Tetra Technologies Inc (TTI) 2025 Q4 法說會逐字稿

Hello and thank you for standing by. My name is Tiffany and I'll be your conference operator today. At this time, I would like to welcome everyone to the Tetra Technologies Inc. Q4 25 in full year 2025 earnings conference call.

(Operator Instructions)

I would now like to turn the call over to Kurt Hallead, Treasurer and Investor Relations. Kurt, please go ahead.

Thank you, so much and good morning, and thank you for joining Tetra's fourth quarter and full year 2025 earnings call. The speakers for today will be Brady Murphy, Chief Executive Officer, Elijio Serrano, Chief Financial Officer, and Matthew Sanderson, Chief Commercial Officer.

Before we begin, I would like to call your attention to the Safe Harbor statement in our Form 10-k. Some of the remarks we make today may be forward-looking and are subject to risks and uncertainties as outlined in our SEC filings. Actual results may differ materially from those expressed or implied. In addition, we may refer to adjusted EBITDA, free cash flow, and other non-GAAP financial measures. Please refer to our press release for reconciliations of non-GAAP and the most comparable GAAP financial measures. These reconciliations are not a substitute for GAAP financials, and we encourage you to refer to our 10-k that was filed yesterday. After Brady, Elijio, and Matt provide their comments, we'll open a line for Q&A. I'll now turn the call over to Brady.

Thanks, Kurt, and good morning, everyone. Welcome to Tetra's fourth quarter and total year 2025 earnings call.

Before we get into the quarterly results and outlook, I would like to begin the call by acknowledging and highlighting the exceptional efforts in the 2025 performance of our leadership team and all of the Tetra employees. 2025 was a challenging year for the US oil and gas industry, marked by reduced levels of US onshore activity and a volatile global economic environment.

But despite these headwinds, there's a long list of Tetra's record financial achievements as well as overwhelming support for the company's strategic developments. I'll highlight some of the outstanding financial achievements and progress against our 2030 objectives, which we communicated as part of our One Tetra 2030 strategy at our investor conference at the New York Stock Exchange last September. I'll then turn it over to Matt Sanderson and Elijio Serrano to summarize our fourth quarter results and provide an update on our balance sheet.

Headlining our exceptional 2025 performance is our Gulf of America completion fluids team.

For the fifth consecutive year, Tetra was ranked the top supplier in the Gulf of America for product quality and overall performance.

For offshore completion fluid suppliers in the well-respected Kimberlyke International Oilfield Research Report.

As the market and technology advance to 20k ultra high pressure and ultra-high temperature wells, our innovation leadership is resulting in market share gains. Tetra's Gulf of America revenue increased well over 50% in 2025 compared to 2024, driven by participation in deepwater projects, including three CS Neptune wells that we completed in the first half of the year for a super major. Our unique zinc-free high density completion fluid allowed them to complete their high pressure wells on schedule without exposing their production facilities to zinc in the production flowback.

The performance of our Gulf American team drove our completion fluids and products EBITDA margins to improve 420 basis points from 28.9% in 2024 to 33% in 2025. The combination of our vertically integrated business model as the only service provider that manufactures our own fluids and our unique technology portfolio gives us a very strong market position.

Supporting our global completion fluids business is our West Memphis manufacturing team, which is the heart of our bromine-based completion fluids and our pure flow electrolyte production. Using elemental bromine sourced through a combination of open market purchases and our long-term supply agreement, we produce offshore completion fluids, including CS Neptune and the pure flow-based electrolyte.

2025 was a record production year for West Memphis, producing 40% more bromine end products than our long-term bromine supply agreement allows.

The West Memphis team also expanded their production and distribution capacity to ship pure flow electrolyte to Eos in tanker trucks rather than totes to keep up with their expanded production.

Another 2025 record performance is our global calcium chloride business, which set both revenue and adjusted EBITDA records and again outperformed GDP in 2025. We hold a market leading position in Europe and a strong second place in the US market.

