TETRA Technologies(TTI) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements This section presents TETRA Technologies, Inc.'s unaudited consolidated financial statements, including statements of operations, comprehensive income, balance sheets, equity, and cash flows, along with detailed notes explaining accounting policies, revenue, inventories, investments, debt, commitments, fair value measurements, net income per share, industry segments, and subsequent events Consolidated Statements of Operations Presents revenues, expenses, and net income for specified periods Three Months Ended June 30, 2025 vs. 2024 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Total Revenues | $173,872 | $171,935 | $1,937 | 1.1% | | Gross Profit | $48,244 | $43,253 | $4,991 | 11.5% | | Net Income Attributable to TETRA Stockholders | $11,305 | $7,643 | $3,662 | 47.9% | | Basic Net Income Per Common Share | $0.08 | $0.06 | $0.02 | 33.3% | | Diluted Net Income Per Common Share | $0.08 | $0.06 | $0.02 | 33.3% | Six Months Ended June 30, 2025 vs. 2024 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Total Revenues | $331,012 | $322,907 | $8,105 | 2.5% | | Gross Profit | $91,150 | $74,355 | $16,795 | 22.6% | | Net Income Attributable to TETRA Stockholders | $15,354 | $8,558 | $6,796 | 79.4% | | Basic Net Income Per Common Share | $0.12 | $0.07 | $0.05 | 71.4% | | Diluted Net Income Per Common Share | $0.12 | $0.06 | $0.06 | 100.0% | Consolidated Statements of Comprehensive Income Details net income and other comprehensive income components Three Months Ended June 30, 2025 vs. 2024 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------------------ | :------------------ | :------------------ | :--------- | :--------- | | Net Income | $11,305 | $7,640 | $3,665 | 48.0% | | Foreign currency translation adjustment | $5,313 | $(1,959) | $7,272 | NM | | Unrealized gain (loss) on investment | $(416) | $(5) | $(411) | NM | | Comprehensive income attributable to TETRA stockholders | $16,202 | $5,679 | $10,523 | 185.3% | Six Months Ended June 30, 2025 vs. 2024 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------------------ | :------------------ | :------------------ | :--------- | :--------- | | Net Income | $15,354 | $8,555 | $6,799 | 79.5% | | Foreign currency translation adjustment | $9,189 | $(3,593) | $12,782 | NM | | Reclassification of non-cash cumulative foreign currency translation adjustment loss from dissolution of Canadian subsidiary | $9,516 | $0 | $9,516 | NM | | Unrealized gain (loss) on investment | $(135) | $232 | $(367) | NM | | Comprehensive income attributable to TETRA stockholders | $33,924 | $5,197 | $28,727 | 552.8% | Consolidated Balance Sheets Provides a snapshot of assets, liabilities, and equity at specific dates As of June 30, 2025 vs. December 31, 2024 | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total Assets | $645,576 | $605,195 | $40,381 | 6.7% | | Total Current Assets | $311,633 | $269,628 | $42,005 | 15.6% | | Cash and Cash Equivalents | $68,749 | $36,987 | $31,762 | 85.9% | | Net Property, Plant and Equipment | $162,385 | $142,160 | $20,225 | 14.2% | | Total Liabilities | $355,958 | $351,888 | $4,070 | 1.2% | | Total Equity | $289,618 | $253,307 | $36,311 | 14.3% | Consolidated Statements of Equity Outlines changes in stockholders' equity, including net income - Total TETRA Stockholders' Equity increased from $253,307 thousand at December 31, 2024, to $289,618 thousand at June 30, 2025[17] - Comprehensive income attributable to TETRA stockholders for the six months ended June 30, 2025, was $33,924 thousand, a significant increase from $5,197 thousand in the prior year[12] Consolidated Statements of Cash Flows Summarizes cash flows from operating, investing, and financing activities Six Months Ended June 30, 2025 vs. 2024 | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :------------------------------------ | :------------------ | :------------------ | :--------- | :--------- | | Net Cash Provided by Operating Activities | $52,268 | $11,015 | $41,253 | 374.5% | | Net Cash Used in Investing Activities | $(18,275) | $(31,041) | $12,766 | (41.1)% | | Net Cash Provided by (Used in) Financing Activities | $(4,584) | $10,978 | $(15,562) | NM | | Increase (Decrease) in Cash and Cash Equivalents | $31,593 | $(9,733) | $41,326 | NM | | Cash, Cash Equivalents and Restricted Cash at End of Period | $68,801 | $42,752 | $26,049 | 60.9% | Notes to Consolidated Financial Statements NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES Describes segments, low-carbon energy expansion, and key accounting adjustments - TETRA Technologies, Inc. operates through two reporting segments: Completion Fluids & Products Division and Water & Flowback Services Division[24] - The company