TETRA Technologies' Q4 2024: Navigating Contradictions in Neptune Projects, Desalination Efforts, and Market Dynamics

These are the key contradictions discussed in TETRA Technologies' latest 2024Q4 earnings call, specifically including: Neptune Projects Timeline and Revenue Expectations, Progress and Timing of Water Desalination Projects, Beneficial Reuse and Government Support, Status of Electrolyte Delivery to Eos, Water Desalination Project Progression, and Bromine and Lithium Project Timeline:



Strong Financial Performance and Strategic Investments:
- TETRA Technologies reported a strong fourth quarter and full year 2024, with adjusted EBITDA margins of 17%, despite lower revenue quarter-on-quarter and year-on-year.
- The growth was driven by strong offshore and industrial chemicals performance, despite a weaker-than-expected year-end slowdown in U.S. land operations.

Offshore and Industrial Chemicals Segment Growth:
- The offshore segment executed 13 deepwater completion jobs in Q4, and the industrial chemicals business achieved record revenue and adjusted EBITDA.
- This growth was attributed to expanded capacity in Brazil for a large deepwater completion fluids award and increased deepwater activity in the Gulf of Mexico.

Strategic Initiatives and Future Growth:
- TETRA plans to ramp up meaningful volumes of zinc bromide-based electrolyte for long-duration energy storage use, which is expected to increase its industrial chemicals business percentage in total revenue.
- The company is also advancing its water desalination initiatives, planning multiple pilot projects, and anticipates favorable gas prices contributing to increased activity in 2025.

Water and Flowback Segment Challenges and Opportunities:
- The Water and Flowback segment's revenue declined due to a more severe-than-normal year-end completion slowdown, with rig count and frack fleet count down more than double digits from last year.
- The company's focus is on automating assets and enhancing operational efficiencies, expecting revenue to remain flat but margins to increase by focusing on desalination for beneficial reuse.