TETRA TECHNOLOGIES INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and accompanying notes included in this Quarterly Report. In addition, the following discussion and analysis should also be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”) on February 25, 2025 (“2024 Annual Report”). This discussion includes forward-looking statements that involve certain risks and uncertainties. Business Overview 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 are also developing and pilot testing technologies to treat and desalinate produced water from oil wells for beneficial reuse, including surface discharge. We are composed of two segments – Completion Fluids & Products Division and Water & Flowback Services Division. Consolidated revenue for the first three months of 2025 of $157.1 million increased compared to the prior year due to strong results from our Completion Fluids & Products Division, which offset expected weaker United States onshore activity in our Water & Flowback Services Division. Completion Fluids & Products Division revenues for the first three months of 2025 increased compared to both the last three months of 2024 and the first three months of 2024, led by deepwater Gulf of America as we completed the first of the three scheduled CS Neptune wells and made significant progress on the second well. TETRA CS Neptune fluids projects are historically higher revenue and margin projects. The Completion Fluids & Products division also benefited from an early start to the seasonally strong calcium chloride business in Northern Europe in the first quarter, for which we expect to continue to benefit through the second quarter. We also expect to begin the multi-year deep water completion fluids contract in Brazil during the second quarter. Our Water & Flowback Services revenues decreased slightly compared to the last three months of 2024 and decreased 13.0% compared to the first three months of 2024, reflecting weaker onshore activity in the United States, as well as lower service revenues following the sale of early production facilities in Latin America in 2024. Water & Flowback Services gross profit margins were relatively flat despite much lower customer activity levels as our cost control actions and continued focused on automation contributed to stable margins in a weaker environment. We remain committed to pursuing low-carbon energy initiatives that leverage our completion fluids and aqueous chemistry core competencies, our significant bromine and lithium assets and technologies, and our leading calcium chloride production capabilities. In August 2024, we published a definitive feasibility study and updated our technical resources report with respect to bromine from our Evergreen Brine Unit. We have ongoing negotiations with various bromine providers for bridging supply agreements that, if and when finalized, will give us flexibility on the timing of a plant start-up, allowing us to accumulate additional cash from our existing base business. These initiatives are expected to provide us the bromine supply volumes necessary for the growing deepwater market plus the growing long-duration battery requirements, while deferring investments in Arkansas or scaling up our bromine production at lower levels than previously anticipated. If and when the bridging supply agreement is finalized, we will announce our revised Arkansas investment and timing plans. We continue to advance our development efforts in Arkansas and anticipate this continue throughout the duration of 2025. We are prioritizing our strategic initiatives on projects that can immediately impact our near-term results, focused on TETRA CS Neptune fluids in the Gulf of America, TETRA PureFlow+ electrolyte shipments and our recently announced TETRA Oasis Total Desalination Solution ("TDS"), an end-to-end water treatment and desalination solution for re-use and mineral extraction applications for produced water from oil and gas wells. We are commencing a pilot project that is expected to begin in the first half of 2025 and includes a rangeland grass growth study in a greenhouse using TDS processed water. 