in for million, $XX.X quarter. unusual adjusting there charges, for of of excluding offshore compared adjusted in was million, of the remains the from per EBITDA down compared third Adjusting At quarter or operating adjusted TETRA's to TETRA the the of XX.X% on the for Loss the share this $XX.X on and was was solid. unusual $XX in seasonality for also fourth profit special up quarter the was balance revolver. XX.X%. $X.XX Maritech $X.XX drawn consolidated $X.XX flow $XX.X a no on of only consolidated share from million quarter. million and

is have fluids have revenue the down this some and our the the of we Water CS slowed was our in of revenue the bulk onshore market that year. end at was the the quarter. been the bit sequentially completed increase and included year in consistent the growth decreased levels at CapEx the with division. revenue experienced. since the all little the early Water of quarter of of management the The and a third customers quarter water and early fluids resumed fact the activity additional highest into that has project Going fourth sequentially up activity third XXXX many quarter despite benefiting fourth Fluids management, as been Gulf levels in price from non-Neptune, we management implemented. Neptune of Mexico, investing increases trends that from industry large that those were

to in included XX.X% also In project CS are of advantage planning below continue are take adjusted end acquisition market. of Neptune margin the expectations to benefit the the we in shale returns the of of addition we the was we the are capital tail and to our experiencing in in third to third the SwiftWater, America as the the and in the activity sequentially growth some fourth the our add testing down play the but fourth end revenue EBITDA The million strong shale plays internal Fluids strong active of to shale $XX.X doubled at quarter most to the year. from the the very quarter. at slowed by for North of increased fourth water increasing right solid a from production onshore transfer quarter, Production XX% testing the position plays. revenue in $XX.X flowback the reflecting million

increases seen the of strong, reflecting the North on have also mid-teens price strongest while. we revenue have utilization of were was Our large we very testing and sale were able Production margins facility. Incremental early in secure. better in international margins slightly equipment of America a been also production a the to the back up are and that

sales, and EBITDA points XXXX. from in We to fourth compression revenue sales was increased increased in basis services, overseas. Compression sale XX.X%. the testing utilization sale equipment of aftermarket better sequentially are occur by and the a of to the early XX% as parts large production quarter another result XX.X% North facility services. facility first quarter XXX revenue revenue Utilization due adjusted early higher from pricing and Production expecting America production to the

horsepower over as fleet the is utilized large end of Our XX% of December.

to just in only the We are West strongest are but those EBITDA. and implemented concentration South customers impact the is to Compressco's pushing assets are of activity. New This our industry increases resources level now increases significant price beginning has being seen and Southeastern now where of CSI Oklahoma Texas, Mexico. and

consistently added order. one Our in million the since for quarter million backlog equipment sales additional new $XX half year $XX last and increasing January third have alone, in last the added We second been we an year. of from of

of that Our Demand backlog time. revenue. is half now the or during long has the year $XX.X million was of will next is fourth of approximately seen team strongest $XXX equipment million this be and quarter first for Adjusted a sold for half second our the XX% in equipment EBITDA year. compression services and for

maintenance to and and for becoming With million for of Our are XXXX returns for between CSI plan capital million $XX $XX calls between inclusive million, more pricing, Compressco expenditures our $XX $XX million investing level utilization attractive. capital of higher expenditures. better

decreased Compressco offering XXXX. restrictive We facility capital which of the covered that are to we markets our The CSI at currently debt business EBITDA profitable. also in of seasonality of that Adjusted will that price segments we testing stages fully realized of attractive with generated either Gulf the EBITDA generated in less small over invest benefiting working compression have a with and returns. early an I was of to These margin margins In versus inherent generate cost benefit credit are water believe demand over generated matures XX% upon services imbalance XX%. all renewing We covenants. are replacing Nephew also are of or and increases. fluids Offshore increasing with of attractive just not the and from focused modestly be the activity on are revenue current in segment quarter to margins the a from the Mexico. the due supply and willing impact management, XX%, segments production yet EBITDA August CS areas

million $XX acquisition this will the acquisition, by we revolver. undrawn On fund our SwiftWater drawing on

open have With go for questions. call on for the with SwiftWater and will invest to organic opportunistically to that, opportunities. significant targets We or like continue we available ahead will liquidity capital TETRA

Operator

[Operator Instructions].

comes Our from first Meakim question with Please ahead. JPMorgan. go Sean

Sean Meakim

you. Good Thank morning. Hi.