is expanding into the low-carbon energy market, leveraging its chemistry expertise, key mineral acreage (Smackover Formation in Southwest Arkansas for bromine and lithium), and global infrastructure[24][35] - An out-of-period adjustment in Q1 2025 increased income tax benefit by $1.2 million and net income per share by $0.01, deemed immaterial to prior or current annual financial statements[32] - A $9.5 million cumulative foreign currency translation adjustment loss was reclassified from accumulated other comprehensive loss due to the dissolution of a Canadian subsidiary during the six months ended June 30, 2025[36] NOTE 2 – REVENUE Details revenue recognition policies and disaggregates revenue by segment and geography - Contract asset balances decreased from $30.4 million at December 31, 2024, to $22.3 million at June 30, 2025[42] - Unearned income balances increased from $0.4 million at December 31, 2024, to $0.7 million at June 30, 2025[43] Revenue by Segment and Geography (Six Months Ended June 30, 2025 vs. 2024) | Segment/Geography | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Completion Fluids & Products | $202,462 | $177,301 | $25,161 | 14.2% | | Water & Flowback Services | $128,550 | $145,606 | $(17,056) | (11.7)% | | United States Total | $228,273 | $208,472 | $19,801 | 9.5% | | International Total | $102,739 | $114,435 | $(11,696) | (10.2)% | NOTE 3 – INVENTORIES Provides information on the composition and changes in inventory balances - Total inventories increased from $101.7 million at December 31, 2024, to $108.5 million at June 30, 2025[46] - Finished goods inventories were $91.1 million at June 30, 2025, including newly manufactured and recycled clear brine fluids[46] - Raw materials increased from $1.6 million at December 31, 2024, to $5.4 million at June 30, 2025[46] NOTE 4 – INVESTMENTS Outlines investment holdings, including sales and strategic lithium interests - Total investments decreased from $28.2 million at December 31, 2024, to $9.0 million at June 30, 2025[47] - The company sold its Kodiak Gas Services, Inc. shares in January 2025 for $19.0 million, realizing a net gain of $0.6 million[47] - TETRA holds investments in Standard Lithium, with rights to explore and an option to acquire lithium production rights in Arkansas leases, entitling TETRA to a 2.5% royalty on gross revenues from lithium produced[48][133] NOTE 5 – LONG-TERM DEBT AND OTHER BORROWINGS Details debt structure, interest rates, and covenant compliance - Total long-term debt was $180.5 million as of June 30, 2025, primarily from the Term Credit Agreement[51] - The Term Credit Agreement matures on January 1, 2030, with an interest rate of SOFR plus 5.75% (10.17% as of June 30, 2025), and includes a $75 million delayed-draw term loan for the Arkansas bromine processing project[52] - As of June 30, 2025, the company had $55.4 million available under its ABL Credit Agreement and was in compliance with all credit agreement covenants[57][62] NOTE 6 – COMMITMENTS AND CONTINGENCIES Describes contractual obligations, legal proceedings, and potential liabilities - Product purchase obligations totaled approximately $44.5 million as of June 30, 2025, extending through 2028, with an additional $22.3 million committed for long-lead power infrastructure for the Arkansas bromine plant[65] - The company faces significant contingencies related to decommissioning liabilities from its former Offshore segment, including a lawsuit against Orinoco and the Clarkes to enforce bonding agreements, with a new trial granted[66][67][68] - A potential liability ranging from $5.8 million to $19.4 million is estimated for certain Gulf of America decommissioning work, with $5.8 million accrued in 2024, and Arena Energy, LLC has filed a complaint seeking indemnification[69][71] NOTE 7 – FAIR VALUE MEASUREMENTS Explains valuation methodologies for financial instruments by hierarchy levels - Investments in Standard Lithium are classified as Level 1 fair value measurements ($1.6 million at June 30, 2025) based on quoted market prices[75] - Other investments ($7.4 million at June 30, 2025) in privately-held companies (convertible notes, common units, preferred units) are classified as Level 3, valued using internal valuations and third-party specialists[73][75] - For the six months ended June 30, 2025, changes in fair value included a $223 thousand unrealized gain on equity securities, an $(883) thousand unrealized loss on embedded options, and a $(135) thousand unrealized loss on convertible notes (excluding embedded options)[75] NOTE 8 – NET INCOME PER SHARE Presents the calculation of basic and diluted net income per common share Weighted Average Shares Outstanding (in thousands) | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :----------------------------------- | :------------------------------- | :----------------------------- | | Weighted average basic shares outstanding | 133,152 | 132,753 | | Weighted average diluted shares outstanding | 133,422 | 133,371 | NOTE 9 – INDUSTRY SEGMENTS Provides financial performance data disaggregated by operating segments Segment Revenue (Six Months Ended June 30, 2025 vs. 