TTI - Earnings call 2 2023 | TETRA Technologies, Inc.

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Operator

Good morning, and welcome to TETRA Technologies Second Quarter 2023 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Rigo Gonzalez, Manager of Corporate Finance and Investor Relations. Please go ahead.

Rigo Gonzalez

Thank you, Chris. Good morning, and thank you for joining TETRA's Second Quarter 2023 Results Call. may call Chief Murphy, to to Financial that conference today's and Executive remind be for are estimated this Serrano, that earnings. projections, Elijio Officer. I call profitability forward speakers looking, are be financial Chief Brady Officer; you or including The may statements guidance, deemed and contain would like These based on are by TETRA statements are and based on factors. certain assumptions and analysis made several of are the to subject risks uncertainties, beyond several the which control These statements are company. many and of

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

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

turn press now our it to you to over our went Brady. release also to addition will yesterday, to In refer filed also XX-Q that announcements we yesterday. I encourage that we

Brady Murphy

Quarter XXXX Thanks, Rigo. Call. Good and morning, Earnings everyone, Second TETRA's to welcome

XXXX. our on the highlights second Associates, strategic operations, excluding the of quarter our turning quarter, while on overview call initiatives. business, in history. E&P in we'll financials, strong our historically the demonstrate global our in strength to quarterly execute broader an spending progress & Spears overview before over provide open revenue, and an the discontinued growth making Our results to team longer-term the meaningful highest provide to company's peak of we then still year is delivered call I'll also the Yet, ability below second for second questions. According our of XX% to and quarter employees' management the Elijio base our

in activity. While the benefit Neptune doing so, X adjusted CS in achieved years the quarter the of almost highest without we EBITDA

posted encouraging revenue year-on-year both XX% recent in & a capacity growth and markets in Products of XX% Although we while our offshore and an Mexico already have at year-on-year activity Completion pace. with North growth, impressive led continues key deepwater way, Fluids and investments to segments made Gulf in Brazil, growth Sea offshore sequentially. The meaningful contributed grow

without the in been Sea TETRA QX were quarter benefit strong quarter results we planning as Neptune a second achieved the CS of job delayed. have North were Our the for second jobs the

load One for of jobs the to these scheduled out is week. this rig now

drilled provider to with a acreage America early of percentage solutions, completion growth sales major ability longer-term extensive us fluids with provider, portfolio positioned our flexibility including great cycle. the family increasing an in activity. Equipped high-value of with product and is this as grow a companies, well reclamation a service as international fluids for environmentally-friendly well As XX is a of services, North gives X fluids our to Tier we're with of a larger more completed, and even countries shale full offshore we remain to over model upcycle. in sales TETRA's conviction, the stages deepwater service business longer-term that year-to-date, beliefs, as the and still TETRA

chain improved history, business variances of industrial peak Northern quarter the achieved year-over-year and its driving higher in entered volumes. with our as XX%, supply our Europe addition, with production manufacturing favorable chloride calcium strongest In seasonal growth we

the utilizing explore region, order our a new process. manufacturing the who continuing in example expand customer to second lithium in have from As while Europe, the capacity largest chloride is of we production the producer An is Northern to opportunities. this high-purity invested calcium in

are following forward progress closely developments. We look to future their and

announced growth. year-end the of For on ahead we of for our focus schedule. Water EBITDA margin the will enhancement margin bottom XXXX XXXX, in adjusted well be end previously second And our that, quarter, target Flowback & over Services, we achieved

quarter-on-quarter, revenue improved margins by Although to points basis XX.X%. our was flat sequentially XXX

continued strong continue automation driving offerings, water, reliability Water Services, enhancements Our and margin our further emphasis of our Demand more SandStorm & expansion are and fleet to quality and within for focus automate Flowback to decisions. the treating on innovation make and customer as produced with moving we efficiencies. more TETRA driving further and remain differentiated drive is on equipment service

we're certain to land the our we advance relatively engineering capitalize has by some differentiated achieve to to a softness water produced by engagements, produced year-end. for goal signs required seen high future of design U.S. have remained treatment The market. interest our segments, level, continue to disposal with a continues stable and at of very commercial work more in good And very pricing we our challenges for a reuse, on believe options, in customer regards While driven water position offerings. With with our beneficial customer more we this ongoing level.

overall this our year, the XXXX. continue us we growth double-digit margin the track initiatives segment segment, we keeping achieving goals, started on also overall For our will for to on while enhancement to execute achieve in

