TETRA Technologies, Inc. Q2 FY2025 earnings call

• Employees delivered exceptional Q2 performance with record-setting adjusted EBITDA for the first 6 months of 2025.
• Deepwater activity was record level in H1 2025, including 25 deepwater jobs in Q1 and completion of the 3-well Neptune project in Q2.
• Completion Fluids & Products saw 11% sequential revenue increase, with long-term outlook strong due to deepwater market positions.
• Progress on strategic initiatives: Eos electrolyte production line expected to ramp in Q4 2025, Arkansas bromine processing facility with $44M invested so far towards 2027 online, and produced water treatment technology with engineering firm engaged for first commercial plant design.

For the quarter, TETRA achieved an adjusted EBITDA of $35.9 million with margins of 20.6% and base business free cash flow of $37.4 million. The first 6 months of 2025 had a record adjusted EBITDA of $68.1 million, $3.1 million above the upper range of first quarter guidance. Completion Fluids & Products saw adjusted EBITDA margins increase by 100 basis points to 36.7% in Q2 2025 compared to Q1, driven by deepwater jobs like the CS Neptune project. Industrial Chemicals grew 5.5% year-over-year, outpacing GDP. Water & Flowback services had flat Q2 revenue vs Q1, down 10% YoY, with adjusted EBITDA margins at 10% (down from 13% Q1 but flat adjusting for non-recurring costs).

• Full-year 2025 GAAP net income before taxes expected $21M-$34M, adjusted EBITDA $100M-$110M, revenue $610M-$630M.
• 2026 expected to be first year with material impact from Eos electrolyte and Arkansas bromine project.
• Deepwater activity projected to be a 10-year revenue high in 2025, with 2026 benefiting from full year of Brazil Deepwater award and Gulf of America 20K award.

• Risks include scheduled delays for completion fluid projects, hurricane disruptions in the Gulf of America, and changes to oil and gas spending plans.

Q: About desalinization, could you speak to economics, energy use, and legislative initiatives?

A: Disposal well costs for operators are increasing while desalination costs are decreasing. Regulatory environment supportive with Texas HB 49 and EPA involvement. Commercial details to be refined with first complete engineering package by Q4.

Q: On offshore completion market, customer conversations and alignment with strengths?

A: Deepwater activity increasing, pressures rising aligning with TETRA's heavy bromine-based completion fluids strengths like Neptune for higher pressure wells.

Q: Guidance for second half vs Q3/Q4?

A: Activity expected consistent between Q3 and Q4, not at first half record pace but annual record for 2025.

Q: Assumptions underpinning revenue guidance?

A: Deepwater activity strength, Eos volumes ramping in 2026, timing of projects with deepwater projects weighted to early 2026 rather than second half of 2025.

Q: Desalination engineering design and modular capacity?

A: Design for 25,000 bbl/day with modular option to add 25,000 bbl/day increments, scalable for multiple basins and customer needs.

Q: Bromine supply for Arkansas project?

A: Discussions underway with multiple suppliers, optimistic about bridging supplies to 2027 plant target.

Q: Desalination progress and NDAs?

A: Pilot with EOG going well, multiple NDAs in place, shifting to small commercial plants over low volume pilots.

Q: Brazil and Gulf revenue outlook?

A: Brazil benefit in 2026 more significant than 2025, Gulf of America 20K award impact in 2026.

Q: U.S. land completions and Water & Flowback business?

A: Activity trending down, but automated technology utilization and produced water treatment offset declines, aiming for margin enhancement and cash generation.

Q: Capital returns to shareholders?

A: Details to be addressed at Investor Day on Sept 25, transitioning from growth investment to capital return program.