TETRA Technologies, Inc. (NYSE:TTI) Q3 2023 Earnings Conference Call October 31, 2023 10:30 AM ET Company Participants Rigo Gonzalez - Manager of Corporate Finance and Investor Relations Brady Murphy - President and Chief Executive Officer Elijio Serrano - Senior Vice President and CFO Conference Call Participants Martin Malloy - Johnson Rice Stephen Gengaro - Stifel Tim Moore - EF Hutton Operator Good morning and welcome to TETRA Technologies Third Quarter 2023 Results Conference Call. All participants wil ...

PART I—FINANCIAL INFORMATION This section presents TETRA Technologies, Inc.'s unaudited financial statements and management's analysis of operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents TETRA Technologies, Inc.'s unaudited consolidated financial statements and detailed notes [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, gross profit, and net income attributable to stockholders Net Income Attributable to TETRA Stockholders | Period | 2023 (in thousands) | 2022 (in thousands) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :----------- | | Three Months Ended Sep 30 | $5,420 | $278 | +1842.4% | | Nine Months Ended Sep 30 | $29,675 | $9,743 | +204.6% | Total Revenues | Period | 2023 (in thousands) | 2022 (in thousands) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :----------- | | Three Months Ended Sep 30 | $151,464 | $135,012 | +12.2% | | Nine Months Ended Sep 30 | $473,136 | $405,765 | +16.6% | Gross Profit | Period | 2023 (in thousands) | 2022 (in thousands) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :----------- | | Three Months Ended Sep 30 | $37,924 | $29,473 | +28.7% | | Nine Months Ended Sep 30 | $123,402 | $90,000 | +37.1% | Basic Net Income Per Common Share (Continuing Operations) | Period | 2023 | 2022 | Change (YoY) | | :----------------------- | :--- | :--- | :----------- | | Three Months Ended Sep 30 | $0.04 | $0.00 | N/A | | Nine Months Ended Sep 30 | $0.23 | $0.08 | +187.5% | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents the company's net income and other comprehensive income components Comprehensive Income (Loss) Attributable to TETRA Stockholders | Period | 2023 (in thousands) | 2022 (in thousands) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :----------- | | Three Months Ended Sep 30 | $2,816 | $(3,901) | N/A (from loss to gain) | | Nine Months Ended Sep 30 | $29,865 | $2,342 | +1175.2% | Net Income | Period | 2023 (in thousands) | 2022 (in thousands) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :----------- | | Three Months Ended Sep 30 | $5,420 | $256 | +2017.2% | | Nine Months Ended Sep 30 | $29,650 | $9,700 | +205.7% | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Total Assets | Date | Amount (in thousands) | Change (vs Dec 31, 2022) | | :---------------- | :-------------------- | :----------------------- | | Sep 30, 2023 | $472,419 | +$38,053 | | Dec 31, 2022 | $434,366 | | Total Equity | Date | Amount (in thousands) | Change (vs Dec 31, 2022) | | :---------------- | :-------------------- | :----------------------- | | Sep 30, 2023 | $141,137 | +$34,740 | | Dec 31, 2022 | $106,397 | | Cash and Cash Equivalents | Date | Amount (in thousands) | Change (vs Dec 31, 2022) | | :---------------- | :-------------------- | :----------------------- | | Sep 30, 2023 | $33,826 | +$20,234 | | Dec 31, 2022 | $13,592 | | [Consolidated Statements of Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Equity) This statement tracks changes in the company's equity, including retained deficit and equity-based compensation Total TETRA Stockholders' Equity | Date | Amount (in thousands) | Change (vs Dec 31, 2022) | | :---------------- | :-------------------- | :----------------------- | | Sep 30, 2023 | $142,393 | +$34,768 | | Dec 31, 2022 | $107,625 | | Retained Deficit | Date | Amount (in thousands) | Change (vs Dec 31, 2022) | | :---------------- | :-------------------- | :----------------------- | | Sep 