What changed in this filing

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Item 1. Financial Statements

2021-11-01 compared with 2021-08-02 · 133 added, 93 removed, 506 unchanged (31% of the section changed)

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

21 unchanged sentences

Other income, net ( 6,968 ) ( 788 ) ( 14,295 ) ( 1,308 )

Loss before taxes and discontinued operations ( 5,270 ) ( 12,125 ) ( 17,045 ) ( 8,411 )

Income (loss) before taxes and discontinued operations 3,082 ( 9,458 ) ( 13,963 ) ( 17,869 )

Provision for income taxes 587 101 2,139 1,877

Loss before discontinued operations ( 6,654 ) ( 13,179 ) ( 18,597 ) ( 10,187 )

Income (loss) before discontinued operations 2,495 ( 9,559 ) ( 16,102 ) ( 19,746 )

Discontinued operations:

4 unchanged sentences

Net income (loss) attributable to TETRA stockholders $ 2,513 $ ( 13,302 ) $ 104,474 $ ( 36,108 )

Basic and diluted net income (loss) per common share:

Loss from continuing operations $ ( 0.05 ) $ ( 0.11 ) $ ( 0.15 ) $ ( 0.08 )

Basic net income (loss) per common share:

Income (loss) from continuing operations $ 0.02 $ ( 0.08 ) $ ( 0.13 ) $ ( 0.16 )

Income (loss) from discontinued operations — ( 0.02 ) 0.96 ( 0.13 )

Net income (loss) attributable to TETRA stockholders $ 0.02 $ ( 0.10 ) $ 0.83 $ ( 0.29 )

Average shares outstanding 126,583 125,886 126,365 125,736

(1) (Income) loss attributable to noncontrolling interest includes zero and $ 15,781 loss for the three-month periods ended June 30, 2021 and 2020, respectively, and $ 333 income and $ 24,615 loss for the six-month periods ended June 30, 2021 and 2020, respectively, related to discontinued operations.

Weighted average basic shares outstanding 126,733 125,893 126,489 125,789

Diluted net income (loss) per common share:

Income (loss) from continuing operations $ 0.02 $ ( 0.08 ) $ ( 0.13 ) $ ( 0.16 )

Income (loss) from discontinued operations — ( 0.02 ) 0.96 ( 0.13 )

Net income (loss) attributable to TETRA stockholders $ 0.02 $ ( 0.10 ) $ 0.83 $ ( 0.29 )

Weighted average diluted shares outstanding 128,694 125,893 126,489 125,789

(1) (Income) loss attributable to noncontrolling interest includes zero and $ 8,342 loss for the three-month periods ended September 30, 2021 and 2020, respectively, and $ 333 income and $ 32,957 loss for the nine-month periods ended September 30, 2021 and 2020, respectively, related to discontinued operations.

See Notes to Consolidated Financial Statements

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

10 unchanged sentences

(In Thousands)

September 30,

2021 December 31,

43 unchanged sentences

(In Thousands, Except Share Amounts)

September 30,

2021 December 31,

8 unchanged sentences

1,327 734,039

Current portion of long-term debt 8,157 —

Total current liabilities

11 unchanged sentences

Common stock, par value 0.01 per share;

250,000,000 shares authorized at June 30, 2021 and December 31, 2020;

129,729,406 shares issued at June 30, 2021 and 128,930,047 shares issued at December 31, 2020

250,000,000 shares authorized at September 30, 2021 and December 31, 2020;

130,075,838 shares issued at September 30, 2021 and 128,930,047 shares issued at December 31, 2020

Additional paid-in capital

1 unchanged sentence

Treasury stock, at cost;

3,133,674 shares held at June 30, 2021, and 2,953,976 shares held at December 31, 2020

3,135,434 shares held at September 30, 2021, and 2,953,976 shares held at December 31, 2020

( 19,945 ) ( 19,484 )

40 unchanged sentences

Balance at June 30, 2021 $ 1,297 $ 473,872 $ ( 19,939 ) $ ( 43,368 ) $ ( 311,704 ) $ ( 1,101 ) $ 99,057

