TETRA Technologies, Inc. (TTI) Bundle
Understanding TETRA Technologies, Inc. (TTI) Revenue Streams
Understanding TETRA Technologies, Inc. Revenue Streams
As of the nine months ended September 30, 2024, consolidated revenues for TETRA Technologies, Inc. totaled $464.6 million, reflecting a decrease of 1.8% from $473.1 million in the same period of 2023.
Revenue Breakdown by Division
The revenue streams for TETRA Technologies can be categorized into two primary divisions: Completion Fluids & Products and Water & Flowback Services.
| Division | 2024 Revenues (in thousands) | 2023 Revenues (in thousands) | Change ($ in thousands) | Percentage Change |
|---|---|---|---|---|
| Completion Fluids & Products | $242,432 | $240,474 | $1,958 | 0.8% |
| Water & Flowback Services | $222,175 | $232,662 | $(10,487) | (4.5%) |
Year-over-Year Revenue Growth Rate
The overall revenue growth exhibited a slight decline year-over-year. The primary factors influencing this trend include:
- Weaker onshore activity in the United States impacting Water & Flowback Services.
- Increased fluids shipments from the Completion Fluids & Products Division, which partially offset declines in other areas.
Contribution of Business Segments
For the nine months ended September 30, 2024, the contribution of different business segments to overall revenue is detailed below:
| Segment | Contribution to Total Revenue (%) |
|---|---|
| Completion Fluids & Products | 52.2% |
| Water & Flowback Services | 47.8% |
Significant Changes in Revenue Streams
During the first nine months of 2024, significant changes in revenue streams included:
- A 4.5% decline in Water & Flowback Services revenues, attributed to decreased U.S. drilling and completion activity.
- Completion Fluids & Products revenues increased slightly by 0.8%, supported by industrial chemical sales despite a sequential decrease of 34.9% in the third quarter.
Overall, the revenue dynamics highlight a mixed performance across divisions, with ongoing challenges in onshore operations being countered by stable demand in certain fluid product areas.
A Deep Dive into TETRA Technologies, Inc. (TTI) Profitability
Profitability Metrics
Gross Profit for the nine months ended September 30, 2024, was $108,718,000, down from $123,402,000 in the same period in 2023, reflecting a decrease of 11.9%. The gross profit margin decreased from 26.1% to 23.4%.
Operating Profit for the nine months ended September 30, 2024, was $21,350,000, compared to $35,330,000 for the same period in 2023, marking a decline of 39.6%. The operating profit margin as a percentage of revenue decreased from 7.5% to 4.6%.
Net Profit for the nine months ended September 30, 2024, was $5,560,000, significantly down from $29,675,000 in 2023, an 81.3% decrease. The net profit margin also fell from 6.3% to 1.2%.
Trends in Profitability Over Time
In the past year, there has been a noticeable downward trend in profitability metrics. The gross profit has consistently declined due to weaker activity in the Water & Flowback Services Division. This trend is reflected in the following table:
| Metric | 2023 | 2024 | % Change |
|---|---|---|---|
| Gross Profit | $123,402,000 | $108,718,000 | -11.9% |
| Operating Profit | $35,330,000 | $21,350,000 | -39.6% |
| Net Profit | $29,675,000 | $5,560,000 | -81.3% |
Comparison of Profitability Ratios with Industry Averages
The profitability ratios of the company are below industry averages. For instance, the average net profit margin in the industry is approximately 5.0%, while the company’s net profit margin stands at 1.2%. Similarly, the average gross profit margin in the industry is around 30.0%, compared to the company's 23.4%.
Analysis of Operational Efficiency
The company's operational efficiency has been declining, as indicated by increased general and administrative expenses. For the nine months ended September 30, 2024, general and administrative expenses were $66,841,000, down from $73,254,000 in 2023, a decrease of 8.8%. However, as a percentage of revenue, these expenses increased from 15.5% to 14.4%.
Furthermore, the exploration and pre-development costs were zero for the current year compared to $6,836,000 in 2023, indicating a strategic shift towards cost management.
The following table summarizes the operational efficiency metrics:
| Metric | 2023 | 2024 | % Change |
|---|---|---|---|
| General & Administrative Expenses | $73,254,000 | $66,841,000 | -8.8% |
| G&A as % of Revenue | 15.5% | 14.4% | -1.1% |
| Exploration & Pre-development Costs | $6,836,000 | $0 | -100% |
Debt vs. Equity: How TETRA Technologies, Inc. (TTI) Finances Its Growth
Debt vs. Equity: How TETRA Technologies Finances Its Growth
As of September 30, 2024, TETRA Technologies reported total long-term debt of $249.3 million and short-term debt of $0.9 million, bringing the total debt to $250.2 million. The company's total assets stood at $501.2 million, resulting in a debt-to-equity ratio of approximately 1.61, which indicates a relatively high level of debt financing compared to equity.