30, 2023 | $(272,818) | +$29,675 (reduction in deficit) | | Dec 31, 2022 | $(302,493) | | - Equity-based compensation for the nine months ended September 30, 2023, totaled **$6.4 million**[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by operating, investing, and financing activities Net Cash Provided by Operating Activities | Period | 2023 (in thousands) | 2022 (in thousands) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :----------- | | Nine Months Ended Sep 30 | $51,331 | $25,948 | +97.8% | Net Cash Used in Investing Activities | Period | 2023 (in thousands) | 2022 (in thousands) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :----------- | | Nine Months Ended Sep 30 | $(28,918) | $(28,280) | +2.3% | Net Cash Used in Financing Activities | Period | 2023 (in thousands) | 2022 (in thousands) | Change (YoY) | | :----------------------- | :------------------ | :------------------ | :----------- | | Nine Months Ended Sep 30 | $(1,894) | $(2,771) | -31.7% | Cash and Cash Equivalents at End of Period | Date | Amount (in thousands) | Change (YoY) | | :---------------- | :-------------------- | :----------- | | Sep 30, 2023 | $33,826 | +34.0% | | Sep 30, 2022 | $25,247 | | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the consolidated financial statements [NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION,%20BASIS%20OF%20PRESENTATION,%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines TETRA's business segments, Tax Benefits Preservation Plan, and lithium and bromine resource development - TETRA operates in two segments: Completion Fluids & Products Division and Water & Flowback Services Division[23](index=23&type=chunk) - A Tax Benefits Preservation Plan was adopted on February 28, 2023, to protect the company's net operating loss carryforwards (NOLs) and other tax attributes from potential ownership changes under Section 382 of the Internal Revenue Code[27](index=27&type=chunk) - The company holds rights to bromine and lithium in the Smackover Formation in Southwest Arkansas. Standard Lithium Ltd. exercised its option to acquire lithium rights in these leases on October 6, 2023[33](index=33&type=chunk) - In June 2023, TETRA entered into an MOU with Saltwerx LLC for a newly-proposed brine unit in Arkansas for potential bromine and lithium production, which was unanimously approved by the Arkansas Oil & Gas Commission on September 26, 2023[34](index=34&type=chunk) Exploration and Pre-development Costs for Lithium and Bromine Properties | Period | Amount (in thousands) | | :----------------------- | :-------------------- | | Three Months Ended Sep 30, 2023 | $3,800 | | Nine Months Ended Sep 30, 2023 | $6,800 | | Three Months Ended Sep 30, 2022 | $900 | | Nine Months Ended Sep 30, 2022 | $3,500 | - The adoption of ASU 2016-13 (Credit Losses) and amendments to credit agreements (replacing LIBOR/Eurodollar with SOFR) did not have a material impact on the consolidated financial statements[41](index=41&type=chunk)[42](index=42&type=chunk) [NOTE 2 – DISCONTINUED OPERATIONS](index=13&type=section&id=NOTE%202%20%E2%80%93%20DISCONTINUED%20OPERATIONS) This note details the classification and financial impact of the company's discontinued Compression and Offshore

TETRA Technologies, Inc. (NYSE:TTI) Q2 2023 Earnings Conference Call August 1, 2023 10:30 AM ET Company Participants Rigo Gonzalez - Corporate Finance & IR Manager Brady Murphy - President, CEO & Director Elijio Serrano - SVP & CFO Conference Call Participants Martin Malloy - Johnson Rice & Company Stephen Gengaro - Stifel, Nicolaus & Company Operator Good morning, and welcome to TETRA Technologies Second Quarter 2023 Results Conference Call. [Operator Instructions] I would now like to turn the conference ...

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, 2023 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 or Other Jurisdic ...

