Tetra Technologies’ Deepwater Timelines and Lithium-Bromine Priorities Don’t Match in Q2 2026 Earnings Call

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Date of Call: Aug 4, 2026

Financials Results

• Revenue: $185.7 million, up 19% sequentially and 7% year-over-year
• EPS: Net income from continuing operations was $10.2 million compared with eight years of $9.9 million
• Operating Margin: Adjusted EBITDA margin was 17.2% of revenue, up sequentially from 16.4% in Q1 and down from 20.8% in Q2 2025

Guidance:

• Base business expected to perform in line with market expectations for the remainder of 2026, though Middle East conflict introduces unpredictability.
• Multiple drivers support continued growth beyond 2026: increased deepwater completion activity, expansion of long-duration energy storage electrolyte business, and commercialization of ACES TDS produced water desal solution.
• Arkansas bromine plant startup planned for early 2028 will materially impact supply and cost of bromine.
• Deepwater market growth projected to reverse in 2027, with 8% CAGR expected through 2030.

Business Commentary:

Financial Performance and Strategic Milestones:

• Tetra Technologies reported second quarter revenue of $185.7 million, up 19% sequentially and 7% year-over-year. Adjusted EBITDA increased 24% sequentially to $31.9 million.
• The growth was driven by strong performance in deepwater markets, increased sales in completion fluids, and strategic milestones such as the expansion of their patented tetra-neptune completion fluid offering.

International and Offshore Revenue Growth:

• The company's international revenue achieved a 10-year high, with the second quarter revenue being 24% higher than the first half of the previous year.
• This growth was primarily due to strong performance in Argentina and the Gulf of Mexico, despite some delays in Middle East sales due to the conflict.

Completion Fluids and Electrolyte Demand:

• Revenue in completion fluids and products increased 23% sequentially and 3% year-over-year, with record first-half revenues.
• The growth was driven by increased sales activity in Europe and the Caspian region, as well as rising demand for zinc bromide electrolytes, supported by expanding customer manufacturing capacity.

Water and Flowback Services Expansion:

• Revenue for water and flowback services increased 12% sequentially and 13% year-over-year, led by record second-quarter revenues from Argentina.
• The growth was attributed to strong performance in early production projects and the continued expansion of their customer engagement in the region.

Strategic Investments and Project Development:

• The board approved the final investment decision for the Arkansas bromine project, with $108 million from a recent equity offering allocated to fund part of the project costs.
• The project is expected to provide a path to electrolyte demand and significant benefits for securing bromine supply at a lower cost, with completion scheduled for the fourth quarter of 2027.

Sentiment Analysis:

Overall Tone: Positive

• Management described the quarter as 'very productive and successful on many fronts' and expressed being 'very pleased with our ability to execute on the key strategic milestones' and 'the outlook going forward.' They highlighted 'record second quarter revenues from Argentina,' a 'strongest it has ever been' project pipeline, and 'growing confidence' in new markets like hyperscaler water needs.

Q&A:

• Question from Stephen Gingaro (Stifel): When you say base business, What are you including? Are you including electrolyte sales to EOS?
  Response: Yes, base business includes ongoing completion fluids, water and flow back, and electrolyte sales, but excludes Neptune-type jobs.

• Question from Stephen Gingaro (Stifel): What should we think about the timing for deep water fluid sales growth as we look into 27? Like what's sort of the lag time we should be banking into expectations?
  Response: The Gulf of America has been down this year, but growth is expected to reverse in 2027; the company projects an 8% CAGR through 2030, potentially even higher.

• Question from Stephen Gingaro (Stifel): How much of EOS growth and needs is driving the need for raw materials expansion?
  Response: EOS growth represents a material volume need, with its projected four-gigawatt-hour capacity in 2027 being a significant but not dominant portion of the new bromine plant's capacity.

• Question from Bobby Brooks (Northland Capital Markets): Could you give us a sense for how impactful the Neptune Z-Lite project can be on financials and how it expands opportunities?
  Response: Z-Lite is financially impactful, sitting between a typical deepwater job and a full Neptune job. It expands the market by reducing zinc content, a material value to customers, and is significant for high-pressure markets.

• Question from Bobby Brooks (Northland Capital Markets): Can you touch on commercial discussions on Oasis and specifically calling out hyperscaler conversations?
  Response: Confidence in Oasis commercial projects is growing, with direct engagements with hyperscalers. The company is evaluating larger projects, and permitting is the main gating issue.

• Question from Bobby Brooks (Northland Capital Markets): What are the key differences within each conversation (hyperscalers vs. midstream) regarding Oasis?
  Response: Hyperscalers are transitioning from air-cooled to water-cooled systems, while midstream customers are looking at larger plant facilities. Permitting is a common hurdle across all discussions.

• Question from Bobby Brooks (Northland Capital Markets): What are the new markets driving break-ins and what factors are involved?
  Response: Sandstorm technology is driving growth in Argentina and is being introduced in Middle East conventional markets, contributing to revenue doubling this year.

• Question from Martin Malloy (Johnson Rice): Could you expand a little bit more about the equipment in Argentina?
  Response: Growth is driven by early production facilities (EPS) and Sandstorm flowback technology.

• Question from Martin Malloy (Johnson Rice): Could you give more color on the higher pressure, higher temperature wells in Gulf of America and the opportunity set?
  Response: Z-Lite provides a commercial solution for existing high-pressure wells, and ongoing permitting activity indicates continued opportunity in the region.

