TETRA Technologies (TTI) Misses Q1 EPS by 1c, Revenues Beat

TETRA Technologies (NYSE: TTI) reported Q1 EPS of ($0.04), $0.01 worse than the analyst estimate of ($0.03). Revenue for the quarter came in at $77.32 million versus the consensus estimate of $76.95 million.

Brady Murphy, TETRA's Chief Executive Officer, stated, "The first quarter of 2021 represents a full year since the start of the global COVID-19 pandemic and despite the February winter storm impacting our quarterly financial results, I am pleased with the critical milestones we achieved during the quarter that are accelerating our opportunities in low carbon energy markets and positioning us very well for an improving oil and gas market. During the quarter we accomplished a successful deconsolidation of CSI Compressco, reduced our total debt by $29 million, achieved eight straight quarters of positive adjusted free cash flow from continuing operations, maintained positive adjusted EBITDA for our Water and Flowback segment despite the historical February winter storm impact, and advanced several of our low carbon initiatives ahead of schedule including our announcement yesterday on our strategic partnership with CarbonFree for Carbon Capture Utilization and Storage (CCUS). As oil prices reached pre-COVID-19 levels and stabilized for the past few months, we believe both the U.S. and international markets will continue with meaningful recovery for the rest of 2021 with continuing momentum into 2022.

"In the first quarter, we generated $9.0 million of adjusted EBITDA which was inclusive of an estimated unfavorable impact of $3.1 million due to the severe weather conditions during February that shut down fracking activity in several of our key markets and negatively impacted the supply chain for our industrial chemicals operations. In March we saw a strong rebound of activity with double digit adjusted EBITDA margins in our Water & Flowback Services segment and over 25% adjusted EBITDA margins for our Completion Fluids & Products segment. As we enter the second quarter, we see stronger activity levels that are well above our March run rate. We are optimistic for delivering a very solid second quarter that will be representative of what we can achieve in the current market environment as we leverage our strong industrial chemicals business, proprietary automation technology, and strong international and offshore market position for completion fluids. Although we are seeing some inflationary costs for fuel and wages, we have been successful pushing across price increases which will allow us to further improve our margins in the US onshore business. Since the issuance of our prior press release, we secured a second project in Argentina for a fully automated sand recovery using our proprietary SandstromTM advanced cyclone technology. Our TETRA BlueLinxtm digitized control system solution continues to be a key enabler for our integrated water management projects as we achieved a record high 47 integrated water management projects with 22 different customers in the first quarter, up from 35 projects in the fourth quarter. Our Northern Europe industrial chemicals business is off to a strong start in the second quarter, as they have also been able to successfully secure price increases.

"Adjusted EBITDA in the first quarter included $4.0 million in gains on the increased equity value of our holdings in CSI Compressco LP and Standard Lithium where we own approximately 11% and 1%, respectively. Following the earlier announcement on the deconsolidation of CSI Compressco and reflecting the $77 million of cash from operating activities and the $59 million of adjusted free cash flow from continuing operations that we generated in 2020, we have reduced our term loan by $36 million from $220.5 million as of September 30, 2020 to $184.2 million as of March 31, 2021. Additionally, at the end of March no amounts were outstanding under our bank revolver.

"We continue to invest significant management time and technical expertise to evolve our low carbon opportunities with meaningful advancements in each of the key areas of Carbon Capture Utilization and Storage as well as zinc bromide and lithium for energy storage. We are pleased to announce that we reached an agreement with CarbonFree yesterday in which we believe is a step change for the technical and commercial model for Carbon Capture Utilization and Storage. We have also qualified our "TETRA PureFlow" ultra-pure zinc bromide with two technology leaders in the energy storage space, with first revenues expected as early as this year. In April we received our additional Standard Lithium shares per our agreement. We expect to continue to make meaningful progress on these initiatives in the coming quarters to further evolve our diverse revenue stream and to accelerate our entry into low carbon energy."

For earnings history and earnings-related data on TETRA Technologies (TTI) click here.

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