TTI - Earnings call transcript Q2 2018 | TETRA Technologies, Inc.

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Operator

Good morning and welcome to TETRA Technologies' Second Quarter 2018 Earnings 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. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. this being note Please Instructions] event recorded. is [Operator conference Mr. will now to the turn I over Brightman. ahead, go Please sir.

Stuart Brightman

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

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

the believe, context complete These be GAAP are in nearest website considered per flow, in financial offshore of accordance Please through Earlier news release coverage announced streamline In should backlog, for reconciliations measures. this cash decommissioning a profit returns with we structure of measures. divestment highest actions our segment the financial this of Maritech core focus not EBITDA, can or and period. morning's within information adjusted the to refer business where, non-GAAP reconciliations non-GAAP adjusted TETRA's generate for share, of our on measures realignment, free profitability. to we we the public reporting the the other the for on our debt, visibility in year, series capital. adjusted those that we earnings our generate improved based to to course drivers drive We tax that to prepared and With are to to to provide more new to addition, on call, we shifted ratio net consistent financial to the may refer our that businesses more results financial focus of before our or results. a and predictable better or moved substitute key businesses investor GAAP segment

under a messages. key quarter. very structure, new quarter first a what achieve. believe, Overall, can had strong reporting full segment we of we is I'll highlight TETRA second this CSI The good and indication Compressco five

by strong all driven adjusted only the South by of Texas. our reported in strong revenue and not First, Basin, sequential also Rockies, EBITDA, MidCon, improvements but in business improvements segments Permian and Northeast

rate generated cash working flow other acquisition million we in have increase Normally, free such million. significant revenue would capital revenue sequential TETRA-only increased when The direction. Compressco run margins gross materially sequentially continue a in compression a to backlog basis. strong in for on to economics acquisition services. CSI in improved Fourth, benefits outperform the to Next $XX TETRA-only cost the by in continues pricing better seeing a of SwiftWater we of $XX addition build

on Fluids Completion our onshore multiple of addition by XX% Halliburton business activity quarter. technology. proprietary Expanding jointly increased CS stronger first Europe, in double the was these EBITDA Finally, U.S. Adjusted Fluids areas. to $XX.X to five sequentially million basins. seasonal in more our reflecting and weeks products revenue Neptune our completions in market than further agreement we several and with announced, global ago, develop

on family of sale and other drives recently we issued the collaborative gas and agreement global Neptune further TETRA's with with and Fluids. CS joint the on marketing earlier, and oil TETRA Halliburton based and and development proprietary Completion And be development We for fosters to a Halliburton offerings. Fluids stated technologies As agreement release a especially we and develop expect Completion distribution great The deepwater press new jointly also and for with of this the expand resource to respective drilling years to capabilities. sales drilling working look closely activity rebounds. to as forward relationship come,

that be initial to, newly the opportunities are, in the meetings The addition We two through XXXX. previously have working had projects delivering in and beyond. half had of in on XXXX opportunities relationship. with the Halliburton and mentioned These will several we established are we second identified identified

of expecting stages advanced Mexico. second both the year of outside projects Gulf the in two is One the projects are of drilling, and the of half these we're in referenced

for are Mexico since Mexico that market. Gulf will be project deepwater signs Completion a in the of us a rebound the We multi-well This is significant ago, of offshore of in weeks first we deepwater in for major Several secured seeing a in downturn. the award super Fluids Gulf the XXXX. delivered

was XX%. TETRA Northeast. benefit In MidCon very of this from continues Also hose driving activities Production the internationally base, focus addition, the financial to Adjusted to sequentially. were a Adjusted EBITDA XX%. improving and employee revenue. flowback regions. our sequentially, driving the the margins in was management The in management Incremental Sea Fluids in EBITDA other the services activity North management enhanced larger team XX% and while the and and the the and up for up strong of revenue geographic in Permian customer all performance. to as the addition growth management Water we of profitability TETRA see EBITDA adjusted rebound increase segment existing for also products. rest water leverage backlog SwiftWater important, Rockies, in was is of was SwiftWater, focus XX.X% extensively our product and customer the multiple EBITDA more to strong coming flowback in of allows we both on areas. U.S. use This the expand on with have STEEL Testing proprietary performance SwiftWater to outperform from lay-flat been basis expectation, offerings, of TETRA continues basis double-jacket up our able

highs, our pricing we've and historical EBITDA business adjusted cumulative the Our utilization. better the approaching as for margins equipment improved of are seen flowback effect onshore

focus to value and value for on And believe those unique quality. getting continue service, delivering we TETRA's our customers compensated safety We we're proposition. efforts that

to be higher to encouraged continue profitability management We Permian with water and in the the see the side. improved very activity, well regions flowback outside both testing respond