Commission, during & we our development bromine in larger Smackover than production, associated this of important key and studies technology to in experience required X,XXX-acre a optimize a formation wealth Saltwerx and production, to LLC Saltwerx into have agreed XX% Arkansas efforts upstream plans achieved brine with by on including long-term to and tremendous very understanding We with Arkansas. If quarter. lithium collaborate evaluation a Smackover brings our unit. and potential related to design the financial partner development brine and in unit is to newly that unit engineering for We strength. extraction with areas, develop development, unit brine originally for proposed and is lithium the proposed recently brine the milestones memorandum some Arkansas entered approved and of Southwest proposed Gas Moving Oil our the

further the it test newly our We we'll to as or for FEED, update achieve bromine pipelines results Elijio and study The will proposed completed of prior sampling and the it open for quarter for a to FEED front-end Associates contracted wells, plant, inferred We've lithium unit, optimized injection previously during execute and lithium. to facility. in we to with second the completed to production in certain consistent we milestones. Also turn and quarter, resources well that, first up was provide some wells some study, the developments our design of tests questions. our Hargrove test lithium noted underway the completed drilling production communicate over will the be second design during for plant then the which I'll and commentary, share bromine with additional XXXX. With engineering

Elijio V. Serrano

the Brady. improved & Adjusted Fluids in from sequentially. you, XX.X% XX.X% XX% second EBITDA adjusted quarter Thank in segment EBITDA Products of Completion and the quarter. margins year-over-year to million $XX.X XX% first increased

including We third early Industrial XX% the but large remaining drop-off Water Fluids flat Chemicals revenue have historically driving Brazil increases. Both our our year-over-year. In while chain prices, exceptionally integrated this up our relatively focus growth ramp for and we organization, by and above business We in to team year projects investments. at price more expected from XX.X% second Mexico. Shifting deliveries the as benefit growth the indicating production approximately was margin have high-margin as year, approximately rigs year-on-year, and Adjusted only Gulf EBITDA to our projects, is in quarter-over-quarter. XXX an quarter, capital underpinned higher the highest Completion in will large been of efficiencies business, we there and many segment in strong by quarter well strong fourth on approximately than revenue of improved Europe. We the speaks the our industrial volumes see EBITDA in when believe of rates second Flowback total the operational completion of of Argentina. XX% by quarter, remain ago, Neptune with strength incremental margin XX.X% improved improved third Mexico post exceptional attractive fluids XXXX, commercial as year a key adjusted commenced were sourcing via floor our of materials the consistent segment, XX% first supply since the revenue the from performance Adjusted the XX% where large of regions. in the of more the for points to seasonal Deepwater another to several XX%, supply drive business without compared rising the the and quarter and of basis for year-on-year this to as encouraged an to utilization to this Neptune, adjusted the raw addition model team marking XXXX margins the quarter pushing CS several operating highest business in was fall-through sequentially, we above were TETRA deepwater of Services Gulf & projects XX% of XX% on projects. margin for quarter, in instead enhancements EBITDA deepwater margins segment since had our XX% production in in driven CS expansion. In growth The XX% and EBITDA projects, we active EBITDA the margins the segment focus quarter globally. facility chain as improved by continues by

that facilities term one have This expenditures contract contract to we for Argentina, in focus contract for a extended expansion. this a with Middle secured points working and early awarded investments required production in prefunding X managing capital. We're to our with on production a of the also testing capital East. also We customer an the capital expand the approach

anticipate operating quarter capital increase net at XX%, free was working use to outstanding million during by focus of capital the the first achieving in a quality the capital. Working cash of $X.X $X.X from approximately quarter revenue activities company's flow the and second million. adjusted the operating XXXX. cash flow of in flat of quarter, to $XX.X of net in The and States. Cash third and quarter activities compared year. the $X fourth free flow down the this we of $XX.X million quarter in -- proceeds. from activities slightly million funding was million the income expenditures high the the quarter reflects managing operating revenue to of million $XX.X of sequentially million $XXX for on days first and first was cash of of sequential quarter. to continuing end flow, in consumed modest of the cash Adjusted revenue the cash sales Working of second the second in in Day X of international compared compared to a cash $XX.X million incremental we flow growth to only last from For operations the quarter United capital of from improved conversion while year quarter,