In addition to our food grade products, we are encouraged by the outlook for our tech grade product lines supporting the reintroduction of chip and other high-tech manufacturing operations in the US. Although still a small percentage of our US calcium chloride revenue, our tech grade for chip manufacturing grew by 144% in 2025 over 2024.

The combination of these three-record setting operations Gulf of America, West Memphis plant production, and calcium chloride business, not surprisingly resulted in record level revenue and adjusted EBITDA for the completion fluid segment as a whole in 2025.

This performance occurred despite an estimated 55% fewer floating deepwater rigs operating globally than the 2014 peak.

And we believe we are still in the early days of anticipated EOs production ramp up. This is one of the reasons we are still very well positioned to benefit from the multi-year deepwater activity recovery and the electrolyte growth highlighted in our one Tetra 2030 strategy.

Moving on to the strategic milestones for 2025 and the fourth quarter.

During the year, we made significant progress on our new bromine plant and reached a major milestone in December by erecting a 120 ft tall titanium bromine tower and support structure at our Evergreen plant site in southwest Arkansas. We completed phase one of the planned 3 phases on time and materially below budget. We've advanced the detailed engineering design for phases 2 and 3, placed orders for long lead items, refined the plant's total cost, and are finalizing the detailed schedule.

By designing the plant around the bromine tower's capacity of GBP75 million of bromine annually, we will have 56% more low-cost bromine available to us than the GBP48 million we published in our definitive feasibility study in August of 2024.

Since that study was completed, we have increased our demand outlook for deepwater completion fluids and now expect total bromine product demand to reach the 75 million plant capacity by 2029.

Once we have the final upstream well field schedule from Standard Lithium and Ecuador's Reynolds unit, from which we intend to receive the post lithium extracted brine with board approval, we intend to FID the project. For the reasons highlighted, we expect the Arkansas Bromium Project's economics to be improved from what we previously published.

Continuing along with our Arkansas brine resources, we're pleased with the progress towards finalizing JV terms with Magrothea for the production of magnesium metal using the rich concentration of magnesium also in the same smack over brine on our 40,000 acres. Magnesium is classified as a critical mineral by the US government and is used to produce a highly valued metal for the Department of War and other US industries.

To our planned partnership, we would combine Marothea's advanced process technology with Tetra's deep operational expertise and a world-class magnesium resource base from our southwest Arkansas Brian acreage.

Magaia has already secured Defense Production Act Title III funding from the Department of War to support its commercial phase one plan to be on site at Tetra's Evergreen plant. We're optimistic that further government support is possible for our future commercial plans.

Finally, as it relates to our Arkansas brine resources and as we highlighted in our 2030 strategy, lithium has been viewed as a future opportunity beyond our 2030 targets.

However, with lithium prices increasing back to over 20,000 per metric ton, we are re-engaging direct lithium extraction technology companies and evaluating technological and cost efficiency advantages to understand the current economic environment. As a reminder, Petra is the designated operator of the Evergreen brine unit and owns 65% of the brine minerals, including lithium, while ExxonMobil owns the remaining 35%.

Our final strategy update concerns desalination for beneficial reuse.

We're very pleased with the results of our EOG commercial plant desalination operation in the Permian Basin.

This phase 2 grassland study has been running with over 95% uptime for the past 4 months following completion of the greenhouse phase 1 study. This grassland study is evaluating oil and gas produced water desalinated through Tetra's Oasis technology. Of great significance is that Tetra was issued a patent for our Tetra Oasis TDS end to end desalination solution.

We're pleased that our unique pre-treatment combined with exclusive membrane and post-treatment technologies has been recognized as a unique and patentable solution for desalinating oil and gas produced water for beneficial reuse.

However, the biggest desalination update since our investor day in September is the growing attractiveness of West Texas for data centers, which has shifted our customers' priorities and our focus.

With data center straining electric utility grids and driving price increases behind the meter, cost-effective power has become a major driver for data centers.

With West Texas low cost, abundant natural gas, ample and affordable land, and a friendly regulatory environment, it's easy to understand why.

