TETRA Q2 Earnings: Bromine, Water Revenue Drive Beat

TETRA Technologies beat second-quarter expectations on strength in its bromine and water businesses, with adjusted EBITDA of $75 million topping guidance of $70 million to $74 million. Shares rose 8% in early trading Tuesday after the company raised its full-year adjusted EBITDA forecast to $315 million to $325 million, up from a prior range of $305 million to $320 million.

CEO Brady Murphy said on the earnings call that the bromine business benefited from higher volumes and pricing across both oilfield and non-oilfield applications, while the water segment saw improved utilization in its produced-water recycling operations. "We are seeing continued momentum in our bromine franchise and the water business is performing at the high end of our expectations," Murphy said.

The company also announced a $100 million share repurchase program, which Murphy said reflects confidence in the balance sheet and cash flow outlook. TETRA generated free cash flow of $28 million in the quarter, up from $15 million a year earlier.

The results come as the company continues to expand its bromine-based completion fluids into international markets, particularly in the Middle East. CFO Matt Sanderson noted that international revenue grew 12% year over year, helped by new contracts in Saudi Arabia and the United Arab Emirates.

For the third quarter, TETRA guided adjusted EBITDA of $78 million to $84 million, above the $75 million consensus. Sanderson said the guidance reflects "seasonal strength in bromine and continued growth in water services."

The company's backlog for completion fluids and services stood at $310 million at the end of the quarter, up from $280 million in the first quarter. Murphy said the pipeline for new bromine projects remains strong, with several large tenders expected to be awarded in the second half of the year.

Analysts on the call pressed management on the pace of international expansion and the potential impact of new bromine capacity coming online globally. Murphy acknowledged that new supply could pressure prices in 2027 but said TETRA's cost position and technology advantage would protect margins.

TETRA's water segment, which processes and recycles produced water from oil and gas operations, generated segment revenue of $95 million, up 15% year over year. The company said it is seeing increased demand for its high-TDS (total dissolved solids) water treatment technology, particularly in the Permian Basin.

Sanderson said the company expects to maintain its capital expenditure budget of $110 million for the year, with most spending directed toward bromine capacity expansion and water infrastructure. He added that the company's net leverage ratio stands at 1.4 times, giving it flexibility for additional shareholder returns.

Murphy said TETRA is also exploring opportunities in the lithium extraction space, using its existing bromine infrastructure to process lithium-rich brines. "We see a natural fit between our bromine operations and lithium extraction," he said, noting that the company is in early discussions with several partners.

The company will hold its next investor day in November, where management said it will provide a longer-term outlook for the bromine and water businesses. TETRA's stock page shows the company trading at roughly 12 times forward earnings, below its five-year average of 15 times.