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 June 30, ~~2022~~2023

☐ 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
Preferred Share Purchase Right	N/A	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 July ~~29, 2022,~~28, 2023, there were ~~128,255,427~~129,556,619 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			2
Consolidated Balance Sheets			3
Consolidated Statements of Equity			5
Consolidated Statements of Cash Flows			6
Notes to Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			1720
Item 3. Quantitative and Qualitative Disclosures about Market Risk			3033
Item 4. Controls and Procedures			3034

PART II—OTHER INFORMATION
Item 1. Legal Proceedings			3135
Item 1A. Risk Factors			3135
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3136
Item 3. Defaults Upon Senior Securities			3136
Item 4. Mine Safety Disclosures			3136
Item 5. Other Information			3236
Item 6. Exhibits			3337
SIGNATURES			3438

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 June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues:	Revenues:									Revenues:
Product sales	Product sales	$	70,301	$	62,583	$	140,356	$	107,615	Product sales	$	96,217	$	70,301	$	161,752	$	140,356
Services	Services	70,415		39,743		130,397		72,035		Services	79,246		70,415		159,920		130,397
Total revenues	Total revenues	140,716		102,326		270,753		179,650		Total revenues	175,463		140,716		321,672		270,753
Cost of revenues:	Cost of revenues:									Cost of revenues:
Cost of product sales	Cost of product sales	48,341		42,477		94,345		74,460		Cost of product sales	55,873		48,341		98,268		94,345
Cost of services	Cost of services	54,258		34,731		101,942		63,362		Cost of services	61,201		54,258		122,872		101,942
Depreciation, amortization, and accretion	Depreciation, amortization, and accretion	7,748		8,236		15,427		17,187		Depreciation, amortization, and accretion	8,457		7,748		17,127		15,427
Impairments and other charges	Impairments and other charges	2,262		449		2,262		449		Impairments and other charges	777		2,262		777		2,262
Insurance recoveries	Insurance recoveries	—		—		(3,750)		(110)		Insurance recoveries	—		—		(2,850)		(3,750)
Total cost of revenues	Total cost of revenues	112,609		85,893		210,226		155,348		Total cost of revenues	126,308		112,609		236,194		210,226
Gross profit	Gross profit	28,107		16,433		60,527		24,302		Gross profit	49,155		28,107		85,478		60,527
Exploration and appraisal costs		634		—		2,564		—
Exploration and pre-development costs										Exploration and pre-development costs	2,341		634		3,061		2,564
General and administrative expense	General and administrative expense	23,620		17,351		44,263		37,363		General and administrative expense	26,225		23,620		49,416		44,263
Interest expense, net	Interest expense, net	3,610		3,886		6,934		8,290		Interest expense, net	5,944		3,610		11,036		6,934

Other (income) expense, net		(1,037)		466		(3,448)		(4,306)
Income (loss) before taxes and discontinued operations		1,280		(5,270)		10,214		(17,045)
(Benefit) provision for income taxes		(479)		1,384		721		1,552
Income (loss) before discontinued operations		1,759		(6,654)		9,493		(18,597)
Discontinued operations:
(Loss) income from discontinued operations, net of taxes		(34)		(126)		(49)		120,864
Net income (loss)		1,725		(6,780)		9,444		102,267
Less: loss (income) attributable to noncontrolling interests(1)		20		27		21		(306)
Net income (loss) attributable to TETRA stockholders		$	1,745	$	(6,753)	$	9,465	$	101,961
Basic net income (loss) per common share:
Income (loss) from continuing operations		$	0.01	$	(0.05)	$	0.07	$	(0.15)
Other income, net										Other income, net	(6,435)		(1,037)		(6,649)		(3,448)
Income before taxes and discontinued operations										Income before taxes and discontinued operations	21,080		1,280		28,614		10,214
Provision for income taxes										Provision for income taxes	2,875		(479)		4,364		721
Income before discontinued operations										Income before discontinued operations	18,205		1,759		24,250		9,493

Loss from discontinued operations, net of taxes										Loss from discontinued operations, net of taxes	(8)		(34)		(20)		(49)
Net income										Net income	18,197		1,725		24,230		9,444
Loss attributable to noncontrolling interests										Loss attributable to noncontrolling interests	18		20		25		21
Net income attributable to TETRA stockholders										Net income attributable to TETRA stockholders	$	18,215	$	1,745	$	24,255	$	9,465
Basic net income per common share:										Basic net income per common share:
Income from continuing operations										Income from continuing operations	$	0.14	$	0.01	$	0.19	$	0.07
Income from discontinued operations	Income from discontinued operations	—		—		—		0.96		Income from discontinued operations	—		—		—		—
Net income (loss) attributable to TETRA stockholders		$	0.01	$	(0.05)	$	0.07	$	0.81
Net income attributable to TETRA stockholders										Net income attributable to TETRA stockholders	$	0.14	$	0.01	$	0.19	$	0.07
Weighted average basic shares outstanding	Weighted average basic shares outstanding	127,992		126,583		127,627		126,365		Weighted average basic shares outstanding	129,460		127,992		129,201		127,627
Diluted net income (loss) per common share:
Income (loss) from continuing operations		$	0.01	$	(0.05)	$	0.07	$	(0.15)
Diluted net income per common share:										Diluted net income per common share:
Income from continuing operations										Income from continuing operations	$	0.14	$	0.01	$	0.19	$	0.07
Income from discontinued operations	Income from discontinued operations	—		—		—		0.96		Income from discontinued operations	—		—		—		—
Net income (loss) attributable to TETRA stockholders		$	0.01	$	(0.05)	$	0.07	$	0.81
Net income attributable to TETRA stockholders										Net income attributable to TETRA stockholders	$	0.14	$	0.01	$	0.19	$	0.07
Weighted average diluted shares outstanding	Weighted average diluted shares outstanding	130,099		126,583		129,654		126,365		Weighted average diluted shares outstanding	129,925		130,099		129,953		129,654

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

See Notes to Consolidated Financial Statements

Table of Contents

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(In Thousands)

(Unaudited)

Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Net income (loss) $ 1,725 $ (6,780) $ 9,444 $ 102,267
Foreign currency translation adjustment from continuing operations, net of taxes of $0 in 2022 and 2021 (3,414) 2,157 (3,222) (622)
Comprehensive income (loss) (1,689) (4,623) 6,222 101,645
Less: Comprehensive (income) loss attributable to noncontrolling interests 20 27 21 (306)
Comprehensive income (loss) attributable to TETRA stockholders $ (1,669) $ (4,596) $ 6,243 $ 101,339


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	18,197	$	1,725	$	24,230	$	9,444
Foreign currency translation adjustment from continuing operations, net of taxes of $0 in 2023 and 2022	1,045		(3,414)		2,466		(3,222)
Unrealized gain on investment in CarbonFree	207		—		328		—
Comprehensive income (loss)	19,449		(1,689)		27,024		6,222
Less: Comprehensive loss attributable to noncontrolling interests	18		20		25		21
Comprehensive income (loss) attributable to TETRA stockholders	$	19,467	$	(1,669)	$	27,049	$	6,243

See Notes to Consolidated Financial Statements

Table of Contents

TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands)


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	36,332	$	31,551	Cash and cash equivalents	$	27,675	$	13,592

Trade accounts receivable, net of allowances of $541 in 2022 and $289 in 2021		104,062		91,202
Trade accounts receivable, net of allowances of $1,177 in 2023 and $538 in 2022						Trade accounts receivable, net of allowances of $1,177 in 2023 and $538 in 2022	130,386		129,631
Inventories	Inventories	62,604		69,098		Inventories	81,833		72,113

Prepaid expenses and other current assets	Prepaid expenses and other current assets	20,698		18,539		Prepaid expenses and other current assets	21,058		23,112
Total current assets	Total current assets	223,696		210,390		Total current assets	260,952		238,448
Property, plant, and equipment:	Property, plant, and equipment:					Property, plant, and equipment:
Land and building	Land and building	24,420		26,380		Land and building	23,488		25,723
Machinery and equipment	Machinery and equipment	342,274		345,454		Machinery and equipment	320,977		318,693
Automobiles and trucks	Automobiles and trucks	14,079		16,174		Automobiles and trucks	10,796		11,832
Chemical plants	Chemical plants	59,402		61,565		Chemical plants	64,743		63,528
Construction in progress	Construction in progress	12,776		5,349		Construction in progress	4,588		7,660
Total property, plant, and equipment	Total property, plant, and equipment	452,951		454,922		Total property, plant, and equipment	424,592		427,436
Less accumulated depreciation	Less accumulated depreciation	(358,233)		(365,946)		Less accumulated depreciation	(315,098)		(325,856)
Net property, plant, and equipment	Net property, plant, and equipment	94,718		88,976		Net property, plant, and equipment	109,494		101,580
Other assets:	Other assets:					Other assets:
Patents, trademarks and other intangible assets, net of accumulated amortization of $45,022 in 2022 and $44,323 in 2021		34,752		36,958
Patents, trademarks and other intangible assets, net of accumulated amortization of $49,447 in 2023 and $46,996 in 2022						Patents, trademarks and other intangible assets, net of accumulated amortization of $49,447 in 2023 and $46,996 in 2022	31,102		32,955

Operating lease right-of-use assets	Operating lease right-of-use assets	35,127		36,973		Operating lease right-of-use assets	36,964		33,818
Investments	Investments	14,167		11,233		Investments	16,718		14,286
Other assets	Other assets	14,154		13,736		Other assets	14,762		13,279
Total other assets	Total other assets	98,200		98,900		Total other assets	99,546		94,338
Total assets	Total assets	$	416,614	$	398,266	Total assets	$	469,992	$	434,366

See Notes to Consolidated Financial Statements

Table of Contents

TETRA Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(In Thousands, Except Share Amounts)


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(Unaudited)					(Unaudited)
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Trade accounts payable	Trade accounts payable	$	44,999	$	37,943	Trade accounts payable	$	53,673	$	49,121
Current portion of long-term debt	Current portion of long-term debt	11		—		Current portion of long-term debt	1,900		3
Compensation and employee benefits	Compensation and employee benefits	23,485		20,811		Compensation and employee benefits	23,117		30,958
Operating lease liabilities, current portion	Operating lease liabilities, current portion	8,255		8,108		Operating lease liabilities, current portion	8,461		7,795
Accrued taxes	Accrued taxes	7,295		7,085		Accrued taxes	10,898		9,913
Accrued liabilities and other	Accrued liabilities and other	24,155		21,810		Accrued liabilities and other	27,368		25,557
Current liabilities associated with discontinued operations	Current liabilities associated with discontinued operations	1,367		1,385		Current liabilities associated with discontinued operations	414		920
Total current liabilities	Total current liabilities	109,567		97,142		Total current liabilities	125,831		124,267
Long-term debt, net	Long-term debt, net	153,191		151,936		Long-term debt, net	156,007		156,455
Operating lease liabilities	Operating lease liabilities	29,160		31,429		Operating lease liabilities	31,136		28,108
Asset retirement obligations	Asset retirement obligations	13,244		12,984		Asset retirement obligations	13,983		13,671
Deferred income taxes	Deferred income taxes	1,432		1,669		Deferred income taxes	2,000		2,038

Other liabilities	Other liabilities	4,484		4,543		Other liabilities	3,978		3,430
Total long-term liabilities	Total long-term liabilities	201,511		202,561		Total long-term liabilities	207,104		203,702
Commitments and contingencies		0		0
Commitments and contingencies (Note 7)						Commitments and contingencies (Note 7)
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 June 30, 2022 and December 31, 2021; 131,394,102 shares issued at June 30, 2022 and 130,075,838 shares issued at December 31, 2021		1,314		1,301
Common stock, par value 0.01 per share; 250,000,000 shares authorized at June 30, 2023 and December 31, 2022; 132,695,294 shares issued at June 30, 2023 and 131,800,975 shares issued at December 31, 2022						Common stock, par value 0.01 per share; 250,000,000 shares authorized at June 30, 2023 and December 31, 2022; 132,695,294 shares issued at June 30, 2023 and 131,800,975 shares issued at December 31, 2022	1,327		1,318
Additional paid-in capital	Additional paid-in capital	476,381		475,624		Additional paid-in capital	481,448		477,820
Treasury stock, at cost; 3,138,675 shares held at June 30, 2022, and at December 31, 2021		(19,957)		(19,957)
Treasury stock, at cost; 3,138,675 shares held at June 30, 2023 and December 31, 2022						Treasury stock, at cost; 3,138,675 shares held at June 30, 2023 and December 31, 2022	(19,957)		(19,957)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(50,154)		(46,932)		Accumulated other comprehensive loss	(46,269)		(49,063)
Retained deficit	Retained deficit	(300,867)		(310,332)		Retained deficit	(278,238)		(302,493)
Total TETRA stockholders’ equity	Total TETRA stockholders’ equity	106,717		99,704		Total TETRA stockholders’ equity	138,311		107,625
Noncontrolling interests	Noncontrolling interests	(1,181)		(1,141)		Noncontrolling interests	(1,254)		(1,228)
Total equity	Total equity	105,536		98,563		Total equity	137,057		106,397
Total liabilities and equity	Total liabilities and equity	$	416,614	$	398,266	Total liabilities and equity	$	469,992	$	434,366

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
Currency
Translation
Balance at December 31, 2021 $ 1,301 $ 475,624 $ (19,957) $ (46,932) $ (310,332) $ (1,141) $ 98,563
Net income for first quarter 2022 — — — — 7,720 (1) 7,719
Translation adjustment,
net of taxes of $0
— — — 192 — — 192
Comprehensive income 7,911
Equity compensation expense — 1,104 — — — — 1,104
Other 7 (673) — — — (10) (676)
Balance at March 31, 2022 $ 1,308 $ 476,055 $ (19,957) $ (46,740) $ (302,612) $ (1,152) $ 106,902
Net income for second quarter 2022 — — — — 1,745 (20) 1,725
Translation adjustment,
net of taxes of $0
— — — (3,414) — — (3,414)
Comprehensive loss (1,689)
Equity compensation expense — 1,159 — — — — 1,159
Other 6 (833) — — — (9) (836)
Balance at June 30, 2022 $ 1,314 $ 476,381 $ (19,957) $ (50,154) $ (300,867) $ (1,181) $ 105,536


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

Balance at December 31, 2022	$	1,318	$	477,820	$	(19,957)	$	(48,991)	$	(72)	$	(302,493)	$	(1,228)	$	106,397
Net income (loss) for first quarter 2023	—		—		—		—		—		6,040		(7)		6,033
Translation adjustment, net of taxes of $0	—		—		—		1,421		—		—		—		1,421
Other comprehensive income	—		—		—		—		121		—		—		121
Comprehensive income															7,575




Equity-based compensation(1)	—		3,514		—		—		—		—		—		3,514

Other	7		(1,341)		—		—		—		—		1		(1,333)
Balance at March 31, 2023	$	1,325	$	479,993	$	(19,957)	$	(47,570)	$	49	$	(296,453)	$	(1,234)	$	116,153
Net income (loss) for second quarter 2023	—		—		—		—		—		18,215		(18)		18,197
Translation adjustment, net of taxes of $0	—		—		—		1,045		—		—		—		1,045
Other comprehensive income	—		—		—		—		207		—		—		207
Comprehensive income															19,449



Equity-based compensation	—		1,507		—		—		—		—		—		1,507
Other	2		(52)		—		—		—		—		(2)		(52)
Balance at June 30, 2023	$	1,327	$	481,448	$	(19,957)	$	(46,525)	$	256	$	(278,238)	$	(1,254)	$	137,057

(1) Equity-based compensation for the three months ended March 31, 2023 includes $2.3 million for a portion of short-term incentive compensation that was settled through grants of restricted stock units rather than cash.