18 Results of Operations The following information should be read in conjunction with the Consolidated Financial Statements and the associated Notes contained elsewhere in this report. The analysis herein reflects the optional approach to discuss results of operations on a sequential-quarter basis, which we believe provides information that is most useful in assessing our quarterly results of operations. Three months ended March 31, 2025 compared with three months ended December 31, 2024. Consolidated Comparisons Three Months Ended Period to Period Change March 31, December 31, $ Change % Change 2025 2024 (in thousands, except percentages) Revenues $ 157,140 $ 134,504 $ 22,636 16.8 % Gross profit 42,906 31,135 11,771 37.8 % Gross profit as a percentage of revenue 27.3 % 23.1 % General and administrative expense 24,134 23,128 1,006 4.3 % General and administrative expense as a percentage of revenue 15.4 % 17.2 % Interest expense, net 4,724 5,232 (508) (9.7) % Other (income) expense, net 8,962 (4,617) (13,579) NM (1) Income before taxes and discontinued operations 5,086 7,392 (2,306) (31.2) % Income before taxes and discontinued operations as a percentage of revenue 3.2 % 5.5 % Provision (benefit) for income taxes 1,037 (94,841) 95,878 (101.1) % Net income before discontinued operations 4,049 102,233 (98,184) (96.0) % Discontinued operations: Income from discontinued operations, net of taxes — 490 490 100.0 % Net income 4,049 102,723 (98,674) (96.1) % Loss attributable to noncontrolling interests — 1 (1) 100.0 % Net income attributable to TETRA stockholders $ 4,049 $ 102,724 $ (98,675) (96.1) % (1) Percent change is not meaningful Consolidated revenues increased between the current and previous quarters primarily due to higher activity for the Completion Fluids & Products division, driven by increased pricing and volume sales in the Northern European industrial chemicals market. See Divisional Comparisons section below for a more detailed discussion of the change in our revenues. Consolidated gross profit increased primarily due to stronger activity levels from the Completion Fluids & Products Division driven by the first CS Neptune well and an early start to the seasonal calcium chloride business in Northern Europe. See Divisional Comparisons section below for additional discussion. Consolidated interest expense, net decreased compared to the prior quarter primarily due to an increase in the interest expense capitalized for our Arkansas development. Consolidated other (income) expense, net, changed compared to the prior quarter primarily due to a $7.8 million increase in foreign exchange losses, including recognition of $9.5 million cumulative currency translation adjustment loss associated with the dissolution of a former subsidiary in Canada, partially offset by increased foreign exchange gains in Brazil. Consolidated other (income) expense, net also includes a $4.8 million net decrease in unrealized gains on investments. Consolidated provision for income tax was $1.0 million expense during the current quarter, compared to $94.8 million benefit during the prior quarter. The change in our tax provision compared to the prior quarter tax benefit was primarily due to the reversal of the valuation allowance related to our United States deferred tax assets (federal and state) during the prior quarter. Our consolidated effective tax rate for the three months ended March 31, 2025 was 20.4%, which approximates our statutory tax rate in the United States. 19 Divisional Comparisons Completion Fluids & Products Division Three Months Ended Period to Period Change March 31, December 31, $ Change % Change 2025 2024 (in thousands, except percentages) Revenues $ 93,018 $ 68,869 $ 24,149 35.1 % Gross profit 36,526 24,852 11,674 47.0 % Gross profit as a percentage of revenue 39.3 % 36.1 % General and administrative expense 6,683 6,016 667 11.1 % General and administrative expense as a percentage of revenue 7.2 % 8.7 % Interest (income) expense, net (115) 633 748 (118.2) % Other (income) expense, net (719) 871 (1,590) (182.5) % Net income before taxes and discontinued operations $ 30,677 $ 17,332 $ 13,345 77.0 % Net income before taxes and discontinued operations as a percentage of revenue 33.0 % 25.2 % Revenues for our Completion Fluids & Products Division increased driven by completion of the first of the three scheduled CS Neptune wells. We also benefited from an early start to the seasonally strong calcium chloride business in Northern Europe. Gross profit for our Completion Fluids & Products Division increased compared to the prior quarter primarily due to the increase in revenues mentioned above. Profit margins improved as CS Neptune fluids generate higher margins than other projects. Our profitability in future periods will continue to be affected by the mix of our products and services, market demand for our products and services, and drilling and completions activity. Completion Fluids & Products Division general and administrative expense increased $0.7 million, primarily due to a $0.3 million increase in compensation expense including short-term incentive compensation and a $0.3 million increase in professional services fees. Other expense, net increased primarily due to a $1.7 million increase in foreign exchange gain, primarily in Brazil. Water & Flowback Services Division Three Months Ended Period to Period Change March 31, December 31, $ Change % Change 2025 2024 (in thousands, except percentages) Revenues $ 64,122 $ 65,635 $ (1,513) (2.3) % Gross