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Item 1. Financial Statements

2022-08-02 compared with 2022-05-02 · 167 added, 73 removed, 431 unchanged (36% of the section changed)

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Product sales

9 unchanged sentences

Depreciation, amortization, and accretion

7,748 8,236 15,427 17,187

Impairments and other charges

2,262 449 2,262 449

Insurance recoveries

2 unchanged sentences

112,609 85,893 210,226 155,348

28,107 16,433 60,527 24,302

Exploration and appraisal costs 634 — 2,564 —

1 unchanged sentence

Interest expense, net 3,610 3,886 6,934 8,290

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

Other (income) expense, net ( 1,037 ) 466 ( 3,448 ) ( 4,306 )

Income (loss) before taxes and discontinued operations 1,280 ( 5,270 ) 10,214 ( 17,045 )

Provision for income taxes 1,200 168

(Benefit) provision for income taxes ( 479 ) 1,384 721 1,552

Income (loss) before discontinued operations 1,759 ( 6,654 ) 9,493 ( 18,597 )

1 unchanged sentence

(Loss) income from discontinued operations, net of taxes ( 34 ) ( 126 ) ( 49 ) 120,864

Net income 7,719 109,047

(income) loss attributable to noncontrolling interest (1)

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

Net income (loss) 1,725 ( 6,780 ) 9,444 102,267

loss (income) attributable to noncontrolling interests (1)

20 27 21 ( 306 )

Net income (loss) attributable to TETRA stockholders $ 1,745 $ ( 6,753 ) $ 9,465 $ 101,961

Basic net income (loss) per common share:

1 unchanged sentence

Income from discontinued operations — — — 0.96

Net income attributable to TETRA stockholders $ 0.06 $ 0.86

Net income (loss) attributable to TETRA stockholders $ 0.01 $ ( 0.05 ) $ 0.07 $ 0.81

Weighted average basic shares outstanding 127,992 126,583 127,627 126,365

2 unchanged sentences

Income from discontinued operations — — — 0.96

Net income attributable to TETRA stockholders $ 0.06 $ 0.86

Net income (loss) attributable to TETRA stockholders $ 0.01 $ ( 0.05 ) $ 0.07 $ 0.81

Weighted average diluted shares outstanding 130,099 126,583 129,654 126,365

(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.

(1) (Income) loss attributable to noncontrolling interests includes zero for the three months ended June 30, 2022 and 2021, respectively, and zero and $( 333 ) income for the six months ended June 30, 2022 and 2021, respectively, related to discontinued operations.

See Notes to Consolidated Financial Statements

4 unchanged sentences

Three Months Ended

Net income $ 7,719 $ 109,047

June 30, Six Months Ended

2022 2021 2022 2021

Net income (loss) $ 1,725 $ ( 6,780 ) $ 9,444 $ 102,267

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

( 3,414 ) 2,157 ( 3,222 ) ( 622 )

Comprehensive income 7,911 106,268

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

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

Comprehensive income (loss) ( 1,689 ) ( 4,623 ) 6,222 101,645

Comprehensive (income) loss attributable to noncontrolling interests 20 27 21 ( 306 )

Comprehensive income (loss) attributable to TETRA stockholders $ ( 1,669 ) $ ( 4,596 ) $ 6,243 $ 101,339

See Notes to Consolidated Financial Statements

7 unchanged sentences

$ 36,332 $ 31,551

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

Trade accounts receivable, net of allowances of $ 541 in 2022 and

$ 289 in 2021

104,062 91,202

59 unchanged sentences

Common stock, par value 0.01 per share;

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

250,000,000 shares authorized at June 30, 2022 and December 31, 2021;

131,394,102 shares issued at June 30, 2022 and 130,075,838 shares issued at December 31, 2021

Additional paid-in capital

1 unchanged sentence

Treasury stock, at cost;

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

3,138,675 shares held at June 30, 2022, and at December 31, 2021

( 19,957 ) ( 19,957 )

