TTI - Earnings call transcript Q4 2020 | TETRA Technologies, Inc.

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Operator

Good morning, and welcome to TETRA Technologies Fourth Quarter and Full Year 2020 Results Conference Call. The speakers for today's call are, Mr. Brady M. Murphy, Chief Executive Officer; and Mr. Elijio Serrano, Chief Financial Officer. in be will participants listen-only mode. All After to ask Instructions] today’s presentation, opportunity an be will questions. there [Operator [Operator Instructions] Please note, this event is being recorded. like I Mr. now to conference the would over turn to Serrano. Please go ahead.

Elijio Serrano

a TETRA's morning, call. deemed results like to TETRA may contain based to this These you Kate. statements year of on that and I'd and of many certain statements the are company. and you subject factors. number be by call of beyond control are you, and of on full forward-looking. Good are for These Thank be joining statements risks conference fourth remind number that analysis based quarter which assumptions a XXXX are the or made uncertainties, to thank may and are,

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

substitute for accordance financial of website non-GAAP to a In gross or flow, measures nearest addition EBITDA, measures. of public adjusted to information course non-GAAP measures. financial release results other within complete of our to margins, These EBITDA, should not are prepared period. financial Please GAAP call, adjusted in our refer be may financial refer and margins, yesterday's the with we in ratio or the press adjusted reconciliations to free EBITDA gross context leverage GAAP the cash considered reconciliation for the the for

turn filing to posted days. XX-K our coming it our to in announcement In addition me be that, Brady. and went press release our over let With on yesterday that website, we'll out is the

Brady M. Murphy

to some the full quarter Compressco, to call. will provide current CSI and on I XXXX the financial Elijio. and flow quarter it Good you, our information morning Thank sheet. the for costs, earnings to over balance cash without and turn welcome then year and highlights reporting outlook operating and Elijio TETRA SG&A fourth Technologies and everyone, summarize

thanking year by management another this again and good Let all challenging delivering me the to year. past quarter energy market team relative very the start for very employees strong the a TETRA and services

XX% than US macro quarter. XX%. flow accomplished adjusted For for XXXX, EBITDA by and every flow million management total adjusted the with year over we free Fourth in and positive the consecutive delivered total accomplished continuing adjusted as decline delivered crew an million frac revenue over generated by of quarter of increasing seven onshore cash of is cash was free environment, operations backdrop of exceptional a was count flow free quarter of our EBITDA, cash despite quarters. rig a we positive through seventh year-on-year from the reducing that This and with of EBITDA $XX costs, $XX our have This basis points. more those decline of active last cost by decline macro margin XXX XX% year measured adjusted a year, the energy

oil While the positioning able and company for low-carbon energy our gas of were markets. deconsolidation delivering results, to recovering execute these and CSI Compressco, in successfully including a key we participation the meaningful market also strategies,

chemicals the value a be Our offerings segments unconventionals; importantly has focus in along participate segments, the positions resilient and as chemicals The been completion our proven US differentiated on our our vertically challenging offshore was of with global ended sequentially, markets improving and fluids innovation highlighted in year with most discontinued operations deepwater; each just balanced in free all with again and cash of downturns. of in quarter integrated operations and basis revenue with lower cash industrial generated us in like market as international flow an adjusted business XXXX, but has model million $XX to including by to international; contribution strong from and adjusted which TETRA points. million up million. XX% of of activity. quarter the from quarter continuing adjusted improvement quarter fourth the recovers. US, EBITDA cash liquidity of the and $XX Revenue margins XXX before $XX slightly million, Fourth of the somewhat was sequentially offset EBITDA growth revenue was $XX for in

quarter For revenue operations, year. the last saw compared year from of increase. X% growth quarter-on-quarter frac modest XXXX, the million of crew continued of flowback improvement million the full XX% we and sequential from cash $XX generated Water in an $XX fourth to