profit 6,474 6,382 92 1.4 % Gross profit as a percentage of revenue 10.1 % 9.7 % General and administrative expense 5,735 4,583 1,152 25.1 % General and administrative expense as a percentage of revenue 8.9 % 7.0 % Interest income, net (7) (75) 68 (90.7) % Other (income) expense, net 9,634 (275) 9,909 NM (1) Net income (loss) before taxes and discontinued operations $ (8,888) $ 2,149 $ (11,037) (513.6) % Net income (loss) before taxes and discontinued operations as a percentage of revenue (13.9) % 3.3 % (1) Percent change is not meaningful Revenues for our Water & Flowback Services Division declined slightly compared to the prior quarter, primarily due to lower overall customer activity in the North America onshore business. 20 Gross profit for our Water & Flowback Services Division remained comparable to the previous quarter as our cost control actions and continued focused on automation contributed to stable margins in a weaker environment. The Water & Flowback Services Division net loss before taxes and discontinued operations this quarter compared to a gain from the previous quarter is primarily due to recognition of a $9.5 million cumulative currency translation adjustment loss associated with the dissolution of a former subsidiary in Canada and a $1.2 million increase in general and administrative expense due to an increase in compensation expense. Corporate Overhead Three Months Ended Period to Period Change March 31, December 31, $ Change % Change 2025 2024 (in thousands, except percentages) Depreciation and amortization $ 94 $ 99 $ (5) (5.1) % General and administrative expense 11,716 12,529 (813) (6.5) % Interest expense, net 4,846 4,674 172 3.7 % Other (income) expense, net 47 (5,213) (5,260) NM (1) Net loss before taxes and discontinued operations $ (16,703) $ (12,089) $ 4,614 38.2 % (1) Percent change is not meaningful Corporate overhead net loss before taxes and discontinued operations increased compared to the prior quarter is primarily due to a $4.7 million decrease in unrealized gains related to unit price changes of our investment in Kodiak, which we sold in January 2025. Kodiak acquired CSI Compressco LP (“CSI Compressco”) in April 2024. Three months ended March 31, 2025 compared with three months ended March 31, 2024. Consolidated Comparisons Three Months Ended March 31, Period to Period Change 2025 2024 $ Change % Change (in thousands, except percentages) Revenues $ 157,140 $ 150,972 $ 6,168 4.1 % Gross profit 42,906 31,102 11,804 38.0 % Gross profit as a percentage of revenue 27.3 % 20.6 % General and administrative expense 24,134 22,298 1,836 8.2 % General and administrative expense as a percentage of revenue 15.4 % 14.8 % Interest expense, net 4,724 5,952 (1,228) (20.6) % Loss on debt extinguishment — 5,535 (5,535) 100.0 % Other (income) expense, net 8,962 (3,978) (12,940) (325.3) % Net income before taxes 5,086 1,295 3,791 292.7 % Net income before taxes as a percentage of revenue 3.2 % 0.9 % Provision for income taxes 1,037 380 657 172.9 % Net income attributable to TETRA stockholders $ 4,049 $ 915 $ 3,134 342.5 % (1) Percent change is not meaningful Consolidated revenues increased compared to the prior year due to stronger activity from our Completion Fluids & Products Division partially offset by lower revenues from our Water & Flowback Services Division. See Divisional Comparisons section below for a more detailed discussion of the change in our revenues. Consolidated gross profit increased in the current year primarily due to strong margins from our Completion Fluids & Products and stable margins from our Water & Flowback Services Divisions. 21 Consolidated general and administrative expenses increased compared to the prior year due to higher professional services and other expenses. Interest expense, net decreased $1.2 million due to an increase in the interest expense capitalized for our Arkansas development as well as lower interest rates on our Term Credit Agreement. Consolidated loss on debt extinguishment decreased $5.5 million from non-cash unamortized finance costs expensed in connection with the repayment of our prior Term Credit Agreement in January 2024. Consolidated other expense, net, changed compared to the prior year primarily due to a $9.0 million increase in foreign exchange loss, including recognition of the cumulative currency translation adjustment loss associated with the dissolution of a former subsidiary in Canada, and a $2.5 million decrease in net unrealized gain on investments. Consolidated provision for income taxes was $1.0 million expense during the current year, compared to $0.4 million expense during the prior year. Our consolidated effective tax rate for the current year is 20.4%, compared to 29.3% during the prior year. Our effective tax rate for the current year approximates our statutory tax