TETRA TECHNOLOGIES INC 10-Q

Item 1. Financial Statements. TETRA Technologies, Inc. and Subsidiaries Consolidated Statements of Operations (In Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues: Product sales $ 96,622 $ 96,217 $ 169,959 $ 161,752 Services 75,313 79,246 152,948 159,920 Total revenues 171,935 175,463 322,907 321,672 Cost of revenues: Cost of product sales 61,078 55,873 106,484 98,268 Cost of services 58,830 61,201 124,538 122,872 Depreciation, amortization, and accretion 8,774 8,457 17,530 17,127 Impairments and other charges — 777 — 777 Insurance recoveries — — — ( 2,850 ) Total cost of revenues 128,682 126,308 248,552 236,194 Gross profit 43,253 49,155 74,355 85,478 Exploration and pre-development costs — 2,341 — 3,061 General and administrative expense 22,137 26,225 44,435 49,416 Interest expense, net 6,185 5,944 12,137 11,036 Loss on debt extinguishment — — 5,535 — Other (income) expense, net 2,452 ( 6,435 ) ( 1,526 ) ( 6,649 ) Income before taxes and discontinued operations 12,479 21,080 13,774 28,614 Provision for income taxes 4,839 2,875 5,219 4,364 Income before discontinued operations 7,640 18,205 8,555 24,250 Discontinued operations: Loss from discontinued operations, net of taxes — ( 8 ) — ( 20 ) Net income 7,640 18,197 8,555 24,230 Loss attributable to noncontrolling interests 3 18 3 25 Net income attributable to TETRA stockholders $ 7,643 $ 18,215 $ 8,558 $ 24,255 Basic net income per common share: Income from continuing operations $ 0.06 $ 0.14 $ 0.07 $ 0.19 Income from discontinued operations — — — — Net income attributable to TETRA stockholders $ 0.06 $ 0.14 $ 0.07 $ 0.19 Weighted average basic shares outstanding 131,263 129,460 130,858 129,201 Diluted net income per common share: Income from continuing operations $ 0.06 $ 0.14 $ 0.06 $ 0.19 Income from discontinued operations — — — — Net income attributable to TETRA stockholders $ 0.06 $ 0.14 $ 0.06 $ 0.19 Weighted average diluted shares outstanding 132,169 129,925 132,115 129,953 See Notes to Consolidated Financial Statements 1 Table of Contents TETRA Technologies, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (In Thousands) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net income $ 7,640 $ 18,197 $ 8,555 $ 24,230 Foreign currency translation adjustment from continuing operations, net of taxes of $ 0 in 2024 and 2023 ( 1,959 ) 1,045 ( 3,593 ) 2,466 Unrealized gain (loss) on investment in CarbonFree ( 5 ) 207 232 328 Comprehensive income 5,676 19,449 5,194 27,024 Less: Comprehensive loss attributable to noncontrolling interests 3 18 3 25 Comprehensive income attributable to TETRA stockholders $ 5,679 $ 19,467 $ 5,197 $ 27,049 See Notes to Consolidated Financial Statements 2 Table of Contents TETRA Technologies, Inc. and Subsidiaries Consolidated Balance Sheets (In Thousands) June 30, 2024 December 31, 2023 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 37,713 $ 52,485 Restricted cash 5,039 — Trade accounts receivable, net of allowances of $ 369 in 2024 and $ 614 in 2023 140,805 111,798 Inventories 82,780 96,536 Prepaid expenses and other current assets 23,284 21,196 Total current assets 289,621 282,015 Property, plant, and equipment: Land and building 23,572 23,173 Machinery and equipment 314,504 304,884 Automobiles and trucks 10,371 10,148 Chemical plants 66,763 67,114 Construction in progress 21,014 10,323 Total property, plant, and equipment 436,224 415,642 Less accumulated depreciation ( 314,640 ) ( 307,926 ) Net property, plant, and equipment 121,584 107,716 Other assets: Patents, trademarks and other intangible assets, net of accumulated amortization of $ 53,480 in 2024 and $ 51,509 in 2023 27,026 29,132 Operating lease right-of-use assets 30,217 31,915 Investments 20,427 17,354 Other assets 10,850 10,829 Total other assets 88,520 89,230 Total assets $ 499,725 $ 478,961 See Notes to Consolidated Financial Statements 3 Table of Contents TETRA Technologies, Inc. and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Share Amounts) June 30, 2024 December 31, 2023 (Unaudited) LIABILITIES AND EQUITY Current liabilities: Trade accounts payable $ 53,069 $ 52,290 Compensation and employee benefits 17,111 26,918 Operating lease liabilities, current portion 8,595 9,101 Accrued taxes 13,977 10,350 Accrued liabilities and other 27,584 27,303 Total current liabilities 120,336 125,962 Long-term debt, net 179,670 157,505 Operating lease liabilities 25,957 27,538 Asset retirement obligations 14,772 14,199 Deferred income taxes 2,284 2,279 Other liabilities 3,128 4,144 Total long-term liabilities 225,811 205,665 Commitments and contingencies (Note 6) Equity: TETRA stockholders’ equity: Common stock, par value 0.01 per share; 250,000,000 shares authorized at June 30, 2024 and December 31, 2023; 134,587,465 shares issued at June 30, 2024 and 133,217,848 shares issued at December 31, 2023 1,346 1,332 Additional paid-in capital 490,192 489,156 Treasury stock, at cost; 3,138,675 shares held at June 30, 2024 and December 31, 2023 ( 19,957 ) ( 19,957 ) Accumulated other comprehensive loss ( 48,592 ) ( 45,231 ) Retained deficit ( 268,151 ) ( 276,709 ) Total TETRA stockholders’ equity 154,838 148,591 Noncontrolling interests ( 1,260 ) ( 1,257 ) Total equity 