THE WOODLANDS, Texas, Aug. 7, 2024 /PRNewswire/ -- TETRA Technologies, Inc. ("TETRA" or the "Company") (NYSE: TTI) today released on its investor relations website an S-K 1300 Bromine Definitive Feasibility Study ("DFS") containing positive results including certain financial information on the development of TETRA's Arkansas bromine assets in the Evergreen Unit based on engineering studies, reservoir analysis, certain cost and revenue assumptions, plus quotes received on major components received or comple ...

Financial Data and Key Metrics Changes - The company reported a 14% sequential revenue growth and a 32% increase in adjusted EBITDA for Q2 2024 [4] - Adjusted EBITDA for the second quarter was $30.2 million, negatively impacted by $1.1 million of foreign exchange losses [17][24] - The net leverage ratio at the end of Q2 was 1.6x, with a return on net capital employed of 17.4% for the 12-month period ending June 2024 [24] Business Line Data and Key Metrics Changes - Completion Fluids & Products and Water & Flowback segments achieved adjusted EBITDA margins of 28.9% and 15.2%, respectively, with Water & Flowback showing a sequential improvement of 560 basis points from Q1 [5][18] - Revenue for Water & Flowback was down 2% year-over-year, correlating with a 16% decline in U.S. onshore rig activity [5] - The industrial calcium chloride business generated nearly $140 million in revenue on a trailing 12-month basis, indicating stable revenue and cash flow [19] Market Data and Key Metrics Changes - The U.S. completion activity was lower, while international offshore market activity increased [4] - The company noted a sequential improvement in Europe and Latin America, partially offset by project timing in the Gulf of Mexico [20] Company Strategy and Development Direction - The company is focusing on automation and treatment of operator-produced water for frack reuse and desalination, aiming to reduce costs and environmental impact [9][12] - Strategic initiatives include the desalination of produced water, pure flow electrolyte for energy storage, and Arkansas bromine and lithium supply projects, which are expected to provide material financial benefits [16] - The company is committed to maintaining EBITDA margins above 15% in a flat onshore activity environment [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the CS Neptune project, which is expected to significantly impact financials over the next six to nine months [26] - The company anticipates a strong finish to the year and significant momentum heading into 2025 and beyond [26] - Management acknowledged challenges in the onshore oil and gas industry but noted continued strength in the offshore market [20] Other Important Information - The company has secured a three-well deepwater Gulf of Mexico CS Neptune fluids project, marking a significant milestone [5][6] - Liquidity as of the call was approximately $187 million, including a $75 million delay draw feature for the bromine project [24] Q&A Session All Questions and Answers Question: What is the outlook for the CS Neptune projects? - The company has a healthy pipeline of projects and is in discussions with multiple operators for additional projects beyond the three secured [27][28] Question: How many NDAs have been signed for beneficial reuse? - The number of NDAs has increased throughout the year, with no backouts from initial agreements [31][32] Question: Can you disclose the reimbursement amount for the $9.8 million CapEx towards Arkansas? - The reimbursement details are covered by an NDA, and the partner continues to work alongside the company on initiatives [33]

Tetra Technologies (TTI) came out with quarterly earnings of $0.07 per share, missing the Zacks Consensus Estimate of $0.10 per share. This compares to earnings of $0.13 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -30%. A quarter ago, it was expected that this oil and gas services company would post earnings of $0.02 per share when it actually produced earnings of $0.05, delivering a surprise of 150%. Over the last four q ...

To register for virtual one-on-one meetings with management, interested parties should either contact their Northland sales representative or Bobby Brooks at [email protected]. SOURCE TETRA Technologies, Inc. Elijio Serrano, Chief Financial Officer and Julian Higuera, Director of Investor Relations will be hosting virtual one-on-one meetings. TETRA Technologies, Inc. is an energy services and solutions company focused on developing environmentally conscious services and solutions that help make people's liv ...

TETRA Technologies, Inc. (NYSE:TTI) Q1 2024 Earnings Conference Call May 1, 2024 10:30 AM ET Company Participants Brady Murphy - Chief Executive Officer Elijio Serrano - Chief Financial Officer Conference Call Participants Martin Malloy - Johnson Rice Kurt Hallead - Benchmark Josh Jayne - Daniel Energy Partners Patrick Ouellette - Stifel Bobby Brooks - Northland Capital Markets Tim Moore - EF Hutton Stephen Gengaro - Stifel Operator Good morning, and welcome to TETRA Technologies' First Quarter 2024 Results ...

(Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q (281) 367-1983 or ☐ 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 o ...

Financial Performance - First quarter 2024 revenue was $151 million, a 3% increase year-over-year[4] - Net income for the first quarter was $915,000, with net income per share attributable to TETRA stockholders at $0.01[4] - Adjusted EBITDA for the first quarter was $22.8 million, reflecting an 11% increase year-over-year, with margins at 15.1%[4] - Revenues for Q1 2024 were $150,972,000, a decrease of 1% from $153,126,000 in Q4 2023 and an increase of 3% from $146,209,000 in Q1 2023[22] - Gross profit for Q1 2024 was $31,102,000, compared to $30,243,000 in Q4 2023 and $36,323,000 in Q1 2023, indicating a decline in profitability[22] - Net income attributable to TETRA stockholders for Q1 2024 was $915,000, a significant improvement from a net loss of $3,891,000 in Q4 2023, but down from $6,040,000 in Q1 2023[22] - Adjusted net income for the three months ended March 31, 2024, was $6,129,000, compared to $3,777,000 for the previous quarter and $4,036,000 for the same period last year[37] - Adjusted EBITDA for the three months ended March 31, 2024, was $22,840,000, representing 15.1% of total revenue, compared to $24,142,000 (15.8%) in the previous quarter and $20,587,000 (14.1%) in the same period last year[38] - Net income before taxes for the three months ended March 31, 2024, was $1,295,000, compared to a loss of $3,631,000 for the same period in 2023[43] Revenue Breakdown - Completion Fluids & Products revenue increased 12% year-on-year to $77 million, with adjusted EBITDA margins at 28.1%[9] - Water & Flowback Services revenue declined 4.5% year-on-year to $74 million, with adjusted EBITDA margins decreasing to 9.6%[8] Cash Flow and Liquidity - Cash used in operating activities was $13.8 million, compared to cash provided of $9.0 million in Q1 2023[5] - Adjusted free cash flow was a use of $29.6 million, including $4.0 million of capital expenditures for the Arkansas bromine and lithium projects[13] - Cash and cash equivalents decreased to $35,939,000 from $52,485,000 at the end of Q4 2023, reflecting a cash outflow[25] - Net cash used in operating activities for Q1 2024 was $(13,816,000), a decline from $18,875,000 in Q4 2023, indicating operational challenges[25] - Adjusted free cash flow for the three months ended March 31, 2024, was $(29,617,000), compared to $20,073,000 in the previous quarter and $(3,716,000) in the same period last year[42] Debt and Leverage - TETRA completed refinancing of its term loan, extending maturity to 2030 and securing capital for the bromine project[3] - TETRA's net leverage ratio was 1.5X at the end of Q1 2024, with liquidity of $195.1 million[13] - Long-term debt increased to $179,394,000 from $157,505,000 in Q4 2023, suggesting increased leverage[24] - Net debt increased to $143,455,000 as of March 31, 2024, from $105,020,000 at the end of the previous quarter[41] - The net leverage ratio as of March 31, 2024, was 1.5, indicating a decrease in financial leverage compared to previous periods[45] - Total debt and commitments amounted to $196,245,000, with unrestricted cash of $35,939,000[45] Assets and Liabilities - Total assets increased to $491,325,000 as of March 31, 2024, up from $478,961,000 at the end of 2023[24] - Total current liabilities decreased to $117,926,000 from $125,962,000 in Q4 2023, indicating improved short-term financial health[24] - Consolidated total assets increased to $491,325,000 as of March 31, 2024, from $435,584,000 a year earlier[47] Operational Insights - The company is focusing on exploration and pre-development costs related to lithium and bromine properties, which are expected to be capitalized starting January 2024[30] - The company aims to assess its ability to retire debt and further invest and grow through various financial metrics[36] - Return on net capital employed for the period is used to evaluate the company's financial performance relative to its assets[35] - Return on net capital employed for the twelve months ended March 31, 2024, was 19.6%, reflecting improved efficiency in capital utilization[47] Other Financial Metrics - Adjusted EBITDA is used as a supplemental financial measure to assess performance, excluding certain charges and credits[26] - Debt covenant adjusted EBITDA for the twelve months ended March 31, 2024, was $105,679,000, down from $126,000,000 in the previous twelve months[43] - Interest expense for the twelve months ended March 31, 2024, totaled $23,209,000, indicating stable financing costs[43] - The company reported a loss on debt extinguishment of $5,535,000 for the three months ended March 31, 2024[38] - Equity-based compensation expense for the three months ended March 31, 2024, was $1,623,000, compared to $6,406,000 in the previous quarter[38]