York for are wellsite several create and operational products during meeting suite our efficiencies our we ago, our we and that for the investor services mentioned New to Additionally, of City customers offering integrating Fluids at through our in months TETRA. additional opportunities create

major recycling project a secured have offering another super first major management our secured West Texas major for for a in customer. successfully integrated have We fluid and integrated key

The to projects us fluid integrated by We have up expect from and the further continue increased in the technology The of Compressco year. the market pricing put newly team in services, our fabrication to centers and for this and position competition, office, continues ERP us distribution will operations, at running focus market. of facility, efficiencies aftermarket capital our gain secure us to adjusted using CSI to implemented idle initiatives equipment automation three by team XX% and CSI proprietary our retain our and system. deploy series and this undertaken back all to allow to a in differentiate on high-return improved has revenue We sequentially, our the field improving a Compressco end to invest previously fully management improve share opportunities. equipment on prices believe in EBITDA increased XX%. supported

efficiency efforts our impact quarter results reflected the in those financial of improvements. from This

exceed As our we to be celebrate deployment, in the continue the one-year the economics. anniversary expect investment upturn The see to strong. in compression America market and of that to North we benefits continues

investment to been and to to CSI adjust we and those and Our equipment are expenditures quickly not is or This to services customer capital our network the expect invested situation. strengths with We're greater, XX% only have over and speculative add horsepower. how approximately high-horsepower margins growth disciplined opportunities for XXX,XXX in customers fleet. XX% and This infrastructure, allocate compression leverages are able on returns as existing approximately we fleet. basis All specific, we ordering very our more demanding this, fit demands. fleet X,XXX on building equipment focused are Of when we incremental orders this are capital existing with capital areas our targeting customers. and being are geographic better existing new year, and from Compressco, on horsepower in respond or

on services and our capital, projects us returns have we Given regions on hurdle focus exceed bring that the rates. customers, for appropriate our properly that the will and equipment we compensate identified

customers systems future work the range solutions application and continue providing on with compression We to to requirements, closely a horsepower ranges. these of compression

to fleet XX,XXX cash Permian, most majority horsepower funded demand mentioned XX.X% recent to our from the deployed. where focused in and equipment from system utilization include we're around XXXX. quarter. expect for an the investments in XX.X%, XX%, SCOOP/STACK and up previously of out as first Overall, We operating our and areas the build bond The rates. the active from XX.X% large gathering Ford the return all activity basins quarter During up of with at at these the increasing of end XX% exceed at meet horsepower and for the utilization from is flow in equipment second deployed is in horsepower in vast horsepower X,XXX the areas the well of of the quarter capacity during quarter, to equipment, offering existing of deployed the continue incremental on first as now amount the at Today, XXX,XXX. end our the but of more up the higher is of effectively the end the XX.X% increase of and at Oklahoma quarter, Eagle

with customers over. pricing review compression services contracts to roll continue also We our as

are gathering in These in materially to results especially for Our our system second put increases the new impact assets. place, large gas started contracts quarter.

to the progress the increased demand large price on We pleased reflect the for continue to actions horsepower. be with

combination returns improved up integration on capital. the We expect continue to to pricing fabricate our cost continue equipment and to our drive vertical of to given lower

strong. sales activity unit New remained

remained quarter, quarter end we of the had strong our above $XXX As unit backlog fabrication sales $XX equipment announced million. with as backlog for over million, order strong pushing Even in at the third-party million. orders January, previously second our June history, our the we in over in in the $XXX with first secured sales incoming new another the quarter, Company's to largest booking

processing Additionally, the Basin and $XX midstream that pushing XXXX, to sales from in in additional and continues million Midland order is industry industry short the ship The equipment more rising. $XXX demand benefit in be strong over on integration to this as at backlog to fabrication an cycle. build horsepower out continues And our today. new early pipeline of as a million The has huge a in large vertical our capacity, will the operator with large for July, again, shop we our equipment, received Permian specifically Permian. in the of point