153,578 147,334 Total liabilities and equity $ 499,725 $ 478,961 See Notes to Consolidated Financial Statements 4 Table of Contents TETRA Technologies, Inc. and Subsidiaries Consolidated Statements of Equity (In Thousands) (Unaudited) Common Stock Par Value Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Deficit Noncontrolling Interest Total Equity Currency Translation Unrealized Gain (Loss) on Investment Balance at December 31, 2023 $ 1,332 $ 489,156 $ ( 19,957 ) $ ( 45,886 ) $ 655 $ ( 276,709 ) $ ( 1,257 ) $ 147,334 Net income for first quarter 2024 — — — — — 915 — 915 Translation adjustment, net of taxes of $ 0 — — — ( 1,634 ) — — — ( 1,634 ) Other comprehensive income — — — — 237 — — 237 Comprehensive loss ( 482 ) Equity-based compensation — 1,623 — — — — — 1,623 Other 11 ( 2,339 ) — — — — — ( 2,328 ) Balance at March 31, 2024 $ 1,343 $ 488,440 $ ( 19,957 ) $ ( 47,520 ) $ 892 $ ( 275,794 ) $ ( 1,257 ) $ 146,147 Net income (loss) for second quarter 2024 — — — — — 7,643 ( 3 ) 7,640 Translation adjustment, net of taxes of $ 0 — — — ( 1,959 ) — — — ( 1,959 ) Other comprehensive loss — — — — ( 5 ) — — ( 5 ) Comprehensive income 5,676 Equity-based compensation — 1,800 — — — — — 1,800 Other 3 ( 48 ) — — — — — ( 45 ) Balance at June 30, 2024 $ 1,346 $ 490,192 $ ( 19,957 ) $ ( 49,479 ) $ 887 $ ( 268,151 ) $ ( 1,260 ) $ 153,578 Common Stock Par Value Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Income (Loss) Retained Deficit Noncontrolling Interest Total Equity Currency Translation Unrealized Gain (Loss) on Investment Balance at December 31, 2022 $ 1,318 $ 477,820 $ ( 19,957 ) $ ( 48,991 ) $ ( 72 ) $ ( 302,493 ) $ ( 1,228 ) $ 106,397 Net income (loss) for first quarter 2023 — — — — — 6,040 ( 7 ) 6,033 Translation adjustment, net of taxes of $ 0 — — — 1,421 — — — 1,421 Other comprehensive income — — — — 121 — — 121 Comprehensive income 7,575 Equity-based compensation (1) — 3,514 — — — — — 3,514 Other 7 ( 1,341 ) — — — — 1 ( 1,333 ) Balance at March 31, 2023 $ 1,325 $ 479,993 $ ( 19,957 ) $ ( 47,570 ) $ 49 $ ( 296,453 ) $ ( 1,234 ) $ 116,153 Net income (loss) for second quarter 2023 — — — — — 18,215 ( 18 ) 18,197 Translation adjustment, net of taxes of $ 0 — — — 1,045 — — — 1,045 Other comprehensive income — — — — 207 — — 207 Comprehensive income 19,449 Equity compensation expense — 1,507 — — — — — 1,507 Other 2 ( 52 ) — — — — ( 2 ) ( 52 ) Balance at June 30, 2023 $ 1,327 $ 481,448 $ ( 19,957 ) $ ( 46,525 ) $ 256 $ ( 278,238 ) $ ( 1,254 ) $ 137,057 (1) Equity-based compensation for the three months ended March 31, 2023 includes $ 2.3 million for a portion of short-term incentive compensation that was settled through grants of restricted stock units rather than cash. See Notes to Consolidated Financial Statements 5 Table of Contents TETRA Technologies, Inc. and Subsidiaries Consolidated Statements of Cash Flows (In Thousands, Unaudited) Six Months Ended June 30, 2024 2023 Operating activities: Net income $ 8,555 $ 24,230 Reconciliation of net income to net cash provided by operating activities: Depreciation, amortization, and accretion 17,530 17,127 Impairment and other charges — 777 Gain on investments ( 2,841 ) ( 403 ) Equity-based compensation expense 3,423 2,768 (Recovery of) provision for credit losses ( 167 ) 720 Amortization and expense of financing costs 884 1,781 Loss on debt extinguishment 5,535 — Insurance recoveries associated with damaged equipment — ( 2,850 ) Gain on sale of assets ( 67 ) ( 281 ) Other non-cash credits ( 686 ) ( 737 ) Changes in operating assets and liabilities: Accounts receivable ( 23,625 ) ( 514 ) Inventories 11,995 ( 8,549 ) Prepaid expenses and other current assets ( 3,160 ) 2,242 Trade accounts payable and accrued expenses ( 6,490 ) 443 Other 129 603 Net cash provided by operating activities 11,015 37,357 Investing activities: Purchases of property, plant, and equipment, net ( 31,219 ) ( 23,274 ) Proceeds from sale of property, plant, and equipment 372 497 Proceeds from insurance recoveries associated with damaged equipment — 2,850 Purchase of investments — ( 250 ) Other investing activities ( 194 ) ( 1,827 ) Net cash used in investing activities ( 31,041 ) ( 22,004 ) Financing activities: Proceeds from credit agreements and long-term debt 184,613 97,169 Principal payments on credit agreements and long-term debt ( 163,372 ) ( 98,237 ) Payments on financing lease obligations ( 640 ) ( 689 ) Debt issuance costs ( 5,956 ) — Shares withheld for taxes on equity-based compensation ( 2,387 ) — Other financing activities ( 1,280 ) — Net cash provided by (used in) financing activities 10,978 ( 1,757 ) Effect of exchange rate changes on cash ( 685 ) 487 Increase (decrease) in cash and cash equivalents ( 9,733 ) 14,083 Cash and cash equivalents at beginning of period 52,485 13,592 Cash, cash equivalents, and restricted cash at end of period $ 42,752 $ 27,675 Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets Cash and cash equivalents at end of period $ 37,713 $ 27,675 Restricted cash at end of period 5,039 — Total cash, cash equivalents, and restricted cash at end of period shown in the consolidated statements of cash flows $ 42,752 $ 27,675 See Notes to Consolidated Financial Statements 6 Table of Contents TETRA