TETRA Technologies has reported robust financial results for Q3 2023, including an adjusted EBITDA of $26.1 million, marking the highest since Q3 2015. The company also announced its foray into bromine and lithium extraction, with the approval of its unit application for development and production. The announcement was made in the company's recent earnings call, where they also discussed their business outlook and recent financial results.
Key takeaways from the earnings call include:
- The company's year-on-year revenue grew by 12%, and adjusted EBITDA increased by 40%. The year-to-date adjusted EBITDA of $83 million has already surpassed the full-year 2022 adjusted EBITDA of $78 million.
- TETRA is entering joint venture negotiations with its partner following the approval of its unit application for bromine and lithium extraction.
- The Completion Fluids & Products segment performed well with a 24% year-on-year revenue growth and a 42% increase in adjusted EBITDA.
- Despite a decline in US onshore drilling activity, the Water & Flowback Services segment saw improved margins and flat revenue.
- The company expects strong cash flow in Q4, driven by the sale of an early production facility in Argentina and working capital improvements.
During the call, the company emphasized their strong margins, attributing it to their vertically integrated business model and long-term supply agreements. They reported cash flow from operating activities of $40 million in Q3 2023, a significant increase from $2.1 million in Q3 2022. TETRA's liquidity at the end of Q3 was $107 million, and their net debt was $125 million.
CEO Elijio Serrano highlighted that their Argentina business, which generates around $20 million in annual revenue, will see a Q4 revenue impact due to the sale of one of the facilities. However, he emphasized that the majority of their business is focused on U.S. shale plays, particularly in the Permian Basin, where they have gained market share without deteriorating pricing.
Serrano also provided updates on their bromine and lithium projects, stating that they have spent $19 million on development and expect to start construction before the second half of 2024. The company is currently in discussions with potential customers for offtake agreements. Serrano expects free cash flow to be around $40 million in the coming years, which will support their investments in Arkansas.
InvestingPro Insights
Drawing upon real-time data from InvestingPro, TETRA Technologies (TTI) has an adjusted market capitalization of $722.93 million and a P/E ratio of 27.05 as of Q2 2023. The company's revenue for the last twelve months as of Q2 2023 stands at $604.13 million, marking a growth of 26.02%. Despite recent price downturns, with a 1-month total price return of -25.71%, the company has seen a significant price uptick over the last six months with a return of 62.89%.
Expounding on InvestingPro Tips, TTI's net income is expected to grow this year, a promising indicator for investors. Moreover, two analysts have revised their earnings upwards for the upcoming period, further suggesting positive financial performance. Despite a recent hit to the stock, TTI is trading at a low P/E ratio relative to near-term earnings growth, which could offer a potential opportunity for value investors.
These insights are among hundreds of additional tips and metrics provided by InvestingPro, aimed at empowering investors to make informed decisions.
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