Common Stock
Par Value Additional Paid-In
Capital Treasury
Stock Accumulated Other
Comprehensive Loss Retained
Deficit Noncontrolling
Interest Total
Equity
Currency
Translation
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 — — — — 108,714 333 109,047
Translation adjustment, net of taxes of $0 — — — (2,779) — — (2,779)
Comprehensive income 106,268
Deconsolidation of CSI Compressco — — — 7,168 — (82,775) (75,607)
Equity award activity 6 — — — — — 6
Treasury stock activity, net — — (449) — — — (449)
Equity compensation expense — 962 — — — 580 1,542
Other — (574) — — — 219 (355)
Balance at March 31, 2021 $ 1,295 $ 472,522 $ (19,933) $ (45,525) $ (304,951) $ (941) $ 102,467
Net loss for second quarter 2021 — — — — (6,753) (27) (6,780)
Translation adjustment, net of taxes of $0 — — — 2,157 — — 2,157
Comprehensive loss (4,623)
Dividend — — — — — (119) (119)
Equity award activity 2 — — — — — 2
Treasury stock activity, net — — (6) — — — (6)
Equity compensation expense — 1,592 — — — — 1,592
Other — (242) — — — (14) (256)
Balance at June 30, 2021 $ 1,297 $ 473,872 $ (19,939) $ (43,368) $ (311,704) $ (1,101) $ 99,057


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

Balance at December 31, 2021	$	1,301	$	475,624	$	(19,957)	$	(46,932)	$	(310,332)	$	(1,141)	$	98,563
Net income (loss) for first quarter 2022	—		—		—		—		7,720		(1)		7,719
Translation adjustment, net of taxes of $0	—		—		—		192		—		—		192
Comprehensive income													7,911



Equity compensation expense	—		1,104		—		—		—		—		1,104
Other	7		(673)		—		—		—		(10)		(676)
Balance at March 31, 2022	$	1,308	$	476,055	$	(19,957)	$	(46,740)	$	(302,612)	$	(1,152)	$	106,902
Net income (loss) for second quarter 2022	—		—		—		—		1,745		(20)		1,725
Translation adjustment, net of taxes of $0	—		—		—		(3,414)		—		—		(3,414)
Comprehensive income (loss)													(1,689)



Equity compensation expense	—		1,159		—		—		—		—		1,159
Other	6		(833)		—		—		—		(9)		(836)
Balance at June 30, 2022	$	1,314	$	476,381	$	(19,957)	$	(50,154)	$	(300,867)	$	(1,181)	$	105,536

See Notes to Consolidated Financial Statements

Table of Contents

TETRA Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In Thousands, Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	9,444	$	102,267	Net income	$	24,230	$	9,444
Reconciliation of net income to net cash provided by operating activities:	Reconciliation of net income to net cash provided by operating activities:					Reconciliation of net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	Depreciation, amortization, and accretion	15,427		17,215		Depreciation, amortization, and accretion	17,127		15,427
Gain on GP Sale		—		(120,574)

Impairment and other charges	Impairment and other charges	2,262		449		Impairment and other charges	777		2,262
Gain on investments	Gain on investments	(390)		(5,613)		Gain on investments	(403)		(390)
Equity-based compensation expense	Equity-based compensation expense	2,263		2,554		Equity-based compensation expense	2,768		2,263
Provision for doubtful accounts		244		216
Provision for credit losses						Provision for credit losses	720		244

Amortization and expense of financing costs	Amortization and expense of financing costs	1,573		1,429		Amortization and expense of financing costs	1,781		1,573
Insurance recoveries associated with damaged equipment	Insurance recoveries associated with damaged equipment	(3,750)		(110)		Insurance recoveries associated with damaged equipment	(2,850)		(3,750)

Warrants fair value adjustment		—		3,021

Gain on sale of assets	Gain on sale of assets	(719)		(275)		Gain on sale of assets	(281)		(719)
Other non-cash charges		(313)		(176)
Other non-cash credits						Other non-cash credits	(737)		(313)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(14,581)		(15,694)		Accounts receivable	(514)		(14,581)
Inventories	Inventories	4,519		5,456		Inventories	(8,549)		4,519
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(2,282)		(2,442)		Prepaid expenses and other current assets	2,242		(2,282)
Trade accounts payable and accrued expenses	Trade accounts payable and accrued expenses	11,185		21,295		Trade accounts payable and accrued expenses	443		11,185
Other	Other	(1,079)		(1,411)		Other	603		(1,079)
Net cash provided by operating activities	Net cash provided by operating activities	23,803		7,607		Net cash provided by operating activities	37,357		23,803
Investing activities:	Investing activities:					Investing activities:
Purchases of property, plant, and equipment, net	Purchases of property, plant, and equipment, net	(20,412)		(12,489)		Purchases of property, plant, and equipment, net	(23,274)		(20,412)
Proceeds from GP Sale, net of cash divested		—		18

Proceeds from sale of property, plant, and equipment	Proceeds from sale of property, plant, and equipment	1,194		754		Proceeds from sale of property, plant, and equipment	497		1,194
Proceeds from insurance recoveries associated with damaged equipment	Proceeds from insurance recoveries associated with damaged equipment	3,750		110		Proceeds from insurance recoveries associated with damaged equipment	2,850		3,750
Purchase of investment						Purchase of investment	(250)		—
Other investing activities	Other investing activities	(451)		1,156		Other investing activities	(1,827)		(451)
Net cash used in investing activities	Net cash used in investing activities	(15,919)		(10,451)		Net cash used in investing activities	(22,004)		(15,919)
Financing activities:	Financing activities:					Financing activities:
Proceeds from long-term debt		1,667		—
Principal payments on long-term debt		(3,267)		(29,320)
Proceeds from credit agreements and long-term debt						Proceeds from credit agreements and long-term debt	97,169		1,667
Principal payments on credit agreements and long-term debt						Principal payments on credit agreements and long-term debt	(98,237)		(3,267)
Payments on financing lease obligations	Payments on financing lease obligations	(1,174)		—		Payments on financing lease obligations	(689)		(1,174)

Debt issuance costs and other financing activities		—		(455)

Net cash used in financing activities	Net cash used in financing activities	(2,774)		(29,775)		Net cash used in financing activities	(1,757)		(2,774)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(329)		(896)		Effect of exchange rate changes on cash	487		(329)
Increase (decrease) in cash and cash equivalents		4,781		(33,515)
Cash and cash equivalents and restricted cash at beginning of period		31,551		83,894
Cash and cash equivalents at beginning of period associated with discontinued operations		—		16,577
Cash and cash equivalents and restricted cash at beginning of period associated with continuing operations		31,551		67,317
Increase in cash and cash equivalents						Increase in cash and cash equivalents	14,083		4,781

Cash and cash equivalents and restricted cash at end of period associated with continuing operations		$	36,332	$	50,379
Cash and cash equivalents at beginning of period						Cash and cash equivalents at beginning of period	13,592		31,551

Cash and cash equivalents at end of period						Cash and cash equivalents at end of period	$	27,675	$	36,332

See Notes to Consolidated Financial Statements

Table of Contents

TETRA Technologies, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

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

Organization

We are an ~~industrial~~energy services and ~~oil and gas products and services~~solutions company operating on six continents, focused on ~~bromine-based~~calcium chloride, completion fluids ~~calcium chloride,~~and associated products and services, comprehensive water management solutions, frac flowback, ~~and~~ production well testing ~~services.~~and offshore rig cooling. We were incorporated in Delaware in 1981 and are composed of 2two segments – Completion Fluids & Products Division and Water & Flowback Services Division. Unless the context requires otherwise, when we refer to “we,” “us,” and “our,” we are describing TETRA Technologies, Inc. and its subsidiaries on a consolidated basis.

Presentation

Our unaudited consolidated financial statements include the accounts of our wholly owned or controlled subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The information furnished reflects all normal recurring adjustments, which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods. Operating results for the period ended June 30, ~~2022~~2023 are not necessarily indicative of results that may be expected for the twelve months ended December 31, ~~2022.~~2023.

We have reflected the operations of our former Compression Division and Offshore Division as discontinued operations for all periods presented. See Note 2 - “Discontinued Operations” for further information. Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate solely to continuing operations and exclude all discontinued operations.

The accompanying unaudited consolidated financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the U.S. 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, ~~2021~~2022 and notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February ~~28, 2022~~27, 2023 (the “~~2021~~2022 Annual Report”).

Tax Benefits Preservation Plan

On February 28, 2023, the Board of Directors adopted a Tax Benefits Preservation Plan (the “Tax Plan”) designed to protect the availability of the Company’s net operating loss carryforwards (“NOLs”) and other tax attributes (collectively, the “Tax Attributes”), which may be utilized in certain circumstances to reduce the Company’s future income tax obligations. The Tax Plan is intended to reduce the likelihood that any changes in the Company’s investor base would limit the Company’s future use of its Tax Attributes as a result of the Company experiencing an “ownership change” under Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”). If a corporation experiences an “ownership change,” any NOLs, losses or deductions attributable to a “net unrealized built-in loss” and other Tax Attributes could be substantially limited, and timing of the usage of such Tax Attributes could be substantially delayed. A corporation generally will experience an ownership change if one or more stockholders (or group of stockholders) who are each deemed to own at least 5% of the corporation’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a testing period (generally, a rolling three-year period).

In adopting the Tax Plan, the Board of Directors declared a dividend of one Series A Junior Participating Preferred Stock purchase right (the “Rights”) for each outstanding share of Common Stock pursuant to the terms of the Tax Plan. Initially, each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Stock”) at a price of $20.00 per one one-thousandth of a share of Preferred Stock (the “Purchase Price”), subject to adjustment. The Rights will cause substantial dilution to a person or group that acquires 4.99% or more of the Common Stock (or to a person or group that already owns 4.99% or more of the Company’s Common Stock if

Table of Contents

such person or group acquires additional shares representing 2% of the Company’s then outstanding shares of Common Stock) without prior approval from the Board of Directors.

The Rights will expire at the earliest of: (i) the close of business on February 28, 2026 (the “Final Expiration Date”); (ii) the time at which the Rights are redeemed pursuant to the Tax Plan, (iii) the time at which the Rights are exchanged pursuant to the Tax Plan; (iv) the closing of any merger or other acquisition transaction involving the Company pursuant to an agreement as described in the penultimate paragraph of Section 1.3 of the Tax Plan; (v) the close of business on the effective date of the repeal of Section 382 of the Code if the Board determines that the Tax Plan is no longer necessary or desirable for the preservation of the Tax Attributes; or (vi) the close of business on the first day of a taxable year of the Company following a Board determination that no Tax Attributes may be carried forward or otherwise utilized.

The Tax Plan adopted by the Board of Directors is similar to plans adopted by other publicly held companies with significant NOLs or other substantial tax benefits and is not designed to prevent any action that the Board of Directors determines to be in the best interest of the Company and its stockholders. At the Company’s 2023 annual meeting of stockholders held on May 24, 2023, the Company’s stockholders ratified the adoption of the Tax Plan.

The Rights are in all respects subject to and governed by the provisions of the Tax Plan. The foregoing summary provides only a general description of the Tax Plan and does not purport to be complete. The Tax Plan, which specifies the terms of the Rights and includes as Exhibit A the Form of Certificate of Designation of Series A Junior Participating Preferred Stock of the Company and as Exhibit B the Form of Right Certificate, is attached to the Company’s Current Report on Form 8-K, which was filed with the SEC on March 1, 2023, as Exhibit 4.1 and is incorporated herein by reference. The foregoing summary should be read together with the entire Tax Plan and is qualified in its entirety by reference to the Tax Plan.

Mineral Resources Arrangement

We have rights to the brine underlying our approximately 40,000 gross acres of brine leases in the Smackover Formation in Southwest Arkansas, including rights to the bromine and lithium contained in the brine. We recognized approximately $2.3 million and $3.1 million of expense during the three-month and six-month periods ended June 30, 2023, respectively, and $0.6 million and $2.6 million of expense during the three-month and six-month periods ended June 30, 2022, respectively, for exploration and pre-development costs representing expenditures incurred to evaluate potential future development of our lithium and bromine properties in Arkansas.

In June 2023, we entered into a memorandum of understanding (“MOU”) with Saltwerx LLC (“Saltwerx”), an indirect wholly owned subsidiary of a Fortune 500 company, relating to a newly-proposed brine unit in the Smackover Formation in Southwest Arkansas and potential bromine and lithium production from brine produced from the unit. The binding provisions of the MOU provide, among other things, that (i) we will file an amended brine unit application (“the Application”) covering approximately 6,138 acres, which expands the size of the unit area and also combines brine acreage that was previously leased by each of TETRA and Saltwerx (“the Brine Unit”), with the Arkansas Oil & Gas Commission (“AOGC”) and (ii) Saltwerx will provide a letter to us in support of the Application. The MOU also contains provisions effective after, and contingent on, the approval of the Brine Unit by the AOGC, including provisions relating to: (i) initial brine ownership percentages within the Brine Unit, including the bromine and lithium contained in the brine, (ii) the transfer of certain leased acres outside the proposed Brine Unit from the Company to Saltwerx, (iii) Saltwerx reimbursing the Company for certain expenses incurred by the Company to date regarding the development of leased acreage to be included in the Brine Unit, and (iv) an allocation of certain future costs for the drilling of a brine production test well and other development operations, including FEED studies for bromine and lithium production facilities. We recognized approximately $4.7 million of income during the three-month and six-month periods ended June 30, 2023 for income from collaborative arrangement representing the portion of exploration and pre-development costs that are reimbursable by Saltwerx and is included in other income, net in our consolidated statements of operations.

Table of Contents

Significant Accounting Policies

Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, ~~2021~~2022 included in our ~~2021~~2022 Annual Report. There have been no significant changes in our accounting policies or the application thereof during the second quarter of ~~2022.~~2023.

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

Foreign Currency Translation

We have designated the Euro, the British pound, the Canadian dollar, the Brazilian real, and the Mexican peso as the functional currencies for our operations in Finland and Sweden, the United Kingdom, Canada, Brazil,

~~Table of Contents~~

and certain of our operations in Mexico, respectively. The United States dollar is the designated functional currency for all of our other non-U.S. operations. The cumulative translation effects of translating the applicable accounts from the functional currencies into the United States dollar at current exchange rates are included as a separate component of equity. Foreign currency exchange ~~(gains) and losses~~gains are included in other (income) expense, net and totaled ~~$(0.8) million~~losses of $67,000 and ~~$(1.6)~~$0.2 million during the three and six months ended June 30, ~~2022,~~2023, respectively, and ~~$(0.2)~~gains of $0.8 million and ~~$(1.0)~~$1.6 million during the three and six months ended June 30, ~~2021,~~2022, respectively.

Fair Value Measurements

We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements are utilized on a recurring basis in the determination of the carrying values of certain investments. See Note 8 - “Fair Value Measurements” for further discussion. Fair value measurements are also utilized on a nonrecurring basis in certain circumstances, including the impairment of long-lived assets (a Level 3 fair value measurement).

Table of Contents

Supplemental Cash Flow Information

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

Six Months Ended
June 30,
2022 2021
(in thousands)
Supplemental cash flow information(1):

Interest paid $ 8,056 $ 7,577
Income taxes paid 1,470 853
Decrease in accrued capital expenditures 1,712 1,434

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


	Six Months Ended June 30,
	2023		2022
	(in thousands)
Interest paid	$	9,412	$	8,056
Income taxes paid	$	2,012	$	1,470

	June 30, 2023		December 31, 2022
	(in thousands)
Accrued capital expenditures	$	3,142	$	4,901

New Accounting Pronouncements

Standards ~~not yet~~ adopted during 2023

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instruments.”~~Instruments”. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the ~~currently used~~previously-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. On January 1, 2023, we adopted ASU ~~2016-13 will become effective for us in the first quarter~~2016-13. The adoption of ~~fiscal 2023. We continue to assess the potential effects of these changes to~~this standard did not have a material impact on 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. ~~Entities may elect to apply~~In December 2022, the ~~amendments for contract modifications made on or before December 31, 2022.~~FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848.” During ~~2021,~~the three months ended June 30, 2023, our asset-based credit agreement and term credit agreement were amended to ~~allow replacement of~~replace LIBOR and Eurodollar rates with ~~another benchmark rate, such as~~ the secured overnight financing rate (“SOFR”) in. There were no significant costs associated with the ~~event that LIBOR cannot be determined or does~~amendments and the amendments did not ~~fairly reflect the cost to our lenders of funding our loans. If LIBOR is not available, we cannot predict what alternative index would be negotiated with our lenders. We will assess the~~have a significant impact ~~of adopting ASU 2020-04~~ on our consolidated financial ~~statements if or when our contracts are modified to eliminate references to LIBOR.~~

statements.

~~Table of Contents~~

NOTE 2 – DISCONTINUED OPERATIONS

On January 29, 2021, we entered into the Purchase and Sale Agreement with Spartan Energy Partners, LP (“Spartan”) pursuant to which we sold the general partner of CSI Compressco, including the incentive distribution rights (“IDRs”) in CSI Compressco LP, (“CSI Compressco”), and approximately 23.1% of the outstanding limited partner interests in CSI Compressco, in exchange for the combination of $13.9 million in cash and $3.1 million in contingent consideration in the form of cash and/or CSI Compressco common units if CSI Compressco achieves certain financial targets on or before December 31, 2022. Throughout this Quarterly Report, we refer to this transaction as the “GP Sale.”Following the closing of the transaction, we retained an interest in CSI Compressco representing approximately 3.7% of the outstanding common units as of June 30, 2022. As a result of these transactions, we no longer consolidate CSI Compressco as of January 29, 2021. We recognized a primarily non-cash accounting gain of $120.6 million during the three-month period ended March 31, 2021 related to the GP Sale. The gain is included in income (loss) from discontinued operations, net of taxes in our consolidated statement of operations. We provided back-office support to CSI Compressco under a Transition Services Agreement that ended during the three-month period ended March 31, 2022. During the three months ended June 30, 2022, we sold equipment to CSI Compressco for approximately $0.3 million. Our interest in CSI Compressco and the general partner represented substantially all of our Compression Division.

