What changed in this filing

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Item 1. Financial Statements

2022-05-02 compared with 2021-11-01 · 143 added, 278 removed, 361 unchanged (54% of the section changed)

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Product sales

9 unchanged sentences

Depreciation, amortization, and accretion

8,308 9,657 25,495 28,934

Impairments and other charges

Insurance recoveries

2 unchanged sentences

97,617 69,455

15,747 10,215 40,049 55,063

Exploration and appraisal costs 1,930 —

General and administrative expense 20,643 20,012

Interest expense, net 3,324 4,404

Warrants fair value adjustment expense (income) ( 3,164 ) — ( 143 ) ( 327 )

Other income, net ( 2,411 ) ( 4,772 )

3 unchanged sentences

Discontinued operations:

Income (loss) from discontinued operations, net of taxes 18 ( 12,039 ) 120,882 ( 49,195 )

Net income (loss) 2,513 ( 21,598 ) 104,780 ( 68,941 )

(Loss) income from discontinued operations, net of taxes ( 15 ) 120,990

Net income 7,719 109,047

(income) loss attributable to noncontrolling interest (1)

— 8,296 ( 306 ) 32,833

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

Net income attributable to TETRA stockholders $ 7,720 $ 108,714

Basic net income (loss) per common share:

Income (loss) from continuing operations $ 0.06 $ ( 0.10 )

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 )

Income from discontinued operations — 0.96

Net income attributable to TETRA stockholders $ 0.06 $ 0.86

Weighted average basic shares outstanding 127,259 126,149

1 unchanged sentence

Income (loss) from continuing operations $ 0.06 $ ( 0.10 )

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 )

Income from discontinued operations — 0.96

Net income attributable to TETRA stockholders $ 0.06 $ 0.86

Weighted average diluted shares outstanding 129,211 126,149

(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.

(1) (Income) loss attributable to noncontrolling interest includes zero and $( 333 ) income for the three-month periods ended March 31, 2022 and 2021, respectively, related to discontinued operations.

See Notes to Consolidated Financial Statements

1 unchanged sentence

and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

(In Thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net income (loss) $ 2,513 $ ( 21,598 ) $ 104,780 $ ( 68,941 )

Net income $ 7,719 $ 109,047

Foreign currency translation adjustment from continuing operations, net of taxes of $ 0 in 2022 and 2021

192 ( 2,779 )

Comprehensive income (loss) 363 ( 18,724 ) 102,008 ( 71,439 )

Comprehensive income 7,911 106,268

Comprehensive income (loss) attributable to noncontrolling interest 1 ( 333 )

Comprehensive income (loss) attributable to TETRA stockholders $ 363 $ ( 10,495 ) $ 101,702 $ ( 38,559 )

Comprehensive income attributable to TETRA stockholders $ 7,912 $ 105,935

See Notes to Consolidated Financial Statements

3 unchanged sentences

(In Thousands)

September 30,

2022 December 31,

2 unchanged sentences

$ 32,851 $ 31,551

Restricted cash

Trade accounts receivable, net of allowances of $ 377 in 2022 and $ 289 in 2021

1 unchanged sentence

64,649 69,098

Assets of discontinued operations

Prepaid expenses and other current assets

21 unchanged sentences

35,846 36,958

Deferred tax assets, net

Operating lease right-of-use assets

10 unchanged sentences

(In Thousands, Except Share Amounts)

September 30,

2022 December 31,

3 unchanged sentences

$ 39,826 $ 37,943

Unearned income

Current portion of long-term debt 1,533 —

Compensation and employee benefits 18,421 20,811

Operating lease liabilities, current portion 8,502 8,108

Accrued taxes 6,252 7,085

Accrued liabilities and other

21,125 21,810

Liabilities of discontinued operations

1,327 734,039

Current liabilities associated with discontinued operations 1,379 1,385

Total current liabilities

1 unchanged sentence

Long-term debt, net 152,531 151,936

Deferred income taxes 1,817 1,942

Asset retirement obligations 12,840 12,484

Warrants liability 56 198

Operating lease liabilities 31,266 31,429

Asset retirement obligations 13,120 12,984

Deferred income taxes 1,635 1,669

Other liabilities 4,276 4,543

4 unchanged sentences

Common stock, par value 0.01 per share;

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

250,000,000 shares authorized at March 31, 2022 and December 31, 2021;

130,829,770 shares issued at March 31, 2022 and 130,075,838 shares issued at December 31, 2021

Additional paid-in capital

1 unchanged sentence

Treasury stock, at cost;

