Good morning, and welcome to TETRA Technologies Fourth Quarter and Full Year 2020 Results Conference Call. The speakers for today's call are, Mr. Brady M. Murphy, Chief Executive Officer; and Mr. Elijio Serrano, Chief Financial Officer. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Serrano. Please go ahead.

Thank you, Kate. Good morning, and thank you for joining TETRA's fourth quarter and full year 2020 results call. I'd like to remind you that this conference call may contain statements that are, or may be deemed to be forward-looking. These statements are based on certain assumptions and analysis made by TETRA and are based on a number of factors. These statements are subject to a number of risks and uncertainties, many of which are beyond the control of the company. You are cautioned that such statements are not guarantees of future performance, and that actual results may differ materially from those projected in the forward-looking statements. In addition in the course of the call, we may refer to EBITDA, gross margins, adjusted EBITDA, adjusted EBITDA gross margins, adjusted free cash flow, leverage ratio or other non-GAAP financial measures. Please refer to yesterday's press release or to our public website for reconciliation of non-GAAP financial measures to the nearest GAAP measures. These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of our complete financial results for the period. In addition to our press release announcement that went out yesterday and is posted on our website, we'll be filing our 10-K in the coming days. With that, let me turn it over to Brady.

Thank you, Elijio. Good morning everyone, and welcome to the TETRA Technologies fourth quarter and full year 2020 earnings call. I will summarize some highlights for the quarter and current outlook and then turn it over to Elijio to provide information on our financial reporting without CSI Compressco, operating and SG&A costs, cash flow and the balance sheet. Let me start again by thanking all the TETRA employees and the management team for delivering another strong quarter and a very good year relative to the very challenging energy services market this past year. For the year of 2020, despite the energy macro environment, we delivered positive adjusted EBITDA and free cash flow in every quarter. Fourth quarter adjusted free cash flow from continuing operations of $16 million is the seventh consecutive quarter that we have delivered positive free cash flow with a total of $73 million generated over those seven quarters. This was accomplished through exceptional cost management by reducing total costs, as measured by adjusted EBITDA, more than our revenue decline of 33% and increasing our adjusted EBITDA margin for the year, over last year by 150 basis points. This was accomplished with a macro backdrop of a year-on-year US onshore rig count decline of 55% and an active frac crew decline of 56%. While delivering these results, we were also able to successfully execute our key strategies, including the deconsolidation of CSI Compressco, positioning the company for a recovering oil and gas market and meaningful participation in low-carbon energy markets. Our focus on innovation and differentiated offerings in each of our business segments, along with our vertically integrated chemicals and completion fluids model has proven again to be resilient in the most challenging of downturns. The value of our balanced revenue and cash contribution from US unconventionals; global…

Thank you Brady. The results we reported yesterday are all within the range of our pre-announcement of January 29 and more specifically at the midpoint of our pre-announced results. With the announced sale of the GP and IDRs and the 11 million limited partner units of CSI Compressco also that we announced on January 29, the financial results of CSI Compressco will be reported as follows. The 2020 and prior years income statement will reflect CSI Compressco as discontinued operations. Revenue income before taxes adjusted EBITDA will be TETRA-only without CSI Compressco. All our historical results in CSI Compressco will be reflected as discontinued operations. Given that we were still the general partner of CSI Compressco at the end of the year, the balance sheet at the end of 2020 and prior yields -- prior years will reflect all of CSI Compressco assets as assets held-for-sale and all the liabilities of CSI Compressco will be recorded as liabilities held-for-sale. This will allow everyone to look at TETRA's balance sheet and quickly exclude the impact of CSI Compressco by excluding assets and liabilities for those items held-for-sale. The cash flow statement for 2020 and prior years will include the impact of CSI Compressco in each of the various line items. In the press release we issued yesterday, we continue to show TETRA-only free cash flow excluding the impact of CSI Compressco. And as previously mentioned this is because TETRA was still the general partner of CSI Compressco at the end of 2020. When we report first quarter 2021 results and the future quarters, the income statement will be TETRA-only and CSI Compressco results in prior periods will continue to be reported as discontinued operations. The balance sheet will completely exclude CSI Compressco given that we will not be the general partner…

[Operator Instructions] Our first question is from Stephen Gengaro from Stifel.

Thanks. Thank you, good morning, gentlemen.

Good morning.

So a few questions, the first being, as we think about the progression into the first quarter, what are the moving pieces that we should be kind of contemplating in the two segments? After -- I know there's probably a little seasonality in some of the areas, but how do we think about the progression into the first quarter?

So I'll take it from the different segments Stephen. From our chemicals business, it's seeing strong activity. Weather has supported us in terms of -- I should say the extreme weather has supported us in terms of the seasonality portion of that business. But even our industrial business is picking up and looking very strong. And then as you know as we head into Q2, we have our seasonal peak in Europe. So that piece looks very good. Clearly, we had some very good momentum in January on our water and flowback in North America before the freeze. We -- like everyone else, we were impacted by a dramatic reduction in activity, frac and completion activity for a week or so. We're still trying to assess that, but we are seeing a pretty significant bounce back in terms of customers calling us back out to work and resuming activity. So difficult to quantify all those pieces yet, but we expect going into the second quarter -- certainly into March and into the second quarter North America activity continuing to rebound. International, as you saw was down a little bit for us in the fourth quarter, pretty consistent with the international activity that's been declining. We think that's going to stabilize and bottom in the first half of the year. And then all indications that we are getting will be a pretty strong recovery in the second half of the year and certainly into 2022 from the international and deepwater side of the business which obviously supports our completion fluids activity.