a contributed adjusted on quarter produced Our count XXXX are Basin, crew per XXXX Permian our XX% added on in positive $X.X treatment, recycling Permian fourth increase the integrated water our another deliver leading in in one-third new stay operator and and peak. ability Adjusted on a increased every of still and water clearly to to EBITDA margin that by million of fourth was the water million of and a in of management, sequentially. $X.X which with in recycling customers barrels We adjusted track, day. two EBITDA the the new E&P sand water water the XX frac management strategies produced EBITDA capacity automation and will contracts XXX,XXX quarter quarter

currently management to crews, provide currently We and quarter, we oilfield above treatment water of tracking we solutions. that we XXXX, XX our transfer as produced in frac believe Based working six different are fourth in And start are market that service Permian leading with averaged rate. water water the full-cycle integrated E&P customers. run we for the Permian Basin. partnering on were the we companies leader projects, recycling the XX Basin with water In

the key BlueLinx to System projects and these integrated for efficiency financial benefits a Control deliver is automation. of enabler Our Automated

deploy customers SandStorm Advanced and Cyclone to regions. to new TETRA our continue Technology We

TETRA of of CS fourth from our Standard XX% start large benefit XXXX, crude quarter including not international included throughout due project. year that declined decreased activity wells increased between was The the a a our the States, offshore Fluids XXXX the prices for Neptune XXXX. project fourth We their and first we pushed original fleet half count margin XXXX year about fourth sequentially a adjusted in are on Completion As TETRA now the into and in demand, of additional completion were quarter year. these which With the points fully we of of was several and investing delayed WTI Completion this fourth customer meaningful of the We're the XX.X% & recovery CS through third getting of and December high & the Neptune. in Deepwater customers Products with start to half in margin did the XX, sand release, the Argentina, basis United fluids a margins $XX XXXX, discussions those this filtration Neptune gains pandemic points increase that project. averaging believe automated the are press this for be evening's adjusted of excluding a EBITDA mentioned and Fluids down EBITDA dates. our sand quarter. Products EBITDA benefits than our engaged oil high adjusted Revenue primarily in where and with record quarter XXX segment in in executed global the technology, second rig of a sale start quarter March agreement. market the approximately share optimistic without for will in effective quarter better recovery will customers XXXX. includes basis XX% of and has XX.X% of replanned. offshore from the last market has several XX% sequentially, our the CS we CS outside from projects, capital Through for for bottom scheduled benefit the are for highly Neptune projects, to XXX planned year. end ended secured the assets utilization a of repeat first the Based also by ago, CS Lithium Neptune

lithium we XXth, opportunities. initiatives chemicals mentioned fully X.X business. energy in challenging the offset in impact the for On the these of issued we're bromine to on two, conditions highlighting working appointed XXXX, resources, reserves executive release the business Coast for period segment XXX,XXX for We're of P&L inferred economic approximately calcium agreement. up $X.X our Lithium. partnered value leases, is demonstrating frac well sorry, and of of to expect equity In that saw and this tons in completion as part receiving until net the press focus industrial and and in This this even the We our and record quantified resources, significantly cold high remain to business leases. in will from the for of but XXXX Europe. was Arctic-like And Standard we're chloride East lithium sell and made uncertainty. tons business yet a we compensation quarter. extracted from these of January benefit Revenue estimated million Southwestern industrial weather for strong the we weather, on quantifying Our from of -- our of not a recent I'm being lithium Europe senior us, experienced from expecting low-carbon for be have recover activity revenue of The strong most a somewhat continues curtailed. solutions our this with the chemicals impact strategic the which of have U.S., may Lithium a to which million and XXXX, perform our we this seasonal business sales benefit the U.S. Arkansas XX% cash the Standard from and resulted impact the