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Completion Fluids & Products | $202,462 | $177,301 | $25,161 | 14.2% | | Water & Flowback Services | $128,550 | $145,606 | $(17,056) | (11.7)% | Segment Net Income (Loss) Before Taxes (Six Months Ended June 30, 2025 vs. 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Completion Fluids & Products | $68,809 | $46,445 | $22,364 | 48.2% | | Water & Flowback Services | $(10,158) | $3,877 | $(14,035) | (362.0)% | Segment Capital Expenditures (Six Months Ended June 30, 2025 vs. 2024) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Completion Fluids & Products | $27,514 | $17,902 | $9,612 | 53.7% | | Water & Flowback Services | $9,848 | $12,952 | $(3,104) | (24.0)% | NOTE 10 – SUBSEQUENT EVENTS Discloses significant events occurring after the balance sheet date - The company is evaluating the impact of the recently signed 'One Big Beautiful Bill Act' (OBBBA) on its effective tax rate or cash flows[84] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on TETRA's financial condition and operational results, covering business overview, detailed analysis of quarterly and year-to-date performance by segment, non-GAAP financial measures, liquidity, capital resources, and critical accounting policies. It highlights revenue growth driven by the Completion Fluids & Products Division, strategic initiatives in low-carbon energy, and efforts to manage costs and liquidity Business Overview TETRA is an energy services and solutions company expanding into the low-carbon energy market, leveraging its chemistry expertise, bromine and lithium assets, and global infrastructure - TETRA is an energy services and solutions company expanding into the low-carbon energy market, leveraging its chemistry expertise, bromine and lithium assets, and global infrastructure[86] - Consolidated revenue for the first six months of 2025 increased due to strong performance in the Completion Fluids & Products Division, offsetting weaker United States onshore activity in the Water & Flowback Services Division[87] - Strategic initiatives include ongoing negotiations for bromine bridging supply agreements to defer Arkansas investments, advancing the first phase of the Arkansas bromine plant by year-end, and prioritizing TETRA CS Neptune fluids, TETRA PureFlow+ electrolyte, and TETRA Oasis Total Desalination Solution (TDS)[90][91] Results of Operations Three months ended June 30, 2025 compared with three months ended March 31, 2025. Consolidated Comparisons Compares overall financial performance for Q2 2025 against Q1 2025 Consolidated Performance (Q2 2025 vs. Q1 2025) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | $ Change | % Change | | :-------------------------------- | :----------------------------- | :---------------------------- | :------- | :------- | | Revenues | $173,872 | $157,140 | $16,732 | 10.6% | | Gross profit | $48,244 | $42,906 | $5,338 | 12.4% | | Net income attributable to TETRA stockholders | $11,305 | $4,049 | $7,256 | 179.2% | - Consolidated other (income) expense, net, changed significantly due to the recognition of a $9.5 million cumulative currency translation adjustment loss in Q1 2025 and increased foreign exchange gains in Brazil[95] - Consolidated provision for income tax increased to $8.1 million from $1.0 million in the prior quarter, primarily due to higher income before taxes and a $1.2 million out-of-period tax benefit recognized in Q1 2025[96] Completion Fluids & Products Division Analyzes Q2 2025 performance, highlighting revenue and profit drivers Completion Fluids & Products Division Performance (Q2 2025 vs. Q1 2025) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | $ Change | % Change | | :-------------------------------- | :----------------------------- | :---------------------------- | :------- | :------- | | Revenues | $109,445 | $93,018 | $16,427 | 17.7% | | Gross profit | $44,637 | $36,526 | $8,111 | 22.2% | | Gross profit as a percentage of revenue | 40.8% | 39.3% | 1.5 pp | 3.8% | | Net income before taxes | $38,133 | $30,677 | $7,456 | 24.3% | - Revenue growth was driven by the successful completion of CS Neptune wells in the Gulf of America, seasonally strong calcium chloride business in Northern Europe, higher completion fluids sales in South America, and increased TETRA PureFlow+ electrolyte sales in the U.S[97] - Profit margins improved due