rate in the United States. Divisional Comparisons Completion Fluids & Products Division Three Months Ended March 31, Period to Period Change 2025 2024 $ Change % Change (in thousands, except percentages) Revenues $ 93,018 $ 77,282 $ 15,736 20.4 % Gross profit 36,526 26,431 10,095 38.2 % Gross profit as a percentage of revenue 39.3 % 34.2 % General and administrative expense 6,683 6,693 (10) (0.1) % General and administrative expense as a percentage of revenue 7.2 % 8.7 % Interest income, net (115) (269) (154) (57.2) % Other (income) expense, net (719) 215 934 NM (1) Net income before taxes $ 30,677 $ 19,792 $ 10,885 55.0 % Net income before taxes as a percentage of revenue 33.0 % 25.6 % (1) Percent change is not meaningful Revenues for our Completion Fluids & Products Division increased primarily due to completion of the first of the three scheduled CS Neptune wells. We also benefited from an early start to the seasonally strong calcium chloride business in Northern Europe. Gross profit for our Completion Fluids & Products Division increased compared to the prior year due to higher revenues. Profit margins improved as CS Neptune fluids generate higher margins than other projects. Our profitability in future periods will continue to be affected by the timing of and the mix of our products and services, market demand for our products and services, and drilling and completions activity. Net income before taxes for our Completion Fluids & Products Division increased compared to the prior year driven by higher gross profit. Other (income) expense, net improved, primarily from an $0.8 million increase in foreign exchange gains, primarily in Brazil. 22 Water & Flowback Services Division Three Months Ended March 31, Period to Period Change 2025 2024 $ Change % Change (in thousands, except percentages) Revenues $ 64,122 $ 73,690 $ (9,568) (13.0) % Gross profit 6,474 4,752 1,722 36.2 % Gross profit as a percentage of revenue 10.1 % 6.4 % General and administrative expense 5,735 4,503 1,232 27.4 % General and administrative expense as a percentage of revenue 8.9 % 6.1 % Interest (income) expense, net (7) 76 (83) (109.2)% Other (income) expense, net 9,634 (548) (10,182) NM (1) Net income (loss) before taxes $ (8,888) $ 721 $ (9,609) (1,332.7) % Net income (loss) before taxes as a percentage of revenue (13.9) % 1.0 % (1) Percent change is not meaningful Revenues for our Water & Flowback Services Division decreased primarily from lower United States drilling and completion activity. Gross profit for our Water & Flowback Services Division increased slightly from the prior year despite the decrease in revenues primarily due to continuous efforts to increase margins through streamlining operations and automation. Net income (loss) before taxes for our Water & Flowback Services Division decreased primarily due to recognition of the $9.5 million cumulative currency translation adjustment loss associated with the dissolution of a former subsidiary in Canada, as well as a $1.2 million increase in general and administrative expense due to higher compensation expense. Corporate Overhead Three Months Ended March 31, Period to Period Change 2025 2024 $ Change % Change (in thousands, except percentages) Depreciation and amortization $ 94 $ 81 $ 13 16.0 % General and administrative expense 11,716 11,102 614 5.5 % Interest expense, net 4,846 6,145 (1,299) (21.1) % Loss on debt extinguishment — 5,535 (5,535) 100.0 % Other (income) expense, net 47 (3,645) (3,692) (101.3) % Net loss before taxes $ (16,703) $ (19,218) $ (2,515) (13.1) % Corporate overhead net loss before taxes decreased primarily due to a $5.5 million loss associated with the early extinguishment of our prior term credit agreement in January 2024 and a $3.0 million decrease in unrealized gains related to share price changes of our investment in Kodiak and a $1.3 million decrease in interest expense, net due to an increase in the interest expense capitalized for our Arkansas development as well as lower interest rates on our Term Credit Agreement, partially offset by a $0.6 million increase in general and administrative expenses primarily from an increase in professional services. Non-GAAP Financial Measures We use U.S. GAAP financial measures such as revenues, gross profit, income (loss) before taxes and discontinued operations, and net cash provided by operating activities, as well as certain non-GAAP financial measures, including Adjusted EBITDA, as performance measures for our business. 