• Adjusted EBITDA Margin: 17% in Q4 2024, up from 16.6% in Q3 2024 and 15.8% in Q4 2023.
• Industrial Chemicals Revenue Growth: Over 9% increase in 2024 compared to 2023.
• Completion Fluids and Products Revenue: $311 million for 2024, second highest since 2015.
• Water and Flowback Segment Margin: 13.8% in Q4 2024.
• Produced Water Volume: Record 89 million barrels treated and recycled in Q4 2024.
• Projected Net Income Before Taxes (H1 2025): Between $19 million and $34 million.
• Projected Adjusted EBITDA (H1 2025): Between $55 million and $65 million.
• Net Operating Loss (NOL) Carryforward: Can offset approximately $345 million of US taxable income, saving about $97.5 million in cash taxes.
• Cash on Hand (End of December 2024): $37 million.
• Liquidity (As of February 2025): Almost $207 million.
• Interest Expense (2025 Projection): Approximately $20 million.
• Capital Expenditures (2025 Projection): Between $30 million and $35 million.
• Cash Taxes (2025 Projection): Approximately $6 million to $7 million.
• Free Cash Flow (2025 Projection): Potential to generate over $50 million from the base business.

• Warning! GuruFocus has detected 4 Warning Sign with TTI.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tetra Technologies Inc (NYSE:TTI) reported strong offshore and industrial chemicals performance, which offset a weaker US land operations performance.
• The company achieved a record volume of 89 million barrels of treated and recycled produced water for frac reuse in the fourth quarter.
• Tetra's industrial chemicals business achieved its highest revenue and adjusted EBITDA in the company's history, with a 9% revenue growth over 2023.
• The company is projecting a significant year-over-year increase in both revenue and EBITDA in the first half of 2025, with net income before taxes between $19 million and $34 million.
• Tetra Technologies Inc (NYSE:TTI) has secured power for its Arkansas project and completed the front-end engineering design, preparing for the next phase of construction.

Negative Points

• The US land operations experienced a weaker than expected year-end slowdown, impacting overall performance.
• The water and flowback segment faced challenges due to operator consolidation and low natural gas prices, leading to a decline in rig count and frac fleet.
• The company anticipates potential regulatory restrictions on water disposal, which could impact operations.
• Tetra Technologies Inc (NYSE:TTI) experienced a year-on-year working capital increase of $21 million due to inventory ramp-up for projects.
• The company expects revenue from the water and flowback services segment to remain flat in 2025, despite efforts to enhance operational efficiencies.

Q & A Highlights

Q: How do you foresee the evolution of Tetra's emerging growth opportunities in 2025, particularly in water desalination and electrolytes? A: Brady Murphy, CEO, explained that the first half of 2025 will see benefits from long-term projects like CF Neptune and EOS electrolyte deliveries. Water desalination is a long-term venture, with several pilot operations expected in 2025, but commercial scale projects are anticipated in 2026. The company is also focused on constructing a bromine plant to support future growth.

Q: What is the expected EBITDA for 2025, and what factors could influence the second half of the year? A: Elijio Serrano, CFO, indicated that the company expects at least $100 million in EBITDA for the full year, with $60 million projected for the first half. The second half's performance will depend on deepwater projects, electrolyte sales, and other initiatives. The company anticipates high single-digit to low double-digit top-line growth and stable or slightly improved margins.

Q: What is the capacity for pilot desalination projects in 2025, and are there any constraints? A: Brady Murphy, CEO, stated that the lead time for pilots is mainly dependent on membrane systems from partners like KMX. The company is confident in placing orders for additional pilot units for 2025, with room to expand capacity if needed.

Q: Can you provide more details on the Brazil Deepwater multi-year program and its potential revenue contribution? A: Brady Murphy, CEO, noted that Tetra is the only heavy brine completion fluid provider in Brazil, positioning them well for the two-year contract. The program is expected to contribute evenly over the next two years, with potential for heavier brine completion projects in Brazil.

Q: How does Tetra plan to fund the bromine development project, and what is the timeline for plant startup? A: Brady Murphy, CEO, mentioned that the company is exploring options to fund the bromine project through free cash flow, potentially deferring or spacing out construction. Significant progress has been made, but a final investment decision timeline is not yet set.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.