in September that next nascent A portion discharge four discharge at storage qualifying hours energy states to the XX-year energy decade market flow also and farms to grow four Zinc and in XX% we class to six zinc-bromide energy hours the for have between market, side, lithium-ion XXXX of over year the relatively companies XX show risks investment XXXX, energy storage over meeting new great underlying a gigawatt with Mackenzie growth this rate battery engaged storage. who storage representing promise typical market application are a high-purity which and gigawatt by report bromide battery to for and storage Wood a on by such process slow billion still projects solar the On compound but of batteries, different currently with compared are XXX a from grow XXXX. deployed our charge requires XXXX $XX hours the times. that annual as wind market is three the XX

advance with Given mentioned in confident calcium our the technical products arrangements. recent carbon qualify we battery uses exchanges we flow we will commercial advancement purity high our chloride. and the OEMs, our zinc that capture bromide And specifications and to are of highly finally technology

understanding the and of January the a including we'll and owns patents memorandum our these technology we've company We to initiatives in as open they key company exciting to successful These for you turn are additional with our color capture ESG we and opportunities to in very to currently earlier Standard important a and to that, some our keep our Xth, in solution. strategies continue mentioned announced Since provide continue will gas both and evolve. use discussions the put in capitalize place of are around this it Lithium. beginning at three, business. reducing I'll positioned that products four, grow at; results updated levels; market balance numerous the has TETRA our With battery with by actions carbon and committed one, shoring and chemicals remain progress operating business made to industrial up of areas. and increasing and lines; a efficiencies; up Elijio sheet. of aimed on our two, and simplifying on TETRA each storage Board business strategic the all meaningful over our of it management initiated I to segments partnership recovering and Furthermore, We've XXXX oil our questions. costs applications, all strengthen strengthened The for that execution and of we

Elijio Serrano

our at specifically yesterday reported the our within Thank range midpoint Brady. we of results. are January of pre-announced of XX and The pre-announcement the results more you all

be of and With of also will without prior before IDRs announced reflected TETRA-only All Revenue CSI CSI follows. and in XX the CSI Compressco we and reflect that the as adjusted partner the on operations. will GP of The results discontinued will CSI January reported announced income results taxes statement limited units operations. financial be XX, sale Compressco be as million our XXXX will Compressco EBITDA Compressco. historical discontinued income CSI years as Compressco the

of future show items and XXXX we those TETRA-only the CSI line to the in we report held-for-sale. for first prior The year, quarter own. Compressco a at release allow issued that of liabilities price noting results that held-for-sale. will excluding that of will CSI the of be trading the reported CSI valuation still the our CSI because still Given for the CSI the or quarter of is CSI CSI discontinued that free the million previously The look of will to impact $X.XX. statement Compressco. as Compressco flow the future the general cash years will impact TETRA-only held-for-sale days cash of results given Compressco partner flow was This yesterday, When that we quarters, at common units at will when XXXX adjustment the was will we continue And prior were sheet the the as the operations. and impact liabilities partnership item Compressco of XXXX. years of balance the XXXX reflect be Compressco the Compressco will include various price end or at Compressco income will XXXX the Compressco CSI prior of include And press quickly we the of the continue include assets and XX, end units The at of recorded units for general this In loss CSI each statement of as to flow income and that all prior the sheet we were sheet continue in the excluding as of -- Compressco of partner and unit to X.X own we reflected as results end statement. for the will be sold be income cash completely all statement Compressco. general CSI CSI and balance assets increase we partner decrease of March TETRA's end January loss or exclude Any exclude will at still the general TETRA general the the Compressco from will income be The and CSI balance not first in as liabilities in by assets were partner everyone yields other periods mentioned items. mark-to-market we XXXX.