~~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~~Division is 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 ~~prior-year consolidated statement of~~loss from discontinued operations ~~statement of comprehensive income, statement of equity and statement of cash flows include CSI Compressco activity for January 1 through January 29 in 2021. Our consolidated statements of cash flows~~ for the ~~six-month period~~three and six months ended June 30, ~~2021 included $3.0 million,~~2023 consist of ~~capital expenditures related to~~general and administrative expense associated with ongoing litigation for our former ~~Compression division.~~Offshore Division. A summary of additional financial information related to our discontinued operations is as follows:

Table of Contents

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

(in thousands, unaudited)

Three Months Ended
June 30, 2022
Offshore Services Maritech Total
Major classes of line items constituting loss from discontinued operations
Cost of revenues $ 54 $ — $ 54
General and administrative expense 8 — $ 8
Other expense, net — (28) (28)
Pretax income (loss) from discontinued operations (62) 28 (34)
Loss from discontinued operations attributable to TETRA stockholders $ (34)

Three Months Ended
June 30, 2021
Compression Offshore Services Total
Major classes of line items constituting loss from discontinued operations
General and administrative expense — 5 5
Other (income) expense, net 121 — 121
Pretax loss from discontinued operations (121) (5) (126)
Loss from discontinued operations attributable to TETRA stockholders $ (126)


	Three Months Ended June 30, 2022
	Offshore Services		Maritech		Total
Major classes of line items constituting income from discontinued operations

Cost of revenues	$	54	$	—	$	54


General and administrative expense	8		—		8

Other income, net	—		(28)		(28)
Pretax income (loss) from discontinued operations	(62)		28		(34)





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

~~Table of Contents~~

Six Months Ended
June 30, 2022
Offshore Services Maritech Total
Major classes of line items constituting income from discontinued operations
Cost of revenues 55 — 55
General and administrative expense 22 — 22
Other expense, net — (28) (28)
Pretax income (loss) from discontinued operations (77) 28 (49)
Loss from discontinued operations attributable to TETRA stockholders $ (49)

Six Months Ended
June 30, 2021
Compression Offshore Services Total
Major classes of line items constituting loss from discontinued operations
Revenue $ 18,968 $ — $ 18,968
Cost of revenues 11,474 28 11,502
General and administrative expense 2,795 — 2,795
Interest expense, net 4,336 — 4,336
Other expense, net 15 — 15
Pretax income (loss) from discontinued operations 348 (28) 320
Pretax gain on disposal of discontinued operations 120,574
Total pretax income from discontinued operations 120,894
Income tax provision 30
Total income from discontinued operations 120,864
Income from discontinued operations attributable to noncontrolling interest (333)
Income from discontinued operations attributable to TETRA stockholders $ 120,531


	Six Months Ended June 30, 2022
	Offshore Services		Maritech		Total
Major classes of line items constituting income from discontinued operations

Cost of revenues	$	55	$	—	$	55


General and administrative expense	22		—		22

Other income, net	—		(28)		(28)
Pretax income (loss) from discontinued operations	(77)		28		(49)





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

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

(in thousands)


		June 30, 2022							June 30, 2023
		Offshore Services		Maritech		Total			Offshore Services		Maritech		Total

		(unaudited)							(unaudited)

Carrying amounts of major classes of liabilities included as part of discontinued operations	Carrying amounts of major classes of liabilities included as part of discontinued operations							Carrying amounts of major classes of liabilities included as part of discontinued operations
Trade payables	Trade payables	$	1,272	$	—	$	1,272	Trade payables	$	319	$	—	$	319

Accrued liabilities and other	Accrued liabilities and other	—		95		95		Accrued liabilities and other	—		95		95

Total liabilities associated with discontinued operations	Total liabilities associated with discontinued operations	$	1,272	$	95	$	1,367	Total liabilities associated with discontinued operations	$	319	$	95	$	414

December 31, 2021
Offshore Services Maritech Total
Carrying amounts of major classes of liabilities included as part of discontinued operations
Trade payables $ 1,157 $ — $ 1,157
Accrued liabilities and other — 228 228
Total liabilities associated with discontinued operations $ 1,157 $ 228 $ 1,385


	December 31, 2022
	Offshore Services		Maritech		Total









Carrying amounts of major classes of liabilities included as part of discontinued operations
Trade payables	$	319	$	—	$	319

Accrued liabilities and other	506		95		601


Total liabilities associated with discontinued operations	$	825	$	95	$	920

~~Table of Contents~~

NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Our contract asset balances, primarily associated with contractual invoicing milestones and/or customer documentation requirements, were ~~$32.2~~$36.7 million and ~~$20.5~~$33.1 million as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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. We are also party to agreements ~~in which~~whereby Standard Lithium Ltd.

Table of Contents

(NYSE: SLI) (“Standard Lithium”) has the right to explore for, and an option to acquire the rights to produce and extract lithium in our Arkansas leases ~~as well as~~and other potential resources in the Mojave region of California. The Company receives cash and stock of Standard Lithium under the terms of the arrangements. The cash and stock component of consideration received is initially recorded as unearned income based on the quoted market price at the time the stock is received, then recognized in income over the contract term. Unearned income balances were ~~$7.9~~$5.1 million and ~~$3.2~~$3.7 million as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and vary based on the timing of (i) invoicing, ~~and~~(ii) performance obligations being met and ~~the timing of~~(iii) the receipt of stock and ~~shares~~cash from Standard Lithium. Unearned income is included in accrued liabilities and other in our consolidated balance sheets. ~~We recognized approximately $0.8 million and $0.5 million of income during~~During the six-month periods ended June 30, ~~2022~~2023 and June 30, ~~2021,~~2022, contract costs were not significant.

We recognized approximately $1.4 million and $0.9 million of revenue during the three-month and six-month periods ended June 30, 2023, respectively, and $0.2 million and $0.5 million of revenue during the three-month and six-month periods ended June 30, 2022, respectively, deferred in unearned income as of the beginning of the period. We also recognized approximately $0.8 million and $1.4 million of income during the three-month and six-month periods ended June 30, 2023, respectively, and $0.9 million and $1.5 million of income during the three-month and six-month periods ended June 30, 2022, respectively, related to the Standard Lithium ~~arrangements. These amounts are~~arrangements deferred in unearned income as of the beginning of the period and included in other income, net in our consolidated statements of operations. Other revenue recognized during the three-month and six-month periods ended June 30, 2022 and the three-month period ended June 30, 2021 deferred as of the beginning of the period was not significant. During the six-month period ended June 30, 2021, we recognized approximately $1.4 million of revenue deferred as of the preceding year end. During the three-month and six-month periods ended June 30, 2022 and June 30, 2021, contract costs were not significant.

We disaggregate revenue from contracts with customers into Product Sales and Services within each segment, as noted in our 2two reportable segments in Note 10 - “Industry Segments.” In addition, we disaggregate revenue from contracts with customers by geography based on the following table below.


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in thousands)									(in thousands)
Completion Fluids & Products	Completion Fluids & Products									Completion Fluids & Products
United States	United States	$	34,344	$	25,229	$	73,188	$	49,824	United States	$	45,859	$	34,344	$	78,682	$	73,188
International	International	40,454		39,378		74,804		61,304		International	52,363		40,454		88,582		74,804
		74,798		64,607		147,992		111,128			98,222		74,798		167,264		147,992
Water & Flowback Services	Water & Flowback Services									Water & Flowback Services
United States	United States	61,654		35,463		114,417		64,395		United States	68,231		61,654		136,569		114,417
International	International	4,264		2,256		8,344		4,127		International	9,010		4,264		17,839		8,344
		65,918		37,719		122,761		68,522			77,241		65,918		154,408		122,761

Total Revenue	Total Revenue									Total Revenue
United States	United States	95,998		60,692		187,605		114,219		United States	114,090		95,998		215,251		187,605
International	International	44,718		41,634		83,148		65,431		International	61,373		44,718		106,421		83,148
		$	140,716	$	102,326	$	270,753	$	179,650		$	175,463	$	140,716	$	321,672	$	270,753

NOTE 4 – INVENTORIES

Components of inventories as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are as follows:


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(in thousands)					(in thousands)
Finished goods	Finished goods	$	52,924	$	59,925	Finished goods	$	68,141	$	60,481
Raw materials	Raw materials	2,872		2,827		Raw materials	5,287		3,734
Parts and supplies	Parts and supplies	5,048		4,713		Parts and supplies	6,477		6,432
Work in progress	Work in progress	1,760		1,633		Work in progress	1,928		1,466
Total inventories	Total inventories	$	62,604	$	69,098	Total inventories	$	81,833	$	72,113

~~Table of Contents~~

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

Table of Contents

NOTE 5 – INVESTMENTS

Our investments as of June 30, 2023 and December 31, 2022 consist of the following:


	June 30, 2023		December 31, 2022
	(in thousands)
Investment in CSI Compressco	$	6,599	$	6,967
Investment in CarbonFree	6,269		6,139
Investment in Standard Lithium	3,600		1,180
Other investment	250		—
Total Investments	$	16,718	$	14,286

Following the ~~closing~~January 2021 sale of the ~~GP Sale,~~general partner of CSI Compressco LP (“CSI Compressco”), we continue to own approximately 3.7% of the outstanding CSI Compressco common units (NASDAQ: CCLP) as of June 30, ~~2022.~~ 2023.

We have an intellectual property joint development agreement in place with CarbonFree to evaluate potential new technologies. CarbonFree is a carbon capture company with patented technologies that capture CO2 and mineralize emissions to make commercial, carbon-negative chemicals. In December 2021, we invested $5.0 million in a convertible note issued by CarbonFree. Our exposure to potential losses by CarbonFree are limited to our investments and capitalized and accrued interest associated with the CarbonFree convertible note.

In addition, we are party to agreements ~~in which~~whereby Standard Lithium has the right to explore for, and an option to acquire the rights to produce and extract, lithium in our Arkansas leases ~~as well as~~and other additional potential resources in the Mojave region of California. The Company receives cash and stock of Standard Lithium ~~(NYSE:SLI)~~ under the terms of the arrangements. 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 8 - “Fair Value Measurements” for further information.

~~In May 2021, we signed a memorandum of understanding (“MOU”) with CarbonFree, a carbon capture company with patented technologies that capture CO~~2 and mineralize emissions to make commercial, carbon-negative chemicals. Although the MOU expired in May 2022 at the end of its twelve-month term, we have an intellectual property joint development agreement in place with CarbonFree to evaluate potential new technologies. In December 2021, we invested $5.0 million in a convertible note issued by CarbonFree. Our exposure to potential losses by CarbonFree is limited to our investment in the convertible note and associated accrued interest.

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

June 30, 2022 December 31, 2021
(in thousands)
Investment in CSI Compressco $ 6,862 $ 6,233
Investment in CarbonFree 5,609 5,000
Investment in Standard Lithium $ 1,696 $ —
Total Investments $ 14,167 $ 11,233

NOTE 6 – LONG-TERM DEBT AND OTHER BORROWINGS

Consolidated long-term debt as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022 consists of the following:


		Scheduled Maturity	June 30, 2022		December 31, 2021			Scheduled Maturity	June 30, 2023		December 31, 2022

			(in thousands)						(in thousands)
Term Credit Agreement(1)							Term Credit Agreement(1)	September 10, 2025	$	156,007	$	154,570
Asset-Based Credit Agreement(2)							Asset-Based Credit Agreement(2)	May 31, 2025	—		1,885
Argentina Credit Agreement							Argentina Credit Agreement	October 19, 2023	1,900		—
Swedish Credit Facility	Swedish Credit Facility	December 31, 2022	$	11	$	—	Swedish Credit Facility	December 31, 2023	—		3
Asset-based credit agreement(1)		May 31, 2025	—		67
Term credit agreement(2)		September 10, 2025	153,191		151,869
Total debt	Total debt		153,202		151,936		Total debt		157,907		156,458
Less current portion	Less current portion		(11)		—		Less current portion		(1,900)		(3)
Total long-term debt	Total long-term debt		$	153,191	$	151,936	Total long-term debt		$	156,007	$	156,455

(1) Net of unamortized discount of $2.8 million and $3.4 million as of June 30, 2023 and December 31, 2022, respectively, and net of unamortized deferred financing costs of $4.2 million and $5.1 million as of June 30, 2023 and December 31, 2022, respectively.

(2) Net of unamortized deferred financing costs of ~~zero and $1.5~~$1.1 million as of December 31, 2022. Deferred financing costs of $0.9 million as of June 30, ~~2022 and December 31, 2021, respectively. Deferred financing costs of $1.3 million as of June 30, 2022,~~2023, were classified as other long-term assets on the accompanying consolidated balance sheet as there was no outstanding balance on our asset-based credit agreement.

~~(2)~~

Term Credit Agreement

~~Net of unamortized discount of $4.0 million and $4.5 million as~~As of June 30, ~~2022 and December 31, 2021, respectively, and~~2023, we had $156.0 million outstanding, net of unamortized discounts and unamortized deferred financing costs ~~of $5.9 million and $6.7 million as of June 30, 2022 and December 31, 2021, respectively.~~

~~Swedish~~under our term credit agreement (“Term Credit ~~Facility~~

~~In January 2022, the Company entered into a revolving credit facility for seasonal working capital needs of subsidiaries in Sweden (“Swedish Credit Facility”~~Agreement”). AsThe Term Credit Agreement requires us to offer to prepay up to 50% of ~~June 30, 2022, we had less than US$0.1 million outstanding and availability~~Excess Cash Flow (as defined in the Term Credit Agreement) from the most recent full fiscal year within five business days of approximately US$4.9 million under the Swedish Credit Facility. During each year, all outstanding loans under the Swedish Credit Facility must be repaid for at least 30 consecutive days. Borrowings bear interest at a rate of 2.95% per annum. The Swedish Credit Facility expires on December 31, 2022 and the Company intends to renew it annually.filing our Annual Report. If our Leverage Ratio (as defined in

1213

Table of Contents

~~Finland~~the Term Credit ~~Agreement~~Agreement) at year-end is less than 2.00 to 1.00, the prepayment requirement is decreased to 25%. If our Leverage Ratio at year-end is less than 1.50 to 1.00, then no prepayment is required.

The ~~Company also entered into~~Term Credit Agreement was amended in June 2023 to remove references to LIBOR and Eurodollar rates. Borrowings under the Term Credit Agreement bear interest at a ~~new agreement guaranteed by certain accounts receivable and inventory in Finland (“Finland Credit Agreement”).~~rate per annum equal to, at the option of TETRA, either (i) SOFR (subject to a 1% floor) plus a margin of 6.25% per annum or (ii) a base rate plus a margin of 5.25% per annum. As of June 30, ~~2022, there were US$1.4 million~~2023, the interest rate per annum on borrowings under the Term Credit Agreement is 11.40%. In addition to paying interest on the outstanding principal under the Term Credit Agreement, TETRA is required to pay a commitment fee in respect of ~~letters~~the unutilized commitments at the rate of ~~credit outstanding against~~1.0% per annum, paid quarterly in arrears based on utilization of the ~~Finland~~commitments under the Term Credit Agreement.

All obligations under the Term Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest for the benefit of the Term Lenders on substantially all of the personal property of TETRA and certain of its subsidiaries, the equity interests in certain domestic subsidiaries, and a maximum of 65% of the equity interests in certain foreign subsidiaries.

ABL Credit Agreement

As of June 30, ~~2022,~~2023, our asset-based credit agreement (“ABL Credit ~~Agreement’~~Agreement”) provides for a senior secured revolving credit facility of up to $80.0 million, with a $20.0 million accordion. The credit facility is subject to a borrowing base determined monthly by reference to the value of inventory and accounts receivable, and includes a sublimit of $20.0 million for letters of credit, a swingline loan sublimit of $11.5 million, and a $15.0 million sub-facility subject to a borrowing base consisting of certain trade receivables and inventory in the United Kingdom.

As of June 30, ~~2022,~~2023, we had ~~zero~~no balance outstanding and ~~$6.0~~$11.5 million in letters of credit and guarantees under our ABL Credit ~~Agreement, respectively.~~Agreement. Subject to compliance with the covenants, borrowing base, and other provisions of the ABL Credit Agreement that may limit borrowings, we had availability of ~~$61.8~~$66.6 million under this agreement.

~~Term~~The ABL Credit Agreement was amended in May 2023 to remove references to LIBOR. Borrowings under the ABL Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) SOFR plus 0.10%, (ii) a base rate plus a margin based on a fixed charge coverage ratio, (iii) the Daily Simple Risk Free Rate plus 0.10%, or (iv) with respect to borrowings denominated in Sterling, the Daily Simple Risk Free Rate for Sterling plus 0.0326%. The base rate is determined by reference to the highest of (a) the prime rate of interest as announced from time to time by JPMorgan Chase Bank, N.A. (b) the Federal Funds Effective Rate (as defined in the ABL Credit Agreement) plus 0.5% per annum and (c) SOFR (adjusted to reflect any required bank reserves) for a one-month period on such day plus 1.0% per annum. In addition to paying interest on the outstanding principal under the ABL Credit Agreement, TETRA is required to pay a commitment fee in respect of the unutilized commitments at an applicable rate ranging from 0.375% to 0.5% per annum, paid monthly in arrears based on utilization of the commitments under the ABL Credit Agreement. TETRA is also required to pay a customary letter of credit fee equal to the applicable margin on LIBOR-based loans and fronting fees.

All obligations under the ABL Credit Agreement and the guarantees of those obligations are secured, subject to certain exceptions, by a security interest for the benefit of the ABL Lenders on substantially all of the personal property of TETRA and certain subsidiaries of TETRA, the equity interests in certain domestic subsidiaries, and a maximum of 65% of the equity interests in certain foreign subsidiaries.

Table of Contents

Argentina Credit Agreement

In January 2023, the Company entered into a revolving credit facility for certain working capital and capital expenditure needs for its subsidiary in Argentina (“Argentina Credit Facility”). As of June 30, ~~2022~~2023, we had ~~$153.2~~$1.9 million outstanding ~~net~~and availability of ~~unamortized discounts~~$0.1 million under the Argentina Credit Agreement. Borrowings bear interest at a rate of 2.50% per annum. The Argentina Credit Facility expires on October 19, 2023 and ~~unamortized deferred financing costs~~is backed by a letter of credit under our ~~term~~ABL Credit Agreement.

Swedish Credit Facility

In January 2022, the Company entered into a revolving credit ~~agreement~~facility for seasonal working capital needs of subsidiaries in Sweden (“~~Term~~Swedish Credit ~~Agreement”~~Facility”). ~~The Term Credit Agreement requires us to offer to prepay a percentage of Excess Cash Flow (as defined in the Term Credit Agreement) within five business days of filing our Annual Report.~~ As of June 30, 2023, we had no balance outstanding and availability of approximately $4.6 million under the Swedish Credit Facility. During each year, all outstanding loans under the Swedish Credit Facility must be repaid for at least 30 consecutive days. Borrowings bear interest at a rate of 2.95% per annum. The Swedish Credit Facility expires on December 31, 2023 and the Company intends to renew it annually.

