Tetra Technologies Inc 10-Q for FY2021 Q1
Tetra Technologies Inc (TTI)
10-Q
2021-05-05
For: 2021-03-31
View Original
Added on
April 11, 2026
About this 10-Q
Tetra Technologies Inc filed this 10-Q on May 5, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).
Headline figures
Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $77.32M
- down 41.7% from $132.7M a year earlier
- Net income
- $108.71M
- compared with a net loss of $1.55M a year earlier
- Diluted EPS
- $0.86
- compared with -$0.01 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended March 31, 2021
or
For the transition period from to .
Commission File Number 1-13455
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||
(281 ) 367-1983
(Registrant’s Telephone Number, Including Area Code)
_______________________________________________________________________
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 3, 2021, there were 126,587,492 shares outstanding of the Company’s Common Stock, $0.01 par value per share.
| TETRA Technologies, Inc. and Subsidiaries | |||||
| Table of Contents | |||||
| Page | |||||
| PART I—FINANCIAL INFORMATION | |||||
| PART II—OTHER INFORMATION | |||||
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
Product sales | $ | $ | |||||||||||||||||||||
Services | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||||
Cost of product sales | |||||||||||||||||||||||
Cost of services | |||||||||||||||||||||||
Depreciation, amortization, and accretion | |||||||||||||||||||||||
Insurance recoveries | ( | ||||||||||||||||||||||
Total cost of revenues | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
| General and administrative expense | |||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Warrants fair value adjustment expense (income) | ( | ||||||||||||||||||||||
| Other (income) expense, net | ( | ||||||||||||||||||||||
| (Loss) income before taxes and discontinued operations | ( | ||||||||||||||||||||||
| Provision for income taxes | |||||||||||||||||||||||
| (Loss) income before discontinued operations | ( | ||||||||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||
| Income (loss) from discontinued operations, net of taxes | ( | ||||||||||||||||||||||
| Net income (loss) | ( | ||||||||||||||||||||||
| Less: (income) loss attributable to noncontrolling interest ($333 income in 2021 and $8,834 loss in 2020 related to discontinued operations) | ( | ||||||||||||||||||||||
| Net income (loss) attributable to TETRA stockholders | $ | $ | ( | ||||||||||||||||||||
| Basic net income (loss) per common share: | |||||||||||||||||||||||
| (Loss) income from continuing operations attributable to TETRA stockholders | $ | ( | $ | ||||||||||||||||||||
| Income (loss) from discontinued operations attributable to TETRA stockholders | ( | ||||||||||||||||||||||
| Net income (loss) attributable to TETRA stockholders | $ | $ | ( | ||||||||||||||||||||
| Average shares outstanding | |||||||||||||||||||||||
| Diluted net income (loss) per common share: | |||||||||||||||||||||||
| (Loss) income from continuing operations attributable to TETRA stockholders | $ | ( | $ | ||||||||||||||||||||
| Income (loss) from discontinued operations attributable to TETRA stockholders | ( | ||||||||||||||||||||||
| Net income (loss) attributable to TETRA stockholders | $ | $ | ( | ||||||||||||||||||||
| Average diluted shares outstanding | |||||||||||||||||||||||
See Notes to Consolidated Financial Statements
1
TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(In Thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | ||||||||||||||||||||
Foreign currency translation adjustment from continuing operations, net of taxes of $ | ( | ( | |||||||||||||||||||||
| Comprehensive income (loss) | ( | ||||||||||||||||||||||
| Less: Comprehensive (loss) income attributable to noncontrolling interest | ( | ||||||||||||||||||||||
| Comprehensive income (loss) attributable to TETRA stockholders | $ | $ | ( | ||||||||||||||||||||
See Notes to Consolidated Financial Statements
2
TETRA Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
| March 31, 2021 | December 31, 2020 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Trade accounts receivable, net of allowances of $ | |||||||||||
Inventories | |||||||||||
Assets of discontinued operations | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
| Property, plant, and equipment: | |||||||||||
Land and building | |||||||||||
Machinery and equipment | |||||||||||
Automobiles and trucks | |||||||||||
Chemical plants | |||||||||||
Construction in progress | |||||||||||
Total property, plant, and equipment | |||||||||||
Less accumulated depreciation | ( | ( | |||||||||
Net property, plant, and equipment | |||||||||||
| Other assets: | |||||||||||
Patents, trademarks and other intangible assets, net of accumulated amortization of $ | |||||||||||
Deferred tax assets, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
| Investments | |||||||||||
Other assets | |||||||||||
Total other assets | |||||||||||
| Total assets | $ | $ | |||||||||
See Notes to Consolidated Financial Statements
3
TETRA Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share Amounts)
| March 31, 2021 | December 31, 2020 | ||||||||||
| (Unaudited) | |||||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
Trade accounts payable | $ | $ | |||||||||
Unearned income | |||||||||||
Accrued liabilities and other | |||||||||||
Liabilities of discontinued operations | |||||||||||
| Current portion of long-term debt | |||||||||||
Total current liabilities | |||||||||||
| Long-term debt, net | |||||||||||
| Deferred income taxes | |||||||||||