June under XXXX, end second of return measure quarter, availability and XX the As of as our months At the year unrestricted cash the million or yesterday. was above XX.X%, end the capital to ROCE, average improved credit cost $XX of day employed, facility non-GAAP $XX $XX million at million. of our was our million end was on the and our the of trailing second materially capital. $XXX of quarter was Liquidity

on In value investment based approximately investments $X.X and closing and Combined, a currently addition, $X.X million. is addition to free in market at for Standard almost valued of Friday's totaled total $XX Lithium, in our Compressco our million. closing price, CSI these holdings price carbon in combined -- approximately million, Friday's

to $X.X the favorable previous on FEED costs reflect We for second Arkansas we and study a the a consistent certain During the MOU to and in and to our with booked share million charges with reservoir work to that bromine first test Saltwerx amount. earnings the the pay and of Saltwerx those incurred adjustment second up passed analysis. agreed well, costs Saltwerx signed. and recently XX% agreed we up to to to findings previously quarter,

is a expect to the pass We we'll up net in million collect reporting results. costs in to to $X.X reflected third Arkansas to to limit. When income, certain this them benefit of continue quarter, million our investment related and GAAP $X.X up on the XX% to

second not did this we results. However, million when benefit favorable of reporting adjusted in EBITDA quarter, the adjusted $XX in reflect our

turn this from Saltwerx. Free comments cash results adjusted flow closing income do and do not of flow reflect in not reflected third the benefit will Our when Brady from benefit flow coming collect operations and cash flow before we it free quarter questions. quarter. I'll this the also be the quarter over operations from include opening and to cash of in the cash back cash up the this second to for in $X.X million

Brady Murphy

Okay. you, Elijio. Thank

quarter longer-term second well for segments opportunities our milestones we're as our as as with our to So pleased of major to the very closing, outlook achieve near results projects. and longer-term well with we continue as business the strategic both

open So we'll for with that, up some questions. it

Operator

first from Today's comes with Martin Malloy [Operator Instructions] question Johnson Rice.

Martin Malloy

quarter. strong results and Could a to timetable the getting to from take what production positive? some the mean the might on talk that for assuming maybe time to the about come be facility Saltwerx back Congratulations the lithium the might where well that point you for second FID-ed, MOU

Elijio V. Serrano

binding Marty. is also Good memorandum question, And collaboratively. some of want areas includes The a that agreements. it's to MOU together some understanding, we that limited outlining it work

acres work Brady of will our a the our binding data work done we that for more agreement. we agreements, Arkansas that and with MOU for then X,XXX sharing try the get to approval definitive is example, of that for convert for cost partner the we date. Once One mentioned, to of our those the have unit to sharing into

So final to we convert attached understanding of XX-Q, to as with at part encourage XX-Q. to I at would redacted a take our MOU it into And as some a our of items you term. the that got look point, key we've this filed, a copy

Brady Murphy

pulled we be next those timing, production of once that get evaluation for add, Saltwerx, period expectation. of And And would as as of we by together we've made with expect year continuing will we investment Saltwerx between by with lithium. with and the it or moves quarter said, unit and of the unit move from bromine first Board We a relates our have agreements kicked to once I final Board, our lithium. year. now and in years to to decision then the and forward end forward X the time, That's our in study more first that we our the the we're definitive Marty, off FEED hope things Elijio would established

Martin Malloy

Mexico. Okay. us And in there? projects the then my projects give of potential question, about of Neptune wanted terms on sight in Gulf update of an I follow-up to line ask you Can any

Brady Murphy

Yes.

right. we have wells to for good second quarter continue delays They that success pushed we had the So have were Neptune. to did some in planned. We the some with

out the as Sea As the jobs the year. then a mentioned for week. I've my comments, later sector in this expect the of North other loading sector to job we're materialize the And of Neptune later for we actually U.K. in Norway Sea as the in North some well

the mentioned of Mexico, we've are longer-term projects. For before, these Gulf bigger, planned as much

very We have quarter in Gulf believe line we with likely fortunate, projects of If is still for some we of the a start sight materializing. well fourth year get of this to several but of those the more the may projects next Mexico year, closely working we're of customers. of

Operator

Stephen Gengaro The Instructions] [Operator question next from with comes Stifel.

Stephen Gengaro

comment to I margins normal to chemicals very try then on EBITDA curious first when the about And of sort thing about, think very number seasonality high impacted margins the a, And were the just ask -- b, the wanted was excellent? obviously was good, quarter the as progression if could from were and kind think that little bit ballpark. I the wanted business strong. about the we've seen it how by think because but you of you what of And all. kind EBITDA is was, had was I European third a it I I to obviously historically, normal in feels the the Europe, at right? like XXs understand a we quarter,

Brady Murphy

really, the out managing that us. But calcium Very very, wells been very been in have few for quite good chain business. the margins Elijio did of I had that, the handle team European Stephen. Thanks, and supply pleased our very chloride then on board. quarter. of with quarter. the the I'll the third business margins the pricing remember, ask we deepwater also quarter. way it's has to a in for strong Yes, We would across comment first were and the Yes. say, Sure. the part the

and Although good margin Neptune volumes. they're jobs still they're very for pretty jobs, not high us

as the it quarter say third the So even Elijio impact. to the I ask for comment board quarter. to relates the across it's on would I'll margin pretty

Elijio V. Serrano

Marty. question, Good Yes.