Net income for third quarter 2021 — — — — 2,513 — 2,513

Translation adjustment, net of taxes of $ 0

— — — ( 2,150 ) — — ( 2,150 )

Comprehensive income 363

Equity award activity 4 — — — — — 4

Treasury stock activity, net — — ( 6 ) — — — ( 6 )

Equity compensation expense — 1,057 — — — — 1,057

Other — ( 385 ) — — — ( 12 ) ( 397 )

Balance at September 30, 2021 $ 1,301 $ 474,544 $ ( 19,945 ) $ ( 45,518 ) $ ( 309,191 ) $ ( 1,113 ) $ 100,078

Par Value Additional Paid-In

25 unchanged sentences

Balance at June 30, 2020 $ 1,288 $ 469,777 $ ( 19,434 ) $ ( 57,441 ) $ ( 385,328 ) $ 103,824 $ 112,686

Net loss for third quarter 2020 — — — — ( 13,302 ) ( 8,296 ) ( 21,598 )

Translation adjustment, net of taxes of $ 0

— — — 2,807 — 67 2,874

Comprehensive loss ( 18,724 )

Distributions to public unitholders — — — — — ( 312 ) ( 312 )

Equity award activity 1 — — — — — 1

Treasury stock activity, net — — ( 50 ) — — — ( 50 )

Equity compensation expense — 1,363 — — — 232 1,595

Other — 6 — — — ( 27 ) ( 21 )

Balance at September 30, 2020 $ 1,289 $ 471,146 $ ( 19,484 ) $ ( 54,634 ) $ ( 398,630 ) $ 95,488 $ 95,175

See Notes to Consolidated Financial Statements

3 unchanged sentences

(In Thousands, Unaudited)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

6 unchanged sentences

Gain on retained CSI Compressco units and Standard Lithium shares

( 5,613 ) ( 183 )

Equity-based compensation expense

15 unchanged sentences

Net cash provided by operating activities

10,424 64,827

Investing activities:

5 unchanged sentences

Other investing activities

1,156 ( 357 )

Net cash used in investing activities ( 10,451 ) ( 14,063 )

Net cash (used in) provided by investing activities ( 12,164 ) 2,760

Financing activities:

4 unchanged sentences

Tax remittances on equity based compensation

Dividend payments attributable to noncontrolling interest ( 99 ) —

Debt issuance costs and other financing activities

14 unchanged sentences

NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES

We are a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, water management, frac flowback and production well testing.

We are an industrial and oil and gas products and services company operating on six continents, focused on bromine-based completion fluids, calcium chloride, water management solutions, frac flowback and production well testing services.

We were incorporated in Delaware in 1981.

We are composed of two divisions – Completion Fluids & Products and Water & Flowback Services.

We are composed of two segments – Completion Fluids & Products Division and Water & Flowback Services Division.

Unless the context requires otherwise, when we refer to “we,” “us,” and “our,” we are describing TETRA Technologies, Inc.

3 unchanged sentences

The information furnished reflects all normal recurring adjustments, which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods.

Operating results for the period ended June 30, 2021 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2021.

Operating results for the period ended September 30, 2021 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2021.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S.

5 unchanged sentences

Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K .

There have been no significant changes in our accounting policies or the application thereof during the second quarter of 2021.

There have been no significant changes in our accounting policies or the application thereof during the third quarter of 2021.

Use of Estimates

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If such indicators are present, the determination of the amount of impairment is based on our judgment as to the future undiscounted operating cash flows to be generated from the relevant assets throughout their remaining estimated useful lives.

If these undiscounted cash flows are less than the carrying amount of the related assets, an impairment is recognized for the excess of the carrying value over fair value.

value of intangible assets is generally determined using the discounted present value of future cash flows using discount rates commensurate with the risks inherent with the specific assets.

If these undiscounted cash flows are less than the carrying

amount of the related assets, an impairment is recognized for the excess of the carrying value over fair value.

Fair value of intangible assets is generally determined using the discounted present value of future cash flows using discount rates commensurate with the risks inherent with the specific assets.

Assets held for disposal are recorded at the lower of carrying value or estimated fair value less estimated selling costs.