Financial Data and Key Metrics Changes - The company achieved a full year 2023 adjusted EBITDA of $106 million, which grew by 37% from 2022 and was nearly three times higher than that of 2021 [40] - Adjusted free cash flow for 2023 was $41.1 million, representing a 61.6% increase compared to 2022, with a conversion rate of approximately 40% of adjusted EBITDA to adjusted free cash flow [10][21] - The adjusted EBITDA margin increased by 300 basis points year-over-year to 17.1% [21][52] Business Line Data and Key Metrics Changes - Completion Fluids & Products revenue for the full year was $313 million, the highest since 2015, with a year-over-year growth of $40 million or 15% [4][11] - The Water & Flowback Services segment saw a revenue increase of $33 million or 12%, with adjusted EBITDA up $10 million or 23% [15] - The industrial chemicals business achieved its highest revenue and adjusted EBITDA in history, with a revenue growth of over 18% year-over-year [42] Market Data and Key Metrics Changes - The company reported a strong market position in Northern Europe and the U.S., providing stable markets with predictable revenue and earnings [5] - Offshore projects attributed to Energy Services increased total revenue by 11% year-over-year, with expectations for continued double-digit growth in 2024 [43][118] - Marketed utilization is expected to peak at 91% in 2028 due to steady growth in project development activity [44] Company Strategy and Development Direction - The company is focusing on strategic partnerships and investments in high-growth opportunities, particularly in lithium and bromine projects in Arkansas [24][50] - The company plans to shift growth capital towards Arkansas and produced water beneficial reuse projects while maintaining a focus on returns rather than additional growth [17][54] - The company anticipates generating revenue and EBITDA from the first desalination project in the second half of 2024, which will be a catalyst for growth [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong recovery in activity for the first half of 2024, expecting another year of growth despite year-end slowdowns in 2023 [2] - The company expects 2024 revenue, adjusted EBITDA, and free cash flow to exceed 2023 levels, driven by electrolyte sales and desalination projects [55][131] - Management highlighted the importance of regulatory engagement regarding produced water solutions, indicating a collaborative approach with agencies [123][134] Other Important Information - The company ended 2023 with a net leverage ratio of 1.1x and a 27% reduction in net debt [52] - Liquidity as of February 26 was reported at $212 million, including a $35 million delayed draw feature for the bromine project [22] - The company is in advanced negotiations for a beneficial reuse project with a major U.S. oil producer and expects to deploy its first commercial project in the second half of 2024 [18][35] Q&A Session Summary Question: Timing of CapEx requirements for the bromine project - Management indicated that detailed engineering design and civil work for the bromine project will begin this year, with significant construction expected to start next year [30][63] Question: Next steps for investors regarding the bromine project - Management discussed ongoing evaluations and the potential for significant synergies between the bromine and lithium projects [100][152] Question: Growth expectations for the Water business - Management expressed confidence in achieving mid-single-digit growth in the Water business, supported by technology and market share gains [78][121] Question: Desalination project specifications and ownership - Management confirmed ownership of the desalination technology and equipment, with a partner handling civil works [89] Question: Lithium project revenue expectations - Management anticipates first revenue from lithium projects in late 2026 or early 2027, with significant resource potential identified [141][102]

Part I [Item 1. Business](index=7&type=section&id=Item%201.%20Business.) TETRA is a global energy services and solutions company with two main segments, focusing on environmentally conscious services and low-carbon energy expansion - TETRA Technologies, Inc. is an **energy services and solutions company** with global operations, focused on **environmentally conscious services and solutions**[22](index=22&type=chunk) - The company has **two reportable segments**: Completion Fluids & Products Division and Water & Flowback Services Division[22](index=22&type=chunk) - TETRA is expanding into the **low-carbon energy market**, utilizing its chemistry expertise, key mineral acreage (**bromine and lithium**), and global infrastructure[22](index=22&type=chunk)[34](index=34&type=chunk) [About TETRA](index=7&type=section&id=About%20TETRA) TETRA Technologies, Inc. was incorporated in Delaware in 1981 and its common stock is traded on the NYSE under the symbol "TTI" - TETRA Technologies, Inc. was incorporated in **Delaware in 1981** and has its corporate headquarters in **The Woodlands, Texas**[21](index=21&type=chunk) - The company's common stock is traded on the **New York Stock Exchange (NYSE)** under the symbol "**TTI**"[21](index=21&type=chunk) [Products and Services](index=7&type=section&id=Products%20and%20Services) The company offers a range of products and services through its Completion Fluids & Products and Water & Flowback Services divisions [Completion Fluids & Products Division](index=7&type=section&id=Completion%20Fluids%20%26%20Products%20Division) This division manufactures and markets clear brine fluids, additives, and calcium chloride products, while also pursuing low-carbon energy initiatives - Manufactures and markets **clear brine fluids (CBFs)**, additives, and associated products/services for well drilling, completion, and workover operations in the oil and gas industry across multiple continents[23](index=23&type=chunk)[26](index=26&type=chunk) - Also markets **liquid and dry calcium chloride products** for diverse non-energy markets (water treatment, industrial, food processing, road maintenance, etc.) and **ultra-pure zinc bromide (TETRA PureFlow)** for battery technology companies[23](index=23&type=chunk)[31](index=31&type=chunk)[35](index=35&type=chunk) - Offers environmentally friendly CBF alternatives like **TETRA CS Neptune**, and reconditions/recycles used CBFs[28](index=28&type=chunk)[29](index=29&type=chunk) - Operates calcium chloride manufacturing facilities in the United States (four plants, two solar evaporation facilities) and Finland, with a combined production capacity of approximately **1.0 million equivalent liquid tons per year**[32](index=32&type=chunk) - Manufactures **liquid calcium bromide, zinc bromide, zinc calcium bromide, and sodium bromide** at its West Memphis, Arkansas facility[33](index=33&type=chunk) - Pursuing **low-carbon energy initiatives**, including evaluating new technologies with **CarbonFree Chemicals Holdings, LLC** and a strategic agreement with **Eos Energy Enterprises, Inc.