Tetra Technologies Q1 Earnings Call Highlights

Key Points

• Strong Q1 performance: Tetra reported one of its strongest first quarters in a decade with revenue of $156 million and adjusted EBITDA of $26 million (10-year highs excluding the prior-year Neptune benefit), driven by record industrial-chemicals sales in completion fluids and 10-year highs in Brazil and the Gulf of America.
• Solid financial posture and guidance: The company reiterated 2026 guidance for single-digit revenue growth and specific margin ranges (completion fluids 25–30%, water & flowback mid-teens), ended the quarter with $36 million cash and $182 million debt (net leverage ~1.5x), used cash in Q1 but expects positive base-business free cash flow in 2026 to fund reinvestment.
• ONE TETRA 2030 progress: The Southwest Arkansas bromine plant is on time and on budget (phase 2 underway, first production expected start of 2028 with up to 75 million pounds annual capacity), while initiatives in battery electrolytes, produced-water desalination (Permian pilot >96% uptime), a magnesium JV, and evaluation of 585,000 MT LCE lithium resources are advancing.

Tetra Technologies NYSE: TTI executives highlighted what they described as one of the company’s strongest first-quarter performances in the past decade, while also addressing geopolitical uncertainty and providing updates on long-term growth initiatives tied to its ONE TETRA 2030 strategy.

First-quarter performance and operating backdrop

President and CEO Brady Murphy said the company “started 2026 with one of the strongest first quarter performances in the company's past 10 years,” despite what he called “one of the most tumultuous periods in the history of the oil and gas industry.” Murphy said that excluding the benefit of the Gulf of America Neptune project that boosted the prior-year quarter, first-quarter 2026 revenue of $156 million and adjusted EBITDA of $26 million were 10-year highs, and that both Brazil and the Gulf of America delivered 10-year high first-quarter results.

Murphy also said industrial chemicals and production testing each posted 10-year high revenues in the quarter, and added that he was encouraged because “the operational and financial fundamentals for each of our segments and many of our sub-segments are improving even before the benefit of current elevated oil prices and potential increased customer spending activity.”

On the conflict in the Middle East, Murphy said the region has historically represented about 5% of company revenue and that he did not expect an overall negative impact, citing expected strength in the U.S., Europe, and Latin America. CFO Matt Sanderson added that offshore activity in the Middle East has slowed and that logistics into the region face higher costs and shipping delays, which could delay some second-quarter completion fluids sales. However, Sanderson said manufacturing has been unaffected because the company’s calcium chloride and bromine-based completion fluids are produced outside the Middle East, and he noted an increase in spot-sale inquiries from regions and customers the company has not historically served.

Completion fluids: industrial chemicals strength and offshore activity

Murphy said the industrial chemicals portion of the completion fluids and products business had a “record-setting” first quarter, with revenue up 15% year-over-year and 13% sequentially, and that it accounted for more than 50% of segment revenue for the first time since 2021. He attributed demand to higher-pressure gas plays in South Texas and the Western Haynesville supporting Gulf Coast LNG plants, as well as increasing pressures in West Texas that are contributing to higher-density fluids for workovers.

Sanderson reported completion fluids and products revenue of $92 million and adjusted EBITDA of $26 million, up 10% and 12%, respectively, from the fourth quarter of 2025. He said the sequential increase was driven by higher sales volumes in industrial chemicals and ongoing deepwater projects in the Gulf of America and Brazil. Year-over-year, Sanderson said completion fluids and products revenue fell 1% and adjusted EBITDA declined 23%, referencing the absence of “high-impact TETRA CS Neptune projects” that benefited the first half of 2025.

Murphy said Brazil and the Gulf of Mexico (excluding Neptune work in the prior year’s first quarter) both posted 10-year highs in first-quarter revenue and adjusted EBITDA. On Neptune, Murphy said the company was “very encouraged by the growing pipeline,” and during Q&A he said the probability of a Neptune project in 2027 is “continuing to increase pretty significantly,” while noting that it may or may not occur in 2026.

Murphy also pointed to a trend toward deeper, hotter wells in the Gulf of Mexico and said it was evidenced by “very strong first quarter revenues for our highest density zinc bromide completion fluid.”

Water & flowback and production testing: outperformance amid lower U.S. activity

Water and flowback revenue totaled $65 million, Sanderson said, up 3% sequentially and 1% year-over-year. He contrasted that result with a more than 24% year-over-year decline in U.S. frac activity over the same period. Adjusted EBITDA for the segment was $9 million, up 20% sequentially and 9% year-over-year, which Sanderson attributed to cost reductions and increased penetration of higher-margin automation technology.

Murphy said that despite a slow January due to freezing weather and frac fleets down 24% year-over-year, the company still posted modest growth in water and flowback revenue. He also said TETRA is positioned to benefit if higher oil prices pull forward offshore projects and eventually support increased U.S. unconventional activity.

Production testing reached a 10-year high for first-quarter revenue, Murphy said, as the company’s automated SandStorm technology gained market share across unconventional operations in the U.S., Argentina, and the Middle East. Murphy said international production testing revenue exceeded 50% of the subsegment total for the first time in the past decade. Sanderson said project startups in Argentina’s Vaca Muerta basin are expected to enable the company to double Argentina revenue in 2026 at segment-accretive margins.