Stuart Brightman

morning. Good

Sean Meakim

just water from even a see you that the a the being perhaps drill stage business Maybe management that to you fair you of in product how bit an too little made you Well, of rate last bit us maybe in how Elijio say more about product that XXXX? that give pricing lines? would where benefiting XXXX? rank area granularity just comment across on be following early that Could of change just categories see power. little your in playing little see the you Meaning it could is could at to out a most

Stuart Brightman

Yes. show services them we I businesses to look the first what rate that business pricing I rank we as expect a lot the that's year, water will just continue. would has of that. with Maybe of in year, and management the start we in would of tier that if expended have as give I and clearly a that of timing demand the seen as be of SwiftWater, of the think at we individually, would suite domestically, this testing we added expect going XXXX I the to inflection that are to Flowback that is exit currently that as you benefit opportunities. we start the well services provide from say,

on approve the we pricing To the the the between perspective, I the phone, that in with of referenced, and capital That's in utilization, three put that articulated. accelerating clearly levels As that the compression every we showing the and XX% have certainly quarter. earlier, I customer, water trends, first continuing us returns stated those seeing say of we in dollars benefit large quarter. would fourth lag management the horsepower capital in targeted the there

speculating are it's hardwired. We not and very

would It say, with It's I And year. in three, be the of really and business, And come it's has a those steady. good been is down. year similar really chemicals, this about. the it's coming think better of little to chemical steady similar So relatively will base fluids we it bit there point. didn't business, would start. still pricing, steady, modest the more services going more to a we given feel coming business decommissioning, our activity say, challenged abandonment but probably offshore I offshore been more off our piece starting the start a steady, to off

optimistic a where we services So those little point. seeing bit first more are inflection but clearly the three are

Sean Meakim

it. very you That's that. Got for Thank helpful.

Just thinking planning How about looks little a of on capital? on growth expansion unit talk about think just that? to the you do pace water capital bit the it How restrictions growth? Any today? deploy, just are you business, return about you the you of could that the economics or have

Stuart Brightman

Yes.

we existing to management that allocated vast market that for vast our TETRA year. TETRA. expect was vast which invest will the So water the Mid-Con STEEL And to and business, legacy into majority majority Texas, and to management. of have strongest allocated continue probably water been West was to operate, was our the last are regions that typically the to allocated in markets robust most year, TETRA management three that of Those Appalachia. we capital water growth the majority And this

on. market, number the clearly are and our market most combination area an focused SwiftWater, one our important area Permian becomes With the most of we

base that of cannibalization very we and and The flowback rationalization The branding team have place. determined. lay-flat the knows on The customer TETRA testing articulated. some has will say SwiftWater sales SwiftWater two organizational how have and identified the that in base are SwiftWater is design. how The one. been take offering internally. complementary. is been fluids. we some back additional of team organization. is been leaders plan The terms through Everybody The pull in would we The has There product services looking no and looking the determined. through. of developed been product at between together is integration organizations day pull at will very, do customers our of of I do So come The target customer of

expect are we So we very to growth that be going oriented.

We are very that. confident in

want we will of bit growth yet be One that haven't do of days, the the we more before By opportunity set aware guidance reasons little that report we and given calibration everybody CapEx is that. a out. let next on we the the XX

When on look we the target strong very So very return of of SwiftWater, very we that that's to on our investment have we We at strong, These kind two target. trend. business continue investments. it has at way from capital. being That's expect the company return and been are a short new number similar looked to our water return a solutions clearly immediately. very, their

Sean Meakim

water making does it Got or will some emphasis re-segmenting does sense it. point, relates one given as longer-term? that, giving the it, the or I it Thank think At to enough, if management you. you scale point what on some the potentially and maybe plusses could. the it in And that for as its own segment. At be you now, more minuses about make

Stuart Brightman

Yes.

I and insightful. think very it's great a question

look not we through are think a will going we taking of water we as be existing a how it. we way business value. a change, that to creates report but I run at and at beginning we I large am say ton create that businesses solutions will very to the look them, recognize talk and we fresh our we shareholder

Sean Meakim

enough. Fair

a lot. Okay. Thanks

Operator

Raymond Your comes go Please James. ahead. from question with Narra Praveen next

Praveen Narra

guys. Hi. Good morning

that we still? margins project correctly, Neptune XQ? So more of just generation from step of get we the the bit as first little do half projects Or second margin are should are the in pricing, the this is we how just the XXXX, it a those in getting talking sure level half? go to we like XX% we a you up about to So for progresses lot have of think until hitting see sound profile thinking make business, the from am does through I that about kind EBITDA Neptune you had fluids calibrating

Stuart Brightman

Elijio go obviously give ask kind overview you to bit little maybe more mean of then a I into detail. an to

have two think I you variables.

