TETRA Technologies(TTI)2022-08-02 20:33Financial Data and Key Metrics Changes - For Q2 2022, revenue grew 8% sequentially and 38% year-over-year, with adjusted EBITDA of 1.8 million sequentially due to various charges [13][44] - Cash from operating activities was 11.9 million sequentially, exceeding pre-pandemic results [14][48] - Adjusted earnings per share was 0.06 in Q1 and a loss of 0.02 in Q2 of the previous year [43] Business Line Data and Key Metrics Changes - Water & Flowback Services revenue increased 16% sequentially and 75% year-over-year, with adjusted EBITDA margins of 15.1% [26][27] - Completion Fluids & Products revenue increased 2% sequentially, but adjusted EBITDA decreased by 4 million, with margins at 23.7% compared to 26.1% in Q1 [33][34] Market Data and Key Metrics Changes - The European chemical business was impacted by supply chain disruptions due to the Russia/Ukraine conflict, but still achieved 24% adjusted EBITDA margins [10] - The offshore and deepwater markets are showing signs of a multiyear growth cycle, supported by a forecasted 5-year high in subsea tree orders in 2022 [11] Company Strategy and Development Direction - The company is focusing on low carbon energy markets, which require critical minerals and chemistry expertise, creating significant growth opportunities [40] - Plans to execute a preliminary economic assessment for bromine and lithium extraction, with expectations for completion by year-end [24][84] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating inflationary pressures and supply chain disruptions, with technology investments yielding growth opportunities [39][41] - The company anticipates continued demand for its products, particularly in the Water & Flowback segment, despite limited frac crew capacity [76] Other Important Information - Total debt outstanding was 222 million in 2019, with a net leverage ratio improved to 1.7x [53] - Liquidity at the end of Q2 was $103 million, the highest since 2019, indicating strong cash management [54] Q&A Session Summary Question: Potential of calcium chloride in lithium extraction - Management confirmed that calcium chloride is being used by an international lithium provider, with encouraging results and potential for broader application [62] Question: Supplier outlook for Finland calcium chloride production - Management acknowledged the fluid situation due to the Russia/Ukraine conflict but expressed optimism about resolving supply issues [65][66] Question: Third quarter expectations for fluids business - Management expects a typical seasonal drop-off in Northern Europe but anticipates offsetting factors from increased sales in other areas [72] Question: Progress on low carbon initiatives - Management is engaged with CarbonFree and remains optimistic about future projects, although timelines for announcements are uncertain [95] Question: Direct lithium extraction technology viability - Management expressed confidence in adapting direct lithium extraction technology for Arkansas, despite current commercial applications being limited [119]