Tetra Technologies at Lytham Partners: Strategic Growth in Focus

On Thursday, 29 May 2025, Tetra Technologies (NYSE:TTI) presented at the Lytham Partners Spring 2025 Investor Conference, showcasing its robust first-quarter performance. The company highlighted its strategic growth areas, balancing strong financial results with emerging initiatives in energy storage and mineral extraction, amid global economic challenges.

Key Takeaways

• Tetra Technologies reported strong Q1 2025 results, driven by its completion fluids and industrial chemicals segments.
• The company is exploring growth strategies in energy storage electrolytes and critical minerals extraction.
• Partnerships with EOG Resources and EOS Technologies are central to advancing new initiatives.
• The company maintained a solid balance sheet with a leverage ratio of 1.5x and significant liquidity.
• Tetra increased its guidance for the first half of 2025, indicating confidence in continued performance.

Financial Results

• Q1 2025 adjusted EBITDA margins reached 36% for completion fluids and products, and 13% for water and flowback services.
• The industrial chemicals business achieved its highest first-quarter revenue and adjusted EBITDA in history.
• Trailing twelve months revenue for the completion fluids business was $327 million, with EBITDA margins at 31%.
• Adjusted EBITDA for the first quarter improved by $10 million year-over-year and sequentially.
• The company increased the lower end of its first-half 2025 adjusted EBITDA guidance by $57 million compared to the previous year.

Operational Updates

• Tetra expanded its SmackOver formation evergreen unit, approved by the Arkansas Oil and Gas Commission.
• Collaborated with EOG Resources on a produced water beneficial reuse pilot in the Permian Basin.
• Completed the first of three major wells in the Gulf of America, with the second in progress and the third expected by Q2 2025.
• Secured a long-term agreement with a major operator in Brazil, with the project underway in 2025.
• Introduced automation in water and flowback services, including BlueLinx and automated sandstorm systems.

Future Outlook

• Tetra is focusing on electrolytes for long-duration energy storage, targeting utility-scale batteries with EOS Technologies.
• The company is advancing produced water desalination for beneficial reuse in the Permian Basin.
• It holds strategic brine leases in Arkansas for critical minerals extraction, including lithium and bromine.
• The bromine project will be implemented in phases, aiming for a total production of 75 million pounds.

Q&A Highlights

There were no questions provided in the transcript.

In conclusion, Tetra Technologies’ comprehensive strategy and strong financial footing position it well for future growth. For more details, refer to the full transcript below.

Full transcript - Lytham Partners Spring 2025 Investor Conference:

Robert Blum, Managing Partner, Lithium Partners: Alright. Hello, everyone, and thank you for continuing to join us throughout the day here at the Lithium Partners Spring twenty twenty five Investor Conference. Again, my name is Robert Blum, Managing Partner at Lithium Partners. And during this next webcast, we welcome TETRA Technologies, ticker symbol of TTI on the NYSE. Participating today from TETRA is the CEO, Brady Murphy and CFO, Elijio Serrano.

Gentlemen, thank you both for your participation. With that, I’ll turn the floor over to you both.

Brady Murphy, CEO, TETRA Technologies: Thank you, Robert, and thanks to Litham Partners for allowing us to participate in your spring twenty twenty five, investor conference. Very excited to have the opportunity. Our, forward looking statements. So Petra has been around for over forty years. Today, we have a very diverse revenue streams from The United States and and 23 other different countries for energy services and industrial chemicals.

As you can see on the map, we’re not in every country around the world, but we are in the key markets that are important to us, the deepwater markets as well as the unconventional markets in North America, Latin America, particularly Argentina, and growing markets in The Middle East. We’re viewed as industry innovation leaders for our vertically integrated completion fluids business segment. We’re a leading oil and gas water treatment and water management service provider, and we feel we have very compelling emerging growth strategies that we’ll talk about for energy storage electrolyte, produced water beneficial reuse, and critical minerals, all of which are part of the core competencies that the company has developed over the years around aqueous chemistry. An overview, you can see the mix of our trailing twelve months revenues between our completion fluids segment, our water and flowback services segment, and industrial chemicals business, which is part of our externally reported completion fluids segment. One of the things we’re very proud of is the chart that you see on the right hand side is the EBITDA margin progression, really going back to 2016 and going through the different cycles, certainly, that the oil and gas market has seen during this time, especially COVID, as we’ve reshaped the company that made pretty significant divestitures of parts of our business that didn’t fit, added competencies and businesses that do fit our strategy and have continued to increase our margin profile over that period of time.

