UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 1-13455

TETRA Technologies, Inc.

(Exact name of registrant as specified in its charter)


Delaware			74-2148293
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

24955 Interstate 45 North
The Woodlands,
Texas			77380
(Address of Principal Executive Offices)			(Zip Code)

(281) 367-1983

(Registrant’s Telephone Number, Including Area Code)

_______________________________________________________________________

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	TTI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November 2, 2020,~~May 3, 2021, there were ~~125,976,728~~126,587,492 shares outstanding of the Company’s Common Stock, $0.01 par value per share.


TETRA Technologies, Inc. and Subsidiaries
Table of Contents
			Page
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations			1
Consolidated Statements of Comprehensive Income (Loss)			2
Consolidated Balance Sheets			3
Consolidated Statements of Equity			5
Consolidated Statements of Cash Flows			76
Notes to Consolidated Financial Statements			87
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2618
Item 3. Quantitative and Qualitative Disclosures about Market Risk			4227
Item 4. Controls and Procedures			4227

PART II—OTHER INFORMATION
Item 1. Legal Proceedings			4228
Item 1A. Risk Factors			4228
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4328
Item 3. Defaults Upon Senior Securities			4428
Item 4. Mine Safety Disclosures			4428
Item 5. Other Information			4428
Item 6. Exhibits			4529
SIGNATURES			4630

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Revenues:	Revenues:									Revenues:
Product sales	Product sales	$	68,810	$	93,377	$	252,016	$	320,508	Product sales	$	45,032	$	70,215
Services	Services	83,791		152,570		315,968		457,963		Services	32,292		62,489
Total revenues	Total revenues	152,601		245,947		567,984		778,471		Total revenues	77,324		132,704
Cost of revenues:	Cost of revenues:									Cost of revenues:
Cost of product sales	Cost of product sales	50,541		71,957		184,512		254,798		Cost of product sales	31,983		45,288
Cost of services	Cost of services	52,441		98,356		201,056		298,911		Cost of services	28,631		48,827
Depreciation, amortization, and accretion	Depreciation, amortization, and accretion	29,604		30,867		88,906		93,312		Depreciation, amortization, and accretion	8,951		9,552
Impairments and other charges		97		849		14,445		3,306

Insurance recoveries	Insurance recoveries	(52)		(1,042)		(643)		(1,392)		Insurance recoveries	(110)		0
Total cost of revenues	Total cost of revenues	132,631		200,987		488,276		648,935		Total cost of revenues	69,455		103,667
Gross profit	Gross profit	19,970		44,960		79,708		129,536		Gross profit	7,869		29,037
General and administrative expense	General and administrative expense	25,256		34,926		89,807		105,498		General and administrative expense	20,012		20,348

Interest expense, net	Interest expense, net	17,631		18,146		53,073		55,054		Interest expense, net	4,404		5,292
Warrants fair value adjustment (income) expense		0		78		(327)		(1,035)
CCLP Series A Preferred Units fair value adjustment expense		0		0		0		1,309
Warrants fair value adjustment expense (income)										Warrants fair value adjustment expense (income)	323		(338)

Other (income) expense, net	Other (income) expense, net	(2,137)		(690)		2,141		(1,014)		Other (income) expense, net	(5,095)		22
Loss before taxes and discontinued operations		(20,780)		(7,500)		(64,986)		(30,276)
(Loss) income before taxes and discontinued operations										(Loss) income before taxes and discontinued operations	(11,775)		3,713
Provision for income taxes	Provision for income taxes	645		1,579		3,800		5,678		Provision for income taxes	168		721
Loss before discontinued operations		(21,425)		(9,079)		(68,786)		(35,954)
(Loss) income before discontinued operations										(Loss) income before discontinued operations	(11,943)		2,992
Discontinued operations:	Discontinued operations:									Discontinued operations:
Loss from discontinued operations, net of taxes		(173)		(9,130)		(155)		(9,901)
Net loss		(21,598)		(18,209)		(68,941)		(45,855)
Less: loss attributable to noncontrolling interest		8,296		2,378		32,833		12,273
Net loss attributable to TETRA stockholders		$	(13,302)	$	(15,831)	$	(36,108)	$	(33,582)
Basic net loss per common share:
Loss before discontinued operations attributable to TETRA stockholders		$	(0.10)	$	(0.06)	$	(0.29)	$	(0.19)
Loss from discontinued operations attributable to TETRA stockholders		0		(0.07)		0		(0.08)
Net loss attributable to TETRA stockholders		$	(0.10)	$	(0.13)	$	(0.29)	$	(0.27)
Income (loss) from discontinued operations, net of taxes										Income (loss) from discontinued operations, net of taxes	120,990		(13,368)
Net income (loss)										Net income (loss)	109,047		(10,376)
Less: (income) loss attributable to noncontrolling interest ($333 income in 2021 and $8,834 loss in 2020 related to discontinued operations)										Less: (income) loss attributable to noncontrolling interest ($333 income in 2021 and $8,834 loss in 2020 related to discontinued operations)	(333)		8,825
Net income (loss) attributable to TETRA stockholders										Net income (loss) attributable to TETRA stockholders	$	108,714	$	(1,551)
Basic net income (loss) per common share:										Basic net income (loss) per common share:
(Loss) income from continuing operations attributable to TETRA stockholders										(Loss) income from continuing operations attributable to TETRA stockholders	$	(0.10)	$	0.02
Income (loss) from discontinued operations attributable to TETRA stockholders										Income (loss) from discontinued operations attributable to TETRA stockholders	0.96		(0.03)
Net income (loss) attributable to TETRA stockholders										Net income (loss) attributable to TETRA stockholders	$	0.86	$	(0.01)
Average shares outstanding	Average shares outstanding	125,893		125,568		125,789		125,620		Average shares outstanding	126,149		125,587
Diluted net loss per common share:
Loss before discontinued operations attributable to TETRA stockholders		$	(0.10)	$	(0.06)	$	(0.29)	$	(0.19)
Loss from discontinued operations attributable to TETRA stockholders		0		(0.07)		0		(0.08)
Net loss attributable to TETRA stockholders		$	(0.10)	$	(0.13)	$	(0.29)	$	(0.27)
Diluted net income (loss) per common share:										Diluted net income (loss) per common share:
(Loss) income from continuing operations attributable to TETRA stockholders										(Loss) income from continuing operations attributable to TETRA stockholders	$	(0.10)	$	0.02
Income (loss) from discontinued operations attributable to TETRA stockholders										Income (loss) from discontinued operations attributable to TETRA stockholders	0.96		(0.03)
Net income (loss) attributable to TETRA stockholders										Net income (loss) attributable to TETRA stockholders	$	0.86	$	(0.01)
Average diluted shares outstanding	Average diluted shares outstanding	125,893		125,568		125,789		125,620		Average diluted shares outstanding	126,149		125,597

See Notes to Consolidated Financial Statements

Table of Contents

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Net loss $ (21,598) $ (18,209) $ (68,941) $ (45,855)
Foreign currency translation adjustment, net of taxes of $0 in 2020 and 2019 2,874 (3,742) (2,498) (3,300)
Comprehensive loss (18,724) (21,951) (71,439) (49,155)
Less: Comprehensive loss attributable to noncontrolling interest 8,229 2,358 32,880 11,994
Comprehensive loss attributable to TETRA stockholders $ (10,495) $ (19,593) $ (38,559) $ (37,161)


	Three Months Ended March 31,
	2021		2020
Net income (loss)	$	109,047	$	(10,376)
Foreign currency translation adjustment from continuing operations, net of taxes of $0 in 2021 and 2020	(2,779)		(6,467)

Comprehensive income (loss)	106,268		(16,843)
Less: Comprehensive (loss) income attributable to noncontrolling interest	(333)		9,054
Comprehensive income (loss) attributable to TETRA stockholders	$	105,935	$	(7,789)

See Notes to Consolidated Financial Statements

Table of Contents

TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	75,165	$	17,704	Cash and cash equivalents	$	54,163	$	67,252
Restricted cash	Restricted cash	59		64		Restricted cash	65		65
Trade accounts receivable, net of allowances of $7,742 in 2020 and $5,262 in 2019		108,222		175,918
Trade accounts receivable, net of allowances of $6,840 in 2021 and $6,824 in 2020						Trade accounts receivable, net of allowances of $6,840 in 2021 and $6,824 in 2020	62,408		64,078
Inventories	Inventories	113,020		136,510		Inventories	74,460		76,658

Assets of discontinued operations						Assets of discontinued operations	0		710,006

Prepaid expenses and other current assets	Prepaid expenses and other current assets	21,176		21,158		Prepaid expenses and other current assets	14,296		13,487
Total current assets	Total current assets	317,642		351,354		Total current assets	205,392		931,546
Property, plant, and equipment:	Property, plant, and equipment:					Property, plant, and equipment:
Land and building	Land and building	39,534		60,586		Land and building	26,443		26,506
Machinery and equipment	Machinery and equipment	1,341,905		1,335,157		Machinery and equipment	362,564		365,296
Automobiles and trucks	Automobiles and trucks	26,581		31,681		Automobiles and trucks	17,982		18,446
Chemical plants	Chemical plants	60,195		57,692		Chemical plants	61,605		62,714
Construction in progress	Construction in progress	10,819		34,393		Construction in progress	955		1,526
Total property, plant, and equipment	Total property, plant, and equipment	1,479,034		1,519,509		Total property, plant, and equipment	469,549		474,488
Less accumulated depreciation	Less accumulated depreciation	(804,466)		(760,872)		Less accumulated depreciation	(376,994)		(377,632)
Net property, plant, and equipment	Net property, plant, and equipment	674,568		758,637		Net property, plant, and equipment	92,555		96,856
Other assets:	Other assets:					Other assets:

Patents, trademarks and other intangible assets, net of accumulated amortization of $93,976 in 2020 and $88,422 in 2019		68,350		74,199
Patents, trademarks and other intangible assets, net of accumulated amortization of $67,279 in 2021 and $66,078 in 2020						Patents, trademarks and other intangible assets, net of accumulated amortization of $67,279 in 2021 and $66,078 in 2020	40,340		41,487
Deferred tax assets, net	Deferred tax assets, net	24		24		Deferred tax assets, net	89		52

Operating lease right-of-use assets	Operating lease right-of-use assets	78,867		68,131		Operating lease right-of-use assets	41,293		43,448
Investments						Investments	13,320		2,675
Other assets	Other assets	22,089		19,577		Other assets	14,189		16,775
Total other assets	Total other assets	169,330		161,931		Total other assets	109,231		104,437
Total assets	Total assets	$	1,161,540	$	1,271,922	Total assets	$	407,178	$	1,132,839

See Notes to Consolidated Financial Statements

Table of Contents

TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share Amounts)


		September 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
		(Unaudited)					(Unaudited)
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Trade accounts payable	Trade accounts payable	$	42,406	$	88,917	Trade accounts payable	$	29,057	$	22,573
Unearned income	Unearned income	7,310		9,831		Unearned income	1,202		2,675
Accrued liabilities and other	Accrued liabilities and other	80,500		87,877		Accrued liabilities and other	43,064		38,791
Liabilities of discontinued operations	Liabilities of discontinued operations	1,852		2,098		Liabilities of discontinued operations	1,746		734,039

Current portion of long-term debt						Current portion of long-term debt	8,157		0

Total current liabilities	Total current liabilities	132,068		188,723		Total current liabilities	83,226		798,078
Long-term debt, net	Long-term debt, net	843,216		842,871		Long-term debt, net	163,003		199,894
Deferred income taxes	Deferred income taxes	3,421		2,988		Deferred income taxes	1,847		1,942
Asset retirement obligations	Asset retirement obligations	12,973		12,762		Asset retirement obligations	12,620		12,484
Warrants liability	Warrants liability	123		449		Warrants liability	521		198
Operating lease liabilities	Operating lease liabilities	64,200		53,919		Operating lease liabilities	35,608		37,569
Other liabilities	Other liabilities	10,364		7,384		Other liabilities	7,886		11,612
Total long-term liabilities	Total long-term liabilities	934,297		920,373		Total long-term liabilities	221,485		263,699
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Equity:	Equity:					Equity:
TETRA stockholders’ equity:	TETRA stockholders’ equity:					TETRA stockholders’ equity:
Common stock, par value 0.01 per share; 250,000,000 shares authorized at September 30, 2020 and December 31, 2019; 128,930,704 shares issued at September 30, 2020 and 128,304,354 shares issued at December 31, 2019		1,289		1,283
Common stock, par value 0.01 per share; 250,000,000 shares authorized at March 31, 2021 and December 31, 2020; 129,538,442 shares issued at March 31, 2021 and 128,930,047 shares issued at December 31, 2020						Common stock, par value 0.01 per share; 250,000,000 shares authorized at March 31, 2021 and December 31, 2020; 129,538,442 shares issued at March 31, 2021 and 128,930,047 shares issued at December 31, 2020	1,295		1,289
Additional paid-in capital	Additional paid-in capital	471,146		466,959		Additional paid-in capital	472,522		472,134
Treasury stock, at cost; 2,953,976 shares held at September 30, 2020, and 2,823,191 shares held at December 31, 2019		(19,484)		(19,164)
Treasury stock, at cost; 3,131,428 shares held at March 31, 2021, and 2,953,976 shares held at December 31, 2020						Treasury stock, at cost; 3,131,428 shares held at March 31, 2021, and 2,953,976 shares held at December 31, 2020	(19,933)		(19,484)
Accumulated other comprehensive (loss)	Accumulated other comprehensive (loss)	(54,634)		(52,183)		Accumulated other comprehensive (loss)	(45,525)		(49,914)
Retained deficit	Retained deficit	(398,630)		(362,522)		Retained deficit	(304,951)		(413,665)
Total TETRA stockholders’ equity	Total TETRA stockholders’ equity	(313)		34,373		Total TETRA stockholders’ equity	103,408		(9,640)
Noncontrolling interests	Noncontrolling interests	95,488		128,453		Noncontrolling interests	(941)		80,702
Total equity	Total equity	95,175		162,826		Total equity	102,467		71,062
Total liabilities and equity	Total liabilities and equity	$	1,161,540	$	1,271,922	Total liabilities and equity	$	407,178	$	1,132,839

See Notes to Consolidated Financial Statements

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			Common Stock Par Value			Additional Paid-In Capital					Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Deficit			Noncontrolling Interest			Total Equity
								Currency Translation													Currency Translation

Balance at December 31, 2019				$	1,283				$	466,959	$	(19,164)	$	(52,183)			$	(362,522)					$	128,453				$	162,826
Net loss for first quarter 2020		—				—			—		—		(1,551)		(8,825)				(10,376)
Balance at December 31, 2020																					Balance at December 31, 2020	$	1,289			$	472,134				$	(19,484)		$	(49,914)		$	(413,665)		$	80,702		$	71,062
Net income for first quarter 2021																					Net income for first quarter 2021	—			—					—			—			108,714			333			109,047
Translation adjustment, net of taxes of $0	Translation adjustment, net of taxes of $0	—				—			—		(6,238)		—		(229)				(6,467)		Translation adjustment, net of taxes of $0	—			—					—			(2,779)			—			0			(2,779)
Comprehensive loss		—				—			—		—		—		—				(16,843)
Distributions to public unitholders		—				—			—		—		—		(309)				(309)
Comprehensive income																					Comprehensive income																					106,268
Deconsolidation of CSI Compressco																					Deconsolidation of CSI Compressco	—			—					—			7,168			—			(82,775)			(75,607)

Equity award activity	Equity award activity	4				0			—		—		—		—				4		Equity award activity	6			0					—			—			—			—			6
Treasury stock activity, net	Treasury stock activity, net	—				—			(89)		—		—		—				(89)		Treasury stock activity, net	—			—					(449)			—			—			—			(449)
Equity compensation expense	Equity compensation expense	—				1,145			—		—		—		228				1,373		Equity compensation expense	—			962					—			—			—			580			1,542

Other	Other	—				(16)			—		—		—		(15)				(31)		Other	—			(574)					—			—			—			219			(355)
Balance at March 31, 2020		$	1,287			$	468,088		$	(19,253)	$	(58,421)	$	(364,073)	$	119,303			$	146,931
Net loss for second quarter 2020		—				—			—		—		(21,255)		(15,712)				(36,967)
Translation adjustment, net of taxes of $0		—				—			—		980		—		115				1,095
Comprehensive loss		—				—			—		—		—		—				(35,872)
Distributions to public unitholders		—				—			—		—		—		(311)				(311)
Equity award activity		1				0			—		—		—		—				1
Treasury stock activity, net		—				—			(181)		—		—		—				(181)
Equity compensation expense		—				1,685			—		—		—		449				2,134
Other		—				4			—		—		—		(20)				(16)
Balance at June 30, 2020		$	1,288			$	469,777		$	(19,434)	$	(57,441)	$	(385,328)	$	103,824			$	112,686
Net loss for third quarter 2020		—				—			—		—		(13,302)		(8,296)				(21,598)
Translation adjustment, net of taxes of $0		—				—			—		2,807		—		67				2,874
Comprehensive loss		—				—			—		—		—		—				(18,724)
Distributions to public unitholders		—				—			—		—		—		(312)				(312)
Equity award activity		1				0			—		—		—		—				1
Treasury stock activity, net		—				—			(50)		—		—		—				(50)
Equity compensation expense		—				1,363			—		—		—		232				1,595
Other		—				6			—		—		—		(27)				(21)
Balance at September 30, 2020		$	1,289			$	471,146		$	(19,484)	$	(54,634)	$	(398,630)	$	95,488			$	95,175
Balance at March 31, 2021																					Balance at March 31, 2021	$	1,295		$	472,522				$	(19,933)		$	(45,525)		$	(304,951)		$	(941)		$	102,467

~~See Notes to~~ ~~Consolidated~~ ~~Financial Statements~~

~~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			Common Stock Par Value			Additional Paid-In Capital					Treasury Stock			Accumulated Other Comprehensive Loss			Retained Deficit			Noncontrolling Interest			Total Equity
								Currency Translation													Currency Translation

Balance at December 31, 2018				$	1,285				$	460,680	$	(18,950)	$	(51,663)			$	(217,952)					$	139,349				$	312,749
Net loss for first quarter 2019		—				—			—		—		(10,838)		(8,262)				(19,100)
Balance at December 31, 2019																					Balance at December 31, 2019	$	1,283			$	466,959				$	(19,164)		$	(52,183)		$	(362,522)		$	128,453		$	162,826
Net loss for first quarter 2020																					Net loss for first quarter 2020	—			—					—			—			(1,551)			(8,825)			(10,376)
Translation adjustment, net of taxes of $0	Translation adjustment, net of taxes of $0	—				—			—		(582)		—		176				(406)		Translation adjustment, net of taxes of $0	—			—					—			(6,238)			—			(229)			(6,467)
Comprehensive loss	Comprehensive loss	—				—			—		—		—		—				(19,506)		Comprehensive loss																					(16,843)
Distributions to public unitholders	Distributions to public unitholders	—				—			—		—		—		(307)				(307)		Distributions to public unitholders	—			—					—			—			—			(309)			(309)
Equity award activity	Equity award activity	(1)				—			—		—		—		—				(1)		Equity award activity	4			—					—			—			—			—			4
Treasury stock activity, net	Treasury stock activity, net	—				—			(155)		—		—		—				(155)		Treasury stock activity, net	—			—					(89)			—			—			—			(89)
Equity compensation expense	Equity compensation expense	—				1,628			—		—		—		311				1,939		Equity compensation expense	—			1,145					—			—			—			228			1,373
Conversions of CCLP Series A Preferred		—				—			—		—		—		2,539				2,539
Cumulative effect adjustment		—				—			—		—		2,843		—				2,843

Other	Other	—				(67)			—		—		—		76				9		Other	—			(16)					—			—			—			(15)			(31)
Balance at March 31, 2019		$	1,284			$	462,241		$	(19,105)	$	(52,245)	$	(225,947)	$	133,882			$	300,110
Net loss for second quarter 2019		—				—			—		—		(6,913)		(1,633)				(8,546)
Translation adjustment, net of taxes of $0		—				—			—		765		—		83				848
Comprehensive loss		—				—			—		—		—		—				(7,698)
Distributions to public unitholders		—				—			—		—		—		(308)				(308)
Balance at March 31, 2020																					Balance at March 31, 2020	$	1,287		$	468,088				$	(19,253)		$	(58,421)		$	(364,073)		$	119,303		$	146,931

Treasury stock activity, net		—				—			(11)		—		—		—				(11)
Equity compensation expense		—				2,100			—		—		—		567				2,667
Other		—				(36)			—		—		—		(33)				(69)
Balance at June 30, 2019		$	1,284			$	464,305		$	(19,116)	$	(51,480)	$	(232,860)	$	132,558			$	294,691
Net loss for third quarter 2019		—				—			—		—		(15,831)		(2,378)				(18,209)
Translation adjustment, net of taxes of $0		—				—			—		(3,762)		—		20				(3,742)
Comprehensive loss		—				—			—		—		—		—				(21,951)
Distributions to public unitholders		—				—			—		—		—		(309)				(309)
Equity award activity		0				—			—		—		—		—				0
Treasury stock activity, net		—				—			(48)		—		—		—				(48)
Equity compensation expense		—				1,316			—		—		—		(211)				1,105
Other		—				(6)			—		—		—		46				40
Balance at September 30, 2019		$	1,284			$	465,615		$	(19,164)	$	(55,242)	$	(248,691)	$	129,726			$	273,528