expansion we of million generating generated on free the With cash a $XX the the significant excluding Free to be in we first Tetra, orders, million the we unit the margin our overall new cash basis. distribution. flow go-forward of the to and guidance the including the CSI expect piece flow contributor Compressco, third-party consumed in cash half of recent and half reiterated Historically, flow, EBITDA much cash of second to free additional year. more have for $XX year a

quarters, million the the for the to fourth turn million projects. mentioned two we free QX and of monetize we revenue the for Neptune build collect to previously With cash Compressco, increased I over financial Elijio details. on CSI in flow. $XX it revenue and excluding generated that, CS $XX increase yet, will to expect elaborate In third quarter the Second and TETRA,

Elijio Serrano

Stu. you, Thank

Stu year. for adjusted the to revenue XXXX the million quarter sales continuing completion mentioned, activity from Fluids for in projects of million had to to of first $XXX quarter EBITDA of quarter quarter, chemical as the fluid our increased which seasonality second quarter two the pricing, increased continuing equipment compares had last in SwiftWater a in quarter later and Neptune seasonality from in $XX revenue seasonal million Completion Revenue quarter. from potential quarter compares products the of and post first were but adjusted $XXX we million Europe across compares first Fluids strong year. We step-up million million strong second the XX.X% operations from and typically the second was Second EBITDA of the and European and higher from quarter materially operations first was driven full European CS a quarter. to in by lines, business services $XX.X and million compared $XXX the on activity $XX.X which or and EBITDA no from $XX.X and sales, acquisition. was benefit sequentially and million first quarter are XXXX. $XX the products all of We better in the utilization, a the progressing sales, in overall Revenue typical this for increased demand Consolidated revenue.

were sale CS $XX management EBITDA the this flowback in had Our increase margins million million and up benefit and the one without any XX.X% was Neptune early small revenue Water quarter. activity. quarter. second from the first of production facility We services of $XX quarter

SwiftWater XXX increased the EBITDA points from Quarter-over-quarter, We only basins versus a quarter and revenue. second of by this XX.X% full margins results. benefited a $XX.X strong Water all flowback first from of or revenue of across activity one-month million million SwiftWater quarter. and also SwiftWater distribution $XX.X quarter quarter was full the basis services in year. EBITDA we and of in second had adjusted adjusted quarter of

our gave included were of quarter at embedded SwiftWater, guidance the acquisition. quarter that from has months million SwiftWater. of the one-month annual million first to $XX adjusted three second $X.X of that EBITDA the annualized $XX outperformed the communicated SwiftWater expectations of while of on million EBITDA for for second of we in included time the we million The $X.X EBITDA quarter the

over in $XX on offerings, million for of given and past We months. the to our revenue The topline from benefit adjusted $XX.X to expect to primarily in compares additional fleet. proven compares in quarter is continue them in million growth EBITDA services, higher deliver to management Compression and our quarter. $XX.X the equipment Basin strategy compression be cross-selling several strong of successful services second the opportunities to first million first million the on and the quarter. results was coming has Compression $XX.X services aftermarket demand TETRA the through Permian pricing the sales water

increased more our recovery, improve TETRA's become increases look price ERP the roll strong. over, ways from from return higher initiatives several continue to for to efficient management efficiencies. financial plus equipment traction seeing for equipment new from a leveraging new sheet reduce drivers demand investments installed perspective, balance to in to and are We capital Despite system. we recently and recent remains balance market From as Those are activity, contracts in sales. addition aftermarket cost, sheet

with cash revolver on million million of and of the $XXX of as million of a have availability We hand end $XXX $XX June.

organic access ample have inorganic, arise. to capital We to addressing the as on or opportunities they

end Compressco The maturities. million a quarter, debt was new the or X.X% the fund outstanding $XX offering $XXX of completed and investments, asset For CSI and CSI to near-term capital credit. is achieved that for of agreement earmarked and second million CSI credit the without unrestricted maintenance are CSI with no the term from finalized In expected Compressco $XX be coupon. covenant successfully Compressco, bond is June, returns secured a higher. we base working cash needs This the million offering letters seven-year of where after XX% to implemented bond at structure Compressco had recent

done also that CSI like Now a the on TETRA no perspective, and separate. Compressco's faults, no and guidance remind no distinct again TETRA CSI we cross have are between to debt everyone guarantees Compressco. and are collateral policy debt the There cross From and I'd following.