| Asset retirement obligations | |||||||||||
| Warrants liability | |||||||||||
| Operating lease liabilities | |||||||||||
| Other liabilities | |||||||||||
Total long-term liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Equity: | |||||||||||
| TETRA stockholders’ equity: | |||||||||||
Common stock, par value | |||||||||||
Additional paid-in capital | |||||||||||
Treasury stock, at cost; | ( | ( | |||||||||
| Accumulated other comprehensive (loss) | ( | ( | |||||||||
Retained deficit | ( | ( | |||||||||
| Total TETRA stockholders’ equity | ( | ||||||||||
Noncontrolling interests | ( | ||||||||||
Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
See Notes to Consolidated Financial Statements
4
TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Equity
(In Thousands)
(Unaudited)
| Common Stock Par Value | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Retained Deficit | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||
| Currency Translation | |||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||
| Net income for first quarter 2021 | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Translation adjustment, net of taxes of $ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||||||||||||||||||||
Deconsolidation of CSI Compressco | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||
| Equity award activity | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Treasury stock activity, net | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Equity compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Other | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||
| Common Stock Par Value | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Deficit | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||
| Currency Translation | |||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||
| Net loss for first quarter 2020 | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||
Translation adjustment, net of taxes of $ | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Comprehensive loss | ( | ||||||||||||||||||||||||||||||||||||||||
| Distributions to public unitholders | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Equity award activity | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Treasury stock activity, net | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
| Equity compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Other | — | ( | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||
See Notes to Consolidated Financial Statements
5
TETRA Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands, Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| Operating activities: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Reconciliation of net income (loss) to net cash provided by operating activities: | |||||||||||
Depreciation, amortization, and accretion | |||||||||||
| Gain on GP Sale | ( | ||||||||||
Impairment and other charges | |||||||||||
Gain on retained CSI Compressco units and Standard Lithium shares | ( | ||||||||||
Equity-based compensation expense | |||||||||||
| Amortization and expense of financing costs and deferred financing gains | |||||||||||
| Debt-related expenses | |||||||||||
Warrants fair value adjustment | ( | ||||||||||
Gain on sale of assets | ( | ( | |||||||||
| Other non-cash charges | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | |||||||||||
Inventories | ( | ||||||||||
Prepaid expenses and other current assets | ( | ( | |||||||||
Trade accounts payable and accrued expenses | |||||||||||
Other | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
| Investing activities: | |||||||||||
Purchases of property, plant, and equipment, net | ( | ( | |||||||||
| Proceeds from sale of CCLP, net of cash divested | |||||||||||
Proceeds on sale of property, plant, and equipment | |||||||||||
Insurance recoveries associated with damaged equipment | |||||||||||
Other investing activities | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Financing activities: | |||||||||||
Proceeds from long-term debt | |||||||||||
Principal payments on long-term debt | ( | ( | |||||||||
CSI Compressco distributions | ( | ||||||||||
Tax remittances on equity based compensation | ( | ||||||||||
| Repurchase of common stock | ( | ||||||||||
Debt issuance costs and other financing activities | ( | ( | |||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash | ( | ( | |||||||||
| (Decrease) increase in cash and cash equivalents | ( | ||||||||||
| Cash and cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash and cash equivalents at beginning of period associated with discontinued operations | |||||||||||
| Cash and cash equivalents and restricted cash at beginning of period associated with continuing operations | |||||||||||
| Cash and cash equivalents and restricted cash at end of period | |||||||||||
| Cash and cash equivalents at end of period associated with discontinued operations | |||||||||||
| Cash and cash equivalents and restricted cash at end of period associated with continuing operations | $ | $ | |||||||||
See Notes to Consolidated Financial Statements
6
TETRA Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES
Organization
We are a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, water management, frac flowback and production well testing. We were incorporated in Delaware in 1981. We are composed of two divisions – Completion Fluids & Products and Water & Flowback Services. Unless the context requires otherwise, when we refer to “we,” “us,” and “our,” we are describing TETRA Technologies, Inc. and its consolidated subsidiaries on a consolidated basis.