The industry average for the debt-to-equity ratio in the oil and gas services sector typically ranges from 0.50 to 1.00. This means TETRA Technologies is above the industry average, suggesting a more aggressive approach to leveraging debt to finance its operations and growth.
In 2024, the company engaged in significant refinancing activity, including the repayment of its prior term credit agreement. This repayment led to a loss on debt extinguishment of $5.5 million. Despite this loss, the company managed to maintain liquidity of approximately $196.5 million at the end of the third quarter, which includes unrestricted cash and available credit.
TETRA Technologies balances its financing strategy between debt and equity. Recent financial statements indicate that total stockholders’ equity increased to $156.7 million from $148.6 million at the end of the previous year. This reflects an ongoing effort to strengthen equity financing amidst fluctuating market conditions.
| Metric | Value |
|---|---|
| Total Long-Term Debt | $249.3 million |
| Total Short-Term Debt | $0.9 million |
| Total Debt | $250.2 million |
| Total Assets | $501.2 million |
| Debt-to-Equity Ratio | 1.61 |
| Industry Average Debt-to-Equity Ratio | 0.50 - 1.00 |
| Loss on Debt Extinguishment | $5.5 million |
| Liquidity | $196.5 million |
| Total Stockholders’ Equity | $156.7 million |
Assessing TETRA Technologies, Inc. (TTI) Liquidity
Assessing TETRA Technologies, Inc. Liquidity
Current and Quick Ratios
The current ratio for TETRA Technologies, Inc. as of September 30, 2024, is 1.76, indicating a healthy liquidity position. The quick ratio, which excludes inventory from current assets, stands at 1.42.
Working Capital Trends
As of September 30, 2024, the working capital is approximately $60.3 million, showing a decrease from $68.4 million in the previous quarter. This decline reflects changes in accounts receivable and inventory levels.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, is $30.9 million, down from $51.3 million in the same period of 2023. Investing activities resulted in cash outflows of $44.4 million, primarily due to capital expenditures. Financing activities generated cash inflows of $10.0 million.
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $30,885 | $51,331 |
| Investing Activities | $(44,444) | $(28,918) |
| Financing Activities | $9,998 | $(1,894) |
Potential Liquidity Concerns or Strengths
Liquidity at the end of the third quarter of 2024 was reported at $196.5 million, including $75 million available under the delayed draw from the Term Credit Agreement. The company has sufficient liquidity to meet both short-term and long-term obligations, although the decrease in operating cash flow raises potential concerns about future operational efficiency and profitability.
Is TETRA Technologies, Inc. (TTI) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health of the company, key valuation metrics such as Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA) ratios are essential.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 13.4, based on earnings per share (EPS) of $0.09 for the trailing twelve months. This indicates a modest valuation compared to the industry average of 15.2.
Price-to-Book (P/B) Ratio
The P/B ratio is recorded at 1.2, with the book value per share being $1.67. This is lower than the sector median of 1.5, suggesting the stock may be undervalued relative to its net assets.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is noted at 9.5, while the industry average is approximately 10.1. This indicates a competitive valuation in terms of operational performance.
Stock Price Trends
Over the past twelve months, the stock price has fluctuated between $1.25 and $2.50. Currently, the stock trades at $1.90, reflecting a 20% decline from its peak.
Dividend Yield and Payout Ratios
The company currently does not offer a dividend, resulting in a dividend yield of 0%. The payout ratio remains N/A due to the lack of dividend payments.
Analyst Consensus
Analysts have rated the stock with a consensus of Hold. The average target price is set at $2.10, indicating a potential upside of approximately 10.5% from the current trading price.
| Valuation Metric | Company Value | Industry Average |
|---|---|---|
| P/E Ratio | 13.4 | 15.2 |
| P/B Ratio | 1.2 | 1.5 |
| EV/EBITDA Ratio | 9.5 | 10.1 |
| Current Stock Price | $1.90 | — |
| 52-Week Range | $1.25 - $2.50 | — |
| Dividend Yield | 0% | — |
| Analyst Consensus | Hold | — |
| Average Target Price | $2.10 | — |
Key Risks Facing TETRA Technologies, Inc. (TTI)
Key Risks Facing TETRA Technologies, Inc. (TTI)
Overview of Internal and External Risks:
TETRA Technologies, Inc. faces several internal and external risks that could impact its financial health as of 2024. These risks include:
- Industry Competition: The company operates in a highly competitive market, with significant pressure from both established firms and new entrants. This competition affects pricing and market share.