During 2021, we recorded an impairment charge of $ 0.4 million related to idle equipment in our Canada office within our Water & Flowback Services Division.

There were no impairments associated with continuing operations during the six months ended June 30, 2020.

During the nine months ended 2021, we recorded an impairment charge of $ 0.4 million related to idle equipment in our Canada office within our Water & Flowback Services Division.

There were no significant impairments associated with continuing operations during the nine months ended September 30, 2020.

Foreign Currency Translation

We have designated the Euro, the British pound, the Norwegian krone, the Canadian dollar, the Brazilian real, and the Mexican peso as the functional currencies for our operations in Finland and Sweden, the United Kingdom, Norway, Canada, Brazil, and certain of our operations in Mexico, respectively.

The United States dollar is the designated functional currency for all of our other non-U.S.

We have designated the Euro, the British pound, the Canadian dollar, the Brazilian real, and the Mexican peso as the functional currencies for our operations in Finland and Sweden, the United Kingdom, Canada, Brazil, and certain of our operations in Mexico, respectively.

During 2021, we determined our business operations in Norway were primarily operating using the United States dollar.

Effective July 1, 2021, the functional currency of our operations in Norway was changed from the Norwegian krone to the United States dollar.

The United States dollar is also the designated functional currency for all of our other non-U.S.

The cumulative translation effects of translating the applicable accounts from the functional currencies into the United States dollar at current exchange rates are included as a separate component of equity.

Foreign currency exchange (gains) and losses are included in other (income) expense, net and totaled $( 0.2 ) million and $( 1.0 ) million during the three and six months ended June 30, 2021, respectively, and $ 0.8 million and $ 0.9 million for the three and six months ended June 30, 2020, respectively.

Foreign currency exchange (gains) and losses are included in other (income) expense, net and totaled $( 0.1 ) million and $( 1.1 ) million during the three and nine months ended September 30, 2021, respectively, and $ 1.2 million and $ 2.2 million for the three and nine months ended September 30, 2020, respectively.

Fair Value Measurements

6 unchanged sentences

Supplemental cash flow information from continuing and discontinued operations is as follows:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

3 unchanged sentences

Income taxes paid

Decrease in accrued capital expenditures 1,434 1,820

Increase (decrease) in accrued capital expenditures 463 ( 1,614 )

(1) Prior-year information includes the activity for CSI Compressco for the full period.

15 unchanged sentences

Updates at each reporting date after initial adoption will be recorded through selling, general, and administrative expense.

ASU 2016-13 has an effective date of the first quarter of fiscal 2023.

ASU 2016-13 will become effective for us in the first quarter of fiscal 2023.

We continue to assess the potential effects of these changes to our consolidated financial statements.

1 unchanged sentence

GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued.

The amendments are effective for all entities as of March 12, 2020 through December 31, 2022.

Entities may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020.

As of June 30, 2021, we have not modified our credit agreements to remove references to LIBOR.

We are currently evaluating the impacts of the provisions of ASU 2020-04 on our consolidated financial statements .

Entities may elect to apply the amendments for contract modifications made on or before December 31, 2022.

During the three months ended September 30, 2021, our asset-based credit agreement and term credit agreement were amended to allow replacement of LIBOR with another benchmark rate, such as the secured overnight financing rate (“SOFR”) in the event that LIBOR cannot be determined or does not fairly reflect the cost to our lenders of funding our loans.

If LIBOR is not available, we cannot predict what alternative index would be negotiated with our lenders.

We will assess the impact of adopting ASU 2020-04 on our consolidated financial statements if or when our contracts are modified to eliminate references to LIBOR.

NOTE 2 – DISCONTINUED OPERATIONS

On January 29, 2021, we entered into the Purchase and Sale Agreement with Spartan Energy Partners, LP (“Spartan”) pursuant to which we sold the general partner of CSI Compressco, including the IDRs in CSI Compressco and approximately 23.1 % of the outstanding limited partner interests in CSI Compressco, in exchange for the combination of $ 13.4 million in cash paid at closing, $ 0.5 million in cash payable on the six-month anniversary of the closing and $ 3.1 million in contingent consideration in the form of cash and/or CSI Compressco common units if CSI Compressco achieves certain financial targets on or before December 31, 2022.