See Notes to Consolidated Financial Statements

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TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In ~~Thousands)~~Thousands, Unaudited)

~~(Unaudited)~~


		Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
Operating activities:	Operating activities:					Operating activities:
Net loss		$	(68,941)	$	(45,855)
Reconciliation of net loss to net cash provided by operating activities:
Net income (loss)						Net income (loss)	$	109,047	$	(10,376)
Reconciliation of net income (loss) to net cash provided by operating activities:						Reconciliation of net income (loss) to net cash provided by operating activities:
Depreciation, amortization, and accretion	Depreciation, amortization, and accretion	88,906		93,364		Depreciation, amortization, and accretion	8,981		29,460
Gain on GP Sale						Gain on GP Sale	(120,574)		0
Impairment and other charges	Impairment and other charges	14,445		3,306		Impairment and other charges	0		5,371
Gain on retained CSI Compressco units and Standard Lithium shares						Gain on retained CSI Compressco units and Standard Lithium shares	(3,992)		0
Equity-based compensation expense						Equity-based compensation expense	2,478		784

Benefit for deferred income taxes		550		545
Equity-based compensation expense		4,847		6,260
Provision for doubtful accounts		5,907		3,351
Loss on disposition of business		0		7,500
Amortization and expense of financing costs		3,698		4,614
Insurance recoveries associated with damaged equipment		(643)		(1,392)
Equipment received in lieu of cash		725		0
Debt exchange expenses		4,777		0
CCLP Series A Preferred Unit distributions and adjustments		0		3,574

Amortization and expense of financing costs and deferred financing gains						Amortization and expense of financing costs and deferred financing gains	728		569

Debt-related expenses						Debt-related expenses	93		0

Warrants fair value adjustment	Warrants fair value adjustment	(326)		(1,035)		Warrants fair value adjustment	323		(337)
Contingent consideration liability fair value adjustment		0		(800)

Gain on sale of assets	Gain on sale of assets	(4,340)		(1,583)		Gain on sale of assets	(255)		(833)
Other non-cash charges						Other non-cash charges	14		1,435
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	61,314		13,309		Accounts receivable	1,501		3,601
Inventories	Inventories	11,780		(6,847)		Inventories	498		(12,414)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(916)		(1,831)		Prepaid expenses and other current assets	(1,060)		(2,442)
Trade accounts payable and accrued expenses	Trade accounts payable and accrued expenses	(57,844)		10,344		Trade accounts payable and accrued expenses	8,521		8,742

Other	Other	888		(3,234)		Other	(478)		(1,384)
Net cash provided by operating activities	Net cash provided by operating activities	64,827		83,590		Net cash provided by operating activities	5,825		22,176
Investing activities:	Investing activities:					Investing activities:
Purchases of property, plant, and equipment, net	Purchases of property, plant, and equipment, net	(22,011)		(89,192)		Purchases of property, plant, and equipment, net	(6,761)		(12,390)
Acquisition of businesses, net of cash acquired		0		(12,024)

Proceeds from sale of CCLP, net of cash divested						Proceeds from sale of CCLP, net of cash divested	18		0
Proceeds on sale of property, plant, and equipment	Proceeds on sale of property, plant, and equipment	24,704		2,152		Proceeds on sale of property, plant, and equipment	561		1,425
Insurance recoveries associated with damaged equipment	Insurance recoveries associated with damaged equipment	643		1,392		Insurance recoveries associated with damaged equipment	110		0
Other investing activities	Other investing activities	(576)		(890)		Other investing activities	1,771		350
Net cash provided by (used in) investing activities		2,760		(98,562)
Net cash used in investing activities						Net cash used in investing activities	(4,301)		(10,615)
Financing activities:	Financing activities:					Financing activities:
Proceeds from long-term debt	Proceeds from long-term debt	404,060		246,090		Proceeds from long-term debt	160		56,512
Principal payments on long-term debt	Principal payments on long-term debt	(408,666)		(204,718)		Principal payments on long-term debt	(29,500)		(54,511)
CCLP distributions		(932)		(924)
CSI Compressco distributions						CSI Compressco distributions	0		(309)

Redemptions of CCLP Series A Preferred		0		(28,049)

Tax remittances on equity based compensation	Tax remittances on equity based compensation	(341)		(571)		Tax remittances on equity based compensation	0		(319)
Repurchase of common stock						Repurchase of common stock	(449)		0
Debt issuance costs and other financing activities	Debt issuance costs and other financing activities	(3,897)		(373)		Debt issuance costs and other financing activities	(98)		(235)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(9,776)		11,455		Net cash provided by (used in) financing activities	(29,887)		1,138
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(355)		(606)		Effect of exchange rate changes on cash	(1,303)		(940)
Increase (decrease) in cash and cash equivalents		57,456		(4,123)
(Decrease) increase in cash and cash equivalents						(Decrease) increase in cash and cash equivalents	(29,666)		11,759
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	17,768		40,102		Cash and cash equivalents and restricted cash at beginning of period	83,894		17,768
Cash and cash equivalents at beginning of period associated with discontinued operations						Cash and cash equivalents at beginning of period associated with discontinued operations	16,577		2,370
Cash and cash equivalents and restricted cash at beginning of period associated with continuing operations						Cash and cash equivalents and restricted cash at beginning of period associated with continuing operations	67,317		15,398
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	75,224	$	35,979	Cash and cash equivalents and restricted cash at end of period	54,228		29,527
Cash and cash equivalents at end of period associated with discontinued operations						Cash and cash equivalents at end of period associated with discontinued operations	0		7,416
Cash and cash equivalents and restricted cash at end of period associated with continuing operations						Cash and cash equivalents and restricted cash at end of period associated with continuing operations	$	54,228	$	22,111

Supplemental cash flow information:
Interest paid		$	42,199	$	49,073
Income taxes paid		4,692		6,226

See Notes to Consolidated Financial Statements

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TETRA Technologies, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

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

Organization

We are a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, water management, frac flowback and production well ~~testing and offshore rig cooling services, and compression services and equipment.~~testing. We were incorporated in Delaware in 1981. We are composed of 32 divisions – Completion Fluids & Products and Water & Flowback ~~Services, and Compression.~~Services. 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.

Presentation

Our unaudited consolidated financial statements include the accounts of our wholly owned 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 ~~September 30, 2020~~March 31, 2021 are not necessarily indicative of results that may be expected for the twelve months ended December 31, ~~2020.~~

We consolidate the financial statements of our CSI Compressco LP subsidiary (“CCLP”) as part of our Compression Division, as we determined that CCLP is a variable interest entity and we are the primary beneficiary. We control the financial interests of CCLP and have the ability to direct the activities of CCLP that most significantly impact its economic performance through our ownership of its general partner. The share of CCLP net assets and earnings that is not owned by us is presented as noncontrolling interest in our consolidated financial statements. Our cash flows from our investment in CCLP are limited to the quarterly distributions we receive on our CCLP common units and general partner interest (including incentive distribution rights) and the amounts collected for services we perform on behalf of CCLP, as TETRA’s capital structure and CCLP’s capital structure are separate, and do not include cross default provisions or cross guarantees.2021.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. 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, ~~2019~~2020 and notes thereto included in our Annual Report on Form 10-K, which we filed with the SEC on March ~~16, 2020.~~5, 2021.

Significant Accounting Policies

Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, ~~2019~~2020 included in our Annual Report on Form 10-K. There have been no significant changes in our accounting policies or the application thereof during the ~~third~~first quarter of ~~2020.~~2021.

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.

Reclassifications

Certain previously reported financial information has been reclassified to conform to the current year's presentation. ~~The~~For a discussion of the reclassification of the financial presentation of our former Compression Division as discontinued operations, see Note 2 - “Discontinued Operations”. Other than the discontinued operations presentation, the impact of ~~such~~ reclassifications was not significant to the prior ~~year’s~~year's overall presentation. Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate solely to continuing operations and exclude all discontinued operations.

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Impairments and Other Charges

Impairments of long-lived assets, including identified intangible assets, are determined periodically when indicators of impairment are present. If such indicators are present, the determination of the amount of impairment is based on our judgment as to the future undiscounted operating cash flows to be generated from the relevant assets throughout their remaining estimated useful lives. If these undiscounted cash flows are less than the carrying amount of the related assets, an impairment is recognized for the excess of the carrying value over fair value. Fair

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value of intangible assets is generally determined using the discounted present value of future cash flows using discount rates commensurate with the risks inherent with the specific assets. Assets held for disposal are recorded at the lower of carrying value or estimated fair value less estimated selling costs. ~~See Note 3 - “Impairments and Other Charges” for additional discussion of recorded impairments.~~There were no impairments associated with continuing operations during the three months ended March 31, 2021 or 2020.

~~Revenue Recognition~~

~~Performance Obligations.~~ Revenue is generally recognized when we transfer control of our products or services to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or providing services to our customers. We receive cash equal to the invoice price for most sales of product and services and payment terms typically range from 30 to 60 days from the date we invoice our customer. Since the period between when we deliver products or services and when the customer pays for such products or services is not expected to exceed one year, we have elected not to calculate or disclose a financing component for our customer contracts.

Depending on the terms of the arrangement, we may also defer the recognition of revenue for a portion of the consideration received because we have to satisfy a future performance obligation. For example, consideration received from customers during the fabrication of new compressor packages is typically deferred until control of the compressor package is transferred to our customer.

For any arrangements with multiple performance obligations, we use management’s estimated selling price to determine the stand-alone selling price for separate performance obligations. For revenue associated with mobilization of service equipment as part of a service contract arrangement, such revenue, if significant, is deferred and amortized over the estimated service period.

~~Product Sales.~~ Product sales revenues are generally recognized when we ship products from our facility to our customer. The product sales for our Completion Fluids & Products Division consist primarily of clear brine fluids (“CBFs”), additives, and associated manufactured products. Product sales for our Water & Flowback Services Division are typically attributed to specific performance obligations within certain production testing service arrangements. Parts and equipment sales comprise the product sales for the Compression Division.

~~Services~~. Service revenues represent revenue recognized over time, as our customer arrangements typically provide agreed upon day-rates (monthly service rates for compression services) and we recognize service revenue based upon the number of days services have been performed. Service revenue recognized over time is associated with a majority of our Water & Flowback Services Division arrangements, compression service and aftermarket service contracts within our Compression Division, and a small portion of Completion Fluids & Products Division revenue that is associated with completion fluid service arrangements. With the exception of the initial terms of the compression services contracts for medium- and high-horsepower compressor packages of our Compression Division, our customer contracts are generally for terms of one year or less. The majority of the service arrangements in the Water & Flowback Services Division are for a period of 90 days or less.

Sales taxes, value added taxes, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. We have elected to recognize the cost for freight and shipping costs as part of cost of product sales when control over our products (i.e. delivery) has transferred to the customer.

~~Use of Estimates.~~ In recognizing revenue for variable consideration arrangements, the amount of variable consideration recognized is limited so that it is probable that significant amounts of revenues will not be reversed in future periods when the uncertainty is resolved. For products returned by the customer, we estimate the expected returns based on an analysis of historical experience. For volume discounts earned by the customer, we estimate the discount (if any) based on our estimate of the total expected volume of products sold or services to be provided to the customer during the discount period. In certain contracts for the sale of CBFs, we may agree to issue credits

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~~for the repurchase of reclaimable used fluids from certain customers at an agreed price that is based on the condition of the fluids.~~

~~Contract Assets and Liabilities.~~We consider contract assets to be trade accounts receivable when we have an unconditional right to consideration and only the passage of time is required before payment is due. In certain instances, particularly those requiring customer specific documentation prior to invoicing, our invoicing of the customer is delayed until certain documentation requirements are met. In those cases, we recognize a contract asset rather than a billed trade accounts receivable until we are able to invoice the customer. Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets.

We classify contract liabilities as unearned income in our consolidated balance sheets. Such deferred revenue typically results from advance payments received on orders for new compressor equipment prior to the time such equipment is completed and transferred to the customer in accordance with the customer contract. New equipment sales orders generally take less than twelve months to build and deliver.

~~Bill-and-Hold Arrangements.~~ We design and fabricate compressor packages based on our customer’s specifications. In some cases, the customer will request us to hold the equipment, upon completion of the unit, until the job site is ready to receive the equipment. When this occurs, we along with the customer sign a bill-and-hold agreement, which outlines that the customer has title to the equipment, the equipment is ready for delivery, we cannot use the equipment or direct it to another customer, and we have a present right to payment. When those criteria have been met and the agreement is executed, we recognize the revenue on the equipment because control of the equipment has passed to our customer and our performance obligations are complete. Entering into these arrangements is something we have done as a courtesy for certain customers for many years. The equipment subject to the bill-and-hold agreements has generally been invoiced and paid for through progressive billings such that at the time the bill-and-hold agreement is executed, the majority of the contractual cash obligation of the customer has been received by us.

~~Operating Costs~~

Cost of product sales includes direct and indirect costs of manufacturing and producing our products, including raw materials, fuel, utilities, labor, overhead, repairs and maintenance, materials, services, transportation, warehousing, equipment rentals, insurance, and certain taxes. Cost of services includes operating expenses we incur in delivering our services, including labor, equipment rental, fuel, repair and maintenance, transportation, overhead, insurance, and certain taxes. We include in product sales revenues the reimbursements we receive from customers for shipping and handling costs. Shipping and handling costs are included in cost of product sales. Amounts we incur for “out-of-pocket” expenses in the delivery of our services are recorded as cost of services. Reimbursements for “out-of-pocket” expenses we incur in the delivery of our services are recorded as service revenues. Depreciation, amortization, and accretion includes depreciation expense for all of our facilities, equipment and vehicles, amortization expense on our intangible assets, and accretion expense related to our decommissioning and other asset retirement obligations.

We include in general and administrative expense all costs not identifiable to our specific product or service operations, including divisional and general corporate overhead, professional services, corporate office costs, sales and marketing expenses, insurance, and certain taxes.

Foreign Currency Translation

We have designated the ~~Euro,~~euro, the British pound, the Norwegian krone, the Canadian dollar, the Brazilian real, and the Mexican peso as the functional currencies for our operations in Finland and Sweden, the United Kingdom, Norway, Canada, Brazil, and certain of our operations in Mexico, respectively. The ~~U.S.~~United States dollar is the designated functional currency for all of our other ~~foreign~~non-U.S. operations. The cumulative translation effects of translating the applicable accounts from the functional currencies into the ~~U.S.~~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 ~~$(0.8)~~$(0.6) million and ~~$(3.2) millionduring the three and nine months ended September 30, 2020, respectively, and $(1.7) million and $(2.2)~~$0.2 million during the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2021 and March 31, 2020, respectively.

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Fair Value Measurements

We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements are utilized on a recurring basis in the determination of the carrying values of certain assets, including our interest in Standard Lithium Ltd. (“Standard Lithium”) and our retained interest in CSI Compressco and liabilities, including the liabilities for the warrants to purchase 11.2 million shares of our common stock (the “Warrants”) ~~and our foreign currency derivative contracts.~~. See Note 9 - “Fair Value Measurements” for further discussion.

Fair value measurements are also utilized on a nonrecurring basis in certain circumstances, such as in the allocation of purchase consideration for acquisition transactions to the assets and liabilities acquired, including intangible assets and goodwill (a Level 3 fair value measurement), the initial recording of our asset retirement obligations, and for the impairment of long-lived assets ~~including goodwill~~ (a Level 3 fair value measurement).

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Supplemental Cash Flow Information

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


			Three Months Ended March 31,
			2021						2020


	(in thousands)
Supplemental cash flow information(1):
Interest paid	$	3,973	$	15,421
Income taxes paid	252		1,479
Decrease in accrued capital expenditures	1,051		1,489

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

New Accounting Pronouncements

Standards adopted in ~~2020~~2021

In ~~August 2018,~~December 2019, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued Accounting Standards Update (“ASU”) ~~2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)~~2019-12, “Income Taxes (Topic 740): ~~Customer’s~~Simplifying the Accounting for ~~Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.~~Income Taxes.” ASU ~~2018-15~~2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocation, interim period income tax calculation methodology, and the recognition of deferred tax liabilities for outside basis differences. It also simplifies certain aspects of accounting for franchise taxes and clarifies the accounting for ~~implementation costs~~transactions that results in ~~cloud computing arrangements.~~a step-up in the tax basis of goodwill. On January 1, 2021, we adopted ASU ~~2018-15 is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted.~~2019-12. The adoption of this standard did not have a material impact on our consolidated financial statements.

Standards not yet adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses on financial instruments not accounted for at fair value through net income. The provisions require credit impairments to be measured over the contractual life of an asset and developed with consideration for past events, current conditions, and forecasts of future economic information. Credit impairment will be accounted for as an allowance for credit losses deducted from the amortized cost basis at each reporting date. We are continuing to work through our implementation plan which includes evaluating the impact on our allowance for doubtful accounts methodology, identifying new reporting requirements, and implementing changes to business processes, systems, and controls to support adoption of the standard. Upon adoption, the allowance for doubtful accounts is expected to increase with an offsetting adjustment to retained earnings. Updates at each reporting date after initial adoption will be recorded through selling, general, and administrative expense. ASU 2016-13 has an effective date of the first quarter of fiscal 2023. We continue to assess the potential effects of these changes to our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocation, interim period income tax calculation methodology, and the recognition of deferred tax liabilities for outside basis differences. It also simplifies certain aspects of accounting for franchise taxes and clarifies the accounting for transactions that results in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for us the first quarter of fiscal 2021. We continue to assess the potential effects of these changes to our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. Entities may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020. As of March 31, 2021, we have not modified our credit agreements to remove references to LIBOR. We are currently evaluating the impacts of the provisions of ASU 2020-04 on our consolidated financial statements.

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NOTE 2 – DISCONTINUED OPERATIONS

On January 29, 2021, we entered into the Purchase and Sale Agreement with Spartan Energy Partners, LP (“Spartan”) pursuant to which we sold the general partner of CSI Compressco, including the IDRs in CSI Compressco and approximately 23.1% of the outstanding limited partner interests in CSI Compressco, in exchange for the combination of $13.4 million in cash paid at closing, $0.5 million in cash payable on the six-month anniversary of the closing and $3.1 million in contingent consideration in the form of cash and/or CSI Compressco common units if CSI Compressco achieves certain financial targets on or before December 31, 2022. Throughout this Quarterly Report, we refer to the transaction with Spartan as the “GP Sale.”As a result of these transactions, we no longer consolidate CSI Compressco as of January 29, 2021. We recognized a primarily non-cash accounting gain of $120.6 million during the first quarter of 2021 related to the GP Sale. The gain is included in income (loss) from discontinued operations, net of taxes in our consolidated statement of operations. We will also continue to provide back-office support to CSI Compressco under a Transition Services Agreement for up to one year until CSI Compressco has completed a full separation from our back-office support functions.

