Tetra Technologies, Inc.

Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tetra Technologies Inc. 1Q 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I'd now like to turn the call over to Kurt Elliott. Please go ahead.

Hey, good morning, and thank you for joining Tetra's first quarter 2026 earnings call. Speakers on today's call will be Brady Murphy, President and Chief Executive Officer, and Matt Sanderson, Chief Financial Officer. Before we begin, I'd like to call your attention to the Safe Harbor Statement in our Form 10-Q. 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 GAAP reconciliations and note that these reconciliations are not a substitute for GAAP financials. As such, we encourage you to refer to our 10Q that was filed yesterday. After Brady and Matt provide their comments, we will open the line for Q&A. I'll now turn the call over to Brady.

Thank you, Kurt, and good morning, everyone. Welcome to Tetra's first quarter 2026 earnings call. I'll walk through the very positive first quarter highlights, how Tetra's positions in this uniquely uncertain time, and the progress towards our 2030 targets before turning it over to Matt to cover more detailed financials and the balance sheet. Despite the backdrop of one of the most tumultuous periods in the history of the oil and gas industry, We started 2026 with one of the strongest first quarter performances in the company's past 10 years. If we exclude the benefit of the Gulf of America Neptune project in the first quarter of last year, revenue of $156 million and adjusted EBITDA of $26 million were 10-year highs, as were the first quarter results for both Brazil and Gulf of America. In addition, the industrial chemicals and production testing subsegments each delivered 10-year high revenues with strong margin contributions. What encourages us most about our results is that the operational and financial fundamentals for each of our segments and many of our sub-segments are improving, even before the benefit of current elevated oil prices and potential increased customer spending activity. At current oil prices, we anticipate offshore projects could be pulled forward and unconventional activity in the U.S. will eventually respond. Combine this with the significant growth opportunities laid out in our One-Touch Tetra 2030 strategy, which I will update later on our call, we feel very good about Health Tetra's position for 2026 in the coming years. Regarding the ongoing conflict in the Middle East, and given that this region has historically accounted for about 5% of the company's revenue, we do not expect an overall negative impact on our financial results. That is because what we have seen so far is activity in our core business regions of the U.S., Europe, and Latin America will likely offset any reductions that may occur in our Middle East business. This applies to our supply chain as well, since all of our chemical manufacturing plants are located in the United States and Europe, and our elemental bromine is sourced from Arkansas, which is also the location of our critical minerals resources. Over the longer term, it remains to be seen how developments in the Persian Gulf and Middle East will impact the global oil and gas markets and our business. But in general, we believe it could boost investment in the U.S. and international unconvention activity and provide tailwinds to an already robust offshore and deepwater outlook. For completion fluids and products, our industrial chemicals business had a record-setting first quarter with revenue up 15% year-over-year and 13% quarter-over-quarter. For the first time since 2021, when energy services were suppressed due to COVID-19, it accounted for over 50% of total first quarter segment revenue. Higher pressure gas plays in south Texas and the western Haynesville supporting Gulf Coast LNG plants are driving higher volumes of higher value completion fluids. Increasing pressures in west Texas due to disposal well pore space are also contributing to higher density fluids for well workovers. Looking forward, we're well positioned heading into our traditional European seasonal second quarter peak. For completion fluid energy services, Q1 revenue and adjusted EBITDA in Brazil were at a 10-year high. Although we did not execute any Neptune jobs, our first quarter fluids business in the Gulf of America, excluding Neptune work in the first quarter of last year, also recorded a 10-year high in revenue and adjusted EBITDA. Regarding Neptune projects, we're very encouraged by the growing pipeline. The trend toward deeper, hotter wells in the Gulf of America continues, as evidenced by very strong first-quarter revenues for our highest-density zinc bromide completion fluid. For the water and flowback business, despite U.S. frack fleets down 24% year-over-year and a slow January due to freezing weather, our overall revenue was up 1% year-over-year and 3% quarter-over-quarter. Our production testing subsegment reached a 10-year high in the Q1 revenue, as our automated sandstorm technology continues to gain market share across the unconventional