we to $X.X price of reflecting the this materially, quarter, million, the Compressco the $X.XX price has own yesterday. is given unit CSI at far So a unit $X increased of the market CCLP of gain date million that as close of

what this related. evaluate will long the TETRA's price and we asset. million nonrecurring which We at we quarter, $X.X of might were $X.X of million monetize charges, $XX.X decision million cash incurred on In how fourth

very and a salaries match remain During and into a the XXX(k) temporary implemented Board, quarter the our We furlough structure. by focused year suspending and cost reduction program. reducing on permanent we the of series actions implementing cost optimizing fourth across

monitoring. keep Dorado into into locations management we permanent management eliminating automating agreements El our by several shutting costs to at to not operations to senior that lock of our several multiyear intend structure acceptable returns Brady and and wellsite facility; mentioned also especially executives supply site in a earning capital positions; included that including streamlining the aggressively remote business; such well entering We recovery. down favorable us our staff and as and significant in pricing, reductions implementing implemented were as the cost at chemicals reduced digitizing technologies long-term This

these XX% million year-over-year. million XX% from cash As as revenue $XXX when a impact to $XXX costs result reduced or we of actions, by they company-wide EBITDA declined

for or cost that the other reduce year we $XX items in revenue. year. were only model structure points. allow cost decline to margins XX% by the adjusted company-wide million EBITDA This in cost $X.XXX. we to to With cost, Our a margins words decline $X for us have improved XXX by rapidly cost our of year-on-year revenue, basis SG&A we In by relative how unusual back scale in down every down demonstrates reduced SG&A X.X%. cash in respect Decremental actually flexible XX% a adjusted

were from On the was almost ago. compared working fourth G&A we million $X.X corporate fourth compares corporate quarter costs and by a quarter underperforming was expenditures. X.X% quarter reduced quarter of $XX Corporate the and year To to our fourth generate capital XX% million, a down down year liquidity, G&A fourth managed in an basis, revenue. annualized to last sold capital, of revenue year minimized ago. G&A quarter fourth aggressively XX% being Our from the assets

made cash sale $XX from of previously or Energy such flow total Partners from capital As all that were we This that the compressors TETRA this of sale capital to million underutilized without of that was previously announced the proceeds cash Also expenditures noncore capital. benefit assets a XXXX of in million $X result, was the $XX we of and we sold $XX of million. the working million $XX.X Spartan monetizing than million free TETRA-only working XXXX. generated assets included flow free owned. the year more

In flexible of keep minimum without year at expenditures the that flow we demonstrated that working generate have addition we capital a in having monetizing can cash even cost and working such free as benefit a positive necessary, capital capital. can assets difficult aggressively a keep we model, to manage

at have working sale following total at debt capital a proceeds net of we and receipt the to to million. from debt of the end of And As monetization XXXX assets, result Compressco, end $XXX we of positive million the reduced and million selling of CSI $XXX further noncore the XXXX. EBITDA of underperforming reduced $XXX from

the clean XXXX further the the that that have end with further We cash at before successful of that and from the $XXX Our Compressco, expect down a XX, company quarter, since transaction equity the bad of a in shares our certainly further can believe stream, of be reducing with we hand business of term passive to to expense. price beginning year January to the technologies the $XXX amount revenue loan of cycles, of has flex $XXX end be a million. differentiator in on can pay of X, results fourth good the a in this first energy funds $XXX mimic has our the XXXX in that will in model million loan highlighting from the be down believe the been we structure million Since addition interest begin term on $XXX our believe our and We flexible in and have times, even can year, the the significant TETRA. markets be and model our and movement introduce can diverse cash better the the cost the leverage that. communications market, we'll to that, the a increase all monetizing the in reduced community. by buying the would to and And stages its and demonstrated moves on of can to indicates volumes million and seen completion January have to in working June. during the following believe since we rapidly our cost That those. up CSI trading simpler increased flow of infrastructure We of from addition very cycle top to in has The us a the we in growth the that value we create support activity communication generate early are recent without model the index included of business for deconsolidation understood in strategic free investment cycles, in its quarter positions of our that have an of the as capital. initiatives equity share top public in end in cash on of demonstrated preannouncement Russell million we this ESG difficult our opportunities all Russell value to year that XXXX and do have generate of we announcement And ability benefit opportunity.

flow will you I organization read metrics. encourage focused streamlining yesterday and our and on and cash that financial all to press additional We debt. further issued details supporting the we outstanding generating the reduce operational remain release free to for

we'll Additionally, XX-K days it open TETRA the will With coming file Kate. up the SEC. that, with the questions for in

Operator

first is Our Instructions] Gengaro [Operator Stifel. question Stephen from from

Stephen Gengaro

good morning, you, gentlemen. Thank Thanks.

