TTI - Earnings call transcript Q1 2021 | TETRA Technologies, Inc.

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Operator

Good morning, and welcome to TETRA Technologies First Quarter 2021 Results Conference Call. Speakers for today's call are Brady Murphy, Chief Executive Officer; and Elijio Serrano, Chief Financial Officer. [Operator Instructions]. I will now turn the conference over to Mr. Serrano. ahead. go Please

Elijio Serrano

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

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

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

our now it over turn to went out posted I website. earlier announcement addition press In that is to release our this morning to and Brady.

Brady Murphy

to welcome of cash included first turn sheet to Elijio, then the impact the for potentially Technologies to outlook XXXX and And on you, flow, and call. Russell morning, in over the TETRA current everyone. it information balance I'll highlights quarter XXXX. being Thank the Elijio the and good the earnings quarter summarize provide and

February With us is of full underway. appear a the recovery inventories and and of pre-pandemic all storm, oilfield activity is represents declining market. services its downturn it behind dramatic the quarter market levels, the pandemic prices notwithstanding and worst impact winter at would on the stabilizing first COVID-XX a The year

period, market including to the accelerating as we've For pleased gas what opportunities. I'm quarter milestones TETRA, company energy critical with oil position achieving this carbon challenging for and recovering well as during incredibly low our the accomplished over further

America prior year, offerings our a well, XXXX Water us declined industrial at over to pandemic North our Flowback year. the TETRA-only adjusted for since us completions international differentiated segment up last & started, adjusted exceptionally in every our pace in the record While held business to maintain while our EBITDA positive the margins improve chemicals and quarter activity allowing EBITDA allowed

the period forward, the we international the last quarter the well see off exception with offshore first activity during of as Going and from market U.S. the activity year. is storm, bottom completion the bottom February of mid our and

Flowback EBITDA Water confidence the strong in is margins into & double-digit for of gives Completion the March segment Fluids adjusted margins a of rest second year. and EBITDA adjusted XX% Our our for north us good quarter

EBITDA million. $XXX again quarters free straight this Flowback winter storm, February despite segment. We to million $XXX positive flow retaining the loan an Compressco, We first the our of generated over while million of where successfully key on $XX we cash achieved of and positive maintained we several adjusted XX% historical adjusted & deconsolidation our executing term including X quarter, Focusing achieved CSI from cash, once milestones, we Water interest. for reduced

for first approximately was quarter revenue EBITDA higher as on exited margin estimated was also adjusted holdings the offshore and chain and the shut our continuing our by storms Adjusted our normally million the our EBITDA quarter mix several continue sales our of are generation operations Standard the land and Adjusted up challenging driven a margins $X $XXX of the the to of and second for and international first million. it In chemical plants of term in U.S. EBITDA impacted were and in of Completion many chemical season. quarter softness flow This result historical markets. quarter higher sales million that ended Products' as the offshore supply impacted for to oil segment from the impact February down. $X Compressco demand. by by cash Adjusted loan disrupted was international increased operations and quarter $X.X carbon flow $X.X to days payments Despite despite down we quarter winter and that due ago. our gas EBITDA just first margins. in had values continue a increased those from negatively generated ramp initiatives improving the than of and of advancing in $XXX,XXX million, winter Lithium. adjusted faster in included winter the gas with operational to equity cash was quarter this XX% the million the We a free $X.X above with sequentially, industrial higher expect to eighth We gains achievements, paying first we lower anticipated land X% & first business, due the quarter the peak of were XX during adjusted advance to EBITDA chemicals European and for the low second into weather oil million, quarter addition XX.X%, negatively first sales for margins straight conditions we U.S. inventory quarter. EBITDA made traditionally Fluids Adjusted storms the are above million. XX% decreased and currently what We liquidity early first CSI year quarter EBITDA $XX

will the seen also Europe has Northern revenue million business of see by benefit compared seasonally high industrial quarter that the $XX historically first second our The approximately increase quarter. to

industry paper, and Neptune that their both XXXX of our were prices complete of we oil second the us to an that and multiple conference we a into to combination this require list present opportunities wells. projects Neptune to product our the them plans At result of targeted allowing our pressure as we of a first projects But ExxonMobil, from confirm in us that higher and completed well environmentally-friendly, Mexico zinc-free projects Gulf presented this jointly February, highlighting over The drilling pushed solution overall with of depressed activity We a customers deepwater in also CS quarter difficult pressures work success stronger appreciate the ExxonMobil benefits activity to CS for deepwater later highlight We to recent with XXXX. expect levels. our years. international of paper year and high very remains COVID many encouraging pushed to for from continue finalize the of will the the with of CS jointly Neptune. working and