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

3,138,675 shares held at March 31, 2022, and 3,138,675 shares held at December 31, 2021

( 19,957 ) ( 19,957 )

23 unchanged sentences

Comprehensive income 7,911

Deconsolidation of CSI Compressco

— — — 7,168 — ( 82,775 ) ( 75,607 )

Equity award activity 6 — — — — — 6

Treasury stock activity, net — — ( 449 ) — — — ( 449 )

Equity compensation expense — 1,104 — — — — 1,104

1 unchanged sentence

Balance at March 31, 2022 $ 1,308 $ 476,055 $ ( 19,957 ) $ ( 46,740 ) $ ( 302,612 ) $ ( 1,152 ) $ 106,902

Net loss for second quarter 2021 — — — — ( 6,753 ) ( 27 ) ( 6,780 )

Translation adjustment, net of taxes of $ 0

— — — 2,157 — — 2,157

Comprehensive loss ( 4,623 )

Dividend — — — — — ( 119 ) ( 119 )

Equity award activity 2 — — — — — 2

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

Equity compensation expense — 1,592 — — — — 1,592

Other — ( 242 ) — — — ( 14 ) ( 256 )

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

5 unchanged sentences

Balance at December 31, 2020 $ 1,289 $ 472,134 $ ( 19,484 ) $ ( 49,914 ) $ ( 413,665 ) $ 80,702 $ 71,062

Net loss for first quarter 2020 — — — — ( 1,551 ) ( 8,825 ) ( 10,376 )

Net income for first quarter 2021 — — — — 108,714 333 109,047

Translation adjustment, net of taxes of $ 0

— — — ( 2,779 ) — — ( 2,779 )

Comprehensive loss ( 16,843 )

Distributions to public unitholders — — — — — ( 309 ) ( 309 )

Comprehensive income 106,268

Deconsolidation of CSI Compressco — — — 7,168 — ( 82,775 ) ( 75,607 )

Equity award activity 6 — — — — — 6

3 unchanged sentences

Balance at March 31, 2021 $ 1,295 $ 472,522 $ ( 19,933 ) $ ( 45,525 ) $ ( 304,951 ) $ ( 941 ) $ 102,467

Net loss for second quarter 2020 — — — — ( 21,255 ) ( 15,712 ) ( 36,967 )

Translation adjustment, net of taxes of $ 0

— — — 980 — 115 1,095

Comprehensive loss ( 35,872 )

Distributions to public unitholders — — — — — ( 311 ) ( 311 )

Equity award activity 1 — — — — — 1

Treasury stock activity, net — — ( 181 ) — — — ( 181 )

Equity compensation expense — 1,685 — — — 449 2,134

Other — 4 — — — ( 20 ) ( 16 )

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)

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

Net income (loss) $ 104,780 $ ( 68,941 )

Reconciliation of net income (loss) to net cash provided by operating activities:

Net income $ 7,719 $ 109,047

Reconciliation of net income to net cash provided by operating activities:

Depreciation, amortization, and accretion 7,679 8,981

25,524 88,906

Gain on GP Sale — ( 120,574 )

Impairment and other charges

Gain on retained CSI Compressco units and Standard Lithium shares

Gain on investments ( 1,100 ) ( 3,992 )

Equity-based compensation expense 1,104 2,478

Amortization and expense of financing costs and deferred financing gains 2,320 3,698

Debt-related expenses — 4,777

Warrants fair value adjustment

( 143 ) ( 326 )

Provision for doubtful accounts 61 155

Amortization and expense of financing costs 780 728

Insurance recoveries associated with damaged equipment ( 3,750 ) ( 110 )

Gain on sale of assets ( 218 ) ( 255 )

( 479 ) ( 4,340 )

Other non-cash charges ( 101 ) 385

1 unchanged sentence

Accounts receivable ( 13,185 ) 1,501

( 15,246 ) 62,039

Inventories 4,579 498

Prepaid expenses and other current assets 2,510 ( 1,060 )

( 2,927 ) ( 916 )

Trade accounts payable and accrued expenses 9 8,521

25,231 ( 57,844 )

( 2,428 ) 888

Other ( 153 ) ( 478 )

Net cash provided by operating activities 5,934 5,825

10,424 64,827

Investing activities:

Purchases of property, plant, and equipment, net ( 9,305 ) ( 6,761 )

( 14,620 ) ( 22,011 )

