TETRA Technologies(TTI) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the year 2021, the company delivered $50 million of adjusted EBITDA on$388 million in revenue, achieving positive free cash flow and significantly reducing total debt outstanding [7][19] - Fourth quarter revenue was $113 million, representing a 19$53 million, increasing 14% sequentially and 70% year-on-year, with adjusted EBITDA margins of 12.9% [9][11] - Completion Fluids & Products revenue increased 23% sequentially and 36% year-over-year, with adjusted EBITDA margins of 20.4% [12] - The company expects further double-digit growth in the first quarter of 2022, driven by recovering oil and gas markets and strong chemical sales [13] Market Data and Key Metrics Changes - The Eastern Hemisphere energy services revenue more than doubled from Q3, indicating improved international market activity [12] - The company noted a significant recovery in the US rig count and active frac fleet count, which were down 29% and 36% sequentially, respectively [9] - Argentina is highlighted as a strong market, with new contracts and projects expected to positively impact revenue [10] Company Strategy and Development Direction - The company is focused on low carbon energy initiatives and has formed a partnership with Eos Energy to supply high-purity zinc bromide for energy storage systems [15][16] - The company is exploring opportunities for grants and low-cost loans from the Department of Energy to support its low carbon energy initiatives [24] - The company aims to expand its market share in water management and flowback services, particularly through its proprietary Sandstorm technology [10][44] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about surpassing the adjusted EBITDA margin target of 15% earlier than anticipated due to ongoing improvements in the Water & Flowback Services business [11] - The company is well-positioned for a recovering oil and gas industry and is optimistic about growth in the energy transition market [7][27] - Management acknowledged the challenges posed by inflation and global logistics but expects to recover costs through pricing improvements [33] Other Important Information - The company reduced its term loan by $13 million in the fourth quarter, resulting in a 26$3.75 million in cash proceeds from an insurance claim related to hurricane damage, which will further improve liquidity [25] Q&A Session Summary Question: Clarification on Eos partnership revenue correlation - Management indicated that they expect their revenue from PureFlow to increase proportionately with Eos's revenue growth, although specific percentages were not disclosed [30][31] Question: Impact of inflation on Completion Fluids margins - Management acknowledged a small drop in margins due to inflation-related costs but expects improvements in Q1 as pricing adjustments are implemented [32][33] Question: Market share and growth in Water & Flowback business - Management confirmed that they are gaining traction in pricing and technology, aiming for a 15% margin target for the Water & Flowback business [38][44] Question: CapEx plans for expanding water business - Management stated that most CapEx is directed towards Sandstorm-related projects and early production studies in South America, with a focus on achieving quick paybacks [41] Question: Extraction of minerals from produced water - Management discussed the growing interest in extracting key minerals from produced water, indicating potential commercial viability [46][47]