20 unchanged sentences

Net income for first quarter 2022 — — — — 7,720 ( 1 ) 7,719

Translation adjustment, net of taxes of $ 0

Translation adjustment,

net of taxes of $ 0

— — — 192 — — 192

3 unchanged sentences

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

Net income for second quarter 2022 — — — — 1,745 ( 20 ) 1,725

Translation adjustment,

net of taxes of $ 0

— — — ( 3,414 ) — — ( 3,414 )

Comprehensive loss ( 1,689 )

Equity compensation expense — 1,159 — — — — 1,159

Other 6 ( 833 ) — — — ( 9 ) ( 836 )

Balance at June 30, 2022 $ 1,314 $ 476,381 $ ( 19,957 ) $ ( 50,154 ) $ ( 300,867 ) $ ( 1,181 ) $ 105,536

Par Value Additional Paid-In

15 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 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

See Notes to Consolidated Financial Statements

3 unchanged sentences

(In Thousands, Unaudited)

Three Months Ended

Six Months Ended

Operating activities:

3 unchanged sentences

Gain on GP Sale — ( 120,574 )

Impairment and other charges 2,262 449

Gain on investments ( 390 ) ( 5,613 )

3 unchanged sentences

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

Warrants fair value adjustment — 3,021

Gain on sale of assets ( 719 ) ( 275 )

17 unchanged sentences

Principal payments on long-term debt ( 3,267 ) ( 29,320 )

Repurchase of common stock — ( 449 )

Payments on financing lease obligations ( 1,174 ) —

Debt issuance costs and other financing activities — ( 455 )

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

Net cash used in financing activities ( 2,774 ) ( 29,775 )

Effect of exchange rate changes on cash ( 329 ) ( 896 )

15 unchanged sentences

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

We were incorporated in Delaware in 1981 and 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.

and its consolidated subsidiaries on a consolidated basis.

and its subsidiaries on a consolidated basis.

Our unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries.

1 unchanged sentence

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

Operating results for the period ended June 30, 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.

5 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, 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, 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.

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 Annual Report .

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

Use of Estimates

10 unchanged sentences

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 $( 0.8 ) million and $( 0.6 ) million during the three months ended March 31, 2022 and 2021 respectively.

Foreign currency exchange (gains) and losses are included in other (income) expense, net and totaled $( 0.8 ) million and $( 1.6 ) million during the three and six months ended June 30, 2022, respectively, and $( 0.2 ) million and $( 1.0 ) million during the three and six months ended June 30, 2021, respectively.

Fair Value Measurements

5 unchanged sentences

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

Three Months Ended

Six Months Ended

(in thousands)

23 unchanged sentences

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 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.

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 LP, (“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.

As a result of these transactions, we no longer consolidate CSI Compressco as of January 29, 2021.

2 unchanged sentences

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

During the three months ended June 30, 2022, we sold equipment to CSI Compressco for approximately $ 0.3 million.

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 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.

Our consolidated statements of cash flows for the six-month period ended June 30, 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:

2 unchanged sentences

Three Months Ended

March 31, 2022

Offshore Services

June 30, 2022

Offshore Services Maritech Total

Major classes of line items constituting loss from discontinued operations

Cost of revenues $ 54 $ — $ 54

General and administrative expense 8 — $ 8

Pretax loss from discontinued operations ( 15 )

Other expense, net — ( 28 ) ( 28 )

Pretax income (loss) from discontinued operations ( 62 ) 28 ( 34 )

Loss from discontinued operations attributable to TETRA stockholders $ ( 34 )

Three Months Ended

March 31, 2021

June 30, 2021

Compression Offshore Services Total

Major classes of line items constituting loss from discontinued operations

General and administrative expense — 5 5

Other (income) expense, net 121 — 121

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

Loss from discontinued operations attributable to TETRA stockholders $ ( 126 )

