Participants

Julian Higuera; Director of FP&A and Investor Relations; Tetra Technologies Inc

Brady Murphy; Chief Executive Officer; Tetra Technologies Inc

Elijio Serrano; Senior Vice President and CFO; Tetra Technologies Inc

Kurt Stroyer; Analyst; Benchmark Industrial

Tim Moore; Analyst; Clear Street

Bobby Brooks; Analyst; Northland Capital Markets

Presentation

Operator

Good morning and welcome to Tetra Technologies 4th quarter 2024 results conference call. All participants are in listen-only mode. [operator instruction]
I would like to turn the conference over to Julian Higuera. Please go ahead, sir.

Julian Higuera

Thank you, John. Good morning and thank you for joining Tetra's 4th quarter and full year 2024 results call. 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're 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 margins, free cash flow, net debt, net leverage, ratio, liquidity, returns on net capital employed. Or other non-gap financial measures, please refer to yesterday's press release or to our public website for reconciliation of non-gap 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, we encourage you to refer to our 10K that we filed yesterday. I'll now turn it over to Brady.

Brady Murphy

Thank you, Julian. Good morning, everyone, and welcome to Tetra's 4th quarter and full year 2024 earnings call. I'll summarize some highlights from our 4th quarter and full year results, discuss the current outlook, and provide an update on our strategic initiatives before turning the call over to Elijio to discuss more details on the 4th quarter and some views on 2025.
Our fourth quarter results were overall in line with our expectations that strong offshore and industrial chemicals performance mostly offset a weaker than expected year-end slowdown for our US land operations. Adjusted the EBITDA margins of 17%, improved from 16.6% in the third quarter and from 15.8% in the fourth quarter of 2023, despite lower revenue quarter on quarter and year on year. Contributing to our strong offshore performance in the 4th quarter, we executed 13 deepwater completion jobs compared to 11 in the 3rd quarter.
While our industrial chemicals business achieved a record revenue and adjusted EBITDA for the 4th quarter. Our water and flowback segment achieved even on margins of 13.8% and was impacted by a more severe than normal year in the completion slowdown. And although both rig count and frac fleet count are down more than double digits from last year, the volume of produced water continues to increase. In the fourth quarter, we achieved a record volume of $89 million barrels of treated and recycled produced water for frac reuse. Our primary focus and capital allocation for this segment will continue to be on solutions for produced water treatment and recycle, including desalination for beneficial reuse.
For the full year, our completion fluids and product segment revenue was down 1% but grew even down by 2% year over year, driven by a strong performance in our industrial chemicals business. Total year completion fluids and products revenue of $311 million was the second highest since 2015 when we completed two large CS Neptune projects in the Gulf of America. Our industrial chemicals business had an excellent year, achieving its highest revenue and adjusted EBITDA in our company's history. With 2024 revenue growth over 2023 of over 9%. Our industrial chemicals business represents 22% of Tetras's total revenue.
This year and into the future we expect to ramp up meaningful volumes of zinc bromide-based electrolyte, and so we expect this percentage to continue to increase. Our diversification of calcium chloride markets continues to increase, including grades for food, agriculture, paper, industrial applications, the more seasonal demand for de-icing and dust binding, plus a growing demand for technology, including chip manufacturing. The superior purity level of our zinc bromide allows us to participate in the long duration energy storage electrolyte market, as evidenced by our first batch of pure flow-based electrolyte shipments to EOS Energy enterprises in the 4th quarter.
Our leading market positions in Northern Europe and the US gives us stable markets in which to operate with predictable revenue and earnings and strong free cash flow, allowing us to reinvest in our new high growth business opportunities.
Looking back on 2024, we made some strategic investments that are paying off as we head into 2025. Capital investments and the expansion of our capacity in Brazil is supporting a large deep water completion fluids award, which will start in the second quarter of 2025. Investments in the Gulf of America has led to increased deep water activity for us, including a three-we Tetris CS Neptune project currently ongoing. We just completed the 1st of the 3 wells, and we'll be getting the 2nd well shortly. Inventory ramp up for both of these projects contributed to a year on year working capital increase of $21 million but the combined CapEx and working capital investments are expected to be earned back more than $1 for dollar in the first six months of 2025.