to changes in product mix, particularly higher-margin CS Neptune fluid sales[98] Water & Flowback Services Division Reviews Q2 2025 performance, noting revenue and profit changes Water & Flowback Services Division Performance (Q2 2025 vs. Q1 2025) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | $ Change | % Change | | :-------------------------------- | :----------------------------- | :---------------------------- | :------- | :------- | | Revenues | $64,427 | $64,122 | $305 | 0.5% | | Gross profit | $3,701 | $6,474 | $(2,773) | (42.8)% | | Gross profit as a percentage of revenue | 5.7% | 10.1% | (4.4 pp) | (43.6)% | | Net loss before taxes | $(1,271) | $(8,888) | $7,617 | 85.7% | - Gross profit declined due to a weaker market environment and costs associated with closing underperforming service lines in the United States[101] - The decrease in net loss before taxes was primarily due to the Q1 2025 cumulative currency translation adjustment loss and a $0.9 million decrease in general and administrative expense from cost reduction efforts[102] Corporate Overhead Examines changes in corporate overhead and net loss before taxes for Q2 2025 Corporate Overhead Performance (Q2 2025 vs. Q1 2025) | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | $ Change | % Change | | :-------------------------------- | :----------------------------- | :---------------------------- | :------- | :------- | | General and administrative expense | $13,544 | $11,716 | $1,828 | 15.6% | | Net loss before taxes | $(17,426) | $(16,703) | $723 | 4.3% | - Net loss before taxes increased primarily due to a $1.8 million increase in general and administrative expenses and a $0.6 million increase in unrealized losses on investments, partially offset by a $0.9 million increase in foreign exchange gains[103] Six months ended June 30, 2025 compared with six months ended June 30, 2024. Consolidated Comparisons Compares overall financial performance for YTD June 30, 2025, against 2024 Consolidated Performance (YTD June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | $ Change | % Change | | :-------------------------------- | :------------------ | :------------------ | :------- | :------- | | Revenues | $331,012 | $322,907 | $8,105 | 2.5% | | Gross profit | $91,150 | $74,355 | $16,795 | 22.6% | | Net income before taxes | $24,522 | $13,774 | $10,748 | 78.0% | | Net income attributable to TETRA stockholders | $15,354 | $8,558 | $6,796 | 79.4% | - Loss on debt extinguishment decreased by $5.5 million (100%) due to non-cash unamortized finance costs expensed in January 2024[107] - Other (income) expense, net, changed significantly due to a $5.7 million increase in foreign exchange loss (including the Canadian subsidiary dissolution) and a $2.9 million decrease in net unrealized gains on investments[108] Divisional Comparisons Completion Fluids & Products Division Analyzes YTD 2025 performance, detailing revenue and profit growth Completion Fluids & Products Division Performance (YTD June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | $ Change | % Change | | :-------------------------------- | :------------------ | :------------------ | :------- | :------- | | Revenues | $202,462 | $177,301 | $25,161 | 14.2% | | Gross profit | $81,162 | $60,062 | $21,100 | 35.1% | | Net income before taxes | $68,809 | $46,445 | $22,364 | 48.2% | - Revenue growth was primarily driven by three CS Neptune wells in the Gulf of America, higher Northern Europe industrial chemical sales, and North America ultra-pure zinc bromide electrolyte sales[110] - Profit margins improved due to changes in product mix, including higher-margin CS Neptune fluid sales[111] Water & Flowback Services Division Reviews YTD 2025 performance, noting revenue and profit declines Water & Flowback Services Division Performance (YTD June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | $ Change | % Change | | :-------------------------------- | :------------------ | :------------------ | :------- | :------- | | Revenues | $128,550 | $145,606 | $(17,056) | (11.7)% | | Gross profit | $10,176 | $14,458 | $(4,282) | (29.6)% | | Net income (loss) before taxes | $(10,158) | $3,877 | $(14,035) | (362.0)% | - Revenue decreased due to lower United States drilling and completion activity and reduced service revenues following the sale of early production facilities in Latin America in 2024[113] - The shift to a net loss before taxes was primarily due to the $9.5 million cumulative currency translation adjustment loss from the dissolution of a Canadian subsidiary and a $1.6 million increase in general and administrative expense[115] Corporate Overhead Examines changes in corporate overhead and net loss before taxes for YTD 2025 Corporate Overhead Performance (YTD