Technologies, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES Organization We are an energy services and solutions company with operations on six continents focused on developing environmentally conscious services and solutions that help make people's lives better. In addition to providing products and services to the oil and gas industry and calcium chloride for diverse applications, TETRA is expanding into the low-carbon energy market with chemistry expertise, key mineral acreage, and global infrastructure, helping to meet the demand for sustainable energy in the twenty-first century. We were incorporated in Delaware in 1981. Our products and services are delivered through two reporting segments – Completion Fluids & Products Division and Water & Flowback Services Division. Our Completion Fluids & Products Division manufactures and markets clear brine fluids (“CBFs”), additives, and associated products and services to the oil and gas industry for use in well drilling, completion, and workover operations in the United States and in certain countries in Latin America, Europe, Asia, the Middle East, and Africa. The Division also markets liquid and dry calcium chloride products manufactured at its production facilities or purchased from third-party suppliers to a variety of markets outside the energy industry. Calcium chloride is used in the oil and gas industry, and also has broad industrial applications to the agricultural, road, food and beverage, and lithium production markets. Our Completion Fluids & Products Division also markets TETRA PureFlow, an ultra-pure zinc bromide, as well as TETRA PureFlow Plus, an ultra-pure zinc bromide/zinc chloride blend, to battery technology companies. Our Water & Flowback Services Division provides onshore oil and gas operators with comprehensive water management services. The Division also provides frac flowback, production well testing, and other associated services in many of the major oil and gas producing regions in the United States, as well as in oil and gas basins in certain countries in Latin America, Europe, and the Middle East. Unless the context requires otherwise, when we refer to “we,” “us,” and “our,” we are describing TETRA Technologies, Inc. and its subsidiaries on a consolidated basis. Presentation Our unaudited consolidated financial statements include the accounts of our wholly owned or controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 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, 2024 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2024. 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. Securities and Exchange Commission (“SEC”) and do not include all information and footnotes required by U.S. generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2023 and notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2024 (the “ 2023 Annual Report ”). 7 Table of Contents Significant Accounting Policies Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, 2023 included in our 2023 Annual Report . Other than reporting restricted cash as described below, there have been no significant changes in our accounting policies or the application thereof during the second quarter of 2024. Out-of-Period Correction During the three months ended June 30, 2024, we discovered an error in which a prepaid tax balance denominated in a foreign currency was not remeasured at current rates, resulting in an overstatement of prepaid expenses and understatement of foreign exchange losses from 2018 through the current period. We have corrected this error by making an out-of-period adjustment during the three months ended June 30, 2024, which reduced prepaid expenses and other current assets and retained deficit as of June 30, 2024 in the consolidated balance sheets, increased other (income) expense, net by $ 1.4 million and reduced net income per share attributable to TETRA stockholders by $ 0.01 in the consolidated statement of operations for the three and six months ended June 30, 2024. The Company assessed the impact of this out-of-period adjustment and concluded that it was not material to the financial statements previously issued for any interim or annual period, and the cumulative adjustment during the quarter ended June 30, 2024 is not expected to be material to the annual financial statements for 2024. The out-of-period adjustment is included in the Water & Flowback Services Division results. Restricted Cash Restricted cash is classified as a current asset when it is expected to be repaid or settled in the next twelve-month period. In connection with the May 2024 amendment to our ABL Credit Agreement, our former administrative agent required us to collateralize our credit card facility and outstanding letters of credit. See Note 5 - “Long-Term Debt and Other Borrowings” for additional discussion of the ABL Amendment. Restricted cash as of June 30, 2024 consists of $ 4.4 million to secure our credit card facility and $ 0.6 million to secure our outstanding letters of credit with our former administrative agent. The restriction for the credit card facility is expected to terminate during the third quarter of 2024 and the restriction for the outstanding letters of credit are expected to terminate as the letters of credit expire between September 2024 and March 2025. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, and impairments during the reporting period. Actual results could differ from those estimates, and such differences could be material. Mineral Resources Arrangement We have rights to the brine underlying our approximately 40,000 gross acres of brine leases in the Smackover Formation in Southwest Arkansas, including rights to the bromine and lithium contained in the brine. In June 2023, we entered into a memorandum of understanding (“MOU”) with Saltwerx LLC (“Saltwerx”), an indirect wholly owned subsidiary of ExxonMobil Corporation, relating to a newly formed Brine Unit and potential bromine and lithium production from brine produced from the unit. We completed an initial preliminary economic assessment in early 2023 for a bromine extraction plant. On January 8, 2024, we announced the completion of a technical resources report for our Brine Unit in Arkansas. During the three and six months ended June 30, 2024, we capitalized approximately $ 9.8 million and $ 13.2 million, respectively, of costs associated with the development of our properties in Arkansas. We recognized $ 2.3 million and $ 3.1 million of expenses during the three and six months ended June 30, 2023, respectively, for exploration and pre-development costs representing expenditures incurred to evaluate potential future development of our lithium and bromine properties in Arkansas. 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. The United States dollar is the designated functional currency 8 Table of Contents for all of our other non-U.S. operations. 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 losses are included in other (income) expense, net and totaled $ 2.5 million and $ 2.4 million during the three and six months ended June 30, 2024, respectively, including the $ 1.4 million out-of-period correction described above, and less than $ 0.1 million and $ 0.2 million during the three and six months ended June 30, 2023, 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 investments. See Note 7 - “Fair Value Measurements” for further discussion. Fair value measurements are also utilized on a nonrecurring basis in certain circumstances, including the impairment of long-lived assets (a Level 3 fair value measurement). Supplemental Cash Flow Information Supplemental cash flow information is as follows: Six Months Ended June 30, 2024 2023 (in thousands) Interest paid $ 10,830 $ 9,412 Income taxes paid $ 2,991 $ 2,012 June 30, 2024 December 31, 2023 (in thousands) Accrued capital expenditures $ 8,073 $ 5,171 New Accounting Pronouncements Standards not yet adopted In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which is intended to improve reportable segments disclosures in annual and interim financial statements, primarily through expanded disclosures of significant segment expenses. ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim reporting periods beginning after December 15, 2024, with early adoption permitted. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The new standard requires companies to disclose specific categories in the income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the expected impact of these standards but does not expect them to have a significant impact on its consolidated financial statements upon adoption as the standards expand disclosures only. NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS Our contract asset balances, primarily associated with contractual invoicing milestones and/or customer documentation requirements, were $ 30.8 million and $ 30.6 million as of June 30, 2024 and December 31, 2023, 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 $ 3.6 million and $ 3.1 million as of June 30, 2024 and December 31, 2023, respectively, and vary based on the timing of invoicing and performance 9 Table of Contents obligations being met. Unearned income is included in accrued liabilities and other in our consolidated balance sheets. We recognized approximately $ 2.0 million and $ 1.0 million during the three and six months ended June 30, 2024, respectively, and $ 1.4 million and $ 0.9 million of revenue during the three and six months ended June 30, 2023, respectively, deferred in unearned income as of the beginning of the period. During the six months ended June 30, 2024 and June 30, 2023, 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 - “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 June 30, 2024 2023 2024 2023 (in thousands) Completion Fluids & Products United States $ 41,560 $ 45,859 $ 82,996 $ 78,682 International 58,459 52,363 94,305 88,582 100,019 98,222 177,301 167,264 Water & Flowback Services United States 60,765 68,231 125,476 136,569 International 11,151 9,010 20,130 17,839 71,916 77,241 145,606 154,408 Total Revenue United States 102,325 114,090 208,472 215,251 International 69,610 61,373 114,435 106,421 $ 171,935 $ 175,463 $ 322,907 $ 321,672 NOTE 3 – INVENTORIES Components of inventories as of June 30, 2024 and December 31, 2023 are as follows: June 30, 2024 December 31, 2023 (in thousands) Finished goods $ 67,497 $ 79,769 Raw materials 5,794 8,329 Parts and supplies 7,632 6,868 Work in progress 1,857 1,570 Total inventories $ 82,780 $ 96,536 Finished goods inventories include newly manufactured clear brine fluids as well as used brines that are repurchased from certain customers for recycling . NOTE 4 – INVESTMENTS Our investments as of June 30, 2024 and December 31, 2023 consist of the following: June 30, 2024 December 31, 2023 (in thousands) Investment in Kodiak (1) $ 12,279 $ 8,538 Investment in CarbonFree 6,798 6,850 Investment in Standard Lithium 1,000 1,616 Other investments 350 350 Total Investments $ 20,427 $ 17,354 (1) Kodiak Gas Services, Inc. (NYSE: KGS) (“Kodiak”) acquired CSI Compressco LP (“CSI Compressco”) on April 1, 2024. 