Tetra Technologies ((TTI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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TETRA Technologies’ recent earnings call showcased a robust financial performance, marked by record-setting adjusted EBITDA and substantial cash flow generation. The company is advancing well in its strategic growth initiatives, particularly in deepwater and industrial chemicals, while maintaining a strong financial position. However, the U.S. land drilling sector presents challenges with declining activity and some margin impacts due to non-recurring costs.
Record Adjusted EBITDA and Free Cash Flow
TETRA Technologies reported a record-setting adjusted EBITDA of $68.1 million for the first half of 2025, which exceeded the upper range of their guidance by $3.1 million. The company also generated $37.4 million in free cash flow from its base business for the quarter, surpassing expectations and highlighting its strong financial performance.
Deepwater Activities and Market Position
The company experienced unprecedented levels of deepwater activity, completing 25 deepwater jobs in the first quarter and securing a multi-year ultra-deepwater 20K completions award in the Gulf of America. This positions TETRA strongly in the deepwater market, indicating a promising future in this segment.
Industrial Chemicals Growth
TETRA’s industrial chemicals segment achieved a year-over-year growth of 5.5%, outpacing both U.S. and global GDP growth. This consistent growth underscores the segment’s strength and its contribution to the company’s overall success.
Progress in Strategic Initiatives
Significant advancements were made in strategic growth initiatives, particularly in energy storage electrolyte needs. The company expects a 76% increase in energy storage capacity by 2025, indicating a strong commitment to future growth and innovation.
Strong Financial Position
TETRA improved its net leverage ratio to 1.2x trailing 12 months EBITDA and increased its cash balance by $32 million. This solid financial footing provides the company with the flexibility to pursue further growth opportunities.
Decline in U.S. Land Drilling Activity
The U.S. land drilling sector is facing a downturn, with a 16-month decline in the U.S. rig count and lower oil prices contributing to market uncertainty. This decline poses challenges for TETRA, impacting their operations in this segment.
Flat Revenue in Water and Flowback Services
Revenue from water and flowback services remained flat compared to the first quarter and decreased by 10% year-over-year. Despite outperforming the U.S. frac activity, which saw a significant decline, this segment faces challenges in maintaining growth.
Non-Recurring Costs Impacting Margins
The Water & Flowback segment’s adjusted EBITDA margins declined from 13% in the first quarter to 10%, affected by nearly $2 million in non-recurring costs, including inventory write-offs. These costs have impacted the segment’s profitability.
Forward-Looking Guidance
TETRA provided robust financial guidance for the year, projecting full-year 2025 revenue between $610 million and $630 million, with adjusted EBITDA between $100 million and $110 million. The company plans further investments in its Arkansas bromine processing facility and aims to capitalize on growth opportunities in desalination and energy storage solutions, despite challenges from declining U.S. rig counts and oil prices.
In summary, TETRA Technologies’ earnings call reflects a strong financial performance, with record-setting adjusted EBITDA and significant cash flow generation. The company is making substantial progress in its strategic initiatives, particularly in deepwater activities and industrial chemicals. Despite challenges in the U.S. land drilling sector, TETRA maintains a solid financial position and is well-positioned for future growth.