- Regulatory Changes: Changes in environmental regulations or other compliance requirements could lead to increased operational costs or limit operational capabilities.
- Market Conditions: Fluctuations in oil and gas prices directly impact the demand for the company’s products and services, affecting revenue and profitability.
Operational Risks:
Operational risks highlighted in recent filings include:
- Weak U.S. Onshore Activity: The Water & Flowback Services Division has seen a 4.5% decrease in revenues for the first nine months of 2024 compared to the previous year, driven by weaker onshore activity in the United States and lower offshore completions fluids activity.
- Discontinued Operations: The company recorded a loss from discontinued operations of $5.8 million for the third quarter of 2024, impacting overall profitability.
Financial Risks:
Financial risks include the following:
- Interest Expense Increases: Interest expense increased to $17.2 million for the first nine months of 2024, up 3.4% from the previous year.
- Loss on Debt Extinguishment: The company reported a loss on debt extinguishment of $5.5 million, reflecting non-cash unamortized finance costs.
Strategic Risks:
Strategic risks include challenges in capitalizing on growth opportunities:
- Capital Expenditures: Total cash capital expenditures for the first nine months of 2024 were $45.8 million, reflecting increased investments to advance Arkansas brine resource development.
- Market Demand Fluctuations: The company’s revenue decreased by 1.8% year-over-year, with total revenues of $464.6 million for the first nine months of 2024.
Mitigation Strategies:
While specific mitigation strategies were not detailed in recent filings, the company is focusing on:
- Investment in Technology: Investments in technologies such as BlueLinx automation and TETRA SandStorm sand filtration are aimed at gaining market share.
- Low-Carbon Energy Initiatives: The company is pursuing initiatives leveraging its fluids and aqueous chemistry competencies to expand into low-carbon energy markets.
| Risk Category | Description | Recent Financial Impact |
|---|---|---|
| Operational | Weak U.S. onshore activity impacting revenue. | Revenue decrease of 4.5% in Water & Flowback Services |
| Financial | Increased interest expenses. | Interest expense of $17.2 million for 2024 |
| Strategic | Capital expenditure requirements for growth. | Total cash capital expenditures of $45.8 million |
| Regulatory | Compliance with changing environmental regulations. | Potential for increased operational costs |
Future Growth Prospects for TETRA Technologies, Inc. (TTI)
Future Growth Prospects for TETRA Technologies, Inc.
Analysis of Key Growth Drivers
Key growth drivers for the company include:
- Product Innovations: The company has invested in technologies such as BlueLinx automation, TETRA SandStorm sand filtration, and TETRA Automated Drillout Systems Technology, which have contributed to gaining market share.
- Market Expansions: Recent contracts include a three-well project in the Gulf of Mexico expected to begin in Q1 2025, and a significant multi-well completion fluids contract in Brazil.
- Acquisitions: The acquisition of CSI Compressco by Kodiak Gas Services is projected to enhance operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
The consolidated revenue for the first nine months of 2024 was $464.6 million, a slight decrease from $473.1 million in the prior year, reflecting a 1.8% decline. The revenues for the Completion Fluids & Products Division increased by 0.8% year-over-year.
Earnings estimates project continued challenges with fluctuating market conditions, but the company anticipates recovery in revenues as new contracts come online and as market conditions stabilize.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has entered into a memorandum of understanding (MOU) with Saltwerx, a subsidiary of ExxonMobil, for the potential development of a joint venture focused on lithium and bromine production. This initiative leverages existing brine resources and aligns with the growing demand for low-carbon technologies.
Competitive Advantages that Position the Company for Growth
The company benefits from:
- Strong Brand Recognition: Established presence in the energy services sector enhances customer trust and loyalty.
- Diverse Product Offerings: A broad portfolio of services and products, including completion fluids and water management services, enables adaptability to market changes.
- Technological Advancements: Continued investment in automation and filtration technologies positions the company favorably against competitors.
| Key Financial Metrics | 2024 (YTD) | 2023 (YTD) | Change (%) |
|---|---|---|---|
| Consolidated Revenues | $464.6 million | $473.1 million | -1.8% |
| Completion Fluids Revenues | $242.4 million | $240.5 million | +0.8% |
| Gross Profit | $108.7 million | $123.4 million | -11.9% |
| Net Income | $5.6 million | $29.7 million | -81.3% |
These metrics highlight the financial landscape the company operates within and the challenges that accompany growth initiatives.
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Article updated on 8 Nov 2024
Resources:
- TETRA Technologies, Inc. (TTI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of TETRA Technologies, Inc. (TTI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View TETRA Technologies, Inc. (TTI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.