June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | $ Change | % Change | | :-------------------------------- | :------------------ | :------------------ | :------- | :------- | | Net loss before taxes | $(34,129) | $(36,548) | $(2,419) | (6.6)% | | Loss on debt extinguishment | $0 | $5,535 | $(5,535) | (100.0)% | | Interest expense, net | $9,329 | $12,397 | $(3,068) | (24.7)% | | General and administrative expense | $25,260 | $21,790 | $3,470 | 15.9% | - The decrease in net loss before taxes was primarily due to the absence of a $5.5 million loss from early debt extinguishment in 2024 and a $3.1 million decrease in interest expense, net, partially offset by a $3.5 million increase in general and administrative expenses[116] Non-GAAP Financial Measures Adjusted EBITDA is defined as net income (loss) before taxes, excluding impairments, special charges, loss on debt extinguishment, interest, depreciation and amortization, equity-based compensation, and certain foreign currency translation adjustments - Adjusted EBITDA is defined as net income (loss) before taxes, excluding impairments, special charges, loss on debt extinguishment, interest, depreciation and amortization, equity-based compensation, and certain foreign currency translation adjustments[118] Adjusted EBITDA (Three Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :---------------- | :------------------ | :------------------ | :--------- | :--------- | | Total Adjusted EBITDA | $35,879 | $30,234 | $5,645 | 18.7% | | Adjusted EBITDA as % of revenue | 20.6% | 17.6% | 3.0 pp | 17.0% | Adjusted EBITDA (Six Months Ended June 30, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change ($) | Change (%) | | :---------------- | :------------------ | :------------------ | :--------- | :--------- | | Total Adjusted EBITDA | $68,146 | $59,001 | $9,145 | 15.5% | | Adjusted EBITDA as % of revenue | 20.6% | 18.3% | 2.3 pp | 12.6% | Liquidity and Capital Resources Liquidity was $204.5 million at June 30, 2025, comprising unrestricted cash and available credit under the Term Credit Agreement and other credit facilities - Liquidity was $204.5 million at June 30, 2025, comprising unrestricted cash and available credit under the Term Credit Agreement and other credit facilities[123] - Net cash provided by operating activities increased significantly to $52.3 million for the six months ended June 30, 2025, from $11.0 million in the prior year, driven by higher gross profit and working capital changes[124][125] - Total cash capital expenditures were $37.4 million for the first six months of 2025, including $22.0 million for the advancement of Arkansas brine resource development[126] - The company received $19.0 million in proceeds from the sale of Kodiak shares and filed a universal shelf Registration Statement on Form S-3, effective May 2025, allowing for the sale of up to $400 million in debt or equity securities[127][134] - TETRA is entitled to a 2.5% royalty on gross revenues from lithium produced by Standard Lithium from TETRA's option acreage in Arkansas, and retains rights to bromine and other minerals[133] Critical Accounting Policies and Estimates There have been no material changes or developments in the evaluation of the accounting estimates and underlying assumptions or methodologies pertaining to the company's Critical Accounting Policies and Estimates disclosed in its 2024 Annual Report - There have been no material changes or developments in the evaluation of the accounting estimates and underlying assumptions or methodologies pertaining to the company's Critical Accounting Policies and Estimates disclosed in its 2024 Annual Report[137] Commitments and Contingencies For detailed information on litigation, long-term debt, leases, and product and asset purchase obligations, refer to Note 6 - 'Commitments and Contingencies' in the Notes to Consolidated Financial Statements - For detailed information on litigation, long-term debt, leases, and product and asset purchase obligations, refer to Note 6 - 'Commitments and Contingencies' in the Notes to Consolidated Financial Statements[138][139][140][141] Cautionary Statement for Purposes of Forward-Looking Statements The report contains forward-looking statements identifiable by words such as 'anticipates,' 'believes,' 'expects,' and 'plans,' which reflect current views but are subject to numerous risks and uncertainties - The report contains forward-looking statements identifiable by words such as 'anticipates,' 'believes,' 'expects,' and 'plans,' which reflect current views but are subject to numerous risks and uncertainties[142][143] - Key risks include economic and operating conditions, capital availability, inflation, geopolitical events (e.g., Russia-Ukraine, Israel-Iran conflicts, Strait of