TETRA Technologies(TTI) - 2025 Q2 - Quarterly Results

Executive Summary & Q2 2025 Financial Highlights TETRA Technologies, Inc. reported strong Q2 2025 financial results, achieving record Adjusted EBITDA for the first six months, and provided robust full-year 2025 guidance Overall Performance TETRA Technologies, Inc. reported strong second quarter 2025 financial results, exceeding expectations with significant sequential improvements in revenue, net income, and Adjusted EBITDA Q2 2025 Financial Performance Highlights | Metric | Q2 2025 | | :-------------------------------- | :---------- | | Revenue | $174 million | | Net income before taxes | $19.4 million | | Adjusted EBITDA | $35.9 million | | GAAP earnings per share | $0.08 | | Adjusted earnings per share | $0.09 | | Net cash provided by operating activities | $48.3 million | | Free cash flow from base business | $37.4 million | | Capital expenditures | $19 million | - Adjusted EBITDA for the first six months of 2025 was $68.1 million, a historical record for current reporting segments and $3.1 million above the upper range of Q1 2025 guidance[4] - Performance was achieved despite a sixteen-month decline in the U.S. rig count and lower oil prices, driven by the successful completion of three CS Neptune Gulf of America wells and a strong Northern Europe industrial chemicals season[4] Full Year 2025 Guidance TETRA Technologies, Inc. provided its full-year 2025 financial guidance, projecting continued strong performance across key metrics, while acknowledging potential market risks Full Year 2025 Financial Guidance | Metric | Projected Range (Low) | Projected Range (High) | | :------------------------ | :-------------------- | :--------------------- | | GAAP net income before taxes | $21 million | $34 million | | Adjusted EBITDA | $100 million | $110 million | | Revenue | $610 million | $630 million | - Guidance ranges are subject to risks including schedule delays for completion fluid projects, hurricane disruptions, changes to oil and gas company spending plans, lower U.S. land-based drilling and frac activity, and macro impacts from U.S. tariffs[7] Segment Performance The Completion Fluids & Products segment showed strong growth, while Water & Flowback Services maintained flat revenue despite market declines, focusing on efficiency improvements Completion Fluids & Products The Completion Fluids & Products segment demonstrated strong sequential and year-over-year growth in revenue, net income before taxes, and Adjusted EBITDA, driven by deepwater completion fluids and industrial calcium chloride business Q2 2025 Segment Performance | Metric | Q2 2025 | Sequential Change | Year-over-Year Change | | :---------------------- | :---------- | :---------------- | :-------------------- | | Revenue | $109 million | +18% | +9% | | Net income before taxes | $38.1 million | +24% | +43% | | Adjusted EBITDA | $40.1 million | +21% | +39% | | Adjusted EBITDA margins | 36.7% | +100 bps | | - Growth was driven by stronger volumes for deepwater completion fluids, proprietary TETRA CS Neptune fluid used in Gulf of America wells, and continued strong results from the industrial calcium chloride business[9] - The long-term outlook remains solid, with full year 2025 segment revenue projected to be a ten-year high, and a material increase in battery electrolyte revenue expected from 2026 as Eos ramps up deliveries[10] Water & Flowback Services The Water & Flowback Services segment maintained flat revenue sequentially despite a significant decline in U.S. frac activity, showcasing resilience Q2 2025 Segment Performance | Metric | Q2 2025 | Sequential Change | | :---------------------- | :---------- | :---------------- | | Revenue | $64 million | Slightly increased (flat) | | Net loss before taxes | $1.3 million | | | Adjusted EBITDA | $6.4 million | | | Adjusted EBITDA margins | 9.9% | Down from 13% (Q1 2025) | - Revenue was flat compared to the first quarter, outperforming a 14% sequential decline in U.S. frac activity[4][11] - Adjusted EBITDA margins would have been flat excluding approximately $2 million of costs not expected to repeat in the third quarter[4][11] - Focus on cost reductions, automation, technology (TETRA SandStorm