The one challenge West Texas does have is a lack of fresh water for power and data center cooling. However, with over 20 million barrels of produced water per day, there's far more water available by desalinating produced water. This is an extremely attractive option since operators need to reduce the amount of water they reinject for disposal, and converting it into a valuable resource for power and data center cooling is a double win given they now have a revenue source instead of incurring disposal costs.

Our customer plan for 25,000 barrels per day plants have been shifted to greater than 100,000 barrels per day desalination plants, as one data center could require as much as 200,000 barrels of desalinated water. This is a very dynamic environment that has not changed the fact that operators need a solution for disposal well pore space filling up. However, it has provided an exciting acceleration opportunity that has significant potential for tetra.

All these efforts are contributing towards the goals we laid out for 2030, including our future segments focused on specialty chemicals, and we dot with water desalination and treatment.

Looking forward to 2026, we see continued momentum towards our 2030 objectives. We expect incremental revenue growth driven largely by a material increase in electrolyte business and major contract awards in Argentina. Argentina has been a real success story for us as our team has secured contracts to meaningfully expand our production testing business anchored by our proprietary and highly efficient sandstorm technology. In addition, our team secured three early production facility contracts. The combination of winning more early production facility contracts and gaining market share with Sandstorm is expected to double our revenue in 26 compared to 25. Argentina's margins are accreted to our overall water management and flowback margins and are more stable given the longer-term nature of our contracts.

On the completion fluid side, Gulf of America activity in 2025 was heavily weighted towards completion and less towards drilling. 2026 activity is forecasted to be higher in drilling, including more exploration, with less completion activity. As a result, we do not expect the Gulf of America to reach the same record levels as in 2025. However, this is projected to cycle into stronger 2027 completions activity, and our 2030 targets for this business are on track. Our US water onshore.

Our onshore water and flow back services business continues to benefit from longer laterals, increased sand and water usage, and more production-related activities, including water treatment and recycling.

We expect the net impact of all these to result in overall modest growth in 2026.

We've secured third-party bromine supply for 26 and 27 to bridge our growing bromine demand and until our bromine processing plant is brought online. These third-party supplies will allow us to keep pace with expected material increase in electrolyte and robust deepwater market, but they do come at an incrementally higher cost relative to our current long-term bromine supply agreement, which is consistent with our expectations.

Although it is possible for one or more CS Neptune jobs to materialize in 26, without CS Neptune projects and somewhat higher short-term cost of bromine, we expect our completion fluids and products adjust to EBITDA margins to be in the 25% to 30% range, which is consistent with the average margin range for this segment over the past seven years.

The increased cost for additional bromine supply has been anticipated as a bridge until we have our bromine processing plant operational, but it further supports the strong business case and significant EBITDA increase we expect for this segment starting in 2028 when the plant is operational. For water and lowback services, the continued focus on differentiated technology and our profitable international growth contribute to improve the EBITDA margins from 12% in 25% to the mid-teens in 2026.

With that, I'll ask Matt Anderson, who is currently and for the past two years done a great job as our Chief Commercial Officer, to update us on the fourth quarter highlights and then Elijio Serrano to close out with our balance sheet and update. Before turning the call over to Matt and Elijio, I'd like to again express my and the board's deep appreciation for Elijio contributions and efforts over the past 13 years.

Last October, we announced that Elijio had notified Tetra of his intentions to retire at the end of March. Over the past six months, Elijio has worked with Matt to ensure a seamless and orderly transition of the CFO responsibilities.

Matt has been with Tetra for over 9 years and as stated, most significantly as Chief Commercial Officer.

The board and I spend a lot of time on succession planning to ensure we have the talent necessary for the organization to execute on the base business and deliver our longer-term goals.

This transition will allow us to do so. Elijio has agreed to remain available to Matt, me, and the board as an advisor so we can leverage his skills, knowledge, and relationships with our investors, the financial community, our lenders, and the financial team. While this might be Elijio's last quarterly earnings call, we fully expect that in the background he will continue to support the organization as we methodically march towards our 2030 goals. With that, Matt will provide some additional color on the fourth quarter results before handing over to Elijio.

