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TETRA TECHNOLOGIES INC (TTI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was solid: revenue $173.9M (+1% y/y, +11% q/q), GAAP EPS $0.08, adjusted EPS $0.09, and adjusted EBITDA $35.9M with 20.6% margin; base business free cash flow was $37.4M .
  • Versus S&P Global consensus, revenue modestly beat ($172.9M* vs $173.9M actual) and adjusted EPS beat ($0.077* vs $0.09 actual); prior Q1 similarly delivered an EPS beat and slight revenue miss* [Values retrieved from S&P Global].
  • FY25 guidance introduced: revenue $610–$630M, adjusted EBITDA $100–$110M, GAAP pre-tax income $21–$34M; management reiterated strong liquidity ($204M at quarter-end; $218M as of 7/28) and net leverage at 1.2x .
  • Catalysts: deepwater momentum (Neptune completions, Brazil award), emerging electrolyte volumes tied to Eos ramp in 2026, and commercial progress on Oasis TDS desalination (first Permian pilot revenue; modular 25K bbl/d design) .

What Went Well and What Went Wrong

What Went Well

  • Completion Fluids & Products delivered 18% q/q revenue growth to $109M and 36.7% adjusted EBITDA margin; CEO: “exceptional second quarter… adjusted EBITDA of $35.9M, margins of 20.6% and base business free cash flow of $37.4M – all above our expectations” .
  • Strong deepwater execution (three-well CS Neptune in Gulf of America) plus Northern Europe industrial chemicals season; segment profit up 21% q/q and 39% y/y .
  • Balance sheet strength and cash generation: cash from ops $48.3M, liquidity $204M at quarter-end (improved to $218M by 7/28) and net leverage 1.2x; CFO emphasized maintaining leverage <2x and non-dilutive project financing .

What Went Wrong

  • Water & Flowback margins declined to 9.9% (10% stated) from 13% in Q1 due to ~$2M non-recurring costs (inventory write-offs, trailing exit costs); revenue flat vs Q1 despite frac activity down 14% q/q .
  • Macro headwinds: continued decline in U.S. onshore drilling/completion and lower oil prices; pace of deepwater completions expected to normalize in 2H after record 1H .
  • Non-recurring credits/charges net $1.3M (legal/advisor fees, severance/restructuring in Water & Flowback) highlight ongoing footprint rationalization .

Financial Results

Consolidated vs Prior Periods and Estimates

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD 000s)171,935 157,140 173,872
GAAP EPS ($)0.06 0.03 0.08
Adjusted EPS ($)0.07 0.11 0.09
Adjusted EBITDA ($USD 000s)30,234 32,267 35,879
Adjusted EBITDA Margin (%)17.6% 20.5% 20.6%
Consensus vs ActualQ2 2024Q1 2025Q2 2025
Revenue Consensus* ($USD)180,084,000*159,712,500*172,875,000*
Revenue Actual ($USD)171,935,000 157,140,000 173,872,000
Primary EPS Consensus* ($)0.105*0.063*0.0767*
Adjusted EPS Actual ($)0.07 0.11 0.09

Values retrieved from S&P Global.*

Segment Breakdown

Segment MetricQ2 2024Q1 2025Q2 2025
Completion Fluids & Products Revenue ($USD 000s)100,019 93,018 109,445
CF&P Adjusted EBITDA ($USD 000s)28,916 33,216 40,114
CF&P Adjusted EBITDA Margin (%)28.9% 35.7% 36.7%
CF&P Pre-tax Income ($USD 000s)26,653 30,677 38,133
Water & Flowback Revenue ($USD 000s)71,916 64,122 64,427
W&F Adjusted EBITDA ($USD 000s)10,940 8,321 6,401
W&F Adjusted EBITDA Margin (%)15.2% 13.0% 9.9%
W&F Pre-tax Income ($USD 000s)3,156 (8,888) (1,271)

KPIs and Cash Metrics

KPIQ2 2024Q1 2025Q2 2025
Cash from Operations ($USD 000s)24,831 3,935 48,333
Total Adjusted Free Cash Flow ($USD 000s)8,089 4,241 26,492
Base Business Adjusted FCF ($USD 000s)17,918 15,409 37,353
Capital Expenditures ($USD 000s)15,271 (net of proceeds) ~18,000 19,000
Cash & Equivalents ($USD 000s)42,752 (incl. restricted) 41,050 (incl. restricted) 68,801 (incl. restricted); cash $68,749
Liquidity ($USD 000s)—208,000 (as of Q1-end) 204,000 (Q2-end); $218,000 (7/28)
Net Leverage Ratio (x)—1.5x 1.2x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)FY 2025— (prior commentary: “high single digit to low double-digit growth”) $610M–$630M Initiated numeric range
Adjusted EBITDA ($USD)FY 2025—$100M–$110M Initiated
GAAP Net Income Before Taxes ($USD)FY 2025—$21M–$34M Initiated
Base Business Free Cash Flow ($USD)FY 2025“> $50M” (company expectation) “in excess of $50M” reiterated Maintained
Adjusted EBITDA ($USD)1H 2025$57M–$65M (raised lower end in Q1) Actual 1H adjusted EBITDA $68.1M (record, +$3.1M above upper range) Beat prior guidance