Some recent highlights on financial side. We had a very strong first quarter. We achieved Q1 adjusted EBITDA margins of 36% for our completion fluids and products and 13% for our water and flowback services. Our industrial chemicals business that we’ve mentioned achieved its highest first quarter revenue and adjusted EBITDA in our history. We’ve given guidance for the first half of the year that would also be at or near record levels for the company for adjusted EBITDA.

We’ve we’ve expanded our SmackOver formation evergreen unit, which was approved by the Arkansas Oil and Gas, which contains a lot of the the key minerals that that we will touch on later in our presentation. And we announced a very important collaboration with a key customer, EOG Resources, around our technology and commercial introduction of produced water beneficial reuse pilot. The primary markets markets that we serve, the energy services side, again, consists of our completion fluids, production testing and flowback, water management, and early days in produced water desalination. We have the industrial chemicals business, which is today largely calcium chloride, entering into the battery storage electrolytes and our bromine resources that we have in Arkansas, and then entering into the critical minerals aspect of our business, which we’ll talk some more about in our our brine resources, rich in both lithium and bromine in Arkansas, and very uniquely positioned with our oil and gas operators, our customers, for not only produced water beneficial reuse, but mineral extraction from that water. A little more detail with our completion fluids business.

Trailing twelve months revenue, $327,000,000. As we’ve mentioned, we’re viewed as as innovation leaders in this space. We do have a global infrastructure in place with long term bromine supply agreements and, as I said, a diverse and stable industrial chemicals business, as you can see on the on the pie chart, the distribution of our of our revenues. This segment is one that is primarily a lot of our our revenue growth is driven by deepwater operations. You can see we’ve made a very strong recovery since the second year of COVID in in 2021, grown almost 50% to on a trailing twelve months basis for the first quarter of twenty twenty five to 327,000,000 in revenue and 31 percent EBITDA margins.

But, you know, as importantly, as I said, we’re viewed as an industry leader. The the reference here of David Bett, he’s an industry marketing analyst of Kimberly, basically points out TETRA, in his market surveys analysis, that we are viewed as one of the most technically challenges Gulf Of America markets where we are we are viewed as the as the leader by the by the cuss our customers and the operators. On the completion fluids side, we see the deepwater market continuing to grow over the coming years. We have a strong market share position. We have very innovative unique technologies such as our Neptune fluid.

We’ve made some key investments over the past few years, including Deepwater Brazil, followed up with a large contract in Deepwater Brazil. We’ve made investments, incremental investments in the Gulf Of Mexico, the Gulf Of America, I should say, and the North Sea. And as I said, we have some very proprietary offering, which gives us some margin enhancements and margin advantages with the market. Again, this shows some of the trends that are that have been occurring in Deepwater and the projections that are shown through 2028 by RICED, again, fitting the the, you know, robust market that we’re seeing right now in our deepwater markets, but even growing further, you know, by a 7% CAGR through through 2028. Our calcium chloride business, we are number one producer of calcium chloride in Europe, and we’re number two in the market in The United States.

And this this business, you know, obviously is more diversified than our traditional oil and gas services. We serve the agriculture businesses, food and beverage business, road and infrastructure, construction materials, and with some interesting growth opportunities in both lithium extraction and the semiconductor chip manufacturing, which is being insourced back into to The United States. But as you can see on the chart on the right, our our performance in almost every year In a typical GDP type of business, we’ve been able to outperform the GDP and grow at at a higher rate, in fact, accelerating that the last last three years. Moving to the water and flowback segment. This segment has also recovered significantly from the second year of COVID twenty twenty one, although we are, you know, seeing some slight decline in activity due to the North America rig count and and frac kind frac count.

Our margins have held up reasonably well, really through the introduction of technology, certainly automation. We’re still in the early days of deploying automation in our fleet, so we still have quite a bit of room to grow on that side of the business. But even in a flat to slightly down market, we’re expecting to be able to maintain or enhance our margins from where we are today. The important part of this business for us, it is the foundation and the route to market for our patent pending TETRA Oasis, which we have announced at the fourth quarter of last year, along with EOG Resources, who we’ve been collaborating with for the last three years to really bring what we believe is the first true commercial offering for desalinating produced water and using for beneficial purposes. And we’ll talk a little bit more about about that opportunity.

So in the water and flowback segment, as we’ve mentioned, we’re we’re really, I think, a leader in introducing technology, particularly as it relates to automation in what is traditionally a pretty high intensity manpower operations. We’re bringing a BlueLinx automation to our water transfer operations, reducing personnel by 40%. Our automated sandstorm, again, a 50% reduction of of manpower from jobs. And our patented automated drill out system, again, a 75% reduction. So we’re still pretty early days in the rollout and upgrading the fleet to getting fully automated.