Guidance and financial position

Murphy said the company is maintaining its prior 2026 guidance of single-digit revenue growth over 2025, with completion fluid margins of 25% to 30% and water and flowback margins in the mid-teens. He said the company expects more clarity on customer activity offshore and outside the Middle East as the second quarter progresses.

On the balance sheet, Sanderson said the company ended the quarter with $36 million in cash and $182 million of total debt, resulting in a net leverage ratio of 1.5 times. Cash used in operating activities was $12 million, and total capital expenditures were $19 million, including $8.4 million for the Evergreen Project. Adjusted free cash flow was a use of $32 million, and base business adjusted free cash flow was a use of $23.5 million. Sanderson attributed the cash use to higher incentive compensation tied to 2025 results, an accounts receivable build, and seasonal inventory builds in Europe that he said would be monetized in the second quarter.

Sanderson said the company expects to generate positive base business free cash flow in 2026 and plans to reinvest it into the Arkansas bromine plant.

ONE TETRA 2030 updates: bromine plant, electrolytes, produced water, and critical minerals

Murphy told investors the company’s confidence in its ONE TETRA 2030 growth trajectories has strengthened, citing deepwater, specialty chemicals, electrolytes for battery energy storage, critical minerals, and produced-water desalination. He said the company expects bromine demand tied to deepwater completion fluids and battery storage electrolytes to double by 2030, and noted that more than 50% of global bromine supply comes from the Middle East.

On its Southwest Arkansas bromine plant, Murphy said the project is proceeding on time and on budget. He said phase 2 is underway, phase 3 is slated for 2027, and first production is expected at the start of 2028. The plant is designed for annual capacity of up to 75 million pounds, which he said is more than double the company’s existing long-term third-party supply agreement. In Q&A, Murphy said phase one has been completed, including installation of a 130-foot titanium bromine tower, and that additional construction around the tower, pipelines, and pretreatment systems remains ahead. He said the company plans to fund the project from free cash flow, while noting it has “very good options” if additional capital is needed.

Murphy also discussed the company’s electrolyte business, referencing U.S. Energy Information Administration data showing 15 gigawatts of utility-scale battery storage added in 2025 and a projected 24 gigawatts planned for 2026. He said TETRA’s proprietary PureFlow zinc bromide is used in long-duration storage systems and supports “safe, non-flammable performance at utility scale.” Asked about supplying Eos Energy, Murphy said TETRA is “very plugged into their forecast” for planning purposes, but declined to provide specifics, adding that additional third-party bromine supply has been secured to meet the forecast received from Eos.

For produced-water desalination, Murphy said the company’s OASIS TDS solution has “multiple engineering efforts and customer commercial engagements.” He said the Permian Basin pilot has operated at over 96% uptime since achieving 24/7 steady-state operations 60 days earlier and continues to meet performance specifications. In response to an analyst question, Murphy said the company is pursuing several parallel engineering studies, including for a 100,000 barrel-per-day plant and smaller configurations, and expects the work to support deeper commercial discussions before the end of the second quarter. Sanderson said customer engagement has increased and noted that disposal challenges and disposal costs “continue to rise.”

Murphy also updated the company’s Arkansas lithium and magnesium resources. He said TETRA has formed a joint venture with Magrathea Metals—named Arkansas Magnesium—to advance domestic magnesium production and monetize the asset, leveraging TETRA’s processing expertise and Magrathea’s electrolytic magnesium technology, which he said has been partially underwritten by the U.S. Department of Energy. Murphy said Magrathea converted TETRA’s magnesium-rich Smackover brine into high-purity magnesium metal at a small pilot operation in the San Francisco Bay Area in April, and that engineering studies are underway for a demonstration plant planned for co-location at the Evergreen Bromine site. Murphy said it was premature to determine the size of a first commercial magnesium plant and cited considerations including offtake agreements and potential government support.

On lithium, Murphy said a rebound in lithium carbonate prices over the past six months is prompting the company to evaluate options to accelerate development of its Evergreen resources, which he described as 585,000 metric tons of lithium carbonate resources on a 6,900-acre brine unit where TETRA owns 65% of the brine mineral rights and ExxonMobil owns 35%. He said current lithium carbonate equivalent prices of around $25,000 per metric ton and efficiency advances in direct lithium extraction technology are improving the attractiveness of accelerating development, but added the company is not ready to make a final investment decision on a lithium plant.

About Tetra Technologies NYSE: TTI

Tetra Technologies, Inc NYSE: TTI is a provider of specialized products and services to the upstream oil and gas industry. The company operates through two primary segments: Oilfield Services, which offers hydraulic fracturing and wellsite fluid systems, and Chemical Solutions, which manufactures and delivers a broad range of drilling, completion and production chemicals. Tetra's integrated service model spans the design, blending and on-site delivery of fluids, as well as pumping equipment and related wellsite operations.

Within the Oilfield Services segment, Tetra supplies pressure pumping fleets and associated equipment to support onshore hydraulic fracturing and well placement activities.

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