Our interest in CSI Compressco and the general partner represented substantially all of our Compression Division. In addition, on March 1, 2018, we closed a series of related transactions that resulted in the disposition of our Offshore Division, consisting of our Offshore Services and Maritech segments. Our former Compression and Offshore Divisions are reported as discontinued operations for all periods presented. Our consolidated balance sheets and consolidated statements of operations report discontinued operations separate from continuing operations. Our consolidated statements of comprehensive income, statements of equity and statements of cash flows combine continuing and discontinued operations. Our current-year consolidated statement of operations, statement of comprehensive income, statement of equity and statement of cash flows include CSI Compressco activity for January 1 through January 29. Our consolidated statements of cash flows for the three-month periods ended March 31, 2021 and March 31, 2020 included $3.0 million and $6.5 million, respectively, of capital expenditures related to our former Compression division, as well as amortization of deferred financing discounts, costs and gains of $0.7 million for the three-month period ended March 31, 2020. Our current-year results do not include CSI Compressco depreciation or amortization as the assets were considered held for sale. A summary of financial information related to our discontinued operations is as follows:

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

(in thousands)


	Three Months Ended March 31, 2021
	Compression		Offshore Services		Total
Major classes of line items constituting income from discontinued operations
Revenue	$	18,968	$	0	$	18,968
Cost of revenues	11,474		28		11,502

General and administrative expense	2,795		(5)		2,790
Interest expense, net	4,336		0		4,336
Other expense, net	(106)		0		(106)
Pretax income (loss) from discontinued operations	469		(23)		446
Pretax gain on disposal of discontinued operations					120,574
Total pretax income from discontinued operations					121,020
Income tax provision					30
Total income from discontinued operations					$	120,990
Income from discontinued operations attributable to noncontrolling interest					$	(333)
Income from discontinued operations attributable to TETRA stockholders					$	120,657

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	Three Months Ended March 31, 2020
	Compression		Offshore Services		Total
Major classes of line items constituting loss from discontinued operations
Revenue	$	90,238	$	0	$	90,238
Cost of revenues	54,579		(60)		54,519
Depreciation, amortization, and accretion	19,908		0		19,908
Impairments and other charges	5,371		0		5,371
General and administrative expense	10,189		205		10,394
Interest expense, net	12,564		0		12,564
Other expense, net	417		0		417
Pretax (loss) from discontinued operations	(12,790)		(145)		(12,935)


Income tax provision					433
Total loss from discontinued operations					$	(13,368)
Loss from discontinued operations attributable to noncontrolling interest					$	8,834
Loss from discontinued operations attributable to TETRA stockholders					$	(4,534)

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

(in thousands)


	March 31, 2021
	Offshore Services		Maritech		Total









Carrying amounts of major classes of liabilities included as part of discontinued operations
Trade payables	$	1,222	$	0	$	1,222

Accrued liabilities and other	296		228		524


Total liabilities associated with discontinued operations	$	1,518	$	228	$	1,746


	December 31, 2020
	Compression		Offshore Services		Maritech		Total
Carrying amounts of major classes of assets included as part of discontinued operations
Cash and cash equivalents	$	16,577	$	0	$	0	$	16,577
Trade receivables	43,837		0		0		43,837
Inventories	31,220		0		0		31,220
Other current assets	5,231		0		0		5,231
Property, plant, and equipment	551,401		0		0		551,401
Other assets	61,740		0		0		61,740
Total assets associated with discontinued operations	$	710,006	$	0	$	0	$	710,006

Carrying amounts of major classes of liabilities included as part of discontinued operations
Trade payables	$	19,766	$	1,222	$	0	$	20,988
Unearned Income	269		0		0		269
Accrued liabilities and other	36,318		352		228		36,898
Long-term debt, net	638,631		0		0		638,631
Other liabilities	37,253		0		0		37,253
Total liabilities associated with discontinued operations	$	732,237	$	1,574	$	228	$	734,039

See Note 8 - “Commitments and Contingencies” for further discussion of contingencies associated with discontinued operations.

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~~NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS~~

~~As of September 30, 2020, we had~~ ~~$47.1 million~~ ~~of remaining contractual performance obligations for compression services.~~ As a practical expedient, this amount does not reflect revenue for compression service contracts whose original expected duration is less than twelve months and does not consider the effects of the time value of money. Expected revenue to be recognized in the future as of September 30, 2020 for completion of performance obligations of compression service contracts are ~~as follows:~~

2020 2021 2022 2023 2024 Total
(In Thousands)
Compression service contracts remaining performance obligations $ 13,939 $ 26,608 $ 5,785 $ 703 $ 56 $ 47,091

For sales of CBFs where we have agreed to issue credits for the repurchase of reclaimable used fluids at an agreed price based on the condition of the fluid upon return, we adjust the revenue recognized in the period of shipment by an estimated amount, based on historical experience, of the credit expected to be issued. As of September 30, 2020, the amount of remaining credits expected to be issued for the repurchase of reclaimable used fluids was ~~$1.1 million recorded in inventory (right of return asset) and either accounts payable or as a reduction to accounts receivable. T~~here were no material differences between amounts recognized during the three and nine month period ended September 30, 2020, compared to estimates made in a prior period from these variable consideration arrangements.

~~Our contract asset balances, primarily associated with customer documentation requirements, were $17.2 million and $34.9 million as of~~ ~~September 30, 2020 and~~ ~~December 31, 2019, respectively. Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets.~~

~~Collections primarily associated with progressive billings to customers for the construction of compression equipment is included in unearned income in~~ ~~the consolidated balance sheets.~~ ~~The following table reflects the changes in unearned income in our consolidated balance sheets for the periods indicated:~~

Nine Months Ended
September 30,
2020 2019
(In Thousands)
Unearned Income, beginning of period $ 9,678 $ 25,333
Additional unearned income 38,979 106,744
Revenue recognized (41,624) (105,486)
Unearned income, end of period $ 7,033 $ 26,591

During the nine month period ended September 30, 2020, we recognized product sales revenue of $9.4 million from unearned income that was deferred as of December 31, 2019. During the nine months ended September 30, 2019, we recognized product sales revenue of $22.2 million from unearned income that was deferred as of December 31, 2018.

~~As of September 30, 2020, contract costs were immaterial.~~

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We disaggregate revenue from contracts with customers into Product Sales and Services within each segment, as noted in our three reportable segments in Note 12. In addition, we disaggregate revenue from contracts with customers by geography based on the following table below.

Three months ended September 30, Nine months ended September 30,
2020 2019 2020 2019
(In Thousands)
Completion Fluids & Products
U.S. 15,013 31,480 $ 85,073 $ 100,622
International 36,937 27,860 113,460 100,066
51,950 59,340 198,533 200,688
Water & Flowback Services
U.S. 19,767 68,052 97,016 209,663
International 1,767 4,789 6,708 14,980
21,534 72,841 103,724 224,643
Compression
U.S. 71,478 105,153 240,661 324,792
International 7,639 8,613 25,066 28,348
79,117 113,766 265,727 353,140
Total Revenue
U.S. 106,258 204,685 422,750 635,077
International 46,343 41,262 145,234 143,394
152,601 245,947 $ 567,984 $ 778,471

~~NOTE 3 –IMPAIRMENTS AND OTHER CHARGES~~

~~Impairments of Long-Lived Assets~~

During the first nine months of 2020, the COVID-19 pandemic and decline in oil and gas prices had a significant impact on our customers and industry. These events led to a significant reduction in the operations of our customers resulting in a decrease in demand in certain of our service lines.

During the first quarter of 2020, we started to see our customers revise their capital budgets downwards and adjust their operations accordingly, which led to a decline in orders for new compression equipment to be fabricated and sold to third parties. We concluded that these events were indicators of impairment for all our asset groups within our Compression Division and certain asset groups within our Completion Fluids & Products Division. We performed recoverability analyses on the relevant asset groups within these divisions. Based upon these recoverability analyses, we determined that the carrying values of our Midland manufacturing facility and related new unit sales inventory in our Compression Division exceeded their respective fair values. Therefore, we recorded impairments of approximately $5.4 million related to these assets. Fair value was estimated based on a market approach.

During the second quarter of 2020, primarily as a result of continued negative impacts on our compression fleet associated with the COVID-19 pandemic and declines in oil and gas prices, our Compression Division recorded impairments and other charges of approximately $9.0 million associated with non-core used compressor equipment that we have held for sale, the low-horsepower class of our compression fleet, and field inventory for compression and related services. During the third quarter of 2020, no further impairments were recorded. Impairment charges are reflected in impairment and other charges in our consolidated statements of operations. Fair value used to determine impairments was estimated based on a market approach. Given the dynamic nature of the events, we are not able to reasonably estimate how long our operations will be adversely impacted and the full impact these events will have on our operations. As a result, we could have indicators of impairment again in future periods resulting in additional asset impairments.

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~~NOTE 4 – INVENTORIES~~

~~Components of inventories as of September 30, 2020 and December 31, 2019 are as follows:~~

September 30, 2020 December 31, 2019
(In Thousands)
Finished goods $ 70,452 $ 70,135
Raw materials 3,744 4,125
Parts and supplies 32,340 47,793
Work in progress 6,484 14,457
Total inventories $ 113,020 $ 136,510

Finished goods inventories include newly manufactured clear brine fluids as well as used brines that are repurchased from certain customers for recycling. Work in progress inventory consists primarily of new compressor packages located at our Compression Division manufacturing facility in Midland, Texas as well as work in progress on certain compression services jobs.

~~NOTE 5 – LEASES~~

We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. We have finance leases for certain storage tanks and equipment rentals. These finance leases are not material to our financial statements. Our leases have remaining lease terms ranging from 1 to 16 years. Some of our leases have options to extend for various periods, while some have termination options with prior notice of generally 30 days or six months. The office space, warehouse space, operating location leases, and machinery and equipment leases generally require us to pay all maintenance and insurance costs. During the fourth quarter of 2019, CCLP entered into a lease agreement commitment for 14 compressor packages. The leases are for an initial term of seven years and commenced upon the completion of the equipment fabrication. During the first quarter, CCLP took delivery of eight compressor packages. During the second quarter, CCLP took delivery of the remaining six compressor packages. We have no other lease commitments that have not yet commenced that create significant rights and obligations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Variable rent expense was not material.

Our corporate headquarters facility located in The Woodlands, Texas, was sold on December 31, 2012, pursuant to a sale and leaseback transaction. As a condition to the completion of the purchase and sale of the facility, the parties entered into a lease agreement for the facility having an initial lease term of 15 years, which is classified as an operating lease. Under the terms of the lease agreement, we have the ability to extend the lease for five successive five-year periods at base rental rates to be determined at the time of each extension.

Components of lease expense, included in either cost of revenues or general and administrative expense based on the use of the underlying asset, are as follows (inclusive of lease expense for leases not included on our consolidated balance sheet based on our accounting policy election to exclude leases with a term of 12 months or less):

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
(In Thousands)
Operating lease expense $ 5,822 $ 5,075 $ 17,839 $ 15,106
Short-term lease expense 3,758 9,556 17,061 30,269
Total lease expense $ 9,580 $ 14,631 $ 34,900 $ 45,375

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~~Supplemental cash flow information:~~

Nine Months Ended September 30,
2020 2019
(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases $ 17,861 $ 14,868
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 24,201 $ 7,631

~~Supplemental balance sheet information:~~

September 30, 2020 December 31, 2019
(In Thousands)
Operating leases:
     Operating lease right-of-use assets $ 78,867 $ 68,131
     Accrued liabilities and other $ 16,362 $ 15,850
     Operating lease liabilities 64,200 53,919
     Total operating lease liabilities $ 80,562 $ 69,769

~~Additional operating lease information:~~

September 30, 2020 December 31, 2019
Weighted average remaining lease term:
Operating leases 6.09 years 6.43 years
Weighted average discount rate:
Operating leases 9.33 % 9.46 %

~~Future minimum lease payments by year and in the aggregate, under non-cancellable operating leases with terms in excess of one year consist of the following at September 30, 2020:~~

Operating Leases
(In Thousands)
Remainder of 2020 $ 5,809
2021 22,322
2022 18,896
2023 15,803
2024 12,067
Thereafter 32,611
Total lease payments 107,508
Less imputed interest (26,946)
Total lease liabilities $ 80,562

At September 30, 2020, future minimum rental receipts under a non-cancellable sublease for office space in one of our locations totaled $5.0 million. For the three and nine months ended September 30, 2020, we recognized sublease income of $0.3 million and $0.9 million.

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NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Our contract asset balances, primarily associated with customer documentation requirements, were $16.9 million and $12.8 million as of March 31, 2021 and December 31, 2020, respectively. Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets.

Unearned income includes amounts in which the Company was contractually allowed to invoice prior to satisfying the associated performance obligations. Unearned income balances were $1.2 million and $2.7 million as of March 31, 2021 and December 31, 2020, respectively, and vary based on the timing of invoicing and performance obligations being met. Revenues recognized during the three-month periods endedMarch 31, 2021 and March 31, 2020 deferred as of the end of the preceding year were not significant. During the three-month periods ended March 31, 2021 and March 31, 2020, contract costs were not significant.

We disaggregate revenue from contracts with customers into Product Sales and Services within each segment, as noted in our two reportable segments in Note 11. In addition, we disaggregate revenue from contracts with customers by geography based on the following table below.


	Three Months Ended March 31,
	2021		2020
	(In Thousands)
Completion Fluids & Products
United States	$	24,597	$	37,958
International	21,925		37,279
	46,522		75,237
Water & Flowback Services
United States	28,931		54,384
International	1,871		3,083
	30,802		57,467




Total Revenue
United States	53,528		92,342
International	23,796		40,362
	$	77,324	$	132,704

NOTE 4 – INVENTORIES

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


	March 31, 2021		December 31, 2020
	(In Thousands)
Finished goods	$	64,484	$	68,121
Raw materials	3,288		2,910
Parts and supplies	5,018		4,001
Work in progress	1,670		1,626
Total inventories	$	74,460	$	76,658

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

NOTE 5 – LEASES

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insurance costs. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Variable rent expense was not material.


	Three Months Ended March 31,
	2021		2020
	(In Thousands)
Operating lease expense	$	3,241	$	3,704
Short-term lease expense	6,457		9,010
Total lease expense	$	9,698	$	12,714

Supplemental cash flow information:


	Three Months Ended March 31,
	2021		2020
	(In Thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	3,296	$	3,745

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	1,017	$	4,218

Supplemental balance sheet information:


	March 31, 2021		December 31, 2020
	(In Thousands)
Operating leases:
Operating lease right-of-use assets	$	41,293	$	43,448

Accrued liabilities and other	$	8,507	$	8,795
Operating lease liabilities	35,608		37,569
Total operating lease liabilities	$	44,115	$	46,364

Additional operating lease information:


	March 31, 2021		December 31, 2020
Weighted average remaining lease term:
Operating leases	6.6 years		6.8 years


Weighted average discount rate:
Operating leases	9.64	%	9.62	%

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Future minimum lease payments by year and in the aggregate, under non-cancellable operating leases with terms in excess of one year consist of the following at March 31, 2021:


		Operating Leases
	(In Thousands)

Remainder of 2021		$	9,393
2022		10,827
2023		8,784
2024		7,299
2025		5,419
Thereafter		18,474
Total lease payments		60,196
Less imputed interest		(16,081)
Total lease liabilities		$	44,115

At March 31, 2021, future minimum rental receipts under a non-cancellable sublease for office space in one of our locations totaled $5.2 million. For the three months ended March 31, 2021, we recognized sublease income of $0.3 million.

NOTE 6 – INVESTMENTS

Following the closing of the GP Sale, we continue to own approximately 10.9% of the outstanding CSI Compressco common units. In addition, we are party to agreements in which Standard Lithium has the right to explore, produce and extract lithium in our Arkansas leases as well as additional potential resources in the Mojave region of California. The Company receives cash and stock of Standard Lithium (TSXV: SLL) 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. See Note 9 - “Fair Value Measurements” for further information.

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


	March 31, 2021		December 31, 2020
	(In Thousands)
Investment in CSI Compressco	$	9,533	$	0
Investment in Standard Lithium	3,787		2,675
Total Investments	13,320		2,675

NOTE 7 – LONG-TERM DEBT AND OTHER BORROWINGS

We believe our capital structure, excluding CCLP, (“TETRA”) and CCLP’s capital structure should be considered separately, as there are no cross default provisions or cross guarantees between CCLP’s debt and TETRA’s debt.

Consolidated long-term debt as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, consists of the following:

September 30, 2020 December 31, 2019
(In Thousands)
TETRA Scheduled Maturity
Asset-based credit agreement (presented net of unamortized deferred financing costs of $0 million as of September 30, 2020 and $1.0 million as of December 31, 2019) September 10, 2023 $ 0 $ 0
Term credit agreement (presented net of the unamortized discount of $5.7 million as of September 30, 2020 and $6.4 million as of December 31, 2019 and net of unamortized deferred financing costs of $8.5 million as of September 30, 2020 and $9.5 million as of December 31, 2019) September 10, 2025 206,273 204,633
TETRA total long-term debt $ 206,273 $ 204,633
CCLP
CCLP asset-based credit agreement (presented net of unamortized deferred financing costs of $0 million as of September 30, 2020 and $0.9 million of December 31, 2019) June 29, 2023 0 2,622
CCLP 7.25% Senior Notes (presented net of the unamortized discount of $0.3 million as of September 30, 2020 and $1.7 million as of December 31, 2019 and net of unamortized deferred financing costs of $0.5 million as of September 30, 2020 and $2.8 million as of December 31, 2019) August 15, 2022 79,893 291,444
CCLP 7.50% First Lien Notes (presented net of unamortized deferred financing costs of $5.4 million as of September 30, 2020 and $5.8 million as of December 31, 2019, net of the unamortized discount of $0.2 million as of September 30, 2020, and net of deferred restructuring gain of $5.3 million as of September 30, 2020) April 1, 2025 399,640 344,172
CCLP 10.00%/10.75% Second Lien Notes (presented net of the unamortized discount of $0.8 million as of September 30, 2020, net of unamortized deferred financing costs of $1.2 million as of September 30, 2020, and net of deferred restructuring gain of $3.9 million as of September 30, 2020) April 1, 2026 157,410 0
CCLP total long-term debt $ 636,943 $ 638,238
Consolidated total long-term debt $ 843,216 $ 842,871


	Scheduled Maturity	March 31, 2021		December 31, 2020
		(In Thousands)
TETRA
Asset-based credit agreement	September 10, 2023	$	0	$	0
Term credit agreement (1)	September 10, 2025	171,160		199,894


Total long-term debt		$	171,160	$	199,894

(1) Net of unamortized discount of $5.3 million and $5.5 million as of March 31, 2021 and December 31, 2020, respectively, and net of unamortized deferred financing costs of $7.8 million and $8.2 million as of March 31, 2021 and December 31, 2020, respectively.

As of ~~September 30, 2020, TETRA~~March 31, 2021, we had 0 outstanding balance and $~~6.4~~6.9 million in letters of credit against ~~its~~our asset-based credit agreement (“ABL Credit Agreement”). Because there was no outstanding balance on this ABL Credit Agreement, associated deferred financing costs of ~~$1.1~~$0.9 million as of ~~September 30, 2020,~~March 31, 2021, were classified as other long-term assets on the accompanying consolidated balance sheet. As of ~~September 30, 2020,~~March 31, 2021, subject to compliance with the

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covenants, borrowing base, and other provisions of the ABL Credit Agreement that may limit borrowings, ~~TETRA~~we had an availability of ~~$25.8~~$26.9 million under this agreement.

~~As of September 30, 2020, CCLP had 0 balance outstanding and$2.5 million in letters of~~Our creditagainst its asset-based credit agreement (“CCLP Credit Agreement”). Because there was no outstanding balance under the CCLP Credit Agreement, associated deferred financing costs of $0.7 million were classified as other long-term assets on the accompanying consolidated balance sheet. As of September 30, 2020, and subject to compliance with the covenants, borrowing base, and other provisions of the CCLP Credit Agreement that may limit borrowings, CCLP had availability of $14.5 million.

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~~TETRA and CCLP credit and senior note~~ agreements contain certain affirmative and negative covenants, including covenants that restrict the ability to pay dividends or other restricted payments. ~~TETRA and CCLP~~As of March 31, 2021, we are ~~both~~ in compliance with all covenants ~~of their respective credit and senior note agreements as of September 30, 2020.~~

~~Second Amendment to Credit Agreement~~

~~On June 11, 2020, CSI Compressco, LP and CSI Compressco Sub Inc (the “Borrowers”) entered into the~~Second Amendment to Loan and Security Agreement (the “Amendment”) amending the Loan and Security Agreement dated June 29, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) with Bank of America, N.A., in its capacity as administrative agent, issuing bank and swing line issuer (“Administrative Agent”), and the other lenders and loan parties party thereto. The Amendment provided for changes and modifications to the Credit Agreement which include, among other things, changes to certain terms of the Credit Agreement as follows: (i) resizing of the maximum credit commitment under the ~~Credit Agreement from $50,000,000~~credit agreements. Our term credit agreement requires us to ~~$35,000,000; (ii) the inclusion~~offer to prepay a percentage of ~~a $5,000,000 reserve with respect to the Borrowing Base~~Excess Cash Flow (as defined in the ~~Credit Agreement) thereunder, which would result in reduced borrowing availability; (iii)~~term credit agreement) following the ~~removal~~conclusion of the financial covenant compliance test with respect to the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement); (iv) an increase in the applicable margin related to (x) LIBOR Rate Loans (as defined in the Credit Agreement) to a range between 3.00% and 3.50% and (y) Base Rate Loans (as defined in the Credit Agreement) to a range between 2.00% and 2.50%, in each case, which shall be determined according to average daily excess availability under the Credit Agreement; and (v) an increase in the rate used to calculate the commitment fee in respect of the unutilized commitments under the Credit Agreement to 0.50%. In connection to this amendment, $0.2 million of financing costs were incurred by CCLP and deferred against the carrying value of the amount outstanding, if any. Additionally, $0.2 million of financing fees were charged to other (income) expense, net during the nine month period ended September 30, 2020.

~~First Supplemental Indenture for the Old Notes~~

On June 11, 2020, CSI Compressco, LP and CSI Compressco Finance Inc. (the “Issuers”) announced that they had accepted for exchange $215,208,000, or approximately 72.7%, of their outstanding 7.25% Senior Notes due 2022 (the “Old Notes”) that were validly tendered (and not validly withdrawn) by 11:59 p.m., New York City time, on June 10, 2020, for (i) $50,000,000 of the Issuers’ 7.50% Senior Secured First Lien Notes due 2025 (the “7.50% First Lien Notes”) and (ii) $155,529,000 aggregate principal amount of new 10.00%/10.75% Senior Secured Second Lien Notes due 2026 (the “10.00%/10.75% Second Lien Notes” and, together with the 7.50% First Lien Notes, the “New Notes”), pursuant to its previously announced exchange offer and consent solicitation (the “Exchange Offer”), which commenced on April 17, 2020. In connection with the exchange offer, CCLP incurred financing fees of $4.6 million which were charged to other (income) expense, net during the nine month period ended September 30, 2020.

