TETRA Technologies, Inc. (NYSE:TTI) Q1 2024 Earnings Call Transcript

TETRA Technologies, Inc. (NYSE:TTI) Q1 2024 Earnings Call Transcript May 1, 2024

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Operator: Good morning, and welcome to TETRA Technologies’ First Quarter 2024 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this event is being recorded. I will now turn the conference over to Julian Higuera [ph]. Please go ahead.

Unidentified Company Representative: Thank you, Constantini. Good morning and thank you for joining TETRA’s first quarter 2024 results call. The speakers for today’s call are Brady Murphy, Chief Executive Officer; and Elijio Serrano, Chief Financial Officer. I would like to remind you that this conference call may contain statements that are or may be deemed to be forward looking, including projections, financial guidance, profitability and estimated earnings. These statements are based on certain assumptions and analysis made by TETRA and are based on several factors. These statements are subject to several 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, adjusted EBITDA, adjusted EBITDA gross margins, free cash flow, net debt, net leverage ratio, liquidity, returns on net capital employed or other non-GAAP financial measures. Please refer to yesterday’s press release or to our public website for reconciliations 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 a complete financial results for the period. In addition to our press release announcement, we encourage you to refer to our 10-K that we also filed yesterday. I will now turn it over to Brady.

Brady Murphy: Thanks, Julian. Good morning, everyone and welcome to TETRA’s first quarter 2024 earnings call. I’ll summarize some highlights for the first quarter and provide an update on our strategic initiatives before turning the call over to Elijio to discuss first quarter financials and provide an update on our balance sheet and second quarter outlook. Overall, first quarter results were in line with our expectations with strong Completion Fluids & Products results, offsetting an anticipated weaker start to the year in our Water & Flowback segment. Year-over-year, our revenue grew 3% and adjusted EBITDA grew 11% while US land rig count was down 18% in the first quarter of 2024 versus the first quarter of 2023. Adjusted EBITDA was $22.8 million with strong Completion Fluids & Products adjusted EBITDA margins at 28.1%, driven by 15 offshore deepwater operations that we serviced during the quarter.

The outlook for offshore and deepwater continues to point to a longer duration upcycle and TETRA’s well-prepared to benefit through our recent strategic capacity investments in Brazil, Gulf of Mexico and the North Sea. For the Water & Flowback segment, the year-end 2023 customer activity slowdown, which impacted our Water Services business in the fourth quarter had a carryover effect to the first quarter for our Flowback Services, which operationally lags one quarter behind our Water Services. At the same time our higher margin Sandstorm services were slower in the first quarter. We did experience some Water Services ramp-up costs as activity levels rebounded. Looking to the second quarter both Water Services and Flowback including Sandstorm will be operating at a more normalized activity levels with margins expected to recover to the mid-teens.

Before discussing more details on each of the segments, I’d like to highlight the progress that we’ve made with regards to our strategic initiatives. 2024 will be a key year for us to complete milestones that will allow us to quantify the financial benefits of each initiative. On the energy storage side, we remain in close contact with Eos are very encouraged with the progress they’re making on automating their first production line. We fully expect Eos to be up and running their Z3 zinc bromine battery automation line in the second half of this year, which is expected to result material sales of electrolyte from TETRA. In the coming weeks, we’re hopeful to have our first commercial desalination for beneficial reuse contract in place that should be operational by the first part of 2025.

This is planned to be a 24,000 barrel a day South Texas facility. We’re also in discussions for a one-year commercial pilot project in the New Mexico area of the Delaware Basin using TETRA’s proprietary pretreatment technology and our solution for higher total dissolved solids. We’re in the process of tying the legal terms and conditions together for these two projects, which has delayed our first project slightly but we’re optimistic to close on both of these opportunities in the near-term. The demand for beneficial reuse projects continues to build, as this solution is the ultimate answer to overpressure disposal wells in areas like the Permian Basin that need usable water sources. There is a very informative article in this weekend’s version of The Wall Street Journal that highlighted the challenges of continuing to dispose, so much produced water.

I would encourage you to read that article. By the end of June, we hope to publish our Arkansas Bromine Definitive Feasibility Report, which will include updated financials taking into account the shared CapEx investment and OpEx sharing with our planned Lithium Joint Venture, ExxonMobil. Because of the sharing with the Lithium Project, we expect the bromine economics to reflect material improvement from what we previously published. And with financing in place for bromine, we expect Board approval to move forward with this project. We’re targeting the first half of 2026 to be operational with our bromine plant, which will give us the needed capacity to meet our growing deepwater Completion Fluids demand and the significant Eos electrolyte requirement.