Hormuz), regulatory changes, cyberattacks, and uncertainties related to mineral extraction (lithium, bromine) and facility construction[143][144] - Investors are cautioned that mineral resources do not have demonstrated economic value, and there are uncertainties regarding the successful and economic commercialization of lithium and bromine from the Evergreen Brine Unit[144] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section details TETRA's exposure to market risks, specifically interest rate risk on its borrowings and foreign currency exchange rate risk from international operations, and outlines the company's approach to managing these risks Interest Rate Risk Details the company's exposure to interest rate fluctuations on its debt and hedging strategies - The Term Credit Agreement bears interest at SOFR plus 5.75% (10.17% as of June 30, 2025) on a principal amount of $190.0 million[147][148] - The company is not a party to interest rate swap contracts or other derivative instruments to hedge its exposure to interest rate fluctuations[147] Exchange Rate Risk Describes the company's exposure to foreign currency exchange rate fluctuations - TETRA has currency exchange rate risk exposure related to revenues, expenses, operating receivables, and payables denominated in foreign currencies[149] - The company may use short-term foreign-currency forward derivative contracts as economic hedges, but these are not formally designated for hedge accounting; no such contracts were outstanding as of June 30, 2025[149] Item 4. Controls and Procedures Management, including the Chief Executive Officer and Chief Financial Officer, concluded that TETRA's disclosure controls and procedures were effective as of June 30, 2025, and reported no material changes to internal controls over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[150] - There were no changes in internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, internal controls during the quarter ended June 30, 2025[151] PART II—OTHER INFORMATION Item 1. Legal Proceedings This section refers to the company's 2024 Annual Report and Note 6 of the current report for detailed information regarding legal proceedings - For information regarding litigation, refer to 'Item 3. Legal Proceedings' in the 2024 Annual Report and Note 6 - 'Commitments and Contingencies' in the Notes to Consolidated Financial Statements[154] Item 1A. Risk Factors This section reiterates that TETRA's operations are subject to previously disclosed risk factors, with an added emphasis on how current geopolitical events and macroeconomic conditions could adversely affect the business, including demand for services, commodity prices, and supply chains - TETRA's operations continue to be subject to the risk factors previously disclosed in the 'Risk Factors' sections of its 2024 Annual Report[155] - Current geopolitical events (e.g., military conflicts in Russia-Ukraine, Israel-Iran, and impact on the Strait of Hormuz) and macroeconomic conditions could adversely affect the business, financial condition, and results of operations due to oil and natural gas price volatility, supply chain disruptions, and capital market constraints[156] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds during the reporting period - None[157] Item 3. Defaults Upon Senior Securities This section reports that there were no defaults upon senior securities during the reporting period - None[158] Item 4. Mine Safety Disclosures This section indicates that there are no mine safety disclosures to report - None[159] Item 5. Other Information This section states that 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 June 30, 2025 - No director or officer of TETRA adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[160] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, equity incentive plans, certifications, and XBRL taxonomy documents, providing transparency into supporting legal and financial information - Exhibits include organizational documents (Certificate of Designation, Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws), equity incentive plans, and related award agreements[161] - Certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed or furnished with the report[161] - XBRL Taxonomy Extension documents (Schema, Calculation, Definition, Label, Presentation Linkbase Documents) are attached as Exhibit 101[161][162] SIGNATURES This section contains the required signatures of the company's principal executive and financial officers, certifying the accuracy and completeness of the Quarterly Report on Form 10-Q - The report is signed by Brady M. Murphy, President and Chief Executive Officer, and Elijio V. Serrano, Senior Vice President and Chief Financial Officer, on July 29, 2025[166]