On June 12, 2020, following receipt of the requisite consents of the holders of the Old Notes, the Issuers entered into the First Supplemental Indenture (the “First Supplemental Indenture”), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of August 4, 2014 (the “Unsecured Indenture”), by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee.

The First Supplemental Indenture eliminated substantially all of the restrictive covenants and certain of the default provisions in the Unsecured Indenture and became operative upon the consummation by the Issuers of the Exchange Offer.

On June 12, 2020, the Issuers issued $50,000,000 in aggregate principal amount of New First Lien Notes to certain holders of the Old Notes pursuant to the terms of the Exchange Offer. In March 2018, the Issuers had issued $350,000,000 in aggregate principal amount of 7.50% Senior Secured Notes due 2025 (the “Existing First Lien Notes” and, together with the New First Lien Notes, the “7.50% First Lien Notes”) pursuant to the First Lien Base Indenture. The New First Lien Notes were issued as “additional notes” under the First Lien Base Indenture and will be treated as a single class with such notes but will not trade fungibly with the Existing First Lien Notes.

~~Second Lien Notes Indenture~~

On June 12, 2020, the Issuers issued $155,529,000 in aggregate principal amount of the 10.00%/10.75% Second Lien Notes to certain holders of the Old Notes pursuant to the terms of the Exchange Offer. The Issuers

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issued the 10.00%/10.75% Second Lien Notes pursuant to an indenture, dated June 12, 2020 (the “Second Lien Notes Indenture”),by and among the Issuers, the subsidiary guarantors named therein and U.S. Bank National Association, as trustee (the “Second Lien Trustee”). In connection with the payment of PIK Interest (as defined below), if any, in respect of the 10.00%/10.75% Second Lien Notes, the Issuers will be entitled, without the consent of the Holders, to increase the outstanding aggregate principal amount of the 10.00%/10.75% Second Lien Notes or issue additional notes (“PIK notes”) under the Second Lien Notes Indenture on the same terms and conditions as the 10.00%/10.75% Second Lien Notes offered hereby (each such increase or issuance, a “PIK Payment”). The Issuers may issue additional 10.00%/10.75% Second Lien Notes under the Second Lien Notes Indenture from time to time. Any issuance of additional 10.00%/10.75% Second Lien Notes (including PIK notes) is subject to all of the covenants in the Second Lien Notes Indenture. The 10.00%/10.75% Second Lien Notes and any additional 10.00%/10.75% Second Lien Notes subsequently issued under the indenture, will be treated as a single class for all purposes under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Subject to the making of PIK Payments, the Issuers will issue 10.00%/10.75% Second Lien Notes in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000; provided that PIK Payments may result in 10.00%/10.75% Second Lien Notes being issued in denominations of $1.00 and integral multiples of $1.00. The 10.00%/10.75% Second Lien Notes will mature on April 1, 2026. Interest on the 10.00%/10.75% Second Lien Notes will be payable semi-annually in arrears on April 1 and October 1, commencing on October 1, 2020. The Issuers will make each interest payment to the holders of record on March 15 and September 15 immediately preceding each interest payment date. Interest will accrue at (1) the annual rate of 7.250% payable in cash, plus (2) at the election of the Issuers (made by delivering a notice to the Second Lien Trustee not less thancalendar year. Within five business days ~~prior to~~of filing our Annual Report Form 10-K for the ~~record date),~~year ending December 31, 2021, the ~~annual rate of (i) 2.750% payable in cash (together with the annual rate set forth in clause (1), the “Cash Interest Rate”) or (ii) 3.500% payable by increasing the principal~~minimum amount of the outstanding 10.00%/10.75% Second Lien Notes or by issuing additional PIK notes, in each case rounding up to the nearest $1.00 (such increased principal amount or additional PIK notes, the “PIK Interest”). In the absence of an interest payment election made by the Issuers as set forth above, interest on the noteswe will be ~~payable as if the Issuers had elected~~required to ~~pay PIK Interest with respect~~offer to ~~the portion of interest payable~~prepay pursuant to ~~clause (2) above.~~

~~The 10.00%/10.75% Second Lien Notes are jointly and severally, and fully and unconditionally, guaranteed (the “Guarantees”) on~~this obligation is $8.2 million, which is reported as a senior secured basis initially by each of the Partnership’s domestic restricted subsidiaries (other than Finance Corp, certain immaterial subsidiaries and certain other excluded domestic subsidiaries, the “Guarantors”) and will be secured by a second-priority security interestcurrent liability in substantially all of the Issuers’ and the Guarantors’ assets (other than certain excluded assets) (the “Collateral”) as collateral security for their obligations under the 10.00%/10.75% Second Lien Notes, subject to certain permitted encumbrances and exceptions. At any time prior to April 1, 2023, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount of the 10.00%/10.75% Second Lien Notes issued under the Second Lien Notes Indenture at a redemption price of 110.000% of the principal amount of the 10.00%/10.75% Second Lien Notes, plus accrued and unpaid interest to the redemption date, with an amount of cash equal to the net cash proceeds of certain equity offerings. On or after April 1, 2023, the Issuers may redeem all or part of the 10.00%/10.75% Second Lien Notes at redemption prices (expressed as percentages of the principal amount) equal to (i) 107.500% for the twelve month period beginning on April 1, 2023; (ii) 105.000% for the twelve-month period beginning on April 1, 2024 and (iii) 100.000% at any time thereafter, plus accrued and unpaid interest up to, but not including, the redemption date. In addition, at any time prior to April 1, 2023, the Company may redeem all or a part of the 10.00%/10.75% Second Lien Notes at a redemption price equal to 100% of the principal amount of the 10.00%/10.75% Second Lien Notes to be redeemed plus a make-whole premium, plus accrued and unpaid interest up to, but not including, the redemption date.

The Second Lien Notes Indenture contains customary covenants restricting the Partnership’s ability and the ability of its restricted subsidiaries to: (i) pay distributions on, purchase or redeem its common units or purchase or redeem its subordinated debt; (ii) incur or guarantee additional indebtedness or issue certain kinds of preferred equity securities; (iii) create or incur certain liens securing indebtedness; (iv) sell assets, including dispositions of the Collateral; (v) consolidate, merge or transfer all or substantially all of its assets; (vi) enter into transactions with affiliates; and (vii) enter into agreements that restrict distributions or other payments from its restricted subsidiaries to the Partnership. These covenants are subject to a number of important limitations and exceptions, including certain provisions permitting the Partnership, subject to the satisfaction of certain conditions, to transfer assets to certain of its unrestricted subsidiaries. Moreover, if the 10.00%/10.75% Second Lien Notes receive an investment grade rating from at least two rating agencies and no default has occurred and is continuing under the 10.00%/10.75% Second Lien Notes Indenture, many of the restrictive covenants in the Second Lien Notes Indenture will be terminated. The Second Lien Notes Indenture also contains customary events of default and acceleration provisions relating to such events of default, which provide that upon an event of default under the

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Second Lien Notes Indenture, the Second Lien Trustee or the holders of at least 25% in aggregate principal amount of the then outstanding 10.00%/10.75% Second Lien Notes may declare all of the 10.00%/10.75% Second Lien Notes to be due and payable immediately.our consolidated balance sheet

~~NOTE 7 – DISCONTINUED OPERATIONS~~

On March 1, 2018, we closed a series of related transactions that resulted in the disposition of our Offshore Division. As a result, we have accounted for our Offshore Division, consisting of our Offshore Services and Maritech segments, as discontinued operations. See Note 8 - “Commitments and Contingencies” for further discussion. A summary of financial information related to our discontinued operations is as follows:

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

~~(in thousands)~~

Three Months Ended
September 30, 2020 Three Months Ended
September 30, 2019
Offshore Services Maritech Total Offshore Services Maritech Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Cost of revenues 2 0 2 (273) 0 (273)
Depreciation, amortization, and accretion 0 0 0 52 0 52
General and administrative expense 171 0 171 1,734 0 1,734
Other expense, net 0 0 0 117 0 117
Pretax income (loss) from discontinued operations (173) 0 (173) (1,630) 0 (1,630)
Pretax (loss) on disposal of discontinued operations 0 (7,500)
Total pretax (loss) from discontinued operations (173) (9,130)
Income tax provision (benefit) 0 0
Total (loss) from discontinued operations $ (173) $ (9,130)

Nine Months Ended
September 30, 2020 Nine Months Ended
September 30, 2019
Offshore Services Maritech Total Offshore Services Maritech Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Cost of revenues (332) 0 (332) (251) 0 (251)
Depreciation, amortization, and accretion 0 0 0 52 0 52
General and administrative expense 487 0 487 2,483 0 2,483
Other expense, net 0 0 0 117 0 117
Pretax (loss) from discontinued operations (155) 0 (155) (2,401) 0 (2,401)
Pretax (loss) on disposal of discontinued operations 0 (7,500)
Total pretax (loss) from discontinued operations (155) (9,901)
Income tax provision (benefit) 0 0
Total (loss) from discontinued operations $ (155) $ (9,901)

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

~~(in thousands)~~

September 30, 2020 December 31, 2019
Offshore Services Maritech Total Offshore Services Maritech Total
Carrying amounts of major classes of assets included as part of discontinued operations
Trade receivables $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Other current assets 0 0 0 0 0 0
Assets of discontinued operations $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Carrying amounts of major classes of liabilities included as part of discontinued operations
Trade payables $ 1,223 $ 0 $ 1,223 $ 1,233 $ 0 $ 1,233
Accrued liabilities 401 228 629 745 120 865
Liabilities of discontinued operations $ 1,624 $ 228 $ 1,852 $ 1,978 $ 120 $ 2,098

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Litigation

We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. 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.

Contingencies of Discontinued Operations

In early 2018, we closed the Maritech Asset Purchase and Sale Agreement with Orinoco Natural Resources, LLC (“Orinoco”) that provided for the purchase by Orinoco of Maritech’s remaining oil and gas properties and related assets. ~~Shortly thereafter,~~Also in early 2018, we closed the Maritech Membership Interest Purchase and Sale Agreement with Orinoco that provided for the purchase by Orinoco of all of the outstanding membership interests in Maritech. ~~As a result of these transactions, we have effectively exited the business of our former Maritech segment.~~

Under the Maritech Asset Purchase and Sale Agreement, Orinoco assumed all of Maritech’s decommissioning liabilities related to the leases sold to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase and Sale Agreement, Orinoco assumed all other liabilities of Maritech, including the decommissioning liabilities associated with the oil and gas properties previously sold 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 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 USU.S. Department of the Interior and other parties, respectively.

Pursuant to a Bonding Agreement entered into as part of these transactions (the “Bonding Agreement”), Orinoco provided non-revocable performance bonds in an aggregate amount of $46.8 million to cover the performance by Orinoco and Maritech of the asset retirement obligations of Maritech (the “Initial Bonds”) and agreed to replace, within 90 days following the closing, the Initial Bonds with other non-revocable performance bonds, meeting certain requirements, in the aggregate sum of $47.0 million (collectively, the “Interim Replacement Bonds”). Orinoco further agreed to replace, within 180 days following the closing, the Interim Replacement Bonds with a maximum of three non-revocable performance bonds in the aggregate sum of $47.0 million, meeting certain requirements (the “Final Bonds”). Among the other requirements of the Final Bonds was that they must provide coverage for all of the asset retirement obligations of Maritech instead of only relating to specific properties. In the event Orinoco ~~did~~does not provide the Interim Replacement Bonds or the Final Bonds, Orinoco ~~was~~is required to make certain cash escrow payments to us.

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been granted. On November 5, 2019, the trial court signed an order granting our motion for new trial and vacating the prior order granting summary judgment for Orinoco and the Clarkes. The parties are awaiting direction from the court on a new scheduling order and/or trial setting. The Initial Bonds, which are non-revocable, remain in effect.

If we become liable in the future for any decommissioning liability associated with any property covered by either an Initial Bond or an Interim Replacement Bond while such bonds are outstanding and the payment made to us under such bond is not sufficient to satisfy such liability, the Bonding Agreement provides that Orinoco will pay us an amount equal to such deficiency and if Orinoco fails to pay any such amount, such amount must be paid by the Clarkes under the Clarke Bonding Guaranty Agreement. However, if the Final Bonds or the full amount of the escrowed cash have been provided, neither Orinoco nor the Clarkes would be liable to pay us for any such deficiency. Our financial condition and results of operations may be negatively affected if Orinoco is unable to cover any such deficiency or if we become liable for a significant portion of the decommissioning liabilities.

In early 2018, we also closed the sale of our Offshore Division to Epic Companies, LLC (“Epic Companies,” formerly known as Epic Offshore Specialty, LLC). Part of the consideration we received was a promissory note of Epic Companies in the original principal amount of $7.5 million (the “Epic Promissory Note”) payable to us in full, together with interest at a rate of 1.52% per annum, on December 31, 2019, along with a personal guaranty agreement from Thomas M. Clarke and Ana M. Clarke guaranteeing the payment obligations of Epic Companies pursuant to the Epic Promissory Note (the “Clarke Promissory Note Guaranty Agreement”). Additionally, pursuant to the Equity Interest Purchase Agreement (the “Offshore Services Purchase Agreement”) and other agreements with Epic Companies, certain other amounts relating to the Offshore Division totaling approximately $1.5 million were payable to us. At the end of August 2019, Epic Companies filed for ~~bankruptcy. We~~bankruptcy and we recorded a reserve of $7.5 million for the full amount of the promissory note, including accrued interest, and ~~the~~ certain other receivables in the amount of $1.5 million during the quarter ended September 30, 2019. The Epic Promissory Note became due on December 31, 2019 ~~but~~and neither Epic nor the Clarkes made ~~the required~~ payment. ~~Upon the default by Epic and the Clarkes, we~~TETRA filed a lawsuit against the Clarkes on January 15, 2020 ~~in Montgomery County, Texas~~ for breach of the ~~Clarke Promissory Note Guaranty Agreement, seeking~~promissory note guaranty agreement. In September 2020, the amounts due under the Epic Promissory Note and related interest, as well as attorneys’ fees and expenses. The Clarkes each filed an answer and counterclaims for fraud and negligent misrepresentation and seek monetary damages in excess of $1 million, punitive damages, and attorneys’ fees. After taking discovery from the Clarkes, on August 21, 2020, we filed a Motion for Summary Judgment to recover the principal amount of the note plus interest from the Clarkes and to dismiss their counterclaims. The Courtcourt granted ~~the~~TETRA’s Motion for Summary Judgment and entered Final Judgment in our favor, ~~thereby~~ dismissing counterclaims by the ~~Clarkes’ counterclaims~~Clarkes and ~~awarding TETRA the full amount requested pursuant to an Order dated September 23, 2020. The Court~~ awarded TETRA ~~the full amount of $7,887,454, plus post-judgment interest at the rate of 3.52% per annum. On October 21, 2020,~~$7.9 million in damages. The Clarkes have filed an appeal which we will defend. We cannot provide any assurance the Clarkes ~~filed~~will pay the judgment or that they will not file for bankruptcy protection. If the Clarkes do file for bankruptcy protection, we likely would be unable to collect all, or even a ~~Notice~~significant portion of, ~~Appeal. We will defend~~ the ~~Clarkes’ appeal and consider the options available~~judgment owed to ~~enforce the Court’s Order.~~us.

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NOTE 9 – FAIR VALUE MEASUREMENTS

Financial Instruments

Investments

Our retained investment in CSI Compressco and our investment in Standard Lithium are recorded based on the quoted market stock price in active markets (a Level 1 fair value measurement). The stock component of consideration received for our arrangement with Standard Lithium is initially recorded as unearned income based on the quoted market price at the time the stock is received, then recognized in income over the contract term. The unearned income associated with the stock component of this agreement is not significant as of March 31, 2021 or December 31, 2020. Changes in the value of stock are recorded in other income (expense) in our consolidated statements of operations

Warrants

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

~~Derivative Contracts~~

We and CCLP each enter into short term foreign currency forward derivative contracts with third parties as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. As of September 30, 2020, we and CCLP had the following foreign currency derivative contracts outstanding relating to portions of our foreign operations:

Derivative contracts US Dollar Notional Amount Traded Exchange Rate Settlement Date
(In Thousands)
Forward sale Mexican peso 5,464 21.87 October 1, 2020

Under this program, we and CCLP may enter into similar derivative contracts from time to time. Although contracts pursuant to this program will serve as an economic hedge of the cash flow of our currency exchange risk exposure, they are not formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative contracts during a period will be included in the determination of earnings for that period.

The fair values of foreign currency derivative contracts are based on quoted market values (a Level 2 fair value measurement). The fair values of our and CCLP’s foreign currency derivative contracts as of September 30, 2020 and December 31, 2019, are as follows:

Foreign currency derivative contracts Balance Sheet Location Fair Value at
September 30, 2020 Fair Value at
December 31, 2019
(In Thousands)
Forward purchase contracts Current assets $ 59 $ 86
Forward sale contracts Current liabilities 0 (53)
Forward purchase contracts Current liabilities 0 (3)
Net asset $ 59 $ 30

None of our foreign currency derivative contracts contain credit risk related contingent features that would require us to post assets or collateral for contracts that are classified as liabilities. During the three and nine months ended September 30, 2020, we recognized $0.2 million and $(0.7) million, respectively,~~of net (gains) losses associated with our foreign currency derivative program. During the three and nine months ended September 30, 2019, we recognized $1.0 million and~~$1.8 million, respectively, of net (gains) losses associated with our foreign currency derivative program. These amounts are reflected in other (income) expense, net, in the accompanying consolidated statement of operations.

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During the nine months ended September 30, 2020, we recorded impairments of approximately $9.0 million, reflecting the decreased fair value for certain assets. The fair values used in these impairment calculations were estimated based on a market approach, which is based on significant unobservable inputs (Level 3) in accordance with the fair value hierarchy. See Note 3 - “Impairments and Other Charges” for further discussion.

Recurring and nonrecurring fair value measurements by valuation hierarchy as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, are as follows:


				Fair Value Measurements Using									Fair Value Measurements Using
		Total as of		Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs			Total as of		Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Description	September 30, 2020		(Level 1)		(Level 2)		(Level 3)		Description	March 31, 2021		(Level 1)		(Level 2)		(Level 3)
		(In Thousands)									(In Thousands)

Investment in CSI Compressco										Investment in CSI Compressco	$	9,533	$	9,533	$	0	$	0
Investment in Standard Lithium										Investment in Standard Lithium	3,787		3,787		0		0
Warrants liability	Warrants liability	$	(123)	$	0	$	0	$	(123)	Warrants liability	(521)		0		0		(521)
Asset for foreign currency derivative contracts		59		0		59		0

Net asset	Net asset	$	(64)							Net asset	$	12,799

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, 2019 (Level 1) (Level 2) (Level 3)
(In Thousands)
Warrants liability $ (449) $ 0 $ 0 $ (449)
Asset for foreign currency derivative contracts 86 0 86 0
Liability for foreign currency derivative contracts (56) 0 (56) 0
Net liability $ (419)

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			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, 2020		(Level 1)		(Level 2)	(Level 3)
	(In Thousands)

Investment in Standard Lithium	$2,675		$	2,675	0	$	0
Warrants liability	(198)		0		0	(198)
Net asset	$	2,477

The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt pursuant to TETRA’s ABL Credit Agreement and ~~Term Credit Agreement, and the CCLP Credit Agreement~~term credit agreement approximate their carrying amounts. The fair values of the publicly traded CCLP 7.25% Senior Notes at September 30, 2020 and December 31, 2019, were approximately $59.7 million and $266.0 million, respectively. Those fair values compare to the face amount of $80.7 million and $295.9 million at September 30, 2020 and December 31, 2019, respectively. The fair values of the CCLP 7.50% Senior Secured Notes at September 30, 2020 and December 31, 2019 were approximately $360.0 million and $344.8 million, respectively. These fair values compare to aggregate principal amount of such notes at September 30, 2020 and December 31, 2019, of $400.0 million and $350.0 million, respectively. The fair value of the CCLP 10.00%/10.75% Second Lien Notes at September 30, 2020 was approximately $115.5 million. This fair value compares to aggregate principal amount of such notes at September 30, 2020 of $155.5 million. We based the fair values of the CCLP 7.25% Senior Notes, the CCLP 7.50% Senior Secured Notes, and the CCLP 10.00%/10.75% Second Lien Notes as of September 30, 2020 on recent trades for these notes. See Note 67 - “Long-Term Debt and Other Borrowings” for further discussion.