Six Months Ended

June 30, 2022

Offshore Services Maritech Total

Major classes of line items constituting income from discontinued operations

Cost of revenues 55 — 55

General and administrative expense 22 — 22

Other expense, net — ( 28 ) ( 28 )

Pretax income (loss) from discontinued operations ( 77 ) 28 ( 49 )

Loss from discontinued operations attributable to TETRA stockholders $ ( 49 )

Six Months Ended

June 30, 2021

Compression Offshore Services Total

Major classes of line items constituting loss from discontinued operations

Revenue $ 18,968 $ — $ 18,968

2 unchanged sentences

Interest expense, net 4,336 — 4,336

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

Other expense, net 15 — 15

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

7 unchanged sentences

(in thousands)

March 31, 2022

June 30, 2022

Offshore Services Maritech Total

10 unchanged sentences

NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

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.

Our contract asset balances, primarily associated with contractual invoicing milestones and/or customer documentation requirements, were $ 32.2 million and $ 20.5 million as of June 30, 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.

1 unchanged sentence

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.

(“Standard Lithium”) has the right to explore, and an option to acquire the rights to produce and extract lithium in our Arkansas leases as well as other 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 balances were $ 7.9 million and $ 3.2 million as of June 30, 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.

We recognized approximately $ 0.8 million and $ 0.5 million of income during the six-month periods ended June 30, 2022 and June 30, 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.

In addition, we disaggregate revenue from contracts with customers by geography based on the following table below.

Other revenue recognized during the three-month and six-month periods ended June 30, 2022 and the three-month period ended June 30, 2021 deferred as of the beginning of the period was not significant.

During the six-month period ended June 30, 2021, we recognized approximately $ 1.4 million of revenue deferred as of the preceding year end.

During the three-month and six-month periods ended June 30, 2022 and June 30, 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 10 - “Industry Segments.” In addition, we disaggregate revenue from contracts with customers by geography based on the following table below.

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in thousands)

12 unchanged sentences

NOTE 4 – INVENTORIES

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

March 31, 2022 December 31, 2021

Components of inventories as of June 30, 2022 and December 31, 2021 are as follows:

June 30, 2022 December 31, 2021

(in thousands)

6 unchanged sentences

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 3.7 % of the outstanding CSI Compressco common units as of June 30, 2022.

In addition, we are party to agreements in which Standard Lithium has the right to explore, and an option to acquire the rights to 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.

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

Although the MOU expired in May 2022 at the end of its twelve-month term, we have an intellectual property joint development agreement in place with CarbonFree to evaluate potential new technologies.

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

Our exposure to potential losses by CarbonFree is limited to our investment in the convertible note and associated accrued interest.

Our investments as of June 30, 2022 and December 31, 2021, consist of the following:

June 30, 2022 December 31, 2021

(in thousands)

Investment in CSI Compressco

$ 6,862 $ 6,233

Investment in CarbonFree 5,609 5,000

Investment in Standard Lithium $ 1,696 $ —

Total Investments $ 14,167 $ 11,233

NOTE 6 – LONG-TERM DEBT AND OTHER BORROWINGS

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

Consolidated long-term debt as of June 30, 2022 and December 31, 2021, consists of the following:

Scheduled Maturity June 30, 2022 December 31, 2021

(in thousands)

7 unchanged sentences

Total long-term debt $ 153,191 $ 151,936

(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.

(1) Net of unamortized deferred financing costs of zero and $1.5 million as of June 30, 2022 and December 31, 2021, respectively.

Deferred financing costs of $ 1.3 million as of June 30, 2022, were classified as other long-term assets on the accompanying consolidated balance sheet as there was no outstanding balance on our asset-based credit agreement.

(2) Net of unamortized discount of $ 4.0 million and $ 4.5 million as of June 30, 2022 and December 31, 2021, respectively, and net of unamortized deferred financing costs of $ 5.9 million and $ 6.7 million as of June 30, 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.

