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.

Thank you, Brady. Good morning, everybody. Completion fluids and products revenue of $92 million, adjusted EBITDA of $26 million, increased 10% and 12%, respectively, relative to Q4 2025. The sequential increase was driven by higher sales volumes in our industrial chemicals business and ongoing deepwater projects in the Gulf of America and Brazil that Brady referenced earlier. Year over year, completion fluids and products revenue in adjusted EBITDA decreased 1% and 23% respectively. As a reminder, our first half 2025 results included high impact tetra-Neptune projects, which we previously noted we do not expect to repeat in the first half of this year. That said, the pipeline of deep water and high pressure, high temperature completion opportunities continues to grow. With our best-in-class service delivery and unique fluid chemistry solutions, we are well positioned to participate in the forecasted growth in offshore deepwater activity. As Brady mentioned earlier, geopolitical unrest in Europe and the Middle East has led to rapid shifts in global market dynamics. As a result, offshore activity in the Middle East has slowed, and logistics into the region continue to face higher costs and shipping delays. Our exposure in the region is relatively small compared with our overall business, but some of our Q2 2026 completion fluid sales in the Middle East could be delayed. However, as mentioned, our calcium chloride and bromine-based completion fluids are manufactured outside the Middle East. As such, our fluid production has been unaffected, and we are seeing an increased number of spot sales inquiries from regions and customers we have not historically supported, which could more than offset any delays. For water and flow-back services, revenue of $65 million increased 3% sequentially and 1% year-over-year. To put our performance in context, during the same 12-month period, U.S. frack activity declined more than 24% year-over-year. Adjusted EBITDA of $9 million increased 20% sequentially and 9% from the prior year. The improvement of profitability was driven by cost reduction initiatives and continued market penetration of higher margin automation technology. Outside the US, project startups in the Vaca Morda Basin will enable us to double revenue in Argentina in 2026 at margins that are overall accretive to this segment. Compared with the broader market conditions, our outperformance highlights the strength of our service delivery, our differentiated technology, and our geographical diversification. As commodity prices have increased and a 12-month strip price remains above what the market projected at the start of this year, we are seeing our customers consider increasing their activity plans for 2026. Should this occur, we are well positioned to incrementally benefit from any increase in activity in U.S. shale basins that may result from higher oil and gas prices. Regarding our capital structure, we had $36 million in cash and a total debt of $182 million at the end of the quarter resulting in a net leverage ratio of 1.5 times. Cash used in operating activities was 12 million. Total capex was 19 million, including 8.4 million for our Arkansas bromine project. Total adjusted free cash flow was a use of 32 million, and base business adjusted free cash flow was a use of 23.5 million. The use of cash was driven by higher incentive compensation tied to our strong 2025 financial results Our three-year return on net capital invested and our exceptional total shareholder return performance. Cash use also reflected a build in our AR balance at the end of the quarter and the seasonal inventory builds in Europe, which will be monetized in Q2. We expect to generate positive base business free cash flow in 2026 with that cash being reinvested in our Arkansas bromine plant. Overall, we are off to a strong start and remain confident in our ability to deliver solid financial results this year while continuing to advance towards our 2030 targets. The global market conditions continue to evolve, but overall they're providing modest tailwinds for the markets that we serve. I'll now turn the call back to Brady for his closing comments.

Well, thanks, Matt. And again, despite the continued uncertainty caused by the conflict in the Persian Gulf, the long-term outlook for our business appears to be even better than when we had started the year in 2026. So overall, very confident in Tetra's ability to execute in these market conditions that we see, make prudent financial decisions to support our growth, and continue to make progress towards our 2030 targets. So with that, let's open it up to questions and answers.

At this time, if you would like to ask a question, press star followed by the number one on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Your first question comes from Bobby Brooks with Northland Capital Markets.

Hey, good morning, guys. Thank you for taking my question. Good morning. It seems like the OASIS commercial discussions are progressing well. and what really stuck out to me in the script was the quote, multiple engineering efforts and customer commercial engagements. Could you just pull back the curtain a little bit more about what that looks like and add some comparison to what that looked like, say, at the start of the year or six months ago?