Proceeds from sale of CCLP, net of cash divested 566 —

Proceeds on sale of property, plant, and equipment

Insurance recoveries associated with damaged equipment

Proceeds from GP Sale, net of cash divested — 18

Proceeds from sale of property, plant, and equipment 416 561

Proceeds from insurance recoveries associated with damaged equipment 3,750 110

Other investing activities ( 453 ) 1,771

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

Net cash used in investing activities ( 5,592 ) ( 4,301 )

Financing activities:

1 unchanged sentence

Principal payments on long-term debt ( 811 ) ( 29,500 )

( 37,477 ) ( 408,666 )

CSI Compressco distributions

Tax remittances on equity based compensation

Dividend payments attributable to noncontrolling interest ( 99 ) —

Repurchase of common stock — ( 449 )

Debt issuance costs and other financing activities — ( 98 )

( 1,080 ) ( 3,897 )

Net cash used in financing activities ( 38,656 ) ( 9,776 )

Net cash provided by (used in) financing activities 722 ( 29,887 )

Effect of exchange rate changes on cash 236 ( 1,303 )

(Decrease) increase in cash and cash equivalents ( 42,031 ) 57,456

Increase (decrease) in cash and cash equivalents 1,300 ( 29,666 )

Cash and cash equivalents and restricted cash at beginning of period 31,551 83,894

Cash and cash equivalents at beginning of period associated with discontinued operations 16,577 2,370

Cash and cash equivalents and restricted cash at beginning of period associated with continuing operations 67,317 15,398

Cash and cash equivalents at beginning of period

associated with discontinued operations

Cash and cash equivalents and restricted cash at beginning of period

associated with continuing operations

31,551 67,317

Cash and cash equivalents and restricted cash at end of period

Cash and cash equivalents at end of period associated with discontinued operations — 6,757

Cash and cash equivalents and restricted cash at end of period associated with continuing operations $ 41,863 $ 68,467

associated with continuing operations

$ 32,851 $ 54,228

See Notes to Consolidated Financial Statements

11 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 September 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 March 31, 2022 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2022.

We have reflected the operations of our former Compression Division and Offshore Division as discontinued operations for all periods presented.

See Note 2 - “Discontinued Operations” for further information.

Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate solely to continuing operations and exclude all discontinued operations.

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.

2 unchanged sentences

GAAP”) for complete financial statements.

These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2020 and notes thereto included in our Annual Report on Form 10-K , which we filed with the SEC on March 5, 2021.

These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2021 and notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2022 (the “ 2021 A nnual Report ”).

Significant Accounting Policies

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 third quarter of 2021.

Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, 2021 included in our 2021 A nnual Report .

There have been no significant changes in our accounting policies or the application thereof during the first quarter of 2022.

Use of Estimates

4 unchanged sentences

Certain previously reported financial information has been reclassified to conform to the current year's presentation.

For a discussion of the reclassification of the financial presentation of our former Compression Division as discontinued operations, see Note 2 - “Discontinued Operations”.

Other than the discontinued operations presentation, the impact of reclassifications was not significant to the prior year's overall presentation.

Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate solely to continuing operations and exclude all discontinued operations.

Impairments and Other Charges

Impairments of long-lived assets, including identified intangible assets, are determined periodically when indicators of impairment are present.

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.

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 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.

The impact of reclassifications was not significant to the prior year's overall presentation.

Foreign Currency Translation

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.

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.

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 $( 0.1 ) 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.

Foreign currency exchange (gains) and losses are included in other (income) expense, net and totaled $( 0.8 ) million and $( 0.6 ) million during the three months ended March 31, 2022 and 2021 respectively.

Fair Value Measurements

We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements.

Fair value measurements are utilized on a recurring basis in the determination of the carrying values of certain assets, including our interest in Standard Lithium Ltd.

(“Standard Lithium”) and our retained interest in CSI Compressco and liabilities, including the liabilities for the warrants to purchase 11.2 million shares of our common stock (the “Warrants”).

Fair value measurements are utilized on a recurring basis in the determination of the carrying values of certain investments.

See Note 7 - “Fair Value Measurements” for further discussion.

2 unchanged sentences

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

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

3 unchanged sentences

Income taxes paid

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

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

Current-year information includes activity for CSI Compressco for January only.

Decrease in accrued capital expenditures 2,164 1,051

(1) Prior-year information includes the activity for CSI Compressco for January only.

New Accounting Pronouncements

Standards adopted in 2021

In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.” ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocation, interim period income tax calculation methodology, and the recognition of deferred tax liabilities for outside basis differences.