23 Adjusted EBITDA . We define Adjusted EBITDA as net income (loss) before taxes and discontinued operations, excluding impairments, certain special, non-recurring or other charges (or credits), including loss on debt extinguishment, interest, depreciation and amortization and certain non-cash items such as equity-based compensation expense and foreign currency translation adjustments not associated with current operations. The most directly comparable GAAP financial measure is net income (loss) before taxes and discontinued operations. Adjustments to long-term incentives represent adjustments to valuation of long-term cash incentive compensation awards that are related to prior years. These costs are excluded from Adjusted EBITDA because they did not relate to the periods presented and are considered to be outside of normal operations. Long-term incentives are earned over a three-year period and the costs are recorded over the three-year period they are earned. The amounts accrued or incurred are based on a cumulative of the three-year period. Equity-based compensation expense represents compensation that has been or will be paid in equity and is excluded from Adjusted EBITDA because it is a non-cash item. Adjusted EBITDA is used by management as a supplemental financial measure to assess financial performance, without regard to charges or credits that are considered by management to be outside of its normal operations and without regard to financing methods, capital structure or historical cost basis, and to assess the Company’s ability to incur and service debt and fund capital expenditures. 24 The following tables reconcile net income (loss) before taxes and discontinued operations to Adjusted EBITDA for the periods indicated: Three Months Ended March 31, 2025 Completion Fluids & Products Water & Flowback Services Corporate SG&A Corporate Other Total (in thousands, except percentages) Revenue $ 93,018 $ 64,122 $ — $ — $ 157,140 Net income (loss) before taxes 30,677 (8,888) (11,716) (4,987) 5,086 Cost of product sales and services adjustment 477 — — — 477 Impairments and other charges — 518 — — 518 Former CEO stock appreciation right credit — — (151) — (151) Transactions, restructuring and other expenses — 302 784 — 1,086 Non-cash cumulative foreign currency translation adjustment loss from dissolution of Canadian subsidiary — 9,516 — — 9,516 Interest (income) expense, net (115) (7) — 4,846 4,724 Depreciation, amortization and accretion 2,177 6,880 — 94 9,151 Equity-based compensation expense — — 1,860 — 1,860 Adjusted EBITDA $ 33,216 $ 8,321 $ (9,223) $ (47) $ 32,267 Adjusted EBITDA as % of revenue 35.7 % 13.0 % 20.5 % Three Months Ended December 31, 2024 Completion Fluids & Products Water & Flowback Services Corporate SG&A Corporate Other Total (in thousands, except percentages) Revenue $ 68,869 $ 65,635 $ — $ — $ 134,504 Net income (loss) before taxes and discontinued operations 17,331 2,149 (12,529) 441 7,392 Cost of product sales and services adjustment (1,776) — — — (1,776) Former CEO stock appreciation right expense — — 103 — 103 Transaction, restructuring and other expenses 56 146 650 — 852 Interest (income) expense, net 633 (75) — 4,674 5,232 Depreciation, amortization and accretion 2,569 6,686 — 99 9,354 Equity-based compensation expense — — 1,668 — 1,668 Adjusted EBITDA $ 18,813 $ 8,906 $ (10,108) $ 5,214 $ 22,825 Adjusted EBITDA as % of revenue 27.3 % 13.6 % 17.0 % Three Months Ended March 31, 2024 Completion Fluids & Products Water & Flowback Services Corporate SG&A Corporate Other Total (in thousands, except percentages) Revenue $ 77,282 $ 73,690 $ — $ — $ 150,972 Net income (loss) before taxes 19,792 721 (11,101) (8,117) 1,295 Former CEO stock appreciation right credit — — (186) — (186) Transaction, restructuring and other (income) expenses (159) — 24 — (135) Loss on debt extinguishment — — — 5,535 5,535 Interest (income) expense, net (269) 76 — 6,145 5,952 Depreciation, amortization and accretion 2,387 6,288 — 81 8,756 Equity-based compensation expense — 1,623 — 1,623 Adjusted EBITDA $ 21,751 $ 7,085 $ (9,640) $ 3,644 $ 22,840 Adjusted EBITDA as % of revenue 28.1 % 9.6 % 15.1 % Adjusted EBITDA is a financial measure that is not in accordance with U.S. GAAP and should not be considered an alternative to net income, operating income, cash provided by operating activities, or any other measure of financial performance presented in accordance with U.S. GAAP. This measure may not be comparable 25 to similarly titled financial metrics of other companies, as other companies may not calculate Adjusted EBITDA in the same manner as we do. Management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable U.S. GAAP measures, understanding the differences between the measures, and incorporating this knowledge into management’s decision-making processes. Liquidity and Capital Resources We believe that our capital structure allows us to meet our financial obligations on both a short-term and long-term basis. Our liquidity at the end of the first quarter was $208.1 million. Liquidity is defined as unrestricted cash plus availability of $75 million under the delayed draw from our Term