TETRA Technologies, Inc. (TTI) Earnings

Management highlights

- Strategic Milestones & Product Launches • Launched Tetra Neptune Z-Lite, a new deepwater completion fluid that delivers higher densities while significantly reducing zinc content, and was awarded a three-well 20,000 PSI Gulf of America contract with Beacon All-Sure Energy. • Board approved final investment decision (FID) for the Arkansas bromine project, with $108 million in net proceeds from a recent follow-on equity offering to fund a portion of costs; the project is scheduled for completion in Q4 2027 and startup in early 2028, and will improve supply security and lower costs for both completion fluids and electrolytes. • Advanced Tetra Oasis TDS produced water desalination solution: completed significant engineering design progress for a 100,000 barrel per day facility to meet hyperscaler/data center volume requirements, and received patent allowance expanding IP coverage to critical pretreatment technologies for long-term membrane performance. - Market Position & Financial Performance • Consolidated Q2 2026 revenue hit $185.7 million, up 19% sequentially and 7% year-over-year. Adjusted EBITDA was $31.9 million, up 24% sequentially. Income from continuing operations was $10.2 million. • International and global offshore revenues reached 10-year highs for both Q2 and H1 2026, with H1 2026 international revenue 24% higher than the average H1 over the past decade. Argentina leads international growth, on track to double 2026 revenue over 2025, driven by early production systems and Tetra Sandstorm technology. • Demand for Tetra Pure Flow zinc bromide electrolyte for long-duration energy storage continues to accelerate, driven by growing demand for grid resiliency, critical infrastructure power needs, and expanding customer manufacturing backlogs. - Critical Mineral Optionality • Tetra controls 40,000 acres of mineral rights in Southwest Arkansas with exposure to lithium and magnesium, holding lithium royalty rights on ~35,000 acres, a 65% ownership interest in an estimated 585,000 tons of lithium carbonate equivalent, and over 2 million tons of measured/indicated magnesium resources. These resources provide long-term optionality and shareholder value with synergies to the existing bromine project.

Guidance

- Base business performance for the remainder of 2026 is expected to meet market expectations, though Middle East conflict creates unpredictability, and the timing of large Tetra Neptune pipeline projects can meaningfully impact H2 2026 results. - The 8% projected compound annual growth rate for deepwater activity through 2030 remains intact, and management notes there is potential to exceed this CAGR based on current market trends. - Completion fluids segment adjusted EBITDA margin is expected to remain in the 25% to 30% range for the base business, in line with prior guidance. - Management reaffirmed the Arkansas bromine project schedule, with startup targeted for early 2028, when it will deliver material reductions in bromine supply costs.

Segment performance

1. Completion Fluids and Products: Q2 2026 revenue was $113.1 million, accounting for 60.9% of total consolidated Q2 revenue. Pre-tax net income was $27.2 million, adjusted EBITDA was $29.9 million, and adjusted EBITDA margin was 26.4%. Revenue increased 23% sequentially and 3% year-over-year. 2. Water and Flow Back Services: Q2 2026 revenue was $72.5 million, accounting for 39.1% of total consolidated Q2 revenue. Pre-tax net income was $3.2 million, adjusted EBITDA was $10.8 million, and adjusted EBITDA margin was 14.8%. Revenue increased 12% sequentially and 13% year-over-year. The 68% year-over-year increase in adjusted EBITDA, with margin up from 9.9% in Q2 2025.

Risks & headwinds

- The ongoing Middle East conflict has delayed fluid shipments to the region, introduces market unpredictability, and creates uncertainty for future capital spending in the region that may impact near-term sales results. - For the Tetra Oasis produced water desalination business, permitting from the Texas Commission on Environmental Quality (TCEQ) is identified as a potential near-term gating factor for finalizing commercial projects, with multiple general produced water discharge permits pending approval. - Third-party bromine prices are rising, which pressure margins for the completion fluids segment until the Arkansas bromine project comes online in 2028. - Actual results may differ materially from forward-looking statements due to risks and uncertainties outlined in Tetra's SEC filings.

Analyst Q&A

• Q: What is included in the "base business" referenced in 2026 guidance, and how much does EOS's growth drive the Arkansas bromine expansion? /

  A: Base business includes ongoing completion fluids, water and flow back services, and electrolyte sales, but does not currently include large, irregular Tetra Neptune projects. While EOS's growth to 4 GWh of capacity in 2027 and 8 GWh pre-2030 will consume a material portion of the new plant's capacity, the project's business case stands on its own even without electrolyte sales growth. If EOS underperforms, the capacity can be fully utilized for the growing completion fluids business, and excess bromine can be sold into the strong global elemental bromine market.

• Q: What financial impact will Neptune Z-Lite have, and how does it expand Tetra's deepwater market opportunity? /

  A: Z-Lite's financial impact per project falls mid-range between a typical deepwater completion job and a full large-scale Tetra Neptune project. By significantly reducing zinc content, Z-Lite addresses environmental and operational challenges of traditional high-density zinc-based completion fluids, opening access to markets where full-zinc fluids are restricted, and materially expanding the total addressable market for Tetra's Neptune chemistry.

• Q: What is the timeline and outlook for developing the Arkansas lithium and magnesium resources? /

  A: Development of critical minerals is currently secondary to the Arkansas bromine project, which is on track to come online in 2028. The company may release engineering study results and make a development decision by the end of 2026, with infrastructure synergies from the bromine plant reducing lithium development capex. Magnesium development is further out, requiring a small-scale demonstration plant first, with full commercial development expected after 2030, following lithium.

• Q: Why have hyperscalers recently become engaged with your Tetra Oasis desalination solution, and what are the key dynamics? /

  A: Hyperscalers are increasingly adopting water-cooled systems for high-density AI data centers in West Texas, where air cooling becomes impractical at higher densities and produces higher operating costs. Existing oil and gas produced water, desalinated via Tetra Oasis, can provide a low-cost water supply for these operations. While customer engagement and confidence have grown significantly, TCEQ permitting for produced water discharge remains a key near-term gating factor for project finalization.