It also simplifies certain aspects of accounting for franchise taxes and clarifies the accounting for transactions that results in a step-up in the tax basis of goodwill.

On January 1, 2021, we adopted ASU 2019-12.

The adoption of this standard did not have a material impact on our consolidated financial statements.

Standards not yet adopted

11 unchanged sentences

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.

During 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.

1 unchanged sentence

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 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 nine-month period ended September 30, 2021 related to the GP Sale.

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 incentive distribution rights (“IDRs”) in CSI Compressco, and approximately 23.1 % of the outstanding limited partner interests in CSI Compressco, in exchange for the combination of $ 13.9 million in cash 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 this transaction as the “GP Sale.” Following the closing of the transaction, we retained an interest in CSI Compressco representing approximately 3.7 % of the outstanding common units as of March 31, 2022.

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 three-month period ended March 31, 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.

We will also continue to provide back-office support to CSI Compressco under a Transition Services Agreement for up to one year until CSI Compressco has completed a full separation from our back-office support functions.

We provided back-office support to CSI Compressco under a Transition Services Agreement that ended during the three-month period ended March 31, 2022.

Our interest in CSI Compressco and the general partner represented substantially all of our Compression Division.

3 unchanged sentences

Our consolidated statements of comprehensive income, statements of equity and statements of cash flows combine continuing and discontinued operations.

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 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.

Our prior-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 three-month period ended March 31, 2021 included $ 3.0 million, of capital expenditures related to our former Compression division.

A summary of financial information related to our discontinued operations is as follows:

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations

(in thousands)

(in thousands, unaudited)

Three Months Ended

September 30, 2021

Compression Offshore Services Total

March 31, 2022

Offshore Services

Major classes of line items constituting loss from discontinued operations

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

General and administrative expense $ 15

Other expense, net 150 — 150

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

Pretax loss from discontinued operations ( 15 )

Loss from discontinued operations attributable to TETRA stockholders $ ( 15 )

Three Months Ended

September 30, 2020

March 31, 2021

Compression Offshore Services Total

2 unchanged sentences

Cost of revenues 11,474 28 11,502

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

General and administrative expense 2,795 ( 5 ) 2,790

Interest expense, net 4,336 — 4,336

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

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

Income tax provision 544

Total loss from discontinued operations ( 12,039 )

Loss from discontinued operations attributable to noncontrolling interest 8,342

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

Nine Months Ended

September 30, 2021

Compression Offshore Services Total

Major classes of line items constituting income from discontinued operations

Revenue $ 18,968 $ — $ 18,968

Cost of revenues 11,474 ( 146 ) 11,328

General and administrative expense 2,796 6 2,802

Interest expense, net 4,336 — 4,336

Other expense, net 164 — 164

Pretax income from discontinued operations 198 140 338

Other (income) expense, net ( 106 ) — ( 106 )

Pretax income (loss) from discontinued operations 469 ( 23 ) 446

Pretax gain on disposal of discontinued operations 120,574

4 unchanged sentences

Income from discontinued operations attributable to TETRA stockholders $ 120,657

Nine Months Ended

September 30, 2020

Compression Offshore Services Total

Major classes of line items constituting loss from discontinued operations

Revenue $ 265,727 $ — $ 265,727

Cost of revenues 167,279 ( 332 ) 166,947

Depreciation, amortization, and accretion 59,972 — 59,972

Impairments and other charges 14,348 — 14,348

General and administrative expense 29,474 487 29,961

Interest expense, net 38,839 — 38,839

Other expense, net 2,932 — 2,932

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

Income tax provision 1,923

Total loss from discontinued operations ( 49,195 )

Loss from discontinued operations attributable to noncontrolling interest 32,957

Loss from discontinued operations attributable to TETRA stockholders $ ( 16,238 )

Reconciliation of Major Classes of Assets and Liabilities of the Discontinued Operations to Amounts Presented Separately in the Statement of Financial Position

(in thousands)

September 30, 2021

March 31, 2022

Offshore Services Maritech Total

4 unchanged sentences

December 31, 2021

Compression Offshore Services Maritech Total

Carrying amounts of major classes of assets included as part of discontinued operations

Cash and cash equivalents $ 16,577 $ — $ — $ 16,577

Trade receivables 43,837 — — 43,837

Inventories 31,220 — — 31,220

Other current assets 5,231 — — 5,231

Property, plant, and equipment 551,401 — — 551,401

Other assets 61,740 — — 61,740

Total assets associated with discontinued operations $ 710,006 $ — $ — $ 710,006

Offshore Services Maritech Total

Carrying amounts of major classes of liabilities included as part of discontinued operations

Trade payables $ 1,157 $ — $ 1,157

Unearned Income 269 — — 269

Accrued liabilities and other — 228 228

Long-term debt, net 638,631 — — 638,631

Other liabilities 37,253 — — 37,253

Total liabilities associated with discontinued operations $ 1,157 $ 228 $ 1,385

NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

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.