land operations in the U.S., Argentina, and the Middle East. Our strategy to grow this segment internationally has been successful, and for the first time in the last 10 years, international production testing revenue was over 50% of the total PT subsegment revenue. Looking ahead to the rest of 26, significant uncertainty remains for oil and gas prices. However, given our geographic footprint, we believe any headwinds from the Middle East will be offset by the strength of our other geomarkets. We expect to gain further clarity on customer activity offshore and outside of the Middle East as we move through the second quarter. For now, we are maintaining our prior 26 guidance of single digit revenue growth over 2025 with completion fluid margins between 25 and 30% and water flow back in the mid teens. Turning to our strategic progress, towards our one Tetra 2030 objectives. At our Industrial Day last September, we outlined a clear strategic path for the company. Although much has changed in the world since that event, our view of the company's key growth trajectories across deep water, specialty chemicals, electrolytes for battery energy storage, critical minerals, and desalination of produced water has strengthened. We expect roaming demand to support our deep water completion fluids and battery storage electrolytes to double by 2030. driving the need for and reliable access to cost-effective elemental bromine, a critical feedstock. This has become more evident with the current events in the Middle East, as well over 50% of the global bromine supply comes from that region. Our bromine plant project in southwest Arkansas continues to proceed on time and on budget. Phase two of the project is underway, with phase three slated for 2027 and first production at the start of 2028. The plant is designed to have an annual capacity of up to 75 million pounds, more than double our existing long-term third-party supply agreement. Tetra's electrolyte revenue grew meaningfully in 2025, as the U.S. Energy Information Administration reports that a record 15 gigawatts of utility-scale battery storage was added to the grid in 2025. The EIA projects that another record 24 gigawatts is planned for 2026. representing a 60% growth rate. As artificial intelligence and cloud computing drive rapid growth in data center power demand, scalable long-duration energy storage is becoming increasingly critical. Tetra's proprietary pure flow zinc bromide is a key input for these systems, supporting safe, non-flammable performance at utility scale. Tetra's OASIS TDS and the desalination of produced water for beneficial reuse continues to gain momentum. with multiple engineering efforts and customer commercial engagements. Since achieving 24-7 steady state operations 60 days ago, our Permian Basin pilot project has operated at over 96% uptime and continues to meet our performance specifications. We believe that behind the meter power generation, access to affordable natural gas and land and other factors will drive significant data center growth in West Texas and accelerate the produced water desalination market well ahead of our 2030 targets. Regulatory agencies continue to focus on understanding the technology, setting permitting standards, and encouraging the industry to bring solutions to the produced water disposal challenge. Tetra is honored to participate in the National Petroleum Council Produced Water Committee and to support the recently announced U.S. Environmental Protection Agency Reuse Action Plan 2.0. Regarding Tetra's lithium and magnesium critical mineral resources in Arkansas, We continue to advance relationships with technology providers and conduct engineering studies. We have formed a joint venture with Magrathea Metals to advance domestic magnesium metal production and monetize this asset. The JV will leverage our specialty chemical processing expertise and large scale magnesium resource base combined with Magrathea's proprietary electrolytic magnesium production technology, which has been partially underwritten by the U.S. Department of War. In April, Magrathea successfully converted tetrasmack over brine, rich in magnesium, into a high-purity magnesium metal at its small pilot operation in the San Francisco Bay Area. The JV, named Arkansas Magnesium, is currently conducting engineering studies for a first-of-a-kind demonstration plant planned for co-location at the Evergreen Bromine site in Arkansas. For lithium, a strong rebound in lithium carbonate prices over the past six months. has led us to look at options to accelerate the development of our Evergreen 585,000 metric ton lithium carbonate resources. As a reminder, Evergreen is a 6,900 acre brine unit in Southwest Arkansas, on which Tetra owns 65% of the brine mineral rights and ExxonMobil owns 35%. The combination of current LCE prices of around 25,000 per metric ton and efficiency advances in direct lithium extraction technology are making this a very attractive option to accelerate. More to come as we look at ways to advance this opportunity. With that, I'll turn the call over to Matt.