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 6% quarter-over-quarter and by 8% year-over-year, marking the highest adjusted EBITDA since Q1 2020 [4][5] - Cash flow from operating activities was $9 million in Q1 2023, compared to cash used of $7 million in Q4 2022 [14] - Net leverage was 2.0x at the end of Q1 2023, with unrestricted cash of $17 million and liquidity of $86 million [15] Business Line Data and Key Metrics Changes - Completion Fluids & Products revenue was $69 million, a 4% sequential increase, with adjusted EBITDA of $18 million and margins of 26.1% [8] - Water & Flowback Services revenue improved by 36% year-over-year to $77 million, with adjusted EBITDA of $12.9 million, reflecting a 57% year-over-year increase [9][10] Market Data and Key Metrics Changes - Revenue from international markets grew by 17% compared to Q1 2022, driven by stronger activity in Latin America [5] - The European industrial chemicals business has nearly returned to pre-Russia-Ukraine conflict levels, contributing to a strong second quarter forecast [9] Company Strategy and Development Direction - The company is focused on margin expansion, maximizing returns on capital, and generating meaningful cash flow in 2023 [7][20] - Investments in international markets and completion fluids businesses are expected to contribute to earnings as the deepwater market recovers [20] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the deepwater market upcycle and anticipates a strong second quarter, projecting revenue between $165 million and $175 million [16][20] - The company is working on low carbon energy initiatives and evaluating lithium and bromine resources in Arkansas, with a focus on strategic partnerships [12][29] Other Important Information - The company completed a completion fluids investment in Brazil, which will more than double its deepwater operational capacity [5] - The third early production facility in Argentina is expected to come online in Q2 2023, supporting growth in the Water & Flowback Services segment [11] Q&A Session Summary Question: Overview of water technology and competitive environment - Management provided updates on exclusive technology agreements for water desalination and expressed confidence in completing a commercial plant design by year-end [21][22] Question: Market opportunities for Neptune products - Management highlighted strong opportunities in the North Sea and potential projects in the Gulf of Mexico, with expectations for execution in 2024 [24][25] Question: EBITDA headwinds in Q3 - Management indicated that strong market conditions in deepwater completion fluids could mitigate seasonal drops in Q3 [27] Question: Impact of IRA on lithium projects - Management acknowledged the importance of the U.S. lithium market and expressed optimism about future partnerships for lithium and bromine projects [28][29] Question: Factors affecting Water & Flowback EBITDA margins - Management identified margin enhancement initiatives, including automation and new applications for SandStorm technology, as key drivers [32][33] Question: Timeline for bromine project construction - Management indicated readiness to begin construction immediately upon board approval, having already identified long lead items [37] Question: Free cash flow expectations - Management expects strong free cash flow in the second half of the year as inventory is converted to receivables [40] Question: Calcium chloride sales outlook - Management anticipates year-over-year growth in calcium chloride sales, with preparations for inventory build-up post-peak season [41][42]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 (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, 2023 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 FORM 10-Q TETRA Technologies, Inc. (Exact name of registrant as specified in its charter) Delaware 74-2148293 24955 Interstate 45 Nor ...

Financial Data and Key Metrics Changes - The company reported a sequential revenue growth of 9% in Q4 2022 compared to Q3 2022 and a 42% increase for the full year over 2021 [4] - Adjusted EBITDA for Q4 2022 was $20.3 million, up from $18.6 million in Q3 2022, with a full-year adjusted EBITDA increase of 112% over 2021 [4][5] - Cash from operating activities was a use of $7 million in Q4, while adjusted free cash flow from continuing operations was a use of $14 million [15] Business Line Data and Key Metrics Changes - Completion fluids and products segment revenue for Q4 2022 was $66 million, a 12% increase from Q3 2022, with adjusted EBITDA of $16 million [7] - Water and Flowback segment revenues reached $81 million, growing 52% year-on-year and 7% quarter-on-quarter, marking the highest quarterly revenue since Q2 2018 [8][9] - The Water and Flowback segment achieved a full-year revenue growth of 66% and adjusted EBITDA increased by 191% [9] Market Data and Key Metrics Changes - The combined markets of the Gulf of Mexico and international offshore businesses saw a 20% sequential revenue increase and over 50% year-on-year growth [5] - The company expects a 25% increase in deepwater floater rigs by 2025, indicating a strengthening offshore market [6] Company Strategy and Development Direction - The company is