winter Flowback flexible the negative the positive quarter For the operations. and disruption $X.X weather were -- adjusted cost EBITDA impacts EBITDA mainly storms We impacted Water to our Services, approximately estimate & to revenue to the fourth structure that us allow of down the negatively despite million. from Nevertheless, first the our due storm. quarter EBITDA remain by adjusted adjusted

system continue key allows -- us integrated be continues and management automated to has control to a our BlueLinx and allowed for projects enabler market Our to gain water share.

the automation the number fourth additional projects of costs. XX XXXX for quarter and even XX need The rebounds the value increases, record-high staff to labor quarter the XX integrated our different field activity increased in of in a become projects to more customers. will As with from of control important

deploying proprietary to value and safety the a the more secured delivery reduce realize exposures, fully concerns second service they're fourth using in technology automation automated units SandStorm we a in key We the customers of sand recovery of for technology. is with one improve a addition earning efficiencies, Our Argentina units high. cash to projects address in April of payback. and managing. quarter communicated call. providers earnings started environmental are We the of SandStorm This reduce project remains integrated these our the being component Utilization an to a quick system taking number

ahead that and stronger expect March and was success with segment, a and working also of improvement and to that above oil this addition us margins prices. be increasing are are across February this in focused highest activity ability press innovative EBITDA large, pushing and pricing market our levels of recognizing patented the pleased focused capture March from the increase securing in area for are levels established areas, at calcium of from energy chloride team waste COX Precipitated and industry, very in for given on anticipated. MOU adjusted service calcium to and strong with the the customers technology. deployment carbonate. top streams. commercially technology of quality key and respect all conversion in carbon Yesterday, utilization announcement With which technology. SandStorm from are an or of a well issued part for to moving carbonate is attractive uses the of to advance SkyCycle we and COX precipitated a a as of calcium we to initiatives, what continued activity price we on quarter on consistently entering our use been of we better increases key jointly PCC we three CarbonFree's better that we are perform previously a achieved Our our environment double-digit low a price second global to schedule I'm levels has a valuable seeing carbon to with CarbonFree in a our efficiency

We considerable technology are We to CarbonFree and utilize this chloride for believe and and are source technical pleased growth commercial global partner TETRA. calcium chemistry expertise our nearly of many cost footprint. of years to with a XX and advantages there

these in continues received lithium carbonate. an high-quality Consistent as energy a also resources for demand in sales additional over shares an majority and of battery bromide inferred multiple electrolyte The of April. with outlook bromine for its both companies Standard We energy Standard arrangement, PureFlow, sources with in at the electrification X.X resources zinc and The is with their lithium billion as to of In part technology. cover of lithium resources $XX underground also with which today's U.S. very qualifying million our Arkansas solution our storage, advance have tons. minerals key zinc through carbonate of of our in bromide and of name we brand one great value storage XXX,XXX XXX,XXX over high-purity use leases Lithium that resources quarter, the we relationship play and important their prices promising. that acres first Lithium, contractual are the of estimated market made since world's our is the progress, XX,XXX bromine key lithium our tons role

expect these We for first XXXX estimates. discussions in in revenue well ahead of are application our with currently new companies commercial prior and this

bromide zinc As be new can market our create completely us this a technologies demands commercialize, and this will very for meaningful. for

intend with more we we storage carbon As capture, in way. work to companies looking with our deep to energy chemistry use these technology are a CarbonFree for and expertise collaborative

to addition a and upside performance low Fluids carbon the can energy have which Water three consistent of in of now business, in with and chemicals we're recovery, TETRA. free showing signs our we CS market with stages along to for & EBITDA cash strong Flowback businesses the significant opportunities of position our advanced with that Neptune positive transformational consistently on generate So industrial areas offshore be Completion predictably a the in steady all flow, capitalize

deliver very investor and for we free the each. over our Elijio open we In questions. have two it opportunities, flow on meantime, we'll turn and And progress up open from all will some delever. additional I'll these continue for the then were base we cash to with to continue our of execute to segments color, As