Finland Credit Agreement

In January 2022, the ~~interest rate per annum on borrowings under~~Company also entered into an agreement guaranteed by certain accounts receivable and inventory in Finland (“Finland Credit Agreement”). As of June 30, 2023, there were $1.5 million of letters of credit outstanding against the ~~Term~~Finland Credit Agreement. The Finland Credit Agreement ~~is 7.92%. For additional information~~expires on ~~our Term Credit agreement, see our~~ January 31, 2024 and the Company intends to renew it annually.

~~2021 Annual Report~~.

Covenants

Our credit agreements contain certain affirmative and negative covenants, including covenants that restrict the ability to pay dividends or other restricted payments. As of June 30, ~~2022,~~2023, we are in compliance with all covenants under the credit agreements.

NOTE 7 – 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.

We have a Bromine Requirements Sales Agreement (“Sales Agreement”) to purchase a certain volume of elemental bromine from LANXESS Corporation (formerly Chemtura Corporation) (“LANXESS”), included in Product Purchase Obligations below. LANXESS notified us of a proposed non-ordinary course increase to the price of bromine. After lengthy discussions, we and LANXESS were unable to reach an agreement regarding the validity of the proposed price increase; therefore, we filed for arbitration in May 2022 seeking declaratory relief, among other relief, declaring that the proposed price increase is invalid. In September 2022, LANXESS filed a counterclaim with the American Arbitration Association seeking declaratory relief, among other relief. On May 25, 2023, TETRA entered into the Third Amendment to Bromine Requirements Sales Agreement (the “Amendment”) with LANXESS. The Amendment has an effective date of April 1, 2023 and was entered into in connection with the entry into a settlement agreement in the Company’s arbitration with LANXESS. The Amendment provides for, among other things, revised volume requirements and related terms. On June 14, 2023, in light of the settlement agreement, and in response to the parties’ stipulated motion to dismiss, the arbitration panel issued an Order of Dismissal, which dismissed all claims in the arbitration with prejudice.

There have been no other material developments in our legal proceedings during the quarter ended June 30, ~~2022.~~2023. For aadditional discussion of our legal proceedings, please see our ~~2021~~2022 Annual Report.

Table of Contents

Product Purchase Obligations

In the normal course of our Completion Fluids & Products Division operations, we enter into supply agreements with certain manufacturers of various raw materials and finished products. Some of these agreements have terms and conditions that specify a minimum or maximum level of purchases over the term of the agreement. Other agreements require us to purchase the entire output of the raw material or finished product produced by the manufacturer. Our purchase obligations under these agreements apply only with regard to raw materials and finished products that meet specifications set forth in the agreements. We recognize a liability for the purchase of such products at the time we receive them. As of June 30, ~~2022,~~2023, the aggregate amount of the fixed and determinable portion of the purchase obligation pursuant to our Completion Fluids & Products Division’s supply agreements was approximately ~~$104.6~~$63.6 million, including ~~$3.0~~$5.2 million for the remainder of ~~2022, an average of $15.7~~2023, $21.4 million ~~per year from 2023 to~~in 2024, $19.3 million in 2025, $13.0 million in 2026, and ~~$40.2~~$4.7 million ~~thereafter, extending through 2029.~~in 2027.

1316

Table of Contents

NOTE 8 – FAIR VALUE MEASUREMENTS

Financial Instruments

Investments

We retained an interest in CSI Compressco ~~(NASDAQ: CCLP)~~ representing approximately 3.7% of CSI Compressco’s outstanding common units as of June 30, ~~2022.~~

2023. In December 2021, we invested in a $5.0 million convertible note issued by CarbonFree. In addition, we receive cash and stock of Standard Lithium under the terms of our arrangements as noted in Note 5 - “Investments.”

Our ~~investment~~investments in ~~CarbonFree is~~CSI Compressco and Standard Lithium are recorded in investments on our consolidated balance sheets based on ~~an internal valuation with assistance from a third-party valuation specialist (a Level 3~~the quoted market stock price (Level 1 fair value ~~measurement)~~measurements). The ~~valuation is impacted by key assumptions, including the assumed probability and timing of potential debt or equity offerings.~~

We are party to agreements in which Standard Lithium has the right to explore, produce and extract lithium in our Arkansas leases as well as additional potential resources in the Mojave region of California. The Company receives cash and stock of Standard Lithium (NYSE:SLI) under the terms of the arrangements. The cash and stock component of consideration received from 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.

~~Our investments in CSI Compressco and Standard Lithium are recorded based on the quoted market stock price in active markets (a Level 1 fair value measurement).~~ Changes in the value of stock are recorded in other ~~income (expense)~~(income) expense, net in our consolidated statements of operations.

~~Recurring~~Our investment in convertible notes issued by CarbonFree is recorded in our consolidated financial statements based on an internal valuation with assistance from a third-party valuation specialist (Level 3 fair value measurement). The valuation is impacted by key assumptions, including the assumed probability and ~~nonrecurring~~timing of potential debt or equity offerings. The convertible note includes an option to convert the note into equity interests issued by CarbonFree. The change in the fair value of the embedded option is included in other (income) expense, net in our consolidated statements of operations. The change in the fair value of the convertible note, excluding the embedded option, is included in other comprehensive income (loss) in our consolidated statements of comprehensive income. The change in our investment in CarbonFree for the six-month period ended June 30, 2023 is as follows:


	Six Months Ended June 30, 2023
	(in thousands)
Balance at beginning of period	$	6,139
Change in fair value of embedded option	(198)
Change in fair value of convertible note, excluding embedded option	328
Balance at end of period	$	6,269

Recurring fair value measurements by valuation hierarchy as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022 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	June 30, 2022		(Level 1)		(Level 2)		(Level 3)		Description	June 30, 2023		(Level 1)		(Level 2)		(Level 3)
		(in thousands)									(in thousands)
Investment in CSI Compressco	Investment in CSI Compressco	$	6,862	$	6,862	$	—	$	—	Investment in CSI Compressco	$	6,599	$	6,599	$	—	$	—
Investment in CarbonFree	Investment in CarbonFree	5,609		—		—		5,609		Investment in CarbonFree	6,269		—		—		6,269
Investment in Standard Lithium	Investment in Standard Lithium	1,696		1,696		—		—		Investment in Standard Lithium	3,600		3,600		—		—
Other investment										Other investment	250		—		—		250

Investments	Investments	$	14,167							Investments	$	16,718

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, 2021 (Level 1) (Level 2) (Level 3)
(in thousands)
Investment in CSI Compressco $ 6,233 $ 6,233 $ — $ —
Investment in CarbonFree $ 5,000 $ — — $ 5,000
Investments $ 11,233

Table of Contents


			Fair Value Measurements Using
	Total as of		Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	December 31, 2022		(Level 1)		(Level 2)		(Level 3)
	(in thousands)
Investment in CSI Compressco	$	6,967	$	6,967	$	—	$	—
Investment in CarbonFree	6,139		—		—		6,139
Investment in Standard Lithium	1,180		1,180		—		—

Investments	$	14,286

Impairments

During the second quarter of 2022, our Completion Fluids & Products and Water & Flowback Services Divisions each recorded certain inventory and long-lived tangible asset impairments. Our Water & Flowback Services Division recorded impairments, including $1.3 million of equipment, $0.2 million of inventory, and $0.5 million for land and buildings. The Completion Fluids & Products Division also2023, we recorded a ~~$0.2~~$0.8 million impairment ~~related to obsolete inventory. The inventory and equipment were written down to zero or scrap value.~~of our corporate office lease. The fair ~~value of land and buildings of $0.4 million was~~values were estimated based on ~~recent sales price~~the discounted cash flows from our lease and sublease agreements, including the rent rate per square ~~acre or square~~ foot ~~of comparable properties~~ (a Level 3 fair value measurement) in accordance with the fair value hierarchy.

14Other

~~Table of Contents~~

The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt pursuant to ~~TETRA’s~~our Term Credit Agreement, ABL Credit Agreement, ~~Swedish~~Argentina Credit Agreement, and ~~Term~~Swedish Credit Agreement approximate their carrying amounts. See Note 6 - “Long-Term Debt and Other Borrowings” for further discussion.

NOTE 9 – 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
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
(in thousands)
Number of weighted average common shares outstanding 127,992 126,583 127,627 126,365
Assumed exercise of equity awards and warrants 2,107 — 2,027 —
Average diluted shares outstanding 130,099 126,583 129,654 126,365

The average diluted shares outstanding excludes the impact of certain outstanding equity awards and warrants of 2,013,000 and 1,740,000 shares for the three and six-month periods ended June 30, 2021, respectively, as the inclusion of these shares would have been anti-dilutive due to the net loss from continuing operations recorded during these periods.


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
	(in thousands)
Number of weighted average common shares outstanding	129,460	127,992	129,201	127,627
Assumed vesting of equity awards	465	2,107	752	2,027
Average diluted shares outstanding	129,925	130,099	129,953	129,654

1518

Table of Contents

NOTE 10 – INDUSTRY SEGMENTS

We manage our operations through 2two segments: Completion Fluids & Products Division and Water & Flowback Services Division.

Summarized financial information concerning the business segments is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022

		(in thousands)									(in thousands)
Revenues from external customers	Revenues from external customers									Revenues from external customers
Product sales	Product sales									Product sales
Completion Fluids & Products Division	Completion Fluids & Products Division	$	70,227	$	62,565	$	140,115	$	107,583	Completion Fluids & Products Division	$	94,368	$	70,227	$	159,883	$	140,115
Water & Flowback Services Division	Water & Flowback Services Division	74		18		241		32		Water & Flowback Services Division	1,849		74		1,869		241
Consolidated	Consolidated	$	70,301	$	62,583	$	140,356	$	107,615	Consolidated	$	96,217	$	70,301	$	161,752	$	140,356

Services	Services									Services
Completion Fluids & Products Division	Completion Fluids & Products Division	$	4,571	$	2,042	$	7,877	$	3,545	Completion Fluids & Products Division	$	3,854	$	4,571	$	7,381	$	7,877
Water & Flowback Services Division	Water & Flowback Services Division	65,844		37,701		122,520		68,490		Water & Flowback Services Division	75,392		65,844		152,539		122,520
Consolidated	Consolidated	$	70,415	$	39,743	$	130,397	$	72,035	Consolidated	$	79,246	$	70,415	$	159,920	$	130,397

Total revenues	Total revenues									Total revenues
Completion Fluids & Products Division	Completion Fluids & Products Division	$	74,798	$	64,607	$	147,992	$	111,128	Completion Fluids & Products Division	$	98,222	$	74,798	$	167,264	$	147,992
Water & Flowback Services Division	Water & Flowback Services Division	65,918		37,719		122,761		68,522		Water & Flowback Services Division	77,241		65,918		154,408		122,761

Consolidated	Consolidated	$	140,716	$	102,326	$	270,753	$	179,650	Consolidated	$	175,463	$	140,716	$	321,672	$	270,753

Income (loss) before taxes	Income (loss) before taxes									Income (loss) before taxes
Completion Fluids & Products Division	Completion Fluids & Products Division	$	15,261	$	16,427	$	34,553	$	25,438	Completion Fluids & Products Division	$	31,956	$	15,261	$	50,398	$	34,553
Water & Flowback Services Division	Water & Flowback Services Division	1,644		(4,978)		4,326		(10,458)		Water & Flowback Services Division	8,014		1,644		14,394		4,326
Interdivision eliminations		3		3		6		6
Interdivision Eliminations										Interdivision Eliminations	—		3		—		6
Corporate Overhead(1)	Corporate Overhead(1)	(15,628)		(16,722)		(28,671)		(32,031)		Corporate Overhead(1)	(18,890)		(15,628)		(36,178)		(28,671)
Consolidated	Consolidated	$	1,280	$	(5,270)	$	10,214	$	(17,045)	Consolidated	$	21,080	$	1,280	$	28,614	$	10,214

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022

		(in thousands)									(in thousands)
General and administrative expense	General and administrative expense	$	11,542	$	9,543	$	21,888	$	22,564	General and administrative expense	$	12,594	$	11,542	$	23,654	$	21,888
Depreciation and amortization	Depreciation and amortization	172		248		363		418		Depreciation and amortization	92		172		202		363
Impairments and other charges										Impairments and other charges	777		—		777		—
Interest expense	Interest expense	3,894		4,044		7,541		9,107		Interest expense	5,813		3,894		11,273		7,541
Warrants fair value adjustment (income) expense		—		2,698		—		3,021
Other general corporate income, net		20		189		(1,121)		(3,079)

Other general corporate (income) expense, net										Other general corporate (income) expense, net	(386)		20		272		(1,121)
Total	Total	$	15,628	$	16,722	$	28,671	$	32,031	Total	$	18,890	$	15,628	$	36,178	$	28,671

1619

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and accompanying notes included in this Quarterly Report. In addition, the following discussion and analysis should also ~~should~~ be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the Securities and Exchange Commission (“SEC”) on February ~~28,~~ 27, 2023 (“2022 ~~(“2021~~ Annual Report”). This discussion includes forward-looking statements that involve certain risks and uncertainties.

Business Overview

We are an ~~industrial~~energy services and ~~oil and gas products and services~~solutions company operating on six continents, focused on ~~bromine-based~~calcium chloride, completion fluids ~~calcium chloride,~~and associated products and services, comprehensive water management solutions, frac flowback, ~~and~~ production well testing ~~services.~~and offshore rig cooling. Calcium chloride is used in the oil and gas industry, and also has broad industrial applications to the agricultural, road, food and beverage and lithium production markets. We are composed of two segments – Completion Fluids & Products Division and Water & Flowback Services Division.

Customer activity levels continued to trend upward as sustained high oil prices increased to an average of approximately $109 per barrel for the second quarter of 2022, and natural gas prices averaged $7.50 per million Btu. As a result, second quarterSecond-quarter consolidated revenue of ~~$270.8~~$175.5 million ~~is very comparable to~~reflects the ~~pre-pandemic period, but with significantly fewer operating frac crews~~highest quarterly revenue in the ~~United States.~~Company’s history, excluding discontinued operations. Our strong second-quarter results reflect our employees delivering operational and financial excellence in our core businesses while simultaneously advancing our key strategic initiatives.

Completion Fluids & Products Division revenues ~~were slightly higher~~increased 42% sequentially, ~~with~~resulting in a new segment record high driven by growth in international markets and the Gulf of Mexico, as well as the seasonal ~~increase~~peak for our Northern Europe industrial chemicals ~~business partially offset by lower Gulf of Mexico and international fluid sales as the first quarter~~business. Our strong offshore results have benefited from ~~sales pulling forward from~~our recent investments to expand fluids capacity in the ~~second quarter. However with much higher oil prices continuing to drive demand, revenues were significantly higher compared to the prior year quarter, primarily due to higher completions activity in~~North Sea, Brazil and the Gulf of Mexico and international markets. While drilling and completion activity has not returned to pre-pandemic levels, we have continued to successfully leverage opportunities to expand integrated services to completion fluids customers, resulting in Completion Fluids & Products revenues reaching near pre-pandemic levels. Our Completion Fluids & Products Division also continued to ship TETRA's high purity zinc bromine solution, TETRA PureFlow® to Eos Energy Enterprises, Inc. ("Eos") (NASDAQ: EOSE) under our recent strategic partnership. Our sales to Eos increased materially during the second quarter compared to the first quarter of 2022 as Eos expands its production capacity to meet its growing backlog and to service its increasing number of identified opportunities

We have not historically directly purchased any significant volumes of raw materials from Russia nor from Ukraine. Additionally, we have not historically sold any significant volumes of product to Russia or to Ukraine. However, one of our raw material providers sourced one of their raw materials from Russia or Ukraine. Because of the ongoing conflict between Russia and Ukraine, toward the end of the first quarter, our primary European supplier of certain raw materials advised us of supply constraints with one of their suppliers of a key raw material used in their manufacturing process. This raw material is a widely used, global commodity but the disruption to the current supply chain has caused some impact on their production which in turn has caused a reduction in delivered volumes of certain raw materials to our plant in Finland where we manufacture calcium chloride, which has decreased our calcium chloride production volumes and had some impact on second quarter margins. Our supplier has sourced their material from an alternative location and resumed supplying reduced volumes to us. We are also continuing to work with secondary and tertiary raw material providers on options to address the situation and mitigate the financial impact and we are told from our primary provider that they expect improved deliveries and a more normalized supply chain as they progress through the second half of the year. The exact financial impact remains difficult to quantify at this time and is dependent on our ability to find alternative sources of certain raw materials from suppliers not directly or indirectly impacted by the conflict or the ability of our primary supplier to source alternative raw material sources.Mexico.

Our Water & Flowback Services revenues ~~improved over~~remained stable compared to the first quarter of 2023 and ~~significantly~~improved compared to the ~~second quarter of 2021 due to a combination of continued increases~~prior year, driven primarily by the first two early production facilities in ~~customer activity levels and continued price recovery, particularly~~Latin America that became operational in ~~the United States onshore land business. The second quarter revenue for our United States land business was the highest since~~ the third quarter of ~~2019, despite significantly lower drilling~~2022 and ~~fracking activity compared to prior years. We continue to add~~the third early production facility which became operational in May 2023. The early production facilities are longer-term, high-margin projects with stable and predictable cash flows. Our growing fleet of TETRA SandStormTM ~~(“SandStorm”) units to United States onshore markets~~advanced cyclone technology separators also remains at rates approaching pre-pandemic pricing. We continue to see strong utilization for our SandStorm technology and continue to invest additional capital for new units as activity remains strong. During the quarter, we secured a patent on this unique sand filtration technology. Our focus on produced water treatment and recycling continues to generate results with four new recycling projects added during the second quarter. Revenue growth

~~Table of Contents~~

~~was a result of the continued increase in the number of integrated projects and customers,~~ high utilization ~~of SandStorm units~~with continued market penetration and ~~market share gains with private oil and gas operators.~~positive pricing progression.