revenue new and for increased First, $X.XXX Compressco the between to billion, to additional between our $XXX million million CSI guidance million, we reflect $XXX equipment be full-year from expectations of sales. up and and prior $XXX demand

consolidated upward adjusted from are revisions full-year million full-year revenue and adjustment equipment CSI higher flowing EBITDA The EBITDA $XXX sales. the $XXX adjusted guidance to increased have through Compressco's and We to between be million.

third During as CS previously from Permian any quarter, the the award potential the offset revisit projections and and formal concerns TETRA the impact we we'll Neptune of discussed. the Basin projects timing

the half adjusted leverage between half We quarter have is in times and first CSI to improve this With expect half first the distribution higher Stu the capital than be be half X.X Compressco, expenditures. in mentioned. in of to and the have Compressco's profitability earnings fourth CSI we I lower the X.XX X.X X.XX be the maintenance X.X to and adjusted that times X.X higher indicated ratio the second by of reasons CSI in the of further range when indicated Compressco's EBITDA. between year of the on expected the by driven year, to yesterday's EBITDA the and second XX% trajectory, annualized that from call, previously year, for coverage year-end will XXXX approximately improve to measured times year

being funded read that have guidance offering. bond that, very a you the All basins with release I'll higher, this in from CSI all, our all than recently is compressor capital segments, outside supported to strongly $XX many on back details for about all the the All water is with on participating increasing proceeds million we press CSI the solid to projected turn modestly $X expected CSI it to the attaining. Compressco focused I with the testing. the systems. approximately Permian are updated. are improvement completed from quarter the Stu. encourage gathering in full-year supporting be also be of the all we given morning supporting Compressco our the large are on TETRA prior higher investments guidance, expected requirements Compressco we in are million for management had the over to capital across the focused flowback quarter. the All the We customer With commitments. investments returns and prior

Stuart Brightman

this questions. the At stage, we'll open for Great. lines

Operator

of The ahead. Instructions] first question James. [Operator begin We the Praveen session. comes Narra go will Please now Raymond question-and-answer from

Praveen Narra

quarter. morning, Good and Thanks. great guys

Stuart Brightman

you. Thank

Praveen Narra

it in seems the on Gulf we kind But guys frame. seeing Mexico start of about multi-well on what potential customer? over there? give seeing are clear you're the for us that opportunity what a looking project what a there here? Is pretty Is time on? XXXX. you can XXXX a and It of for XH guess, you you're new you're you can little bit just talk color more working Can Neptune I

Stuart Brightman

of a our product. Mexico I about the Yes. Gulf war. not We mean, Neptune. couple That's That's talked elements. of standard

that. So with. in been an XXXX. awarded customer it deliver We've worked is existing it we've We'll

XXXX the go in into much larger we'll we with started than Gulf So Mexico of a year. the backlog

So point. that's data one

we as two point, data and cash second year. several to discussing collect of The about been the the those this past quarters in expect projects the we've status Neptune talked the execute and

One Halliburton. of fairly those, as stage drilling give some it, going on let a the the marketing XXXX, Maybe that. of the starting process. had you with funnel Brady, a the I'll and third we opportunity the we lay said, And on to larger, advanced a Neptune the at look was forward. element be at certainly for out And color can broader middle base meetings first in we've Brady you and little then plan the in been you've color. will much But We're think set. add

Brady Murphy

Stu. Thanks, Yes.

jointly have of we of we projects we pursue landed in those session new joint a markets and projects the that. around press had, we've out world. the and but various governance the had under So throughout will agreement, spread mentioned our terms are on of a those with as subset that Halliburton, TETRA and pipeline release, our significant team first between that Identified employees we've

Praveen Narra

Okay, going to perfect. follow-up question. That my was actually

that. for much very you thank So

you more I that thing, solution? Can of – are tell now, guys they integrated on the sizable you a other have tests guess. us little you these little integrated guess, awards scope? bit was have a bit mentioned the projects us give true projects, that that? slate I Are the The interesting three on Can you