Turning to our water and flowback services segment, 2024 proved to be a challenging year. Operator consolidation, as well as low natural gas prices, contributed to a decline in the rig count and frac leaks by 17% and 30% respectively over the past two years. Our water and flowback focus remains in two areas. First is deploying relatively low dollar capital to automate our existing fleet of water management and flowback assets, including sandstorm that lower labour costs and increase margins, and to focus on recycling, treatment, and desalination of produced water for beneficial reuse. We believe that we're industry leaders in both of these areas which we expect over time will improve margins and give us a significant path to grow through desalination.
Looking ahead to 2025 for water and flowback, we expect revenue to remain flattish while increasing margins by enhancing operational efficiencies, including automation, enabling us to maximize capital returns and generate substantial cash flow. Earlier this month, I had the pleasure of being a keynote speaker at the well-attended 35th annual Produced Water Society conference in Houston. The main topic of focus for the conference is the industry's challenge dealing with over $23 million barrels per day of produced water in the Permian Basin.
It is clear that downhole pool pressure in water disposable wells is filling up. Disposable pressures are increasing, and potentially more regulatory restrictions are coming. The best long-term solution for this problem is reducing the volumes of water for disposal and desalinating the water for beneficial reuse, including industrial agriculture, and irrigation purposes. I discussed Tetra's commercial offering Tetra Oasis Total Desalination Solution, or TDS as a comprehensive end to end desalination solution for beneficial reuse and emphasized the added benefit of recovering essential minerals from produced water as part of the process.
Our recent announcement of Tetra Oasis PDS has been very well received, and our blue-chip customer engagement continues to grow broader and deeper. Although we expect favourable gas prices will contribute to pockets of increased activity in 2025, we will limit our capital investment to automating our current business assets and expect to deploy multiple pilot projects for desalination.
In total, we're expecting a very strong start to the year in 2025. The combination of a strong Gulf of Mexico market, three well Neptune project, the start of the Brazil Deepwater work, increased EOS electrolyte deliveries, and our seasonal second quarter European peak has us projecting a significant year over year increase in both revenue and EBITDA in the first half of 2025, as detailed in our Q4 press release.
We project net income before taxes between $19 million and $34 million dollars and adjust the EBITDA between $55 million and $65 million dollars for the first half of 2025, levels approaching or exceeding a 10-year record high for the company.
Moving on to our strategic initiatives regarding our roaming Arkansas project, we have secured power for the project. We've completed the plus or minus 10% front end engineering design and prepared the plant site for the next phase of construction. As communicated previously, we're in discussions with multiple elemental bromine suppliers for a bridging supply agreement. The purpose of the bridging supply would give us more flexibility on timing for capital spend, give us more opportunity to accumulate cash from operations, and allow us to execute a staged approach targeting initial roaming production of approximately two third' s of the published definitive feasibility study volumes.
To ensure that we find the most capital efficient alternative, we're also exploring scenarios where we could dovetail our upstream operations and investments. With our lithium neighbours, which could significantly reduce our overall project capital investment. We will continue to communicate our progress and actions with this critical long-term low-cost roaming supply investment as we achieve various milestones. For our lithium opportunity and project, we and our partners have completed the plus or minus 10% feed studies as well. We believe the lithium capEx from the plant could be more competitive than current hard rock mining operations, but as owners of 65% of the lithium resources in our evergreen unit, we're waiting for the royalty decision and a firm review of future lithium prices before publishing financial studies.
Longer term, we anticipate a rebound in lithium prices that will support our increased investment in supply, particularly from the US. Our team, along with our Evergreen unit partners remain focused on completing all necessary engineering studies to fully define the economics of this opportunity.
In the meantime, we're prioritizing strategic initiatives that can immediately impact our near term results. These initiatives include deploying CS Neptune in the Gulf of America, shipping tetra pure flow to EOS Energy Enterprises, and further advancing our water desalination commercial pilot units initiatives that we expected to evolve into longer term contracts for commercial desalination plants. Now I'll turn over to Elijio to provide some additional commentary on successful financing on our financial results, then we'll open it up for questions.