Credit Agreement and availability under our credit agreements. Information about the terms and covenants of our debt agreements can be found in Note 5 - Long Term Debt and Other Borrowings. Our consolidated sources and uses of cash are as follows: Three Months Ended March 31, 2025 2024 (in thousands) Operating activities $ 3,935 $ (13,816) Investing activities $ 1,345 $ (15,748) Financing activities $ (2,089) $ 13,348 Operating Activities Consolidated cash flows provided by operating activities increased compared to the first three months of 2024 primarily due to an increase in gross profit and working capital changes. Investing Activities Total cash capital expenditures during the first three months of 2025 were $18.0 million, which reflects increased expenditures for advancement of our Arkansas brine resource development and additions to accommodate industry-wide activity. Our Completion Fluids & Products Division spent $13.8 million on capital expenditures, including $11.2 million for our Arkansas brine resource development. Our Water & Flowback Services Division spent $4.1 million on capital expenditures to maintain, automate and upgrade its water management and flowback equipment fleet. Investing activities during the first three months of 2025 also included $19.0 million of proceeds from the sale of our Kodiak shares, net of broker commissions and fees. 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. Additional information on these resources is described in Part I, “Item 2. Properties” in our 2024 Annual Report . The extraction of lithium and bromine from these brine leases will likely require a significant amount of time and capital, which are subject to further analysis and consideration. In August 2024, we published a definitive feasibility study and updated our technical resources report with respect to bromine from our Evergreen Brine Unit. We have ongoing negotiations with various bromine providers for bridging supply agreements that, if and when finalized, will give us flexibility on the timing of a plant start-up, allowing us to accumulate additional cash from our existing base business operations. These initiatives are expected to provide us the bromine supply volumes necessary for the growing deepwater market plus the growing long-duration battery storage requirements, while deferring investments in Arkansas or scaling up our bromine production at lower levels than previously anticipated. If and when the bridging supply agreement is finalized, we will announce our revised Arkansas investment and timing plans. Historically, a significant majority of our planned capital expenditures have been related to identified opportunities to grow and expand our existing businesses. We are also focused on enhancing shareholder value by capitalizing on our key mineral assets, brine mineral extraction expertise, and deep chemistry competency to expand our offerings into the low carbon energy markets. However, we continue to review all capital expenditure plans carefully in an effort to conserve cash. If the forecasted demand for our products and services increases or 26 decreases, or we proceed with development of brine resources in Arkansas, the amount of planned expenditures on growth and expansion may be adjusted. Financing Activities Our financing activities for the first three months of 2025 include $0.9 million of capital lease payments associated with equipment leased primarily for the early production facilities in Argentina and equipment leases in the United States. We may supplement our existing cash balances and cash flow from operating activities with short-term borrowings, long-term borrowings, issuances of equity and debt securities, and other sources of capital. We are aggressively managing our working capital and capital expenditure needs in order to maximize our liquidity in the current environment. For additional information on our credit agreements, see Note 5 - “Long-Term Debt and Other Borrowings” in the Notes to Consolidated Financial Statements. Other Sources and Uses of Cash In addition to our credit facilities, we fund our short-term liquidity requirements from cash generated by our operations and from short-term vendor financing. In addition, as of March 31, 2025, the market value of our investment in Standard Lithium was $1.0 million, with no holding restrictions on our ability to monetize our interests. In addition, we are party to agreements in which Standard Lithium has the right to explore for, and an option to acquire the right to produce and extract lithium in our Arkansas leases as well as additional potential resources, in the Mojave region of California. Standard Lithium exercised its option with respect to our Arkansas leases on October 6, 2023. TETRA is entitled to a 2.5% royalty on gross revenues from the lithium that