Elijio Serrano

on statements financial Thank the make presentation you, sheet some of about I'll statements balance then our a items. first couple Brady. talk of

in mentioned transaction units million we've XX, excluded common CSI earnings report public days XX January adjusted the include took CSI of call incentive resulted partnership the flow. Compressco from balance January CSI we cash January is of January since of them and this Compressco, in first discontinued statement transaction. deconsolidation for as As When million of cash a gain the with distribution income reflects that from we as recapture Income the still non-cash sale includes flow on our the XXXX majority prior rights operations Compressco completely basis in XXXX. the CSI of Compressco on the period. discontinued operations that of the the received The from free and given we partner. general our CSI over for XX we in $XXX excludes gain flow for for of the on the were XX, and The TETRA, XX on the the The quarter statement result free our vast general -- distributions and CSI February Compressco, Compressco. CSI last first the days carrying deconsolidated now sheet million Compressco cash $XXX Compressco

for United stock March XXXX, first items the Into $XXX,XXX quarter, to were Those value received XX results of to result taxable included and the million. our gain of in value back related U.S. tax to of years first by in we we to Compressco a did result restructuring continues million carrying in Federal approximately of cumulative income million respect non-recurring charges mainly not we a in $X.X to we offset loss the to that and will paying the go of income fair distributions with increase transaction stock pretax transaction appreciation $XXX,XXX significant $XXX the that us we transaction those quarter, saw therefore States, our to in in over And As past forward in related price in be the warrant and of CSI future have TETRA U.S. Then economy not partner, carry a compensation do the $X.X expect charges. costs deconsolidation, $X.X CSI adjustment carrying as the includes $X.X taxes that allow income expense. was expenses, These unusual other reduced expense, million a recovers generating were that Compressco and was of the right our general the The the recapture taxable stock adjustment the a value. quarter. TETRA. investment to for were the long-term the incurred while. of also million resulted

for year compared X% items Our to a cost was ago. was first down XX% the than unusual SG&A in X% quarter revenue and company-wide adjusted lower increase sequentially,

we also Compressco Lithium. the shares X% million to CSI XX% first included ownership X.X Our gain have on Standard own million quarter of $X the and we to results or that a adjustments mark-to-market the on that ownership

XXXX the We will from end of reduced continue first entities. publicly the million of Nothing own We the currently remains traded our the to of revolver. equity to at outstanding $XXX see mark-to-market quarter. two adjustments $XXX net at for end we debt on these ABL million

flow property million, million first the achieved almost flow year above the continuing quarter cash for operations year cash Compressco First of transaction and year-end quarter of despite first bonuses and adjusted was CSI from free We $X.X this so paying the $X on. insurance, quarter the expenses taxes, the ago. free typical first payments

the As annual reduction of on a in we CSI And an the free million XXXX. have basis. of at $XXX XXXX cash $X.X the the -- term flow this and plus expense reduced term $XX to loan result us a million free million our of first reminder, mature at until save $XX last from our will quarter transactions, loan flow year's strong proceeds in The Compressco year million not million cash year's March XX, $XXX the does loan we received September end interest of XXXX. term streak as

addition that that dropped June. about $XXX I profitability Europe a our the quarter outstanding item markets. putting $XX be our resulted increases pressure TETRA the to all business, XXXX. We last year. mentioned year remain to and position of further second SandStorm million, price Russell we Northern States lot year our between reconstituted to by the this and The every I'll X-X, of will getting prices funds previously the price We million. streamlining sequential believe continued increase in XXX where XXXX focused be downward XXXX When flow expect mention stock further be generating the somewhere in we activity is we The technology. debt. in the of segments, TETRA, part cash even typically sequentially of on in see revenue being Russell Last Russell the on to XXXX. the oil has free are and passive our reduce XXXX, last their organization up in cut-off share We driven exit from deployment the industrial our international driving in Russell the decline increased and index-based we in United chemicals seasonality dropped for saw Russell were

Russell -- market the the has see Russell index-based TETRA which that XXXX portfolio Our the is in final Russell listing the cap read in to I today every website the Friday that as -- Friday back XX. metrics. a passive of many and June, May encourage to to yesterday we occur, our XXXX. mimic nice to of issued business visit million. operational having news share their is you If we funds I of for is seeing their is updated is companies demand holdings potential a details been for encourage the impact high close release supporting listing for possibility XXXX, be price. there is updates. part was match hopefully the as This first you on to $XXX also press might shares there the strong June. to added June to additional that will The all see XXXX, a be to a TETRA back If that and and our adding Russell into financial of TETRA

open questions. will end of that, Additionally, with day the XX-Q will file with we the Chad, before it to now we the our today. SEC up

Operator

the with come Stephen Gengaro from will [Operator first question Stifel. Instructions]. And

Stephen Gengaro

suggest teens about mid-to-high the at components seem A are the expansion couple straightforward. EBITDA the in is with, that chloride thinking you number XQ in quarter as guys and margin target, that the as you mind. that's guess, is I'll you I of you the that second things, calcium business, don't start Well, look it a talked guys if European a reasonable to in far When pretty of what probably ballpark would about?

