TETRA Technologies, Inc. (NYSE:TTI) Q3 2023 Earnings Call Transcript

Stephen Gengaro: Got it. That makes sense. And then just a final one for me is when — you’ve reduced leverage a lot, and I know there’s differences clearly in the business models. But a lot of the, at least, oil service peers have been ultra-focused on free cash flow generation and returning capital. I understand you guys have a use for that capital as far as investment. But when you think about free cash generation, is there a measure we should use when we think about free cash flow conversion relative to EBITDA? Or any kind of guidelines you could put around how you think about free cash generation on an annual basis as I look out to next year?

Elijio Serrano: Yes. I would suggest, Stephen, that in 2022 and 2023, those were significant investment period for us, especially on the onshore site. We were building up capacity in the Permian Basin. We built three EPF in Argentina. And then on the fluid side, we expanded blending and storage capacity in Argentina — I mean, sorry, in Brazil. We did that in the Gulf of Mexico, and then we did a small tuck-in acquisition in the North Sea. I would suggest that the last two years were heavy investment periods. We’re going to pull back on those to accelerate free cash flow to direct toward the bromine and lithium assets in Arkansas. I would expect that in the coming years, free cash flow will be in the $40 million range from the base business to help us invest in Arkansas without diluting shareholders.

Stephen Gengaro: Excellent. Thanks for the color.

Elijio Serrano: Thank you, Stephen.

Operator: And this concludes our question-and-answer session. I’d like to turn the conference back over to Mr. Murphy for any closing remarks.

Brady Murphy: Well, thank you. In closing, we’re very pleased with our third quarter results as the best EBITDA third quarter that we’ve had in eight years since 2015. And I’m very, very pleased with where our two businesses stand, Water & Flowback as well as our Completion Fluids & Products heading into 2024. And clearly, very pleased with the major milestones that we continue to achieve and the strategic opportunities that the company has and the partnerships that we’re developing along the way. So we’ll keep you posted. But thank you all very much for your participation today.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.