Finally on the lithium side, we continue advancing the FEED study as well as finalizing the negotiations for the joint venture — joint development agreements and operating the Evergreen Brine Unit. We continue to work with ExxonMobil on many fronts to advance our project. Before the end of this year, we expect to have our joint venture in place and the Evergreen Lithium FEED and financial evaluation completed. Individually these initiatives represent a material benefit to the company that we will quantify, as we complete key milestones throughout the year. Collectively they are transformational for the company. Now turning to the segments; our Completion Fluids & Products segment first quarter 2024 revenue of $77 million increased 7% sequentially, driven by stronger activity in the Gulf of Mexico and the Middle East.

Adjusted EBITDA of $22.6 million increased 20% sequentially, representing EBITDA fall-through of nearly 79%. Adjusted EBITDA margins of 29.3%, compared to the 26% in the fourth quarter of 2023. Adjusted EBITDA margins improved by 330 basis points sequentially, when excluding unrealized gains and losses from both periods, driven by solid performance in our Industrial Chemicals business and growth in our offshore Completion Fluids operations particularly in the Gulf of Mexico. As a reminder, we estimate that 70% of the deepwater wells completed in the Gulf of Mexico, used bromine-based Completion Fluids. So the deepwater activity increase that we’re seeing globally is resulting in higher demand for our high-value bromine-based Completion Fluids which includes TETRA CS Neptune.

Regarding CS Neptune, our outlook continues to improve, as in addition to another job for a super major in the North Sea that is confirmed in June, discussions with two different super majors, for two different projects in the Gulf of Mexico continue to evolve for projects that are scheduled for the fourth quarter of 2024 or early 2025. The level of discussions with operators in the Gulf of Mexico for CS Neptune projects has been the highest in several years, as many of the anticipated projects in our pipeline are moving forward. Shifting to our Water & Flowback Services segment; revenues of $74 million decreased by 5% year-on-year, while adjusted EBITDA of $7.1 million fell by $5.8 million year-on-year. Although, Water Services revenue rebounded from the fourth quarter slowdown, the non-recurring EPS sale and lower Flowback activity in the first quarter, resulted in revenue lower by $6.9 million or 9% quarter-over-quarter.

Combination of water project start-up costs and lower activity for higher margin SandStorm activity resulted in lower adjusted EBITDA margins of 9.6%. Despite a slow start to the year, we’re very encouraged about the outlook for the rest of the year, as we expect Water & Flowback Services margins to rebound to the mid-teens. We also remain encouraged in the resiliency of activity and continue to expect single-digit revenue growth for our overall segment, in 2024. As operators continue to transfer and utilize more-and-more produced water in their frac operations, through treatment and recycling, the risk profile of produced water management and water spills increases and the value of automation and technology increases. Overtime we’re confident these customer trends will work in our favor.

Additionally, while TETRA does not have significant exposure to gas markets, we believe the softness in those markets will be balanced by our continued market share gains, in produced water services led by water recycling and sand management with TETRA SandStorm. Our strategic priority for 2024 is to continue driving margin expansion with operational efficiencies and automation that will allow us to maximize returns on capital and generate meaningful cash flow. Now I’ll turn it over to Elijio, to provide some additional commentary on our results. Then we’ll open it up for questions.

Elijio Serrano: Thank you, Brady. First quarter adjusted free cash flow from continuing operations was a use of cash of $29.6 million. And this included the impact of $4 million of capital investments for our Arkansas bromine and lithium projects. And that also included an accounts receivable increase of almost $21 million sequentially due to the timing of revenue as sales increased progressively through the quarter. Also the inventory drawdown resulting from the stronger deepwater activity was offset by our build of calcium chloride inventory for the seasonal peak in Northern Europe. We expect working capital to come down materially in the coming quarters, as we monetize the calcium chloride inventory in Northern Europe. We remain of the opinion that free cash flow from the base business in 2024 will be in excess of $40 million.