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NOTE 10 ~~– SALE OF ASSETS~~

In April 2020, we entered into a purchase and sale agreement for the sale of the Midland manufacturing facility within our Compression Division. During the nine months ended September 30, 2020, we recorded an impairment of $3.1 million to reduce this asset to its approximate fair market value based on a market approach and expected net proceeds. The impairment charges are reflected in impairment and other charges in our statement of operations.

On July 2, 2020, we completed the previously announced sale of our Midland manufacturing facility for a total sale price of $17.0 million. The Midland facility was used to design, fabricate and assemble new standard and customized compressor packages. The sale of the Midland facility resulted in a gain of $0.3 million during the three and nine months ended September 30, 2020, which is reflected in other (income) expense, net in our statement of operations.

Additionally, in the third quarter of 2020, we sold the remaining inventory and equipment related to the fabrication of new compressors within our Compression Division for a gain of $0.5 million, which is reflected in other (income) expense, net in our statement of operations for the three and nine months ended September 30, 2020. During the nine months ended September 30, 2020, we recorded an impairment of $2.3 million to reduce the carrying value of the new unit sales inventory to its approximate fair market value based on a market approach. The impairment charges are reflected in impairment and other charges in our statement of operations.

During the third quarter ended September 30, 2020, we completed the sale of 58 low-horsepower units to one of our customers for $2.6 million. During the nine months ended September 30, 2020, we recorded an impairment of $3.7 million to reduce these assets to their approximate fair market value based on a market approach and expected net proceeds. The impairment charges are reflected in impairment and other charges in our statement of operations.

~~NOTE 11~~ – NET INCOME (LOSS) 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 (loss) per common and common equivalent share:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended March 31,
		2020	2019	2020	2019		2021	2020
		(In Thousands)					(In Thousands)
Number of weighted average common shares outstanding	Number of weighted average common shares outstanding	125,893	125,568	125,789	125,620	Number of weighted average common shares outstanding	126,149	125,587
Assumed exercise of equity awards and warrants	Assumed exercise of equity awards and warrants	0	0	0	0	Assumed exercise of equity awards and warrants	0	10
Average diluted shares outstanding	Average diluted shares outstanding	125,893	125,568	125,789	125,620	Average diluted shares outstanding	126,149	125,597

For the ~~three and nine month periods~~three-month period ended ~~September 30, 2020 and September 30, 2019,~~March 31, 2021, the average diluted shares outstanding excludes the impact of ~~all~~1,727 outstanding equity awards and warrants, as the inclusion of these shares would have been anti-dilutive due to the net ~~losses~~loss from continuing operations recorded during the periods. In addition, for the three and nine month period ended September 30, 2019, the calculation of diluted earnings per common share excludes the impact of the CSI Compressco LP Series A Convertible Preferred Units (the “CCLP Preferred Units”), as the inclusion of the impact from conversion of the CCLP Preferred Units into CCLP common units would have been anti-dilutive.period.

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NOTE 1211 – INDUSTRY SEGMENTS

We manage our operations through 32 Divisions: Completion Fluids & Products and Water & Flowback ~~Services, and Compression.~~Services.

Summarized financial information concerning the business segments is as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In Thousands)
Revenues from external customers
Product sales
Completion Fluids & Products Division $ 49,986 $ 55,444 $ 187,419 $ 185,578
Water & Flowback Services Division 23 100 56 831
Compression Division 18,801 37,833 64,541 134,099
Consolidated $ 68,810 $ 93,377 $ 252,016 $ 320,508
Services
Completion Fluids & Products Division $ 1,964 $ 3,896 $ 11,114 $ 15,110
Water & Flowback Services Division 21,511 72,741 103,668 223,812
Compression Division 60,316 75,933 201,186 219,041
Consolidated $ 83,791 $ 152,570 $ 315,968 $ 457,963
Total revenues
Completion Fluids & Products Division $ 51,950 $ 59,340 $ 198,533 $ 200,688
Water & Flowback Services Division 21,534 72,841 103,724 224,643
Compression Division 79,117 113,766 265,727 353,140��
Interdivision eliminations 0 0 0 0
Consolidated $ 152,601 $ 245,947 $ 567,984 $ 778,471
Income (loss) before taxes
Completion Fluids & Products Division $ 11,756 $ 11,318 $ 44,354 $ 32,118
Water & Flowback Services Division (7,746) 2,578 (18,408) 7,269
Compression Division (11,321) (3,464) (47,117) (14,748)
Interdivision eliminations 3 (1) 10 6
Corporate Overhead(1)
(13,472) (17,931) (43,825) (54,921)
Consolidated $ (20,780) $ (7,500) $ (64,986) $ (30,276)


	Three Months Ended March 31,
	2021		2020
	(In Thousands)
Revenues from external customers
Product sales
Completion Fluids & Products Division	$	45,019	$	70,190
Water & Flowback Services Division	13		25
Consolidated	$	45,032	$	70,215

Services
Completion Fluids & Products Division	$	1,503	$	5,047
Water & Flowback Services Division	30,789		57,442
Consolidated	$	32,292	$	62,489








Total revenues
Completion Fluids & Products Division	$	46,522	$	75,237
Water & Flowback Services Division	30,802		57,467

Consolidated	$	77,324	$	132,704

Income (loss) before taxes
Completion Fluids & Products Division	$	9,010	$	19,396
Water & Flowback Services Division	(5,480)		(2,244)
Interdivision eliminations	3		5
Corporate Overhead(1)	(15,308)		(13,444)
Consolidated	$	(11,775)	$	3,713

(1)Amounts reflected include the following general corporate expenses:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
		(In Thousands)									(In Thousands)
General and administrative expense	General and administrative expense	$	8,959	$	12,573	$	28,650	$	39,012	General and administrative expense	$	13,020	$	8,081
Depreciation and amortization	Depreciation and amortization	270		167		643		507		Depreciation and amortization	169		197
Interest expense	Interest expense	4,706		5,495		14,909		16,533		Interest expense	5,064		5,455
Warrants fair value adjustment (income) expense	Warrants fair value adjustment (income) expense	0		78		(327)		(1,035)		Warrants fair value adjustment (income) expense	323		(338)
Other general corporate income, net	Other general corporate income, net	(463)		(382)		(50)		(96)		Other general corporate income, net	(3,268)		49
Total	Total	$	13,472	$	17,931	$	43,825	$	54,921	Total	$	15,308	$	13,444

~~NOTE 13 – SUBSEQUENT EVENTS~~

In connection with the Midland manufacturing facility sale discussed in Note 10, we entered into an agreement with the buyer to continue to operate a portion of the facility, which allowed us to close out remaining backlog for the New Unit Sale business and operate our aftermarket services business for an interim period. Following the shipment of the last unit in October, we are no longer fabricating new compressor packages for sales to third parties or for our own service fleet. The operations associated with fabricating new compressor packages will be reported as a discontinued operation in the fourth quarter of 2020.

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In July 2020, we received a purchase order to sell $6.7 million of idle large horsepower compressor units to one of our significant customers. During the third quarter of 2020, we received proceeds and recognized $1.7 million relating to this order. In October 2020, we received the remaining $5.0 million of proceeds and started to deliver the compressor units to the customer. We have and will continue to evaluate the sale of other non-core assets, including our low-horsepower compression fleet. We can provide no assurance that we will consummate a future sale of our low-horsepower compression fleet or any other non-core asset.

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 also should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the SEC on March ~~16, 2020~~5, 2021 (“~~2019~~2020 Annual Report”). This discussion includes forward-looking statements that involve certain risks and uncertainties.

Business Overview

We are a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, comprehensive water management, frac flowback and production well ~~testing and offshore rig cooling services, and compression services and equipment.~~testing. We operate through ~~three~~two reporting segments organized into ~~three~~two Divisions - Completion Fluids & Products and Water & Flowback Services. In January, we announced our commitment to pursue low carbon energy initiatives that would leverage our fluids and aqueous chemistry core competencies, our significant bromine and lithium resources and technologies, and our leading calcium chloride production capabilities.

The first quarter of 2020 reflects the last full quarter before the COVID-19 pandemic. After declining to historic lows during 2020 due to depressed oil prices resulting from Russia and Saudi Arabia’s price war and the COVID-19 pandemic, toward the end of the year activity levels in the North America onshore business began to recover. This trend of increasing activity continued through the first quarter of 2021 as oil prices crossed $50 per barrel in early January, reached $60 per barrel in mid-February and remained in that range for the remainder of the quarter. Although activity continued to trend upward, historic cold temperatures during February temporarily caused a complete shutdown to activity in several southern states, which significantly impacted our onshore business.

Our Completion Fluids and Products business saw lower fluids sales in the North Sea and Middle East, while in the Gulf of Mexico, some planned customer completion activities were deferred to the second quarter. However, despite lower offshore activity levels, revenue increased sequentially from the fourth quarter, primarily driven by increased calcium chloride sales due to winter weather and improving oil and gas demand. Our supply chain strengths and diversification helped to mitigate the impacts of the weather on product manufacturing and sales. Early signs of a potential global economic recovery emerged in January, driven by the rollout of COVID-19 vaccines, and continued fiscal stimulus policies. These factors should further improve the oil demand outlook which, together with continued discipline from United States operators is expected to provide support for oil and gas prices and increasing offshore activity both in the Gulf of Mexico and Internationally during the second and third quarters.

As activity levels increase and the recovery progresses, we are continuing to tightly manage our cost structure. Most of the cost reduction initiatives executed in response to unprecedented industry conditions last year remain in effect as of the end of the first quarter.

On January 29, 2021 as previously announced in our 2020 Annual Report, we closed the sale of the general partner of CSI Compressco, including incentive distribution rights (“IDRs”) in CSI Compressco and approximately 23.1% of the outstanding limited partner interests in CSI Compressco, referred to as the “GP Sale.” We recorded a book gain of $120.6 million during the first quarter of 2021 in connection with the GP Sale. This gain, most of which was non-cash, was a function of CSI Compressco having a negative carrying value within our consolidated balance sheet due to our share of cumulative losses and distributions. We have reflected the operations of our former Compression Division as discontinued operations for all periods presented. Following the closing of the transaction, we continue to own approximately 10.9% of the outstanding CSI Compressco common units. See Note 2 – “Discontinued Operations” in the Notes to Consolidated Financial Statements for further information.

During the quarter, we used proceeds from the GP sale and available cash on hand to pay down $29.3 million on our term loan, which matures in September 2025.

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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.

Three months ended March 31, 2021 compared with three months ended March 31, 2020.

Consolidated Comparisons


	Three Months Ended March 31,						Period to Period Change
	2021			2020			2021 vs 2020		% Change
	(In Thousands, Except Percentages)
Revenues	$	77,324		$	132,704		$	(55,380)	(41.7)	%
Gross profit	7,869			29,037			(21,168)		(72.9)	%
Gross profit as a percentage of revenue	10.2		%	21.9		%
General and administrative expense	20,012			20,348			(336)		(1.7)	%
General and administrative expense as a percentage of revenue	25.9		%	15.3		%

Interest expense, net	4,404			5,292			(888)		(16.8)	%
Warrants fair value adjustment expense	323			(338)			661		(195.6)	%


Other (income) expense, net	(5,095)			22			(5,117)		NM(1)
(Loss) income before taxes and discontinued operations	(11,775)			3,713			(15,488)		(417.1)	%
Loss before taxes and discontinued operations as a percentage of revenue	(15.2)		%	2.8		%
Provision for income taxes	168			721			(553)		(76.7)	%
(Loss) income before discontinued operations	(11,943)			2,992			(14,935)		(499.2)	%
Discontinued operations:
Income (loss) from discontinued operations, net of taxes	120,990			(13,368)			134,358		NM
Net income (loss)	109,047			(10,376)			119,423		NM
(Income) loss attributable to noncontrolling interest	(333)			8,825			(9,158)		(103.8)	%
Net income (loss) attributable to TETRA stockholders	$	108,714		$	(1,551)		$	110,265	NM

(1) Percent change is not meaningful

Consolidated revenues and gross profit during the current year quarter decreased compared to the prior year quarter for both the Completion Fluids and Products and Water & Flowback Services divisions due to the ongoing COVID-19 pandemic and ~~Compression.~~associated decreases in oil demand and oilfield services activity. Gross profit as a percentage of revenue declined primarily due to a combination of product mix, as well as fixed costs including rent, depreciation and amortization, which do not vary with revenue. In addition, our revenues were significantly impacted by historic cold weather during February, which temporarily shut down operations in several southern states. See Divisional Comparisons section below for additional discussion.

~~Demand~~

Consolidated general and administrative expenses for the ~~products~~current year quarter include $3.4 million of additional expense related to the effect of significant stock price appreciation on certain long-term incentive compensation awards, as well as $1.7 million of higher professional fees, primarily related to the GP Sale. Despite the impact of these additional expenses, consolidated general and ~~services~~administrative costs decreased during the current year quarter compared to the prior year quarter due to the cost reduction actions taken during the last twelve months, as well as a lower provision for bad debt expense of $1.0 million and decreased general expenses of $0.6 million.

Consolidated other (income) expense, net, was $5.1 million of other income during the current year quarter compared to $0.02 million of other expense during the prior year quarter. The increase in other income in the current year period was primarily due to $4.0 million related to unit and stock price appreciation of our investments in CSI Compressco and Standard Lithium. In addition, other (income) expense, net, includes foreign currency gains of $0.9 million in the current year quarter compared to foreign currency losses of $0.2 million in the prior year

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quarter. These increases in other income were partially offset by a decrease of $0.6 million in gains associated with the sale of assets.

Our consolidated provision for income taxes during the three-month period ended March 31, 2021 is attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the three-month period ended March 31, 2021 of negative 1.4% was primarily the result of losses generated in entities for which no related tax benefit has been recorded. The losses generated by these entities do not result in tax benefits due to offsetting valuation allowances being recorded against the related net deferred tax assets. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the United States as well as in certain non-U.S. jurisdictions.

Income from discontinued operations, net of taxes, was $121.0 million compared to a loss of $13.4 million for the prior year quarter. The current year income includes a $120.6 million primarily non-cash accounting gain from the deconsolidation of CSI Compressco. This gain is offset by a $0.01 million tax provision after taking into consideration utilization of net operating loss and credit carryforwards. The results of CSI Compressco were consolidated through transaction close on January 29, 2021. Our current-year results do not include CSI Compressco depreciation or amortization as the assets were considered held for sale.

Our income (loss) attributable to noncontrolling interest improved from an $8.8 million loss in the prior year quarter to $0.3 million of income for the first 29 days of January primarily due to the GP Sale in January 2021, and no depreciation or amortization recognized by TETRA for CSI Compressco in the current year.

Divisional Comparisons

Completion Fluids & Products Division


	Three Months Ended March 31,						Period to Period Change
	2021			2020			2021 vs 2020		% Change
	(In Thousands, Except Percentages)
Revenues	$	46,522		$	75,237		$	(28,715)	(38.2)	%
Gross profit	11,650			25,964			(14,314)		(55.1)	%
Gross profit as a percentage of revenue	25.0		%	34.5		%
General and administrative expense	4,306			5,934			(1,628)		(27.4)	%
General and administrative expense as a percentage of revenue	9.3		%	7.9		%
Interest income, net	(138)			(154)			16		(10.4)	%

Other (income) expense, net	(1,528)			788			(2,316)		(293.9)	%
Income before taxes	$	9,010		$	19,396		$	(10,386)	(53.5)	%
Income before taxes as a percentage of revenue	19.4		%	25.8		%

The decrease in Completion Fluids & Products Division ~~has remained resilient despite~~revenues during the ~~continued significant downward pressure on oil prices~~current year quarter compared to the prior year quarter was primarily due to lower activity in the North Sea and ~~ongoing uncertainty in many~~deferral of ~~the markets in which we operate. During the third quarter of 2020, lower domestic completion fluids product sales revenues as a result of hurricane~~ activity in the Gulf of Mexico as several projects were ~~offset~~delayed into future quarters. In addition, the prior year quarter benefited from a large international order.

Completion Fluids & Products Division gross profit during the current year quarter decreased compared to the prior year quarter due to lower revenue and product mix. Completion Fluids & Products Division profitability in future periods will continue to be affected by ~~strong international sales mainly in~~ the ~~Middle East~~mix of its products and ~~Europe. However, continuing low prices for oil and gas and further price erosion could adversely affect the~~services, market demand for our products and services, ~~in the future.~~drilling and completions activity and commodity prices.

Recent macroeconomic uncertainty resulting from depressed commodity prices and the COVID-19 pandemic has particularly affected domestic onshore demand for our Water & Flowback Services Division. We experienced decreased water management services activity during the third quarter of 2020 and without a meaningful recovery, we expect our water management services operations to continue to be negatively impacted in the near future.

Our Compression Division is significantly dependent upon the demand for, and production of, oil and the associated natural gas from unconventional oil and natural gas production in the domestic and international markets in which we operate. During the third quarter of 2020, macroeconomic uncertainty in the oil and natural gas industry continued to drive steep declines in spending by the oil and gas operators but as oil prices stabilized around $40, the pace of horsepower being released slowed in comparison to the second quarter. In addition, the unprecedented drop in U.S. land oil and natural gas activity in the second quarter led to some of our customers temporarily shutting in wells and compression was placed on standby. Customers continued bringing production back online throughout the third quarter and we ended the third quarter with approximately 8% of our US domestic fleet on standby as compared to 15% in the second quarter.

During the first nine months of 2020, we saw our customers revise their capital budgets substantially downward and adjust their operations accordingly, which we believe will continue for an indefinite period. Given the decline in orders for new compression equipment to be fabricated and sold to third parties, in early April 2020, we announced our plan to shut down our Midland manufacturing facility. On July 2, 2020, we completed the previously announced sale of our Midland manufacturing facility for a total sale price of $17.0 million. We continued to operate the facility until the completion and sale of our remaining backlog, which was completed in October 2020. Following the completion of the backlog, we are no longer fabricating new compressor packages for sales to third parties or for our own service fleet.

During the first quarter of 2020, we concluded that the impact on our customers and industry from the COVID-19 pandemic and decline in oil prices were indicators of impairment for all asset groups within our Compression Division and certain asset groups in ourThe Completion Fluids & Products ~~Division. As~~Division reported a ~~result, we performed~~decrease in pretax earnings compared to the prior year period primarily due to the substantial reduction in gross profit described above. General and administrative expense levels decreased compared to the prior year quarter mainly due to decreased wage and benefit related expenses of $1.3 million and a ~~recoverability analysis on all our long-lived asset groups and we determined that~~decrease in general expenses of $0.3 million. Other (income) expense, net changed from $0.8 million expense in the ~~carrying values~~prior year quarter to $1.5 million of ~~our Midland manufacturing facility and related new unit sales inventory exceeded their respective fair values.~~income in the current year quarter. The increase

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~~Therefore, we recorded impairments~~in other income was primarily due to $1.3 million from our investment in Standard Lithium, most of ~~approximately $5.4~~which was represented by an increase in the Standard Lithium stock price. In addition, foreign currency losses were $1.0 million ~~during~~lower in the ~~first~~current year quarter compared to the prior year quarter.

Water & Flowback Services Division


	Three Months Ended March 31,						Period to Period Change
	2021			2020			2021 vs 2020		% Change
	(In Thousands, Except Percentages)
Revenues	$	30,802		$	57,467		$	(26,665)	(46.4)	%
Gross profit (loss)	(3,615)			3,267			(6,882)		(210.7)	%
Gross profit (loss) as a percentage of revenue	(11.7)		%	5.7		%
General and administrative expense	2,686			6,334			(3,648)		(57.6)	%
General and administrative expense as a percentage of revenue	8.7		%	11.0		%

Interest income, net	(522)			(9)			(513)		NM
Other income, net	(299)			(814)			515		(63.3)	%
Income (loss) before taxes	$	(5,480)		$	(2,244)		$	(3,236)	144.2	%
Income (loss) before taxes as a percentage of revenue	(17.8)		%	(3.9)		%

Although customer activity levels continued to increase from recent lows in response to an improving commodity price environment, they remained well below the level of ~~2020 related~~a year ago and therefore Water & Flowback Services Division revenues decreased significantly compared to ~~these assets. During~~ the ~~second~~prior year quarter. Additionally, the current year quarter ~~of 2020, as a result of continued negative impacts on our compression fleet associated with the COVID-19 pandemic and declines~~was negatively impacted by severe weather that caused extended shut downs in oil and gas prices, we recorded impairments and other charges of approximately $9.0 million in our Compression Division associated with non-core used compressor equipment that we have held for sale, the low-horsepower class of our compression fleet, and field inventory for compression and related services. During the third quarter of 2020, no further impairments were recorded. Given the dynamic nature of the events, we are not able to reasonably estimate how long our operations will be impacted and the full impact these events will have on our operations. As a result, we could have indicators of impairment again in future periods resulting in additional asset impairments. We have and will continue to evaluate the sale of non-core assets, including our low-horsepower compression fleet. We can provide no assurance that we will consummate a future sale of our low-horsepower compression fleet or any other non-core asset.certain locations.