very a that November, and as half expect revenue we we half that. back we have think Neptune that generator of second have clear We couple revenue. the of so impact have And second we will said tie been a will be in projects, the

be very on We confident that. continue to

see hits, that in will you when have certainly the impact previous we that margin So as seen when hits. quarters

as of we in progress at we we business, a second that progression margin the yes, are As slow have I to look level up management ramp stay regions comment, doing but regions you will up. my balance the Neptune as immediately will see, in fourth said, up, of then for the the and that the little our will I And it had we as more very I the we as But a was which, that revenue the next modest in on confident SwiftWater quickly, a first on finish they we year see November opinion, right probably the over bit think third couple quarter quarter. expect that largest quarter impact when then February, earlier call. half water close did those as are very than a of they I week. water the the in at are now, are they much made a the ramping we if had comment indicated And of usually contributors

in think be this and see will I three quarter first second will the impact that the quarter, in of very most visible. full you month So months

pieces So we at of those that of through margins fluid are the moving look kind year. progression the the as

Praveen Narra

side. obviously, we And finance that you to CCLP seeing returns from the in and when arm? Or help pricing attractive then through are compression growth we think are the as Perfect. growth for seeing CapEx I Okay. financed see compression? gain the opportunities guess TETRA out about are we just mostly any ability business, see there is the that the CCLP chance the that on should that there any of we

Elijio Serrano

Praveen. things, of couple A

and is is across one profit impressive. the coming from first revenue additions The non-fleet that quite

aftermarket profit now is are from heard have then pricing. that some order increasing benefit addition talked some about And we You the new coming. received talked about see there that significant sales We of increasing materially. part We of materially. to starting we services

are that I to the revolver. those quarterly draw So EBITDA ability the very to a expect to trends support going much on basis, rapidly stronger be on

However, to and that CSI we be debt revolver fund facility, opportunities is existing at same seeing that time, growth with the refinance market and extend very have we whether the trends our out we are whether the group or capacity they we attractive that the TETRA. the support in from there any enough all without believe that we market, their Compressco for given go

Praveen Narra

That's Okay. great.

than the upcycle On XXXX, back XXXX? Can pretty XXXX, were the wasn't sale. impressive that in margins different in about the about talked obviously side, prior services how were production the how you are dynamics they talk you just and the competitive of business that

Stuart Brightman

Yes.

think period. as at the in time market high capacity earlier a growth cycle that that's it clearly more the that is entered typically there I we through level saw happens

I So think that's there. out

willing execution process. size regions we work why are to tactical in that because to of are quality a being that bring the we specific think safety seeing of to where the being areas little we time, profit that's I has think of customers bit. with last us similar impacted But that the I the favorably and the and recovery are opportunity lagged the

combine some we we customer that's and and continue could it's work that In the water performed performed are If detail on accelerate you management to helped a correlates to will and we customers well. testing with very we cases, and go active this to where strategy have both grade high that very SwiftWater the two. That's growth, us.

quarters. us of customer move So clearly mix and I It's with do pricing couple visible the tactical that. over think last been the very to has it's but allowed the activity

Elijio Serrano

the would And occur from quarter. of to had two like couple strong fourth production very testing. items We clearly Praveen, I a add trends in the

year. them We remarks fourth by I had production the in sale And facility way, a first large mentioned that's second occur quarter. we in the to in quarter. the fourth quarter. had of expecting the the are also first of in one We One we the one in this my had quarter. have is, And early one one that

last the quarters those. in five from So quarters, had we have that three benefited

sand the sale more strong of that is are type to and that The water in one-off, and we being than America. be seeing are and United from in or starting after quarter. from injected by much amounts U.S. well one occurred stronger numbers that to coming online. the the rebound suggest impression side might EPF are that is with might testing unfortunate flowback are profit a demand dealt seeing have what the revenue It have So that brought fortunate U.S. the would North are in the the overshadowed sale thing the I up these we in is events. driving the impression that With production improvement the strong States. the of overshadowed that is have activity be common fourth it level,

Praveen Narra

very you Thank much Perfect. guys.

Operator

from Johnson go ahead. Please is Rice. question next Malloy The with Marty

Marty Malloy

morning. Good

Stuart Brightman

morning. Good

Marty Malloy

question. following just from am the last I

is the for and out doing? anticipated a better On in revenue a what business quarter. sense had of EBITDA testing than the bit you results take more side, can of side, the sale get If segment were production the the the help impact little on us the you underlying I during trying that to

Elijio Serrano

not for resource think that surprisingly seen They the by that us and base well customer probably that are equipment engage more super important The is in using was majors. were the up the put and versus a the I to resources base the customer number volumes, on driven to site. large have my were of the significantly it's achieved. the is us to been value what but we we base. think have are significant would in willing believed is base the also were that you we margins that EPF every the mentioned the safety that out again, local our customer to they competitor the side, is have most the strongest The independent, and And I driven, rewards customer there. customer quality, while. utilization I the strong that bring a all and still Marty, both if move And that revenue Right. EBITDA comments was

Marty Malloy

you onshore the being like just the what question fluids end third Could do revenue? on fluid percent here of that to the segment a get it And a revenue of Approximately expect up water. to?