Thank you, Bree. As mentioned, 2025 was a record setting year for Tetra on several fronts. This included our strong fourth quarter performance. Completion fluids and products revenue of $83.7 million was up 22% compared to a year ago, included a material increase in shipment of electrolyte. Our adjusted EBITA margins remained strong at 28.2%. Water and fullback services revenue of $63 million was flat compared to the third quarter, despite the traditional year and slowdown in the US market. Conversely, we saw stronger activity in Argentina as we started another early production facility during the quarter.

We expect to start another one this week, and it's up for a strong year in 2026 in the Vaca Morta region as Brady mentioned earlier.

Production testing activity remains strong on the back of our sandstorm technology. Adjusted EBITDA margins improved 100 basis points on aggressive cost reductions and a continued focus on new technology and automation aimed at reducing personnel at the well site.

Despite competitive pricing pressures in US land, our adjusted EBITDA margins remained relatively flat during the year.

Our focus remains on leveraging technology on higher margin opportunities and generating free cash flow in this segment.

Corporate and other expenses were $11.3 million and included materially higher variable compensation expense resulting from our team's record 2025 performance.

This variable compensation includes both short-term and long-term incentives, including returns on net capital employed targets and a total shareholder return, or TSR over a 3 year period which is structured to align management's interests with those of our shareholders. For the 3 year period that we are being compared to our peers, we were in the top quartile of our peer group. As a result of that increase in shareholder value, our long-term variable cash compensation increased $2 million over the third quarter.

In the fourth quarter, we also changed our corporate office location, which will reduce our corporate G&A expenses by approximately $2 million per year.

We will be participating in several upcoming investor-related events in the first part of this year which have been listed on our website.

I look forward to working closely with our current and future shareholders along with the broader investor community.

On a personal note, I'd like to congratulate Elijio on his upcoming retirement. I sincerely appreciate Elijio's support during these past 9 years, and I wish he and Mary all the best on the next chapter in their life together.

With that, I will turn it over to Elijio to cover cash flow and the balance sheet.

Thank you, Matt. I'll highlight 3 areas then we'll open the call up to our questions. The first one is free cash flow.

Cash flow from the base in the fourth quarter was very solid at $21.8 million.

For the year, free cash flow from the base business was $83 million.

As you recall, all during 2025, we have been communicating our objective of generating over $50 million of base business free cash flow. And we did $83 million.

Included in 2025's free cash flow was $19 million in cash proceeds from the sale of our shares in Kodiak Gas Services.

Following our divestiture of CSIcommresco.

Just like we did with our previous sale of shares in Standard Lithium, we time our sale of Kodiak shares near their 52-week high.

The organization is very focused on managing cash flow and managing working capital. So we can maximize cash flow from our base business to invest into our broming project in Arkansas.

Despite a $12 billion increase in fourth quarter revenue compared to a year ago, our cash management efforts allow us to reduce working capital by almost 20% or by $21 million to $88 million at the end of 2025.

To demonstrate the quality of our customers and our internal focus on timely invoicing and collections, day sales outstanding improved 13% from 71% at the end of 2024.

To 62 days outstanding at the end of 2025.

Based business capital expenditures for $30.5 million and investments in Arkansas were $45 million.

We also capitalize $4.5 million of interest expense consistent with GAAP requirements on large capital projects.

Consolidated tetra-free cash flow including all our Arkansas investments was $33 million in 2025 demonstrated the strength of our base business to allow us to invest into the projects and still be free cash flow positive.

This will allow us to keep making calls to keep making progress towards our 20-30 goals without over levering Tetra.

The second topic of emphasis is our balance sheet.

Even after we invested $45 million into Arkansas, we ended the year with cash on hand of $73 million.

Double where we started the year at.

Net debt is $109 million down from $143 million at the end of 24.

Our net leverage ratio improved from1. 8 times.

At the end of 2024 to 1.1 times at the end of 2025.