That is our intention, and we are seeing the benefit of that. But that is where we’ll be putting our capital in this capital investments in this segment. So moving from our our current core businesses, wanna talk about our emerging growth strategies. There’s really three of them, very exciting opportunities for TETRA. One is introducing electrolytes for long duration energy storage.

Second is we touch on produced water desalination for beneficial reuse, and then the third is critical minerals production and extraction. On the electrolyte side, we’ve basically taken a a zinc bromide based completion fluid that we’ve been using for many, many years in our oil and gas completion fluids business and have developed a electrolyte working with Eos Technologies to and put a contract in place, a supply contract in place with them to be their primary provider for their for their electrolyte. Today, we’re the only US based manufacturer of ultra pure zinc bromide. We have a patented process for the manufacturing process to get the high purity that we need, and we have a five year agreement with EOS supporting their growth. Just a few more pictures, diagrams of the EOS battery, the electrolyte that you can see in the in the tote.

And we’ve mentioned we have we have an agreement to provide a minimum 75% of their electrolyte needs and a % of their pure flow zinc bromide needs. Utility scale battery is really the target for the EOS technology. It’s a long duration energy storage, a ten, twelve hour charge discharge cycle time. This this traditional hockey stick that you see is actually not a forecast. It is the actual data that has been published to show the the growth that the energy storage industry is is going through.

Moving on to produced water recycling and reuse. The the key area for this opportunity is really the Permian Basin. The Permian Basin produces significant amounts of water for every bottle of oil that the Permian produces. This is a chart generated by that shows the total water production between the Midland Basin and the Delaware Basin is about 8,700,000,000 barrels per year. A portion of that is treated, the 1.6.

So that treatment, TETRA is one of the market leaders in. We treat that for benefit not for beneficial reuse, but for frac fracking purposes. So we treat it and resell it to the operators for fracking. And in some, it’s reinjected, but the bulk of the produced water today is injected into dispels disposal wells, about 6,300,000,000 barrels per year. What we are bringing to the market is the ability to treat and desalinate that water to be used instead of injection purposes for reuse end markets such as agriculture, industry, data centers, chip manufacturing, etcetera.

This is an interesting chart for the Delaware Basin that was presented at a recent conference that shows the amount of produced water today that is injected in the in the red bar graphs and then the disposal capacity in the in the in the blue portion of the chart. And as you can see, because the disposal wells are starting to overpressure and limited pore space to put the amount of produced water that’s being injected, there’s an intersection coming, and this chart shows projected by 2030, we will be out of force base to put the the 6,300,000,000 barrels of produced water that today is being disposed of. As I mentioned on this slide, The Wall Street Journal called this oil fields Manhattan Project because of the urgency of finding a solution so that the entire Permian Basin oil production is not curtailed, suppressed, or cut back significantly just because we don’t have a solution for the amount of water that is that is being produced. This is the Tetris, Oasis end to end desalination solution that we introduced at the end of last year basically incorporates what Tetra has learned over the years treating produced water for for frac reuse purposes.

And we’ve partnered up with two membrane technology providers, vacuum membrane distillation through KMX and osmotically assisted reverse osmosis through HiRec. And then our post treatment capabilities at the end, and this end to end solution, we think, is is a first to market and fairly unique in terms of the full solution taking raw produced water and treating to the beneficial reuse purpose in in the market. And couldn’t ask for a better a better partner than EOG who we’ve worked with for the last two and a half years to to to bring this solution to the market. In March, we announced our collaboration for produced water with and the pilot project with EOG. Our first pilot we did in South Texas.

We were able to desalinate 92% of the water to a higher quality level than what is typical municipality drinking water. The new pilot that we have introduced with EOG is pilot for rangeland grassland study, and we have five other NDAs in place with other major operators and midstream companies that we are closely working with for this this solution. And moving on to our our last critical minerals or sorry. Our our last emerging growth strategy is is really is is Critical Minerals. The the the basis for this is really the Arkansas brine leases that we have where we secured over 40,000 acres of leases in Arkansas in the Smackover formation, which are very rich in in minerals.

Those minerals include lithium. Those minerals include bromine, which we use in our completion fluids and also to support the electrolyte for EOS. We’ve also discovered that they’re rich in magnesium and even have a a very interesting levels of manganese, all of which or two of which are on the the critical minerals list. Our bromine project is a project that we have have initiated to really keep up with the demand that we’re seeing both for our completion fluids on the bromine side because of the deep water growth and also to keep base with EOS demands. Between the two of them, we we anticipated we’re gonna need close to 75,000,000 in the future of of bromine.