Stuart Brightman

we Yes. a mean, XX%. little again it's the historically I on probably we answer clearly don't have be said acquisition will of we side the bit start the some and going When other give of basis synergies. businesses, legacy I a But once the projecting XX% go-forward the update the the to XX% impact on your acquisition. we question. guidance, to want of to get get on it's better to

Marty Malloy

Great. Thank much. you very

Operator

with Loop ahead. Please question from go Your Capital. Stephen next Gengaro is

Stephen Gengaro

did I guys. Thanks. Two facility But Good it try fourth underlying be early will it is $X may with production think start kind organize to production we production three. $X quarter you morning $XX things, about do million, bit. testing, as The mean testing in generally actually it if mind. million. maybe I to revenue? It don't of sale, million a just little as high

Elijio Serrano

different production the to not excess was out break prefer between But the early million. facility segments. $X testing production in I of

Stephen Gengaro

is different the underlying And than your margin Okay. business? materially

Elijio Serrano

No.

Stephen Gengaro

think in would just you next this then Okay. give we you as And weeks. some I more know specific said going the forward, about guidance several

are consensus that of million $XXX the for is XXXX least at Is I like the currently excluding in range. EBITDA thinking, ballpark where you the in SwiftWater? think guys

Stuart Brightman

ballpark. in would it's I say the

away the I that. think on very fluids business. We call, legacy in will I that the But on our this XXXX, trends add on we are the some is more color from bullish hope on take

expectation market half the With second international the several seeing the management, of water year, organic the we additional Neptune in on are the water trends show fluids in in activity. investment management, more

So international part fluids was and I quarter think timing. is margin of a fourth of quite muted that think I the some very also

as We go will we first of year. half see through the that benefit the

chemicals The always will positive. that's So steady. business be

customers financing think not restrictive. little that a to is to demanding. plan and the are number. of progression and team contribute as the going us that services, that. that's growth of have support and aggressive But sight Compression, market is we team to And is known operating will pieces on we We financing at forward. a our our have existing contract Elijio have the mentioned, that rate very think modest in all a Elijio domestically that is offshore big Testing, specific The contributor going most a we the then bit couple of have not I got is thing up. participate better. EBITDA. that plan with a items on That's business testing with securing confidence line important both, the enables seen will a new there the compression to We

Steve. So contribute are on, the to confident we that the big pieces number,

Stephen Gengaro

days. tax XXXX? Thank Great. for one, where we Elijio, these the just one quick, it's you. should be then rate maybe may quick not And modeling

Elijio Serrano

think We like forma TETRA that Steve. basis, that's rate a the that on Compressco will to CSI from XX%. income tax basis, a very I flow a a quite pro remind forma cash generated cash loss a before everybody to in cash And earnings would to on from it on are any see shield good we if States believe also carryforwards XX% that are in and normalized going strong. taxes. and we point, profit Therefore, basis, both to show have improve, the pro tax us to But I going to use allow fall-through tax probably United

Stephen Gengaro

guys. you Thank Great. Okay.

Operator

[Operator with Please Instructions]. Praveen We Raymond do go have one James. follow-up Narra from ahead.

Praveen Narra

guys. Hi

follow-up. quick Just one

XXXX? normal in then that? see I you see terms at least foreseeable the about the that Can drawdown inventory working you normally AR just on wouldn't we And progress, that XQ. talk In to capital, and in of how expect

Elijio Serrano

Praveen. point, Good

QX that offshore QX of working in generators have the from a peak as strongest be tail and business balanced. revenue more in was begins lot monetize decommissioning then off So to capital historically, we the hit QX seen the the we That and QX.

offshore look QX revenue move significantly. QX you didn't If services, and at the for

slightly then QX to historically trend the I that the have we working draw higher from we normally will than of slightly collections QX we in think be cash be than But seen. will think capital in what better have that QX seen. QX and

Praveen Narra

Thanks Okay. Perfect. guys.

Operator

I time, like remarks. any showing Ad no back this turn call questions. for to further Mr. would closing Brightman I to am the

Stuart Brightman

major updating appreciate again, we quarter to early businesses this hear, Thank are the and can outlook confident the you. we in our as then for very And business all and you as good the SwiftWater guidance absorb questions year forward and May. look in I the across first out reporting

So thank you very much.

Operator

concluded. you has conference now for attending today's The Thank presentation.

disconnect. now may You

TETRA (TTI) 1 Mar 182017 Q4 Earnings call transcript