We are committed to pursuing low-carbon energy initiatives that leverage our fluids and aqueous chemistry core competencies, our significant bromine and lithium assets and technologies, and our leading calcium chloride production capabilities. ~~During~~In June 2023, we entered into a memorandum of understanding (“MOU”) with Saltwerx LLC (“Saltwerx”), an indirect wholly owned subsidiary of a Fortune 500 company, relating to a newly-proposed brine unit in the ~~first quarter of 2022, we completed the drilling of our~~Smackover Formation in Southwest Arkansas ~~exploration well~~ and ~~during the second quarter of 2022, we secured samples for multiple Smackover formation brine zones. Ongoing~~potential bromine and lithium ~~fluid analysis~~production from ~~these samples is being used~~brine produced from the unit. The binding provisions of the MOU provide, among other things, that: (i) we will file an amended brine unit application (the “Application”) covering approximately 6,138 acres, which expands the size of the unit area and also combines brine acreage that was previously leased by each of TETRA and Saltwerx (the “Brine Unit”), with the Arkansas Oil & Gas Commission (“AOGC”) and (ii) Saltwerx will provide a letter to ~~progress a resource report for both~~us in support of the ~~bromine and lithium in~~Application. We are evaluating results from the second exploratory well on our ~~approximately 31,100 net acre brine leases~~acreage in Arkansas. ~~The resource report is expected~~We expect to ~~be completed in~~receive the well results during the third quarter with the intent to improve the accuracy of ~~2022. We~~our lithium and bromine resource estimates. Additional steps are ~~also in~~required before making a decision to develop the ~~process of completing an engagement agreement with an engineering firm~~bromine assets, and include further studies to ~~begin work on a Preliminary Economic Assessment (“PEA”) to determine~~analyze the ~~economics of developing 3,600 net acres under which we hold exclusive brine rights to meet the demand for bromine-based fluids for both a growing oil and gas market~~resource as well as completion of a rapidly growing energy storage market. In addition to the bromine, we plan to ultimately extract lithium from the same brine feed, which we expect will greatly benefit the financial returns for the project.

Substantially all of our former Compression Division’s operations were conducted through our partially-owned CSI Compressco subsidiary. On January 29, 2021, we closed the sale of the general partner of CSI Compressco, which included the sale of the 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 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. See Note 2 – “Discontinued Operations” in the Notes to Consolidated Financial Statements for further information.pre-feasibility and/or feasibility study.

1820

Table of Contents

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. In November 2020, the SEC issued a final rule to modernize and simplify Management’s Discussion and Analysis and certain financial disclosure requirements in SEC Regulation S-K. As permitted by this final rule, theThe analysis herein reflects the optional approach to discuss results of operations on a sequential-quarter basis, which we believe ~~will provide~~provides information that is most useful in assessing our quarterly results of ~~operations going forward.~~operations.

Three months ended June 30, ~~2022~~2023 compared with three months ended March 31, ~~2022.~~2023.

Consolidated Comparisons


		Three Months Ended						Period to Period Change								Three Months Ended									Period to Period Change
		June 30,			March 31,			$ Change					% Change			June 30,					March 31,				$ Change			% Change
		2022			2022							2023					2023
		(in thousands, except percentages)														(in thousands, except percentages)
Revenues	Revenues	$	140,716		$	130,037				$	10,679					8.2		%	Revenues	$	175,463			$	146,209		$	29,254		20.0	%
Gross profit	Gross profit	28,107			32,420			(4,313)					(13.3)	%	Gross profit	49,155					36,323				12,832			35.3	%
Gross profit as a percentage of revenue	Gross profit as a percentage of revenue	20.0		%	24.9		%								Gross profit as a percentage of revenue	28.0		%			24.8		%
Exploration and appraisal costs		634			1,930			(1,296)					(67.2)	%
Exploration and pre-development costs															Exploration and pre-development costs	2,341					720				1,621			225.1	%
General and administrative expense	General and administrative expense	23,620			20,643			2,977					14.4	%	General and administrative expense	26,225					23,191				3,034			13.1	%
General and administrative expense as a percentage of revenue	General and administrative expense as a percentage of revenue	16.8		%	15.9		%								General and administrative expense as a percentage of revenue	14.9		%			15.9		%
Interest expense, net	Interest expense, net	3,610			3,324			286					8.6	%	Interest expense, net	5,944					5,092				852			16.7	%

Other income, net	Other income, net	(1,037)			(2,411)			1,374					(57.0)	%	Other income, net	(6,435)					(214)				6,221			NM(1)
Income before taxes and discontinued operations	Income before taxes and discontinued operations	1,280			8,934			(7,654)					(85.7)	%	Income before taxes and discontinued operations	21,080					7,534				13,546			179.8	%
Income before taxes and discontinued operations as a percentage of revenue	Income before taxes and discontinued operations as a percentage of revenue	0.9		%	6.9		%								Income before taxes and discontinued operations as a percentage of revenue	12.0		%			5.2		%
(Benefit) provision for income taxes		(479)			1,200			(1,679)					NM(1)
Provision for income taxes															Provision for income taxes	2,875					1,489				1,386			93.1	%
Income before discontinued operations	Income before discontinued operations	1,759			7,734			(5,975)					(77.3)	%	Income before discontinued operations	18,205					6,045				12,160			201.2	%
Discontinued operations:	Discontinued operations:														Discontinued operations:
Loss from discontinued operations, net of taxes	Loss from discontinued operations, net of taxes	(34)			(15)			(19)					126.7	%	Loss from discontinued operations, net of taxes	(8)					(12)				(4)			(33.3)	%
Net income	Net income	1,725			7,719			(5,994)					(77.7)	%	Net income	18,197					6,033				12,164			201.6	%
Loss attributable to noncontrolling interests	Loss attributable to noncontrolling interests	20			1			19					NM		Loss attributable to noncontrolling interests	18					7				11			157.1	%
Net income attributable to TETRA stockholders	Net income attributable to TETRA stockholders	$	1,745		$	7,720		$	(5,975)				(77.4)	%	Net income attributable to TETRA stockholders	$	18,215				$	6,040			$	12,175		201.6	%

(1) Percent change is not meaningful

Consolidated revenuesincreased inbetween thecurrent ~~quarter~~and previous quarters primarily due to an increase in overall activity for ~~both~~ the Completion Fluids & Products division lead by increased pricing and ~~Water & Flowback Services division, as sustained high commodity prices continued for both crude oil and natural gas.~~volume sales in the Northern European industrial chemicals market. See Divisional Comparisons section below for a more detailed discussion of the change in our revenues.

Consolidated gross profit as a percentage of revenue ~~decreased~~increased primarily due to ~~the $3.8 million insurance settlement received in March 2022~~our Completion Fluids & Products division benefiting from ~~prior damage to our Lake Charles facility,~~increased overall activity levels and ~~$2.3 million of impairments recognized in the current quarter.~~margins. See Divisional Comparisons section below for additional discussion.

Consolidated exploration and ~~appraisal~~pre-development costs ~~decreased as the~~increased primarily due to drilling ofcosts associated with our second exploratory brine well in ~~Arkansas was completed during the first quarter of 2022 and sample analysis continued during the second quarter.~~Arkansas.

Consolidated general and administrative expenses increased compared to the prior year, primarily due to ~~$2.3~~a $2.7 million ofincrease in wage and benefit-related expenses driven by divisional headcount additions as operational activity levels increased, ~~salary and employee expenses. Higher salary expenses were mainly due to increased~~as well as higher short and long-term ~~variable~~ incentive ~~costs driven~~expense. General and administrative expenses also increased $0.8 million due to a higher provision for credit losses, partially offset by ~~strong year-to-date financial and stock price performance, as well as divisional headcount additions to support increased activity levels.~~a $0.6 million decrease in legal expenses.

~~Table of Contents~~

Consolidated other income, net, ~~decreased~~increased in the current quarter, compared to the prior quarter primarily due to the $4.7 million cumulative credit for exploration and pre-development costs reimbursable from Saltwerx, a $0.7 million increase in unrealized gain due to the change in the unit price of the CSI Compressco common units we ~~retained,~~own, a $0.3 million increase in unrealized gain from ~~a $1.1 million gain in the prior quarter to a $0.5 million loss in the current period, and a $0.8 million unrealized loss from~~ our ~~investment in~~ Standard Lithium shares received in April ~~2022. These decreases are partially offset by~~2022 and 2023

Table of Contents

and a ~~$0.6 million unrealized gain on our investment in CarbonFree recognized during the second quarter, as well as a $0.3~~$0.4 million increase in ~~gains on asset sales.~~unrealized gain from the change in fair value of the CarbonFree convertible note embedded option.

Consolidated ~~benefit~~provision for income tax was ~~$0.5~~$2.9 million during the current quarter, compared to a ~~$1.2~~$1.5 million ~~expense~~provision during the prior quarter. Our consolidated effective tax rate for the three months ended June 30, ~~2022~~2023 was ~~negative 37.4%~~13.6% due to income generated during the quarter, partially offset by the utilization of net operating loss carryforwards in the United States and certain other non-U.S. jurisdictions for which a valuation allowance had been established. 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 and certain other non-U.S. jurisdictions.

Divisional Comparisons

Completion Fluids & Products Division


	Three Months Ended						Period to Period Change
	June 30,			March 31,			$ Change		% Change
	2023			2023
	(in thousands, except percentages)
Revenues	$	98,222		$	69,042		$	29,180	42.3	%
Gross profit	37,133			25,010			12,123		48.5	%
Gross profit as a percentage of revenue	37.8		%	36.2		%
Exploration and pre-development costs	2,341			720			1,621		225.1	%
General and administrative expense	8,551			7,173			1,378		19.2	%
General and administrative expense as a percentage of revenue	8.7		%	10.4		%
Interest expense (income), net	104			(395)			499		126.3	%
Other income, net	(5,819)			(930)			4,889		525.7	%
Income before taxes and discontinued operations	$	31,956		$	18,442		$	13,514	73.3	%
Income before taxes and discontinued operations as a percentage of revenue	32.5		%	26.7		%

Revenues for our Completion Fluids & Products Division increased primarily due to increased pricing and volumes for industrial chemical sales, including higher sales volume from the seasonal uplift in Northern Europe, as well as an increase in offshore activity levels.

Gross profit for our Completion Fluids & Products Division increased compared to the prior quarter period primarily due to the pricing and sales volume impact mentioned above. Our industrial calcium chloride business reflects the seasonal peak in Europe, high production volumes, and supply chain benefits that ~~changes~~yielded higher margins. Our profitability in future periods will continue to be affected by the mix of our products and services, market demand for our products and services, drilling and completions activity, supply chain challenges and inflationary pressures.

Completion Fluids & Products Division exploration and pre-development costs associated with our potential Southwest Arkansas bromine development project increased $1.6 million due to a second exploratory well drilled during the current quarter, as well as ongoing engineering and design work. General and administrative expense for the division increased $1.4 million to support higher activity levels. Interest expense (income), net increased $0.5 million due to lower interest income on deposit accounts in Brazil and Europe. Other income, net increased primarily due to the $4.7 million cumulative credit for exploration and pre-development costs from Saltwerx, a $0.4 million unrealized gain from the change in fair value of the CarbonFree convertible note embedded option and a $0.3 million increase in unrealized gain from our investment in Standard Lithium shares, partially offset by a $0.5 million increase in foreign exchange losses.

Table of Contents

Water & Flowback Services Division


	Three Months Ended						Period to Period Change
	June 30,			March 31,			$ Change		% Change
	2023			2023
	(in thousands, except percentages)
Revenues	$	77,241		$	77,167		$	74	0.1	%
Gross profit	12,893			11,422			1,471		12.9	%
Gross profit as a percentage of revenue	16.7		%	14.8		%
General and administrative expense	5,080			4,959			121		2.4	%
General and administrative expense as a percentage of revenue	6.6		%	6.4		%

Interest expense, net	27			27			—		—	%
Other (income) expense, net	(228)			58			286		493.1	%
Income before taxes and discontinued operations	$	8,014		$	6,378		$	1,636	25.7	%
Income before taxes and discontinued operations as a percentage of revenue	10.4		%	8.3		%

Revenues for our Water & Flowback Services Division in the ~~full-year forecast had~~current quarter remained comparable to the prior quarter as higher revenues from our early production facilities in Latin America were offset by lower customer activity in the North America onshore business.

Gross profit for our Water & Flowback Services Division increased compared to the prior quarter due to a revenue shift toward higher margin service offerings, including the early production facilities in Latin America. Gross profit as a percentage of revenue increased reflecting the continued margin expansion efforts driven by investments in technology, integration, digitalization and the benefit of our early production facilities in Argentina. While we have seen some signs of softness in certain land segments in the United States, pricing has remained relatively stable for our differentiated products and service offerings.

The Water & Flowback Services Division income before taxes and discontinued operations increased primarily due to an improvement in the gross profit described above, as well as a $0.3 million increase in foreign exchange gains.

Corporate Overhead


	Three Months Ended				Period to Period Change
	June 30,		March 31,		$ Change		% Change
	2023		2023
	(in thousands, except percentages)
Depreciation and amortization	$	93	$	109	$	(16)	(14.7)	%
Impairments and other charges	777		—		777		100.0	%
General and administrative expense	12,595		11,059		1,536		13.9	%
Interest expense, net	5,813		5,460		353		6.5	%

Other (income) expense, net	(388)		658		1,046		159.0	%
Loss before taxes and discontinued operations	$	(18,890)	$	(17,286)	$	(1,604)	9.3	%

Corporate overhead loss before taxes and discontinued operations increased primarily due to a $1.6 million increase in wages and benefits related expenses driven by higher short and long-term incentive expenses, a $0.8 million impairment associated with our corporate office lease, and a $0.4 million increase in interest expense due to an increase in the interest rate on our ~~interim reporting~~Term Credit Agreement. These expenses are partially offset by an increase in other (income) expense, net primarily due to a $0.7 million increase in unrealized gains related to unit price changes of our investment in CSI Compressco, and a $0.3 million increase in foreign exchange gains.

Table of Contents

Six months ended June 30, 2023 compared with six months ended June 30, 2022.

Consolidated Comparisons


	Six Months Ended
	June 30,						Period to Period Change
	2023			2022			$ Change		% Change
	(in thousands, except percentages)
Revenues	$	321,672		$	270,753		$	50,919	18.8	%
Gross profit	85,478			60,527			24,951		41.2	%
Gross profit as a percentage of revenue	26.6		%	22.4		%
Exploration and pre-development costs	3,061			2,564			497		19.4	%
General and administrative expense	49,416			44,263			5,153		11.6	%
General and administrative expense as a percentage of revenue	15.4		%	16.3		%
Interest expense, net	11,036			6,934			4,102		59.2	%

Other income, net	(6,649)			(3,448)			3,201		92.8	%
Income before taxes and discontinued operations	28,614			10,214			18,400		180.1	%
Income before taxes and discontinued operations as a percentage of revenue	8.9		%	3.8		%
Provision for income taxes	4,364			721			3,643		505.3	%
Income before discontinued operations	24,250			9,493			14,757		155.5	%
Discontinued operations:
Loss from discontinued operations, net of taxes	(20)			(49)			(29)		(59.2)	%
Net income	24,230			9,444			14,786		156.6	%
Loss attributable to noncontrolling interests	25			21			4		19.0	%
Net income attributable to TETRA stockholders	$	24,255		$	9,465		$	14,790	156.3	%

Consolidated revenues increased in the current year primarily due to improving industry conditions compared to the prior year for both our Completion Fluids & Products and Water & Flowback Services divisions, as well as the first two early production facilities in Argentina that commenced operations in the third quarter of 2022 and a third early production facility that became operational in the second quarter of 2023. See Divisional Comparisons section below for a more detailed discussion of the change in our revenues.

Consolidated gross profit increased in the current year primarily due to the increase in revenue, partially offset by an increase in costs associated with the higher Water & Flowback Services division activity levels described above. Profit margins for both divisions also improved due to stronger market conditions and a shift to higher-margin projects.

Consolidated exploration and pre-development costs increased $0.5 million compared to the prior year primarily due to drilling costs associated with our second exploratory brine well in Arkansas

Consolidated general and administrative expenses increased compared to the prior year, primarily due to $4.6 million of increased wage and benefit-related expenses driven by divisional headcount additions as operational activity levels increased, as well as higher short and long-term incentive expense. General and administrative expenses also increased $0.5 million due to a higher provision for credit loss allowances on trade accounts receivable.

Consolidated interest expense, net, increased in the current year primarily due to an increase in the interest rate on our Term Credit Agreement and higher borrowings under ~~Accounting Standards Codification 740, Income Taxes.~~our ABL Credit Agreement.

Consolidated other income, net, increased in the current year, compared to the prior year primarily due to a $4.7 million cumulative credit for exploration and pre-development costs reimbursable from Saltwerx, offset by a $1.9 million increase in foreign exchange losses.

Consolidated provision for income taxes was $4.4 million during the current year, compared to $0.7 million during the prior year. Our consolidated effective tax rate for the current year was 15.3%, compared to 7.1% during the prior year. The increase in our tax provision and effective tax rate compared to the prior year was primarily due

Table of Contents

to increased income generated in certain non-U.S. jurisdictions for which a net operating loss carryforward is not available for offset. 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.