Presentation
Our unaudited consolidated financial statements include the accounts of our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The information furnished reflects all normal recurring adjustments, which are, in the opinion of management, necessary to provide a fair statement of the results for the interim periods. Operating results for the period ended March 31, 2021 are not necessarily indicative of results that may be expected for the twelve months ended December 31, 2021.
Significant Accounting Policies
Our significant accounting policies are described in the notes to our consolidated financial statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K. There have been no significant changes in our accounting policies or the application thereof during the first quarter of 2021.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, and impairments during the reporting period. Actual results could differ from those estimates, and such differences could be material.
Reclassifications
Certain previously reported financial information has been reclassified to conform to the current year's presentation. For a discussion of the reclassification of the financial presentation of our former Compression Division as discontinued operations, see Note 2 - “Discontinued Operations”. Other than the discontinued operations presentation, the impact of reclassifications was not significant to the prior year's overall presentation. Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate solely to continuing operations and exclude all discontinued operations.
Impairments and Other Charges
Impairments of long-lived assets, including identified intangible assets, are determined periodically when indicators of impairment are present. If such indicators are present, the determination of the amount of impairment is based on our judgment as to the future undiscounted operating cash flows to be generated from the relevant assets throughout their remaining estimated useful lives. If these undiscounted cash flows are less than the carrying amount of the related assets, an impairment is recognized for the excess of the carrying value over fair value. Fair
7
Foreign Currency Translation
We have designated the euro, the British pound, the Norwegian krone, the Canadian dollar, the Brazilian real, and the Mexican peso as the functional currencies for our operations in Finland and Sweden, the United Kingdom, Norway, Canada, Brazil, and certain of our operations in Mexico, respectively. The United States dollar is the designated functional currency for all of our other non-U.S. operations. The cumulative translation effects of translating the applicable accounts from the functional currencies into the United States dollar at current exchange rates are included as a separate component of equity. Foreign currency exchange (gains) and losses are included in other (income) expense, net and totaled $(0.6 ) million and $0.2 million during the three months ended March 31, 2021 and March 31, 2020, respectively.
Fair Value Measurements
We utilize fair value measurements to account for certain items and account balances within our consolidated financial statements. Fair value measurements are utilized on a recurring basis in the determination of the carrying values of certain assets, including our interest in Standard Lithium Ltd. (“Standard Lithium”) and our retained interest in CSI Compressco and liabilities, including the liabilities for the warrants to purchase 11.2 million shares of our common stock (the “Warrants”). See Note 9 - “Fair Value Measurements” for further discussion.
8
Supplemental Cash Flow Information
Supplemental cash flow information from continuing and discontinued operations is as follows:
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (in thousands) | |||||||||||
Supplemental cash flow information(1): | |||||||||||
Interest paid | $ | $ | |||||||||
Income taxes paid | |||||||||||
| Decrease in accrued capital expenditures | |||||||||||
(1) Prior-year information includes the activity for CSI Compressco for the full period. Current-year information includes activity for CSI Compressco for January only.
New Accounting Pronouncements
Standards adopted in 2021
In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions related to intraperiod tax allocation, interim period income tax calculation methodology, and the recognition of deferred tax liabilities for outside basis differences. It also simplifies certain aspects of accounting for franchise taxes and clarifies the accounting for transactions that results in a step-up in the tax basis of goodwill. On January 1, 2021, we adopted ASU 2019-12. The adoption of this standard did not have a material impact on our consolidated financial statements.
Standards not yet adopted
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses on financial instruments not accounted for at fair value through net income. The provisions require credit impairments to be measured over the contractual life of an asset and developed with consideration for past events, current conditions, and forecasts of future economic information. Credit impairment will be accounted for as an allowance for credit losses deducted from the amortized cost basis at each reporting date. We are continuing to work through our implementation plan which includes evaluating the impact on our allowance for doubtful accounts methodology, identifying new reporting requirements, and implementing changes to business processes, systems, and controls to support adoption of the standard. Upon adoption, the allowance for doubtful accounts is expected to increase with an offsetting adjustment to retained earnings. Updates at each reporting date after initial adoption will be recorded through selling, general, and administrative expense. ASU 2016-13 has an effective date of the first quarter of fiscal 2023. We continue to assess the potential effects of these changes to our consolidated financial statements.