10 Table of Contents CarbonFree Chemicals Holdings LLC (“CarbonFree”) is a carbon capture company with patented technologies that capture CO 2 and mineralize emissions to make commercial, carbon-negative chemicals. In December 2021, we invested $ 5.0 million in a convertible note issued by CarbonFree. During the three month period ended March 31, 2024, the convertible note agreement was amended and, in connection with that amendment, note holders agreed to defer their right to electively convert the convertible notes to common units of CarbonFree (“CarbonFree Units”) for two years . In exchange for the amendment, we received CarbonFree Units representing less than 1 % of the CarbonFree Units outstanding as of June 30, 2024. The CarbonFree Units are not publicly traded and may not be offered, sold, transferred or pledged until such common units are registered pursuant to an effective registration statement or pursuant to an exemption from registration. Our exposure to potential losses by CarbonFree is limited to our investment, including capitalized and accrued interest associated with the CarbonFree convertible note and CarbonFree Units. We are party to agreements whereby Standard Lithium Ltd. (NYSE: SLI) (“Standard Lithium”) has the rights to produce and extract lithium in a portion of our Arkansas leases. The Company received stock of Standard Lithium under the terms of its arrangements. See Note 7 - “Fair Value Measurements” for further information. NOTE 5 – LONG-TERM DEBT AND OTHER BORROWINGS Consolidated long-term debt as of June 30, 2024 and December 31, 2023 consists of the following: Scheduled Maturity June 30, 2024 December 31, 2023 (in thousands) Term Credit Agreement (1) January 1, 2030 $ 179,670 $ 157,505 Total long-term debt $ 179,670 $ 157,505 (1) Net of unamortized discount of $ 5.4 million and $ 2.2 million as of June 30, 2024 and December 31, 2023, respectively, and net of unamortized deferred financing costs of $ 5.0 million and $ 3.3 million as of June 30, 2024 and December 31, 2023, respectively. Term Credit Agreement On January 12, 2024, the Company entered into a definitive agreement for a $ 265.0 million credit facility, consisting of a $ 190.0 million funded term loan and a $ 75.0 million delayed-draw term loan (collectively the “Term Credit Agreement”) that refinanced the Company’s prior credit facility outstanding as of December 31, 2023 and provided capital to advance the Company’s Arkansas bromine processing project. Pricing on the Term Credit Agreement is the secured overnight financing rate plus 5.75 %. The Company is required to pay a commitment fee on the unutilized commitments with respect to the delayed-draw term loan at the rate of 1.5 % per annum. The interest rate per annum on borrowings under the Term Credit Agreement is 11.17 % as of June 30, 2024 and the maturity date of the Term Credit Agreement is January 1, 2030. The Company used the net proceeds to repay in full the balance of its prior credit facility, with approximately $ 15.2 million of additional cash, net of discounts and transaction expenses. In connection with the Term Credit Agreement, we incurred approximately $ 5.3 million of fees which were deferred and will be amortized over the term of the Term Credit Agreement. As a result of termination of the prior credit facility, a loss of $ 5.5 million was recognized during the three-month period ended March 31, 2024 primarily for unamortized deferred financing costs. The Term Credit Agreement contains certain affirmative and negative covenants, including covenants that restrict the ability of the Company and certain of its subsidiaries to take certain actions including, among other things and subject to certain significant exceptions, the incurrence of debt, the granting of liens, engaging in mergers and other fundamental changes, the making of investments, entering into transactions with affiliates, the payment of dividends and other restricted payments, the prepayment of other indebtedness and the sale of assets. The Term Credit Agreement also requires the Company to maintain a Leverage Ratio (as defined in the new term loan credit agreement) of not more than 4.0 to 1.0 as of the end of each fiscal quarter and Liquidity (as defined in the Term Credit Agreement) of not less than $ 50.0 million at all times. All obligations under the Term Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest on substantially all of the property of the Company and its 11 Table of Contents domestic