Divisional Comparisons

Completion Fluids & Products Division


		Three Months Ended						Period to Period Change								Six Months Ended
		June 30,			March 31,			$ Change					% Change			June 30,									Period to Period Change
		2022			2022							2023					2022					$ Change				% Change
		(in thousands, except percentages)														(in thousands, except percentages)
Revenues	Revenues	$	74,798		$	73,194				$	1,604					2.2		%	Revenues	$	167,264			$	147,992		$	19,272		13.0	%
Gross profit	Gross profit	22,062			26,147			(4,085)					(15.6)	%	Gross profit	62,142					48,209				13,933			28.9	%
Gross profit as a percentage of revenue	Gross profit as a percentage of revenue	29.5		%	35.7		%								Gross profit as a percentage of revenue	37.2		%			32.6		%
Exploration and appraisal costs		635			1,930			(1,295)					(67.1)	%
Exploration and pre-development costs															Exploration and pre-development costs	3,061					2,564				497			19.4	%
General and administrative expense	General and administrative expense	6,184			6,059			125					2.1	%	General and administrative expense	15,723					12,243				3,480			28.4	%
General and administrative expense as a percentage of revenue	General and administrative expense as a percentage of revenue	8.3		%	8.3		%								General and administrative expense as a percentage of revenue	9.4		%			8.3		%
Interest income, net	Interest income, net	(283)			(323)			40					(12.4)	%	Interest income, net	(291)					(606)				(315)			(52.0)	%
Other (income) expense, net		265			(811)			1,076					(132.7)	%
Income before taxes		$	15,261		$	19,292		$	(4,031)				(20.9)	%
Income before taxes as a percentage of revenue		20.4		%	26.4		%
Other income, net															Other income, net	(6,749)					(545)				6,204			NM(1)
Income before taxes and discontinued operations															Income before taxes and discontinued operations	$	50,398				$	34,553			$	15,845		45.9	%
Income before taxes and discontinued operations as a percentage of revenue															Income before taxes and discontinued operations as a percentage of revenue	30.1		%			23.3		%

(1) Percent change is not meaningful

Revenues for our Completion Fluids & Products Division increased ~~slightly~~compared to the prior year primarily due to higher European industrial chemical sales volumes, as ~~the seasonal uplift~~well as favorable pricing and customer mix. The division also benefited from ~~our Northern European chemicals business was partially offset by lower~~recent capacity expansions following investments in Brazil, the Gulf of Mexico and ~~international fluid sales as~~ the ~~first quarter benefited from sales pulled forward from the second quarter.~~United Kingdom.

Gross profit for our Completion Fluids & Products Division ~~decreased~~increased compared to the prior ~~quarter period~~year due to increase in revenues. Gross profit as a ~~$3.8 million insurance settlement received in March 2022 from damage to~~percentage of revenue for our ~~Lake Charles facility.~~ Completion Fluids & Products ~~Division~~division increased primarily due to favorable pricing improvements. Our profitability in future periods will continue to be affected by the mix of ~~its~~our products and services, market demand for our products and services, drilling and completions activity, supply chain challenges and inflationary pressures.

~~Pretax income for our Completion Fluids & Products Division decreased primarily due to the $4.1 million lower gross profit described above, a $1.1 million increase in foreign exchange losses~~Income before taxes and a $0.8 million unrealized loss from our investment in Standard Lithium shares received in April 2022. These decreases were partially offset by a $1.3 million decrease in costs associated with the conclusion of our exploratory brine well drilled during the first quarter of 2022 as well as $0.6 million unrealized gain on our investment in CarbonFree recognized during the second quarter.

~~Table of Contents~~

~~Water & Flowback Services Division~~

Three Months Ended Period to Period Change
June 30, March 31, $ Change % Change
2022 2022
(in thousands, except percentages)
Revenues $ 65,918 $ 56,843 $ 9,075 16.0 %
Gross profit 6,214 6,462 (248) (3.8) %
Gross profit as a percentage of revenue 9.4 % 11.4 %
General and administrative expense 5,894 4,238 1,656 39.1 %
General and administrative expense as a percentage of revenue 8.9 % 7.5 %
Interest income, net (2) — (2) NM
Other income, net (1,322) (458) (864) 188.6 %
Income before taxes $ 1,644 $ 2,682 $ (1,038) (38.7) %
Income before taxes as a percentage of revenue 2.5 % 4.7 %

Revenues for our Water & Flowback Services Division increased for both water management and production testing in the current quarter compared to the prior quarter, primarily due to the continued higher overall customer activity in the North America onshore business. The higher customer activity can be attributed to sustained high commodity prices.

Gross profit for our Water & Flowback Services Division decreased compared to the prior quarter due to impairment expenses for obsolete assets and inventory. Excluding the impairment, gross profit is consistent with increased activity level with similar pricing fall through. We expect the third-quarter Adjusted EBITDA margins to further improve reflecting continued better pricing for our United States onshore land business, stronger activity levels and the commencement of operations of two early production facilities in Argentina.

The Water & Flowback Services Division pretax income decreased due to a decrease in gross profit and an increase in general and administrative expense. General and administrative expense increased due to higher compensation and benefits from higher salaries, additional headcount as well as a $0.5 million increase professional services from contract labor. Income for our Water & Flowback Services Division also increased due to a $0.2 million increase in gains on sales of assets and $0.7 million increase in foreign exchange gains.

~~Corporate Overhead~~

Three Months Ended Period to Period Change
June 30, March 31, $ Change % Change
2022 2022
(in thousands, except percentages)
Depreciation and amortization $ 171 $ 191 $ (20) (10.5) %
General and administrative expense 11,542 10,346 1,196 11.6 %
Interest expense, net 3,895 3,647 248 6.8 %
Other (income) expense, net 20 (1,141) 1,161 (101.8) %
Loss before taxes $ (15,628) $ (13,043) $ (2,585) 19.8 %

Corporate overhead pretax loss increased due to a $1.2 million increase in general and administrative expense and a $1.2 million decrease in other (income) expense, net. General and administrative expense increased compared to the prior quarter primarily due to higher salary costs associated with the impact of higher stock price on certain long-term incentive awards and the impact of current year financial performance on accrued short-term incentives. Other (income) expense, net decreased compared to the prior quarter, from a $1.1 million gain in the prior quarter to a $0.5 million loss in the current period, due to the change in the unit price of the CSI Compressco common units we retained. These changes were partially offset by a $0.5 million increase in foreign exchange gains.

~~Table of Contents~~

~~Six months ended June 30, 2022 compared with six months ended June 30, 2021.~~

~~Consolidated Comparisons~~

Six months ended
June 30, Period to Period Change
2022 2021 $ Change % Change
(in thousands, except percentages)
Revenues $ 270,753 $ 179,650 $ 91,103 50.7 %
Gross profit 60,527 24,302 36,225 149.1 %
Gross profit as a percentage of revenue 22.4 % 13.5 %
Exploration and appraisal costs 2,564 — 2,564 100.0 %
General and administrative expense 44,263 37,363 6,900 18.5 %
General and administrative expense as a percentage of revenue 16.3 % 20.8 %
Interest expense, net 6,934 8,290 (1,356) (16.4) %
Other income, net (3,448) (4,306) 858 (19.9) %
Income (loss) before taxes and discontinued operations 10,214 (17,045) 27,259 159.9 %
Income (loss) before taxes and discontinued operations as a percentage of revenue 3.8 % (9.5) %
(Benefit) provision for income taxes 721 1,552 (831) (53.5) %
Income (loss) before discontinued operations 9,493 (18,597) 28,090 151.0 %
Discontinued operations:
Income (loss) from discontinued operations, net of taxes (49) 120,864 (120,913) (100.0) %
Net income 9,444 102,267 (92,823) (90.8) %
Loss (income) attributable to noncontrolling interests 21 (306) 327 (106.9) %
Net income attributable to TETRA stockholders $ 9,465 $ 101,961 $ (92,496) (90.7) %

~~Consolidated revenues increased in the current year~~ ~~primarily~~ ~~due to improving industry conditions compared to the prior year for~~ ~~both the Completion Fluids & Products division and the Water Management & Flowback division. See Divisional Comparisons section below for a more detailed discussion of the change in our revenues.~~

~~Consolidated gross profit increased in the current year primarily due to the increase in revenue, partially offset by an increase in costs associated with~~ the higher activity levels described above. Gross profit as a percentage of revenue also increased, primarily due to the significant improvement in profitability for our Water and Flowback Services Division, as well as a $3.8 million insurance settlement received in March 2022 associated with damage to our Lake Charles facility in 2020.

~~Consolidated exploration and appraisal costs were $2.6 million during the current year due to the exploration and sample analysis costs associated with our exploratory brine well in Arkansas.~~

~~Consolidated general and administrative expenses increased~~ ~~compared to~~ the prior year, primarily due to $7.6 million of increased wage and benefit related expenses driven by reinstatement of full salaries and 401K match as well as higher short and long-term incentive expenses, and divisional headcount additions as operational activity levels increased. Higher wage and benefit related expenses were partially offset by a $1.5 million decrease in professional fees primarily due to the GP Sale in the first quarter of the prior year.

~~Consolidated interest expense, net, decreased in the current year primarily due to $50.5 million of repayments of our term credit facility during 2021.~~

~~Consolidated other income, net, decreased in the current year,~~ ~~compared to~~ the prior year primarily due to a $5.2 million net decrease in unrealized gains on investments in CSI Compressco, Standard Lithium and CarbonFree, partially offset by a $3.0 million warrants fair value adjustment recognized in the prior year, a $0.6 million increase in foreign exchange gains, and a $0.3 million increase in gains on sales of assets.

~~Table of Contents~~

Consolidated provision for income taxes was $0.7 million during the current year, compared to $1.6 million during the prior year. Our consolidated effective tax rate for the current year of 7.1% was primarily due to income generated during the current year, partially offset by the utilization of net operating loss carryforwards in the United States as well as in certain non-U.S. jurisdictions for which a valuation allowance had been established. 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.

~~Consolidated loss from~~ discontinued operations net of taxes, for the prior year includes a $120.6 million primarily non-cash accounting gain from the deconsolidation of CSI Compressco. This gain is net of a $0.01 million tax provision after taking into consideration utilization of net operating loss and credit carryforwards.

Consolidated loss (income) attributable to noncontrolling interests included $0.3 million income from the prior year associated with CSI Compressco’s results for the month of January, prior to the GP Sale.

~~Divisional Comparisons~~

~~Completion Fluids & Products Division~~

Six months ended
June 30, Period to Period Change
2022 2021 $ Change % Change
(in thousands, except percentages)
Revenues $ 147,992 $ 111,128 $ 36,864 33.2 %
Gross profit 48,209 30,194 18,015 59.7 %
Gross profit as a percentage of revenue 32.6 % 27.2 %
Exploration and appraisal costs 2,564 — 2,564 100.0 %
General and administrative expense 12,243 8,904 3,339 37.5 %
General and administrative expense as a percentage of revenue 8.3 % 8.0 %
Interest income, net (606) (300) (306) 102.0 %
Other income, net (545) (3,848) 3,303 (85.8) %
Income before taxes $ 34,553 $ 25,438 $ 9,115 35.8 %
Income before taxes as a percentage of revenue 23.3 % 22.9 %

Revenues for our Completion Fluids & Products Division increased compared to the prior year primarily due to increased International and Gulf of Mexico completion fluids product sales as a result of increased activity following the significant improvement in commodity prices and leveraging opportunities to expand services to completion fluids customers.

Gross profit for our Completion Fluids & Products Division increased compared to the prior year due to more revenues from higher-margin completion fluids services and products, as well as a $3.8 million insurance settlement received in March 2022 from damage to our Lake Charles facility in 2020.

~~Pretax income~~ for our Completion Fluids & Products Division increased compared to the prior year driven by higher gross profit and the $4.7 million cumulative credit for exploration and pre-development costs reimbursable from Saltwerx, partially offset by ~~$2.6 million of costs associated with the exploratory brine well drilled during the current year and~~ a ~~$3.3~~$3.5 million increase in general and administrative costs due to ~~reinstatement of full salaries~~higher compensation and ~~401K match~~short-term incentive expense due to increased activity levels, increased provision for credit loss allowances on trade accounts receivable and higher research and development expenses, as well as ~~higher short and long-term incentive expenses, and divisional headcount additions to support higher activity levels. In addition, other income, net decreased due~~a $0.5 million increase in costs associated with the exploratory brine project compared to the $3.5 million decrease in income from our Standard Lithium shares, most of which were sold during the fourth quarter of 2021, Other income, net also includes a $0.6 million unrealized gain on our investment in CarbonFree recognized during the second quarter.prior period.

2325

Table of Contents

Water & Flowback Services Division

Six months ended
June 30, Period to Period Change
2022 2021 $ Change % Change
(in thousands, except percentages)
Revenues $ 122,761 $ 68,522 $ 54,239 79.2 %
Gross profit (loss) 12,676 (5,479) 18,155 NM
Gross profit (loss) as a percentage of revenue 10.3 % (8.0) %
General and administrative expense 10,132 5,895 4,237 71.9 %
General and administrative expense as a percentage of revenue 8.3 % 8.6 %
Interest income, net (1) (518) 517 (99.8) %
Other income, net (1,781) (398) (1,383) 347.5 %
Income (loss) before taxes $ 4,326 $ (10,458) $ 14,784 NM
Income (loss) before taxes as a percentage of revenue 3.5 % (15.3) %


	Six Months Ended
	June 30,						Period to Period Change
	2023			2022			$ Change		% Change
	(in thousands, except percentages)
Revenues	$	154,408		$	122,761		$	31,647	25.8	%
Gross profit	24,315			12,676			11,639		91.8	%
Gross profit as a percentage of revenue	15.7		%	10.3		%
General and administrative expense	10,039			10,132			(93)		(0.9)	%
General and administrative expense as a percentage of revenue	6.5		%	8.3		%
Interest expense (income), net	54			(1)			55		NM(1)
Other income, net	(172)			(1,781)			(1,609)		(90.3)	%
Income before taxes and discontinued operations	$	14,394		$	4,326		$	10,068	232.7	%
Income before taxes and discontinued operations as a percentage of revenue	9.3		%	3.5		%

(1) Percent change is not meaningful

Revenues for our Water & Flowback Services Division increased significantly for both water management and production testing due to ~~much~~ overall higher customer drilling and completion activity. Customer activity levels have continued to improve, primarily in our North America land ~~business as commodity prices~~business. Revenues have ~~not only recovered but remained high for both crude oil~~also increased in Latin America due to two early production facilities that began operations in the third quarter of 2022 and ~~natural gas compared to~~a third early production facility that came on line in the ~~prior year period.~~second quarter of 2023.

Gross profit for our Water & Flowback Services Division improved substantially from ~~a loss in~~ the prior ~~year to double-digit profit in the current~~ year primarily due to higher revenues resulting from the increased activity levels described above and pricing improvements as activity levels ~~improved.~~improved and continuous efforts to increase margins through streamlining operations and automation.

~~Pretax income~~Income before taxes and discontinued operations for our Water & Flowback Services Division increased in the current year primarily due to an improvement in the gross profit described above, ~~and~~partially offset by a $0.9 million ~~increase~~decrease in foreign exchange gains, ~~offset by an~~and a $0.5 million decrease in gains on asset sales.

Corporate Overhead


	Six Months Ended
	June 30,				Period to Period Change
	2023		2022		$ Change		% Change
	(in thousands, except percentages)
Depreciation and amortization	$	202	$	363	$	(161)	(44.4)	%
Impairments and other charges	777		—		777		100.0	%
General and administrative expense	23,654		21,888		1,766		8.1	%
Interest expense, net	11,273		7,541		3,732		49.5	%
Other (income) expense, net	272		(1,121)		1,393		124.3	%
Loss before taxes and discontinued operations	$	(36,178)	$	(28,671)	$	(7,507)	26.2	%

Corporate overhead loss before taxes and discontinued operations increased due to a $1.8 million increase in general and administrative expense, primarily due a $3.2 million increase in salary and employee expense due to reinstatement of full salaries and 401K match as well as higher short and long-term incentive expenses, and divisional headcount additions to support higher activity levels; a $0.6 million increase in general expenses primarily due to increased rent to support higher activity; and a ~~$0.4~~$3.7 million increase ~~in professional services also supporting higher activity.~~

~~Corporate Overhead~~

Six months ended
June 30, Period to Period Change
2022 2021 $ Change % Change
(in thousands, except percentages)
Depreciation and amortization 363 418 (55) (13.2) %
General and administrative expense $ 21,888 $ 22,564 $ (676) (3.0) %
Interest expense, net 7,541 9,107 (1,566) (17.2) %
Other income, net (1,121) (58) (1,063) NM
Loss before taxes $ (28,671) $ (32,031) $ 3,360 (10.5) %

~~Corporate overhead pretax loss decreased due to a $1.6 million decrease~~ in interest expense, net due to ~~lower debt levels,~~an increase in the interest rate on our Term Credit Agreement and higher borrowings under our ABL Credit Agreement, as well as a ~~$1.1~~$1.4 million ~~increase~~decrease in other ~~income, net.~~(income) expense, net and a $0.8 million impairment of our corporate office lease. Corporate general and administrative expenses increased compared to the prior year, primarily due to increased wage and benefit-related expenses driven by higher short and long-term incentive expenses. Other ~~income,~~(income) expense, net ~~increased~~decreased primarily due to a ~~$3.0 million warrants fair value adjustment recognized in the prior year and a $0.6 million increase in foreign exchange gains, partially offset by a $2.4~~$1.0 million decrease in ~~income~~unrealized gains related to unit price changes of our investment in CSI ~~Compressco.~~Compressco, and a $1.0 million decrease in foreign exchange gains, partially offset by a $0.6 million increase in income from investments.

2426

Table of Contents

Non-GAAP Financial Measures

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

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 yearperiod,and to budget). We~~ define Adjusted EBITDA as ~~earnings~~net income (loss) before ~~interest,~~ taxes ~~depreciation, amortization,~~and discontinued operations, excluding impairments, exploration and ~~appraisal~~pre-development costs, certain special, non-recurring or other charges (or credits), interest, depreciation and amortization, income from collaborative arrangement and certain non-cash items such as equity-based compensation expense. The most directly comparable GAAP financial measure is net income (loss) before taxes and discontinued operations. Exploration and pre-development costs represent expenditures incurred to evaluate potential future development of TETRA’s lithium and bromine properties in Arkansas. Such costs include exploratory drilling and associated engineering studies. Income from collaborative arrangement represents the portion of exploration and pre-development costs that are reimbursable by our strategic partner. Exploration and pre-development costs and ~~certain other~~the associated income from collaborative arrangement are excluded from Adjusted EBITDA because they do not relate to the Company’s current business operations. Adjustments to long-term incentives represent cumulative adjustments to valuation of long-term cash incentive compensation awards that are related to prior years. These costs are excluded from Adjusted EBITDA because they do not relate to the current year and are considered to be outside of normal operations. Long-term incentives are earned over a three-year period and the costs are recorded over the three-year period they are earned. The amounts accrued or incurred are based on a cumulative of the three-year period. Equity-based compensation expense represents compensation that has been or will be paid in equity and is excluded from Adjusted EBITDA because it is a non-cash ~~charges and non-recurring adjustments.~~item.

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

•~~evaluate the~~to assess financial performance, without regard to charges or credits that are considered by management to be outside of ~~our assets~~its normal operations and without regard to financing methods, capital structure or historical cost ~~basis;~~basis, and

•~~determine our~~ to assess the Company’s ability to incur and service debt and fund capital expenditures.

Table of Contents

The following ~~table~~tables ~~reconciles~~reconcile net income (loss) before taxes and discontinued operations to Adjusted EBITDA for the periods indicated:


		Three Months Ended												Three Months Ended
		June 30, 2022												June 30, 2023
		Completion Fluids & Products			Water & Flowback Services			Corporate SG&A		Other and Eliminations		Total				Completion Fluids & Products			Water & Flowback Services			Corporate SG&A		Other and Eliminations		Total
		(in thousands, except percentages)												(in thousands, except percentages)
Revenue	Revenue	$	74,798		$	65,918		$	—	$	—	$	140,716		Revenue	$	98,222		$	77,241		$	—	$	—	$	175,463
Net income (loss) before taxes and discontinued operations	Net income (loss) before taxes and discontinued operations	15,261			1,644			(11,542)		(4,083)		1,280			Net income (loss) before taxes and discontinued operations	31,956			8,014			(12,595)		(6,295)		21,080
Impairments		220			2,042			—		—		2,262
Exploration and appraisal costs		634			—			—		—		634
Insurance recoveries															Insurance recoveries	(5)			—			—		—		(5)
Impairments and other charges															Impairments and other charges	—			—			777		—		777
Exploration and pre-development costs															Exploration and pre-development costs	2,341			—			—		—		2,341
Adjustment to long-term incentives	Adjustment to long-term incentives	—			—			1,450		—		1,450			Adjustment to long-term incentives	—			—			322		—		322

Former CEO stock appreciation right expense															Former CEO stock appreciation right expense	—			—			329		—		329
Transactions and other expenses	Transactions and other expenses	—			556			—		—		556			Transactions and other expenses	—			—			57		—		57
Income from collaborative arrangement															Income from collaborative arrangement	(4,749)			—			—		—		(4,749)

Adjusted income (loss) before taxes and discontinued operations		$	16,115		$	4,242		$	(10,092)	$	(4,083)	$	6,182

Interest expense, net		(283)			(2)			—		3,895		3,610
Depreciation and amortization		1,873			5,705			—		168		7,746
Equity compensation expense		—			—			1,159		—		1,159
Interest (income) expense, net															Interest (income) expense, net	104			27			—		5,813		5,944
Depreciation, amortization and accretion															Depreciation, amortization and accretion	2,193			6,172			—		93		8,458
Equity-based compensation expense															Equity-based compensation expense	—			—			1,492		—		1,492
Adjusted EBITDA	Adjusted EBITDA	$	17,705		$	9,945		$	(8,933)	$	(20)	$	18,697		Adjusted EBITDA	$	31,840		$	14,213		$	(9,618)	$	(389)	$	36,046

Adjusted EBITDA as % of revenue	Adjusted EBITDA as % of revenue	23.7		%	15.1		%					13.3		%	Adjusted EBITDA as % of revenue	32.4		%	18.4		%					20.5		%

		Three Months Ended												Three Months Ended
		March 31, 2022												March 31, 2023
		Completion Fluids & Products			Water & Flowback Services			Corporate SG&A		Other and Eliminations		Total				Completion Fluids & Products			Water & Flowback Services			Corporate SG&A		Other and Eliminations		Total
		(in thousands, except percentages)												(in thousands, except percentages)
Revenue	Revenue	$	73,194		$	56,843		$	—	$	—	$	130,037		Revenue	$	69,042		$	77,167		$	—	$	—	$	146,209
Net income (loss) before taxes and discontinued operations	Net income (loss) before taxes and discontinued operations	19,292			2,682			(10,346)		(2,694)		8,934			Net income (loss) before taxes and discontinued operations	18,442			6,378			(11,059)		(6,227)		7,534
Insurance settlement		(3,750)			—			—		—		(3,750)
Exploration and appraisal costs		1,930			—			—		—		1,930
Insurance recoveries															Insurance recoveries	(2,850)			—			—		—		(2,850)

Exploration and pre-development costs															Exploration and pre-development costs	720			—			—		—		720
Adjustment to long-term incentives	Adjustment to long-term incentives	—			—			784		—		784			Adjustment to long-term incentives	—			—			353		—		353

Interest (income) expense, net															Interest (income) expense, net	(395)			27			—		5,460		5,092
Depreciation, amortization and accretion															Depreciation, amortization and accretion	2,052			6,509			—		109		8,670
Equity-based compensation expense															Equity-based compensation expense	17			—			1,276		—		1,293
Transaction, restructuring and other expenses															Transaction, restructuring and other expenses	—			—			82		—		82
Former CEO stock appreciation right expense	Former CEO stock appreciation right expense	—			—			472		—		472			Former CEO stock appreciation right expense	—			—			(307)		—		(307)

Adjusted income (loss) before taxes and discontinued operations		$	17,472		$	2,682		$	(9,090)	$	(2,694)	$	8,370

Interest expense, net		(323)			—			—		3,647		3,324
Depreciation and amortization		1,948			5,543			—		188		7,679
Equity compensation expense		—			—			1,104		—		1,104
Adjusted EBITDA	Adjusted EBITDA	$	19,097		$	8,225		$	(7,986)	$	1,141	$	20,477		Adjusted EBITDA	$	17,986		$	12,914		$	(9,655)	$	(658)	$	20,587

Adjusted EBITDA as % of revenue	Adjusted EBITDA as % of revenue	26.1		%	14.5		%					15.7		%	Adjusted EBITDA as % of revenue	26.1		%	16.7		%					14.1		%

~~Table of Contents~~

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.

Liquidity and Capital Resources

We believe that our capital structure allows us to meet our financial ~~obligations despite current uncertain operating conditions and financial markets.~~obligations. Our liquidity at the end of the second quarter was ~~$103.0~~$99.0 million. Liquidity is defined as unrestricted cash plus availability under the ABL Credit Agreement, ~~Swedish~~Argentina Credit Facility and ~~Finland~~Swedish Credit ~~Agreement.~~Facility. Information about the terms and covenants of our debt agreements can be found in ~~our~~ ~~2021 Annual Report~~ ~~and in~~ Note 6 - Long Term Debt and Other Borrowings.

Table of Contents

Our consolidated sources and uses of cash ~~which include cash activity from our former Compression Division for January 2021 prior to the closing of the GP sale,~~ are as follows:


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
		(in thousands)					(in thousands)
Operating activities	Operating activities	$	23,803	$	7,607	Operating activities	$	37,357	$	23,803
Investing activities	Investing activities	(15,919)		(10,451)		Investing activities	(22,004)		(15,919)
Financing activities	Financing activities	(2,774)		(29,775)		Financing activities	(1,757)		(2,774)

Operating Activities

Consolidated cash flows provided by operating activities increased compared to the first six months of ~~2021~~2022 primarily due to an increase in cash profit ~~partially offset by the effect of~~and working capital ~~movements and $0.9 million of prior-year cash flows provided by operating activities generated by CSI Compressco in January prior to closing of the GP Sale.~~changes.

Investing Activities

Total cash capital expenditures during the first six months of ~~2022~~2023 were ~~$20.4~~$23.3 million, which reflects ~~front-loading our expected full year~~increased expenditures to accommodate industry-wide activity ~~recoveries.~~recoveries as well as traditional front-loading of expected annual expenditures. Our Water & Flowback Services Division spent ~~$15.9~~$16.6 million on capital expenditures, primarily to deploy additional SandStorm units to meet increased demands and to maintain, automate and upgrade its water management and flowback equipment fleet. Water and Flowback Services Division capital expenditures also included expenditures related to construction of the third early production ~~facilities~~facility in ~~Argentina, including approximately $2.0 million of costs that were reimbursed by customers.~~Argentina. Our Completion Fluids & Products Division spent ~~$4.4~~$6.5 million on capital ~~expenditures.~~expenditures, primarily investing in additional capacity to support higher projected activity levels in the United States, Latin America and Europe.

Investing activities during the first six months of 2023 and 2022 included a$2.9 million and $3.8 million, respectively, of proceeds for insurance ~~settlement received in March 2022~~settlements from damage to our Lake Charles facility in 2020.

Historically, a significant majority of our planned capital expenditures have been related to identified opportunities to grow and expand our existing businesses. We are also focused on enhancing shareholder value by capitalizing on our key mineral assets, brine mineral extraction expertise, and deep chemistry competency to expand our offerings into the low carbon energy markets. However, we continue to review all capital expenditure plans carefully in an effort to conserve cash. We currently have no long-term capital expenditure commitments. If the forecasted demand for our products and services increases or decreases, the amount of planned expenditures on growth and expansion may be adjusted.

2629

Table of Contents

Lithium and Bromine ~~Exploration Targets~~Inferred Resources

We have rights to the brine underlying our approximately ~~31,100 net~~40,000 gross acres of brine leases in the Smackover Formation in Southwest Arkansas, including rights to the bromine and lithium contained in the brine. With respect to approximately ~~27,500~~35,000 acres of that total acreage, we ~~had previously entered into an agreement granting~~granted Standard Lithium an option to acquire the lithium rights. The agreements governing this option contemplate a 2.5% royalty that Standard Lithium would pay us based on gross lithium revenues. Additional information on these ~~exploration targets~~inferred resources is described in Part I, “Item 2. Properties” in our ~~2021~~2022 Annual Report.

During early 2023, we completed an initial economic assessment for a bromine extraction plant. We expect an initial economic assessment to follow in late 2023 for a lithium extraction plant, subject to the progress of early engineering. In ~~August 2021,~~June 2023, we ~~announced~~entered into the ~~completion~~MOU with Saltwerx, an indirect wholly owned subsidiary of a ~~preliminary technical assessment by an independent geological consulting firm~~Fortune 500 company, relating to ~~assess lithium~~a newly-proposed brine unit in the Smackover Formation in Southwest Arkansas and bromine exploration targets in our approximately 31,100 net acres. During the first six months 2022, we incurred $2.6 million to complete the drilling of our Arkansas exploration well and obtain and analyze fluid samples for multiple Smackover formation brine zones. Ongoingpotential bromine and lithium ~~fluid analysis~~production from ~~these samples is being used~~brine produced from the unit. The binding provisions of the MOU provide, among other things, that (i) the Company will file the Application covering the Brine Unit with the AOGC and (ii) Saltwerx will provide a letter to ~~progress a resource report for both~~the Company in support of the Application. The MOU also contains provisions effective after, and contingent on, the approval of the Brine Unit by the AOGC, including provisions relating to: (i) initial brine ownership percentages within the Brine Unit, including the bromine and lithium contained in ~~our approximately 31,100 net acre~~the brine, ~~leases in Arkansas. The resource report is expected~~(ii) the transfer of certain leased acres outside the proposed Brine Unit from us to Saltwerx, (iii) Saltwerx reimbursing us for certain expenses incurred by us to date regarding the development of leased acreage to be ~~completed~~included in the ~~third~~Brine Unit, and (vi) an allocation of certain future costs for the drilling of a brine production test well and other development operations, including FEED studies for bromine and lithium production facilities. During the second quarter of ~~2022. We have engaged an engineering~~2023, we also contracted a third-party firm to ~~begin work on~~execute a ~~PEA to determine~~front-end engineering and design study for a lithium production facility. Only upon completion of an indicated resources study, pre-feasibility and/or feasibility study and attainment of capital commitment from either a joint venture partner, governments grants or loans, or other cost-effective sources of capital that will not over-lever the economics of developing 3,600 net acres under which we hold exclusive brine rights to meet the demand for bromine-based fluids for both a growing oil and gas market as well as a rapidly growing energy storage market. InCompany, in addition to confirmation of a successful recapitalization of the ~~bromine,~~long-duration zinc-bromide battery storage manufacturers, would we ~~plan~~proceed to ~~ultimately extract lithium from the same brine feed which we expect will greatly benefit the financial returns for the project.~~a final investment decision.

Financing Activities

~~As a result of TETRA’s strong cash flow from operations in 2020 and the proceeds from the GP Sale, during~~Our financing activities for the first six months of ~~2021, we repaid $29.3~~2023 include $97.2 million ~~on our term credit agreement. We repaid an additional $21.0~~of borrowings and $98.2 million ~~on our term credit agreement during 2021 using proceeds from~~of repayments under the ~~sale of Standard Lithium shares~~ABL Credit Agreement, Argentina Credit Facility and ~~cash flows from operations. Our financing activities for the fist six months of 2022 include $1.2~~Swedish Credit Facility, as well as $0.7 million of capital lease payments associated with equipment leased primarily for the early production facilities in Argentina. We may supplement our existing cash balances and cash flow from operating activities with short-term borrowings, long-term borrowings, issuances of equity and debt securities, and other sources of capital. We are aggressively managing our working capital and capital expenditure needs in order to maximize our liquidity in the current environment.

Table of Contents

Long-Term Debt

Term Credit Agreement. The Term Credit Agreement is scheduled to mature on September 10, 2025. Our Term Credit Agreement requires us to offer to prepay a percentage of Excess Cash Flow (as defined in the Term Credit Agreement) within five business days of filing our Annual Report. As of June 30, 2023, $163.1 million in aggregate principal amount of our Term Credit Agreement is outstanding.

Asset-Based Credit Agreement. As of June 30, ~~2022,~~2023, our ABL Credit Agreement provides for a senior secured revolving credit facility of up to $80.0 million, with a $20.0 million accordion. The credit facility is subject to a borrowing base 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, a swingline loan sublimit of $11.5 million, and a $15.0 million sub-facility subject to a borrowing base consisting of certain trade receivables and inventory in the United Kingdom. The amounts we may borrow under the ABL Credit Agreement are derived from our accounts receivable, certain accrued receivables and certain inventory. Changes in demand for our products and services have an impact on our eligible accounts receivable, accrued receivables and the value of our inventory, which could result in significant changes to our borrowing base and therefore our availability under our ABL Credit Agreement. As of June 30, ~~2022,~~2023, we had ~~zero~~no balance outstanding and~~$6.0~~ $11.5 million in letters of credit and guarantees against our ABL Credit Agreement and availability of ~~$61.8~~$66.6 million, subject to compliance with the covenants, borrowing base, and other provisions of the ABL Credit Agreement.

Argentina Credit Facility. In January 2023, the Company entered into a revolving credit facility for certain working capital and capital expenditure needs for its subsidiary in Argentina (“Argentina Credit Facility”). As of June 30, 2023, we had $1.9 million outstanding and availability of approximately $0.1 million under the Argentina Credit Agreement. Borrowings bear interest at a rate of 2.50% per annum. The Argentina Credit Facility expires on October 19, 2023 and is backed by a letter of credit under our ABL Credit Agreement.

Swedish Credit Facility. In January 2022, the Company entered into a revolving credit facility for seasonal working capital needs of subsidiaries in Sweden. As of June 30, ~~2022,~~2023, we had ~~less than $0.1 million~~no balance outstanding and availability of approximately ~~$4.9~~$4.6 million ~~United States dollars~~ under this agreement. During each year, all outstanding loans under the Swedish Credit Facility must be repaid for at least 30 consecutive days. Borrowings

~~Table of Contents~~

bear interest at a rate of 2.95% per annum. The Swedish Credit Facility expires on December 31, ~~2022~~2023 and the Company intends to renew it annually.

Finland Credit Agreement. ~~The~~In January 2022, the Company also entered into a ~~new~~ credit agreement guaranteed by certain accounts receivable and inventory in Finland (“Finland Credit Agreement”). As of June 30, ~~2022,~~2023, there were ~~US$1.4~~$1.5 million of letters of credit outstanding against the Finland Credit Agreement.