We’re going to take this project in in phases. Phase one shown here at £30,000,000, phase two at £45,000,000, and phase three up to £75,000,000 to be able to phase that in as our existing supply agreements come to an end, and we’re able to introduce our own lower cost bromine supply through our own through our own plant. It also allows us to manage the cash flow from our operations and fund this through our own cash flow operations, which which we are on track doing and have very high confidence we will be able to continue to do through the project completion. There are other examples of critical minerals with our customers on the operators. As we’re desalinating their produced water, there’s obviously a highly concentrated portion of the of the of the water that’s available for us to extract those minerals, iodine being one of them, lithium chloride, lithium carbonate.

We’ve mentioned bromine out of our own smack over formation, calcium chloride, which we’re a market leader in, and as I’ve mentioned, manganese and magnesium. These are all future future sources of revenue and earnings for the company. With that, I’ll turn it

Elijio Serrano, CFO, TETRA Technologies: over to Elijio for the financial summary. Thank you, Pat. So a few weeks ago, we reported first quarter earnings. On the left side, you can see that revenue increased substantially sequentially versus the fourth quarter, and it was also higher than the first quarter of a year ago. In our business, we’ve got seasonality that is occurs in the second quarter of every year.

We see a ramp up of calcium fluoride activity in Northern Europe. Now on the right side, you can see the adjusted EBITDA margins. 21% was the highest that we’ve seen with the current business configuration that we have. The first quarter results were $10,000,000 better than not only a year ago, but also sequentially. And note also that they were even stronger than the seasonal peak that we have historically seen in the second quarter of every year.

This improvement in EBITDA and margins is driven by our activity in the deepwater Gulf Of Mexico, where we have technology that is differentiated from our competitors. We completed the first of three major wells for one customer in the Gulf Of America. At the end of the quarter at the end of the first quarter, we’re in the process of completing the second well. And in the in by the end of the second quarter, we’ll complete the third well. We also saw activity across Europe and South America get stronger.

We picked up a long term agreement with major operator in Brazil, and that project is underway this year. And then also, Brady mentioned that we’ve been working on technology to reduce manpower at the job site of the onshore business, and that has also led to stronger results. When we reported fourth quarter results in February, we provided guidance for the first half of the year. We didn’t do quarterly guidance because some of the jobs could straddle between q one and q two. And while many companies, given the current environment, are recalling consensus or dropping their expectations for what was occurring in the second quarter, we actually increased the lower end of our guidance.

You can see at the bottom that adjusted EBITDA, the lower end is $57,000,000 above the first half of last year, and we previously had indicated that the low end of that guidance was 55. So we increased our expectations despite the global economic environment and despite a lot of the challenges that our market is going through. And again, that reflects the competitive advantage that we’ve with calcium chloride in the deepwater market and the technology investments that we are seeing occur in the onshore business. We are not yet in the first half of the year seeing any material benefit from the growth initiatives that Brady mentioned, but we expect those to have a material impact on our business beginning in the second half of this year. From a balance sheet and a liquidity perspective, you can see that during the COVID-nineteen downturn, we were materially reducing our debt structure.

We’re generating cash. Today, we’re at a 1.5 times leverage ratio. No maturities that we have. Our revolver that is has no amount outstanding on it does not renew until 2029, and our term loan does not review until 2030. We negotiated a term loan that allows us to have a $75,000,000 draw on it that we can use to fund our Dolby growth initiatives, and that is available to us in addition to the liquidity that we’re sitting on both of cash on hand and the business that we’re generating free cash flow.

In summary, if you look at TEPRA, a base business performance in a very solid environment when the economy is putting pressure and question marks in the performance of the oilfield services sector. Three growth opportunities, a solid balance sheet that we’re improving by continuing to generate free cash flow that we believe allows a lot of investment opportunities to those that are looking for an opportunity to participate with the company growing beyond its base business and leveraging its aqueous chemistry technology. Again, really appreciate the opportunity to participate with LifeMed at this conference, and we look forward to meeting with investors in the future. If there’s any feedback that we can provide in addition to what we shared today, please reach out to me. Our phone numbers are on our press releases, and we will be glad to engage in discussions with you.

Thank you again, and we appreciate your participation. Thank you.

Brady Murphy, CEO, TETRA Technologies: Appreciate it.

Robert Blum, Managing Partner, Lithium Partners: Fantastic. Gentlemen, thank you so much for that presentation and to everyone watching here today. Again, as just mentioned, if there are any questions, you can go ahead and reach out to the management team or you can likewise send me an email. If you’d like to learn more about Lithium Partners, visit our website, lithiumpartners.com, or again, follow us on LinkedIn for future events. Gentlemen, thank you so much for your participation today.

Brady Murphy, CEO, TETRA Technologies: Thank you. Thank you, Robert.

Robert Blum, Managing Partner, Lithium Partners: Wonderful. Everyone, have a great rest of the conference.

Elijio Serrano, CFO, TETRA Technologies: Thank you.

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