Elijio Serrano

Thank you, Brady. In the 4th quarter, we booked a favourable adjustment to the valuation allowance for our deferred taxes. We've mentioned in the past that we have tax laws carried forward that can offset taxable income in the United States. We had previously established a reserve against that asset given our prior uncertainty in the timing of using those NOLs or net operating loss carried forwards.
Our taxable income in the United States over the past three years has been almost $100 million following the recovery from COVID and strong performance of our US business. Without the NOL, we would have likely paid over $20 million in US cash income taxes in the past three years.
Given the three-year cumulative profits, we performed an analysis, and we reviewed our projections with our auditors and came to the conclusion. That there's a high likelihood that we will be using our NOLs in the coming years. Therefore, we eliminated the valuation allowance we had previously established. Our NOLs can offset approximately $345 million of US taxable income in the coming years. And save us approximately $97.5 million of cash taxes in the United States.
This assessment and adjustment reflect our confidence in the performance of our US business driven by the strong activity in the Gulf of America. Our strong US calcium chloride business in the US. Profitability, profitable results from a US onshore oil and gas business, and the growing long duration battery electrolyte business. On a go forward basis with modelling our projections, one should assume a tax rate of between 31% to 33% in computing tetra net income and earnings per share.
However, our cash taxes will only be around $6 million to $7 million per year for taxes we pay overseas. We'll provide periodic updates on how rapidly we are using our deferred tax assets to offset the $345 million of NOLs. The more profitable we become in the United States, the higher the fall through is to cash flow from utilizing our NOL. For example, we mentioned that we sold our investment in Kodiak in the first quarter for approximately $19 million. The tax bases for our shares in Kodiak were quite low and therefore we realized the entire $19 million in cash proceeds by partially using our NOL without any taxes due to that capital gain.
On cash flow, we made significant investment in fixed assets and inventory for our offshore business. Those CapEx and working capital investments were higher than what we would normally have made. They contribute to a slightly negative base business free cash flow in 2024. Those were those investments were to prepare us for the CS Neptune 3 well project. And the Brazil multi-we multi-year project are expected to contribute to a strong free cash flow in the first half of 2025.
For 2025 we expect interest expense of approximately $20 million. Capital expenditures for the base business of between $30million and $35 million dollars, which are below the amounts of 2024. And as I mentioned, cash taxes of approximately $6 million to $7 million. Depending on your assumptions for our total year 2025 EBITDA, we have the opportunity to generate over $50 million of free cash flow in 2025 from the base business.
We provided guidance for the first half of 2025 as we believe that when others in the industry are looking at weaker first half, 2025 results versus the second half of 2024, we are we are showing a strong sequential improvement in our adjusted EBITDA.
Our first half projections are underpinned by the Three Well Neptune project. The start of the Brazil Deepwater project. Our seasonally strong European calcium chloride business and the continuing improvements in the other businesses. On the Neptune project, the first wall has been completed and will soon shift fluid to the second well.
The timing of the projects between the first quarter and the second quarter are uncertain, and that is why we gave first half of the year guidance instead of guidance individually for the first or second quarters. With respect to Arkansas, we reduced our investments in Arkansas in the fourth quarter to less than $1 million. From the free cash flow being generated from the base bid that we will make a determination of how much of that we will spend in Arkansas in 2025. As Brady mentioned, we're looking for the most cap li solution to source additional effective volumes, cost-effective roaming volumes to meet our deep water demands and to meet the ramp up in electrolytes required by EOS.
If we source adequate volumes in the immediate years, we will delay or defer building a broing plant in Arkansas, or we'll space it out over multiple years, allowing us to fund it from the base business free cash flow without taking on any debt. Our objective is to keep our leverage ratio below two times and invest with base business free cash flow. As we make progress on our roaming bridging agreements, we will communicate what firm arrangements have been agreed upon in the meantime, we'll continue to negotiate for the best alternatives. At the end of December, cash on hand was $37 million and to liquid as of yesterday was almost $207 million.
We sold our Kodiak shares at a near record high. For Kodiak's share price and above yesterday's closing price. This is the second time that we've been able to appropriately time the sale of shares that we've held in publicly traded companies. I'll turn this back over to Brady for closing comments before we open it up to questions.