Sure, Bobby, appreciate the question. Yeah, we are very encouraged with the ongoing dialogues that we have. Remember, we'd mentioned in our last call that we were engaging in 100,000 barrel per day plant. We actually now have several parallel engineering studies going on for a smaller size plant as well as 100,000 barrel per day plant. And those engineering studies, they take time and we're still on progress. We feel to have what we need from those projects to at least get into more commercial discussions with our customers before the end of the second quarter. We're encouraged by what we see from the preliminary engineering studies in terms of the OPEX and the CAPEX and socializing some of those discussions with customers, but we still have a ways to go to finish those efforts and we'll continue to do so. That's really kind of an update. Again, we're in the middle of engineering studies, engineering work that we'll need to complete before we can really get into any long-term contracts, Bobby.

Got it. And then maybe just on the customer discussion side, it seems like over the past, like since the investor day specifically, there's probably been more folks entering reaching out, wanting to hear about the technology and learn more. Is that trend still continuing or maybe I'm off base? Just any color on that dynamic?

Yeah, Bobby, this is Matt. So absolutely. I said, you know, we cannot disclose, you know, that the customers that we're engaged with, But certainly those engagements, those dialogues, those engineering studies like Brady referenced, that's increased. And as you say, you picked up on the fact that it's not one engineering effort. This is with different customers, multiple opportunities. We're very encouraged. We're also very encouraged by the performance of our technology, of our patented OASIS offering. and the economics associated with that, I think also are only continuing to improve. I think as you're well aware, some of the challenges with disposal, some of the costs associated with disposal, those costs continue to rise. And as we continue to go through our engineering efforts, we're able to demonstrate that the Tetra Oasis solution is, in our view, very cost competitive with alternatives.

Your next question comes from Martin Malloy, Johnson Rice.

Good morning and congratulations on a solid quarter. Question was on the, my first question was on the deep water side and any indications that I know there's no Neptune projects in your 26 guys, but can you talk about what you're seeing in terms of your the conversations with customers for deep water completion fluids and particularly with respect to Neptune potential projects second half this year or next year?

Yeah, sure, Marty. I mean, we've been feeling good about the deep water outlook really going all the way back to at our investor day when we outlined, you know, some pretty, you know, strong compound annual growth as we march towards 2030. And I would say the recent events have only strengthened that outlook. As you look at cutting off the amount of oil that's currently happening in the Middle East, these projects that already were looking at very strong financially for our customers. As you can imagine, they're looking at what they can pull forward, what makes sense to pull forward. And we're hearing some of that churn. We've actually picked up, as we've mentioned, the work outside of the Middle East that we've seen already will offset whatever impact that we see from our Middle East business. Even though it's roughly 5% of our revenue, we've We've seen opportunities already well overcompensate that potential loss. So yes, we're seeing some churn in that regard, but it's already been a strong outlook, at least in terms of our base business deepwater completion fluids. With regards to Neptune, as we said, the pipeline continues to grow. The wells are getting hotter, more challenging. You know, zinc is still an option in the Gulf of America, but it has its own challenges as you get hotter with corrosion as you deal with production facilities. So we're seeing that pipeline continue to grow. And we're also seeing opportunities outside of the Gulf of America continue to build. So you may or may not see a Neptune project in this year, but I would say the probabilities for next year are continuing to increase pretty significantly.

Very helpful. And then for a follow-up question, just wanted to ask, you commented on it a little bit, but in your press release, you did talk about evaluating options to accelerate lithium and magnesium development. And I don't know if there's more you can share with us now. Would that be in conjunction with perhaps accelerating the bromine project, or is it dependent on that, or is this separate related to the Exxon joint venture?

Yeah, we're accelerating the bromine project really at the fastest pace we can. That project is our priority, and we will definitely prioritize that project to have completion by the end of 2027 and and start in 2028. Now the benefit of that is that all the upstream that we, the brine wells that we put in place, the pipelines, some of the pretreatment plant capabilities to take out H2S from the brine field, those types of things will all be in place for whatever additional plants we put on that site. As we've mentioned on the call, we're currently doing engineering studies and plan to put a demonstration plant with Magrathea for the magnesium demonstration plant. And also, we've already done quite a bit of engineering for a lithium plant that will be on that same site that, again, will benefit from a lot of the infrastructure and investments that we've already made for the bromine project. So a lot of synergies related to that. We're not ready to publish any financial information on those projects yet. But as we move forward, you can anticipate we will be at the appropriate time.

Great. Thank you very much.

Your next question is from Tim Moore with Clear Street.

Thanks. My first question is about battery energy storage. You know, we all know that EOS, you know, has some supply manufacturing hiccups, which you know, seem temporary. So I'm just kind of curious, you know, do you get a rolling update on that? You know, it seems like you have enough feed supply for electrolytes to quickly maybe get it to them if they start ramping up more seriously, you know, after the summer. Just kind of curious about how you're thinking about that logistically and the supply side.