We have nothing outstanding on our revolvers. As of this week, we had borrowing capacity of approximately $7 million on our revolvers.

Brady mentioned the growth in our business in Argentina.

Argentina is cash self-sufficient for us. We are not having to support Argentina by moving cash there to double the business in 2026.

We expect to begin repatriating cash to the US in 2027 given the strong performance that we expect from them with long-term stable early production contracts.

The third topic is our tax loss carry forwards. It's at the end of 2025; we had a tax loss carry forward of approximately $84 million that can offset almost $300 million of taxable income in the United States.

In 2025, we were able to use approximately $7 million of this deferred tax asset to reduce our US cash taxes in the United States.

This tax loss carry forward is of significant value to Tetra and Tetra shareholders as we continue to grow our business and move towards the 2030 goals with expected higher US income from our broaming plant and from water desalination facilities.

And lastly, given that this is my final earnest call, I would like to express my appreciation to the Tetra organization, our board of directors, the research community, and our shareholders for the opportunity to work with all of you.

Tetra is in a great position to deliver on our 2030 goals and create even more value to our shareholders as we grow our earnings.

Tiffany, with that, we'll open the question, the call to questions.

(Operator Instructions)

Stephen Gengaro, Stifel.

Thanks, and good morning, everybody.

Good morning, Stephen.

It will be odd without Elijio here next quarter, but we'll keep talking to him. So, I think, I think the first thing is when we think about the comments on the fluid side and how the deep-water market looks in 26 versus 25 for fluids and how that evolves into 2027. Can you just talk a little bit about kind of what you're seeing, any, just any incremental color on how we should be thinking about the offshore, basically the non-industrial piece of fluids.

Yeah, sure.

We had a record setting year for our completion fluids business in 2025 and really when you think about it, we're still way below where the market peaked in deep water in 2014, as I mentioned, we're 55% below where we were in the peak and we're setting records financially. But we had a couple of tailwinds with us in 2025 because the Gulf of Mexico, as I mentioned, was largely in completion phase. And there are, these cycles happen right in deep water. If your drilling, campaign is ongoing and you're doing less completions, that has an impact on us. If you're doing more exploration and less development, that has an impact on us. So 25 was a great year. 26 is still going to be a very strong year for us, but we are seeing a cycle into more drilling phase and less completion phase. But again, that cycle will reverse itself in 2027 and I will say the overall deep water market, is overall is continuing to look very positive over the next 3 to 4 years.

So hopefully that helps with your question.

Yeah, it does. And the other question I had on that was when we think about margin progression and on the fluid side, and obviously we can sort of back out the first half of 25, which you had the CS Neptune work. The guidance parameters you gave, is there, is it, what's driving that just kind of normalized margins ex Neptune and is there, and what's sort of the pricing situation look like for the deep water fluids?

Yeah, our pricing power is pretty strong in the completion fluids. We are the innovation leaders and we get, we think we get a premium for that. We're also vertically integrated from the standpoint of being able to produce our own fluids, so we feel we have an advantageous position in that regards. I mean, as I've mentioned, we are securing, third-party bromine.

At higher pricing levels, spot market pricing levels than our long-term supply contract because we're growing. In both the deep water and the and the EOS demand, so that does put a little bit of pressure on our margin side, but as we communicated, we think we're going to be, in that range 25 to 30 for the year in the in the segment which is really consistent with our past 7 years. But I think what it does highlight is again the strong business case that we have for our bromine plant because when we bring that that plant online.

We will have GBP75 million of bromine available to us at significantly lower cost than what we are paying today and that that's again part of our 2030 objectives that we've outlined.

Thanks. And then just one really quick one on the margin site. I don't think you've ever said this. I don't know if you will tell us, but, how any guidance on how much of your Bromy needs are serviced by the the long-term Langxis agreement?

I don't know that we have communicated that Stephen.

Do you know if that's public knowledge

we've indicated that approximately 75% of our historical needs have been met under a long-term agreement, and we've been doing open market purchases for the rest of it. But as Brady mentioned, with the volumes increasing, we're doing more and more open market purchases.