9
NOTE 2 – DISCONTINUED OPERATIONS
On January 29, 2021, we entered into the Purchase and Sale Agreement with Spartan Energy Partners, LP (“Spartan”) pursuant to which we sold the general partner of CSI Compressco, including the IDRs in CSI Compressco and approximately 23.1 % of the outstanding limited partner interests in CSI Compressco, in exchange for the combination of $13.4 million in cash paid at closing, $0.5 million in cash payable on the six-month anniversary of the closing and $3.1 million in contingent consideration in the form of cash and/or CSI Compressco common units if CSI Compressco achieves certain financial targets on or before December 31, 2022. Throughout this Quarterly Report, we refer to the transaction with Spartan as the “GP Sale.” As a result of these transactions, we no longer consolidate CSI Compressco as of January 29, 2021. We recognized a primarily non-cash accounting gain of $120.6 million during the first quarter of 2021 related to the GP Sale. The gain is included in income (loss) from discontinued operations, net of taxes in our consolidated statement of operations. We will also continue to provide back-office support to CSI Compressco under a Transition Services Agreement for up to one year until CSI Compressco has completed a full separation from our back-office support functions.
Our interest in CSI Compressco and the general partner represented substantially all of our Compression Division. In addition, on March 1, 2018, we closed a series of related transactions that resulted in the disposition of our Offshore Division, consisting of our Offshore Services and Maritech segments. Our former Compression and Offshore Divisions are reported as discontinued operations for all periods presented. Our consolidated balance sheets and consolidated statements of operations report discontinued operations separate from continuing operations. Our consolidated statements of comprehensive income, statements of equity and statements of cash flows combine continuing and discontinued operations. Our current-year consolidated statement of operations, statement of comprehensive income, statement of equity and statement of cash flows include CSI Compressco activity for January 1 through January 29. Our consolidated statements of cash flows for the three-month periods ended March 31, 2021 and March 31, 2020 included $3.0 million and $6.5 million, respectively, of capital expenditures related to our former Compression division, as well as amortization of deferred financing discounts, costs and gains of $0.7 million for the three-month period ended March 31, 2020. Our current-year results do not include CSI Compressco depreciation or amortization as the assets were considered held for sale. A summary of financial information related to our discontinued operations is as follows:
Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations
(in thousands)
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Compression | Offshore Services | Total | |||||||||||||||||||||||||||||||||||||||
| Major classes of line items constituting income from discontinued operations | |||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Cost of revenues | |||||||||||||||||||||||||||||||||||||||||
| General and administrative expense | ( | ||||||||||||||||||||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||||||||||||||||||||
| Other expense, net | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Pretax income (loss) from discontinued operations | ( | ||||||||||||||||||||||||||||||||||||||||
| Pretax gain on disposal of discontinued operations | |||||||||||||||||||||||||||||||||||||||||
| Total pretax income from discontinued operations | |||||||||||||||||||||||||||||||||||||||||
| Income tax provision | |||||||||||||||||||||||||||||||||||||||||
| Total income from discontinued operations | $ | ||||||||||||||||||||||||||||||||||||||||
| Income from discontinued operations attributable to noncontrolling interest | $ | ( | |||||||||||||||||||||||||||||||||||||||
| Income from discontinued operations attributable to TETRA stockholders | $ | ||||||||||||||||||||||||||||||||||||||||
10
| Three Months Ended March 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
| Compression | Offshore Services | Total | |||||||||||||||||||||||||||||||||||||||
| Major classes of line items constituting loss from discontinued operations | |||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Cost of revenues | ( | ||||||||||||||||||||||||||||||||||||||||
| Depreciation, amortization, and accretion | |||||||||||||||||||||||||||||||||||||||||
| Impairments and other charges | |||||||||||||||||||||||||||||||||||||||||
| General and administrative expense | |||||||||||||||||||||||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||||||||||||||||||||
| Other expense, net | |||||||||||||||||||||||||||||||||||||||||