Our contract asset balances, primarily associated with contractual invoicing milestones and customer documentation requirements, were $ 29.6 million and $ 20.5 million as of March 31, 2022 and December 31, 2021, 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 $ 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 are also party to agreements in which Standard Lithium Ltd.

(“Standard Lithium”) has the right to explore, produce and extract lithium in our Arkansas leases as well as additional potential resources in the Mojave region of California.

The Company receives cash and stock of Standard Lithium under the terms of the arrangements.

The cash and stock component of consideration received 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.

Unearned income balances were $ 5.7 million and $ 3.2 million as of March 31, 2022 and December 31, 2021, respectively, and vary based on the timing of invoicing and performance obligations being met and the timing of the receipt of stock and shares from Standard Lithium.

Unearned income is included in accrued liabilities and other in our consolidated balance sheets.

We recognized approximately $ 0.6 million and $ 0.3 million of income during the three-month periods ended March 31, 2022 and March 31, 2021, respectively, related to the Standard Lithium arrangements.

These amounts are included in other income, net in our consolidated statements of operations.

During the three-month period ended March 31, 2021, we recognized approximately $ 1.4 million of revenue deferred as of the preceding year end.

Other income recognized during the three-month periods ended March 31, 2022 and March 31, 2021 deferred as of the end of the preceding year were not significant.

During the three-month periods ended March 31, 2022 and March 31, 2021, 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 9.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in thousands)

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NOTE 4 – INVENTORIES

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

September 30, 2021 December 31, 2020

Components of inventories as of March 31, 2022 and December 31, 2021 are as follows:

March 31, 2022 December 31, 2021

(in thousands)

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Finished goods inventories include newly manufactured clear brine fluids as well as used brines that are repurchased from certain customers for recycling .

NOTE 5 – INVESTMENTS

Following the closing of the GP Sale, we continue to own approximately 10.9 % of the outstanding CSI Compressco common units.

In addition, we are party to agreements in which Standard Lithium has the right to explore, produce and extract lithium in our Arkansas leases as well as additional potential resources in the Mojave region of California.

The Company receives cash and stock of Standard Lithium (NYSE:SLI) under the terms of the arrangements.

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

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

September 30, 2021 December 31, 2020

(In Thousands)

Investment in CSI Compressco

Investment in Standard Lithium 13,008 2,675

Total Investments $ 22,412 $ 2,675

NOTE 5 – LONG-TERM DEBT AND OTHER BORROWINGS

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

Consolidated long-term debt as of March 31, 2022 and December 31, 2021, consists of the following:

Scheduled Maturity March 31, 2022 December 31, 2021

(in thousands)

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

Swedish Credit Facility December 31, 2022 $ 1,533 $ —

Asset-based credit agreement (1)

May 31, 2025 — 67

Term credit agreement (2)

September 10, 2025 152,531 151,869

Total debt 154,064 151,936

Less current portion ( 1,533 ) —

Total long-term debt $ 152,531 $ 151,936

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

(1) Net of unamortized deferred financing costs of $ 0.8 million and $ 1.6 million as of March 31, 2022 and December 31, 2021, respectively.

Additional deferred financing costs of $ 0.6 million as of March 31, 2022, were classified as other long-term assets on the accompanying consolidated balance sheet as the deferred costs exceeded the outstanding balance.

(2) Net of unamortized discount of $ 4.2 million and $ 4.5 million as of March 31, 2022 and December 31, 2021, respectively, and net of unamortized deferred financing costs of $ 6.3 million and $ 6.7 million as of March 31, 2022 and December 31, 2021, respectively.

Swedish Credit Facility

In January 2022, the Company entered into a new revolving credit facility for seasonal working capital needs of subsidiaries in Sweden (“Swedish Credit Facility”).

As of March 31, 2022, we had US$ 1.5 million outstanding and availability of approximately US$ 3.8 million under the Swedish Credit Facility.

During each year, all outstanding loans under the Swedish Credit Facility must be repaid for at least 30 consecutive days.

Borrowings bear interest at a rate of 2.95 % per annum.