Yeah, the percentage of open markets is definitely increasing, Stephen, as we grow.

And we support the electrolyte ramp up. So we're going to continue to see that in 26 and 27 until we bring the plan online, which will have a dramatic change.

Great, thank you for all the details.

Yeah, thank you, Stev.

Martin Malloy, Johnson Rice.

Good morning and Elijio enjoyed working with you for a number of years and wish you the best in retirement.

Thank you.

Give me a sequel.

We're going to keep him busy, Martin. Don't worry.

Okay, good.

I wanted to ask about the desalinization plants, and, it seems like obviously the size of the potential projects has increased substantially.

I'd imagine that there's a number of different parties involved from EMP companies to midstream to the data slash powered providers. Can you maybe help us with how we should think about the timing of these commercial contracts potentially getting finalized and then the time to revenue?

Yeah, so appropriate question, Martin, because you know we were even since our investor day in September we were going down a path with several customers who, had a really sincere interest to stand up our 25k design plant in 2026.

That has changed, dramatically, since our September discussion, and multiple customers, multiple data centers are now part of the discussion and it's kind of taken over, I would say, the opportunity set that we initially were thinking about, but it also. Includes the fact that, we have to do additional engineering work. We had almost, well, we completed our 25000-engineering study, but clearly when you go to 100000 and above.

We have to kind of restart that that engineering cycle and as you stated, there are multiple parties involved with this, the supplier of natural gas, a potential midstream supplier who's got water or an operator that has their own water, the power generation itself, and the potential hyperscale whoever that, in the case may be, so it is a multi-party process and it's exciting. Process, West Texas is looking very favorable, I would say, in terms of the future of these data centers, and, quite frankly, we've been open to the fact that we to date still to our knowledge anyway, are the only ones that have communicated an end to end full commercial offering for desalinating produced water for beneficial reuse and we're very encouraged by the patent. That we received in the fourth quarter that provides more validation that you know we we've got a cost or a technological advanced position so.

So in terms of timing, look, we're hopeful that that one of these data center desalination projects will materialize in the first half of this year. Obviously we weren't planning on much revenue, if any revenue in 2026, but it does hopefully set us up for a first revenue of a large facility sometime in 2027.

Oh, that's great. And then for my follow-up question, I just wanted to ask about bromine and you're having to go out in the stock market and make purchases to meet the demand and it sounds like from Eos's call earlier this morning, demand is not the issue they've got, they've had some temporary execution issues ramping up, but the demand is certainly out there and they'll be increasing their, the manufacturing, going forward.

Does it make sense to try to accelerate the timing of bringing that brooming project online? It seems like you all were trying to pace it, so you kept it within free cash flow but given the ramp up in demand and potentially completion in the deep water coming back in 27, does it make sense to try to bring that in some the completion date for the brooming facility.

Yeah, the brooming facility is really being a schedule driven; it's a construction driven project right now. The timing of being able to get the contractors on site, get, all of the major equipment, tied equipment.

On location, so we're not slowing the pace of this project by any means to try to pace it with cash flow funding.

So, we are moving as quickly as we can. We're still on schedule for the fourth quarter of 2027, Marty, but there may be a little bit of opportunity to pull it in a little bit, but we want to be conservative with our estimates on that.

Great, thank you. I'll turn it back.

Thanks, Marty.

Bobby Brooks, Northland Capital Markets.

Hey, good morning, guys. And first I want to say Elijio, congratulations on the terrific career, and I, I'm glad I've got to know you pretty well over the past couple of trips we've had the last few years, including you taking me to, on my first trip to Midland.

Thank you, Bobby, and hopefully, that was a very good experience for you.

Absolutely. So I wanted to double click on the desal stuff. Thought it was really exciting to hear the customer conversations have pivoted from the 25,000 barrel a day to 100,000 or more, plants.

But what I wanted some more clarity on was I thought the, when you did the engineering on the 25,000 a barrel a day plant that it was sort of modular and scalable in nature so you could kind of just stack for to get to that 100,000 number maybe I'm misunderstanding it, but could you just could you just discuss why if that is the case, like why not just deploy four of them to hit that 100,000 goal.