Brady M. Murphy

morning. Good

Stephen Gengaro

two So we a do of as first into are I questions, the we -- first a but think the the should think kind into about about there's the quarter? know of little progression moving the areas, we quarter, progression After some be segments? in the seasonality first what pieces few probably the being, how the that contemplating in

Brady M. Murphy

our say Weather portion of the weather So us different I the seasonality as business. From our terms have peak seasonal know strong seeing activity. from extreme in I'll into it QX, chemicals business, in segments supported you And take then it's in terms picking strong. that we us Europe. has up Stephen. supported the of should has business even -- But looking industrial and of our head is very we as

assess piece we very seeing that some January momentum everyone we and out before in terms week We work a dramatic and water pretty were a calling of very good. like on trying reduction or significant completion -- for flowback are so. us that, to activity, We're looks still had in back we impacted resuming freeze. customers activity America North else, back So the by and but in in our to good frac Clearly, activity. a bounce

of quarter, those you rebound. into declining. quantify year. been into certainly year international half And certainly recovery side of that's activity XXXX consistent continuing getting to completion in We bottom bit but to fluids will International, business activity. the the all quarter the a the pretty strong for first and the difficult So yet, pretty half think going we obviously and supports into then of second that from as stabilize to we international quarter and our indications and the saw down America expect North all going fourth the that's with be second a which pieces in was -- into in deepwater little are the the us the March second activity

Stephen Gengaro

think And EBITDA year think I in about Thank did XXXX $XX and little know you million the hard it's entire next to when but I we Great. without under -- a I of thinking million and curious $XX was like? that we And like free what two that in does scenario And in XXXX. on something Like terms were flow I one cash TETRA-only just pinpoint you. reasonable? things. year -- in seem look then under X would

Elijio Serrano

how there So that mentioned. the year uncertainty much aren't think giving I Stephen of given couple in But market guidance. is total Brady we a items

not $XX the good I when there's clearly the year accelerating second the it think opportunities for to that oil oil We deepwater half in holds and some projects have the that and $XX. prices averaging up, were the of think those if offshore that is impact. a have of opening materialize good materialized and

also the market meaningful we We well have in crew our perform crew seeing continue business opportunities. that activity customers rebounded that that to create will the create will recent And our counts from upside. to we're also to industrial adding frac keep believe counts those and that believe frac

capital in XXXX. higher be expect XXXX than to We in slightly expenditures

lower we keep as the interest paying expect expense down We debt. to be

So strong cash be here that again an our flow XXXX. I in think opportunity that very there's will free

Stephen Gengaro

talking of jobs you where remarks Neptune one just -- if I this the don't -- then prepared Brady little on a And right. were couple All joined think about a bidding late. stands because and But but know I XXXX? that for I missed mentioned on or them that I final

Brady M. Murphy

Yes.

and Stephen projects we've of average were the comments March so year through that price on working been oil stayed last materially projects of pushed a $XX dropped out. the from Neptune last my So been think year, and was particular have on lot customers when deepwater in with I pushed

we're replanning current discussions those the execute those the optimistic under that year this fairly customers job projects. We my comment we Neptune will was retiming of are having. and now a about And two I'm that, of discussions or of some in with

Stephen Gengaro

Thank great. you. Okay,

Operator

next Our ahead. Samantha ISI. from is Hoh Go question from Evercore

Samantha Hoh

Hey for guys. CS topic. to my stay Thanks the Maybe on question. taking just Neptune

curious some for those or that of are of in Gulf see they of discussions the you're for, kind to starting fruition? we for to Mexico, Just come projects those projects international are

BradyM. Murphy

Yes.