** for **ultra-pure zinc bromide** supply[34](index=34&type=chunk)[35](index=35&type=chunk) - Completed a maiden inferred **bromine and lithium brine resource estimation** report for leased acreage in Southwest Arkansas and a Technical Report Summary for the 6,138-acre "**Evergreen Brine Unit**" in 2022/2023, identifying measured and indicated resources[36](index=36&type=chunk) [Water & Flowback Services Division](index=9&type=section&id=Water%20%26%20Flowback%20Services%20Division) This division provides comprehensive water management and frac flowback services for onshore oil and gas operators across various regions - Provides **comprehensive water management services** for onshore oil and gas operators, including fresh and produced water analysis, treatment, recycling, blending, storage, transfer, and environmental risk mitigation[24](index=24&type=chunk)[37](index=37&type=chunk) - Offers patented and patent-pending equipment and processes such as advanced hydrocyclones (**SandStorm**), water blending technologies, and the **TETRA Steel 1200** rapid deployment water transfer system[37](index=37&type=chunk) - Also provides **frac flowback services**, **early production facilities**, production well testing, and well flow management/evaluation services in major oil and gas producing regions in the U.S., Latin America, Europe, and the Middle East[24](index=24&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) [Former Compression Division](index=10&type=section&id=Former%20Compression%20Division) TETRA divested its interest in the Compression Division in 2021, retaining a minority stake in CSI Compressco LP - The former Compression Division's operations were conducted through the partially-owned **CSI Compressco LP subsidiary**[41](index=41&type=chunk) - TETRA sold the general partner of CSI Compressco, including incentive distribution rights and approximately **23.1%** of outstanding limited partner interests, for **$13.9 million in cash** on January 29, 2021[41](index=41&type=chunk) - As of December 31, 2023, TETRA held approximately **3.7%** of CSI Compressco's outstanding common units[41](index=41&type=chunk) [Sources of Raw Materials](index=10&type=section&id=Sources%20of%20Raw%20Materials) The company sources raw materials for its Completion Fluids & Products Division, including bromine and calcium chloride, and manages brine leases for future resource extraction - Completion Fluids & Products Division manufactures **calcium chloride** from underground brine or by reacting hydrochloric acid with limestone, and **brominated CBFs** using bromine, hydrobromic acid, zinc, ammonia water, and lime[42](index=42&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk) - Has a long-term supply agreement with **LANXESS, AG** for raw material **bromine**, which was amended on May 25, 2023, for revised volume requirements and pricing[45](index=45&type=chunk) - Leases over **40,000 gross acres** of brine leases near Magnolia, Arkansas, containing **bromine and lithium**, with Standard Lithium Ltd. having an option to acquire lithium rights in a portion of this acreage[48](index=48&type=chunk) - Experienced **supply constraints** for certain raw materials in Europe in early 2022 due to the Russia-Ukraine conflict, which decreased **calcium chloride production volumes**[47](index=47&type=chunk) [Market Overview and Competition](index=12&type=section&id=Market%20Overview%20and%20Competition) TETRA operates in competitive markets for both its Completion Fluids & Products and Water & Flowback Services divisions, facing various industry and non-energy competitors [Completion Fluids & Products Division](index=12&type=section&id=Completion%20Fluids%20%26%20Products%20Division) Demand for this division's products is driven by offshore activity, facing intense competition from major energy services companies and non-energy market players - Demand for products and services is driven by **offshore completion and workover activity**, with current market presence in onshore U.S., U.S. Gulf of Mexico, North Sea, Mexico, and parts of South America, Europe, Asia, the Middle East, and Africa[51](index=51&type=chunk) - Faces **intense competition** from major international drilling fluids and energy services companies, with competition based on service, availability, and price[52](index=52&type=chunk) - Non-energy markets for **calcium chloride** include water treatment, industrial, food processing, road maintenance, ice melt, agricultural, and consumer products, facing competitors like **Occidental Chemical Corporation** and **Nedmag B.V.**[53](index=53&type=chunk) [Water & Flowback Services Division](index=13&type=section&id=Water%20%26%20Flowback%20Services%20Division) This division operates in a highly competitive market for water management and frac flowback services, leveraging skilled personnel and integrated solutions as key advantages - Provides **water management and frac flowback services** to onshore oil and gas operators in North America and internationally[54](index=54&type=chunk)[55](index=55&type=chunk) - Operates in a **highly competitive market**, with competition based on equipment availability, qualified personnel, price, service quality, and safety record[56](index=56&type=chunk) - Key competitive advantages include **skilled personnel**, operating procedures, **integrated closed-loop water management solutions**, automation systems, and safety record[56](index=56&type=chunk) [Other Business Matters](index=13&type=section&id=Other%20Business%20Matters) This section covers TETRA's human capital management, proprietary technology, and compliance with health, safety, and environmental regulations [Human Capital Management](index=13&type=section&id=Human%20Capital%20Management) TETRA employs approximately 1,500 people globally, focusing on diversity, talent management, performance-based compensation, and a comprehensive HSEQ Management System - As of December 31, 2023, TETRA employed approximately **1,500 people** worldwide[58](index=58&type=chunk) - Focuses on **diversity and inclusion** through an executive management-sponsored committee and talent management initiatives[59](index=59&type=chunk) - Conducts **executive development and succession planning** annually for senior management and key positions[60](index=60&type=chunk) - **Compensation programs** are designed to incentivize performance and build shareholder value, benchmarked with consultants[61](index=61&type=chunk) - Maintains a comprehensive **Health, Safety, Environment, and Quality (HSEQ) Management System**, including stop-work authority for employees and real-time behavior feedback for drivers[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) [Proprietary Technology and Trademarks](index=14&type=section&id=Proprietary%20Technology%20and%20Trademarks) The company owns various intellectual property rights, including patents, trademarks, and trade secrets, which are protected through confidentiality agreements - Owns various **intellectual property rights**, including patents, trademarks, and trade secrets, which are important to its competitive position[65](index=65&type=chunk) - Employs **confidentiality agreements and policies** to protect trade secrets and proprietary information[66](index=66&type=chunk) [Health, Safety, and Environmental Affairs Regulations](index=14&type=section&id=Health,%20Safety,%20and%20Environmental%20Affairs%20Regulations) TETRA's operations are subject to stringent U.S. and foreign health, safety, and environmental laws, with compliance potentially incurring significant costs and liabilities - Operations are subject to **stringent and complex U.S. and foreign health, safety, and environmental laws and regulations**, including those related to air emissions, wastewater, and waste disposal[68](index=68&type=chunk)[69](index=69&type=chunk) - Compliance with these laws may result in **significant costs, liabilities, and capital expenditures**, with potential for fines, penalties, and litigation for non-compliance[69](index=69&type=chunk)[70](index=70&type=chunk) - Key applicable U.S. environmental laws include the **Clean Water Act, RCRA, Clean Air Act, CERCLA, and ESA**[71](index=71&type=chunk) - New or more stringent regulations, particularly concerning **hydraulic fracturing and greenhouse gas emissions**, could adversely affect oil and natural gas exploration and production, impacting demand for TETRA's services[76](index=76&type=chunk) [Item 1A. Risk Factors](index=17&type=page&id=Item%201A.%20Risk%20Factors) TETRA faces market, operational, financial, legal, regulatory, and political risks, including commodity price volatility, intense competition, supply chain issues, and cybersecurity threats - The demand and prices for TETRA's products and services are **highly sensitive to the supply, demand, and prices of oil and natural gas**, which have historically been volatile[78](index=78&type=chunk)[79](index=79&type=chunk) - The company faces **intense competition** in all operating segments, with some competitors having greater resources or offering lower prices/newer equipment[81](index=81&type=chunk) - **Profitability is dependent on factors beyond control**, such as competition, supply chain constraints, raw material availability and pricing, and customer spending levels[82](index=82&type=chunk)[83](index=83&type=chunk) [Market Risks](index=17&type=section&id=Market%20Risks) TETRA is exposed to market risks including volatile oil and natural gas prices, inflationary pressures, fluctuating fair values of minority investments, and dependence on third-party suppliers Oil and Natural Gas Prices (2021-2023) | Year | West Texas Intermediate Oil Price (per barrel) | Henry Hub Natural Gas Price (per MMBtu) | | :--- | :--- | :--- | | 2021 | $68.14 | $3.89 | | 2022 | $94.90 | $6.45 | | 2023 | $77.58 | $2.53 | - **Inflationary pressures** in 2021, 2022, and 2023 have increased operating costs and capital expenditures, which could negatively impact profitability if not recovered through higher prices[84](index=84&type=chunk) - Holds **minority investments** in publicly-traded (CSI Compressco, Standard Lithium) and privately-held (CarbonFree) companies, whose fair values may **fluctuate significantly**, causing volatility in financial results[85](index=85&type=chunk) - Changes in the economic environment, particularly depressed commodity prices, could lead to **significant impairments of long-lived assets**, impacting earnings[86](index=86&type=chunk) - Dependent on **third-party suppliers** for specific products and raw materials, with limited or single sources for some, posing risks of **supply disruptions or increased costs** due to geopolitical conflicts or sanctions[87](index=87&type=chunk)[88](index=88&type=chunk) [Operating and Technological Risks](index=20&type=section&id=Operating%20and%20Technological%20Risks) The company faces risks from technological obsolescence, significant operating hazards inherent in the oilfield service industry, and uncertainties in developing new low-carbon energy initiatives - Risk of **technological and age-obsolescence** for products, services, and equipment assets; failure to adapt to new technologies or replace older assets could lead to loss of customers and market share[89](index=89&type=chunk) - Operations involve **significant operating hazards** common in the oilfield service industry (e.g., accidents, explosions, environmental spills), and insurance coverage may not be available or cost-effective for all losses[90](index=90&type=chunk)[91](index=91&type=chunk) - Uncertainty regarding the **economic viability of extracting lithium or bromine** from Arkansas brine leases, requiring significant time and capital for further studies and development[92](index=92&type=chunk) - Failure to effectively and timely execute **low-carbon energy initiatives**, including developing new technologies and partnerships, could adversely affect business and financial condition[93](index=93&type=chunk)[94](index=94&type=chunk) [Weather-Related Risks](index=21&type=section&id=Weather-Related%20Risks) TETRA's operations are susceptible to seasonal weather conditions, including droughts and severe storms, which can disrupt activities and reduce customer demand - Certain operations, particularly onshore water management services, are **seasonal and dependent on weather conditions**; severe drought can prevent frac water operations[95](index=95&type=chunk) - Operations in the Gulf of Mexico are **susceptible to adverse weather conditions like hurricanes**, causing disruptions even without direct damage[96](index=96&type=chunk) - Adverse weather, including severe winter conditions, can **significantly impact natural gas storage levels** and reduce drilling/customer activity[96](index=96&type=chunk) [Financial Risks](index=21&type=section&id=Financial%20Risks) TETRA's financial risks include common stock price volatility, restrictive debt covenants, potential inability to utilize tax benefits, and exposure to credit and foreign currency risks - The market price of common stock has been and may continue to be **volatile** due to operational performance, oil/natural gas prices, customer activity, earnings deviations, analyst recommendations, and global economic conditions[97](index=97&type=chunk)[98](index=98&type=chunk) Common Stock Price Range (2023) | Metric | Value | | :--- | :--- | | High | $6.54 per share | | Low | $2.48 per share | - Long-term debt agreements (ABL Credit Agreement, New Term Credit Agreement) contain **covenants restricting actions** like incurring debt, granting liens, making investments, and paying dividends, potentially limiting future business operations or growth[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - May not be able to utilize all **net operating loss carryforwards (NOLs)** or other tax benefits due to future taxable income uncertainty or **Section 382 ownership change limitations**, adversely affecting financial position[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - Has continuing exposure to **abandonment and decommissioning obligations** associated with oil and gas properties previously owned by Maritech, which could be significant if buyers default[108](index=108&type=chunk)[109](index=109&type=chunk) - Possible changes in U.S. Department of Interior's **supplemental bonding and financial assurance requirements** could increase risks associated with Maritech's decommissioning obligations[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - Exposed to **significant credit risks** from accounts receivable with energy industry customers, particularly smaller operators, and from the ability of Maritech property buyers to satisfy decommissioning liabilities[113](index=113&type=chunk)[114](index=114&type=chunk) - Operating results and cash flows of certain subsidiaries are subject to **foreign currency risk**, particularly the euro, British pound, Mexican peso, and Argentinian peso[115](index=115&type=chunk) - Exposed to **interest rate risks** on floating-rate credit facility debt; future refinancing terms may not be as favorable[116](index=116&type=chunk)[117](index=117&type=chunk) [Legal, Regulatory, and Political Risks](index=25&type=section&id=Legal,%20Regulatory,%20and%20Political%20Risks) TETRA faces legal, regulatory, and political risks from intense competition, intellectual property protection, evolving environmental laws, climate change initiatives, foreign operations, and cybersecurity threats - Operates in **highly competitive and rapidly evolving industries**; failure to maintain product and technology leadership could adversely affect competitive advantage, market share, and pricing power[118](index=118&type=chunk) - Limitations on ability to obtain, maintain, protect, or enforce **intellectual property rights** (patents, trade secrets) could lead to revenue loss and competitive disadvantage[119](index=119&type=chunk) - Subject to **extensive and evolving U.S. and foreign laws and regulatory requirements** (corporate governance, employees, taxation, environmental, health and safety) that increase operating costs and expose to fines, penalties, and litigation[122](index=122&type=chunk) - The **Inflation Reduction Act of 2022 (IRA 2022)** could accelerate the transition to a **low-carbon economy** and impose new costs on customers (e.g., methane emissions charge), potentially reducing demand for TETRA's services[128](index=128&type=chunk) - Operations, suppliers, and customers are subject to **risks from climate change**, including regulatory, political, litigation, and financial risks, potentially leading to increased costs, reduced demand for fossil fuels, and restrictions on activities[129](index=129&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - Increasing attention to **ESG matters and conservation measures** may adversely impact business through increased costs, reduced demand, litigation, negative stock price impact, and reduced access to capital[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - **Foreign operations** expose the company to **complex regulations**, restrictions on repatriating cash, anti-corruption laws, political instability, trade restrictions, and changes in tariffs/taxes[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) - Regulatory initiatives related to **hydraulic fracturing** could result in operating restrictions or delays for customers, reducing demand for TETRA's services[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - Operations, reputation, and financial condition may be impaired by **information or operational technology system failures, data breaches, or cyberattacks**, despite significant resources allocated to protection[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) - **Changes to applicable tax laws and regulations** or exposure to additional income tax liabilities could affect business and future profitability[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) [Item 1B. Unresolved Staff Comments](index=33&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) This item indicates that there are no unresolved staff comments from the SEC [Item 1C. Cybersecurity](index=33&type=section&id=Item%201C.%20Cybersecurity.) TETRA relies on its technology systems and implements various cybersecurity measures to assess, identify, and manage risks. While cyber incidents have occurred, none have materially affected the company to date. The Board of Directors and Audit Committee oversee cybersecurity risks, with management responsible for implementation - TETRA's operations are critically reliant on **continuous and uninterrupted technology systems**, including user access, cloud security, and protection against cyber incidents[159](index=159&type=chunk) - Implemented **procedures, standards, and technical controls**, including internal and third-party tools, to protect networks and applications[160](index=160&type=chunk) - **Cybersecurity risk assessment processes** include penetration testing, security audits, incident response planning, vendor risk assessments, and regulatory compliance assessments[161](index=161&type=chunk) - A **monitoring and detection system** is in place to identify cybersecurity incidents, supported by a cross-functional **incident response plan** and regular tabletop exercises[162](index=162&type=chunk) - Provides **cybersecurity training and awareness** to employees, including computer-based training and phishing exercises[163](index=163&type=chunk) - **User access controls**, including **multi-factor authentication** for some accounts, are used to limit unauthorized access based on the principle of least privilege[164](index=164&type=chunk) - As of the report date, **no previous cybersecurity threats have materially affected** or are reasonably likely to materially affect the Company, but future incidents remain a possibility[166](index=166&type=chunk) - **Management**, led by the Vice President of Information Technology, is responsible for assessing, identifying, and managing cybersecurity risks, reporting to the CFO and updating the **Audit Committee quarterly** and the **Board annually**[167](index=167&type=chunk)[168](index=168&type=chunk) [Item 2. Properties](index=34&type=section&id=Item%202.%20Properties.) TETRA's properties include corporate headquarters, chemical plants, processing plants, and distribution facilities, which are deemed adequate for current needs. A significant asset is approximately 40,000 gross acres of brine leases in Arkansas, containing bromine and lithium, with ongoing development and partnership activities for resource extraction - TETRA's facilities include a **corporate headquarters** in The Woodlands, Texas (leased until 2027), a **technical facility**, and various **chemical production plants and service centers** globally[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - The Completion Fluids & Products Division operates **six chemical production plants** in the U.S. and Finland, with a total capacity exceeding **1.1 million equivalent liquid tons per year**[170](index=170&type=chunk) [Facilities](index=34&type=section&id=Facilities) TETRA maintains various facilities globally, including chemical production plants, service centers, and a corporate headquarters, which are considered adequate for current operations - Completion Fluids & Products Division facilities include **six chemical production plants** in Arkansas, California, Louisiana, West Virginia, and Finland, with a total production capacity of over **1.1 million equivalent liquid tons per year**[170](index=170&type=chunk) - The Water & Flowback Services Division operates **production testing and water management service centers** in the U.S. (Louisiana, New Mexico, Oklahoma, Pennsylvania, Texas) and internationally[172](index=172&type=chunk) - Corporate headquarters is a **153,000 sq ft** office building in The Woodlands, Texas, leased until 2027, complemented by a **28,000 sq ft** technical facility[173](index=173&type=chunk) [Bromine and Lithium Resources](index=35&type=section&id=Bromine%20and%20Lithium%20Resources) TETRA leases significant brine acreage in Arkansas containing bromine and lithium, with ongoing resource estimation and partnership activities for future extraction - Leases approximately **40,000 gross acres** of brine leases in Magnolia, Arkansas, containing **bromine and lithium**, intended for future development and raw material supply[174](index=174&type=chunk) - Standard Lithium Ltd. has an option to acquire lithium rights in approximately **35,000 gross acres** of this land, with a **2.5% royalty** on gross lithium revenues[174](index=174&type=chunk) Arkansas Brine Resource Estimation (2022) | Resource | Acreage | Inferred Resource | | :--- | :--- | :--- | | Elemental Bromine | ~40,000 gross acres | 5.25 million short tons | | Elemental Lithium | ~5,000 gross acres | 44,000 short tons | | Lithium Carbonate Equivalent (LCE) | ~5,000 gross acres | 234,000 tons | - Entered into an MOU with **Saltwerx, LLC (ExxonMobil subsidiary)** in June 2023 for the newly-proposed **Evergreen Brine Unit (6,138 acres)** in Southwest Arkansas, approved by AOGC in September 2023, for potential **bromine and lithium production**[176](index=176&type=chunk)[177](index=177&type=chunk) Evergreen Brine Unit Resource Estimation (January 2024) | Resource | Measured Resource | Indicated Resource | Inferred Resource | | :--- | :--- | :--- | :--- | | Elemental Bromine | 329,000 tons | 543,000 tons | 541,000 tons | | Elemental Lithium | 32,000 tons | 53,000 tons | 52,000 tons | | Lithium Carbonate Equivalent (LCE) | - | - | 729,000 tons | Market Prices (January 2024) | Resource | Price | | :--- | :--- | | Lithium | ~$13,500 per ton | | Bromine | ~$3,400 per metric ton | - Extraction of lithium and bromine from brine leases requires **significant time and capital**; an initial **preliminary economic assessment** for a bromine plant was completed in early 2023, with a lithium plant assessment expected in early 2024[180](index=180&type=chunk) [Item 3. Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings.) TETRA was involved in an arbitration with LANXESS Corporation regarding bromine pricing, which was settled in May 2023, and management does not expect other ongoing lawsuits to have a material adverse effect - Filed for **arbitration against LANXESS Corporation** in May 2022 over a proposed non-ordinary course increase to bromine prices[181](index=181&type=chunk)[182](index=182&type=chunk) - **Settled the arbitration** on May 25, 2023, by entering into the **Third Amendment to Bromine Requirements Sales Agreement** with LANXESS, which revised volume requirements, pricing, and related terms[183](index=183&type=chunk) - Management does **not consider it reasonably possible** that losses from other ongoing lawsuits or governmental proceedings will have a **material adverse effect** on financial condition, results of operations, or liquidity[184](index=184&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item states that there are no mine safety disclosures applicable to the company Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) TETRA's common stock is traded on the NYSE under "TTI", with approximately 200 holders of record as of February 23, 2024. The market price has been volatile, ranging from **$2.48** to **$6.54 per share** in 2023. Information on equity compensation plans is incorporated by reference, and no Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers in Q4 2023 - TETRA's common stock is traded on the **New York Stock Exchange (NYSE)** under the symbol "**TTI**"[188](index=188&type=chunk) - As of February 23, 2024, there were approximately **200 holders of record** of the common stock[188](index=188&type=chunk) - During 2023, the closing price for TETRA's common stock ranged from a high of **$6.54 per share** to a low of **$2.48 per share**[98](index=98&type=chunk) - **No director or officer adopted or terminated a Rule 10b5-1 trading arrangement** or non-Rule 10b5-1 trading arrangement during the three months ended December 31, 2023[192](index=192&type=chunk) [Item 6. [Reserved]](index=40&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Consolidated revenues increased **13.2%** to **$626.3 million** in 2023, with net income up **228.9%** to **$25.8 million**, supported by segment growth, low-carbon initiatives, and **$126.3 million** liquidity - Consolidated revenues for 2023 increased by **$73.0 million (13.2%)** to **$626.3 million** compared to 2022[201](index=201&type=chunk)[202](index=202&type=chunk) - Net income attributable to TETRA stockholders increased by **$17.9 million (228.9%)** to **$25.8 million** in 2023[201](index=201&type=chunk) - Consolidated gross profit as a percentage of revenue increased from **21.9%** in 2022 to **24.5%** in 2023[201](index=201&type=chunk)[203](index=203&type=chunk) - Liquidity at the end of Q4 2023 was **$126.3 million**, comprising **$52.5 million** in unrestricted cash and **$73.8 million** in credit agreement availability[221](index=221&type=chunk) [Business Overview](index=41&type=section&id=Business%20Overview) TETRA's business overview highlights revenue growth in both divisions, commitment to low-carbon energy initiatives, and the reflection of former Compression Division operations as discontinued - **Completion Fluids & Products Division revenues increased** in 2023 due to higher Gulf of Mexico and international completions activity, increased industrial chemicals product pricing and volumes, and benefits from the December 2022 Peacock acquisition in Europe[196](index=196&type=chunk) - **Water & Flowback Services revenues increased** due to margin expansion efforts, investments in technology, integration, digitalization, and the full-year operation of early production facilities in Latin America[197](index=197&type=chunk) - TETRA is committed to **low-carbon energy initiatives**, including a MOU with Saltwerx (ExxonMobil) for the **Evergreen Brine Unit** for bromine and lithium production, with an initial economic assessment for a lithium plant expected in early 2024[197](index=197&type=chunk) - The former Compression Division's operations are reflected as **discontinued operations** for all periods presented following the GP Sale in January 2021[198](index=198&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) This section details the consolidated and divisional financial performance, including revenues, gross profit, and income before taxes, highlighting key drivers of change [Consolidated Comparisons](index=43&type=section&id=Consolidated%20Comparisons) Consolidated revenues increased by **13.2%** in 2023, driven by higher activity and pricing, while net income attributable to TETRA stockholders grew **228.9%** Consolidated Financial Performance (2023 vs. 2022) | Metric | 2023 (In Thousands) | 2022 (In Thousands) | Change (In Thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $626,262 | $553,213 | $73,049 | 13.2% | | Gross profit | $153,645 | $121,111 | $32,534 | 26.9% | | Gross profit as % of revenue | 24.5% | 21.9% | - | - | | Exploration and pre-development costs | $12,119 | $6,635 | $5,484 | 82.7% | | General and administrative expense | $96,590 | $91,942 | $4,648 | 5.1% | | Interest expense, net | $22,349 | $15,833 | $6,516 | 41.2% | | Other income, net | $(9,112) | $(4,465) | $(4,647) | 104.1% | | Income before taxes and discontinued operations | $31,699 | $11,166 | $20,533 | 183.9% | | Provision for income taxes | $6,220 | $3,565 | $2,655 | 74.5% | | Net income attributable to TETRA stockholders | $25,784 | $7,839 | $17,945 | 228.9% | - **Consolidated revenues increased** due to higher activity in both Completion Fluids & Products (industrial chemicals product pricing and incremental volumes) and Water & Flowback Services (full year operations of early production facilities in Latin America)[202](index=202&type=chunk) - Exploration and pre-development costs increased by **$5.5 million** due to increased activities for Arkansas strategic initiatives, including additional front-end engineering design studies and a second exploration test well[204](index=204&type=chunk) - General and administrative expenses increased primarily due to a **$5.1 million** increase in employee compensation (headcount, merit, inflationary factors, incentive awards)[205](index=205&type=chunk) - **Interest expense, net, increased** due to a higher interest rate on the Term Credit Agreement[206](index=206&type=chunk) - Other income, net, increased primarily due to a **$9.3 million** reimbursement from a partner for Arkansas resource development, partially offset by a **$4.5 million** increase in foreign exchange losses (e.g., Argentina currency volatility)[207](index=207&type=chunk) - The consolidated effective tax rate decreased from **31.9%** in 2022 to **19.6%** in 2023, primarily because a significant portion of the income increase was in jurisdictions where net operating losses with valuation allowances could be utilized[208](index=208&type=chunk) [Divisional Comparisons](index=44&type=section&id=Divisional%20Comparisons) This section compares the financial performance of the Completion Fluids & Products Division and the Water & Flowback Services Division for 2023 versus 2022 [Completion Fluids & Products Division](index=44&type=section&id=Completion%20Fluids%20%26%20Products%20Division) The Completion Fluids & Products Division saw a **14.5%** revenue increase and a **36.5%** pretax income increase in 2023, driven by higher sales, pricing, and resource development reimbursements Completion Fluids & Products Division Performance (2023 vs. 2022) | Metric | 2023 (In Thousands) | 2022 (In Thousands) | Change (In Thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $313,030 | $273,373 | $39,657 | 14.5% | | Gross profit | $107,684 | $86,718 | $20,966 | 24.2% | | Gross profit as % of revenue | 34.4% | 31.7% | - | - | | Income before taxes and discontinued operations | $78,313 | $57,366 | $20,947 | 36.5% | - **Revenue increase** driven by incremental brominated product sales in the U.S. and Latin America, higher European calcium chloride pricing, increased volumes in Europe (due to resolved raw material limitations and Peacock acquisition), and expanded services to completion fluids customers[209](index=209&type=chunk) - **Pretax income increased** due to higher gross profit and a **$9.3 million** increase in other income from Arkansas resource development reimbursements, partially offset by a **$5.5 million** increase in exploration and pre-development costs[211](index=211&type=chunk) [Water & Flowback Services Division](index=45&type=section&id=Water%20%26%20Flowback%20Services%20Division) The Water & Flowback Services Division experienced **11.9%** revenue growth and **63.5%** pretax income increase in 2023, driven by improved market conditions, technology investments, and early production facilities Water & Flowback Services Division Performance (2023 vs. 2022) | Metric | 2023 (In Thousands) | 2022 (In Thousands) | Change (In Thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $313,232 | $279,840 | $33,392 | 11.9% | | Gross profit | $47,138 | $35,074 | $12,064 | 34.4% | | Gross profit as % of revenue | 15.0% | 12.5% | - | - | | Income before taxes and discontinued operations | $25,724 | $15,732 | $9,992 | 63.5% | - **Revenue growth boosted** by improved market conditions, investments in SandStorm advanced cyclone technology, and full-year operations of three early production facilities in Latin America[212](index=212&type=chunk) - **Gross profit improved** due to higher revenues from increased activity levels and pricing improvements[213](index=213&type=chunk) - **Pretax income increased** due to higher gross profit and a **$2.2 million** decrease in general and administrative expenses, partially offset by a **$3.9 million** swing to foreign exchange losses due to Argentina's currency devaluation[214](index=214&type=chunk) [Corporate Overhead](index=46&type=section&id=Corporate%20Overhead) Corporate overhead loss before taxes increased by **16.8%** in 2023, primarily due to higher interest expense, increased salary-related expenses, and an impairment of the corporate office lease Corporate Overhead Loss Before Taxes (2023 vs. 2022) | Metric | 2023 (In Thousands) | 2022 (In Thousands) | Change (In Thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Loss before taxes and discontinued operations | $(72,339) | $(61,943) | $(10,396) | (16.8)% | | General and administrative expense | $49,135 | $45,077 | $4,058 | 9.0% | | Interest expense, net | $22,790 | $17,041 | $5,749 | 33.7% | | Impairments and other charges | $777 | $0 | $777 | 100.0% | - **Increased loss before taxes** primarily due to higher interest expense on the Term Credit Agreement, a **$4.1 million** increase in salary-related expenses (incentive and equity-based compensation), and a **$0.8 million** impairment of the corporate office lease[215](index=215&type=chunk) [Non-GAAP Financial Measures](index=46&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA is a non-GAAP financial measure used by management to assess financial performance, excluding certain non-operating charges and non-cash items - **Adjusted EBITDA** is a **non-GAAP financial measure** used by management to assess financial performance, excluding certain non-operating charges and non-cash items[217](index=217&type=chunk)[218](index=218&type=chunk) Adjusted EBITDA Reconciliation (2023 vs. 2022) | Metric | 2023 (In Thousands) | 2022 (In Thousands) | | :--- | :--- | :--- | | Net income (loss) before taxes and discontinued operations | $31,699 | $11,166 | | Adjustments: | | | | Impairments and other charges | $2,966 | $2,804 | | Exploration, pre-development costs and collaborative arrangements | $2,838 | $6,635 | | Interest expense, net | $22,349 | $15,833 | | Depreciation, amortization and accretion | $34,329 | $32,819 | | Equity-based compensation expense | $10,622 | $6,880 | | Adjusted EBITDA | $106,834 | $78,111 | | Adjusted EBITDA as % of revenue | 17.1% | 14.1% | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) This section details TETRA's cash flows from operating, investing, and financing activities, along with other sources and uses of cash, leases, and critical accounting policies [Operating Activities](index=48&type=section&id=Operating%20Activities) Consolidated cash flows from operating activities significantly increased by **$51.2 million** to **$70.2 million** in 2023, driven by higher activity, improved margins, and favorable working capital - Consolidated cash flows provided by operating activities increased by **$51.2 million** to **$70.2 million** in 2023, up from **$19.0 million** in 2022[222](index=222&type=chunk)[223](index=223&type=chunk) - **Increase in operating cash flows** primarily due to increased activity levels, higher consolidated margins from product mix changes, and favorable working capital movements[223](index=223&type=chunk) [Investing Activities](index=48&type=section&id=Investing%20Activities) Total cash capital expenditures in 2023 were **$38.2 million**, primarily for Water & Flowback Services and Completion Fluids & Products, supplemented by asset sales and an insurance settlement - Total cash capital expenditures in 2023 were **$38.2 million**, with **$26.6 million** for Water & Flowback Services (SandStorm units, early production facilities) and **$11.1 million** for Completion Fluids & Products (supporting U.S. and European activity)[224](index=224&type=chunk) - Investing activities also included **$6.7 million** from property, plant, and equipment sales, **$3.9 million** from marketable securities sales, and a **$2.9 million** insurance settlement[225](index=225&type=chunk) - Development of Arkansas brine resources for lithium and bromine extraction requires **significant time and capital**, contingent on further studies and capital commitments[226](index=226&type=chunk) [Financing Activities](index=48&type=section&id=Financing%20Activities) Consolidated net cash used in financing activities was **$4.7 million** in 2023, with significant debt refinancing in January 2024, and the company remains in compliance with all debt covenants - Consolidated net cash used in financing activities was **$4.7 million** in 2023, including **$100.5 million** in borrowings and **$97.5 million** in repayments of revolving credit facilities, and **$1.7 million** in finance lease payments[228](index=228&type=chunk) - On January 12, 2024, the company entered into a **New Term Credit Agreement** for **$265.0 million** (a **$190.0 million** funded term loan and a **$75.0 million** delayed-draw term loan) to refinance existing debt and fund the Arkansas bromine project, maturing January 12, 2030[229](index=229&type=chunk)[454](index=454&type=chunk) - The ABL Credit Agreement provides an **$80 million** revolving credit facility (with a **$20 million** accordion), subject to a borrowing base, with **$68.8 million** availability as of December 31, 2023, and no outstanding balance[230](index=230&type=chunk) - Maintains a Swedish Credit Facility for seasonal working capital (**$5.0 million** availability as of December 31, 2023) and a Finland Credit Agreement (**$1.5 million** letters of credit outstanding)[231](index=231&type=chunk)[232](index=232&type=chunk) - As of December 31, 2023, TETRA was in **compliance with all covenants** of its debt agreements[233](index=233&type=chunk) [Other Sources and Uses of Cash](index=49&type=section&id=Other%20Sources%20and%20Uses%20of%20Cash) Short-term liquidity is funded by operations and vendor financing, with equity holdings available for monetization, but capital market instability and customer payment delays pose risks - **Short-term liquidity** is funded by cash from operations and vendor financing[234](index=234&type=chunk) - Equity holdings in CSI Compressco (**$8.5 million**) and Standard Lithium (**$1.6 million**) as of December 31, 2023, are available for monetization[234](index=234&type=chunk) - **Instability in capital markets** could limit the ability to raise additional debt or equity, potentially leading to dilution of common stockholders[234](index=234&type=chunk) - **Increased delays or failures by customers to pay invoices** could adversely affect liquidity and borrowing availability[234](index=234&type=chunk) [Leases](index=50&type=section&id=Leases) TETRA holds various operating leases for equipment and facilities, alongside finance leases for storage tanks and equipment rentals - Has **operating leases** for transportation equipment, office/warehouse space, operating locations, and machinery, and **finance leases** for facility storage tanks and equipment rentals[235](index=235&type=chunk) [Asset Retirement Obligations](index=50&type=section&id=Asset%20Retirement%20Obligations) The company is required to undertake specific actions for the retirement of facilities used in manufacturing, storage, and sale of products, inventories, and equipment - Required to take certain actions in connection with the **retirement of facilities** used in manufacturing, storage, and sale of products, inventories, and equipment[236](index=236&type=chunk) [Product Purchase Obligations](index=50&type=section&id=Product%20Purchase%20Obligations) TETRA enters into supply agreements for raw materials and finished products within its Completion Fluids & Products Division, some of which include minimum or maximum purchase levels - Enters into **supply agreements** for raw materials and finished products in the Completion Fluids & Products Division, some with minimum/maximum purchase levels[237](index=237&type=chunk) [Off Balance Sheet Arrangements](index=50&type=section&id=Off%20Balance%20Sheet%20Arrangements) As of December 31, 2023, TETRA has no off-balance sheet arrangements that are expected to materially affect its financial condition or results of operations - As of December 31, 2023, TETRA has **no off-balance sheet arrangements** that may have a current or future material effect on its consolidated financial condition or results of operations[238](index=238&type=chunk) [Litigation](index=50&type=section&id=Litigation) Information regarding litigation, including contingencies of discontinued operations, is comprehensively detailed in Note 11 to the Consolidated Financial Statements - Information regarding litigation, including contingencies of discontinued operations, is detailed in **Note 11 to the Consolidated Financial Statements**[239](index=239&type=chunk) [Critical Accounting Policies and Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The preparation of financial statements involves management's assumptions, estimates, and judgments, though currently no critical accounting policies materially affect the statements - The preparation of financial statements requires management to make **assumptions, estimates, and judgments** that affect reported amounts, which may differ materially from actual results[240](index=240&type=chunk) - Currently, there are **no critical accounting policies and estimates** that materially affect the preparation of the financial statements[242](index=242&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) TETRA faces interest rate risk on floating-rate debt, with the Term Credit Agreement refinanced to SOFR plus **5.75%**, and currency exchange rate risk from foreign operations, without current derivative hedging - Interest on borrowings is subject to **market risk** from changes in applicable interest rates, as credit facilities consist of **floating rate loans**[243](index=243&type=chunk) Long-Term Debt Obligations (December 31, 2023) | Debt Type | Scheduled Maturity | Interest Rate | | :--- | :--- | :--- | | Term credit agreement | September 10, 2025 | 11.70% | | Asset-based credit agreement | May 31, 2025 | 8.75% | | Swedish credit facility | December 31, 2024 | 2.95% | - The Term Credit Agreement was refinanced on January 12, 2024, with a **New Term Credit Agreement** bearing interest at **SOFR plus 5.75%**[244](index=244&type=chunk) - Has **currency exchange rate risk exposure** related to revenues, expenses, and operating balances denominated in foreign currencies (e.g., Euro, British pound, Mexican peso, and Argentinian peso)[115](index=115&type=chunk)[245](index=245&type=chunk) - May use **short-term foreign-currency forward derivative contracts** to mitigate currency exchange rate risk, but none were outstanding as of December 31, 2023[245](index=245&type=chunk)[438](index=438&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=51&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This item refers to the financial statements and supplementary data included in Item 15 of this Annual Report [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=51&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) This item states that there have been no changes in or disagreements with accountants on accounting and financial disclosure [Item 9A. Controls and Procedures](index=51&type=section&id=Item%209A.%20Controls%20and%20Procedures.) TETRA's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of December 31, 2023. Management also assessed and determined that internal control over financial reporting was effective as of the same date, based on the COSO framework. No material changes in internal control over financial reporting occurred in Q4 2023 - Disclosure controls and procedures were evaluated and concluded to be **effective** as of December 31, 2023[248](index=248&type=chunk) - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2023, based on the COSO (2013 framework), and determined it was **effective**[252](index=252&type=chunk) - Grant Thornton LLP, the independent registered public accounting firm, issued an **unqualified attestation report** on the effectiveness of internal control over financial reporting[253](index=253&type=chunk)[282](index=282&type=chunk)[288](index=288&type=chunk) - **No changes in internal control over financial reporting occurred** during Q4 2023 that materially affected or are reasonably likely to materially affect it[254](index=254&type=chunk) [Item 9B. Other Information](index=52&type=section&id=Item%209B.