The Swedish Credit Facility expires on December 31, 2022 and the Company intends to renew it annually.

Finland Credit Agreement

The Company also entered into a new agreement guaranteed by certain accounts receivable and inventory in Finland (“Finland Credit Agreement”).

As of March 31, 2022, there were US$ 1.8 million of letters of credit outstanding against the Finland Credit Agreement.

ABL Credit Agreement

As of March 31, 2022, our asset-based credit agreement (“ABL Credit Agreement’) provides for a senior secured revolving credit facility of up to $ 80.0 million, with a $ 20.0 million accordion.

The credit facility is subject to a borrowing base determined monthly by reference to the value of inventory and accounts receivable, and includes a sublimit of $ 20.0 million for letters of credit, a swingline loan sublimit of $ 11.5 million, and a $ 15.0 million sub-facility subject to a borrowing base consisting of certain trade receivables and inventory in the United Kingdom.

As of March 31, 2022, we had $ 0.8 million outstanding and $ 6.0 million in letters of credit and guarantees under our ABL Credit Agreement.

Subject to compliance with the covenants, borrowing base, and other provisions of the ABL Credit Agreement that may limit borrowings, we had availability of $ 58.6 million under this agreement.

Term Credit Agreement

As of March 31, 2022 TETRA had $152.5 million outstanding, net of unamortized discounts and unamortized deferred financing costs under the Term Credit Agreement.

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.

As of March 31, 2022, the interest rate per annum on borrowings under the Term Credit Agreement is 7.25%.

For additional information on our Term Credit agreement, see our 2021 Annual Report .

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

As of March 31, 2022, we are in compliance with all covenants under the credit agreements.

NOTE 6 – 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 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.

There have been no material developments in our legal proceedings during the quarter ended March 31, 2022.

For a discussion of our legal proceedings, please see our 2021 A nnual Report .

NOTE 7 – FAIR VALUE MEASUREMENTS

Financial Instruments

Our retained investment in CSI Compressco and our investment in Standard Lithium are recorded based on the quoted market stock price in active markets (a Level 1 fair value measurement).

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 September 30, 2021 or December 31, 2020.

We retained an interest in CSI Compressco (NASDAQ:

CCLP) representing approximately 3.7 % of CSI Compressco’s outstanding common units as of March 31, 2022.

Our investment in CSI Compressco is recorded based on the quoted market stock price in active markets (a Level 1 fair value measurement).

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

In December 2021, we invested in a $ 5.0 million convertible note issued by CarbonFree.

Our investment in CarbonFree is recorded in investments on our consolidated balance sheets based on an internal valuation (a Level 3 fair value measurement).

Recurring and nonrecurring fair value measurements by valuation hierarchy as of March 31, 2022 and December 31, 2021, 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 September 30, 2021 (Level 1) (Level 2) (Level 3)

Description March 31, 2022 (Level 1) (Level 2) (Level 3)

(in thousands)

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$ 7,333 $ 7,333 $ — $ —

Investment in Standard Lithium 13,008 13,008 — —

Warrants liability ( 56 ) — — ( 56 )

Net asset $ 22,356

Investment in CarbonFree 5,000 — — 5,000

Investments $ 12,333

Fair Value Measurements Using

2 unchanged sentences

(in thousands)

Investment in Standard Lithium $ 2,675 $ 2,675 — $ —

Warrants liability ( 198 ) — — ( 198 )

Net asset $ 2,477

The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt pursuant to TETRA’s ABL Credit Agreement and term credit agreement approximate their carrying amounts.

Investment in CSI Compressco

$ 6,233 $ 6,233 $ — $ —

Investment in CarbonFree $ 5,000 $ — — $ 5,000

Investments $ 11,233

The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt pursuant to TETRA’s ABL Credit Agreement, Swedish Credit Agreement and term credit agreement approximate their carrying amounts.

See Note 5 - “Long-Term Debt and Other Borrowings” for further discussion.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in thousands)

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129,211 126,149

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.

The average diluted shares outstanding excludes the impact of certain outstanding equity awards and warrants of 1,727 thousand shares for the three-month period ended March 31, 2021, as the inclusion of these shares would have been anti-dilutive due to the net loss from continuing operations recorded during these periods.

NOTE 9 – INDUSTRY SEGMENTS

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Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in thousands)

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Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(in thousands)

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Interest expense 3,647 5,064

Warrants fair value adjustment (income) expense ( 3,164 ) — ( 143 ) ( 327 )

Other general corporate income, net ( 1,141 ) ( 2,945 )

1 unchanged sentence

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