TETRA Technologies: A Bright Spot in the Energy Sector

TETRA Technologies, Inc. (NYSE: TTI) has recently announced its fourth quarter and total year 2024 results, along with first-half 2025 guidance. The company's strategic focus on produced water and desalination solutions has positioned it for long-term growth and sustainability. Let's dive into the key takeaways and what this means for investors.

TETRA's fourth quarter results were in line with expectations, with strong offshore activity led by deepwater Gulf of Mexico and a robust industrial chemicals business offsetting weaker U.S. onshore activity. The company's adjusted EBITDA margins improved to 17.0% despite lower revenue quarter-over-quarter and year-over-year. This demonstrates TETRA's ability to maintain profitability even in challenging market conditions.

One of the standout aspects of TETRA's performance is its record high treatment and recycling volumes for produced water in the fourth quarter. This, coupled with the commercial success of its TETRA Oasis Total Desalination Solution (TDS), indicates a growing demand for the company's services and a strong foundation for future growth.



TETRA's tax loss carryforward and deferred tax assets also play a significant role in the company's cash flow and overall financial health. The utilization of these assets has allowed TETRA to realize cash tax savings on approximately $97 million of U.S. income over the past three years. The company estimates that its U.S. federal tax loss carryforward can offset approximately $345 million of taxable pretax income in the United States in 2025 and beyond. This cash flow tax benefit is expected to provide TETRA with approximately $97.5 million in the coming years, contributing to the company's long-term shareholder value creation.

Looking ahead, TETRA expects net income before taxes in the first half of 2025 to be between $19 million and $34 million, with adjusted EBITDA projected to be between $55 million and $65 million. This would represent a near or above ten-year record high, compared to $13.8 million of net income before taxes and $53 million of Adjusted EBITDA from the first half of 2024. For the full year of 2025, the company anticipates high single-digit to low double-digit revenue growth and expects to generate over $50 million of free cash flow from its base business.

In conclusion, TETRA Technologies' strategic focus on produced water and desalination solutions, coupled with its strong financial performance and cash flow benefits, positions the company as a bright spot in the energy sector. As investors seek opportunities in the energy space, TETRA Technologies deserves consideration for its potential to drive long-term shareholder value creation and contribute to the company's overall sustainability.