Elijio Serrano

Yes, Stephen. exceeding beating we We like expectations. consensus, like

curveballs would far that doesn't you're that's March, that because we're May if a to with a we've happening us June had we've April and in ahead So and think good you too get what at mid any be encouraged now. very that I appropriate mid-teens of not teens, and might what's more expectation had I encourage -- the good throw the and right double-digit us,

is from doesn't European predictable deviate projections. Our very and rarely business

only So continue whether will. of think markets the like it's matter offshore a perform we really to they

Stephen Gengaro

as follow-up one like just Lithium a a that follow-up quarter, probably to And way and the CCLP, of line show ownership the statement? and the to EBITDA other, materialize line that I income had will that, it up the in then not revenue on each Standard and will that. just The is

Elijio Serrano

that That is incremental of shares the point, correct, received receiving we because at not any from in Standard what XXX,XXX Lithium. this the month April for we're

or a Compressco only ownership reflects our million, to adjustment share Anything in will So that we're impact then mark-to-market any shares. and XX% price the up million of will X.X also and CSI EBITDA, mark-to-market X.X that do income revenue. decreases without increases to be

of agreement $X them we of also both mark-to-market the adjustment, Standard going in that receiving we're year for cash about as from be a them. to million reminder, Lithium, with have are place a So and

Stephen Gengaro

allocated see you'll on and ownership, price, is the EBITDA? your June the the the so, cap difference on impact March between market percentage And is change based March basically, the -- the stock

Elijio Serrano

Yes, and as correct. which shares about we XXX,XXX and shares, EBITDA, getting will addition we Standard more in we will also that also. month of annual when is April, to Lithium report then positively Standard the from such did impact that what basis receive million those Lithium cash EBITDA recognizing income an on of as from that Again, is we're in $X

Stephen Gengaro

levels, it. on Got rates the arguably then, is from and debt refinancing the business where you're balance better given you've been one generating going is having has final forward? sheet, a your balance been me better debt one And and are that just sheet, discussion successful -- cash, there about visibility the reducing

Elijio Serrano

debt paying can more debt might We're find restrictive been Very excess down we has the reduce Stephen. market far, good basis us cash. markets testing indicated out term our we less But with is to the so testing that and if effective the We've available see that there that interest cost effective, most cost question, loan constantly something there to that of consistent to to not us. are for doing is find a expense. capital capital try on cheaper to be

Operator

from come ISI. [Operator Samantha Evercore Instructions]. The next question with will Hoh

Elijio Serrano

mute. you we Samantha, might have on

Samantha Hoh

could in different year, about in Sorry mix us the quarter. coming And was expectations you Congrats have revenue businesses terms are the for I Completions, what that. your about from you if think help maybe just that the on wondering the of of Completions.

Brady Murphy

Sure.

indicated the As as in year comments, QX our Fluids. Completion we for our low during see we the point

aware, our down as on most As the drilling continued rest and but the activity year for came but improving side year, Mexico to markets America international we of and of last offshore you're the Gulf the in of activity through Fluids activity rapidly the North Completion come the flattened internationally very well see the year. on down improving has as rebounding opportunities well slightly the both that

industrial peak business continuing optimistic So of share some we're our impact opportunities we're through our pretty we're add also of then Elijio? without discussing. industrial these and anything chemicals But of low with to business that that year, in Do see the that's the to chemicals some that, good of a to European other future carbon market side QX. the and rest will the want of course, you business gain

Elijio Serrano

that given it's payback we're we're seeing. SandStorm to important and technology some in gaining that America that South we're of the that the deploying encouraging. take that is very quick capital traction We've think advantage the assigned I And

to gains I and bottom also seeing top that addition line. in think we're share market our activity, So benefit

Samantha Hoh

Okay.

other if that quantify kind basins of a came Permian, ramp seeing step of integrated quite where you from? water on, just that up, of the projects, projects sequential the are maybe the that's you you're outside With working incremental the demand could nice some in