Standard Lithium produces from the TETRA option acreage. In addition, TETRA maintains the rights to the bromine and other minerals extracted from the brine produced by Standard Lithium in their approved unit. In May 2022, we filed a universal shelf Registration Statement on Form S-3 with the SEC, which was declared effective by the SEC. Pursuant to this registration statement, we have the ability to sell debt or equity securities in one or more public offerings up to an aggregate public offering price of $400 million. This shelf registration statement currently provides us additional flexibility with regards to potential financing that we may undertake when market conditions permit or our financial condition may require. Should additional capital be required, the ability to raise such capital through the issuance of additional debt or equity securities may currently be limited. Instability or volatility in the capital markets at the times we need to access capital may affect the cost of capital and the ability to raise capital for an indeterminable length of time. If it is necessary to issue additional equity to fund our capital needs, additional dilution of our common stockholders will occur. We periodically evaluate engaging in strategic transactions and may consider divesting non-core assets where our evaluation suggests such transactions are in the best interest of our business. In challenging economic environments, we may experience increased delays and failures by customers to pay our invoices. If our customers delay paying or fail to pay us a significant amount of our outstanding receivables, it could have an adverse effect on our liquidity. An increase in unpaid aged receivables would also negatively affect our borrowing availability under the ABL Credit Agreement. As of March 31, 2025, we had no “off balance sheet arrangements” that may have a current or future material effect on our consolidated financial condition or results of operations. Critical Accounting Policies and Estimates There have been no material changes or developments in the evaluation of the accounting estimates and the underlying assumptions or methodologies pertaining to our Critical Accounting Policies and Estimates disclosed in our 202 4 Annual Report . In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported. These judgments and estimates may change as new events occur, as new information is acquired, and as changes in our operating environments are encountered. Actual results are likely to differ from our current estimates, and those differences may be material. 27 Commitments and Contingencies Litigation For discussion of our legal proceedings, please see our 202 4 Annual Report and Note 6 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements included in this Quarterly Report. Long-Term Debt For information on our credit agreements, see Note 5 - “Long-Term Debt and Other Borrowings” in the Notes to Consolidated Financial Statements. Leases We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations and machinery and equipment, as well as a sales-type lease and subleases for certain facilities. We have finance leases for certain facility storage tanks and equipment rentals. Information about the terms of our lease agreements can be found in our 202 4 Annual Report . Product and Asset Purchase Obligations For information on product and asset purchase obligations, see Note 6 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements. Cautionary Statement for Purposes of Forward-Looking Statements This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this Quarterly Report are identifiable by the use of the following words, the negative of such words, and other similar words: “anticipates”, “assumes”, “believes”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “goal”, “intends”, “may”, “might”, “plans”, “predicts”, “projects”, “schedules”, “seeks”, “should”, “targets”, “will”, and “would”. These forward-looking statements reflect our current views with respect to future events and financial performance and are based on assumptions that we believe to be reasonable, but such forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to: economic and operating conditions that are outside of our control, including the trading price of our common stock, and the supply, demand, and prices of oil and natural gas; the availability of adequate sources of capital to us; the effect of inflation on the cost of goods and services; the activity levels of our customers; our operational performance; actions taken by our customers, suppliers, competitors and third-party operators; the availability of raw materials and labor at reasonable prices; risks related to acquisitions and our growth strategy; restrictions under our debt agreements and the consequences of any failure to