Brady Murphy

Thank you, Elijio. As you can see, we're very excited about what we have in front of us as we enter 2025. We're pleased with the decisions that we've made for the business in the past few years that sometimes take patience but are paying off in a big way. Expanding our deepwater presence and market share in key markets, staying diligent. On the Neptune pipeline of projects that slowed to a crawl during COVID but are now moving forward, expanding our core aqueous chemistry in the long duration energy storage electrolyte and focusing on produced water treatment and recycling. All of these are paying off in the first half of 25 and beyond. But still to come is the benefit of expanding our water recycling offering for desalinating produced water. Positioning ourselves for a high volume low cost supply of bromine to meet our growing opportunities and developing partnerships for future lithium production. With that, we'll open the call for questions.

Question and Answer Session

Operator

Thank you, ladies and gentlemen, we will now begin the question-and-answer session. [operator instruction]
And we will now take the first question. And this comes from the line of Kurt Stroyer from a benchmark company. Please go ahead your lines now.

Kurt Stroyer

Great. Hey, good morning, guys. Thanks for that summary, hey, Brady, question for you, right? There's been a lot of, other fitness starts and maybe some, frustrations with respect to, timing on some of these emerging growth opportunities that you guys have, over the past year kind of year or so, right, so as you kind of, maybe rub off the crystal ball a little bit here for 2025. And as we've had, follow on discussions with a number of different potential customers or whether it's water desal or what's going on with the electrolytes. How do you kind of think about the evolution of those businesses for this year and which one do you think, without giving specific numbers around it, but which one do you think has the opportunity to have some element of a meaningful contribution to the 2025 results?

Brady Murphy

Yes, thanks, Kurt. So, I mean, clearly in the first half of 2025 we're seeing some of the benefits of these longer-term projects that we've been pursuing. I mean, obviously CF Neptune is something we've done in the past, but we've been talking about the pipeline of projects that we've been tracking, and now that's coming into focus and fruition for us. EOS, I don't want to speak for them, but if you look at their, I think their investor presentation in January, they're projecting to meaningfully ramp up their volumes of their batteries and obviously that's material for us as we go through 2025.
On the water desal, we know this is a long-term venture. We are very encouraged with the blue-chip customers that we're in discussions with. As we've said before, we will be operating several pilots in 2025. We think that that's where the industry is at right now is that we will be one of several providers operating pilot operations in 2025, but we really don't expect Commercial scale type of desalination for beneficial reuse projects until we get into 2026. That's our current expectation.
But again, couldn't be happier with the quality of the blue-chip customers we're discussing since we've last talked around our 7 NDAs with major operators in the Permian, we've extended that to a new major midstream player. As they're clearly looking at this as part of their future offering. So that's kind of the cadence, Kurt, that I would respond to. The longer term, we're still, very much intent on getting our bromine plant constructed.
As Elijio said, we are looking at some alternatives to make sure we can fund that through our own cash flow. That may mean deferring a little bit, that may mean getting some additional supply arrangements in place that will allow us to give us a few more years. To accumulate cash from operations, but once that plan is in operation, it is going to be a tremendous benefit, not just for the volumes of bromine, but the cost of the bromine, low cost of the bromine that we will be able to access and then of course lithium following that. So, you know that's kind of the cadence, Kurt, we're pleased where we're at and we see a bright future ahead.