subsidiaries, subject to the lien priorities set forth in the intercreditor agreement with the agent under our ABL 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 beginning with the financial statements for the year ending December 31, 2024. The Term Credit Agreement includes customary events of default including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross-default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments and change of control. ABL Credit Agreement On May 13, 2024, we entered into an amendment (the “ABL Amendment”) to the Asset-Based Lending agreement dated as of September 10, 2018 (as amended, the “ABL Credit Agreement”). In connection with the ABL Amendment, Bank of America, N.A. became successor administrative agent to JPMorgan Chase Bank, N.A. Furthermore, approximately $ 0.6 million of fees were incurred in connection with the ABL Amendment, which were deferred and will be amortized over the term of the ABL Credit Agreement. As of June 30, 2024, our ABL Credit Agreement provides, with certain restrictions, for a senior secured revolving credit facility of up to $ 100.0 million with a $ 25.0 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, and a swingline loan sublimit of $ 11.5 million. The ABL Credit Agreement matures on May 13, 2029. As of June 30, 2024, we had no borrowings outstanding and no letters of credit or guarantees under our ABL Credit Agreement. Deferred financing costs of $ 0.8 million and $ 0.6 million as of June 30, 2024 and December 31, 2023, respectively, were classified as other long-term assets on the accompanying consolidated balance sheet as there was no outstanding balance on 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 $ 62.6 million under this agreement. Borrowings under the ABL Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) the standard overnight financing rate plus 0.10 %, (ii) a base rate plus a margin based on a fixed charge coverage ratio, or (iii) the Daily Simple Risk Free Rate plus 0.10 %. The base rate is determined by reference to the highest of (a) the prime rate of interest as announced from time to time by Bank of America, N.A. (b) the Federal Funds Effective Rate (as defined in the ABL Credit Agreement) plus 0.5 % per annum and (c) the standard overnight financing rate (adjusted to reflect any required bank reserves) for a one-month period on such day plus 1.0 % per annum, provided that the base rate shall not be less than 1.0 %. Borrowings outstanding have an applicable margin ranging from 2.00 % to 2.50 % per annum for SOFR-based loans and 1.00 % to 1.50 % per annum for base-rate loans, based upon the applicable fixed charge coverage ratio. In addition to paying interest on the outstanding principal under the ABL Credit Agreement, TETRA is required to pay a commitment fee in respect of the unutilized commitments at an applicable rate of 0.375 % per annum. TETRA is also required to pay a customary letter of credit fee equal to the applicable margin on loans and fronting fees. All obligations under the ABL Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest for the benefit of the ABL Lenders on substantially all of the personal property of TETRA and certain subsidiaries of TETRA, the equity interests in certain domestic subsidiaries, and a maximum of 65 % of the equity interests in certain foreign subsidiaries. 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, 2024, we had no balance outstanding and availability of approximately $ 4.7 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, 2024 and the Company intends to renew it annually. 12 Table of Contents Finland Credit Agreement In January 2022, the Company also entered into an agreement guaranteed by certain accounts receivable and inventory in Finland (“Finland Credit Agreement”). As of June 30, 2024, there were $ 1.5 million of letters of credit outstanding against the Finland Credit Agreement. The Finland Credit Agreement expires on January 31, 2025 and the Company intends to renew it annually. Covenants 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, 2024, we are in compliance with all covenants under the credit agreements. NOTE 6 – COMMITMENTS AND CONTINGENCIES Litigation We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. On April 25, 2024, a purported stockholder of the Company filed a putative class action complaint in the Delaware Court of Chancery naming as defendants all current members of the Board, the Company and the Rights Agent. The litigation is captioned Webb, et al. v. Murphy, et al., C.A. No. 2024-0445 (Del. Ch.). The plaintiff alleged that the Board breached their fiduciary duties by adopting and maintaining the Company’s Tax Benefits Preservation Plan (the “Tax Plan”). The plaintiff seeks, among other relief, to enjoin the Tax Plan. On May 14, 2024, the plaintiff filed an Amended Motion for Dismissal without prejudice and the Court entered an Order Granting Plaintiff’s Amended Motion for Dismissal without prejudice on May 14, 2024. For additional discussion of our legal proceedings, please see our 2023 Annual Report . 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. 