and Auto-Drillout units), and a favorable customer mix is expected to enhance margins and reduce volatility[4][11][12] Strategic Initiatives TETRA is advancing its Arkansas bromine project to secure supply and profitability, while expanding into energy storage and produced water recycling through emerging growth initiatives Arkansas Evergreen Bromine Project TETRA is advancing its Arkansas bromine processing facility project to secure long-term bromine supply, reduce raw material costs, and enhance profitability, driven by growing demand for deepwater completion fluids and battery storage electrolyte - The project aims to meet accelerating demand for deepwater completion fluids and battery storage electrolyte, reduce reliance on third-party suppliers, and gain access to lower-cost bromine supply[13][15] - Since 2024, $44 million has been invested in Arkansas, funded by base business free cash flow. The plant is expected to be online by the end of 2027, with the first phase (site preparation, power infrastructure, bromine tower installation) completed by year-end 2025[6][16] Projected Financial Impact (at full production, based on 2024 DFS) | Metric | Projected Range (Low) | Projected Range (High) | | :------------------------ | :-------------------- | :--------------------- | | Incremental Revenue | $200 million | $250 million | | Incremental Adjusted EBITDA | $90 million | $115 million | Emerging Growth Initiatives TETRA is leveraging its fluid chemistry expertise to expand into two high-growth emerging markets: energy storage and produced water recycling, which are expected to significantly reshape the company's business profile - Consistent execution in the base business has generated significant recurring cash flow, enabling expansion into energy storage and produced water recycling[19] Electrolytes for Utility Scale Battery Energy Storage Systems (BESS) TETRA is positioned as a key supplier of ultra-pure zinc-bromide electrolyte for the rapidly expanding utility-scale battery energy storage market, particularly through its partnership with Eos Energy Enterprises - U.S. EIA projects battery energy storage power capacity to exceed 45GW in 2025 (76% increase from 2024) and grow 25% annually over the next decade[20] - TETRA is the contracted supplier of Eos' electrolyte products, offering TETRA PureFlow patented ultra-pure zinc-bromide electrolyte, known for exceptional purity, inherent flame-retardant properties, and U.S.-sourced content[21] - Installation of a bulk electrolyte tanker loading system at the West Memphis plant has been completed to support higher volumes for Eos' planned ramp-up[6] Produced Water Desalination TETRA is addressing the critical issue of produced water management in the U.S. oil and gas sector with its TETRA TDS Oasis desalination technology, supported by recent regulatory changes and a collaboration with EOG - The U.S. oil and gas sector faces a massive water management issue, with over 6 billion barrels of produced water discharged annually in the Permian Basin alone, making traditional disposal unsustainable[22] - Recent regulatory changes include the EPA reconsidering wastewater regulations (March 2025) and Texas allowing treatment and sale of produced water for reuse (June 2025)[23] - The commercial launch of TETRA TDS Oasis and collaboration with EOG aim to provide a solution for desalinating and reusing produced water for agricultural, industrial, and other beneficial purposes[6][24] Financial Position & Cash Flow TETRA's financial position is strong with increased cash, robust operating cash flow, healthy liquidity, a low net leverage ratio, and a high RONCE, alongside non-recurring credits Balance Sheet Overview TETRA's balance sheet at June 30, 2025, shows an increase in cash and total assets compared to December 31, 2024, reflecting ongoing operations and strategic investments Condensed Consolidated Balance Sheet (Selected Items, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $68,749 | $36,987 | | Total current assets | $311,633 | $269,628 | | Property, plant and equipment, net | $162,385 | $142,160 | | Total assets | $645,576 | $605,195 | | Total current liabilities | $126,337 | $123,349 | | Long-term debt, net | $180,504 | $179,696 | | Total equity | $289,618 | $253,307 | Cash Flow Analysis The company generated strong cash flow from operating activities in Q2 2025, significantly increasing from the previous quarter. Base business adjusted free cash flow also remained robust, supporting strategic investments Cash Flow Summary (in thousands) | Metric | Q2 2025 | Q1 2025 | | :-------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $48,333 | $3,935 | | Total adjusted free cash flow | $26,492 | $4,241 | | Base business adjusted free cash flow | $37,353 | $15,409 | | Capital expenditures, net of proceeds from asset sales | $(19,422) | $(17,774) | - Capital expenditures in Q2 2025 included $10.9 million related to TETRA's Arkansas project[5][25] Liquidity and Debt TETRA maintained a healthy liquidity position and a low net leverage ratio at the end of Q2 2025, with no near-term debt maturities, indicating strong financial flexibility Liquidity & Debt Metrics | Metric | June 30, 2025 | July 28, 2025 | | :-------------------------- | :------------ | :------------ | | Cash and cash equivalents | $69 million | | | Long-term debt | $181 million | | | Net debt | $112 million | | | Net leverage ratio (Net Debt/TTM Adjusted EBITDA) | 1.2x | | | Liquidity | $204 million | $218 million | - TETRA has no near-term debt maturities, with the ABL Credit Agreement maturing in 2029 and the Term Credit Agreement in 2030[27] Return on Net Capital Employed (RONCE) TETRA reported a strong Return on Net Capital Employed (RONCE) of 17.9% at the end of the second quarter 2025, significantly exceeding its cost of capital - Return on net capital employed (RONCE) was 17.9% at the end of the second quarter of 2025[6][28] Non-recurring Charges and Expenses The company recorded net non-recurring credits of $1.3 million in Q2 2025, primarily related to legal and advisor fees, severance, and restructuring charges from downsizing certain Water & Flowback Services operations - Non-recurring credits, net of charges and expenses, totaled $1.3 million in Q2 2025[29] - These included $1.9 million of legal and advisor fees plus severance and restructuring charges as certain Water & Flowback Services operations were downsized[29] Additional Information This section provides details on non-GAAP financial measures, a company overview, upcoming investor events, and a cautionary statement regarding forward-looking information Non-GAAP Financial Measures This press release includes several non-GAAP financial measures, such as Adjusted net income per share, Adjusted EBITDA, and various adjusted cash flow and debt metrics, which management uses to assess performance and trends more effectively by excluding certain special charges or credits - Non-GAAP financial measures used include Adjusted net income per share, Adjusted EBITDA, Adjusted EBITDA Margin, adjusted net income, total adjusted free cash flow, base business adjusted free cash flow, net debt, net leverage ratio, and return on net capital employed[35][42] - Management believes these measures enable a more effective evaluation of operations, identification of operating trends, and assessment of financial performance without regard to charges or credits considered outside of normal operations[31][44][48] Company Overview TETRA Technologies, Inc. is a global energy services and solutions company focused on environmentally conscious offerings. Its portfolio spans Energy Services, Industrial Chemicals, and Critical Minerals, with a strategic expansion into the low-carbon energy market - TETRA Technologies, Inc. is an energy services and solutions company focused on developing environmentally conscious services and solutions[36] - The company operates on six continents and its portfolio consists of Energy Services, Industrial Chemicals, and Critical Minerals[36] - TETRA is expanding into the low-carbon energy market, leveraging its chemistry expertise, key mineral acreage, and global infrastructure to meet demand for sustainable energy[36] Conference Call & Investor Day TETRA Technologies, Inc. announced details for its upcoming conference call to discuss Q2 2025 results and an Investor Day event in September 2025 at the NYSE - A conference call to discuss Q2 2025 