Yeah, Tim, we don't want to comment on kind of forecasting anything, obviously, ahead of EOS, but obviously we're very plugged into our forecast so we can plan for not only the bromine, but the full electrolyte production that we need to produce. So we do have good visibility into that, but we really can't talk about any specifics. we have as we've mentioned before in addition to our long-term supply agreement we have secured additional third-party uh bromine supply that is in place to meet uh you know the forecast that we are getting from eos that's that's really not a a concern and of course once we have our own plant operating in 2028 if they continue their path to the eight gigawatt hours of production that that they've stated publicly they're they're they're striving for, we will be in a great position to not only supply their requirements, but also the deep water growth that we have projected.

That's helpful, Brady. I'm sure we'll get an update in two weeks from then when they report, but it seems like it's fixable on their end. The other question, just switching gears, I don't know if this is more for Matt than you, Brady, but for the Arkansas bromine project, I mean, it was nice to hear, Brady, your prepared remarks on production still expected early 2028. Can you just maybe just walk us through maybe some of the next construction milestones? And, you know, I'd anticipate CapEx to uptick pretty meaningfully, I guess, the coming quarters. I think it was only 7 million in the March quarter. If Matt could just share some color on that.

Sure. Yeah, I'll take that one. And if Matt wants to add anything, I'm sure he will. So, yeah, the project is on schedule. We've completed phase one. Phase one was important because standing the bromine tower up on site It was a logistics challenge. It's a large 130-foot titanium structure. Having that up and secured was a really important milestone. But again, a lot of the actual on-site construction around the bromine tower, the pipelines from the upstream, all of that, the pretreatment, all of that has to still be constructed. And so, yes, there will be more construction activity in 27 and 28. Again, we're projecting good cash flows for the rest of this year and 2027, so we are looking to finance as much of that as we can from our free cash flow. And if we do need additional capital, we have very good options available to us if we have to go that direction. But for right now, we're funding from our cash flow, and that's the plan.

Your next question comes from Patrick Ouellette with Stifel.

Hey, it's Pat on for Steve and Jigar. Thanks for taking the questions. Sure. Could you talk about the opportunity you have for magnesium production, maybe including any sense you have for demand and any color on the joint venture? I believe I saw the JV partner reference 7,000 tons per year by 2029.

Yeah. So we're having ongoing discussions. We have finalized the joint venture, which is great. We had our first formal board meeting a week or so ago. We really like this technology. As you're probably aware, the US really doesn't produce any magnesium. The world is heavily dependent on China production for magnesium. And so as you can imagine, being on the critical minerals list, it's got the attention of the current administration, the Department of War. So I would say it's a little premature to start saying how large the first commercial plant will be. We are having some discussions along those lines. We will have plenty of brine flow to make the plant as large as we want to make it, but there are some other considerations that we want to take into account. What type of offtake agreements we can have well ahead of time WHAT TYPE OF SUPPORT WE MAY OR MAY NOT GET FROM GOVERNMENT FUNDING. SO THERE ARE CONSIDERATIONS THAT WILL STILL BE TAKEN INTO ACCOUNT. THE DEMONSTRATION PLAN OBVIOUSLY WILL BE A SMALL SCALE TO PROVE OUT THE TECHNOLOGY. BUT AS FAR AS THE COMMERCIAL SCALE, WE HAVE NOT MADE ANY FINAL DETERMINATIONS ON THAT YET.

OKAY. THANKS FOR THE CALL. SEEMS LIKE A GREAT OPPORTUNITY. SHIFTING GEARS A LITTLE BIT. thinking about fluids it seems like the timing of completions versus rig activity in deep water would lead to maybe sharply higher 2027 fluids demand is that reasonable and any way you'd maybe translate deep water rig additions to the demands yeah Patrick on the uh the earnings call back in uh

This is Matt back in February. We mentioned and gave some soft guidance around what to expect at our completion fluids and products this year, highlighting that we came off a very strong performance in 2025, where a lot of the rigs and the markets that we serve were in completion activity. And then we guided that we expected those rigs to move into more drilling activity in 26th. But then again, of course, shifting back to 2027 and seeing some of that higher completion activity like what you referenced. As Brady touched on, certainly the geopolitical events that are going on in the world today have really highlighted global demand in terms of and where that demand is fulfilled. So we are seeing projects coming online, FID. If you look at some of the leasing activity that's been going on, Again, as Brady touched on, it tends to be deeper, hotter, a little more challenging environment requiring higher density brines and more exotic chemistries, which again plays into the strength of Tetra. So we're very pleased by what we're seeing already in 2026. We said some modest tailwinds, quite a strong performance in Q1. And then as we got into earlier on our call back in February, we expect that 2027 some of that completion activity, but also the type of completion activity that'll be going on really benefits Tetra.