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, 2024, 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 $ 57.7 million, including $ 10.7 million for the remainder of 2024, $ 21.9 million in 2025, $ 15.6 million in 2026, $ 7.2 million in 2027, and $ 2.3 million in 2028. As of June 30, 2024, we also have commitments of $ 5.6 million related to long-lead infrastructure for our Completion Fluids & Products Division’s planned bromine plant in Arkansas. Contingencies Related to Discontinued Operations In early 2018, we closed the Maritech Asset Purchase and Sale Agreement (“Maritech APA") and Maritech Membership Interest Purchase Agreement (“Maritech MIPA”) with Orinoco Natural Resources, LLC (“Orinoco”) that together provided for the purchase by Orinoco of all of Maritech’s membership interests and remaining oil and gas properties and related assets. Under the Maritech APA, Orinoco assumed responsibility for all of Maritech’s decommissioning liabilities related to the leases sold to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech MIPA, Orinoco assumed all other liabilities of Maritech, including the decommissioning liabilities associated with Maritech’s interests in oil and gas properties previously sold by Maritech and select infrastructure still operated by Maritech (the “Legacy Liabilities”), subject to certain limited exceptions unrelated to the decommissioning liabilities. To the extent that Maritech or Orinoco fails to satisfy decommissioning liabilities associated with any of the 13 Table of Contents Orinoco Lease Liabilities or the Legacy Liabilities, we may be required to satisfy such liabilities under third party indemnity agreements and corporate guarantees that we previously provided to the U.S. Department of the Interior (“BSEE”) and other parties, respectively, for which costs may be significant. Pursuant to a Bonding Agreement entered into as part of these Orinoco transactions (the “Bonding Agreement”), Orinoco provided non-revocable performance bonds from a surety company in an aggregate amount of $ 46.8 million to cover the performance by Orinoco and Maritech of certain specific asset retirement obligations of Maritech (the “Initial Bonds”) and agreed to replace the Initial Bonds with other non-revocable performance bonds in the aggregate sum of $ 47.0 million (collectively, the “Replacement Bonds”). In the event Orinoco does not provide the Replacement Bonds, Orinoco is required to make certain cash escrow payments to us. To date, no cash escrow payments have been made. In addition, Maritech has received decommissioning orders from BSEE and could receive additional decommissioning orders in the future. From time to time, we receive demand notices from third parties related to certain corporate guarantees related to such decommissioning liabilities. While the ultimate outcome of such matters cannot be predicted at this time, if Maritech or other interest owners default on their decommissioning obligations, BSEE or third parties may seek to enforce certain corporate guarantees or third party indemnity agreements, as applicable, in which event we could become liable, in certain scenarios, for a portion of such decommissioning obligations. We have recently been advised that decommissioning work to plug and abandon certain wells is expected to commence later in 2024 and that the cost to abandon those wells is now projected to be significantly higher than a bond supporting the liability, which was put in place based on earlier cost estimates. While the ultimate outcome of this matter cannot be predicted, if Maritech were to default on this decommissioning obligation, we could potentially become liable for an estimated amount in the range of $ 15 million to $ 18 million, depending on whether other partners or property owners in the chain of title fulfill their obligations. NOTE 7 – FAIR VALUE MEASUREMENTS Financial Instruments Investments We retained an interest in CSI Compressco, which was acquired by Kodiak on April 1, 2024; we received shares of Kodiak in exchange for our common units in CSI Compressco in connection with such acquisition. In December 2021, we invested in a $ 5.0 million convertible note issued by CarbonFree. In addition, we receive stock of Standard Lithium under the terms of our arrangements as noted in Note 4 - “Investments.” Our investments in Kodiak, Standard Lithium, and, formerly, CSI Compressco are recorded in investments on our consolidated balance sheets based on the quoted market stock price (Level 1 fair value measurements). The stock component of consideration received from Standard Lithium was 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. Changes in the value of stock are recorded in other (income) expense, net in our consolidated statements of operations. Our investment in convertible notes and common units issued by CarbonFree is recorded in our consolidated financial statements based on an internal valuation with assistance from a third-party valuation specialist (Level 3 fair value measurement). The valuation is impacted by key assumptions, including the assumed probability and timing of potential debt or equity offerings. The convertible note includes an option to convert the note into equity interests issued by CarbonFree. The change in the fair value of the embedded option is included in other (income) expense, net in our consolidated statements of operations. The change in the fair value of the convertible note, excluding the embedded option, and common units are included in other comprehensive income (loss) in our consolidated statements of comprehensive income. 