Stuart Brightman

Yes.

our the York handling water saw our the also is due that rapidly transferring the people-intensive. investor presentation, is integrated and and location fracs to fluid that produced flowback and water aboveground recycling the various on used water pretty operations introduced water of that growing if management So through encompasses All of you produced produced we it customer exist transferring are locations in strategy, which transferring to storage wellsite to New desanding, on then being amount those wellsite, the and

bit Our cycle. solution a of involves quite of automation that entire

we in and integrated projects cost, So efficiency, types reducing talking mentioned that were of more pursuing earnings our what those about standpoint are are release. from an people

Praveen Narra

much. you perfect. very Okay, Thank

Operator

go The of ahead. next from question comes Sean Meakim Please JPMorgan.

Sean Meakim

good Thank you. morning. Hey,

Stuart Brightman

Good morning.

Sean Meakim

number economics of magnitude how to I line general of you on was to on I'm to would little sounds revenue you have projects? a to the projects. would any something trying capital think size this deploy? across using thinking it think, interesting. and incremental sense, in great? little hoping integrated opportunity basins? the of Is incremental very continue maybe us a about Could Or I equipment? much replicable a insight bit that's more capital. on that just existing maybe It the is give customers be better paybacks just potential, the the I'm trying thinking of into a

Stuart Brightman

would good. capital attributed of think, that to the Margin-wise, business, to profile. we increased out, many a think Again, as And getting on I year Yes, were we're in We proving We're Brady for a in, capital investor getting It's existing the mode. we the in Permian continuing areas the close benefit the next were year. excited you cases, the utilize our We're with capital-intensive. advantages. did most in guidance it's We we're reception. it's fully from that equipment, several job water our fully accruing stage. think say, jobs. that discussion articulating as change there's the not fourth is part in major capital normal incremental good very execution to in saw, day. the awarded not point so I full good rolled It strategy. of We're utilized of comes the I a to mean not out We rolling the the things. quarter. And capital. – some is scalable. out overall, expand

we But to see continued the average we legacy it's And received. that Tetra – it's Permian, of and and is where I it's the good, the very SwiftWater the recycling, of segment. strengths integrated automation, And Steel, organization up the great a you evolution margin think from holistic able combine the for the just in Tetra well have a it think been with the will strategy, so solution. predominantly it it's technology

Sean Meakim

for thank That’s granularity helpful. little feedback. Yes, we great. capital is just guidance see Okay, the touch a improvement free in that Maybe can results Good Can cash the provide line? the what a those and flow? better of working you drove more for bit. top on how given you that fairly restrained working on to back capital the moving the year pieces influence of half the

Elijio Serrano

Well, lot the seen a capital. in we driven through and three second Sean, first the in you've quarter, things. consume It's sometimes that, quarter of historically,

that And activity in break then revenue first in see occurs. Canada. the the We in start spring ramp-up monetizing The is all quarter. typical that the up you second

and late business, Northern The third with quarter. in begins April. that early the our see the chemicals quarter, in end into the and significant start third in of invoicing in thing second all is way the it ramp-up revenue a that Europe collecting March, We you back

of consuming the of year. we the those that expect build see will and it. collect ones the significant QX the the half partially Neptune been benefit half from So second of in ramp-up have That we'll in QX. generating the had that impact of the Then second been in a and very be to projects

Sean Meakim

Got it.

you, great. both. Thank Okay

Operator

comes Jacob go Credit The Suisse. Lundberg Please ahead. question of from next

Jacob Lundberg

guys. morning, good Hi,

Stuart Brightman

morning. Good

Jacob Lundberg

the the full-year. on question Just on down a drilling guidance quick

standing were for million there activity going you caution would like? color guidance over $XX just from this XQ drove example, to water, that on to Is $XX – plus $XX what is be your look like, half So Permian if which today? second Or at guidance results to in Any not helpful. EBITDA, just is million. what levels, flat revisit million guys

Elijio Serrano

a really during on talked to that, going We're So think, up some opportunity. a the to reassess Jake, management to did and takeaway profitability picking upside would the approach, sure any quarter projects take address integrated We and we water about And next continue testing side. you'll the we impact question. good the our flowback solid quarter the us other have testing. cautious have the impact water that concerns make flowback the when opportunity see of don't then report quarter, with Brady outlook.