On January 29, 2021, we entered into the Purchase and Sale Agreement with Spartan Energy Partners, LP (“Spartan”) pursuant to which we sold the general partner of CSI Compressco, including the IDRs in CSI Compressco and approximately 23.1 % of the outstanding limited partner interests in CSI Compressco, in exchange for the combination of $ 13.4 million in cash paid at closing, $ 0.5 million in cash paid on the six-month anniversary of closing and $ 3.1 million in contingent consideration in the form of cash and/or CSI Compressco common units if CSI Compressco achieves certain financial targets on or before December 31, 2022.

Throughout this Quarterly Report, we refer to the transaction with Spartan as the “GP Sale.” As a result of these transactions, we no longer consolidate CSI Compressco as of January 29, 2021.

We recognized a primarily non-cash accounting gain of $ 120.6 million during the six-month period ended June 30, 2021 related to the GP Sale.

We recognized a primarily non-cash accounting gain of $ 120.6 million during the nine-month period ended September 30, 2021 related to the GP Sale.

The gain is included in income (loss) from discontinued operations, net of taxes in our consolidated statement of operations.

6 unchanged sentences

Our current-year consolidated statement of operations, statement of comprehensive income, statement of equity and statement of cash flows include CSI Compressco activity for January 1 through January 29.

Our consolidated statements of cash flows for the six-month periods ended June 30, 2021 and June 30, 2020 included $ 3.0 million and $ 11.2 million, respectively, of capital expenditures related to our former Compression division, as well as $ 271.8 million of proceeds from long-term debt, $ 273.9 million of payments of long-term debt, $ 3.6 million from proceeds from sale of property, plant and equipment, and $ 1.4 million from amortization of deferred financing discounts, costs and gains for the six-month period ended June 30, 2020.

Our consolidated statements of cash flows for the nine-month periods ended September 30, 2021 and September 30, 2020 included $ 3.0 million and $ 10.8 million, respectively, of capital expenditures related to our former Compression division, as well as $ 337.5 million of proceeds from long-term debt, $ 341.2 million of payments of long-term debt, $ 21.7 million from proceeds from sale of property, plant and equipment, and $ 2.0 million from amortization of deferred financing discounts, costs and gains for the nine-month period ended September 30, 2020.

Our current-year results do not include CSI Compressco depreciation or amortization as the assets were considered held for sale.

3 unchanged sentences

Three Months Ended

June 30, 2021

September 30, 2021

Compression Offshore Services Total

Major classes of line items constituting loss from discontinued operations

Cost of revenues $ — $ ( 174 ) $ ( 174 )

General and administrative expense — 6 6

Other expense, net 150 — 150

Pretax loss from discontinued operations ( 121 ) ( 5 ) ( 126 )

Pretax (loss) income from discontinued operations ( 150 ) 168 18

Loss from discontinued operations attributable to TETRA stockholders $ 18

Three Months Ended

June 30, 2020

September 30, 2020

Compression Offshore Services Total

3 unchanged sentences

Depreciation, amortization, and accretion 19,948 — 19,948

Impairments and other charges 8,977 — 8,977

General and administrative expense 9,133 170 9,303

1 unchanged sentence

Other expense, net ( 1,348 ) — ( 1,348 )

Pretax income (loss) from discontinued operations ( 23,004 ) 163 ( 22,841 )

Pretax loss from discontinued operations ( 11,323 ) ( 172 ) ( 11,495 )

Income tax provision 544

2 unchanged sentences

Loss from discontinued operations attributable to TETRA stockholders $ ( 3,697 )

