The following is an update to our September 2, 2020, Research Article published on Seeking Alpha titled: "TETRA Technologies Is A Misunderstood Energy Tech Innovator With Multiple Shots On Goal". Please refer back to that article for deeper segment analysis.
TETRA Technologies (NYSE:TTI) posted positive third quarter 2020 EBITDA, operating cash flow, and free cash flow. The company appears, to us, to be in a league of its own posting positive results despite the brutal downturn in energy services. Every quarter this year they have generated positive free cash flow even without the benefit of monetizing working capital (receivables and inventory - meaning quarterly cash earnings continue to cover interest expense, cash taxes, and all capital expenditures).
TTI management publicly indicated its belief that the third quarter of 2020 represented the market trough and pointed to positive fourth quarter trends. TTI is well situated to gain share in multiple business segments during this downturn, while being highly leveraged to an upturn in energy services. TTI pointed to market share gains in water recycling (#1 in Permian Basin) and in sand remediation with 100% utilization of its new Sand Storm equipment. TTI signaled that it will invest to meet growing demand for its Sand Storm technology.
TTI announced that its Sand Storm sand filtration technology is in the process of displacing a competitor, after a head to head comparison, in Appalachia. We have spoken to a large, and highly reputable, Permian Basin client who is transitioning its sand recapture needs to TTI. This client expects upwards of 70% of its wells to be using TTI's Sand Storm technology by the end of calendar 2020. TTI is gaining market share because of its technological innovation, backed-up by strong customer service.
Importantly, TTI is in the enviable position of being anchored by its non-energy