Great. Thanks for all the callers. I'll turn it over.

Your next question is from John DeLontang with CJS.

Good morning. Thank you for taking my questions. Good morning. My first one is, good morning. Pardon me. Could you talk about your partner's lithium project FID status One, if you may need to pursue your own well investments there to keep the Broman project on time. And then the second part of that is if you do decide to drill your own wells, would that be feeding into your own lithium production endeavors if you wanted to accelerate that? Thank you.

Make sure I understood the question that came across a little bit. The question was status of lithium FID was the first part of the question. Right.

Your partners who are drilling the lithium wells, what's the status there? Do you think you'll have to drill your own lithium or your own wells to get the brine for the bromine?

Let me clarify that a little bit. The wells that we drill in the upstream for the brine contain both lithium, bromine, and magnesium. All three minerals are within the same brine. What I mentioned earlier, the wells that we will be drilling for our bromine project that will feed the bromine tower, those wells already have lithium and magnesium in it. So we don't really need to drill additional wells in order to extract the lithium or even the magnesium. That's the real benefit of this project. We're getting three really critical minerals for us out of the same upstream investment. Now, the plant itself is a different issue. As you know, we're building the bromine plant right now. The lithium plant will come later. We're not at a point where we're ready to FID a lithium plant. There's still some more technology evaluation and engineering studies to be done before we are ready to do that. But as I said, the current economics of lithium may get attractive enough for us to put some some accelerated time into that. Right.

Thank you for that. I guess my question was, are you expecting your partners to drill the wells, or are you expecting to drill your own wells?

When you say our partners, who are you referring to in that case? Standard Lithium and Equinor. Okay. So they have their own project, Standard Lithium and Equinor, on our brine leases. That's a separate project from our brine leases. They have the Reynolds unit that has been approved. We get a royalty of the lithium off of that production. So they're technically really not partners. They are partners themselves. Equinor and Standard Lithium have a joint venture. But we own the brine leases, and we get a royalty off of that production. So there are separate units in discussion. Our Evergreen unit is where we will be drilling producing brine for bromine and future lithium and magnesium, they will be drilling on their own unit, the Reynolds unit, where we get a royalty off of lithium, but still, and then we get the tail brine from that production when we need it in the future. And we also get to have the other mineral rights within that brine. Hopefully that clarifies a bit.

It does. Thank you. Appreciate it. And then another question, if I could. What's happening in calcium chloride markets and Is that being impacted by the conflict you're seeing in Iran and how that flows through supply chains and industrial demand?

Yeah, the calcium chloride business for us continues to perform extremely strong. As I've mentioned, it's a big part of our industrial chemicals business that had a record first quarter up pretty significantly over last year and quarter to quarter. I wouldn't say we're seeing any material decline. change due to the current conflict. We really don't have any supply chain issues related to that for that market. We don't have a large presence selling calcium chloride into the into the Middle East, but our European business is very strong. Our US business is very strong. We mentioned our last call. We saw some new emerging markets as it relates to chip manufacturing requirements. So that business is performing very well for us and we fully expect it to into the future.

Your next question comes from Josh Jane with Daniel Energy Partners.

Good morning. Thanks for taking my questions. First one is just on international production testing. You talked about revenues being greater than 50% internationally. Where do you see that going over time, and could you walk through some of the markets where you're seeing strength today and how the recent events have potentially changed your outlook there?

Yeah, thanks, Josh. As mentioned, we're seeing some, and we got it towards the beginning of the year, strong performance in the Argentina business. As we mentioned in our prepared remarks, we're seeing that continue throughout the quarter and expect that we're more than double our revenue in 2026. Other markets, you know, we've obviously touched on a little bit the Middle East, where we have some exposure there, although it's relatively small. But we also see opportunities in some of those markets, those regions, to continue to deploy technology and automation. We've been, as we touched on, very successful in terms of North America, automating and bringing differentiated technologies such as Sandstorm, automated drill-out, and things like that to our North American customers. And these are technologies that can be exported and used and deliver value in those international markets. So as we touched on, we're quite pleased with our geographical diversification. Again, as we see the world in terms of where energy is produced, having that diversification is getting a lot of focus right now. And so it's not just U.S. land, but other markets are looking at how they secure their own energy, and we're pleased to participate in that.