entering a multiyear growth cycle for offshore markets, supported by increased floater day rates and contract durations [6] - Investments were made to strengthen the offshore completion fluids business, including acquisitions that will increase fluid capacity by 70% in the UK and 15% in the Gulf of Mexico [6][7] - The company is focused on margin expansion and cash generation while continuing to invest in capital projects with short-term returns [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the offshore market's growth and the potential for increased demand for completion fluids [6][31] - The company is committed to evaluating the Arkansas brine resource and expects to provide updates as the project progresses [31][32] Other Important Information - The company holds significant marketable securities, including shares of Standard Lithium and CSI Compressed Gas, valued at approximately $15 million [19] - The company has accumulated approximately $411 million of tax loss carryforwards, which will be beneficial as profitability improves [20] Q&A Session All Questions and Answers Question: Can you talk about the offshore completion fluids market and visibility with customers? - Management noted that they are seeing traction in the North Sea and expect more repetitive jobs in the offshore business, with a meaningful uptick in Neptune opportunities likely in 2024 and beyond [33] Question: How do you view the ability to ramp up production of PureFlow? - Management indicated that there is plenty of capacity at the West Memphis facility to ramp up production with little to no capital required [34] Question: What should be considered for sequential performance in Q1 2023? - Management expects a rebound in margins for the Water and Flowback business and plans to ramp up in Q2 with the European chemicals business recovering [37][39] Question: Is the target for $100 million EBITDA in 2023 reasonable? - Management refrained from providing full-year guidance due to unpredictable economic factors [41] Question: Where do you see the company in 24 months? - Management highlighted growth opportunities in produced water and completion fluids, with expectations for the Arkansas project to be fully evaluated [42][43] Question: How should we think about free cash flow generation for this year? - Management expects to be strongly free cash flow positive in 2023, with lower capital expenditures compared to 2022 [45] Question: Any updates on the regulatory review for desalination and produced water? - Management stated that each operator will need their own permits, and they are confident their technology will meet regulatory requirements [50] Question: How do you view your market share in the deepwater completion fluids market? - Management estimated a 30% market share in high-value completion fluids, with 70% of deepwater wells in the Gulf of Mexico requiring bromine-based fluids [56]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022 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) (State or Other Jurisdiction of Incorporation or ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $135 million, with adjusted EBITDA of $18.6 million, reflecting a 75.5% increase in revenue and a 12% increase in EBITDA from Q2 2022 [10] - Adjusted EBITDA excluding unrealized losses was $19.1 million for the quarter, marking a 24% increase from $15 million in Q3 2021 [30] - Free cash flow was negative $9.8 million in Q3 2022, with expectations for total capital expenditures in the $40 million range for the year [32] Business Line Data and Key Metrics Changes - The energy services business grew revenue by 15% and EBITDA by 33% quarter-on-quarter [11] - Water and Flowback services generated revenue of $76 million, up 62% year-on-year and 15% quarter-on-quarter, with adjusted EBITDA of $13.2 million, marking a 158% increase year-on-year [15] - Completion fluids and products segment revenue was $59 million, a 22% increase year-on-year but a 21% decrease from Q2 2022 [19] Market Data and Key Metrics Changes - The company holds a 30% market share in completion fluids in the Gulf of Mexico, as reported in the Kimberlite Annual Completion Fluids and Wellbore Cleanup Tools Supplier Performance Report [20] - The offshore and deepwater markets are expected to continue improving, with a growing pipeline of completion fluids opportunities [21] Company Strategy and Development Direction - The company is focused on low carbon energy technologies and has executed exclusive technology agreements for recycling produced water [12] - A positive inferred resource report confirmed bromine and lithium brine resource estimates in Arkansas, with bromine estimated at 5.25 million tons and lithium at 234,000 tons of lithium carbonate equivalent [14] - The company aims to leverage its resources in Arkansas to meet the growing demand for critical minerals in energy storage markets [24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from supply chain issues and inflation, particularly regarding raw material prices [25] - Despite short-term challenges, management is optimistic about generating positive momentum and expanding margins into 2023 [27] - The company expects to end the year with liquidity around $100 million