results will be held on July 30, 2025, at 10:30 a.m. Eastern Time[32] - An Investor Day will be hosted on Thursday, September 25, 2025, at The New York Stock Exchange, offering insights into operational performance, innovative technologies, emerging growth initiatives, and financial prospects[33] Cautionary Statement Regarding Forward-Looking Statements The report includes forward-looking statements that convey uncertainty about future events and outcomes, based on certain assumptions and analyses - Forward-looking statements concern economic and operating conditions, potential revenue from electrolyte products and energy storage projects, mineral resources, extraction, timing and costs of activities, and financial projections[57] - Risks and uncertainties include changes in general economic conditions, opportunity risks (e.g., mineral extraction, bromine processing), ability to develop facilities, accuracy of resource reports, capital financing, equipment supply, competition, and changes in laws and regulations[58] - Investors should not place undue reliance on forward-looking statements, and the Company undertakes no obligation to update or revise them, except as required by law[58] Financial Schedules (Unaudited) This section presents unaudited financial schedules including the consolidated income statement, balance sheet, cash flows, and detailed non-GAAP reconciliations Consolidated Income Statement This schedule provides the unaudited consolidated income statement for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, detailing revenues, costs, and net income Consolidated Income Statement (Selected Items, in thousands) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :------------ | | Revenues | $173,872 | $157,140 | $171,935 | | Gross profit | $48,244 | $42,906 | $43,253 | | Income before taxes | $19,436 | $5,086 | $12,479 | | Net income | $11,305 | $4,049 | $7,640 | | Net income attributable to TETRA stockholders per share (Basic) | $0.08 | $0.03 | $0.06 | Condensed Consolidated Balance Sheet This schedule presents the unaudited condensed consolidated balance sheet as of June 30, 2025, and December 31, 2024, outlining the company's assets, liabilities, and equity Condensed Consolidated Balance Sheet (Selected Items, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $68,749 | $36,987 | | Total current assets | $311,633 | $269,628 | | Property, plant and equipment, net | $162,385 | $142,160 | | Total assets | $645,576 | $605,195 | | Total current liabilities | $126,337 | $123,349 | | Long-term debt, net | $180,504 | $179,696 | | Total equity | $289,618 | $253,307 | Consolidated Statements of Cash Flows This schedule provides the unaudited consolidated statements of cash flows for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, detailing cash flows from operating, investing, and financing activities Consolidated Statements of Cash Flows (Selected Items, in thousands) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :------------ | | Net cash provided by operating activities | $48,333 | $3,935 | $24,831 | | Net cash provided by (used in) investing activities | $(19,620) | $1,345 | $(15,293) | | Net cash used in financing activities | $(2,495) | $(2,089) | $(2,370) | | Increase in cash and cash equivalents | $27,751 | $3,842 | $6,813 | | Cash, cash equivalents and restricted cash at end of period | $68,801 | $41,050 | $42,752 | Non-GAAP Reconciliations This section provides detailed reconciliations of various non-GAAP financial measures to their most directly comparable GAAP measures, as used by management to assess financial performance and trends Adjusted Net Income Reconciliation Reconciliation of Adjusted net income to GAAP net income before taxes and discontinued operations, highlighting specific adjustments for non-recurring items Adjusted Net Income Reconciliation (in thousands, except per share amounts) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :------------ | | Net income before taxes and discontinued operations | $19,436 | $5,086 | $12,479 | | Net income attributable to TETRA stockholders | $11,305 | $4,049 | $7,643 | | Adjustments (e.g., impairments, restructuring, FX) | $1,313 | $11,446 | $996 | | Adjusted net income | $12,618 | $14,336 | $8,639 | | Adjusted net income per share | $0.09 | $0.11 | $0.07 | Adjusted EBITDA Reconciliation Reconciliation of Adjusted EBITDA to net income (loss) before taxes and discontinued operations, presented for both consolidated results and by segment (Completion Fluids & Products, Water & Flowback Services) Consolidated Adjusted EBITDA Reconciliation (in thousands, except percents) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :------------ | | Net income (loss) before taxes | $19,436 | $5,086 | $12,479 | | Interest (income) expense, net | $4,194 | $4,724 | $6,185 | | Depreciation, amortization and accretion | $9,189 | $9,151 | $8,774 | | Equity-based compensation expense | $1,747 | $1,860 | $1,800 | | Other adjustments | $1,313 | $11,446 | $996 | | Adjusted EBITDA | $35,879 | $32,267 | $30,234 | | Adjusted EBITDA as a % of revenue | 20.6% | 20.5% | 17.6% | Segment Adjusted EBITDA (Q2 2025, in thousands) | Segment | Revenues | Adjusted EBITDA | Adjusted EBITDA as a % of revenue | | :-------------------------- | :--------- | :-------------- | :-------------------------------- | | Completion Fluids & Products | $109,445 | $40,114 | 36.7% | | Water & Flowback Services | $64,427 | $6,401 | 9.9% | Adjusted Free Cash Flow Reconciliation Reconciliation of Total Adjusted Free Cash Flow and Base Business Adjusted Free Cash Flow, detailing adjustments from net cash provided by operating activities Adjusted Free Cash Flow Reconciliation (in thousands) | Metric | Q2 2025 | Q1 2025 | 6 Months 2025 | | :-------------------------------- | :-------- | :-------- | :------------ | | Net cash provided by operating activities | $48,333 | $3,935 | $52,268 | | Capital expenditures, net of proceeds | $(19,422) | $(17,774) | $(37,196) | | Payments on financing lease obligations | $(1,139) | $(931) | $(2,070) | | Payments on seller financed purchases | $(1,280) | — | $(1,280) | | Cash received from sale of investments | — | $19,011 | $19,011 | | Total Adjusted Free Cash Flow | $26,492 | $4,241 | $30,733 | | Less Investments in Arkansas | $(10,861) | $(11,168) | $(22,029) | | Base Business Adjusted Free Cash Flow | $37,353 | $15,409 | $52,762 | Net Debt Reconciliation Reconciliation of Net Debt, defined as the sum of long-term and short-term debt less unrestricted cash Net Debt Reconciliation (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Unrestricted Cash | $68,749 | $36,987 | | Term Credit Agreement | $180,504 | $179,696 | | Net debt | $111,755 | $142,709 | Net Leverage Ratio Reconciliation Reconciliation of the Net Leverage Ratio, calculated as debt covenant net debt and commitments divided by trailing twelve months adjusted EBITDA for credit facilities - The Net Leverage Ratio was 1.2x as of June 30, 2025[53] - Debt covenant adjusted EBITDA for the trailing twelve months ended June 30, 2025, was $109,293 thousand[53] - Debt covenant net debt and commitments as of June 30, 2025, was $129,067 thousand[53] Return on Net Capital Employed (RONCE) Reconciliation Reconciliation of Return on Net Capital Employed (RONCE), calculated as Adjusted EBIT divided by average net capital employed - Return on net capital employed for the twelve months ended March 31, 2025, was 17.9%[55] - Adjusted EBIT for the twelve months ended June 30, 2025, was $71,185 thousand[55] - Net capital employed as of June 30, 2025, was $456,988 thousand[55] Projected FY 2025 Adjusted EBITDA Reconciliation Reconciliation of projected Adjusted EBITDA for the full fiscal year 2025, alongside actual figures for 2024 Projected FY 2025 Adjusted EBITDA Reconciliation (in thousands) | Metric | FY 2024 (Actual) | FY 2025 (Projected Low) | FY 2025 (Projected High) | | :-------------------------------- | :--------------- | :---------------------- | :----------------------- | | Revenues | $599,111 | $610,000 | $630,000 | | Net income before taxes and discontinued operations | $28,742 | $21,000 | $34,000 | | Interest expense, net | $22,465 | $18,000 | $17,000 | | Depreciation, amortization and accretion | $35,721 | $39,000 | $37,000 | | Equity-based compensation expense | $6,572 | $7,000 | $7,000 | | Other adjustments | $5,903 | $15,000 | $15,000 | | Adjusted EBITDA | $99,403 | $100,000 | $110,000 |