~~Term~~ The Finland Credit Agreement. ~~The Term Credit Agreement is scheduled~~ expires on January 31, 2024 and the Company intends to mature on September 10, 2025. Our Term Credit Agreement requires us to offer to prepay a percentage of Excess Cash Flow (as defined in the Term Credit Agreement) within five business days of filing our Annual Report. As of July 29, 2022, $163.1 million in aggregate principal amount of our Term Credit Agreement is outstanding.renew it annually.

Other Sources and Uses of Cash

In addition to the aforementioned credit facilities, ~~and senior notes,~~ we fund our short-term liquidity requirements from cash generated by our operations and from short-term vendor financing. In addition, as of June 30, ~~2022,~~2023, the market value of our investments in CSI Compressco and Standard Lithium were ~~$6.9~~$6.6 million and ~~$1.7~~$3.6 million, respectively, with no holding restrictions on our ability to monetize our ~~interest. We also hold an investment in convertible notes issued by CarbonFree valued at $5.6 million as of June 30, 2022, excluding accrued interest.~~interests. In addition, we are party to agreements in which Standard Lithium has the right to explore for, and an option to acquire the right to produce and extract ~~Lithium~~lithium in our Arkansas leases as well as additional potential resources in the Mojave region of California. We received an additional 400,000 shares of Standard Lithium stock ~~during the second quarter of 2022~~in April 2023 under the terms of this agreement. We also hold an investment in a convertible note issued by CarbonFree valued at $6.3 million as of June 30, 2023.

On May 5, 2022, we filed a universal shelf Registration Statement on Form S-3 with the SEC. On May 17, 2022, the Registration Statement on Form S-3 was declared effective by the SEC. Pursuant to this registration statement, we have the ability to sell debt or equity securities in one or more public offerings up to an aggregate public offering price of $400 million. This shelf registration statement currently provides us additional flexibility with regards to potential financing that we may undertake when market conditions permit or our financial condition may require.

Should additional capital be required, the ability to raise such capital through the issuance of additional debt or equity securities may currently be limited. Instability or volatility in the capital markets at the times we need to

Table of Contents

access capital may affect the cost of capital and the ability to raise capital for an indeterminable length of time. If it is necessary to issue additional equity to fund our capital needs, additional dilution of our common stockholders will occur. We periodically evaluate engaging in strategic transactions and may consider divesting non-core assets where our evaluation suggests such transactions are in the best interest of our business. In challenging economic environments, we may experience increased delays and failures by customers to pay our invoices. If our customers delay paying or fail to pay us a significant amount of our outstanding receivables, it could have an adverse effect on our liquidity. An increase of unpaid aged receivables would also negatively affect our borrowing availability under the ABL Credit Agreement.

As of June 30, ~~2022,~~2023, 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 ~~2021~~2022 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~~

Commitments and Contingencies

Litigation

For information regarding litigation, see - Note 7 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements and Part II, “Item 1. Legal Proceedings” in this report.

Long-Term Debt

For information on our credit agreements, see ~~our~~ ~~2021 Annual Report~~ ~~and~~ Note 6 - “Long-Term Debt and Other Borrowings” in the Notes to Consolidated Financial Statements.

Leases

We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. We have finance leases for certain facility storage tanks and equipment rentals. Information about the terms ~~and covenants~~ of our lease agreements can be found in our ~~2021~~2022 Annual Report.

Product and Asset Purchase Obligations

For information on product and asset purchase obligations, see - Note 7 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements.

Cautionary Statement for Purposes of Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this Quarterly Report are identifiable by the use of the following words, the negative of such words, and other similar words: “anticipates”, “assumes”, “believes”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “goal”, “intends”, “may”, “might”, “plans”, “predicts”, “projects”, “schedules”, “seeks”, “should”, “targets”, “will”, and “would”.

Table of Contents

These forward-looking statements include statements concerning the ~~exploration targets~~inferred mineral resources of lithium and bromine, the potential extraction of lithium and bromine from the leased acreage, ~~and~~the development of the assets including construction of bromine extraction plants, the economic viability thereof, the demand for such resources, and the timing and cost of such ~~activities,~~activities; the ability to obtain an indicated or measured resources report and an initial economic assessment, indicated or measured resources report, and/or pre-feasibility or feasibility studies regarding our lithium and bromine acreage; statements regarding the Company's beliefs, expectations, plans, goals, future events and ~~performance,~~performance; and other statements that are not purely historical. With respect to the Company's disclosures of inferred mineral resources, including bromine and lithium carbonate equivalent concentrations, it is uncertain if further exploration will ever result in the estimation of a higher category of mineral resource or a mineral reserve. Inferred mineral resources are considered to have the lowest level of geological confidence of all mineral resources. Investors are cautioned that inferred mineral resources do not have demonstrated economic value. Inferred mineral resources have a high degree of uncertainty as to their existence and as to whether they can be economically or legally commercialized. A significant amount of exploration must be completed in order to determine whether an inferred mineral resource may be upgraded to a higher category. Therefore, investors are cautioned not to assume that all or any part of an inferred mineral resource exists, that it can be economically or legally commercialized, or that it will ever be upgraded to a higher category. With respect to the Company’s disclosures of the MOU with Saltwerx, it is uncertain about the ability of the parties to successfully negotiate one or more definitive agreements, the future relationship between the parties, the approval of the application and Brine Unit by the AOGC, and the ability to successfully and economically produce lithium and bromine from the Brine Unit.

Management believes that these forward-looking statements are reasonable as and when made. However, ~~caution should be taken~~investors are cautioned not to place undue reliance on any such forward-looking ~~statements because such~~statements. Such statements speak only as of the date ~~when made. We undertake~~on which they are made, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations, forecasts or projections. 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 ~~2021~~2022 Annual Report, and those described from time to time in our future reports filed with the SEC.

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Interest Rate Risk

The interest on our borrowings is subject to market risk exposure related to changes in applicable interest rates. Borrowings under ~~our Swedish Credit Facility bear interest at a fixed rate of 2.95%. Borrowings under our ABL Credit Agreement bear interest at an agreed-upon percentage rate spread above LIBOR. Borrowings under~~ the Term Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) ~~LIBOR~~SOFR (subject to a 1% floor) plus a margin of 6.25% per annum or (ii) a base rate plus a margin of 5.25% per annum. Borrowings under our ABL Credit Agreement bear interest at an agreed-upon percentage rate spread above SOFR. Borrowings under our Argentina Credit Facility and Swedish Credit Facility bear interest at fixed rates of 2.50% and 2.95%, respectively. The following table sets forth as of June 30, ~~2022,~~2023, the principal amount due under our long-term debt obligations and their respective weighted average interest rates. As of June 30, 2023, we had no balance outstanding under our ABL Credit Agreement or Swedish Credit Facility. We are not a party to an interest rate swap contract or other derivative instrument designed to hedge our exposure to interest rate fluctuation risk.

Interest June 30, 2022
Scheduled Maturity Rate
(in thousands)
Swedish Credit Facility December 31, 2022 2.95% $ 11
Asset-based credit agreement September 10, 2023 4.75% —
Term credit agreement September 10, 2025 7.92% 163,071
TETRA total debt, including current portion $ 163,082


		Interest	June 30, 2023
	Scheduled Maturity	Rate
			(in thousands)
Term Credit Agreement	September 10, 2025	11.40%	$	163,072

Argentina Credit Facility	October 19, 2023	2.50%	1,900

TETRA total debt, including current portion			$	164,972

Exchange Rate Risk

We ~~are exposed to fluctuations between the U.S. dollar and the euro with regard to our euro-denominated operating activities. We also~~ have currency exchange rate risk exposure related to revenues, expenses, operating receivables, and payables denominated in foreign currencies. We may enter into ~~30-day~~short-term foreign-currency forward derivative contracts as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. Although contracts pursuant to this program will serve as an economic

Table of Contents

hedge of the cash flow of our currency exchange risk exposure, they are not expected to be formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period. As of June 30, ~~2022,~~2023, we did not have any foreign currency exchange contracts outstanding.

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 June 30, ~~2022,~~2023, the end of the period covered by this quarterly report.

There were no changes in our internal ~~control~~controls over financial reporting that occurred during the quarter ended June 30, ~~2022,~~2023, that have materially affected, or are reasonably likely to materially affect, our internal ~~control~~controls over financial reporting.

3034

Table of Contents

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

On May 31, 2022, TETRA filed a demand for arbitration with the American Arbitration Association (“AAA”) under a certain Bromine Requirements Sales Agreement between TETRA and LANXESS Corporation (formerly Chemtura Corporation, “LANXESS”) (the “Sales Agreement”).

Under the Sales Agreement, TETRA agreed to purchase a certain volume of elemental bromine. LANXESS notified TETRA of a proposed non-ordinary course increase to the price of ~~bromine, which TETRA believes is not justified nor appropriate under the Sales Agreement.~~bromine. After lengthy discussions, TETRA and LANXESS were unable to reach an agreement regarding the validity of the proposed price increase; therefore, TETRA filed for arbitration seeking declaratory relief, among other relief, declaring that the proposed price increase is invalid. On September 19, 2022, LANXESS filed a counterclaim with the AAA seeking declaratory relief, among other relief.

On May 25, 2023, TETRA entered into the Third Amendment to Bromine Requirements Sales Agreement (the “Amendment”) with LANXESS. The Amendment has an effective date of April 1, 2023 and was entered into in connection with the entry into a settlement agreement in the Company’s arbitration ~~is currently pending,~~with LANXESS. The Amendment provides for, among other things, revised volume requirements and ~~no final hearing date has been set.TETRA is presently unable~~related terms. On June 14, 2023, in light of the settlement agreement, and in response to ~~predict~~ the ~~duration, scope or result~~parties’ stipulated motion to dismiss, the arbitration panel issued an Order of ~~this proceeding.~~Dismissal, which dismissed all claims in the arbitration with prejudice.

For more information regarding litigation, see “Item 1. Legal Proceedings” in our ~~2021~~2022 Annual Report and Note 7 - “Commitments and Contingencies” in the Notes to Consolidated Financial Statements.

Item 1A. Risk Factors.

As of the date of this filing, TETRA and its operations continue to be subject to the risk factors previously disclosed in the “Risk Factors” sections contained in our ~~2021~~2022 Annual Report. In addition, we are subject to the following supplemental risk factor.

We may not be able to utilize all or a portion of our net operating loss carryforwards or other tax benefits to offset future taxable income for U.S. federal, state or foreign tax purposes, which could adversely affect our financial position, results of operations and cash flows. We have adopted a Tax Benefits Preservation Plan that is designed to protect our Tax Attributes.

As of December 31, 2022, we had United States federal, state, and foreign deferred tax assets associated with net operating loss carryforwards (“NOLs”) equal to approximately $86.2 million, $11.1 million, and $7.8 million, respectively. In those countries and states in which NOLs are subject to an expiration period, our NOLs, if not utilized, will expire at various dates from 2023 through 2042.

We may be limited in the portion of our NOLs that we can use in the future to offset taxable income for United States, federal, state, and foreign income tax purposes. Utilization of these NOLs depends on many factors, including our future taxable income, which cannot be assured.

Under Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation experiences an “ownership change,” any NOLs, losses or deductions attributable to a “net unrealized built-in loss” and other tax attributes (“Tax Attributes”) could be substantially limited, and timing of the usage of such Tax Attributes could be substantially delayed. A corporation generally will experience an ownership change if one or more stockholders (or group of stockholders) who are each deemed to own at least 5% of the corporation’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a testing period (generally, a rolling three-year period). Utilization of our Tax Attributes may be subject to a significant annual limitation as a result of prior or future “ownership changes.” Determining the limitations under Section 382 is technical and highly complex, and no assurance can be given that upon further analysis our ability to take advantage of our NOLs or other Tax Attributes may be limited to a greater extent than we currently anticipate.

The Board of Directors has adopted the Tax Plan to protect the availability of the Company’s Tax Attributes. The Tax Plan is designed to reduce the likelihood that we experience an ownership change by deterring certain acquisitions of our common stock. There can be no assurances, however, that the deterrent mechanism will be effective, and,

Table of Contents

therefore, such acquisitions may still occur. In addition, the Tax Plan could adversely affect the marketability of our common stock by discouraging existing or potential investors from acquiring our common stock or additional shares of our common stock. If the Company is unable to use the Tax Attributes in years in which it has taxable income, the Company will pay significantly more in cash tax than if it were able to utilize the Tax Attributes, and those tax costs would negatively impact the Company’s financial position, results of operations and cash flows.

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

~~(a)~~ None.

~~(b) None.~~

~~(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers.~~

~~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)~~

~~April 1 – April 30, 2022~~

—

~~May 1 – May 31, 2022~~

—

~~June 1 – June 30, 2022~~

—

~~Total~~

—

~~(1)In January 2004, our Board of Directors authorized the repurchase of up to $20 million of our common stock.On October 28, 2021, our Board of Directors terminated the repurchase program.~~

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

~~Table of Contents~~

Item 5. Other Information.

None.

3236

Table of Contents

Item 6. Exhibits.

Exhibits:


3.1			Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on March 1, 2023 (SEC File No. 001-13455).
3.2			Restated Certificate of Incorporation of TETRA Technologies, Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 filed on December 22, 2016 (SEC File No. 333-215283)).
3.3			Certificate of Amendment of Restated Certificate of Incorporation of TETRA Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report filed on August 9, 2017 (SEC File No. 001-13455)).
3.4			Amended and Restated Certificate of Incorporation of TETRA Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on May 25, 2023 (SEC File No. 001-13455)).
3.5			Second Amended and Restated Bylaws of TETRA Technologies, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed on May 25, 2023 (SEC File No. 001-13455)).
4.1*+			Amendment to Credit Agreement dated June 6, 2023 between TETRA Technologies, Inc., Wilmington Trust, National Association, as Administrative Agent, and the Lenders party thereto.
4.2*+			Fourth Amendment to Credit Agreement dated May 15, 2023 between TETRA Technologies, Inc., TETRA Technologies U.K. Limited, certain Subsidiaries of TETRA party thereto, the other Loan Parties thereto, the Lenders party thereto, Issuing Banks party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
4.3			Tax Benefits Preservation Plan dated as of February 28, 2023, between TETRA Technologies, Inc. and Computershare Trust Company, N.A. as Rights Agent (incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on March 1, 2023 (SEC File No. 001-13455).
4.4			TETRA Technologies Inc. Second Amended and Restated 2018 Equity Incentive Plan ((incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on May 25, 2023 (SEC File No. 001-13455)).
10.1+			Third Amendment to Bromine Requirements Sales Agreement between Chemtura Corporation and TETRA Technologies, Inc. dated May 25, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on May 31, 2023 (SEC File No. 001-13455)).
10.2*+#			Memorandum of Understanding between TETRA Technologies, Inc. and Saltwerx LLC dated June 19, 2023.
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.
~~10.1*+~~			~~Bromine Requirements Sales Agreement between Chemtura Corporation and TETRA Technologies, Inc. dated December 18, 2006.~~
~~10.2*+~~			~~Amendment to Bromine Requirements Sales Agreement between Chemtura Corporation and TETRA Technologies, Inc. dated June 6, 2008.~~
~~10.3*+~~			~~Second Amendment to Bromine Requirements Sales Agreement between Chemtura Corporation and TETRA Technologies, Inc. dated November 12, 2009.~~
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.

+Portions have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv), because the omitted information is both not material and is the type that the Company treats as private or confidential.

++ 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 six-month periods ended June 30, ~~2022~~2023 and ~~2021;~~2022; (ii) Consolidated Statements of Comprehensive Income for the three and six-month periods ended June 30, ~~2022~~2023 and ~~2021;~~2022; (iii) Consolidated Balance Sheets as of June 30, ~~2022~~2023 and December 31, ~~2021;~~2022; (iv) Consolidated Statements of Equity for the six-month periods ended June 30, ~~2022~~2023 and ~~2021~~2022 ; (v) Consolidated Statements of Cash Flows for the six-month periods ended June 30, ~~2022~~2023 and ~~2021;~~2022; and (vi) Notes to Consolidated Financial Statements for the six months ended June 30, ~~2022.~~2023.

# Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any such omitted schedule to the SEC upon request.

3337

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:	~~August 2, 2022~~July 31, 2023	By:	/s/Brady M. Murphy
			Brady M. Murphy
			President and Chief Executive Officer
			Principal Executive Officer

Date:	~~August 2, 2022~~July 31, 2023	By:	/s/Elijio V. Serrano
			Elijio V. Serrano
			Senior Vice President and Chief Financial Officer
			Principal Financial Officer

Date:	~~August 2, 2022~~July 31, 2023	By:	/s/Richard D. O’Brien
			Richard D. O’Brien
			Vice President – Finance and Global Controller
			Principal Accounting Officer

3438


	Three Months Ended June 30, 2021
	Compression	Offshore Services	Total
Major classes of line items constituting loss from discontinued operations




General and administrative expense	—	5	5

Other (income) expense, net	121	—	121
Pretax loss from discontinued operations	(121)	(5)	(126)





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


	Six Months Ended June 30, 2021
	Compression		Offshore Services		Total
Major classes of line items constituting loss from discontinued operations
Revenue	$	18,968	$	—	$	18,968
Cost of revenues	11,474		28		11,502


General and administrative expense	2,795		—		2,795
Interest expense, net	4,336		—		4,336
Other expense, net	15		—		15
Pretax income (loss) from discontinued operations	348		(28)		320
Pretax gain on disposal of discontinued operations					120,574
Total pretax income from discontinued operations					120,894
Income tax provision					30
Total income from discontinued operations					120,864
Income from discontinued operations attributable to noncontrolling interest					(333)
Income from discontinued operations attributable to TETRA stockholders					$	120,531