Jacob Lundberg

Okay.

of say just baked So bit fair to a conservatism it? into

Elijio Serrano

Fair to say that.

Jacob Lundberg

but then Okay. their of – result, at kind that business. look up going SwiftWater could just was legacy materially if relative the or XQ us wondering implies color. – I secondly, growing you bit you rate XX%, a about looks on rate at if growth to like And gross of just What's annualize if lower little it's there? growth I a sort the the in give

Elijio Serrano

The legacy its business well. is holding own. doing It's

of benefits double-jacket, base customer the that STEEL access that have the SwiftWater with that TETRA seeing is One didn't lay-flat we're hose. to across came

this it's customer SwiftWater be matter versus TETRA customer customer TETRA we're further is the of base the going versus So what assets base we're in STEEL to to harder And project with as both. a of, because a because quarters, moving lot a offering, existing to So SwiftWater TETRA-SwiftWater into pursue collaborative base a and the future completely reported we're integration, it And an hard it'll forth. new benefiting one we is to and in move and assign a you opportunity distinguish be we that do supporting back significantly. people, forward opportunity? equipment a our mind or and As brought keep integrating to service is starting offerings other base that technology get the in employee it's this product segregate area

Stuart Brightman

think is the lag to addition We've were back in we've margin thought strength basins, continued other Again, within would that just But the in they I and the to said year last water starting the we're back it Permian, said testing seen margins to seen one that, call, enhancements that of has. very to to in to over we on margin Jacob. as the which strength see, points side. we've add move the domestic where I want is, XXXX. in testing And starting think, in the encouraging. the strength And we the we progression, on to construct, across get

So as that very encouraged progression we're well. about

Jacob Lundberg

Appreciate guys. the Good color. Got it. quarter

Operator

Kurt The ahead. next comes from go question Hallead RBC. Please from

Kurt Hallead

Hey, good morning.

Stuart Brightman

morning. Good

Kurt Hallead

updates may the whether to as year, Permian. testing? maybe production relates that conservative especially or to and might some be the opportunities Appreciate discuss North have be Completion that it of Gentlemen, Fluids America, worthwhile approach the the thought for it outside you I

Stuart Brightman

can I I'll start it. Yes. Brady mean, then and to add

predictable. I look think would when say, in comfortable Europe. internationally, very our be we very – continue in It's business chemicals we I to

very had would business to we're North Sea. the legacy quarter strong some in Fluids positive our progress say, our West business starting some seeing expected, I Second that. Africa. see in in seasonality And we're would legacy the the we feel we so Fluids areas to in trends continue be

Brazil the even I we to little a The start opportunity to continue. that the opportunities sales up and change some this to look Neptune big with we set that at expect be stronger scope bit is think of year, funnel on will as working Halliburton.

in think time. global fairly I non-Neptune on quite particularly last base I period continues positive piece, certainly basis a to mean, of at I direction offshore. is fluids a offshore think the to the starting move business being grow, the after

Elijio Serrano

opportunities particularly add No, what good do Argentina. only other flowback see to mentioned, We water and side the I us. very is thing Stu some on would the for

a of as well. interest major getting solutions here water in we active the in quite Argentina. work there for Some not quite the And of are our we're U.S. bit IOCs that in

So that future. a in we opportunity as see the growth

Kurt Hallead

in this opportunity Maybe Neptune agreement larger that a Argentina focus and do to on? Is right, and larger with maybe so Argentina, marketing or similar business places a Halliburton business. joint CS like service getting your foothold with just have for for context, and if of presence we the diversified you the feasible? company water an much side or something there completion in the Is

Brady Murphy

it’s I think possible. a I don't it's for us. must-have think

presence must-have. I think execute from we're have currently, possibility. I We that future, about water, the own. that we a And a but offering it's our on look the just Argentina, for recognized in that's may integrated that don't in at spoke believe we could a where we mean, we solution.