%20Other%20Information.) This item states that there is no other information to report [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=52&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) This item states that there are no disclosures regarding foreign jurisdictions that prevent inspections Part III [Item 10. Directors, Executive Officers, and Corporate Governance](index=52&type=section&id=Item%2010.%20Directors,%20Executive%20Officers,%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement for the annual meeting of stockholders to be held on May 21, 2024 - Information for this item is **incorporated by reference** from the Proxy Statement for the annual meeting of stockholders on May 21, 2024[258](index=258&type=chunk) [Item 11. Executive Compensation](index=53&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the company's proxy statement, including details on the Management and Compensation Committee Report, Compensation Discussion and Analysis, and Compensation of Executive Officers - Information for this item is **incorporated by reference** from the Proxy Statement[259](index=259&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=53&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of certain beneficial owners and management, as well as equity compensation plan information, is incorporated by reference from the company's proxy statement - Information for this item is **incorporated by reference** from the Proxy Statement[260](index=260&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=53&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information on certain relationships and related transactions, and director independence, is incorporated by reference from the company's proxy statement - Information for this item is **incorporated by reference** from the Proxy Statement[261](index=261&type=chunk) [Item 14. Principal Accounting Fees and Services](index=53&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's proxy statement - Information for this item is **incorporated by reference** from the Proxy Statement[262](index=262&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=53&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and a comprehensive list of exhibits filed as part of the Annual Report on Form 10-K, including various agreements, plans, and certifications - Includes the **Reports of Independent Registered Public Accounting Firm**, **Consolidated Balance Sheets**, **Statements of Operations**, **Comprehensive Income (Loss), Equity, and Cash Flows**, along with **Notes to Consolidated Financial Statements**[264](index=264&type=chunk) - Lists **numerous exhibits**, including asset purchase agreements, certificates of incorporation, bylaws, credit agreements, equity incentive plans, and certifications[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) [Item 16. Form 10-K Summary](index=57&type=section&id=Item%2016.%20Form%2010-K%20Summary.) This item indicates that there is no Form 10-K Summary provided

Financial Performance - Fourth quarter revenue was $153.1 million, a 4% increase year-over-year[4] - Fourth quarter adjusted EBITDA was $24.1 million, reflecting a 19% year-over-year increase[4] - Total year 2023 income from continuing operations was $25.5 million, a 235% increase compared to 2022[4] - Adjusted free cash flow for 2023 was $41 million, an improvement of $62 million year-over-year[4] - Total year revenue for 2023 was $626 million, a 13% increase from 2022, with international operations contributing 65% to the revenue growth[22] - Income from continuing operations improved to $25.5 million in 2023, up 2.4 times from $7.6 million in 2022[22] - Adjusted EBITDA increased by $28.7 million to $106.8 million in 2023, representing a 37% growth year-over-year[23] - Adjusted EBITDA margin rose to 17.1% in 2023, an increase of 300 basis points from 14.1% in 2022[23] - Cash flow from operations reached $70.2 million, a significant increase of 269% from $19.0 million in 2022[23] - Net income for the twelve months ended December 31, 2023, was $25,757 thousand, a substantial increase from $7,796 thousand in the previous year[35] - Net income before taxes and discontinued operations for 2023 was $31,699,000, up from $11,166,000 in 2022, reflecting a significant increase of 184.5%[50] Revenue Breakdown - Water & Flowback Services revenue for the fourth quarter was $81 million, a 12% increase for the total year[10] - Completion Fluids & Products revenue for the fourth quarter was $73 million, a 10% increase year-over-year[13] - Completion Fluids & Products revenue for 2023 was $313 million, up $39.7 million from 2022, with an income before taxes of $78.3 million[24] - Water & Flowback Services revenue for 2023 was $313 million, an increase of $33.4 million from 2022, with an income before taxes of $25.7 million[25] Debt and Liquidity - As of December 2023, the net leverage ratio was 1.13X and liquidity was $126 million[19] - A $265 million credit facility was secured in January 2024 to advance the Arkansas bromine processing project[20] - Net debt decreased by 27% to $105 million from $142.9 million in 2022[23] - Unrestricted cash increased to $52,485,000 in 2023 from $13,592,000 in 2022, showing a substantial improvement in liquidity[52] - Net debt decreased to $105,020,000 in 2023 from $142,866,000 in 2022, indicating a reduction in leverage[52] Asset Management - Total assets increased to $478,961 thousand in December 2023, up from $434,366 thousand in December 2022, representing an increase of 10.1%[34] - Total current liabilities increased slightly to $125,962 thousand in December 2023 from $124,267 thousand in December 2022, an increase of 1.4%[34] - Long-term debt, net, was $157,505 thousand in December 2023, a marginal increase from $156,455 thousand in December 2022, indicating a growth of 0.7%[34] - Consolidated total assets increased to $478,961 thousand as of December 31, 2023, up from $434,366 thousand in the previous year[55] - Consolidated current liabilities stood at $125,962 thousand, compared to $124,267 thousand in the previous year[55] Operational Efficiency - Adjusted EBITDA is used by management to assess financial performance, excluding certain special or other charges, and is a key metric for evaluating operational efficiency[40] - Adjusted net income per share is utilized to evaluate financial performance, excluding special charges, providing a clearer view of operational results[39] - The company aims to enhance its capacity for further investment and growth, as indicated by its financial strategies and performance metrics[46] Market Expansion - The Arkansas Oil and Gas Commission approved the 6,138-acre Evergreen Brine Unit for future bromine and lithium production[3] - The resource report estimated 22 tons per acre of total lithium resources for the Evergreen Brine Unit, the highest for any lithium brine resource in the U.S.[5] - The company is expanding into the low-carbon energy market, focusing on lithium and bromine resources development[31] Quarterly Performance - For the three months ended December 31, 2023, the company reported an adjusted income from continuing operations of $3.777 million, compared to $9.166 million in the previous quarter, reflecting a decrease of approximately 59.8%[47] - The total revenues for the three months ended December 31, 2023, were $153.126 million, slightly down from $151.464 million in the previous quarter, indicating a marginal decline of about 1.1%[48] - Adjusted EBITDA for the three months ended December 31, 2023, was $24.142 million, representing an adjusted EBITDA margin of 15.8% of revenue, compared to 17.2% in the previous quarter[48] - The net loss before taxes and discontinued operations for the three months ended December 31, 2023, was $(3.631) million, a significant decline from a profit of $6.716 million in the previous quarter[47] - The diluted loss per share from continuing operations for the three months ended December 31, 2023, was $(0.03), compared to a profit of $0.04 in the previous quarter[47] - The company reported total impairments and other charges of $2.189 million for the three months ended December 31, 2023, consistent with the previous quarter's charges[48] - The company experienced an unusual foreign exchange loss of $2.444 million for the three months ended December 31, 2023, which was not present in the previous quarter[48]