Yeah, good question, Bobby, and we did.

Anticipate that if we started out with 25,000 plants that as volumes increased, we would be able to build them in a trained type of environment, right? Another 2,500. But when you know you're going to start instead of a 25000 plan and you're going to start with 100,000 or more.

Obviously, there are efficiencies to be gained out of a large 100,000 barrel per day plant versus going and building four separate 25000 facilities. So, with that in mind, our customer. Is asking us to prepare for a much larger facility as opposed to, well, let's just build 425,000 and put them together. So, because there are some economies of scale to be had.

Absolutely, that makes a lot of sense and maybe to double, to dive a little bit deeper there. I think it took a couple of quarters to do the, to get the engineering finalized for the 25,000 barrel a day plant. Do you think that might be a little bit accelerated since I'm guessing there's probably some crossover, where you, you're kind of starting at second base rather than starting at first base with this, engineering plan.

Yeah, no, absolutely. I mean, the fundamentals of the engineering are in place, so we will get some efficiencies as we as we move into the 100,000 plus plant site and if we were starting from scratch this would clearly be a six month exercise, but we're not, and we feel fairly confident within the next three to four months we will have a good range of where we need to be to move into a commercial discussion.

Great. And then just one last one for me just on the kind of base business water and flow back services US, as if we think, if you take the assumption that onshore US activity stays flat, do you guys think you can continue to outperform that just through the value add that you provider EMPs, or is it probably more likely you kind of stay if it's in a flat environment you stay flat as well?

Yeah, so I mean the sandstorm technology uptake really continues with our customers and we have more room to grow on that side of the business as you probably heard.

As I'm sure you heard during our investor day, we are deemphasizing our water transfer business somewhat, we're still supporting that business and looking for the efficiencies that we'd like to get out of that business, but investing less in growth and that as that piece of our business becomes, which is our lower margin business, becomes less of our North America business, then we fully expect the flowback side of the business to continue to increase share. And that's what's helping us along with Argentina to continually drive our overall margins up in that segment in 26.

Got it. Great to hear. And maybe if I just could squeeze in one more, I thought it was really exciting hearing the calcium, the industrial calcium chloride for chip production had really outstanding growth in 26. Could you just maybe remind us, is that being supplied to domestic chip manufacturing, international chip manufacturing, or is it a mix of both?

It is, I'm sorry, it is domestic, chip manufacturing and really we're on the early days of that growth, and, calcium chloride provides a really valuable, part of the solution for these chip manufacturers because it neutralizes fluorine or fluorides, which we know have are an environmental concern. So we fully expect that business to grow as the chip manufacturing market grows here in the US.

Terrific here. Congrats on the excellent 2025. I'll return to the queue.

Thank you.

John Ken Wansing, CJS Securities.

Hi, thank you for taking my questions and the next quarter. I was wondering if you'd go a little bit more into the decision to bring on a third-party supplier for bromine. Does that indicate that you're having any issues with your current supplier or perhaps any delays or shortfalls expected when you rent the new facility, or is it purely just the demand for bromine is exceeding, what you already had contracted? That's the first part of the question. The second part is, are you expecting to pass on some of that higher, input cost, through to your customers?

Yeah, so the incremental bromine, remember bromine feeds, two important parts of our business, our completion fluids, our deepwater completion fluids, which had a record year in 2025, and then it also supports our electrolyte production which, EOs, electrolyte production, so, as they ramp. So, we are definitely supplying, third or securing third-party supply well above now the long-term contract. There's no issue with the long-term contract, but as we've stated publicly, that contract does wind down through the end of 2029, which dovetails, very nicely with our bringing the plan online in 2028.

We have some success with pricing because of our innovation, leadership. That does help offset some of the increased prices of bromine but again that's consistent with the guidance range that we've given. Between 25 and 30 for the segment, which is consistent with our past seven years, really even overcoming the increased cost of bromine. That we see as a short-term issue in 26 and 27.