And on that point, could you just expand? I mean, has the game changed when we think about energy security longer term and the opportunity set across multiple of your business lines, international and offshore, for just a broader opportunity set as a result of what's happened over the last eight weeks? Are you starting to see that? Are you having incremental conversations with customers you may not have been having eight to 12 weeks ago? Maybe just elaborate on that a little bit more.

Yeah, I think... When you look at the current situation and the future energy markets where you want to be positioned, offshore deep water is clearly a key market for future barrels, right? And then also unconventional activity in the U.S. and Argentina, because relatively speaking, it's a short cycle time. to get additional production as you put more rigs and frack crews into the unconventional markets. So as Matt said, we're also seeing unconventional activities start to grow in the Middle East. We'll see how this current environment impacts, may or may not impact that activity going forward. But the markets where we want to be right now, strong position in Europe, strong position in the US, strong position in Latin America. Offshore, deep water, unconventional. We think these are the markets that we really want to be in as you speak about security of future supply.

Yeah, and I think the other aspect, which we touched on in our remarks as well, is that we are seeing an increased inquiry of spot sale from different customers into different regions. And we've historically served in terms of our completion fluids. As Brady mentioned, more than half of the world's bromine is derived from in the Middle East. Obviously, some of the challenges of that region are well publicized, and so some customers, we are having those conversations, and again, spot sale inquiries around being able to support their business with all of our fluids in terms of the bromine-based fluids being manufactured in North America from Arkansas. So we're pleased with some of that. Obviously, I think as well, in terms of energy security, you highlighted it, right, the current situation. I think everyone's appreciating that the world needs all forms of energy and is going to need all forms of energy for a long time.

Your next question comes from Bobby Brooks with Northland Capital Markets.

Hey, thanks for letting me jump back in the queue. Just turn to domestic onshore completion fluids market. What are you hearing from customers on their back half of this year activity outlook? Are they shorter in a wait and see mode if these higher oil prices are here to stay? Just wanted to hear your perspective on that.

So Bob, you were asking about our U.S. land completion fluids? Business that I understood your answer. Yeah. So, so completion fluids is largely an offshore business for us. We do have some land business for our completion fluids. But generally speaking, it's, it's small relative to our offshore and deep water markets, but we're seeing some interesting trends as it relates to land opportunities. I'd mentioned them on my comments. Some very high pressure Western Haynesville, South Texas gas wells that are feeding LNG projects require a heavier density brine fluid for completion work. So that trend is working in our favor. And then in West Texas, the pore pressures are getting so high in West Texas that some work over activity also requires heavier brine. Those two areas are where we see most of the activity that's growing for us on the completion fluid side for land applications. It's still relatively small to our deep water, but it's actually starting to grow in a meaningful way.

Thank you for that clarity. I'll return the cue and congrats on this great quarter. Thanks, Bobby.

Your next question is from Martin Malloy with Johnson Rice.

Thank you for taking a follow-up question from me. I just wanted to focus maybe a little bit on Argentina. You cited some projects coming on later this year, giving you confidence in the outlook there. Could you maybe talk a little bit more about the services you're providing down there? Are you expecting demand for the early production facilities that have been pretty profitable in the past? being utilized down there, or is this more on the flow back and testing side?

Yeah, really all of the above. So we did see continued interest and secured some early production facility projects for this year. But then also, as I mentioned, in terms of some of the technology such as sandstorm automation, which has been deployed and proven in unconventional plays in the U.S. We're seeing that technology be deployed into Argentina. We have Sandstorm down there today, and so it's a little bit of a combination of both, whereas historically in the past, our business down there was a little more levered towards the early production facilities. Now we're really seeing a combination of the two, an increased number of early production facilities being executed and those pipeline of opportunities are very healthy, but also taking some of our differentiated technology from unconventional plays in the U.S. and deploying them down into the Vaca Morta for the operators there is bringing some value. So we're quite pleased with how that business continues to progress.

Great. Thank you very much.

There are no further questions at this time. I'll now turn the call back over to Brady for any closing remarks.

Thank you all very much. We appreciate your participation in our call, and we look forward to talking to you at our second quarter earnings call. We'll conclude the call now. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.