Six Months Ended

June 30, 2021

Nine Months Ended

September 30, 2021

Compression Offshore Services Total

5 unchanged sentences

Other expense, net 164 — 164

Pretax income (loss) from discontinued operations 348 ( 28 ) 320

Pretax income from discontinued operations 198 140 338

Pretax gain on disposal of discontinued operations 120,574

4 unchanged sentences

Income from discontinued operations attributable to TETRA stockholders $ 120,549

Six Months Ended

June 30, 2020

Nine Months Ended

September 30, 2020

Compression Offshore Services Total

7 unchanged sentences

Other expense, net 2,932 — 2,932

Pretax (loss) income from discontinued operations ( 35,795 ) 18 ( 35,777 )

Pretax loss from discontinued operations ( 47,117 ) ( 155 ) ( 47,272 )

Income tax provision 1,923

Total income from discontinued operations ( 37,156 )

Total loss from discontinued operations ( 49,195 )

Loss from discontinued operations attributable to noncontrolling interest 32,957

2 unchanged sentences

(in thousands)

June 30, 2021

September 30, 2021

Offshore Services Maritech Total

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NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Our contract asset balances, primarily associated with customer documentation requirements, were $ 19.3 million and $ 12.8 million as of June 30, 2021 and December 31, 2020, respectively.

Our contract asset balances, primarily associated with customer documentation requirements, were $ 16.9 million and $ 12.8 million as of September 30, 2021 and December 31, 2020, respectively.

Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets.

Unearned income includes amounts in which the Company was contractually allowed to invoice prior to satisfying the associated performance obligations.

Unearned income balances were $ 3.0 million and $ 2.7 million as of June 30, 2021 and December 31, 2020, respectively, and vary based on the timing of invoicing and performance obligations being met.

Revenues recognized during the six-month periods ended June 30, 2021 and June 30, 2020 deferred as of the end of the preceding year were not significant.

During the six-month periods ended June 30, 2021 and June 30, 2020, contract costs were not significant.

Unearned income balances were $ 1.4 million and $ 2.7 million as of September 30, 2021 and December 31, 2020, respectively, and vary based on the timing of invoicing and performance obligations being met.

Revenues recognized during the nine-month periods ended September 30, 2021 and September 30, 2020 deferred as of the end of the preceding year were not significant.

During the nine-month periods ended September 30, 2021 and September 30, 2020, contract costs were not significant.

We disaggregate revenue from contracts with customers into Product Sales and Services within each segment, as noted in our two reportable segments in Note 10.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

13 unchanged sentences

NOTE 4 – INVENTORIES

Components of inventories as of June 30, 2021 and December 31, 2020 are as follows:

June 30, 2021 December 31, 2020

Components of inventories as of September 30, 2021 and December 31, 2020 are as follows:

September 30, 2021 December 31, 2020

(In Thousands)

12 unchanged sentences

See Note 8 - “Fair Value Measurements” for further information.

Our investments as of June 30, 2021 and December 31, 2020, consist of the following:

June 30, 2021 December 31, 2020

Our investments as of September 30, 2021 and December 31, 2020, consist of the following:

September 30, 2021 December 31, 2020

(In Thousands)

3 unchanged sentences

NOTE 6 – LONG-TERM DEBT AND OTHER BORROWINGS

Consolidated long-term debt as of June 30, 2021 and December 31, 2020, consists of the following:

Scheduled Maturity June 30, 2021 December 31, 2020

Consolidated long-term debt as of September 30, 2021 and December 31, 2020, consists of the following:

Scheduled Maturity September 30, 2021 December 31, 2020

(In Thousands)

Asset-based credit agreement September 10, 2023 $ — $ —

Asset-based credit agreement May 31, 2025 $ — $ —

Term credit agreement (1)

September 10, 2025 164,228 199,894

Total debt 171,760 199,894

Less current portion ( 8,157 ) —

Total long-term debt $ 164,228 $ 199,894

(1) Net of unamortized discount of $ 5.0 million and $ 5.5 million as of June 30, 2021 and December 31, 2020, respectively, and net of unamortized deferred financing costs of $ 7.5 million and $ 8.2 million as of June 30, 2021 and December 31, 2020, respectively.

As of June 30, 2021, we had no outstanding balance and $ 6.2 million in letters of credit against our asset-based credit agreement (“ABL Credit Agreement”).