Brady Murphy

really Permian, on and we for water market Samantha, flowback Well, the share very more the strong in have market the transfer, position share a Yes. the gaining treatment definitely recycling side.

work a the of in certainly basins So that And penetrate with that doing, model that working Appalachia. the now, projects in integrated in South integrated on and we're we good also the to we're we're the but of Texas have. is Mid-Con taking rest percentage

Samantha Hoh

you And then, night, on the was curious announced working Okay. company, that speak potential pilot is next this I last just curious somewhere think how far something you the to I that plant, this MOU was if could the that about you that development, if along initial see I Is read maybe within is? year? could there I guys partner, contributing just actually the project

Brady Murphy

the They are of virtually visited actually proven the and had and myself plant Southwest of -- about We tested be their pilot a Again, its Well, excited construction it the team with where segments I finished they've in our configuration. But with Institute plant. each project final them absolutely. Research few that now. very at of will anytime of yeah, weeks actually should stages offers. and what operational the ago, construction, plant the we're saw

once commercial that running plans is their and in will CarbonFree some pretty parameters in technology. from and we plant know of their they're from what up negotiations I the plant, deploy of think I forward heavy fine-tuning think to the operating point -- the and some be of

Samantha Hoh

of sort sort trend targets that what carbon and industrial emitters of side? the cement on is are it does And targeting, what they like

Brady Murphy

emitters a part as any perfect application. COX gas, Samantha, absolutely. is really that, flue of no, Yes,

see you from -- that their their and the from a If they the can the you precipitation gas when Institute actually performing look they're bringing you including and pilot in plant, then plant bottom, COX gas need, picture. actually they're the at Southwest side and the a And picture reactor. calcium flue operating the Research top got website, in cylinder it's chloride of will chemicals right the

Samantha Hoh

take I'll look a Okay, at it.

Operator

a question Gengaro follow-up next from the Stephen with is Stifel. And

Stephen Gengaro

Thanks.

other So I'm the just two make here. to same gentlemen, just on page ones, sure quick

exclusive Standard two impact margin in highlighted press prices are and are position businesses? your the the the changing the Lithium of release ownership expectations, CCLP, in the you and those stock they on on that So call, in of

Elijio Serrano

share don't upside I try XX Well, get internal that to Yes. that they're expectations to be get Any we're those is assuming that days Stephen, going where surprise at QX to XX, they versus us. and is think enough prices March to out, to and flat for our smart so earnings target were and a flat the in our pleasant it's quarters to versus numbers. future we're

Stephen Gengaro

think you'll to impact them of of XXXX-'XX events, about timing I mean, you Great. That's I'm as one think but wanted are them start think of And obviously impact do sense I you're make getting how about just thinking any in of other short you about what to we assume, new -- you these sure. trying several you just those thinking for impact see the to just as about to the about Standard Lithium payment the positive initiatives, thinking impact. right from when so how timing I the from then, the a is now, the quick contributors? beyond term? you them the that, are get sort -- an are a guys perspective,

Brady Murphy

of on as Yes. particularly surprised we pursuing, that on Stephen, than a categories, are call, advancing couple the what so low different quicker our we've there's electrolyte, know, carbon much that the mentioned you as zinc in we that's side, been bromide of had demand would now achieve last because companies call. revenue coming earliest, said from we that where have this we will revenue on XXXX the that, year. we're fairly previously these that's optimistic anticipated we storage We would energy see probably

technology for bromide and gaining that this demand some So if the pretty supply from their that we'll year pace first into they're we revenue anticipating. good the at XXXX believe continues zinc see energy momentum storage

them and with would first carbons in be be of one our our on the with revenue with closely customer the next we they're On production will late deployment SkyCycle contracts to obviously, we execute carbon year leading but charge for plants. going CarbonFree, the of to at potential negotiating capture those, their working anticipate earliest

Operator

I session. would like Ladies and back Mr. the to Murphy our concludes over to remarks. any closing conference question-and-answer gentlemen, this for turn

Brady Murphy

thanks TETRA conclude We you. morning. This join to your Technologies taking interest the will Thank for and call. this our appreciate time in us

Operator

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

You disconnect. now may

Elijio Serrano	SVP & CFO
Brady Murphy	President, CEO & Director
Stephen Gengaro	Stifel, Nicolaus & Company
Samantha Hoh	Evercore ISI

TETRA (TTI) 4 May 212021 Q1 Earnings call transcript