Got it.

Thank you. And then you did mention you're expecting to hit that plant capacity in 29, just two years after you open it. I'm wondering if, or what the plan is for excess roaming supply after that. Is it to stay with these third-party contractors or are there extension opportunities that you can do with the assets that you have?

Yeah, the 75 million will be the current tower that we have. We have plenty of resources in the ground in our brine to continue building out additional capacity, but most likely, we will, go to the market with incremental, bromine supply above the 75 million at least for a period of time until to see whether or not we've reached a whole new plateau of future roaming growth above our 75%, but for the short-term we would expect to go to the market for any needs above that.

Okay, great, thank you. If I could squeeze one more in there, do you have any expected shortfall in supplying bromine in the short-term to your both your completion business or the battery business, or is it, are you expected, are you expecting to satisfy all the demand with these new agreements?

We have secured contractually secured well what we need for 2026. Obviously as we get closer to 2027, we will do the same thing, but we're in good shape for the supply.

Got it.

Thank you.

Thank you.

Steven Gengaro, Stifel.

Thanks.

Just a quick one, and I was, I might have missed this earlier, so I apologize. The margin guidance you gave on the water side, for 2026 is pretty healthy. What, what's behind that guidance?

That, is simply reflecting, stronger or pricing pressures in the Permian Basin that we're working toward offsetting some of that with aggressive cost actions that Roy McNiven and his team are taking. So we believe we'll remain in the teams, with that business, especially with Argentina coming on.

Okay, thanks. And then just a quick follow-up the. When we think about the progression through 2026, given what you know as far as seasonal factors, etc. Any sense for, or any color you could give on kind of where the consensus sits for the first quarter EBITDA, which I think is like in the $23 million, $24 million range.

Yeah, as we don't, we're not giving any guidance, for the year, much less for the quarters. The only, spikes that we see will be the second quarter spike that we traditionally see in Northern Europe with the calcium chloride, business.

Otherwise, I think you should. Otherwise, I think each of the quarters are going to reflect the offshore activity and the timing of projects.

Great, sorry about that. My phone wasn't on silent. I apologize.

Okay, that's.

That's very helpful and thanks for the details.

Thanks, Stephen.

Your next question.

John Ken Wansing, CJS Securities.

Hi, thanks for the follow-up. I don't know if you mentioned this specifically, but just given where you sit with the Oasis negotiations on the data center side, when's the earliest you think you could have a large scale, the 100 plus million plants, online, and starting to produce?

Probably the earliest I would say would be Q2, probably more like mid-year of 2027 would be our expectation.

Okay, great. And does that also take into account factors like the relative difficulty of like, getting gas turbines on site and things like that just given where backlogs are for power generation.

Yeah, we can't comment on the other partners in these programs kind of where they are on, securing everything they need for these projects, but we are having specific discussions with multiple customers as it relates to data centers on our role and they're aware of our timeline that obviously they're asking us if we can shorten.

That timeline, but, that's a realistic timeline for us to stand up that size of a plant.

Okay, great.

Thank you. One more just high-level question, is there any sort of, long-term impact that you might expect in the offshore business, based on just the changes in Venezuela and how that might be impacting the overall, energy market?

Yeah, I mean, our view of Venezuela, I mean, it's, I think it's positive for both the country and the oil field services long-term. I don't think you're going to see a huge impact in the short-term. We had a business Petra did in Venezuela, that we will look at, returning or at least selling completion fluids into that market.

By way of participation, but in terms of the overall energy market, my view is that it will not be significant in the short-term.

Understood.

Thank you.

That concludes our question-and-answer session. I will now turn the call back over to Brady Murphy for closing remarks.

Well, thank you very much for joining us. 2025 is in the books as a record year for Tetra, and really the year that our strategic initiatives came into, to focus for us with our one Tetra 2030 strategy.

And we're very excited about the future. So thank you all for joining us and participating with us today.

Ladies and gentlemen, this concludes today's call.

Thank you all for joining. You may now disconnect.