Because there was no outstanding balance on this ABL Credit Agreement, associated deferred financing costs of $ 0.9 million as of June 30, 2021, were classified as other long-term assets on the accompanying consolidated balance sheet.

As of June 30, 2021, subject to compliance with the covenants, borrowing base, and other provisions of the ABL Credit Agreement that may limit borrowings, we had an availability of $ 31.7 million under this agreement.

See Note 11 - “Subsequent Events” for additional information.

(1) Net of unamortized discount of $ 4.8 million and $ 5.5 million as of September 30, 2021 and December 31, 2020, respectively, and net of unamortized deferred financing costs of $ 7.1 million and $ 8.2 million as of September 30, 2021 and December 31, 2020, respectively.

On July 30, 2021, we entered into an amendment to our asset-based credit agreement (“ABL Credit Agreement’) that, among other things, extended the term of the credit facility to May 31, 2025 and revised our commitment to $ 80.0 million, with a $ 20.0 million accordion.

The amendment increased the availability by adding the value of accrued Unites States receivables, increased the forward rates on accounts receivable for investment grade customers and incorporated a new $ 15.0 million sub-facility subject to a borrowing base consisting of certain trade receivables and inventory in the United Kingdom.

As of September 30, 2021, we had no outstanding balance and $ 6.2 million in letters of credit against our “ABL Credit Agreement.

Because there was no outstanding balance on this ABL Credit Agreement, associated deferred financing costs of $ 1.7 million as of September 30, 2021, were classified as other long-term assets on the

accompanying consolidated balance sheet.

As of September 30, 2021, subject to compliance with the covenants, borrowing base, and other provisions of the ABL Credit Agreement that may limit borrowings, we had an availability of $ 48.2 million under this agreement.

Our credit agreements contain certain affirmative and negative covenants, including covenants that restrict the ability to pay dividends or other restricted payments.

As of June 30, 2021, we are in compliance with all covenants under the credit agreements.

Our term credit agreement requires us to offer to prepay a percentage of Excess Cash Flow (as defined in the term credit agreement) following the conclusion of each calendar year.

Within five business days of filing our Annual Report for the year ending December 31, 2021, the minimum amount we will be required to offer to prepay pursuant to this obligation is $ 8.2 million, which is reported as a current liability in our consolidated balance sheet

As of September 30, 2021, we are in compliance with all covenants under the credit agreements.

Our term credit agreement requires us to offer to prepay a percentage of Excess Cash Flow (as defined in the term credit agreement) within five business days of filing our Annual Report.

The minimum amount of $ 8.2 million that we would have been required to offer to prepay pursuant to this obligation for the year ending December 31, 2021 was paid on July 30, 2021 in connection with the amendment of our ABL Credit Agreement.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

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While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or other proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.

There have been no material developments in our legal proceedings during the quarter ended June 30, 2021.

There have been no material developments in our legal proceedings during the quarter ended September 30, 2021.

For a discussion of our legal proceedings, please see our Annual Report on Form 10-K for the year ended December 31, 2020.

In May 2021, we signed a memorandum of understanding (“MOU”) with CarbonFree Chemicals Holdings, LLC (“CarbonFree”), a carbon capture company with patented technologies that capture CO 2 and mineralize emissions to make commercial, carbon-negative chemicals.

During the one-year MOU period, both Companies will work towards a definitive agreement that might include investments by TETRA into CarbonFree, a joint venture, or other commercial arrangements.

On July 23, 2021, we entered into a commitment to invest $ 5.0 million in a convertible note to be issued by CarbonFree.

Our investment in CarbonFree is contingent on certain conditions being attained by CarbonFree.

NOTE 8 – FAIR VALUE MEASUREMENTS

2 unchanged sentences

The stock component of consideration received for our arrangement with Standard Lithium is initially recorded as unearned income based on the quoted market price at the time the stock is received, then recognized in income over the contract term.

The unearned income associated with the stock component of this agreement is not significant as of June 30, 2021 or December 31, 2020.

The unearned income associated with the stock component of this agreement is not significant as of September 30, 2021 or December 31, 2020.

Changes in the value of stock are recorded in other income (expense) in our consolidated statements of operations.