• Question from John Tanwanting (CJS): Could you dive deeper into the optionality around lithium and magnesium? Talk about timeline, investment, returns.
  Response: Lithium is attractive due to high prices and capex savings; engineering studies will be published by year-end, with potential development before 2030. Magnesium is further out, dependent on a JV demonstration plant.

• Question from John Tanwanting (CJS): Why did completion fluids margin decline sequentially despite higher revenue?
  Response: Margin mix can impact profile; guided range of 25-30% remains intact. The new bromine plant will lower bromine costs starting in 2027.

• Question from John Tanwanting (CJS): What is the bromine optionality if EOS doesn't perform according to projections?
  Response: Even if EOS meets expectations, deepwater demand will require 100% of plant capacity plus third-party purchases. Bromine can be sold in the Middle East if needed.

• Question from Joshua Jane (Daniel Energy Partners): Could you talk about the 30% cost difference between water-cooled and air-cooled data centers from a dollar perspective?
  Response: The comment came directly from a hyperscaler, but no further detail on dollar value was provided.

• Question from Joshua Jane (Daniel Energy Partners): How are you seeing Lower 48 spending unfold exiting this year and into 2027?
  Response: It's early to project an uptick in 2027 activity; Tetra is on the tail end of the cycle, following drilling and fracking.

• Question from Joshua Jane (Daniel Energy Partners): Any insight into discussions with customers in the Middle East post-conflict and how you think about capital returning?
  Response: The resolution of the Middle East conflict is speculative. Deepwater markets continue to grow, and momentum is building there regardless of Middle East developments.

Contradiction Point 1

Outlook on Deepwater Market Growth and Timing

Contradiction on the expected timing for a reversal in deepwater drilling activity.

What is the company's revenue growth outlook for the next quarter? - Stephen Gingaro (Stifel)

2026Q2: The Gulf of Mexico drilling activity has been down this year. The market cycle and overall deepwater growth are expected to reverse in 2027. - Brady Murphy(President, Strategic Development)

What is the expected timeline and lag for deepwater fluid sales growth driven by rising market activity through 2027? - Martin Malloy (Johnson Rice & Company, L.L.C.)

2026Q1: The deepwater outlook remains strong... The probability for 2027 is increasing significantly. - Brady Murphy(President, CEO & Director)

Contradiction Point 2

Financial and Strategic Positioning of the Lithium Opportunity

Contradiction on the priority and financial visibility for lithium development relative to the bromine plant.

John Tanwanting (CJS) - John Tanwanting (CJS)

2026Q2: Lithium prices have risen above $20,000 per metric ton... Development is likely to occur before the bromine plant reaches full capacity. - Brady Murphy(President, Strategic Development)

Could you discuss the optionality, timeline, investment, and returns for Arkansas's lithium and magnesium resources? - Martin Malloy (Johnson Rice & Company, L.L.C.)

2026Q1: The bromine project is the priority, with completion planned by end of 2027... Financial details will be shared at the appropriate time. - Brady Murphy(President, CEO & Director)

Contradiction Point 3

Timing for Bromine Plant Operational Readiness

Inconsistent timeline for when the new bromine plant will be fully operational and contributing to supply.

John Tanwanting (CJS) - John Tanwanting (CJS)

2026Q2: Development is likely to occur before the bromine plant reaches full capacity. - Brady Murphy(President, Strategic Development)

What are the optionality, timeline, investment, and returns for lithium and magnesium resources in Arkansas? - Martin Malloy (Johnson Rice & Company, L.L.C.)

2025Q4: The bromine facility is on schedule for Q4 2027. - Brady Murphy(President, CEO & Director)

Contradiction Point 4

Outlook on Deepwater Market Activity in 2027

Contradictory statements regarding the expected trend of deepwater drilling versus completion activity in 2027.

Stephen Gingaro (Stifel) - Stephen Gingaro (Stifel)

2026Q2: The Gulf of Mexico drilling activity has been down this year. The market cycle and overall deepwater growth are expected to reverse in 2027, with projected 8% annual growth continuing through 2030. - Brady Murphy(President, Strategic Development)

What is the expected timing and lag for deepwater fluid sales growth driven by rising market activity through 2027? - Stephen Gengaro (Stifel, Nicolaus & Company, Incorporated)

2025Q4: 2026 will be strong but is expected to cycle into more drilling and less completion activity. The 2027 cycle is anticipated to reverse, favoring completions again. - Brady Murphy(President, CEO & Director)

Contradiction Point 5

Status of Deepwater Fluids Recovery

Contradiction on the expected timing of a significant recovery in deepwater fluids sales.

Joshua Jane (Daniel Energy Partners) - Joshua Jane (Daniel Energy Partners)

2026Q2: It is too early to project a material uptick in 2027 spending that would impact Tetra's business. The company is on the tail end of the drilling and fracking cycle. Activity is starting to show signs of improvement, but speculating on 2027 is premature. - Brady Murphy(President, Strategic Development)

What spending trends in the Lower 48 are expected as 2026 ends and 2027 begins? - Stephen Gengaro (Stifel)

2025Q3: Several tailwinds... are expected to benefit the first half of 2026 compared to the second half of 2025. Excluding Eos, fluids are expected to grow in 2026 due to deepwater activity. - Elijio V. Serrano(CFO)

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