TETRA Technologies(US:TTI)2025-04-29 21:03Financial Performance - Consolidated revenue for Q1 2025 was $157.1 million, a 16.8% increase from $134.5 million in Q4 2024, driven by strong performance in the Completion Fluids & Products Division [82][88]. - Consolidated revenues for the three months ended March 31, 2025, increased to $157,140,000, a 4.1% increase from $150,972,000 in the same period of 2024 [100]. - Total revenue for the three months ended March 31, 2025, was $157.14 million, a significant increase from $134.50 million in the same period of 2024, representing a year-over-year growth of approximately 16.8% [1]. - Net income before discontinued operations dropped to $4.0 million in Q1 2025, a 96.1% decline from $102.7 million in Q4 2024, primarily due to a significant tax provision change [88][91]. - Net income attributable to TETRA stockholders surged to $4,049,000, a remarkable 342.5% increase compared to $915,000 in the prior year [100]. - The company reported a net income before taxes of $5.09 million for the first quarter of 2025, compared to a net loss of $8.12 million in the same quarter of 2024 [1]. Division Performance - Completion Fluids & Products Division revenues rose to $93.0 million, a 35.1% increase from $68.9 million in Q4 2024, attributed to the completion of the first CS Neptune well and an early start to the calcium chloride season [92]. - The Completion Fluids & Products Division reported revenues of $93,018,000, a 20.4% increase from $77,282,000, driven by strong project completions [106]. - Water & Flowback Services revenues decreased by 2.3% to $64.1 million compared to $65.6 million in Q4 2024, reflecting lower customer activity in the North American onshore market [96]. - The Water & Flowback Services Division experienced a revenue decline of 13.0%, down to $64,122,000 from $73,690,000, primarily due to reduced drilling activity in the U.S. [109]. Profitability and Expenses - Gross profit for the Completion Fluids & Products Division increased by 47.0% to $36.5 million, with gross profit margin improving to 39.3% from 36.1% [92][93]. - Gross profit rose to $42,906,000, reflecting a significant 38.0% increase from $31,102,000 year-over-year, with gross profit as a percentage of revenue improving to 27.3% [100][101]. - General and administrative expenses for the Completion Fluids & Products Division increased by 11.1% to $6.7 million, reflecting higher compensation and professional service costs [94]. - General and administrative expenses increased to $24,134,000, an 8.2% rise from $22,298,000, attributed to higher professional services costs [100][102]. - Interest expense, net decreased by $1,228,000 to $4,724,000, a 20.6% reduction, due to lower interest rates and increased capitalized interest [100][102]. Tax and Corporate Overhead - The effective tax rate for Q1 2025 was 20.4%, compared to a benefit in the previous quarter, reflecting the reversal of a valuation allowance related to deferred tax assets [91]. - The effective tax rate for the current year was 20.4%, down from 29.3% in the prior year, with a provision for income taxes of $1,037,000 compared to $380,000 previously [105]. - The corporate overhead net loss before taxes increased by 38.2% to $16.7 million, primarily due to a decrease in unrealized gains from investments [99]. - Corporate overhead net loss before taxes decreased to $16,703,000 from $19,218,000, primarily due to the absence of a $5.5 million loss on debt extinguishment [112]. Cash Flow and Liquidity - Operating cash flows improved to $3.94 million in Q1 2025, up from a cash outflow of $13.82 million in Q1 2024, primarily due to increased gross profit and working capital changes [1][21]. - Capital expenditures for the first three months of 2025 totaled $18.0 million, with $11.2 million allocated to Arkansas brine resource development [1][22]. - The company had liquidity of $208.1 million at the end of Q1 2025, consisting of unrestricted cash and available credit [1][19]. - Proceeds from the sale of Kodiak shares amounted to $19.0 million during the first quarter of 2025, net of broker commissions and fees [1][23]. Strategic Initiatives - The company is advancing low-carbon energy initiatives, including a feasibility study for bromine production and ongoing negotiations for supply agreements to support deepwater market demands [85]. - TETRA is launching a pilot project for the TETRA Oasis Total Desalination Solution, expected to begin in the first half of 2025, focusing on water treatment and desalination for produced water [86]. - The company is negotiating bridging supply agreements for bromine, which may allow for flexibility in plant start-up timing and additional cash accumulation from existing operations [1][24]. - The company anticipates potential extraction of lithium and bromine from its Evergreen Unit, but the economic viability and timing of such activities remain uncertain [141]. - The company is focused on developing a bromine processing facility, with risks associated with construction and equipment supply [142]. - The company has entered into a Memorandum of Understanding (MOU) with Saltwerx, but the ability to negotiate definitive agreements and produce lithium and bromine remains uncertain [141]. Risks and Uncertainties - The company faces numerous risks and uncertainties that could impact its financial performance, including economic conditions and regulatory changes [140]. - The company is exposed to interest rate risk with borrowings under the Term Credit Agreement bearing interest at SOFR plus 5.75% [143]. - The company has currency exchange rate risk exposure related to revenues and expenses in foreign currencies, but had no foreign currency exchange contracts outstanding as of March 31, 2025 [145]. - The company has not entered into any interest rate swap contracts to hedge against interest rate fluctuations [143]. - The company cautions investors not to rely solely on forward-looking statements due to inherent risks and uncertainties [142].