Kurt Hallead

analysts Compressco conversations, their dynamic prior in kind a follow-up, maybe Great. for laid you accord. to think of of to parts be now? otherwise, kind think the Do on assess in parts do think guys the the And as at look you value what would and kind investors of And dynamic? of out mapping might investors that to of you you have How own then – some I is TETRA? on sum missing of over

Stuart Brightman

like we we TETRA. through They parts – no going to reflected. cycle. we've the solid I differentiators. clean a compression got businesses. isn't like side. the have got We've the all Yes. talk balance all sure, sheet of on covenants We've They're a about think others, to we fully got on full But continue like that. good always feel three sum bonds with I mean, focus I'm on

world. going We as in over, And MLP and will structure think over on at look how the And the I be years, done. the always parts, some a the and that of something to of value, a others MLP maps at. and we've the have we'll team, There's see that the what shown, continue evaluate. lot leadership continue we'll looking we're things look to

the $X up, short the seen that in compression seen EBITDA margins term, business. the We've services. think, on laser-focused particularly in we're on go sequentially, utilization. we We've increased I fact the million

short That's we and and feel intermediate on, the what about really good grow foremost. first focused we're the So profitability. opportunities business the and just

Kurt Hallead

Stu. Got that. Appreciate it. Thanks

Operator

The next from of Malloy go Rice. Johnson question ahead. comes Martin Please

Martin Malloy

Good morning.

Stuart Brightman

Good morning.

Martin Malloy

about a that? ask utilize be In the at with looking about maybe Could language applications particular, about for there? the applications. Halliburton. new product other the In some there press scope that would you what I little bit for project wanted potential more a talk base to potential release, as fluid – Neptune would that agreement was

Brady Murphy

Yes, Martin.

joint So is we address opportunities together. agreement The Brady. parties jointly and we table, bring work this that to does development on projects where will both the identified technology

Neptune, market. the drilling it as to clear are fluid, while in Fluids Halliburton And The drilling. particular fluid. like are As with benefits applications. is Completion One, reservoir be you certainly, brine there as as well as to fluid, Neptune business market great your technology, having drilling some has a relates impact base huge a would you're reservoir know, Fluids combined clear business. a drilling our There a on

of be that a project that one And so may look would we at. example

prioritize, point. at one We're be phase have this that not discussion example development we'll would potentially with still initiated the the projects any but what We projects large in a of application.

Martin Malloy

out then look give in insight us some XXXX? in customers maybe having you're to you as And with you can Neptune Okay. XXXX, the conversations about potential projects

Stuart Brightman

have have over TETRA have infrastructure, on has where as been the projects. I've geographic for with and put in in mean, of those Halliburton discussions customer pipeline a some Since significant areas. particular a place, that taken in to a been time footprint pretty Halliburton those place, customers relationships subset good we a Yes. mentioned, mentioned of opportunities decided numerous prioritize agreement has I as had we we projects

Some of in materialize XXXX. those could

Some beyond. are we're identifying. long-range, of projects inXXXX are and mostly These them that well deepwater

Martin Malloy

Thank you.

Operator

The of next and Simmons from Please go question Watson John comes Company. ahead.

John Watson

morning. guys. Good Hi

Stuart Brightman

Good morning.

John Watson

would calling missed but this, European in that I apologize If the QX if was mind chemicals you contribution so, I quantified? out?

Elijio Serrano

at $XX million So a QX, chemicals QX $XX the different. no million cash John, was historically, year results, to business, when revenue this by step-up you look and our driven is versus

John Watson

great. then there testing into Elijio. the baked are that the Okay, rest guidance? the Thanks Super year, facility And of sales production helpful. guidance for any for

Elijio Serrano

year. the of half second the in Not

John Watson

on Okay, perfect. talk are And trends wanted there. water the to into sand-viking about segment? you're I management flowback you doing management, sand you dig then within sand and what in Can flowback and seeing

Brady Murphy

this Brady. Yes, is

management development – in the are couple particularly fully we development finishing being sands XX% we're micron current do sand a that Basin. we technologies sand-viking We expect be sands we – commercializing We the couple are QX. assets used, I in in of that at a engineering are up have And of some Permian of – the still be. the of that would and and We deploying. that for in plus tweaks have tweaking to are that the we'll say, stages to

existing – other improve We desanding as efficiencies that the technology technologies to in the to will we're works, continuing and modifying flowback have well, our few to develop. a this is area an

John Watson

guys. a quarter. good great. Okay, Thanks on Congrats

Brady Murphy

Thank you.

