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TETRA Technologies(TTI) - 2024 Q2 - Earnings Call Transcript
TTITETRA Technologies(TTI)2024-08-01 20:54
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Financial Data and Key Metrics Changes - The company reported a 14% sequential revenue growth and a 32% increase in adjusted EBITDA for Q2 2024 [4] - Adjusted EBITDA for the second quarter was 30.2million,negativelyimpactedby30.2 million, negatively impacted by 1.1 million of foreign exchange losses [17][24] - The net leverage ratio at the end of Q2 was 1.6x, with a return on net capital employed of 17.4% for the 12-month period ending June 2024 [24] Business Line Data and Key Metrics Changes - Completion Fluids & Products and Water & Flowback segments achieved adjusted EBITDA margins of 28.9% and 15.2%, respectively, with Water & Flowback showing a sequential improvement of 560 basis points from Q1 [5][18] - Revenue for Water & Flowback was down 2% year-over-year, correlating with a 16% decline in U.S. onshore rig activity [5] - The industrial calcium chloride business generated nearly 140millioninrevenueonatrailing12−monthbasis,indicatingstablerevenueandcashflow[19]MarketDataandKeyMetricsChanges−TheU.S.completionactivitywaslower,whileinternationaloffshoremarketactivityincreased[4]−ThecompanynotedasequentialimprovementinEuropeandLatinAmerica,partiallyoffsetbyprojecttimingintheGulfofMexico[20]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusingonautomationandtreatmentofoperator−producedwaterforfrackreuseanddesalination,aimingtoreducecostsandenvironmentalimpact[9][12]−Strategicinitiativesincludethedesalinationofproducedwater,pureflowelectrolyteforenergystorage,andArkansasbromineandlithiumsupplyprojects,whichareexpectedtoprovidematerialfinancialbenefits[16]−ThecompanyiscommittedtomaintainingEBITDAmarginsabove15140 million in revenue on a trailing 12-month basis, indicating stable revenue and cash flow [19] Market Data and Key Metrics Changes - The U.S. completion activity was lower, while international offshore market activity increased [4] - The company noted a sequential improvement in Europe and Latin America, partially offset by project timing in the Gulf of Mexico [20] Company Strategy and Development Direction - The company is focusing on automation and treatment of operator-produced water for frack reuse and desalination, aiming to reduce costs and environmental impact [9][12] - Strategic initiatives include the desalination of produced water, pure flow electrolyte for energy storage, and Arkansas bromine and lithium supply projects, which are expected to provide material financial benefits [16] - The company is committed to maintaining EBITDA margins above 15% in a flat onshore activity environment [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the CS Neptune project, which is expected to significantly impact financials over the next six to nine months [26] - The company anticipates a strong finish to the year and significant momentum heading into 2025 and beyond [26] - Management acknowledged challenges in the onshore oil and gas industry but noted continued strength in the offshore market [20] Other Important Information - The company has secured a three-well deepwater Gulf of Mexico CS Neptune fluids project, marking a significant milestone [5][6] - Liquidity as of the call was approximately 187 million, including a 75 million delay draw feature for the bromine project [24] Q&A Session All Questions and Answers Question: What is the outlook for the CS Neptune projects? - The company has a healthy pipeline of projects and is in discussions with multiple operators for additional projects beyond the three secured [27][28] Question: How many NDAs have been signed for beneficial reuse? - The number of NDAs has increased throughout the year, with no backouts from initial agreements [31][32] Question: Can you disclose the reimbursement amount for the 9.8 million CapEx towards Arkansas? - The reimbursement details are covered by an NDA, and the partner continues to work alongside the company on initiatives [33]