We further expect that the free cash flow from the base business will fulfill our cash capital requirements for Arkansas this year and that we will not need to draw on our revolver nor our delayed draw feature from our term loan in 2024. This is consistent with our plans of self-funding as much as possible our capital requirements for the bromine project. We have no intentions of issuing equity to fund our Arkansas investments. Liquidity as of the end of this week was approximately $202 million, inclusive of the $75 million delayed drop features that are available to TETRA for the bromine project. In addition to the loaded liquidity, we are also holding slightly over $13 million of marketable securities. This includes our holdings in Standard Lithium and Kodiak Gas Services, which recently acquired CSI Compressco.

The acquisition of CSI Compressco by Kodiak was very favorable to TETRA. Kodiak have a market cap of $2.5 billion, with good global trading volumes that would allow us to quickly monetize our shareholdings without having to spread this over many weeks or putting pressure on the Kodiak share price, as would have been the case with CSI Compressco. The mark-to-market gains that we are recognizing can quickly be converted into cash given the trading volumes these two entities are seeing. Therefore, we believe that reported mark-to-market gains are very appropriate as monetizing those are completely and easily within our control. In January, we refinanced extended and expanded our term loan at more attractive interest rates in our prior term loan, further strengthening our balance sheet and providing us with the flexibility to execute on our growth initiatives.

This includes the $75 million delayed draw feature for the bromine project that we don’t anticipate utilizing until 2025. The maturity of our term loan is now January 2030. At the end of the first quarter, our net leverage ratio was 1.5 times. Let me close out by summarizing what I believe to be the key items everyone should focus on from our first quarter results. First, Completion Fluids & Products segments performed very well; adjusted EBITDA margins of 29.3% without the mark-to-market losses. We are going into the second quarter when we see a seasonal peak from our calcium chloride business. This will be the catalyst to getting TETRA second quarter adjusted EBITDA above $30 million. Brady talked about the increase in visibility of CS Neptune projects, especially in the Gulf of Mexico.

This visibility and level of discussion is the best that we’ve seen in a long time. Second, we fully expect free cash flow this year to be, like I said earlier, above $40 million, consistent with our prior message. The first quarter was a use of free cash flow activity spike towards the end of the quarter that then allow us to invoice and collect before the quarter end. As a data point, March revenue was 15% higher than January revenue. We remain confident that between our borrowing capacity and free cash flow, we can fund our bromine project requirements and have no plans to issue any equity-linked security. And as previously mentioned that we have around $30 million of very marketable securities, completely at our discretion as to when we monetize those.

I’ll remind everyone that the last time we did this we raised $18 million by selling our prior holdings in Standard Lithium. I’m not concerned about our free cash flow generation from our base business to cover our investments in Arkansas this year. Third, the Water & Flowback services adjusted EBITDA margins we fully expect a rebound to the mid-teens in the second quarter. The cost that we had in the first quarter have been addressed. Those are under control. And lastly, all the expected work with deals for the zinc bromide electrolyte remains as expected, for higher volumes in the fourth quarter. Our work on the bromine project with updated economics to reflect sharing of CapEx with ExxonMobil continues as expected, and our negotiations and discussions on the JV with ExxonMobil also remain as expected.

Nothing in the quarter changed the tone or direction of our initiatives and instead give us further clarity and confidence on executing on those. With that, let me turn it back to Brady for closing comments.

Brady Murphy: Okay. Thanks, Elijio. So in closing, we’re off to a good start with our Completion Fluids & Chemicals business with a great outlook for the rest of the year and an anticipated slower start for our Water & Flowback segment, but we do anticipate a strong second quarter for both segments. The outlook remains strong for the markets in which we operate. We have a solid balance sheet close to $200 million of liquidity. We anticipate further growth in 2024 and expect to continue to generate strong free cash flow from our base business to fund our strategic growth investments. The combination of these plus advances with our produced water beneficial reuse solution our Arkansas research position and strategic partnerships provides us the opportunity to continue to drive long-term shareholder value. With that, we’ll now open it up for questions.

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Q&A Session

Operator: We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Martin Malloy from Johnson Rice. Please go ahead.

Martin Malloy: Good morning.

Brady Murphy: Good morning.

Martin Malloy: I wanted to ask about the lithium project. It seems like the FEED may have slipped some from where you previously discussed it — is being completed by, and maybe the timing of this project reaching FID. Could you maybe provide us with some more information about what’s going on there?

Brady Murphy: Yeah. The plus or minus 20% FEED efforts for both bromine and lithium — first of all, they’ve been done individually standalone. But as you know Martin, we’re actually combining those two operations into a single plant site. And so, although the individual FEEDs have mostly been completed to a plus/minus 20%, we’re now doing an integrated FEED study that will allow us to realize the savings and the benefits to both sides of those operations. So I wouldn’t say that the lithium FEED is necessarily behind schedule, but we do have to work through this integrated integrating the two FEED studies and get to a plus/minus 10% which is our next objective before we can really get into an FID type discussion. And clearly, we want to get our joint venture negotiated and completed in place before we would announce that type of decision.

Martin Malloy: Great. And then my follow-up question just wanted to ask about working capital during 2Q. Typically, the Northern Europe chemical sales are very strong. But I would guess you might have some inventory build associated with the Eos business and then collecting on your — the receivables that ramped up at the end of 1Q. Could you maybe talk about some of the drivers of working capital usage during 2Q?

Elijio Serrano: Yeah. Good question, Marty. As soon as the seasonal peak ends in Europe, almost immediately, we begin building inventory for the coming seasonal peak. So last year, as soon as June was over from July onward, we started building inventory and we build inventory all the way through March and then start shipping it in April. So during the second quarter, we convert the inventory into receivables. And then in the tail end of the second quarter and into the third quarter, we convert that receivable into cash. That’s the peak and the seasonality that we’ll expect. So therefore, the free cash flow that we expect in the coming quarters, so we expect to be very strong to the point of putting us over $40 million for the year.

Martin Malloy: Thank you. I’ll turn back.

Operator: Your next question comes from the line of Kurt Hallead from Benchmark. Please go ahead.

Kurt Hallead: Hey, good morning, everybody.

Elijio Serrano: Good morning.

Brady Murphy: Good morning, Kurt.

Kurt Hallead: So I’m kind of — got my attention here on this water desal dynamic. And I know kind of when we had you guys on the road a month ago, you talked about having something in place hopefully, around the time of your earnings release now. But that seems like that’s good to go but I think is with the customer wanting to include this other Permian projects. So maybe you can kind of flesh that out a little bit more for us and just talk about – it looks like the scaling of this dynamic is happening sooner than what you guys were even talking about a month ago.

Brady Murphy: Yes. We’re very pleased with the progress that we’re making Kurt. We’ve essentially I think mostly have agreed on the financial terms and conditions as it relates to the South Texas project. This recent introduction of the Permian, we see as very important for us. Ultimately that’s where the – we think the biggest produced water for beneficial reuse market will be so getting an actual commercial pilot that’s going to run for a full year. We see as a very positive first step. We’re not aware of anybody else having those types of discussions or projects in place. So we see this positive. We are tying the legal terms and conditions between the two projects together. And as you can imagine that starts to involve some of the regulatory agencies, as it relates to how the water is used and the specifications of the water.

So that is taking a little more time than maybe we had hoped had we just done the first project. But overall, we see it as a very big positive from where we’re at and where we’re going.

Kurt Hallead: Okay. And then maybe just a follow-up on that. In the context of you referenced the pilot taking place in the Permian and then you kind of just referenced something about a year timeframe. Does that mean you’re going to have to wait a year to kind of get these contracts signed or is it something that can – I know you mentioned in the near-term so hard to pin down – I get it but just is it not going to take another year to get going is it?

Brady Murphy: No, no, no. Well we do have the pilot equipment pretty much available to us to start delivering the Permian pilot project. When I said a year the actual duration of the pilot is for a year once we get started but we will definitely be starting well ahead of that. We have essentially the pilot equipment that we need. This would involve the KMX vacuum membrane distillation technology that we’ve actually been running – produced water through here at our research center for some time now. So no, I would expect to have both of these contractual arrangements finalized the legal terms and conditions – completed within the next few weeks and off to the races from there.

Elijio Serrano: And Brady just for the sake of clarity, this is a pilot project where we will get paid.

Brady Murphy: Yes. This is a commercial pilot project to Elijio’s point. And we’re – essentially all of our pilot projects now are at the point, where we are fully expecting commercial benefits from.

Kurt Hallead: Okay, got you. I appreciate that color. Now maybe just also following up you talked about the integrated facility now for the bromine expansion as well as the lithium opportunities. And again, I think when you guys were out in front of investors you talk about the prospect of maybe having a share so now I mean the share dynamics and with reduced – potentially reduced CapEx requirements. Is there anything incremental you could flesh out on that for us as well?

Brady Murphy: No Kurt I think the message is still the same. We’ve done the individual FEEDs. We now have a first pass of the integrated FEED in process that as I’ve mentioned, we want to get our bromine Definitive Feasibility finalized and published hopefully, by the end of June. In that DFS report you will see the benefits of having an integrated lithium and bromine facility both in terms of sharing of CapEx as well as sharing of OpEx. And so as we mentioned in our comments, we think the – we’re optimistic that that financial summary that we published will be materially improved from the last – the first bromine FEED that we did as a standalone early last year. And then the next step we would like to do is get our JV agreements finalized. That’s most likely in the third quarter. That’s what we’re targeting. And then the FEED for the lithium piece would follow on to that and hopefully, FID before the end of the year is what we’re targeting.

Kurt Hallead: Okay. Thanks. And then, maybe just one more, if I can follow up on, your water business, right? Started off the year slow, but you referenced in your commentary that you still expect single-digit percentage growth in that. So, is this a dynamic where there’s going to be a pretty meaningful bounce in revenue in the second quarter, and then it kind of flat lines from there or is there going to be potentially a steady increase in revenue for the remainder of the year to get you that single-digit percentage growth rate?

Elijio Serrano: It’s going to be a steady increase. We don’t — we’re not relying on significantly stronger fracking or completions activity to drive our profitability. We think it’s continuing to manage our costs, continuing to rely on the automation to reduce personnel at the well site, and also to continue to deploy the higher margin technology such as the SandStorm systems that we have.

Kurt Hallead: Okay. Appreciate that color. Thanks.

Brady Murphy: Thanks, Kurt.

Operator: Your next question comes from the line of Josh Jayne from Daniel Energy Partners. Please go ahead.

Q – Josh Jayne: Thanks. Good morning.

Brady Murphy: Good morning.

Elijio Serrano: Good morning.

Q – Josh Jayne: Maybe first, you’ve mentioned in your prepared remarks, strategic investments in Brazil, Gulf of Mexico, North Sea, as you prepare for an offshore multiyear upcycle. Could you talk about those a bit more and just your ultimate expectations for what you expect to see offshore, over the next couple of years?

Brady Murphy: Yes. We’ve mentioned in our prior earnings calls that, we’ve actually acquired additional capacity. These are previous investments, so not in our 2024 cash flow impact. We’ve expanded Brazil, by a meaningful percentage of our capacity, which we see that market continuing to grow significantly. We have a very strong position there for the — what we call the high value or the higher density completion fluids market; same in Gulf of Mexico, we acquired Newpark’s plant completion plant facilities and have added those to our own to prepare again, for what we see as a longer term growth. And then, we made a smaller acquisition in the North Sea. So each of those were prior period investments that we anticipated the cycle that we’re seeing.

And fortunately, as we look forward, we’re very bullish on a continued growth outlook for the deepwater market. I think Rice said and Evercore both, are seeing another 20% to 30% growth over the next four to five years in the deepwater rig activity

Elijio Serrano: And Josh I would also add that in addition to the incremental storage and blending capacity, we moved inventory into some of those regions. We moved quite a bit of inventory into Brazil last year, that allowed us to capture some significant projects and we still have inventory to address some of the upcoming opportunities in Brazil, as an example.

Q – Josh Jayne: And then to sort of follow up there. You also mentioned in your prepared remarks, there were a couple of opportunities in Q4 of 2024 early 2025 in the Gulf of Mexico, with two operators. How would you say the scope of those opportunities compares to projects, you’ve completed over the last couple of years pretty in line. Is there anything different about those? And maybe just talk about those, a little bit more.

Brady Murphy: Yes. As we’ve mentioned before, your typical Gulf of Mexico, Neptune job is materially above our normal completion — deepwater completion. I think if you’ve seen numbers in the past, when we’ve announced Neptune jobs, we’ve seen $15 million type of revenues with good margin progression on each of those projects. Those, I would say, are somewhat typical of your deepwater CS Neptune job in the Gulf of Mexico. And we get outside the Gulf of Mexico like North Sea, where we’re continuing to do Neptune jobs are quite a bit smaller, but still quite profitable for us.

Q – Josh Jayne: And maybe just one more, if I may. One of the things you also talked about in your prepared remarks was driving margin expansion through automation. Could you expand on that a bit more, how much margins could ultimately expand based on what you’re doing? And is this something, we will continue to see the benefit for not only across 2024, but as we move into 2025?

Brady Murphy: Yes, absolutely. It’s a key part of our strategy. The Water Services business and Flowback are both fairly manpower-intensive. And we’ve been working on automation of every aspect of the Water Services side now, for a few years. We’re still only at around the 50% of our operations, with automated services, where we can reduce up to 30% 40% of the manpower on a water job. But our objective is to be 100%, by the end of this year on the Water Services side. The Flowback side is similar somewhat manpower intensive a bigger part of our cost. And we’re in the early days now of introducing new Flowback automation technology that, again, we believe is a great way to enhance our margins. We would fully expect to be above the 20% margin levels by end of 2025 as we roll out our automation technology.

Q – Josh Jayne: Thank you.

Operator: Your next question comes from the line of Patrick Ouellette from Stifel.

Patrick Ouellette: Hey good morning. Pat on for Stephen Gengaro. Thanks for taking our questions.

Brady Murphy: Sure.

Patrick Ouellette: So, when thinking about 2Q, I believe you had mentioned this but can we assume that CS Neptune job falls there? And then given the seasonality in the European Industrial Chemicals business how can we think about the overall margin profile in the second quarter?

Brady Murphy: I’ll take the Neptune job. We do have a planned Neptune job in June that is scheduled for a super major, but this is a North Sea Neptune job. This is not a Gulf of Mexico Neptune job. But we are optimistic that we will secure a deepwater Gulf of Mexico job if not before the end of this year fourth quarter, but early into 2025 and potentially multiple wells in that time period maybe not necessarily all in 2024 but between 2024 and early 2025, we have that type of visibility and optimism.

Elijio Serrano: And then with respect to our margins Patrick, we’ve got a couple of items working in our favor in the second quarter. The first one is that we start monetizing our inventory that we’ve been building up with the fall-through in Northern Europe being very attractive. Brady talked about the North Sea Neptune project that also has high margins. And then we also expect the second quarter cost structure on the U.S. onshore water management and Flowback services side to be quite strong. Therefore that puts the EBITDA margins that we’re expecting in the second quarter consistent with what we we’re seeing in the third quarter of last year before we got into the year-end slowdown.

Patrick Ouellette: All right. Thanks a lot. I guess so given the drop in the water margin and the mid-teen guide you gave for the second quarter, is it reasonable to think that margin holds here the rest of the year? Or do you have visibility on how this landscape is playing out the back half?

Brady Murphy: Yes. We’d probably take a more we said the second quarter would be mid-teens. We would fully expect to build on that as we go through the year. But some of that is going to depend on getting automation equipment that we need in place but that would be our expectation is slowly improving that as we go through the rest of the year.

Patrick Ouellette: All right. Thanks a bunch. I’ll turn it back.

Operator: Your next question comes from the line of Bobby Brooks from Northland Capital Markets. Please go ahead.

Bobby Brooks: Hey, good morning guys. Thanks for taking my question. So, really strong year-over-year growth in the United States Completion Fluids business but I was kind of surprised by the small decrease in the International Completion Fluids piece of it, especially when given that there’s 15 deepwater completions in the quarter. So, could you just discuss why the International Completion Fluids slowed year-over-year despite those 15 deepwater completions? And maybe would help just to contrast that with how many deepwater completions there you guys did in the first quarter 2023?

Elijio Serrano: Yes, remember Bobby that if you’re looking at the segment results in the 10-Q that the fluids includes both the calcium chloride and the offshore business. We have not seen a slowdown in the international offshore oil and gas fluids business. And we expect that this year will continue to be strong. Now, maybe ask the question separately, but there’s no indications from our side that the international side is slower.

Bobby Brooks: Got it. And then kind of just going back to that deepwater outlook, you guys have specifically highlighted a growing pipeline in the North Sea and Gulf of Mexico and there’s excitement there. And I know, Brady, kind of touched on the Brazil piece a bit in the Q&A. But I was just — there’s no mention of the LatAm market in your prepared remarks or in the press release. And obviously, that is a growing piece given what’s going on in Guyana and Suriname. And so, I’m just curious to hear maybe a little bit more detail on how the prospects are looking in the Latin American region. And then, maybe just contrast that with the strength that you guys have noted in the Gulf of Mexico and in North Sea.