Operator

from comes Please Thomas question Riley next FBR. ahead. B. go of The Curran

Thomas Curran

Good morning, guys.

Stuart Brightman

morning. Good

Elijio Serrano

Good morning.

Thomas Curran

legacy million water If adjusted and $X.X XQ. the from million my for so to it $XX your is looks correct, million water for first for SwiftWater, excluding increased division, flowback to like, million. math your $XX.X flowback $XX quarter from EBITDA And surged services, and yet revenues the

margin drivers for you the water correct, increased and the So adjusted XX.X% in legacy from behind to EBITDA those could were to profitability calculations such speak increase flowback a XX.X%. legacy If are significant all of what

Elijio Serrano

of across the utilization seeing water the States. multiple in testing as business, flowback higher flowback also, in Brady Basin, much that outside the even Permian all We're the seeing better basins testing that enjoying SwiftWater. the Rockies, getting of And in bit of for in utilization. beyond better pricing, Northeast, there. business geographic success, and seeing quite in the a our getting segments MidCon, an The performance We're all better also we're is we're Thomas, mentioned – United equipment in So pricing on side. they're all areas uptick example, overall our the earlier, of

Thomas Curran

where How where since And – is then pricing pricing, June? relative much rise it to June? how it it to did evolved turning to March has bottomed? now so And from

Stuart Brightman

was that the there from slightly second first to quarter double-digits quarter. first take to part of second question quarter. I’ll believe We quarter from first

out to quarter, going bottom, have have From Elijio that to later somewhat. Although, cover part flatten the it to of not I'm – the the one. we during ask sure. seen I'm

Elijio Serrano

are that's period versus would we're the at say above is site. you the So and slightly here before and duration that they intensity XXXX, the again, right the from value, and assume if the calibrate if that, of volume the of numbers. gas, the also were sand the the at And just of moved water downturn, or being driver work, those time that XXXX you the value, today where take I we job

two we at go to of as site job and a past, stages. weeks job to today, the site So multiple lack and our not significant in That mobilizing we're if mobilize one on through a demobilize the having then seven we'll And five, impact weeks, for four, profitability. and demobilizing at utilization project. the another six, were I is

practices it's margins. much that's and both price giving So us better

Thomas Curran

this geographic be your flowback, of growth to the the most in that’s the XXXX? the is four move basins next derive what time much Texas, then revenue Permian, it the than the then Okay, potential? the which how share see by sticking by you do Where biggest? of of crux happening. where could closer and to outside year, water and presently with – you South time Rockies, markets other gets non-Permian the of So could and Northeast MidCon from division's total this And appears And topline Permian? to

Stuart Brightman

forecasting cycling good we've Permian, said that of those out is, of to capacity. to on forecasting to you strong say again And side, feel message we've trying on. some the I but not the the that, makes it's takeaway flatten in expect fact, much to with And to well good to other as to and our strongest, it leave areas I involves those detail But without in not we confident as Permian, get year, continue things give customers But the next as mean, the in I Appalachia we growth Permian about and that if up. both of in Permian one again, are the you mean, that margins I that flatten good Yes. areas were before, would only if were were pie color, I'm Permian. is certain probably dealt our very feel if, pie of are What grow. because shape. year? piece, outside areas that the MidCon percentage the that next in I view are They've other once to are out out, happen, water our we're businesses just got shape. the we and two too were think, total want the the

Elijio Serrano

the made in that to to of would the all segment they're Rockies first I Marcellus add investments concentrated. the we've We've those areas. capital the capacity Permian not up and in demand incremental Thomas market in And that investment keep into with the half in year, the the

Thomas Curran

I’ll encouraging very End for Thanks here. Correct, of back. my turn fueling Q&A it guys. questions

Operator

to over remarks. conference session. back to Mr. for would like the our I any Brightman [Operator turn Instructions] This concludes closing question-and-answer

Stuart Brightman

Great Well, few questions, as quarter and to third the updating we'll a months. look on thank always, group you. the in forward

thank So you.

Operator

attending Conference for presentation. concluded. is today’s Thank you now

disconnect. You may now

TETRA (TTI) 10 Aug 182018 Q2 Earnings call transcript