The Warrants are valued using a Black Scholes option valuation model that includes estimates of the volatility of the Warrants (a Level 3 fair value measurement).

The Warrants are accounted for as a derivative liability and increases (or decreases) in the fair value of the Warrants are generally associated with increases (or decreases) in the trading price of our common stock and by increases in the volatility of our common stock price, resulting in adjustments to earnings for the associated valuation losses (gains), and resulting in future volatility of our earnings during the period the Warrants are outstanding.

The fair value of the Warrants and associated liability increased during the second quarter of 2021 primarily due to the increase in TETRA’s stock price.

The estimated volatility as of June 30, 2021 was 60 %.

The Warrants are accounted for as a derivative liability and increases (or decreases) in the fair value of the Warrants are generally associated with increases (or decreases) in the trading price of our common stock, increases in the volatility of our common stock price and decreases in time remaining until expiration of the Warrants, resulting in adjustments to earnings for the associated valuation losses (gains), and resulting in future volatility of our earnings during the period the Warrants are

The estimated volatility as of September 30, 2021 was 60 %.

The outstanding Warrants expire by December 31, 2021.

Recurring and nonrecurring fair value measurements by valuation hierarchy as of June 30, 2021 and December 31, 2020, are as follows:

Recurring and nonrecurring fair value measurements by valuation hierarchy as of September 30, 2021 and December 31, 2020, are as follows:

Fair Value Measurements Using

Total as of Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Significant Unobservable Inputs

Description June 30, 2021 (Level 1) (Level 2) (Level 3)

Description September 30, 2021 (Level 1) (Level 2) (Level 3)

(In Thousands)

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NOTE 9 – NET INCOME (LOSS) PER SHARE

The average diluted shares outstanding excludes the impact of certain outstanding equity awards and warrants of 2,013,000 and 1,740,000 shares for the three and six-month periods ended June 30, 2021, respectively, and 16,000 and 11,000 shares for the three and six-month periods ended June 30, 2020, respectively, as the inclusion of these shares would have been anti-dilutive due to the net loss from continuing operations recorded during these periods.

The following is a reconciliation of the weighted average number of common shares outstanding with the number of shares used in the computations of net income (loss) per common and common equivalent share:

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(In Thousands)

Number of weighted average common shares outstanding

126,733 125,893 126,489 125,789

Assumed exercise of equity awards and warrants

Average diluted shares outstanding

128,694 125,893 126,489 125,789

The average diluted shares outstanding excludes the impact of certain outstanding equity awards and warrants of 1,767 thousand shares for the nine-month period ended September 30, 2021, and 93 thousand and 17 thousand shares for the three and nine-month periods ended September 30, 2020, respectively, as the inclusion of these shares would have been anti-dilutive due to the net loss from continuing operations recorded during these periods.

NOTE 10 – INDUSTRY SEGMENTS

We manage our operations through two Divisions:

Completion Fluids & Products and Water & Flowback Services.

We manage our operations through two segments:

Completion Fluids & Products Division and Water & Flowback Services Division.

Summarized financial information concerning the business segments is as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

21 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

6 unchanged sentences

Total $ 9,789 $ 13,472 $ 41,820 $ 43,825

NOTE 11 – SUBSEQUENT EVENTS

On July 30, 2021, we entered into an amendment of the ABL Credit Agreement that, among other things, extended the term of the credit facility to May 31, 2025 and revised our commitment to $ 80.0 million, with a $ 20.0 million accordion.

The amendment resulted in an increase of approximately $ 9.4 million to the borrowing base as of July 30, 2021, compared to the borrowing base prior to the amendment.

In connection with the amendment, we also elected to repay the $ 8.2 million under our term credit agreement that would have become due in 2022.

During the one-year MOU period, both Companies will work towards a definitive agreement that might include investments by TETRA into CarbonFree, a joint venture, or other commercial arrangements.

On July 23, 2021, we entered into a commitment to invest $ 5.0 million in a convertible note to be issued by CarbonFree.

Our investment in Carbon Free is contingent on certain conditions and is expected to be completed during the third quarter of 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements