TETRA Technologies, Inc.'s (NYSE:TTI) stock jumped on Thursday and was up more than 15% at 3 p.m. EST. The catalyst fueling the rally was the company's better-than-expected third-quarter results.
TETRA Technologies reported that its revenue in the third-quarter jumped 23% versus the year-ago period to $216 million, which was also 4% better than last quarter. Meanwhile, the company posted adjusted earnings of $0.04 per share for the third quarter, which was $0.04 per share ahead of expectations. The profit marked quite a turnaround for a company that reported adjusted losses of $0.04 and $0.05 per share in the second quarter and in last year's third quarter, respectively.
The primary driver of the expectation-beating results was the company's fluids division, where sales spiked 49% from the year-ago period due to the completion of the Gulf of Mexico CS Neptune project. That helped push revenue from that segment past $90 million for the first time in nearly two years. In addition, the company noted that stronger activities in the Permian Basin and other markets fueled a "step change increase in water management revenue."
TETRA stated that it plans to accelerate its investments in water transfer services so it can take advantage of the currently strong demand. The company now only expects to generate between $15 million and $30 million in adjusted free cash flow this year, which is down from its prior guidance of $20 million to $40 million.
The rebound in the oil and gas market this year is having a notable impact on TETRA's financial results, which should continue given what's on the horizon. That improvement could drive the stock even higher, especially since it's still down nearly 25% this year even after today's pop. That said, given its small size compared to other oil service companies, it's riskier than its larger peers, and will likely remain quite volatile as the oil market works to get back on its feet.