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

As of June 30, 2022, we had less than US$ 0.1 million outstanding and availability of approximately US$ 4.9 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.

3 unchanged sentences

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.

As of June 30, 2022, there were US$ 1.4 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.

As of June 30, 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.

As of June 30, 2022, we had zero outstanding and $ 6.0 million in letters of credit and guarantees under our ABL Credit Agreement, respectively.

Subject to compliance with the covenants, borrowing base, and other provisions of the ABL Credit Agreement that may limit borrowings, we had availability of $ 61.8 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.

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

As of June 30, 2022 we had $ 153.2 million outstanding, net of unamortized discounts and unamortized deferred financing costs under our term credit agreement (“Term Credit Agreement”).

The 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.

As of June 30, 2022, the interest rate per annum on borrowings under the Term Credit Agreement is 7.92 %.

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.

As of June 30, 2022, we are in compliance with all covenants under the credit agreements.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

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 March 31, 2022.

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

There have been no material developments in our legal proceedings during the quarter ended June 30, 2022.

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

Product Purchase Obligations

In the normal course of our Completion Fluids & Products Division operations, we enter into supply agreements with certain manufacturers of various raw materials and finished products.

Some of these agreements have terms and conditions that specify a minimum or maximum level of purchases over the term of the agreement.

Other agreements require us to purchase the entire output of the raw material or finished product produced by the manufacturer.

Our purchase obligations under these agreements apply only with regard to raw materials and finished products that meet specifications set forth in the agreements.

We recognize a liability for the purchase of such products at the time we receive them.

As of June 30, 2022, the aggregate amount of the fixed and determinable portion of the purchase obligation pursuant to our Completion Fluids & Products Division’s supply agreements was approximately $ 104.6 million, including $ 3.0 million for the remainder of 2022, an average of $ 15.7 million per year from 2023 to 2026 and $ 40.2 million thereafter, extending through 2029.

NOTE 8 – FAIR VALUE MEASUREMENTS

1 unchanged sentence

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.

CCLP) representing approximately 3.7 % of CSI Compressco’s outstanding common units as of June 30, 2022.

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:

Our investment in CarbonFree is recorded in investments on our consolidated balance sheets based on an internal valuation with assistance from a third-party valuation specialist (a Level 3 fair value measurement).

The valuation is impacted by key assumptions, including the assumed probability and timing of potential debt or equity offerings.

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.

Our investments in CSI Compressco and Standard Lithium are 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.

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

Description June 30, 2022 (Level 1) (Level 2) (Level 3)

(in thousands)

2 unchanged sentences

Investment in CarbonFree 5,609 — — 5,609

Investment in Standard Lithium 1,696 1,696 — —

Investments $ 14,167

7 unchanged sentences

Investments $ 11,233

During the second quarter of 2022, our Completion Fluids & Products and Water & Flowback Services Divisions each recorded certain inventory and long-lived tangible asset impairments.

Our Water & Flowback Services Division recorded impairments, including $ 1.3 million of equipment, $ 0.2 million of inventory, and $ 0.5 million for land and buildings.

The Completion Fluids & Products Division also recorded a $ 0.2 million impairment related to obsolete inventory.

The inventory and equipment were written down to zero or scrap value.

The fair value of land and buildings of $ 0.4 million was estimated based on recent sales price per square acre or square foot of comparable properties (a Level 3 fair value measurement) in accordance with the fair value hierarchy.

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.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in thousands)

2 unchanged sentences

Assumed exercise of equity awards and warrants

2,107 — 2,027 —

Average diluted shares outstanding

130,099 126,583 129,654 126,365

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.

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, 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

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in thousands)

20 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(in thousands)

2 unchanged sentences

Interest expense 3,894 4,044 7,541 9,107

Warrants fair value adjustment (income) expense — 2,698 — 3,021

Other general corporate income, net 20 189 ( 1,121 ) ( 3,079 )

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