Stephen, to about million a On the -- $XX increase $XX third sorry. in quarter million we've revenue. seen sequential Historically,

this in this margin the in onshore third the the I Brazil. on fourth or give again, Northern between from, And and me is contingent X% XX% the and than called is X% you higher mentioned. those revenue above think the us October benefit of color, from in are be that year. to expectation year. right numbers third markets, quarter growth to is that this between the And I'll and some several business will into EBITDA first third numbers and of first it be I'll of $XX.X to be third the that let deliver that is some quarter, in million have do think none quarter the that which continued quarter So the quarter for the quarter continue somewhere third projects demonstrates from now able slip to seasonality significant impacted I what mentioned for believe deepwater seasonality benchmark reminder out the that first in offshore Mexico We somewhere we the I the is the quarter the the doesn't September that quarter. I going are expansion and Gulf by quarter a Europe. We Europe. And the XX% adjusted second that to we of expecting with quarter

Stephen Gengaro

U.S. like feels That's that Great. the on made I you in just so water And -- there's comments color. some understand It then land. helpful headwinds revenue. brief

the business? a I just think, of backdrop flattish numbers would kind So the of be in provided, you water

Brady Murphy

Yes.

flat. about think some has you basins. -- is think I fairly There our been some in is For of the revenue obviously, impacted can activity QX,

So we're not to that. immune

decline that be see America, international in will our We with business. North some we're to going but offsetting

would would & really expect about to as mentioned, think Flowback is for our we Elijio side be I So and -- expansion with progress flattish on the margin flattish Water revenue. QX segment. slightly margin that But in fairly again, higher the continues,

Elijio V. Serrano

we've CapEx. I'll focused And addition on adding point, flow through on at margin adding returns than that capital. focused We're the on capacity by free cash rather and of historically, and Stephen, more this we're And grown growth add enhancement capital.

Stephen Gengaro

Okay. business? Great. for without good been seen I coming PureFlow thinking or good ramping second The impact PureFlow I been stream. Should the been results later have they've And really you really in obviously DOE -- then be impact a we -- Or know than you've think do their the loan. question just that -- mean 'XX? on one PureFlow you the has line of ZX about it's And I yet. better Fluids Eos maybe or it's towards this more sooner is January without a the me. And about in any on think X? I think are think quarter to way is, really working

Brady Murphy

know, close continue new a very we to with their stay PureFlow, Eos, look, discussions opportunity But Stephen, to technology. you is contact provide Yes. but for also which in with electrolyte, us. their not for to them transitioning only great ZX as full they're the in

really pretty think and likely up have I the want them, end probably before our automation probably once orders they more to their don't the of XXXX speak slow. equipment the volumes year. And their the accelerate. I But think have be we they running, and in automation will until than running, will that's but for equipment up expectations,

Stephen Gengaro

differentiating And PureFlow differentiate, guys? sure are difference electrolyte? revenue exactly look? full the that the you between the and not how And does difference I for understand just just to you I'm and

Brady Murphy

Yes.

up quite the a composition. is different So made full chemical electrolyte of few

PureFlow, zinc part batteries you as zinc first the Our been we the the the penetrated with. bromide, electrolyte of know, has real that bromide

another able electrolyte. And chemistry revenue not just of that of involved to manufacture to there are step a customers, understand other be the -- in that is line. However, product of working chemistry our and the change composition And in that. we Eos, for potential full quite complex with is out several actually to us that bit of

Operator

conclude Mr. the we are queue. session. And would question-and-answer remarks. time, I this to closing back to over turn further Murphy for this At in showing now conference the does any our no like questions

Brady Murphy

Well, very thank you much.

with results as for the As that just with before, our we offer we tremendous but progress also the that longer-term quarterly I strategies, potential stated pleased we're extremely importantly, make which company. had, the

for joining all. us, it. you So That's appreciate thank and

Operator

The you concluded. conference and disconnect. Thank has you for today's attending presentation, may now now

TETRA (TTI) 1 Aug 232023 Q2 Earnings call transcript