Kurt Stroyer

That's great. I appreciate that colour, Brady. Now, for Olio, if you going to take the numbers you provided in terms of, free cash flow and back that up into, EBITDA, that would get you to at least $100 million of EBITDA on a full year basis, right? You're looking at something around $60 million in the first half, so that would suggest at least right, $40 million in in the back half. What are the what are the variances, as you look into the second half of the EUR that could. I mean you got it differently. You have high degree conviction in that and at least$40 million in the back half and what could be the variances that could push you higher than that.

Elijio Serrano

Yes, we don't traditionally provide guidance as Kurt, unless we're moving in a direction different from the rest of the industry. In the first half, we clearly have visibility with the best backlog that we've had in the company's history on the offshore side. We're very comfortable with what's occurring in the first half of the year by those projects. I think it's foolish to believe that anyone in the industry has full visibility to what's going to happen in the second half of the year. But with the initiatives that we have with the Deepwater projects including the Brazil multiyear program, the ramp up of electrolyte sales that we have a high degree of confidence is occurring, plus all the initiatives that we've taken, we think that we'll continue to perform better than the industry and Brady mentioned that for the full year, we expect high single digits, low double digits, top line growth. And we think our margins will continue to hold in the range that we're at, if not slightly above that.

Kurt Stroyer

Appreciate that thank you guys.

Brady Murphy

Thanks, Kurt.
John, you want to bring on the next question?

Operator

Yes, sir. Thank you. I will now take the next question, and this comes from the line of Tim Moore from Clear Street. Please go ahead.

Tim Moore

Oh, thanks so much. I really like the branding of your desalination Oasis solution, done a lot of analysis on that, but I'm just wondering, Brady mentioned, I think you mentioned maybe 7 NDAs and maybe that midstream potential customer. I'm just wondering what is your capacity for Pilot count this year? I mean, can you do 4 or 5 pilots and is there any constraints, on the side from KMX or Hire their side?

Brady Murphy

Right, yes, good morning, Tim. Yes, so the lead time for the pilots really is predominantly based on the high rec membrane system or the KMex membrane systems. We are obviously in very close communication with both of them, and as I said, we are actually confident enough where we are right now to be placing orders for additional pilot units for the year in 2025. If we had to start from scratch and get additional, pilots say in mid-year, that might be a stretch to get them into the year in 2025, but we've got some room between now and then to add to that capacity.

Tim Moore

That's helpful commentary, rating. And then just going back to your Brazil, the Deepwater multi-year program, I think investors clearly understand CS Neptune pretty well, but you know what, as you look out to next year and the potential for that program beyond this year, I mean, do you think the revenue contribution next year could be as large as this year and, probably larger than the North Sea usually?

Brady Murphy

Yes, the Brazil market is typically not a heavyweight brine market, but the contract that we have is in fact we're really the only heavy brine. A completion fluid provider in the Brazil market, so we're very well positioned with how we've positioned ourselves and the investments we've made there. So Yes, that's a 2 year contract. There's a number of wells that are due to be executed this year and next, so we think that'll be pretty evenly spaced out over the next two years, but we're really encouraged by, what we see as a trend for potentially heavier brine completion projects in Brazil and we'll see how they develop.

Tim Moore

That's great. And my only other question is the switching gears to the potential Bromine development project. You had commentary about, maybe getting close to finalizing the supply agreements. I'm just kind of curious, without putting words in your mouth, how long is maybe the lead time, many months lead time between, if the board does approve the brine project and you go forward with it versus kind of the plant startup construction. You know that 3 or 4 or 5 months just kind of curious.

Brady Murphy

Yes, no, the lead time to get the full roaming project in place is longer than that, Tim. It's, but we've done quite a bit of work already. We've completed the engineering, as we've secured the plant site. We've prepared the plant site for the next days of construction. We've sourced the power. I mean, so we've made considerable progress advancing the bromine project. But at this point in time, we're not at a point where willing to definitively say when the project will be FID by our board. we're looking at some, options in terms of timing, as I said previously in terms of, we'd like to fund it through our own free cash flow, while we're monitoring the demand needs that we have and at this point in time, we're balancing that and we'll keep you posted as we get to a final investment decision.

