On July 31, 2024, Tetra Technologies Inc (TTI, Financial) released its 8-K filing detailing its second-quarter 2024 financial results. The diversified oil and gas services company, which focuses on completion fluids, water management, frac flowback, production well testing, offshore rig cooling, and compression services, reported revenue of $172 million and net income of $7.6 million for the quarter.
Company Overview
Tetra Technologies Inc is a diversified oil and gas services company, focused on completion fluids and associated products and services, water management, frac flowback, production well testing, offshore rig cooling, and compression services. It has two reporting segments namely Completion Fluids & Products, and Water & Flowback Services. The Completion Fluids & Products Division manufactures and markets clear brine fluids, additives, and associated products and services. The Water & Flowback Services Division provides onshore oil and gas operators with comprehensive water management services. The company derives maximum revenue from the United States.
Performance and Challenges
For the second quarter of 2024, Tetra Technologies Inc reported revenue of $172 million, which represents a 14% sequential increase but a 2% decrease compared to the same period last year. The net income for the quarter was $7.6 million, translating to $0.06 per share, which fell short of the analyst estimate of $0.12 per share. The adjusted net income per share, excluding unusual items, was $0.07.
Despite the overall lower US onshore completions activity, the company saw sequential improvements driven by strong performance from its Completion Fluids & Products Division. However, the company faced challenges such as $1.1 million in foreign exchange losses and a slight revenue decline in the Water & Flowback Services segment.
Financial Achievements
Adjusted EBITDA for the quarter was $30.2 million, a 32% sequential increase. The company also reported net cash provided by operating activities of $24.8 million and total adjusted free cash flow of $9.4 million. The Completion Fluids & Products Division experienced a strong quarter with revenue of $100 million, a sequential improvement of 29%, driven primarily by strong seasonal European industrial chemicals volumes.
Income Statement Highlights
| Three Months Ended | June 30, 2024 | March 31, 2024 | June 30, 2023 |
|---|---|---|---|
| Revenue | $171,935 | $150,972 | $175,463 |
| Net Income | $7,640 | $915 | $18,197 |
| Adjusted EBITDA | $30,234 | $22,840 | $36,046 |
| Net Income per Share | $0.06 | $0.01 | $0.14 |
| Adjusted Net Income per Share | $0.07 | $0.05 | $0.13 |
| Net Cash Provided by Operating Activities | $24,831 | $(13,816) | $28,372 |
| Total Adjusted Free Cash Flow | $9,369 | $(29,617) | $17,711 |
Analysis of Performance
The sequential improvement in revenue and Adjusted EBITDA highlights the company's resilience and ability to navigate challenging market conditions. The strong performance from the Completion Fluids & Products Division, particularly in the European industrial chemicals market, underscores the company's strategic focus on high-margin segments.
However, the decline in net income compared to the same period last year and the shortfall in meeting analyst estimates indicate areas where the company needs to improve. The foreign exchange losses and slight revenue decline in the Water & Flowback Services segment are notable challenges that the company must address to sustain its growth trajectory.
Conclusion
Tetra Technologies Inc's second-quarter 2024 financial results reflect a mixed performance with significant achievements in certain segments and challenges in others. The company's ability to secure a three-well deepwater TETRA CS Neptune fluids project in the Gulf of Mexico is a positive development that could drive future growth. Investors will be keen to see how the company addresses its challenges and leverages its strengths in the coming quarters.
Explore the complete 8-K earnings release (here) from Tetra Technologies Inc for further details.