Great. Thank you. And then when we think about next year and I -- without -- I know it's hard to pinpoint the entire year but I think you did a little under $50 million in TETRA-only EBITDA in 2020 and we were thinking in terms of something like $60 million in 2021. And I was just curious on 2 things. Like one does that seem reasonable? And two under that scenario what would free cash flow look like?

So Stephen given how much uncertainty in the market there is we aren't giving total year guidance. But I think a couple of items that Brady mentioned. I think that $60 oil and if it holds is clearly opening up, the deepwater and accelerating some of the offshore projects that have not materialized when the oil prices were averaging $40. We think that there's good opportunities for those to materialize in the second half of the year and have a good impact. We also believe that our industrial business will continue to perform well in the market create opportunities. And we also believe that the frac crew counts that have rebounded and recent activity that we're seeing from our customers to keep adding to those frac crew counts will create meaningful upside. We expect capital expenditures to be slightly higher in 2021 than in 2020. We expect interest expense to be lower as we keep paying down the debt. So I think that there's an opportunity here that our free cash flow will again be very strong in 2021.

All right. And then just one final -- and I missed this because I joined a little late. But I think Brady mentioned a couple of Neptune jobs on the prepared remarks that -- but I don't know if you were talking about bidding on them or where that stands for 2021?

Yes. So my comments Stephen was that when price of oil dropped so materially last year and stayed I think on average $36 from March through last year, a lot of the deepwater projects and in particular the projects we've been working with customers on Neptune were pushed have been pushed out. We are in discussions with those customers now about the retiming and replanning of some of those projects. And my comment was that, I'm fairly optimistic that we will execute a job or two of Neptune this year under the current discussions we're having.

Okay, great. Thank you.

Our next question is from Samantha Hoh from Evercore ISI. Go ahead.

Hey guys. Thanks for taking my question. Maybe just to stay on the CS Neptune topic. Just kind of curious for those projects that you're in discussions for, are they for the Gulf of Mexico, or are we starting to see some of those international projects come to fruition? A – BradyM. Murphy: Yes. Our pipeline Samantha for Neptune is really split between the Gulf of Mexico and primarily the North Sea. There are a couple of other geographies that we're in discussions with. But when you look at the really the pipeline what we call pipeline of discussions and activities, it's more or less split between Gulf and North Sea with a couple of one-offs outside of the North Sea international.

So that sounds like potentially you could get a North Sea project in like the latter half of the year? A – Brady M. Murphy: We feel optimistic about that. But clearly there's some ground that has to be covered for that.

Okay. Great. The other question that I wanted to spend some time on is just the growth CapEx that you're putting into the water segment. Really impressive, how you guys have just taken such a strong market share there. Can you maybe walk us through how the CapEx is going to be spent over the quarter -- the year? Is it going to be pretty evenly spent throughout the year where you have like a steady state of equipment being introduced? Curious how that expansion into Argentina works from a logistics standpoint? Like I mean if you're going all that way it seems like you're probably going to be at a much larger scale there. And then just overall, I'm kind of curious how the equipment held up just during that extreme cold weather that you guys saw down in Texas?

Good question Samantha. So let me make the first stab at it. With respect to capital expenditures, we've increased the bar in terms of what Brady and I will approve. If it doesn't have a direct customer behind it and if it doesn't have a quick payback cash-on-cash payback, we're not approving those items. The SandStorm has done incredibly well. And we've been generating paybacks that are difficult to say no to and they are all with super majors that have very well-defined drilling programs. Fourth quarter did incredibly well. We've ordered more units and those are coming and being delivered, primarily in the first half of the year again all focused on specific customers. And then it's interesting that as the economy has rebounded and the price of oil is better we're starting to get even this week demand for more TETRA Steel to keep adding given the sensitivity that many of our customers have around ESG and spillage. So we're also taking opportunities to deploy more TETRA Steel into the market. I would suggest that, most of the CapEx might be front-end loaded, but they're dedicated all to customers and projects with quick payback on those. Then with respect to the impact of the weather, it appears that the frac crew count went from over 100 to almost zero in the Permian Basin so – let me back up. Total US frac crew count is over 100 of which a big part of it is in the Permian Basin and it dropped almost to zero with the weather last week. And we're seeing a rebound almost to the pre-last week levels immediately. So we think that's going to be a very short-term week type – one-week type impact on our water management and flowback business.

And no damages to the equipment or anything that needs to be addressed or like weatherizing for future years or whatnot?

No, no damage to equipment. And we don't think that that changes our approach in terms of how we react to those type of cold weather conditions.

Okay. And if I can just sneak one more in. I'm curious, in terms of all the discussions that you're having with other parties in your low-carbon initiatives. Do those conversations potentially include some sort of fee or – so similar to what you have with Standard Lithium where you would get some sort of payment just for that exclusivity with the customers even or with the partners even before you start actually producing?

Yeah. I think Samantha we will probably take a different approach with the energy storage folks that we're in discussions with as well as the carbon capture company. I think instead of royalty type arrangements that we've done with Standard Lithium, we're bringing some technology to the table ourselves and I think potentially we could see more partnerships more – even potentially JV-type arrangements down the road, if things progress as we envision it. If not they represent large potential markets for us to supply products into. And so that's beneficial to us, but we think we bring some additional things to the table and the types of discussions we have could be a little bit more meaningful than just a product – part of the supply chain a products provider.

That's really exciting guys. Congrats on the quarter and good luck with everything. A – Brady M. Murphy: Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Murphy for closing remarks.

Okay. Well, thank you everyone. We really appreciate your interest in TETRA Technologies, and thank you for taking your time to join us this morning. This concludes our call.