Tim Moore

Oh great, Brady. Oh, thanks for that colour. That's my question.

Brady Murphy

Thanks Tim.

Operator

Thank you. And the next question comes from the line of Bobby Brooks from Northland Capital Markets. Please go ahead.

Bobby Brooks

Hey, good morning, guys. Thank you for taking my question. So, I just wanted to start with the beneficial reuse project Oasis. I mean this is literally turning a waste stream into a scarce resource in a region that is desperate for more water, so I have to imagine that the demand for the recycled water, that can pass all types of wet testing is very high, especially when I think about conversations of data centres being co-located near Wellhead and along with the fact that data centres have a big demand for water as well. So just taking that all into account how are discussions with potential customers going and maybe could you compare that versus what those conversations were like last year is the announcement in mid-December of the commercial launch of Oasis is that, has that, created any more traction or different type of conversation with customers and you also, but I'll stop there and have a follow up.

Brady Murphy

Yes, sure, Bobby. I mean, the momentum is clearly building for this solution. The more discussions that we have with operators but remember this is also a fairly complex. A problem to solve and solution to put in place just because of the regulatory issues that come into play with this as well. You mentioned data centres and uses of the water. There's a logistics challenge that the operators have to work with as well because, once they or once we desalinate the water for beneficial reuse, there's got to be a logistics solution. To get that that beneficial water where it needs to be used. And so that's all part of the equation that is being worked on. There's no question in my mind the momentum is building.
As I mentioned, I had the opportunity to speak at the Produced Water Society conference, and everyone's on the same page that this is, one of the highest priorities for the industry. And now it's just a question of working through the details, getting everybody comfortable with the quality of the product, the commercials of the projects, the regulatory framework, and the end use destinations for this. And when you throw it all together, it's, it takes time to work through this, but it's definitely coming.

Bobby Brooks

Got it. And then just to follow up, you mentioned, expecting a couple different pilots to kick off this year. I just wanted to confirm it seems like none of those have one of the none of those have locked in yet, right? Those are still in discussions or have you actually locked in any of these pilots?

Brady Murphy

I would say, our confidence level is extremely high for multiple pilots, the biggest started in the first half of 2025.

Bobby Brooks

Got it. And then so you had three Neptune job wins in 2024, internally how many shots on that per se are you guys mapping out on Neptune opportunities in 2025? Does the first half guy bake in any additional wins?

Brady Murphy

Yes did you say the first half of 2025?

Bobby Brooks

Yes, just like that first half guide, is there any, is it just, are you guys baking in any additional Neptune wins into that and more broadly, and then more broadly.

Brady Murphy

Okay, so 2025 really the first half of 2025 that we've got it on really. Includes the three well project that we have ongoing right now in the Gulf of America. I mean we do have, as we mentioned quite a few times, a pipeline of projects that we track, we're engaged with customers and as those projects move forward, we don't really want to announce any of those projects until we're actually given the award and we have the kind of a definitive drill time for those wells. But, the pipeline is clearly more visible and clear to us than it's been in a very long time, certainly since COVID.

Bobby Brooks

Okay, and then just like talking about that pipeline, I can appreciate you guys not wanting to give any colour on it before, counting your chickens before they hatch, but just like high level is the if you had, let's say if you had 5 opportunities in 2024 for Neptune jobs, is the opportunities for Neptune jobs in 2020 is that like double this year? Is it or is it kind of the same pace just trying to get a sense of like the size of that pipeline.

Brady Murphy

Yes, I wouldn't say the timing of these projects are going to double year on year, but they will definitely our expectation is they will increase year on year.

Bobby Brooks

Got it. I appreciate it. Thank you guys. Congrats on the great 2024 results and I'll return to the queue.

Brady Murphy

Thank you, Bobby.

Operator

Thank you. And the next question comes from the line of Stephen Jangaru from Stifo. Your line is now open. Please go ahead.

Thanks. Good morning, everybody.

Brady Murphy

Morning, Stephen.