comply with debt covenants; the effect and results of litigation, commercial disputes, regulatory matters, settlements, audits, assessments, and contingencies; potential regulatory initiatives to restrict hydraulic fracturing activities on federal lands as well as other actions to more stringently regulate certain aspects of oil and gas development such as air emissions and water discharges; risks related to our foreign operations; risks related to our non-controlling equity investments; information and operational technology risks, including the risk of cyberattack; our health, safety and environmental performance; the effects of consolidation on our customers and competitors; global or national health concerns, including the outbreak of pandemics or epidemics such as the coronavirus (COVID-19); acts of terrorism, war or political or civil unrest in the United States or elsewhere, including the current conflict between Russia and Ukraine, the conflict in the Israel-Gaza region and continued hostilities in the Middle East, maritime piracy attacks; and statements regarding our beliefs, expectations, plans, goals, future events and performance and other statements that are not purely historical. 28 These statements include statements concerning the mineral resource and reserve estimates of lithium and bromine, the potential extraction of lithium, bromine and other minerals from our Evergreen Unit and other leased acreage, the ability to obtain local governmental and regulatory approvals, the development of the assets including construction of lithium and/or bromine extraction plants, the economic viability thereof, the demand for such resources, and the timing and cost of such activities, and the expected revenues including any royalties, profits and returns from such activities; the timing and success of our bromine production wells and the construction of our bromine processing facility and related engineering activities; the accuracy of our resources report, feasibility study and economic assessment regarding our lithium and bromine acreage; and the ability to obtain a resources report that moves the remaining portion of our bromine and lithium inferred resources to a higher resource or reserve category. With respect to our disclosures of measured, indicated and inferred mineral resources, including bromine and lithium carbonate equivalent concentrations, it is unclear whether they will ever be economically developed. Investors are cautioned that mineral resources do not have demonstrated economic value and further exploration may not result in the estimation of a mineral reserve. Further there are a number of uncertainties related to processing lithium, which is an inherently difficult process, including, for example, the development of the technology to do so successfully and economically. Therefore, investors are cautioned not to assume that all or any part of our resources can be economically or legally commercialized. In particular, investors are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally commercialized, or that it will ever be upgraded to a higher category. With respect to the Company’s disclosures of the MOU with Saltwerx, it is uncertain about the ability of the parties to successfully negotiate one or more definitive agreements, the future relationship between the parties, and the ability to successfully and economically produce lithium and bromine from the Evergreen Unit. Management believes that these forward-looking statements are reasonable as and when made. However, investors are cautioned not to place undue reliance on any such forward-looking statements. Such statements speak only as of the date on which they are made, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations, forecasts or projections. Factors which may cause actual results to differ materially from current expectations include, but are not limited to: changes in general economic conditions; opportunity risks, such as mineral extraction, demand therefor, or realizing industrial and other benefits expected from bromine processing; our ability to develop a bromine processing facility and risks inherent in the construction such facility; equipment supply, equipment defects and/or our ability to timely obtain equipment components; competition from existing or new competitors; risks associated with changes in laws and regulations, or the imposition of economic or trade sanctions affecting international commercial transactions, including legislative, regulatory and policy changes, such as unexpected changes in tariffs, trade barriers, price and exchange controls; and the other factors described in Part II, “Item 1A. Risk Factors” and elsewhere in this report and in our 202 4 Annual Report , and those described from time to time in our future reports filed with the SEC.