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Deepwater/NeptuneGulf of America strong; set up for three Neptune wells in 1H25 First Neptune well completed; two more expected in Q2 Three-well project completed; pipeline of CS Neptune and Brazil award Strong and continuing; 2H moderates from record 1H
Industrial chemicals (Europe)Inventory build for seasonal peak Start of seasonal peak; margin lift Very strong season; 10th consecutive high Sustained strength
Water & Flowback automationTech/automation focus to stabilize margins SandStorm/Auto-Drillout near fully utilized Fully utilized; margins impacted by non-recurring costs; actions to right-size Tech adoption rising; margins mixed short term
Tariffs/MacroGeneral caution; NOL benefits Limited tariff impact expected; U.S. frac uncertainty Macro headwinds persist; activity lower; guidance resilient Manageable
Regulatory/Produced waterOasis TDS launched; successful TRRC/WET testing Collaboration with EOG; Permian grasslands pilot EPA review; TX HB 49 enabling reuse; first Permian pilot revenue; commercial plant design initiated Accelerating toward commercialization
Energy storage electrolyteGrowing demand; Eos ramp discussed Anticipated increase with automated line Bulk tanker system installed; 2026 material ramp anticipated Building toward 2026 inflection
Financing/Capital returnsLeverage improvement plan Liquidity $220M as of 4/28; leverage target <2x Liquidity $219M as of 7/29; Investor Day to outline return of capital Strengthening; capital return framework pending

Management Commentary

  • “Our employees delivered an exceptional second quarter with Adjusted EBITDA of $35.9 million… and base business free cash flow of $37.4 million – all above our expectations.” — Brady Murphy, CEO .
  • “From the base business, we generated $1 million more in cash than we did EBITDA… improved our net leverage ratio to 1.2x… Any incremental capital required above base business free cash flow will be at the project level and will not be diluted to TETRA shareholders.” — Elijio Serrano, CFO .
  • “We engaged an engineering firm to begin designing our first Permian Basin commercial [Oasis] plant… 25,000 barrels per day… design allowing for 25,000 barrel-per-day increments to enable scaling.” — Brady Murphy .
  • “We have discussions underway with multiple bromine suppliers… optimistic that we will have our demands covered [to bridge to 2027 plant].” — Brady Murphy .

Q&A Highlights

  • Desalination economics/regulatory: Operator disposal costs rising (trucking $5–$6/bbl), supportive EPA/TX HB 49 framework; Oasis designed for lower energy/cost; detailed commercials to follow 4Q engineering package .
  • 2H cadence: Deepwater moderates from record 1H, but Q3/Q4 expected “relatively similar” financials; working capital collections (Neptune, Europe) boost FCF .
  • Guidance underpinnings: Not all 1H uplift was Neptune; technology differentiation to defend margins in onshore; deepwater timing shifts more to early 2026; Eos not material in 2025 .
  • Oasis design: Modular 25K bbl/d trains scalable to 100K+ bbl/d; broad Permian applicability via operator specs .
  • Bromine supply bridging: Multi-supplier approach to bridge deepwater/electrolyte demand until 2027 plant start-up .
  • Capital returns: Investor Day (9/25) to outline transition from growth investments to capital return program .

Estimates Context

  • Q2 2025 results vs consensus: revenue $172.9M* cons. vs $173.9M actual (beat); primary EPS $0.0767* cons. vs $0.09 adjusted actual (beat). Q1 2025 showed an EPS beat and slight revenue miss*. Values retrieved from S&P Global.
  • Implications: Street likely to lift FY25 EPS and revenue modestly on execution and cash generation; mix shift (deepwater normalizing, automation adoption, produced water) supports margin resilience. Electrolyte contribution remains a 2026 driver rather than 2025, as reiterated by management .

Key Takeaways for Investors

  • Completion Fluids continues to be the earnings engine; 2025 segment revenue targeted at a 10-year high with strong margins and deepwater exposure (Gulf of America, Brazil, North Sea) .
  • Water & Flowback is stabilizing via automation and cost actions; expect margins to improve as non-recurring costs roll off and technology utilization stays high .
  • Liquidity and leverage provide ample flexibility; management committed to non-dilutive funding for bromine/desalination and targeting leverage <2x .
  • Oasis TDS commercial pathway accelerating (first pilot revenue; regulatory support; modular plant design); watch for 4Q engineering package and potential customer commitments .
  • Electrolyte shipments set for 2026 step-change as Eos automates; TETRA has invested in bulk tanker logistics to scale deliveries .
  • FY25 guidance frames a stable back half; near-term catalysts include Investor Day (9/25) and continued deepwater work; medium-term upside from bromine plant and electrolyte ramp .
  • Trade: Modest beats and strong FCF are supportive; narrative pivot to desalination/electrolyte commercialization can drive re-rating, while U.S. onshore softness is a watch item .