So, a couple for me, I think maybe the first just to follow up on the previous question. So, over the last, I don't know, 5, 6, 7 years, the CS Neptune work has, we sort of thought about as sort of episodic, and obviously a big plus when it happened, but not kind of part of our model because they were kind of few and far between and that seems to be changing. So maybe another way to ask the prior questions when we think about 2025, 2026, 2027, like at a high level, given the activity level of deep work, can we think about that business and that product line being kind of a more consistent contributor on either a quarterly or half year basis? Like how do we think about it at the higher level?

Brady Murphy

Yes absolutely, Stephen, just remind our followers, the last CS Neptune job in the Gulf of America that we executed was the 4th quarter of 2019 before the current jobs that we have ongoing, and of course right after the 4th quarter of 2019, COVID hit. And as I said, when COVID hit in 2020 and 2021, we essentially lost two years of that pipeline coming to pretty much a halt. Started, we saw it started moving again in 2022 and 2023. And so now as that pipeline moves forward, and more Gulf of America will start going into the lower tertiary. Which are the high pressure, high temperature, sweet spot for CS Neptune. We absolutely believe that the future of CS Neptune projects will increase, and we're also getting some attraction now in deep water markets outside of the Gulf of Mexico. We've been successful in the UK. And Norway to some degree, but those have typically been smaller jobs, but now we are getting visibility of larger scale projects outside of the Gulf of Mexico. And so yes, I would fully expect our CS Neptune projects and work to be certainly at a faster cadence than where we have been.

Okay, good. Now, thank you. That's good colour. The other two quick questions were one when we think about the sort of the history of the company, you've done a good job sort of simplifying the structure to two really core businesses. And I know in the past, there's Obviously the floors business, at least in our view, is sort of the gem, right? And I know the desalination efforts out there, but when you think about the structure of the company like two or three years out, do you think there's any kind of material changes to fund operations and roaming, etc. Do you think we're kind of looking at the structure of the company, two years out will be similar to where we are now.

Brady Murphy

When you say the structure of the company, I think if I look at our business, further years out, Stephen, the way we think about it, our industrial chemicals business, certainly including our electrolyte. That piece of our business is going to continue to be a larger and larger piece of our business, particularly when we bring on the additional brooming from the plant and future lithium. So, when you throw all of those together, we will have a material portion of our business that will be, a chemical, industrial products type of business.
I think the deep-water market has got a lot of legs for quite a few years so our energy services completion fluids business will still be a very core part of our business. I think our water and flowback business will morph into a desalination business. And so, I think our traditional, water transfer, some of those types of services that we offer. We may morph into something differently than what we are today, but the desal will clearly be a part of that. So those are kind of the three future segments down the road that we see in the company.

Great. Now, that's great colour. And then just the final one the Well, when we think about shipments to EOS, and obviously EOS seems to be on the cusp of very robust growth can you give us a sense like when you're thinking about, so like what's the time frame that you recognize and ship revenue Versus when they're able to ship product.

Elijio Serrano

So, Steven, I'll take that one we ship or pure flow electrolyte from West Memphis to Turtle Creek, which is about a 6-to-8-hour drive away. We book revenue when the product leaves our facility and sell it to EOS at that point. I think one of the nice arrangements that we have with EOS is that we can produce product real time for them just in time production, and they're likely buying at or within a few weeks of when they put it into the battery. They're giving us a rolling forecast. They're giving us rolling visibility. So, I would suggest that we've got good insight in terms of how they're doing and how much they need and when. So, within a month after we after we ship it, we think our fluid goes into their batteries.

Okay, great. That, that's good details. Thanks, Elijio and thanks, brady.

Brady Murphy

Sure, thanks, Steve.

Operator

Thank you. No further questions at this time. I'll hand the call back over to Brady Murphy. Please go ahead, sir.

Brady Murphy

Well, thank you very much for your interest. As you can see, we're very excited about our 2025 future and beyond. So, thank you for joining us this morning for our call.
Thank you. This concludes our conference for today. Thank you all for participating. You may now disconnect.