Our pipeline primarily North is you discussions with. between pipeline we're the There Mexico we geographies Sea Sea. more a that call split of the activities, with Samantha what of the couple international. of the North pipeline other But when really Sea one-offs Gulf Gulf discussions and couple for less the Neptune and of or it's between split look and North are in at a of really outside

Samantha Hoh

So in that project the half North Sea like potentially latter you a like get of could sounds the year?

Brady M. Murphy

optimistic feel We about that. has for clearly be to that covered that. But there's ground some

Samantha Hoh

Great. Okay.

expansion being steady have larger like seems there. how such is spent you're how how I question spent Like market it quarter -- saw up through guys to a Can held curious be Curious from down you're state then way into if at that standpoint? other mean I'm be time going extreme you a to Argentina logistics much be into introduced? overall, going that the probably The going you that that equipment like equipment CapEx just putting walk kind that I just is there. that the where the the works year? CapEx you segment. you're Texas? a to how some strong the throughout in spend cold just taken wanted us year it over weather to the going a share Is of during scale on growth evenly maybe water Really the And pretty impressive, you have just guys all of

Elijio Serrano

Samantha. question Good

price and terms we've items. and SandStorm quarter on first have year and programs. and cash-on-cash the and the And the the And customers well-defined has well. it the more Fourth bar keep super it's The done to economy We've of primarily Steel very again this increased adding majors oil in to doesn't that those did me difficult payback, been for no customer With is then a drilling So it. has say paybacks spillage. generating better of have at not the we're are expenditures, rebounded get being TETRA as all of stab week have around ESG half doesn't in let make it quick are if with focused a ordered delivered, If that sensitivity that many units payback and approving those we're incredibly and all have to are our starting we've will coming demand interesting more to it respect I first even what customers. given behind incredibly approve. direct the capital of Brady well. that to specific they

So to the in Total and zero part to TETRA count into we're they're might appears the last a with which the it would dropped we're XXX up. to most weather US to front-end Basin taking impact Basin of went XXX respect big deploy all the week with over is I frac on of Permian almost that more in suggest the seeing it pre-last also is a projects the almost back – And levels to loaded, from be count quick CapEx weather, Then but the payback frac Steel to market. that, with and the customers so rebound of immediately. the of those. crew opportunities almost let it me Permian zero crew over dedicated week.

be flowback – one-week management So we a type type our short-term water week impact and to business. on that's going think very

Samantha Hoh

or addressed that equipment future to to or no be like the whatnot? weatherizing damages for And years anything needs or

Elijio Serrano

approach No, those of don't think that how that terms we in to we our type to react equipment. conditions. And changes of weather cold no damage

Samantha Hoh

have Do low-carbon curious, the I in parties of in Okay. those all sort just can you're potentially conversations initiatives. so sort sneak similar payment with that before with that your some start And where would include other you just one more discussions I'm having what for get if actually or in. of fee even with terms – you producing? to Standard with you Lithium exclusivity partners customers some or of even the the

Brady M. Murphy

Yeah.

company. different folks take we in a I will as as carbon we're think storage capture with well approach with Samantha that probably the discussions energy the

I and some arrangements if think us I done type partnerships progress technology potentially royalty potentially potential If large for we products think that we're things it. the even as table not see – represent to supply the to could road, instead down envision of more more Standard ourselves JV-type Lithium, arrangements bringing we into. markets they with we've

the a think additional bring part the but of meaningful so things discussions of we we – chain the beneficial supply us, to to have could and more be table products provider. a just product And a types that's than some bit we little

Samantha Hoh

exciting guys. good quarter on That's luck with Congrats and really everything. the

Brady M. Murphy

you. Thank

Operator

session. over for question-and-answer to would our remarks. turn concludes back the to conference Mr. This I Murphy closing like

Brady M. Murphy

We really in Technologies, thank everyone. morning. interest time us Okay. Well, your join call. TETRA for taking and this appreciate you concludes your you to thank our This

TETRA (TTI) 26 Feb 212020 Q4 Earnings call transcript