~~We actively managed our flexible cost structure as~~The Water & Flowback Services Division reported a ~~proactive response~~gross loss during the current year quarter compared to the ~~changing market conditions throughout the second and third quarters while taking necessary actions~~prior year quarter gross profit primarily due to manage through these conditions, some of which could result in impairments or restructuring charges in future periods. Temporary and permanent cost reductions we have implemented include reductions in 2020 capital expenditures, workforce reductions, salary reductions, the suspension of 401(k) matching contributions for our employees, targeted reduction in SG&A expenses, and negotiated reductions in expenditures with many of our suppliers. While we are not able to predict how long market disruptionslower revenues resulting from the ~~COVID-19 pandemic will continue, or what impact it will ultimately have on our business, we have seen~~decreased activity levels ~~stabilizing at~~described above. In addition, we incurred start-up costs associated with a ramp up in activity levels.

The Water & Flowback Services Division reported an increase in pretax loss compared to the ~~end~~prior year period primarily due to the reduction in gross profit described above, partially offset by a decrease in general and administrative expense. General and administrative expense levels decreased compared to the prior year quarter primarily due to decreased salary and benefit related expenses of $2.3 million and a decrease in bad debt expense of $1.0 million.

Corporate Overhead


	Three Months Ended March 31,				Period to Period Change
	2021		2020		2021 vs 2020		% Change
	(In Thousands, Except Percentages)
Depreciation and amortization	$	169	$	194	$	(25)	(12.9)	%
General and administrative expense	13,020		8,080		4,940		61.1	%
Interest expense, net	5,064		5,455		(391)		(7.2)	%
Warrants fair value adjustment (income) expense	323		(338)		661		(195.6)	%
Other (income) expense, net	(3,268)		48		(3,316)		NM
Loss before taxes	$	(15,308)	$	(13,439)	$	(1,869)	(13.9)	%

Corporate Overhead pretax loss increased during the current year quarter compared to the prior year due to higher general and administrative expense, partially offset by higher other income.

General and administrative expense increased primarily due to higher salary and employee expenses of $3.2 million. Although base salary expense was lower, significant appreciation in our stock price during the quarter resulted in $3.4 million of additional expense related to certain long-term incentive compensation awards. General

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and administrative expense was also higher due to increased professional fees of $1.9 million, primarily related to the GP Sale.

Corporate other (income) expense, net changed from $0.05 million expense in the prior year quarter to $3.3 million income in the current year quarter. This change was primarily due to a $2.9 million increase in the market value of the ~~third quarter. Despite challenging market conditions,~~CSI Compressco units we ~~will~~ continue to ~~maintain our commitment to safety and service quality for our customers.~~own following the closing of the GP Sale.

How we Evaluate Operations

We use U.S. GAAP financial measures such as revenues, gross profit, income (loss) before taxes, and net cash provided by operating activities, as well as certain non-GAAP financial measures, including Adjusted EBITDA, as performance measures for our business.

Adjusted EBITDA. We view Adjusted EBITDA as one of our primary management tools, and we track it on a monthly basis, both in dollars and as a percentage of revenues (typically compared to the prior month, prior year period, and to budget). We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, impairments and certain other non-cash charges and non-recurring adjustments.

Adjusted EBITDA is used as a supplemental financial measure by our management to:

•evaluate the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis; and

•determine our ability to incur and service debt and fund capital expenditures.

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The following table reconciles net income (loss) to Adjusted EBITDA for the periods indicated:


		Three Months Ended																		Three Months Ended
		September 30, 2020																		March 31, 2021
		Net Income (Loss), as reported		Tax Provision		Income (Loss) Before Tax, as Reported		Impairments & Special Charges		Adjusted Income (Loss) Before Tax		Interest Expense, Net		Adjusted Depreciation & Amortization		Adjusted Equity Comp. Expense		Adjusted EBITDA				Net Income (Loss), as reported		Tax Provision		Income (Loss) Before Tax, as Reported		Impairments & Special Charges		Adjusted Income (Loss) Before Tax		Interest Expense, Net		Adjusted Depreciation & Amortization		Adjusted Equity Comp. Expense		Adjusted EBITDA
		(In Thousands)																		(In Thousands)
Completion Fluids & Products Division	Completion Fluids & Products Division					$	11,756	$	729	$	12,485	$	(291)	$	1,710	$	—	$	13,904		Completion Fluids & Products Division					$	9,010	$	462	$	9,472	$	(138)	$	1,705	$	—	$	11,039
Water & Flowback Services Division	Water & Flowback Services Division					(7,746)		274		(7,472)		(77)		7,584		—		35			Water & Flowback Services Division					(5,480)		—		(5,480)		(522)		6,899		—		897
Compression Division						(11,321)		879		(10,442)		13,293		19,948		143		22,942
Eliminations and other	Eliminations and other					3		—		3		—		(3)		—		—			Eliminations and other					3		—		3		—		(3)		—		—
Subtotal	Subtotal					(7,308)		1,882		(5,426)		12,925		29,239		143		36,881			Subtotal					3,533		462		3,995		(660)		8,601		—		11,936
Corporate and other						(13,472)		1,031		(12,441)		4,706		173		983		(6,579)
Corporate G&A																					Corporate G&A					(13,020)		5,835		(7,185)		—		—		962		(6,223)
Other																					Other					(2,288)		323		(1,965)		5,064		169		—		3,268
TETRA excluding Discontinued Operations	TETRA excluding Discontinued Operations	$	(21,425)	$	645	$	(20,780)	$	2,913	$	(17,867)	$	17,631	$	29,412	$	1,126	$	30,302		TETRA excluding Discontinued Operations	$	(11,943)	$	168	$	(11,775)	$	6,620	$	(5,155)	$	4,404	$	8,770	$	962	$	8,981

		Three Months Ended																		Three Months Ended
		September 30, 2019																		March 31, 2020
		Net Income (Loss), as reported		Tax Provision		Income (Loss) Before Tax, as Reported		Impairments & Special Charges		Adjusted Income (Loss) Before Tax		Interest Expense, Net		Depreciation & Amortization		Equity Comp. Expense		Adjusted EBITDA				Net Income (Loss), as reported		Tax Provision		Income (Loss) Before Tax, as Reported		Impairments & Special Charges		Adjusted Income (Loss) Before Tax		Interest Expense, Net		Depreciation & Amortization		Equity Comp. Expense		Adjusted EBITDA
		(In Thousands)																		(In Thousands)
Completion Fluids & Products Division	Completion Fluids & Products Division					$	11,318	$	(736)	$	10,582	$	(216)	$	3,676	$	—	$	14,042		Completion Fluids & Products Division					$	19,396	$	450	$	19,846	$	(154)	$	1,934	$	—	$	21,626
Water & Flowback Services Division	Water & Flowback Services Division					2,578		76		2,654		(2)		8,568		—		11,220			Water & Flowback Services Division					(2,244)		1,607		(637)		(9)		7,425		—		6,779
Compression Division						(3,464)		3,597		133		12,869		18,459		(211)		31,250
Eliminations and other	Eliminations and other					(1)		—		(1)		—		(3)		—		(4)			Eliminations and other					5		—		5		—		(4)		—		1
Subtotal	Subtotal					10,431		2,937		13,368		12,651		30,700		(211)		56,508			Subtotal					17,157		2,057		19,214		(163)		9,355		—		28,406
Corporate and other						(17,931)		379		(17,552)		5,495		167		1,539		(10,351)
Corporate G&A																					Corporate G&A					(8,081)		411		(7,670)		—		—		1,145		(6,525)
Other																					Other					(5,363)		(338)		(5,701)		5,455		197		—		(49)
TETRA excluding Discontinued Operations	TETRA excluding Discontinued Operations	$	(9,079)	$	1,579	$	(7,500)	$	3,316	$	(4,184)	$	18,146	$	30,867	$	1,328	$	46,157		TETRA excluding Discontinued Operations	$	2,992	$	721	$	3,713	$	2,130	$	5,843	$	5,292	$	9,552	$	1,145	$	21,832

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 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.

~~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~~ ~~2019 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.

~~Table of~~ ~~Contents~~

~~Results of Operations~~

~~Three months ended September 30, 2020 compared with three months ended September 30, 2019.~~

~~Consolidated Comparisons~~

Three Months Ended
September 30, Period to Period Change
2020 2019 2020 vs 2019 % Change
(In Thousands, Except Percentages)
Revenues $ 152,601 $ 245,947 $ (93,346) (38.0) %
Gross profit 19,970 44,960 (24,990) (55.6) %
Gross profit as a percentage of revenue 13.1 % 18.3 %
General and administrative expense 25,256 34,926 (9,670) (27.7) %
General and administrative expense as a percentage of revenue 16.6 % 14.2 %
Interest expense, net 17,631 18,146 (515) (2.8) %
Warrants fair value adjustment expense — 78 (78) 100.0 %
Other income, net (2,137) (690) (1,447) 209.7 %
Loss before taxes and discontinued operations (20,780) (7,500) (13,280) (177.1) %
Loss before taxes and discontinued operations as a percentage of revenue (13.6) % (3.0) %
Provision for income taxes 645 1,579 (934) (59.2) %
Loss before discontinued operations (21,425) (9,079) (12,346) 136.0 %
Discontinued operations:
Loss from discontinued operations, net of taxes (173) (9,130) 8,957 (98.1) %
Net loss (21,598) (18,209) (3,389) 18.6 %
Loss attributable to noncontrolling interest 8,296 2,378 5,918 248.9 %
Net loss attributable to TETRA stockholders $ (13,302) $ (15,831) $ 2,529 (16.0) %

Consolidated revenues during the current year quarter decreased compared to the prior year quarter due to the ongoing COVID-19 pandemic and associated decline in oil and gas prices resulting in decreases in demand and activity. See Divisional Comparisons section below for additional discussion.

Consolidated gross profit during the current year quarter decreased compared to the prior year quarter primarily due to decreased gross profit from our Water & Flowback Services and Compression Divisions.

Consolidated general and administrative expenses decreased during the current year quarter compared to the prior year quarter primarily due to decreased salary and employee expenses of $5.9 million, decreased provision for bad debt expense of $2.0 million, and decreased professional services fees of $1.3 million.

Consolidated other income, net, was $2.1 million of other income during the current year quarter compared to $0.7 million of other income during the prior year quarter. The increase in other income was primarily due to an increase of $1.5 million in gains in the current year period mainly from the sale of the Midland facility and a decrease of expense of $0.5 million associated with a redemption premium incurred in connection with the redemption of CCLP Preferred Units for cash in the prior year quarter. These increases in income were partially offset by an increase in foreign currency losses of $1.8 million in the current year quarter compared to the prior year quarter.

Our consolidated provision for income taxes during the three month period ended September 30, 2020 is attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the three month period ended September 30, 2020 of negative 3.1% was primarily the result of losses generated in entities for which no related tax benefit has been recorded. The losses generated by these entities do not result in tax benefits due to offsetting valuation allowances being recorded against the related net deferred tax assets. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss

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~~carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.~~

~~Divisional Comparisons~~

~~Completion Fluids & Products Division~~

Three Months Ended
September 30, Period to Period Change
2020 2019 2020 vs 2019 % Change
(In Thousands, Except Percentages)
Revenues $ 51,950 $ 59,340 $ (7,390) (12.5) %
Gross profit 16,196 16,181 15 0.1 %
Gross profit as a percentage of revenue 31.2 % 27.3 %
General and administrative expense 4,619 4,865 (246) (5.1) %
General and administrative expense as a percentage of revenue 8.9 % 8.2 %
Interest income, net (291) (216) (75) 34.7 %
Other expense, net 112 214 (102) (47.7) %
Income before taxes $ 11,756 $ 11,318 $ 438 3.9 %
Income before taxes as a percentage of revenue 22.6 % 19.1 %

The decrease in Completion Fluids & Products Division revenues during the current year quarter compared to the prior year quarter was primarily due to decreased revenues in the Gulf of Mexico because of project delays associated with hurricanes and storms in the Gulf of Mexico.

Completion Fluids & Products Division gross profit during the current year quarter remained relatively flat compared to the prior year quarter. Completion Fluids & Products Division profitability in future periods will continue to be affected by the mix of its products and services, market demand for our products and services, drilling and completions activity and commodity prices.

~~Water & Flowback Services Division~~

Three Months Ended
September 30, Period to Period Change
2020 2019 2020 vs 2019 % Change
(In Thousands, Except Percentages)
Revenues $ 21,534 $ 72,841 $ (51,307) (70.4) %
Gross profit (loss) (5,714) 8,236 (13,950) (169.4) %
Gross profit (loss) as a percentage of revenue (26.5) % 11.3 %
General and administrative expense 2,545 5,957 (3,412) (57.3) %
General and administrative expense as a percentage of revenue 11.8 % 8.2 %
Interest income, net (77) (2) (75) 3,750.0 %
Other income, net (436) (297) (139) 46.8 %
Income (loss) before taxes $ (7,746) $ 2,578 $ (10,324) (400.5) %
Income (loss) before taxes as a percentage of revenue (36.0) % 3.5 %

Water & Flowback Services Division revenues decreased significantly during the current year quarter primarily due to decreased customer drilling and completions activity as a result of lower oil and gas prices caused by the ongoing COVID-19 pandemic.

The Water & Flowback Services Division reported a gross loss during the current year quarter compared to the prior year quarter gross profit primarily due to lower revenues resulting from the decreased activity levels described above.

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The Water & Flowback Services Division reported a pretax loss compared to a pretax income in the prior year period primarily due to the substantial reduction in gross profit described above. General and administrative expense levels decreased compared to the prior year quarter primarily due to decreased wage and benefit related expenses of $2.7 million and a decrease in bad debt expense of $0.5 million.

~~Compression Division~~

Three Months Ended
September 30, Period to Period Change
2020 2019 2020 vs 2019 % Change
(In Thousands, Except Percentages)
Revenues $ 79,117 $ 113,766 $ (34,649) (30.5) %
Gross profit 9,755 20,710 (10,955) (52.9) %
Gross profit as a percentage of revenue 12.3 % 18.2 %
General and administrative expense 9,133 11,530 (2,397) (20.8) %
General and administrative expense as a percentage of revenue 11.5 % 10.1 %
Interest expense, net 13,293 12,869 424 3.3 %
Other income, net (1,350) (225) (1,125) 500.0 %
Loss before taxes $ (11,321) $ (3,464) $ (7,857) (226.8) %
Loss before taxes as a percentage of revenue (14.3) % (3.0) %

Compression Division revenues decreased during the current year quarter compared to the prior year quarter primarily due to the ongoing COVID-19 pandemic’s impact on demand for oil and natural gas and the resulting decline in oil prices that led to a significant reduction in our customer’s activity. Product sales revenues decreased$19.0 million, as we continued to close out remaining backlog and prepared to shut down our Midland manufacturing facility and exit the new equipment sales business. Service revenues decreased $15.6 million due to returned compressors, compressors placed on standby rates, and some pricing concessions.

~~Compression Division gross profit decreased during the current year quarter compared to the prior year due to the lower revenues discussed above.~~

The Compression Division recorded an increased pretax loss during the current year quarter compared to the prior year quarter due to the decreased gross profit discussed above. General and administrative expense levels decreased compared to the prior year quarter, primarily due to decreased bad debt expense of $1.5 million and decreased employee expenses of $0.7 million. Other income, net, reflected gains in the current year period primarily from the sale of the Midland facility

~~Corporate Overhead~~

Three Months Ended
September 30, Period to Period Change
2020 2019 2020 vs 2019 % Change
(In Thousands, Except Percentages)
Depreciation and amortization $ 270 $ 167 $ 103 (61.7) %
General and administrative expense 8,959 12,573 (3,614) (28.7) %
Interest expense, net 4,706 5,495 (789) (14.4) %
Warrants fair value adjustment (income) expense 78 (78) 100.0 %
Other income, net (463) (382) (81) 21.2 %
Loss before taxes $ (13,472) $ (17,931) $ 4,459 24.9 %

Corporate Overhead pretax loss decreased during the current year quarter compared to the prior year quarter, primarily due to decreased general and administrative expense and decreased interest expense. Corporate general and administrative expense decreased primarily due to decreased salary and employee expenses of $2.6 million, decreased professional fees of $0.5 million and decreased general expenses of $0.5 million. Interest expense decreased resulting from decreased borrowing under the ABL Credit Agreement.

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~~Results of Operations~~

~~Nine months ended September 30, 2020 compared with nine months ended September 30, 2019.~~

~~Consolidated Comparisons~~

Nine Months Ended September 30, Period to Period Change
2020 2019 2020 vs 2019 % Change
(In Thousands, Except Percentages)
Revenues $ 567,984 $ 778,471 $ (210,487) (27.0) %
Gross profit 79,708 129,536 (49,828) (38.5) %
Gross profit as a percentage of revenue 14.0 % 16.6 %
General and administrative expense 89,807 105,498 (15,691) (14.9) %
General and administrative expense as a percentage of revenue 15.8 % 13.6 %
Interest expense, net 53,073 55,054 (1,981) (3.6) %
Warrants fair value adjustment income (327) (1,035) 708 (68.4) %
CCLP Series A Preferred Units fair value adjustment expense — 1,309 (1,309) (100.0) %
Other (income) expense, net 2,141 (1,014) 3,155 (311.1) %
Loss before taxes and discontinued operations (64,986) (30,276) (34,710) 114.6 %
Loss before taxes and discontinued operations as a percentage of revenue (11.4) % (3.9) %
Provision for income taxes 3,800 5,678 (1,878) (33.1) %
Loss before discontinued operations (68,786) (35,954) (32,832) 91.3 %
Discontinued operations:
Loss from discontinued operations, net of taxes (155) (9,901) 9,746 (98.4) %
Net loss (68,941) (45,855) (23,086) 50.3 %
Loss attributable to noncontrolling interest 32,833 12,273 20,560 167.5 %
Net loss attributable to TETRA stockholders $ (36,108) $ (33,582) $ (2,526) 7.5 %

~~Consolidated revenues~~for the current year period decreased compared to the prior year period primarily due to decreased revenues in our Water & Flowback Services and Compression Divisions, which decreased by $120.9 million~~and~~$87.4 million, respectively, primarily due to the ongoing COVID-19 pandemic and associated decline in oil prices. The decrease in revenues for the Water & Flowback Services Division was primarily due to decreased water management services activity. The decreased revenues of the Compression Division were primarily due to lower new unit sales as we progress the shut down of our Midland manufacturing facility. See Divisional Comparisons section below for additional discussion.

Consolidated gross profit decreased during the current year period compared to the prior year period primarily due to the decreased profitability of our Water & Flowback Services and Compression Divisions. This decreased gross profit was partially offset by increased gross profit of our Completion Fluids & Products Division. While offshore activity levels for our Completion Fluids & Products Division increased from the prior year period, onshore activity levels decreased, particularly during the second and third quarters. The impact of pricing pressures in addition to reduced levels of onshore activity continues to challenge profitability in the current markets. Operating expenses reflect the decrease in consolidated revenues, as well as aggressive management of operating costs and headcount.

~~Consolidated general and administrative expenses decreased during the current year period~~compared to the prior year period primarily due to decreased salary related expenses of $15.2 million, decreased general expenses of $1.6 million and decreased professional services fees of $1.3 million. These decreases were partly offset by increased bad debt expense of $2.8 million. Decreased general and administrative expenses were driven primarily by our Corporate Division. Most of the decrease of our general and administrative expenses stemmed from our restructuring efforts and headcount reductions in response to the decline in activity levels, particularly in our U.S. onshore operations. General and administrative expense as a percentage of revenues increased compared to the prior year period.

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Consolidated interest expense, net, decreased in the current year period primarily due to a decrease in Corporate and Compression Division interest expense. Corporate interest expense decreased due to lower borrowings under the ABL Credit Agreement. Compression Division interest expense decreased due to interest associated with the expense of CCLP Series A Preferred units that was incurred in the prior year period. Interest expense during the current year period and the prior year period includes $3.1 million and $1.9 million, respectively, of finance cost amortization.

The Warrants are accounted for as a derivative liability in accordance with ASC 815 and therefore they are classified as a long-term liability on our consolidated balance sheet at their fair value. Increases (or decreases) in the fair value of the Warrants are generally associated with increases (or decreases) in the trading price of our common stock, resulting in adjustments to earnings for the associated valuation losses (gains), and resulting in future volatility of our earnings during the period the Warrants are outstanding.

The CCLP Preferred Units were eligible to be settled using a variable number of CCLP common units, and therefore the fair value of the CCLP Preferred Units was classified as a long-term liability on our consolidated balance sheets in accordance with ASC 480. Because the CCLP Preferred Units were convertible into CCLP common units at the option of the holder, the fair value of the CCLP Preferred Units generally increased or decreased with the trading price of the CCLP common units, and this increase (decrease) in CCLP Preferred Unit fair value was charged (credited) to earnings, as appropriate. The last remaining outstanding CCLP Preferred Units were redeemed for cash on August 8, 2019.