and significant free cash flow generation in 2023 and 2024 [39] Other Important Information - The company has been in dialogue with the Department of Energy regarding grants and loans to support investments in critical minerals [38] - The company has significant federal tax loss carryforwards that can offset future profits, enhancing cash flow from operations [36] Q&A Session Summary Question: How do you see the bridge in the two segments between the third and fourth quarter? - Management expects the onshore business to continue performing well, but a shift of revenue from Eos to 2023 will impact Q4 results [46] Question: Is the shift from Eos a sequential drop or just not growth? - It will be a sequential decline [50] Question: How do you balance CapEx versus the need to generate free cash and reduce leverage? - The company plans to generate free cash flow to fund initial bromine investments while maintaining capacity for future investments [52] Question: What is the update on the Finland calcium chloride plant? - The plant is operating at 70-80% capacity and is expected to reach full production by the second quarter of 2023 [56] Question: What are the expectations for PureFlow sales in the first half of next year? - Sales growth is anticipated, but specifics will depend on Eos's guidance [68] Question: What is the outlook for potential calcium chloride sales in light of the Inflation Reduction Act? - Revenue opportunities from carbon capture are expected to materialize in late 2023 or 2024 [70]

PART I—FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's unaudited consolidated financial statements detail its operational results, financial position, and cash flows [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported increased revenue but lower net income for the third quarter and nine months ended September 30, 2022 Consolidated Statements of Operations (In Thousands) | | Three Months Ended Sep 30, | Nine Months Ended Sep 30, | | :--- | :--- | :--- | | | **2022** | **2021** | **2022** | **2021** | | **Total revenues** | $135,012 | $95,474 | $405,765 | $275,124 | | **Gross profit** | $29,473 | $15,747 | $90,000 | $40,049 | | **Income (loss) before discontinued operations** | ($63) | $2,495 | $9,430 | ($16,102) | | **Net income attributable to TETRA stockholders** | $278 | $2,513 | $9,743 | $104,474 | | **Diluted EPS attributable to TETRA stockholders** | $0.00 | $0.02 | $0.08 | $0.83 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets and liabilities increased slightly as of September 30, 2022, compared to year-end 2021 Consolidated Balance Sheets (In Thousands) | | Sep 30, 2022 (Unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $224,292 | $210,390 | | **Total assets** | $413,486 | $398,266 | | **Total current liabilities** | $111,504 | $97,142 | | **Total long-term debt, net** | $153,873 | $151,936 | | **Total liabilities** | $311,730 | $299,703 | | **Total TETRA stockholders' equity** | $102,969 | $99,704 | | **Total liabilities and equity** | $413,486 | $398,266 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow improved significantly for the nine months ended September 30, 2022, despite higher investing activities Consolidated Statements of Cash Flows (In Thousands) | (In Thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $25,948 | $10,424 | | **Net cash used in investing activities** | ($28,280) | ($12,164) | | **Net cash used in financing activities** | ($2,771) | ($38,656) | | **Decrease in cash and cash equivalents** | ($6,304) | ($42,031) | | **Cash and cash equivalents at end of period** | $25,247 | $41,863 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's two operating segments, discontinued operations, revenue sources, and a key legal contingency - The company operates through two segments: **Completion Fluids & Products Division** and **Water & Flowback Services Division**[25](index=25&type=chunk) - In January 2021, the company sold the general partner of CSI Compressco, resulting in a primarily non-cash accounting **gain of $120.6 million** reported in discontinued operations[38](index=38&type=chunk) - The company is in arbitration with its bromine supplier, LANXESS Corporation, over a disputed price increase, with an **unpredictable outcome**[62](index=62&type=chunk) Revenue by Geography (in thousands) | Revenue by Geography (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **United States** | $285,508 | $178,983 | | **International** | $120,257 | $96,141 | | **Total Revenue** | **$405,765** | **$275,124** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial results, liquidity, capital resources, and strategic initiatives for its two operating divisions [Business Overview](index=21&type=section&id=Business%20Overview) The company's two segments benefited from strong market conditions while advancing low-carbon energy resource initiatives - The company is focused on bromine-based completion fluids, calcium chloride, water management solutions, and frac flowback services[76](index=76&type=chunk) - A maiden inferred resource estimation for its Arkansas acreage indicated **5.25 million short tons of elemental bromine** and **234,000 short tons of Lithium Carbonate Equivalent (LCE)**[81](index=81&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Sequential revenue decreased due to seasonality, but year-over-year revenue and gross profit grew significantly Consolidated Sequential Comparison (in thousands) | Consolidated Comparison (in thousands) | Q3 2022 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $135,012 | $140,716 | (4.1)% | | **Gross profit** | $29,473 | $28,107 | 4.9% | | **Gross profit %** | 21.8% | 20.0% | - | | **Income before taxes** | $2,115 | $1,280 | 65.2% | Consolidated Year-over-Year Comparison (in thousands) | Consolidated Comparison (in thousands) | 9 Months 2022 | 9 Months 2021 | % Change | | :--- | :--- | :--- | :--- | | **Revenues** | $405,765 | $275,124 | 47.5% | | **Gross profit** | $90,000 | $40,049 | 124.7% | | **Gross profit %** | 22.2% | 14.6% | - | | **Income (loss) before taxes** | $12,329 | ($13,963) | 188.3% | [Non-GAAP Financial Measures](index=29&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA, a key non-GAAP metric, remained stable sequentially at $18.6 million in Q3 2022 - **Adjusted EBITDA** is defined as earnings before interest, taxes, depreciation, amortization, and other non-recurring adjustments[111](index=111&type=chunk) Adjusted EBITDA (in thousands) | Adjusted EBITDA (in thousands) | Q3 2022 | Q2 2022 | | :--- | :--- | :--- | | **Completion Fluids & Products** | $14,703 | $17,705 | | **Water & Flowback Services** | $13,188 | $9,945 | | **Corporate & Other** | ($9,296) | ($8,953) | | **Total Adjusted EBITDA** | **$18,595** | **$18,697** | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position of $92.3 million while funding growth-oriented capital expenditures - **Total liquidity** at the end of Q3 2022 was **$92.3 million**, comprising cash and credit facility availability[114](index=114&type=chunk) - **Capital expenditures** for the first nine months of 2022 were **$32.7 million**, primarily for the Water & Flowback Services Division[117](index=117&type=chunk) - The company holds rights to approximately 40,000 gross acres in Arkansas with an estimated inferred resource of **5.25 million short tons of bromine** and **234,000 short tons of LCE**[120](index=120&type=chunk)[121](index=121&type=chunk) Sources and Uses of Cash (in thousands) | Sources and Uses of Cash (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | **Operating activities** | $25,948 | $10,424 | | **Investing activities** | ($28,280) | ($12,164) | | **Financing activities** | ($2,771) | ($38,656) | [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is primarily exposed to market risks from variable interest rates and foreign currency fluctuations - The company has interest rate risk exposure, with its Term Credit Agreement bearing a **variable rate of 8.77%** as of September 30, 2022[141](index=141&type=chunk)[142](index=142&type=chunk) - The company is exposed to **foreign currency exchange rate risk** from revenues and expenses denominated in various foreign currencies[32](index=32&type=chunk)[143](index=143&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in internal controls - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of the end of the reporting period[144](index=144&type=chunk) - **No material changes** occurred in internal control over financial reporting during the quarter[145](index=145&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is in an ongoing arbitration with a key supplier over a disputed price increase for elemental bromine - The company filed for arbitration against LANXESS Corporation over a **disputed price increase for elemental bromine**[148](index=148&type=chunk)[149](index=149&type=chunk) - LANXESS filed a counterclaim to validate the price increase and seek damages; the **arbitration is currently pending**[150](index=150&type=chunk)[151](index=151&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor related to the Inflation Reduction Act of 2022 could impact demand from oil and gas customers - A new risk factor has been identified related to the **Inflation Reduction Act of 2022 (IRA 2022)**[153](index=153&type=chunk) - The IRA 2022 could accelerate the transition away from fossil fuels and **adversely affect demand** for the company's services from its oil and gas customers[153](index=153&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any of its equity securities during the third quarter of 2022 - The company made **no purchases of its equity securities** during the period from July 1, 2022, to September 30, 2022[155](index=155&type=chunk) [Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - **None** reported[156](index=156&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported for the period - **None** reported[157](index=157&type=chunk) [Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No other material information was reported for the period - **None** reported[158](index=158&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) The report includes required CEO/CFO certifications and financial data files formatted in XBRL - The report includes **certifications pursuant to Sections 302 and 906** of the Sarbanes-Oxley Act of 2002[160](index=160&type=chunk)[161](index=161&type=chunk) - **XBRL financial data files** are attached as exhibits[161](index=161&type=chunk)