14 Table of Contents The change in our investments for the three-month and six-month periods ended June 30, 2024 and 2023 are as follows: Three Months Ended June 30, 2024 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Unobservable Inputs (Level 1) (Level 3) Total (in thousands) Investment balance at beginning of period $ 13,148 $ 7,238 $ 20,386 Unrealized gain on equity securities 131 — 131 Unrealized loss on embedded option — ( 85 ) ( 85 ) Unrealized loss on convertible note, excluding embedded option — ( 5 ) ( 5 ) Investment balance at end of period $ 13,279 $ 7,148 $ 20,427 Three Months Ended June 30, 2023 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Unobservable Inputs (Level 1) (Level 3) Total (in thousands) Investment balance at beginning of period $ 7,963 $ 5,939 $ 13,902 Purchase of investments — 250 250 Unrealized gain on equity securities 2,236 — 2,236 Unrealized gain on embedded option — 123 123 Unrealized gain on convertible note, excluding embedded option — 207 207 Investment balance at end of period $ 10,199 $ 6,519 $ 16,718 15 Table of Contents Six Months Ended June 30, 2024 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Unobservable Inputs (Level 1) (Level 3) Total (in thousands) Investment balance at beginning of period $ 10,154 $ 7,200 $ 17,354 Unrealized gain on equity securities 3,125 — 3,125 Unrealized loss on embedded option — ( 284 ) ( 284 ) Unrealized gain on convertible note, excluding embedded option — 232 232 Investment balance at end of period $ 13,279 $ 7,148 $ 20,427 Six Months Ended June 30, 2023 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Unobservable Inputs (Level 1) (Level 3) Total (in thousands) Investment balance at beginning of period $ 8,147 $ 6,139 $ 14,286 Purchase of investments — 250 250 Unrealized gain on equity securities 2,052 — 2,052 Unrealized loss on embedded option — ( 198 ) ( 198 ) Unrealized gain on convertible note, excluding embedded option — 328 328 Investment balance at end of period $ 10,199 $ 6,519 $ 16,718 Recurring fair value measurements by valuation hierarchy as of June 30, 2024 and December 31, 2023 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, 2024 (Level 1) (Level 2) (Level 3) (in thousands) Investment in Kodiak $ 12,279 $ 12,279 $ — $ — Investment in CarbonFree 6,798 — — 6,798 Investment in Standard Lithium 1,000 1,000 — — Other investments 350 — — 350 Total investments $ 20,427 16 Table of Contents 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 December 31, 2023 (Level 1) (Level 2) (Level 3) (in thousands) Investment in CSI Compressco $ 8,538 $ 8,538 $ — $ — Investment in CarbonFree 6,850 — — 6,850 Investment in Standard Lithium 1,616 1,616 — — Other investments 350 — — 350 Investments $ 17,354 Other The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt approximate their carrying amounts. See Note 5 - “Long-Term Debt and Other Borrowings” for further discussion. NOTE 8 – NET INCOME PER SHARE 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 per common and common equivalent share: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 (in thousands) Number of weighted average common shares outstanding 131,263 129,460 130,858 129,201 Assumed vesting of equity awards 906 465 1,257 752 Average diluted shares outstanding 132,169 129,925 132,115 129,953 17 Table of Contents NOTE 9 – INDUSTRY SEGMENTS 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 June 30, 2024 2023 2024 2023 (in thousands) Revenues from external customers Product sales Completion Fluids & Products Division $ 95,019 $ 94,368 $ 167,772 $ 159,883 Water & Flowback Services Division 1,603 1,849 2,187 1,869 Consolidated $ 96,622 $ 96,217 $ 169,959 $ 161,752 Services Completion Fluids & Products Division $ 5,000 $ 3,854 $ 9,529 $ 7,381 Water & Flowback Services Division 70,313 75,392 143,419 152,539 Consolidated $ 75,313 $ 79,246 $ 152,948 $ 159,920 Total revenues Completion Fluids & Products Division $ 100,019 $ 98,222 $ 177,301 $ 167,264 Water & Flowback Services Division 71,916 77,241 145,606 154,408 Consolidated $ 171,935 $ 175,463 $ 322,907 $ 321,672 Income (loss) before taxes and discontinued operations Completion Fluids & Products Division $ 26,653 $ 31,956 $ 46,445 $ 50,398 Water & Flowback Services Division 3,156 8,014 3,877 14,394 Corporate Overhead (1) ( 17,330 ) ( 18,890 ) ( 36,548 ) ( 36,178 ) Consolidated $ 12,479 $ 21,080 $ 13,774 $ 28,614 (1) Amounts reflected include the following general corporate expenses: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 (in thousands) General and administrative expense $ 10,689 $ 12,594 $ 21,790 $ 23,654 Depreciation and amortization 84 92 165 202 Impairments and other charges — 777 — 777 Interest expense 6,252 5,813 12,397 11,273 Loss on debt extinguishment — — 5,535 — Other general corporate (income) expense, net 305 ( 386 ) ( 3,339 ) 272 Total $ 17,330 $ 18,890 $ 36,548 $ 36,178 18 Table of Contents