Consolidated other (income) expense, net, was $2.1 million of expense during the current year period compared to $1.0 million of income during the prior year period. The increase in expense is primarily due to $4.8 million of fees associated with the CCLP unsecured debt exchange transaction and $3.0 million of increased foreign currency losses due to the devaluation of the Mexican peso. These increases in expense were partially offset by gains associated with the sale of the Midland facility and lower expenses related to the redemption of CCLP Preferred Units for cash in the prior year quarter.

Our consolidated provision for income taxes for the current year period is primarily attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the nine month period ended September 30, 2020 of negative 5.8% was primarily the result of losses generated in entities for which no related tax benefit has been recorded. The losses generated by these entities do not result in tax benefits due to offsetting valuation allowances being recorded against the related net deferred tax assets. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the U.S. as well as in certain foreign jurisdictions.

~~Divisional Comparisons~~

~~Completion Fluids & Products Division~~

Nine Months Ended September 30, Period to Period Change
2020 2019 2020 vs 2019 % Change
(In Thousands, Except Percentages)
Revenues $ 198,533 $ 200,688 $ (2,155) (1.1) %
Gross profit 62,979 46,653 16,326 35.0 %
Gross profit as a percentage of revenue 31.7 % 23.2 %
General and administrative expense 18,995 14,792 4,203 28.4 %
General and administrative expense as a percentage of revenue 9.6 % 7.4 %
Interest income, net (588) (553) (35) 6.3 %
Other expense, net 218 296 (78) (26.4) %
Income before taxes $ 44,354 $ 32,118 $ 12,236 38.1 %
Income before taxes as a percentage of revenue 22.3 % 16.0 %

The decrease in Completion Fluids & Products Division revenues during the current year period compared to the prior year period was primarily due to decline in oil and gas prices and the COVID-19 pandemic.

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Completion Fluids & Products Division gross profit during the current year period increased compared to the prior year period primarily due to profitability associated with increased manufactured products and international CBF sales revenues. Completion Fluids & Products Division profitability in future periods will be affected by the mix of its products and services, including the timing of TETRA CS Neptune~~completion fluid projects.~~

The Completion Fluids & Products Division reported an increase in pretax earnings during the current year period compared to the prior year period due to the increase in gross profit discussed above. Completion Fluids & Products Division general and administrative expenses increased compared to the prior year period primarily due to increased bad debt expense of $2.9 million and increased salary and employee-related expenses of $1.8 million.

~~Water & Flowback Services Division~~

Nine Months Ended September 30, Period to Period Change
2020 2019 2020 vs 2019 % Change
(In Thousands, Except Percentages)
Revenues $ 103,724 $ 224,643 $ (120,919) (53.8) %
Gross profit (loss) (7,283) 24,577 (31,860) (129.6) %
Gross profit as a percentage of revenue (7.0) % 10.9 %
General and administrative expense 12,688 18,528 (5,840) (31.5) %
General and administrative expense as a percentage of revenue 12.2 % 8.2 %
Interest income, net (88) (6) (82) 1,366.7 %
Other income, net (1,475) (1,214) (261) 21.5 %
Income (loss) before taxes $ (18,408) $ 7,269 $ (25,677) 353.2 %
Income (loss) before taxes as a percentage of revenue (17.7) % 3.2 %

~~Water & Flowback Services Division service and product revenues decreased~~$120.9 million during the current year period compared to the prior year period due to decreased water management services activity associated with significantly lower customer drilling and completion activity.

The Water & Flowback Services Division reflected a gross loss during the current year period compared to a gross profit during the prior year period partly due to lower revenues and partly due to certain high-margin projects performed during the prior year.

The Water & Flowback Services Division reported a pretax loss compared to a pretax income in the prior year period, primarily due to the gross loss described above. General and administrative expenses decreased primarily due to decreased wage and benefit related expenses of $5.8 million and decreased general expenses of $1.1 million, partially offset by increased bad debt expense of $1.0 million.

~~Compression Division~~

Nine Months Ended September 30, Period to Period Change
2020 2019 2020 vs 2019 % Change
(In Thousands, Except Percentages)
Revenues $ 265,727 $ 353,140 $ (87,413) (24.8) %
Gross profit 24,645 58,804 (34,159) (58.1) %
Gross profit as a percentage of revenue 9.3 % 16.7 %
General and administrative expense 29,474 33,166 (3,692) (11.1) %
General and administrative expense as a percentage of revenue 11.1 % 9.4 %
Interest expense, net 38,839 39,079 (240) (0.6) %
CCLP Series A Preferred fair value adjustment (income) expense — 1,309 (1,309) (100.0) %
Other (income) expense, net 3,449 (2) 3,451 (172,550.0) %
Loss before taxes $ (47,117) $ (14,748) $ (32,369) 219.5 %
Loss before taxes as a percentage of revenue (17.7) % (4.2) %

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Compression Division revenues decreased during the current year period compared to the prior year period primarily due to the COVID-19 pandemic’s impact on demand for oil and natural gas and the resulting decline in oil prices that led to a significant decrease in customer activity. Product sales revenues decreased$69.6 million due to a decrease in deliveries of new compressors compared to the prior year due to the shut down of our Midland manufacturing facility and exit of the new equipment sales business. Service revenues decreased $17.9 million from compression and aftermarket services operations. The decrease in service revenues was primarily due to reduction in customer activity resulting in a decrease in demand for compression services. In addition, returned compressors, compressors placed on standby rates, and pricing concessions also resulted in decreased revenues.

Compression Division gross profit decreased during the current year period compared to the prior year due to decreased revenues discussed above and the impairments and other charges of $14.3 million primarily on our Midland manufacturing facility and related assets, non-core used compressor equipment that we have held for sale, the low-horsepower class of our compression fleet, and field inventory for compression and related services.

The Compression Division recorded increased pretax loss in the current year period compared to the prior year period due to the decreased gross profit discussed above. General and administrative expense levels decreased compared to the prior year period due to decreased salary and employee-related expenses, including the impact of decreased headcount, incentives and equity compensation of $2.2 million and decreased bad debt expense of $1.1 million. Other (income) expense, net increased to $3.4 million expense in the current year period compared to the prior year period. The increase in expense is primarily due to $4.7 million of fees associated with the exchange of debt and $1.5 million of increased foreign currency losses due to the devaluation of the Mexican peso. These increases in expense were offset by decreased expense of $1.6 million primarily associated with the redemption premium incurred during the prior year period in connection with the redemption of Preferred Units for cash and an increase of $1.2 million in gains in the current year period primarily from the sale of the Midland facility and the remaining inventory and equipment related to the fabrication of new compressors. The last remaining outstanding CCLP Preferred Units were redeemed for cash on August 8, 2019.

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~~Corporate Overhead~~

Nine Months Ended September 30, Period to Period Change
2020 2019 2020 vs 2019 % Change
(In Thousands, Except Percentages)
Depreciation and amortization $ 643 $ 507 $ 136 26.8 %
General and administrative expense 28,650 39,012 (10,362) (26.6) %
Interest expense, net 14,909 16,533 (1,624) (9.8) %
Warrants fair value adjustment income (327) (1,035) 708 (68.4) %
Other income, net (50) (96) 46 (47.9) %
Loss before taxes $ (43,825) $ (54,921) $ 11,096 (20.2) %

Corporate Overhead pretax loss decreased during the current year period compared to the prior year period primarily due to decreased general and administrative expenses. Corporate general and administrative expense decreased primarily due to decreased salary related expense of $8.9 million, $0.9 million of decreased general expenses and $0.5 million of decreased professional fees. Interest expense decreased due to lower borrowings under the ABL Credit Agreement. The fair value of the outstanding Warrants liability resulted in a $0.3 million credit to earnings in the current year period compared to a $1.0 million credit to earnings during the prior year period.

Liquidity and Capital Resources

We believe that our ~~and CCLP’s separate~~ capital ~~structures allow~~structure allows us to meet our ~~respective~~ financial obligations despite current uncertain operating conditions and financial markets. AsOur liquidity at the end of ~~September 30, 2020, we and CCLP are in compliance with all covenants of our respective debt agreements.~~first quarter was $81.1 million. Liquidity is defined as unrestricted cash plus availability under the revolving credit facility. Information about the terms and covenants of our debt agreements can be found in our ~~2019~~2020 Annual Report and in Note 67 - Long Term Debt and Other Borrowings.

We believe it is important to consider our capital structure and that of CCLP separately because there are no cross default provisions or cross guarantees between CCLP’s debt and TETRA’s debt. Our consolidated debt outstanding has a carrying value of approximately $843.2 million as of September 30, 2020. However, approximately $636.9 million of this consolidated debt balance is owed by CCLP and is serviced from the cash balances and cash flows of CCLP, and $557.1 million of which is secured by certain of CCLP’s assets. Through our common unit ownership interest in CCLP, which was approximately 34% as of September 30, 2020, and ownership of an approximate 1.4% general partner interest, we receive our share of the distributable cash flows of CCLP through its quarterly cash distributions. Approximately $16.7 million of the $75.2 million of the cash balance reflected on our consolidated balance sheet is owned by CCLP and is not accessible by us. The following table provides condensed consolidating balance sheet information reflecting TETRA’s net assets and CCLP’s net assets that service and secure TETRA’s and CCLP’s respective capital structures.

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September 30, 2020
Condensed Consolidating Balance Sheet TETRA CCLP Eliminations Consolidated
(In Thousands)
Cash, excluding restricted cash $ 58,466 $ 16,699 $ — $ 75,165
Affiliate receivables 9,428 — (9,428) —
Other current assets 145,672 96,805 — 242,477
Property, plant and equipment, net 102,068 572,500 — 674,568
Long-term affiliate receivables 11,858 — (11,858) —
Other assets, including investment in CCLP 6,617 64,801 97,912 169,330
Total assets $ 334,109 $ 750,805 $ 76,626 $ 1,161,540
Affiliate payables $ — $ 9,428 $ (9,428) $ —
Other current liabilities 64,601 67,467 — 132,068
Long-term debt, net 206,273 636,943 — 843,216
Warrants liability 123 — — 123
Long-term affiliate payable — 11,858 (11,858) —
Other non-current liabilities 63,425 27,533 — 90,958
Total equity (313) (2,424) 97,912 95,175
Total liabilities and equity $ 334,109 $ 750,805 $ 76,626 $ 1,161,540

As of ~~September 30, 2020,~~March 31, 2021, subject to compliance with the covenants, borrowing base requirements, and other provisions of the agreement that may limit borrowings, we had ~~$25.8~~$26.9 million of availability under the ABL Credit Agreement. The amounts we may borrow under the ABL Credit Agreement are derived from our accounts receivable and certain inventory. Decreases in the amount of our accounts receivable and the value of our inventory would result in reduced borrowing availability under the ABL Credit Agreement. As

Table of September 30, 2020, and subject to compliance with the covenants, borrowing base requirements, and other provisions of the agreement that may limit borrowings under the CCLP Credit Agreement, CCLP had availability of $14.5 million. See CCLP Financing Activities below for further discussion.Contents

Our consolidated sources ~~(uses)~~and uses of cash, including cash activity from our former Compression Division, during the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ are as follows:


		Nine months ended September 30,					Three Months Ended March 31,
		2020		2019			2021		2020
		(In Thousands)					(In Thousands)
Operating activities	Operating activities	$	64,827	$	83,590	Operating activities	$	5,825	$	22,176
Investing activities	Investing activities	2,760		(98,562)		Investing activities	(4,301)		(10,615)
Financing activities	Financing activities	(9,776)		11,455		Financing activities	(29,887)		1,138

Operating Activities

Consolidated cash flows provided by operating activitiesdecreased~~by $18.8~~ $16.4 million compared to the first ~~nine~~three months of ~~2019. CCLP generated $13.7 million of our consolidated~~2020. Current year cash flows provided by operating activities ~~during~~include $0.9 million generated by CSI Compressco in January prior to closing of the ~~nine months ended September 30, 2020~~GP Sale, compared to ~~$67.5~~$13.4 million during the ~~corresponding prior year period.~~three-month period ending March 31, 2020. Operating cash flows decreased primarily due to including the results of CSI Compressco for one month during the current year compared to three months during the prior year, as well as a decrease in revenue, ~~and~~partially offset by the effect of working capital movements, particularly related to ~~collections of accounts receivable,~~ management of inventory ~~levels and timing of payments of accounts payable. During the period, TETRA increased cash generation which offset CCLP’s decreased cash generation.~~levels. We continue to monitor customer credit risk in the current environment and focus on serving larger capitalized oil and gas operators and national oil companies.

Investing Activities

Total cash capital expenditures during the first ~~nine~~three months of ~~2020~~2021 were ~~$22.0~~$6.8 million ~~which is net of $7.2 million cost of compressors sold,~~ as we adjusted to current market conditions. Our ~~Completion Fluids & Products Division spent $2.7 million on capital expenditures, the majority of which related to plant and facility additions. Our~~ Water & Flowback Services Division spent ~~$7.8~~$3.4 million on capital expenditures, primarily to maintain, automate and

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upgrade its water management and flowback equipment fleet. Our Completion Fluids & Products Division spent $0.3 million on capital expenditures. Our former Compression Division spent ~~$10.8~~$3.0 million in January of 2021 primarily to maintain its compression fleet.

Historically, a significant majority of our planned capital expenditures ~~has~~have been related to identified opportunities to grow and expand our existing businesses. However, such expenditures have recently been, and may continue to be, postponed or canceled as we are reviewing all capital expenditure plans carefully in an effort to conserve cash. We currently have no long-term capital expenditure commitments. The deferral of capital projects could affect our ability to expand our operations in the future. Excluding our Compression Division, we expect to spend approximately $12.0 million to $15.0 million during 2020 on capital expenditures, primarily to expand and maintain our Water & Flowback Services Division equipment fleet.

~~Our Compression Division has adjusted its expected capital spend downward to approximately $31.0 million to $34.0 million during 2020 primarily to maintain its compression fleet.~~

If the forecasted demand for our products and services increases or decreases, the amount of planned expenditures on growth and expansion may be adjusted.

Financing Activities

~~During~~As a result of TETRA’s strong cash flow from operations in 2020 and the proceeds from the GP Sale, during the first ~~nine months~~quarter of ~~2020, the total amount of consolidated cash used in financing activities was $9.8~~2021, we repaid $29.3 million ~~primarily due to repayments under~~on our ~~ABL Credit Agreement and cash fees paid for the exchange of debt.~~term credit agreement. We ~~and CCLP~~ 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 ~~and CCLP~~ are aggressively managing our working capital and capital expenditure needs in order to maximize our liquidity in the current environment.

~~TETRA~~ Long-Term Debt

Asset-Based Credit Agreement. The ABL Credit Agreement provides for a senior secured revolving credit facility of up to ~~$100~~$100.0 million, subject to a borrowing base to be determined 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 $10.0 million. The amounts we may borrow under the ABL Credit Agreement are derived from our accounts receivable and certain inventory. Changes in demand for our products and services have an impact on our eligible accounts receivable, which could result in significant changes to our borrowing base and therefore our availability under our ABL Credit Agreement. ~~With the current depressed oil and gas market conditions, we believe our availability~~Availability under our ABL Credit ~~facility will be adversely impacted by~~Agreement has reduced compared to the ~~expected decline in~~prior year quarter due to our customers’ reduced activity levels. The ABL Credit Agreement is scheduled to mature on

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September 10, 2023. As of ~~November 2, 2020,~~April 30, 2021, we have ~~$0.1 million~~no amounts outstanding under our ABL Credit Agreement and ~~$6.6~~$6.9 million in letters of ~~credit, resulting in $22.8 million of availability.~~credit.

Term Credit Agreement. The ~~Term Credit Agreement~~term credit agreement is scheduled to mature on September 10, 2025. As of ~~November 2, 2020, $220.5~~April 30, 2021, $184.2 million in aggregate principal amount of our ~~Term Credit Agreement~~term credit agreement is outstanding.

~~CCLP Financing Activities~~

~~CCLP Series A Preferred Units~~. ~~In January 2019, CCLP began redeeming its Series A Preferred Units~~ Our term credit agreement requires us to offer to prepay a percentage of Excess Cash Flow (as defined in the term credit agreement) following the conclusion of each calendar year. Within five business days of filing our Annual Report Form 10-K for ~~cash, resulting in 2,660,569 Series A Preferred Units being redeemed during~~ the ~~nine months ended September 30, 2019 for an aggregate of $31.9 million, which includes approximately $1.5 million of redemption premiums that were paid. The last redemption of~~year ending December 31, 2021, the ~~remaining Series A Preferred Units, along with a final cash payment made in lieu of paid-in-kind units, occurred on August 8, 2019.~~minimum amount we will be required to offer to prepay pursuant to this obligation is $8.2 million.

~~CCLP Bank Credit Facility~~. CCLP’s revolving credit facility ( the “CCLP Credit Agreement”) provides for a maximum credit commitment of $35,000,000 and includes a $5,000,000 reserve with respect to the borrowing base which would result in reduced borrowing availability. During the nine month period ended September 30, 2020 CCLP charged $0.2 million of financing fees to other (income) expense, net in our consolidated statement of operations. As of September 30, 2020, subject to compliance with the covenants, borrowing base, and other provisions of the agreements that may limit borrowings under the Credit Agreement,~~CCLP had no outstanding balance, $2.5 million in letters of credit against the CCLP Credit Agreement and $14.5 million available to borrow. As~~

~~Table of~~ ~~Contents~~

~~of October 30, 2020, CCLP has $0.0 million balance outstanding under the CCLP Credit Agreement and $3.4 million in letters of credit, resulting in $16.4 million of availability.~~

~~CCLP 7.25% Senior Notes due 2022.~~ As of September 30, 2020, CCLP’s 7.25% Senior Notes due 2022 had $79.9 million outstanding net of unamortized discounts and unamortized deferred financing costs. Interest on these notes is payable on February 15 and August 15 of each year. The 2022 Senior Notes are unsecured obligations, and are guaranteed on a unsecured basis by the Partnership’s subsidiaries that guarantee the CCLP Credit Agreement.

~~CCLP 7.50% Senior Secured Notes due 2025.~~ As of September 30, 2020, CCLP’s 7.50% Senior Secured Notes due 2025 (the “First Lien Notes”) had $399.6 million outstanding net of unamortized discounts and unamortized deferred financing costs. Interest on these notes is payable on April 1 and October 1 of each year. The First Lien Notes are secured by a first-priority security interest in substantially all of CCLP’s and its subsidiaries assets, subject to certain permitted encumbrances and exceptions, and are guaranteed on a ~~senior secured basis by each of CCLP’s domestic restricted subsidiaries, with limited exceptions.~~

~~CCLP 10.00%/10.75% Second Lien Notes due 2026.~~ As of September 30, 2020, CCLP’s 10.00%/10.75% Second Lien Notes due 2026 (the “Second Lien Notes”) had $157.4 million outstanding, net of unamortized discounts and unamortized deferred financing costs. Interest on the Second Lien Notes is payable on April 1 and October 1 of each year. The Second Lien Notes are secured by a second-priority security interest in substantially all of CCLP’s and its subsidiaries assets, subject to certain permitted encumbrances and exceptions, and are guaranteed on a senior secured basis by each of CCLP’s domestic restricted subsidiaries, with limited exceptions.In connection with the payment of PIK Interest (as defined below), if any, in respect of the Second Lien Notes, CCLP will be entitled, to increase the outstanding aggregate principal amount of the Second Lien Notes or issue additional notes (“PIK notes”) under the Second Lien Notes indenture on the same terms and conditions as the already outstanding Second Lien Notes. Interest will accrue at (1) the annual rate of 7.250% payable in cash, plus (2) at the election of the Issuers (made by delivering a notice to the Second Lien Trustee not less than five business days prior to the record date), the annual rate of (i) 2.750% payable in cash (together with the annual rate set forth in clause (1), the “Cash Interest Rate”) or (ii) 3.500% payable by increasing the principal amount of the outstanding 10.00%/10.75% Second Lien Notes or by issuing additional PIK notes, in each case rounding up to the nearest $1.00 (such increased principal amount or additional PIK notes, the “PIK Interest”).

Other Sources and Uses

In addition to the aforementioned credit facilities, we ~~and CCLP~~ fund our respective short-term liquidity requirements from cash generated by our respective operations and from short-term vendor financing. 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 transaction is in the best interest of our business. In challenging economic environments, we may experience increased delays and failures by customers to pay our invoices. Given the nature and significance of the pandemic and disruption in the oil and gas industry, we could experience delayed customer payments and payment defaults associated with customer liquidity issues and bankruptcies. 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 of aged unpaid receivable would also negatively affect our borrowing availability under the ABL Credit Agreement.

The Second Amended and Restated Partnership Agreement of CCLP requires that within 45 days after the end of each quarter, CCLP distribute all of its available cash, as defined in the Second Amended and Restated Partnership Agreement, to its common unitholders of record on the applicable record date. During the nine months ended September 30, 2020, CCLP distributed $1.4 million in cash, including $0.9 million to its public unitholders. The amount of quarterly distributions is determined based on a variety of factors, including estimates of CCLP’s cash needs to fund its future operating, investing, and debt service requirements. There can be no assurance that quarterly distributions from CCLP will increase from this amount per unit going forward.

