TETRA Technologies(US:TTI)2025-10-29 15:30Financial Data and Key Metrics Changes - The company achieved record revenue of $484 million and adjusted EBITDA of $93 million over the past 10 years, with Q3 revenue at $153 million and adjusted EBITDA at $25 million, reflecting an 8% year-over-year increase in revenue and a 7% rise in adjusted EBITDA [6][7][19] - Adjusted EBITDA margins for Q3 were 16%, with completion fluids and products revenues increasing 39% year-over-year [7][8] - The company ended Q3 with $67 million in cash and a net leverage ratio of 1.2 times, with working capital at $113 million, only a $4 million increase from year-end [17][18] Business Line Data and Key Metrics Changes - Completion fluids and products saw a significant revenue increase, with adjusted EBITDA margins reaching 34.5%, a 500 basis point improvement compared to the same period in 2024 [8][9] - Water and flowback services revenue declined 2% sequentially and 18% year-over-year, but adjusted EBITDA rose 18% sequentially due to better cost controls [9][10] - The industrial calcium chloride business continues to perform well, with record quarters and expansion into new applications [48][49] Market Data and Key Metrics Changes - The deepwater rig count is currently 40% lower than it was 10 years ago, yet the company has achieved significant market penetration [6][7] - The company is experiencing increased unconventional activity in Argentina and the Middle East, with 100% utilization of automated SandStorm units in Argentina [10][11] - The outlook for the completion fluids and products business remains strong, driven by deepwater completion activity and increased demand for battery electrolyte revenue [9][12] Company Strategy and Development Direction - The company unveiled its "One TETRA 2030" strategy, aiming to leverage its core fluids chemistry expertise into high-growth markets, including battery electrolytes and produced water desalination solutions [12][13] - The goal is to more than double revenue to over $1.2 billion and triple adjusted EBITDA to over $300 million by 2030 [13][16] - The company is focused on generating over $100 million in annual adjusted free cash flow by 2030, driving meaningful cash returns to shareholders [16] Management's Comments on Operating Environment and Future Outlook - Management expressed strong conviction in the long-term outlook despite macroeconomic and energy market uncertainties, highlighting the company's ability to differentiate in its markets [23][62] - The company anticipates continued offshore activity growth, particularly in the Gulf of America, Brazil, and North Sea, with confidence in executing TETRA Neptune projects in 2026 [31][55] - The company is optimistic about the desalination market, expecting to sign its first commercial contract in the coming quarters [15][44] Other Important Information - Elijio Serrano, the CFO, announced his retirement at the end of March 2026, with Matthew Sanderson set to replace him [4][5] - The company is relocating to a new corporate office, expecting to reduce lease expenses by approximately $2 million per year [18][19] Q&A Session Summary Question: Update on Oasis Commercial Engineering and next steps - The FEED study has been completed, and discussions with customers are ongoing to socialize the economics and financials [25][26] Question: Factors behind sequential decline in CFP sales - The decline was primarily due to seasonal industrial calcium chloride sales and the absence of Neptune jobs, partially offset by increased activity in Brazil [27][28] Question: Confidence in offshore market for 2026 and 2027 - Management expressed strong confidence in the deepwater market's growth, with a robust pipeline for TETRA Neptune projects [31][32] Question: Update on desalination projects and capital costs - The core technology will remain owned by TETRA, with various commercial models being considered, and capital costs are estimated at $1 million per 1,000 barrels of desalination [33][34] Question: Outlook for 2026 compared to 2025 - The company expects significant growth in Argentina and the Middle East, with a strong outlook for deepwater projects [36][38] Question: Opportunities in Saudi Arabia and Sandstorm - The company sees potential for growth in Saudi Arabia, similar to the success experienced in Argentina [58][59]