- The stock price of TETRA Technologies, Inc. (NYSE: TTI) increased by over 14% during intraday trading. This is why it happened.
The stock price of TETRA Technologies, Inc. (NYSE: TTI) increased by over 14% during intraday trading. Investors are responding positively to TETRA Technologies’ second quarter 2021 results.
These are the highlights:
— The second quarter 2021 revenue was $102 million, a sequential increase of 32% over the first quarter of 2021 reflecting improvements by all business segments, including the seasonal peak in Northern Europe chemicals sales.
— The net loss before discontinued operations was $6.7 million, inclusive of $4.7 million of non-recurring charges and expenses. This compares to a net loss before discontinued operations of $11.9 million in the first quarter, inclusive of $6.6 million of non-recurring charges and expenses.
— The net loss per share from continuing operations in the second quarter was $0.05. Excluding the non-recurring charges and expenses, the net loss per share from continuing operations was $0.02.
— Adjusted EBITDA, excluding non-recurring charges, was $13 million, which includes a $1.6 million benefit from the increase in TETRA’s equity ownership in CSI Compressco LP and Standard Lithium, where we own approximately 10.9% and 1.1%, respectively.
— Second quarter adjusted EBITDA was up 44% from the first quarter of 2021 reflecting stronger operational performance from both business segments.
— Cash flow from operating activities was $1.8 million in the second quarter of 2021 and compared to $5.8 million in the first quarter of 2021, while adjusted free cash flow from continuing operations was a use of cash of $4.5 million reflecting a buildup in working capital from the higher activity levels towards the end of the second quarter. This compares to $5.4 million of adjusted free cash flow from continuing operations in the first quarter of 2021.
KEY QUOTES:
“We achieved good overall revenue and EBITDA progression from the first quarter, and even more so as the quarter progressed, and with some great wins and key milestones in all of our business segments, I am very encouraged with the outlook going forward. By early June we saw meaningful increase in demand for international and Gulf of Mexico Completion Fluids, which is consistent with what we believe to be the start of strong, multi-year international and offshore recovery. We exited the quarter with June being our highest revenue and Adjusted EBITDA month since March 2020 reflecting sequential improvements in all of our business groups. Completion Fluids and Products Adjusted EBITDA margin of 27.7% was an improvement of 400 basis points from the first quarter of 2021. Although faced with some inflationary headwinds in our Water and Flowback business ahead of our ability to get broad-based price increases, the third quarter EBITDA and related margins are expected to benefit from two newly awarded recycling projects, a fully deployed Sandstorm project in Argentina, and continued improvement and alignment of service pricing. Going into the second half of the year, we expect to see a continued recovery in our North American onshore business with higher prices plus continued stronger activity in our international fluids business with the potential for strong market recovery in all of our segments heading into 2022.”
“The second quarter, and also more recently in July, we received a lot of positive news for our oil and gas related business as well as our low carbon energy opportunities. In July we completed our first international TETRA CS Neptune® fluids job in the North Sea, which also was our first ever high-density monovalent operation. While the revenue from this project was considerably smaller than our typical TETRA CS Neptune fluids projects in the Gulf of Mexico, it reflects acceptance of this proprietary technology into new markets. We were awarded a three-year completion fluids and services contract with one of the most active deepwater super major operators in the Gulf of Mexico (GoM) that represents a significant market share increase for this customer and for our GoM operations. We have also received a multi-year major completion fluids award through partnering with a major integrated service company for deepwater work in Brazil. We are expecting our international and offshore fluids sales to increase materially in the second half of the year from the first half due to major project awards and overall increased customer activity. With the ongoing growth and success of our Northern European industrial chemicals business, we are proceeding with a planned expansion for our Kokkola calcium chloride plant in Finland to increase capacity by over 25% by mid-2022.”
“Each of our low carbon energy business initiatives continues to advance at an accelerated pace. Following diligence and successful CO2 mineralization to design specifications in a San Antonio SkyCycle pilot plant, we have agreed to make a $5 million investment in CarbonFree in the form of a convertible note. This will allow us to participate in the equity upside as CarbonFree continues to make progress in commercializing its SkyCycle proprietary technology and we continue to advance our long-term business relationship. Our PureFlow high purity zinc bromide has been qualified by three energy storage manufacturers, and we have received our first commercial purchase order well ahead of our year-end expectations. We expect that this will be the first of many opportunities for TETRA to expand our PureFlow sales into the energy storage markets. In regard to lithium activities, Standard Lithium announced in the second quarter that they launched an engineering feasibility study to extract lithium from the brine, which would also include bromine, underlying the TETRA Arkansas leases as part of the 2017 agreement between Standard Lithium and TETRA. According to Standard Lithium, the results of this study are expected to be completed in the third quarter of 2021. As previously announced by Standard Lithium, this acreage has 890,000 tons of LCE equivalent at the inferred resource category. As we announced earlier today, we completed a preliminary exploratory study of the bromine and lithium in our Arkansas leases that includes the leases outside of the Standard Lithium agreement. The study indicates a rich brine concentration for both lithium and bromine and supports our actions to further evaluate a full economic feasibility of these assets. Finally, we have executed a memorandum of understanding to work with Anson Resources, an Australian publicly traded minerals company, to explore a business relationship for lithium and bromine extraction from their Paradox Basin Brine Project in southern Utah. The collaboration will include, among other things, the potential off-take agreement of bromine to meet our growing demands for both oil and gas and energy storage, potential licensing of TETRA’s patented bromine derivative manufacturing process, as well as operational management of the plant(s).
“We have reduced our term loan by $36.3 million from $220.5 million as of September 30, 2020, to $184.2 million as of June 30, 2021 and reduced it by another $8.2 million in July. This will save us approximately $3.2 million per year, on an annualized basis, in interest expense. In July, we amended our Asset Based Loan (“ABL”) extending the maturity to May 2025, and increased our availability for our ABL by approximately $9.4 million. With this amendment, we do not have any maturities until May 2025 other than our requirement to offer to prepay a percentage of excess cash flow following the conclusion of each calendar year. During the first half of 2021, we have recorded mark to market gains of $5.6 million on our equity holdings of CSI Compressco LP and Standard Lithium. As of July 30, 2021, the market value of these investments was $17.8 million, with no restrictions on our ability to monetize these investments. Additionally, in July we received an expected payment of $548,000 from our sale of our controlling interest in CSI Compressco.”
— Brady Murphy, TETRA’s Chief Executive Officer
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