Off Balance Sheet Arrangements

As of ~~September 30, 2020,~~March 31, 2021, 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 ~~Table of~~ ~~Contents~~2020 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.

Commitments and Contingencies

Litigation

~~We are named defendants in several lawsuits~~For information regarding litigation, see - Note 8 “Commitments and ~~respondents in certain governmental proceedings arising~~Contingencies” in the ordinary course of business. 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 expectedNotes to ~~have a material adverse impact on our financial condition, results of operations, or liquidity.~~Consolidated Financial Statements.

~~Contingencies of Discontinued Operations~~Long-Term Debt

~~In early 2018, we closed~~For information on our credit agreements, see Note 7 - “Long-Term Debt and Other Borrowings” in the Maritech Asset Purchase and Sale Agreement with Orinoco Natural Resources, LLC (“Orinoco”) that provided for the purchase by Orinoco of Maritech’s remaining oil and gas properties and related assets. Shortly thereafter, we closed the Maritech Membership Interest Purchase and Sale Agreement with Orinoco that provided for the purchase by Orinoco of all of the outstanding membership interests in Maritech. As a result of these transactions, we have effectively exited the business of our former Maritech segment.Notes to Consolidated Financial Statements.

Under the Maritech Asset Purchase and Sale Agreement, Orinoco assumed all of Maritech’s decommissioning liabilities related to the leases sold to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase and Sale Agreement, Orinoco assumed all other liabilities of Maritech, including the decommissioning liabilities associated with the oil and gas properties previously sold 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 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 US Department of the Interior and other parties, respectively.Leases

~~Pursuant~~We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. Our leases have remaining lease terms ranging from 1 to ~~a Bonding Agreement entered into as part~~16 years. See Note 1 - “Organization, Basis of ~~these transactions (the “Bonding Agreement”), Orinoco provided non-revocable performance bonds in an aggregate amount~~Presentation and Summary of ~~$46.8 million to cover the performance by Orinoco~~Significant Accounting Policies” and Maritech of the asset retirement obligations of Maritech (the “Initial Bonds”) and agreed to replace, within 90 days following the closing, the Initial Bonds with other non-revocable performance bonds, meeting certain requirements,Note 5 - “Leases” in the ~~aggregate sum of $47.0 million (collectively, the “Interim Replacement Bonds”). Orinoco~~Notes to Consolidated Financial Statements for further agreed to replace, within 180 days following the closing, the Interim Replacement Bonds with a maximum of three non-revocable performance bonds in the aggregate sum of $47.0 million, meeting certain requirements (the “Final Bonds”). Among the other requirements of the Final Bonds was that they must provide coverage for all of the asset retirement obligations of Maritech instead of only relating to specific properties. In the event Orinoco did not provide the Interim Replacement Bonds or the Final Bonds, Orinoco was required to make certain cash escrow payments to us.

The payment obligations of Orinoco under the Bonding Agreement were guaranteed by Thomas M. Clarke and Ana M. Clarke pursuant to a separate guaranty agreement (the “Clarke Bonding Guaranty Agreement”). Orinoco has not delivered such replacement bonds and neither it nor the Clarkes has made any of the agreed upon cash escrow payments and we filed a lawsuit against Orinoco and the Clarkes to enforce the terms of the Bonding Agreement and the Clarke Bonding Guaranty Agreement. A summary judgment was initially granted in favor of Orinoco and the Clarkes which dismissedinformation our claims against Orinoco under the Bonding Agreement and against the Clarkes under the Clarke Bonding Guaranty Agreement. We filed an appeal and also asked the trial court to grant a new trial on the summary judgment or to modify the judgment because we believe this judgment should not have been granted. On November 5, 2019, the trial court signed an order granting our motion for new trial and vacating the prior order granting summary judgment for Orinoco and the Clarkes. The parties are awaiting direction from the court on a new scheduling order and/or trial setting. The Initial Bonds, which are non-revocable, remain in effect.lease obligations.

4026

Table of ~~Contents~~

In early 2018, we also closed the sale of our Offshore Division to Epic Companies, LLC (“Epic Companies,” formerly known as Epic Offshore Specialty, LLC). Part of the consideration we received was a promissory note of Epic Companies in the original principal amount of $7.5 million (the “Epic Promissory Note”) payable to us in full, together with interest at a rate of 1.52% per annum, on December 31, 2019, along with a personal guaranty agreement from Thomas M. Clarke and Ana M. Clarke guaranteeing the payment obligations of Epic Companies pursuant to the Epic Promissory Note (the “Clarke Promissory Note Guaranty Agreement”). Additionally, pursuant to the Equity Interest Purchase Agreement (the “Offshore Services Purchase Agreement”) and other agreements with Epic Companies, certain other amounts relating to the Offshore Division totaling approximately $1.5 million were payable to us. At the end of August 2019, Epic Companies filed for bankruptcy. We recorded a reserve of $7.5 million for the full amount of the promissory note, including accrued interest, and the certain other receivables in the amount of $1.5 million during the quarter ended September 30, 2019. The Epic Promissory Note became due on December 31, 2019 but neither Epic nor the Clarkes made the required payment. Upon the default by Epic and the Clarkes, we filed a lawsuit against the Clarkes on January 15, 2020 in Montgomery County, Texas for breach of the Clarke Promissory Note Guaranty Agreement, seeking the amounts due under the Epic Promissory Note and related interest, as well as attorneys’ fees and expenses. The Clarkes each filed an answer and counterclaims for fraud and negligent misrepresentation and seek monetary damages in excess of $1 million, punitive damages, and attorneys’ fees. After taking discovery from the Clarkes, on August 21, 2020, we filed a Motion for Summary Judgment to recover the principal amount of the note plus interest from the Clarkes and to dismiss their counterclaims. The Court granted the Motion for Summary Judgment and entered Final Judgment in our favor, thereby dismissing the Clarkes’ counterclaims and awarding TETRA the full amount requested pursuant to an Order dated September 23, 2020. The Court awarded TETRA the full amount of $7,887,454, plus post-judgment interest at the rate of 3.52% per annum. On October 21, 2020, the Clarkes filed a Notice of Appeal. We will defend the Clarkes’ appeal and consider the options available to enforce the Court’s Order.

~~Contractual Obligations~~

~~Our contractual obligations and commitments principally include obligations associated with our outstanding~~

~~indebtedness and obligations under operating leases. The table below summarizes our consolidated contractual cash obligations as of September 30, 2020:~~

Payments Due
Total 2020 2021 2022 2023 2024 Thereafter
(In Thousands)
Long-term debt - TETRA $ 220,500 $ — $ — $ — $ — $ — $ 220,500
Long-term debt - CCLP 636,249 — — 80,720 — — 555,529
Interest on debt - TETRA 79,931 3,997 15,986 15,986 15,986 15,986 11,990
Interest on debt - CCLP 241,409 22,503 51,405 49,454 45,553 45,553 26,941
Purchase obligations 87,806 2,381 9,525 9,525 9,525 9,525 47,325
Asset retirement obligations(1)
12,973 — — — — — 12,973
Operating leases 107,508 5,809 22,322 18,896 15,803 12,067 32,611
Total contractual cash obligations(2)
$ 1,386,376 $ 34,690 $ 99,238 $ 174,581 $ 86,867 $ 83,131 $ 907,869

~~(1)We have estimated the timing of these paymentsfor asset retirement obligation liabilities based upon our plans. The amounts shown represent the discounted obligation as of September 30, 2020.~~

~~(2)Amounts exclude other long-term liabilities reflected in our Consolidated Balance Sheet that do not have known payment streams. These excluded amounts include approximately$0.4 million of liabilities under FASB Codification Topic 740, “Accounting for Uncertainty in Income Taxes,” as we are unable to reasonably estimate the ultimate amount or timing of settlements.~~

~~Table of~~ Contents

Product Purchase Obligations

~~For additional information about~~

In the normal course of our ~~contractual~~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 asunder 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 ~~December~~such products at the time we receive them. As of March 31, ~~2019, see “Management’s Discussion~~2021, the aggregate amount of the fixed and ~~Analysis~~determinable portion of ~~Financial Condition~~the purchase obligation pursuant to our Completion Fluids & Products Division’s supply agreements wasapproximately $83.0 million, including $7.1 million for the remainder of 2021, $9.5 million per year from 2022 to 2025 and ~~Results of Operations” in our~~ $37.9 million thereafter, extending through 2029.

~~2019 Annual Report~~ ~~on Form 10-K.~~

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,”~~“believes”, “budgets”, ~~“could,” “estimates,”~~“could”, “estimates”, “expects”, “forecasts”, “goal”, “intends”, “may”, “might”, “plans”, “predicts”, “projects”, “schedules”, “seeks”, “should”, “targets”, “will”, and “would”.

Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake 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 or projections. These risks and uncertainties include, but are not limited to, those described in Part II, “Item 1A. Risk Factors” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, and those described from time to time in our future reports filed with the SEC.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not Applicable.

Item 4. Controls and Procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September 30, 2020,~~March 31, 2021, the end of the period covered by this quarterly report.

There were no changes in our internal control over financial reporting that occurred during the quarter ended ~~September 30, 2020,~~March 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Table of Contents

Item 1. Legal Proceedings.

We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. 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 amounts accrued has been incurred that is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.

Item 1A. Risk Factors.

~~The statements~~As of the date of this filing, TETRA and its operations continue to be subject to the risk factors previously disclosed in ~~this section describe~~ the ~~known material risks to our business and should be considered carefully. We have described~~“Risk Factors” sections contained in the ~~2019 Annual Report~~ ~~significant risk factors and periodically update those risks for material developments. Provided below is an update to our risk factors as previously disclosed in the~~ ~~2019~~2020 Annual Report.

~~Table of~~ ~~Contents~~

The COVID-19 pandemic has had, or may in the future have, certain negative impacts on our business, and such impacts have had, or may in the future have, an adverse effect on our business, our financial condition, results of operations, or liquidity.

The COVID-19 pandemic and the resulting economic impact have had a significant negative impact on the oil and gas industry. The deterioration in demand for oil caused by the pandemic, coupled with oil oversupply, has had, and is reasonably likely to continue to have, an adverse impact on the demand for our products and services. The public health crisis caused by the COVID-19 pandemic, and the measures that have been taken or that may be taken in the future by governments, various regulatory agencies, our customers and our suppliers, have had, or may in the future have, certain negative impacts on our financial condition, results of operations, and liquidity, including, without limitation, the following:

•~~demand for our products and services is declining as our customers continue to adjust their operations in response to lower oil and gas prices;~~

•actions undertaken by national, state and local governments and health officials to contain COVID-19 or treat its effects. In response to various governmental directives, at points we have required most office-based employees, including most employees based at our headquarters in The Woodlands, Texas, to work remotely. We may experience reductions in productivity and disruptions to our business routines while work-from-home arrangements remain in place;

•We could encounter logistical complications and increased costs adapting our disclosure controls and procedures and our internal control over financial reporting in a changing environment that includes work-from-home arrangements and furloughs. In the future we may encounter operational challenges or disruptions stemming from the pandemic that require us to implement new or enhanced internal controls to mitigate the risks of operating in a remote environment or increased risks of material misstatements resulting from changes to the business and other uncertainties;

•~~restrictions on importing and exporting products;~~

•~~impacts related to late customer payments and contractual defaults associated with customer and supplier bankruptcies;~~

•~~potentially higher borrowing costs in the future;~~

•~~cybersecurity issues, as our network may become more vulnerable to cyberattacks due to increased remote access associated with work-from-home arrangements;~~

•~~our ability to use our net operating loss carryforwards may be limited;~~

•~~increased costs associated with possible facility closures to meet expected customer activity levels; and~~

•we may be required to record significant impairment charges with respect to assets, whose fair values may be negatively affected by the effects of the COVID-19 pandemic on our operations. Also, we may be required to write off obsolete inventory, and such charges may be significant.

The resumption of our normal business operations after the disruptions caused by the COVID-19 pandemic may be delayed or constrained by its lingering effects on the oil and gas industry. Any of the negative impacts of the COVID-19 pandemic, including those described above, alone or in combination with others, may have a significant adverse effect on our financial condition, results of operations, or liquidity. Any of these negative impacts, alone or in combination with others, could exacerbate many of the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019. The full extent to which the COVID-19 pandemic will negatively affect our financial condition, results of operations, or liquidity will depend on future developments that are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and the resulting impact on the oil and gas industry. Given the dynamic nature of these events, we cannot reasonably estimate the period of time that the COVID-19 pandemic and related market conditions will persist, the full extent of the impact they will have on our financial condition, results of operations, or liquidity or the pace or extent of any subsequent recovery. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) None.

(b) None.

~~Table of~~ ~~Contents~~

Period Total Number
of Shares Purchased Average
Price
Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Publicly Announced Plans or Programs(1)
July 1 – July 31, 2020 27,403 (2) $ 0.40 — $ 14,327,000
August 1 – August 31, 2020 18,356 (2) 0.61 — 14,327,000
September 1 – September 30, 2020 — — — 14,327,000
Total 45,759 — $ 14,327,000


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Publicly Announced Plans or Programs(1)
January 1 – January 31, 2021	—		$	—	—	$	14,327,000
February 1 – February 28, 2021	177,452	(2)	2.53		—	14,327,000
March 1 – March 31, 2021	—		—		—	14,327,000
Total	177,452				—	$	14,327,000

(1)In January 2004, our Board of Directors authorized the repurchase of up to $20 million of our common stock. Purchases will be made from time to time in open market transactions at prevailing market prices. The repurchase program may continue until the authorized limit is reached, at which time the Board of Directors may review the option of increasing the authorized limit.

(2)Shares we received in connection with the exercise of certain employee stock options or the vesting of certain shares of employee restricted stock. These shares were not acquired pursuant to the stock repurchase program.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

4428

Table of Contents

Item 6. Exhibits.

Exhibits:


10.1*			~~Transition~~Term Loan Letter Agreement, ~~dates July 27, 2020 between~~dated March 29, 2021, amending Credit Agreement, dated September 10, 2018 among TETRA Technologies, Inc. and ~~Bass C. Wallace, Jr.~~
10.2*			~~Form of Cash Retention Award Agreement under the TETRA Technologies, Inc. 2018 Equity Incentive Plan.~~Wilmington Trust, National Association
31.1*			Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**			Certification Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**			Certification Furnished Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.SCH+			XBRL Taxonomy Extension Schema Document.
101.CAL+			XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF+			XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB+			XBRL Taxonomy Extension Label Linkbase Document.
101.PRE+			XBRL Taxonomy Extension Presentation Linkbase Document.
104*			Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL documents

* Filed with this report.

** Furnished with this report.

+ Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the ~~three and nine month~~three-month periods ended ~~September 30, 2020~~March 31, 2021 and ~~2019;~~2020; (ii) Consolidated Statements of Comprehensive Income for the ~~three and nine month~~three-month periods ended ~~September 30, 2020~~March 31, 2021 and ~~2019;~~2020; (iii) Consolidated Balance Sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019;~~2020; (iv) Consolidated Statements of Equity for the ~~nine month~~three-month periods ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ ; (v) Consolidated Statements of Cash Flows for the ~~nine month~~three-month periods ended ~~September 30, 2020~~March 31, 2021 and ~~2019;~~2020; and (vi) Notes to Consolidated Financial Statements for the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021.

4529

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		TETRA Technologies, Inc.

Date:	~~November 3, 2020~~May 5, 2021	By:	/s/Brady M. Murphy
			Brady M. Murphy
			President and Chief Executive Officer
			~~Chief~~Principal Executive Officer

Date:	~~November 3, 2020~~May 5, 2021	By:	/s/Elijio V. Serrano
			Elijio V. Serrano
			Senior Vice President and Chief Financial Officer
			~~Chief~~Principal Financial Officer

Date:	~~November 3, 2020~~May 5, 2021	By:	/s/Richard D. O’Brien
			Richard D. O’Brien
			Vice President – Finance and Global Controller
			Principal Accounting Officer

4630


	Three months ended September 30,		Nine months ended September 30,
	2020	2019	2020		2019
	(In Thousands)
Completion Fluids & Products
U.S.	15,013	31,480	$	85,073	$	100,622
International	36,937	27,860	113,460		100,066
	51,950	59,340	198,533		200,688
Water & Flowback Services
U.S.	19,767	68,052	97,016		209,663
International	1,767	4,789	6,708		14,980
	21,534	72,841	103,724		224,643
Compression
U.S.	71,478	105,153	240,661		324,792
International	7,639	8,613	25,066		28,348
	79,117	113,766	265,727		353,140




Total Revenue
U.S.	106,258	204,685	422,750		635,077
International	46,343	41,262	145,234		143,394
	152,601	245,947	$	567,984	$	778,471


	September 30, 2020		December 31, 2019
	(In Thousands)
Finished goods	$	70,452	$	70,135
Raw materials	3,744		4,125
Parts and supplies	32,340		47,793
Work in progress	6,484		14,457
Total inventories	$	113,020	$	136,510


		Operating Leases
	(In Thousands)

Remainder of 2020		$	5,809
2021		22,322
2022		18,896
2023		15,803
2024		12,067
Thereafter		32,611
Total lease payments		107,508
Less imputed interest		(26,946)
Total lease liabilities		$	80,562


	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
	Offshore Services		Maritech		Total		Offshore Services		Maritech		Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue	$	0	$	0	$	0	$	0	$	0	$	0
Cost of revenues	2		0		2		(273)		0		(273)
Depreciation, amortization, and accretion	0		0		0		52		0		52
General and administrative expense	171		0		171		1,734		0		1,734
Other expense, net	0		0		0		117		0		117
Pretax income (loss) from discontinued operations	(173)		0		(173)		(1,630)		0		(1,630)
Pretax (loss) on disposal of discontinued operations					0						(7,500)
Total pretax (loss) from discontinued operations					(173)						(9,130)
Income tax provision (benefit)					0						0
Total (loss) from discontinued operations					$	(173)					$	(9,130)


	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
	Offshore Services		Maritech		Total		Offshore Services		Maritech		Total
Major classes of line items constituting pretax loss from discontinued operations
Revenue	$	0	$	0	$	0	$	0	$	0	$	0
Cost of revenues	(332)		0		(332)		(251)		0		(251)
Depreciation, amortization, and accretion	0		0		0		52		0		52
General and administrative expense	487		0		487		2,483		0		2,483
Other expense, net	0		0		0		117		0		117
Pretax (loss) from discontinued operations	(155)		0		(155)		(2,401)		0		(2,401)
Pretax (loss) on disposal of discontinued operations					0						(7,500)
Total pretax (loss) from discontinued operations					(155)						(9,901)
Income tax provision (benefit)					0						0
Total (loss) from discontinued operations					$	(155)					$	(9,901)


Foreign currency derivative contracts	Balance Sheet Location	Fair Value at September 30, 2020		Fair Value at December 31, 2019
		(In Thousands)
Forward purchase contracts	Current assets	$	59	$	86

Forward sale contracts	Current liabilities	0		(53)
Forward purchase contracts	Current liabilities	0		(3)
Net asset		$	59	$	30


	September 30, 2020
Condensed Consolidating Balance Sheet	TETRA		CCLP		Eliminations		Consolidated
	(In Thousands)
Cash, excluding restricted cash	$	58,466	$	16,699	$	—	$	75,165
Affiliate receivables	9,428		—		(9,428)		—
Other current assets	145,672		96,805		—		242,477
Property, plant and equipment, net	102,068		572,500		—		674,568
Long-term affiliate receivables	11,858		—		(11,858)		—
Other assets, including investment in CCLP	6,617		64,801		97,912		169,330
Total assets	$	334,109	$	750,805	$	76,626	$	1,161,540

Affiliate payables	$	—	$	9,428	$	(9,428)	$	—
Other current liabilities	64,601		67,467		—		132,068
Long-term debt, net	206,273		636,943		—		843,216

Warrants liability	123		—		—		123
Long-term affiliate payable	—		11,858		(11,858)		—
Other non-current liabilities	63,425		27,533		—		90,958
Total equity	(313)		(2,424)		97,912		95,175
Total liabilities and equity	$	334,109	$	750,805	$	76,626	$	1,161,540


	Payments Due
	Total		2020		2021		2022		2023		2024		Thereafter
	(In Thousands)
Long-term debt - TETRA	$	220,500	$	—	$	—	$	—	$	—	$	—	$	220,500
Long-term debt - CCLP	636,249		—		—		80,720		—		—		555,529
Interest on debt - TETRA	79,931		3,997		15,986		15,986		15,986		15,986		11,990
Interest on debt - CCLP	241,409		22,503		51,405		49,454		45,553		45,553		26,941
Purchase obligations	87,806		2,381		9,525		9,525		9,525		9,525		47,325
Asset retirement obligations(1)	12,973		—		—		—		—		—		12,973
Operating leases	107,508		5,809		22,322		18,896		15,803		12,067		32,611
Total contractual cash obligations(2)	$	1,386,376	$	34,690	$	99,238	$	174,581	$	86,867	$	83,131	$	907,869