| Pretax (loss) from discontinued operations | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Income tax provision | |||||||||||||||||||||||||||||||||||||||||
| Total loss from discontinued operations | $ | ( | |||||||||||||||||||||||||||||||||||||||
| Loss from discontinued operations attributable to noncontrolling interest | $ | ||||||||||||||||||||||||||||||||||||||||
| Loss from discontinued operations attributable to TETRA stockholders | $ | ( | |||||||||||||||||||||||||||||||||||||||
Reconciliation of Major Classes of Assets and Liabilities of the Discontinued Operations to Amounts Presented Separately in the Statement of Financial Position
(in thousands)
| March 31, 2021 | |||||||||||||||||||||||
| Offshore Services | Maritech | Total | |||||||||||||||||||||
| Carrying amounts of major classes of liabilities included as part of discontinued operations | |||||||||||||||||||||||
| Trade payables | $ | $ | $ | ||||||||||||||||||||
| Accrued liabilities and other | |||||||||||||||||||||||
| Total liabilities associated with discontinued operations | $ | $ | $ | ||||||||||||||||||||
| December 31, 2020 | |||||||||||||||||||||||
| Compression | Offshore Services | Maritech | Total | ||||||||||||||||||||
| Carrying amounts of major classes of assets included as part of discontinued operations | |||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
| Trade receivables | |||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||
| Other current assets | |||||||||||||||||||||||
| Property, plant, and equipment | |||||||||||||||||||||||
| Other assets | |||||||||||||||||||||||
| Total assets associated with discontinued operations | $ | $ | $ | $ | |||||||||||||||||||
| Carrying amounts of major classes of liabilities included as part of discontinued operations | |||||||||||||||||||||||
| Trade payables | $ | $ | $ | $ | |||||||||||||||||||
| Unearned Income | |||||||||||||||||||||||
| Accrued liabilities and other | |||||||||||||||||||||||
| Long-term debt, net | |||||||||||||||||||||||
| Other liabilities | |||||||||||||||||||||||
| Total liabilities associated with discontinued operations | $ | $ | $ | $ | |||||||||||||||||||
11
NOTE 3 – REVENUE FROM CONTRACTS WITH CUSTOMERS
Our contract asset balances, primarily associated with customer documentation requirements, were $16.9 million and $12.8 million as of March 31, 2021 and December 31, 2020, respectively. Contract assets, along with billed trade accounts receivable, are included in trade accounts receivable in our consolidated balance sheets.
Unearned income includes amounts in which the Company was contractually allowed to invoice prior to satisfying the associated performance obligations. Unearned income balances were $1.2 million and $2.7 million as of March 31, 2021 and December 31, 2020, respectively, and vary based on the timing of invoicing and performance obligations being met. Revenues recognized during the three-month periods ended March 31, 2021 and March 31, 2020 deferred as of the end of the preceding year were not significant. During the three-month periods ended March 31, 2021 and March 31, 2020, contract costs were not significant.
We disaggregate revenue from contracts with customers into Product Sales and Services within each segment, as noted in our two reportable segments in Note 11. In addition, we disaggregate revenue from contracts with customers by geography based on the following table below.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Completion Fluids & Products | |||||||||||||||||||||||
| United States | $ | $ | |||||||||||||||||||||
| International | |||||||||||||||||||||||
| Water & Flowback Services | |||||||||||||||||||||||
| United States | |||||||||||||||||||||||
| International | |||||||||||||||||||||||
| Total Revenue | |||||||||||||||||||||||
| United States | |||||||||||||||||||||||
| International | |||||||||||||||||||||||
| $ | $ | ||||||||||||||||||||||
NOTE 4 – INVENTORIES
Components of inventories as of March 31, 2021 and December 31, 2020 are as follows:
| March 31, 2021 | December 31, 2020 | ||||||||||
| (In Thousands) | |||||||||||
| Finished goods | $ | $ | |||||||||
| Raw materials | |||||||||||
| Parts and supplies | |||||||||||
| Work in progress | |||||||||||
Total inventories | $ | $ | |||||||||
NOTE 5 – LEASES
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insurance costs. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Variable rent expense was not material.
Our corporate headquarters facility located in The Woodlands, Texas, was sold on December 31, 2012, pursuant to a sale and leaseback transaction. As a condition to the completion of the purchase and sale of the facility, the parties entered into a lease agreement for the facility having an initial lease term of 15 years, which is classified as an operating lease. Under the terms of the lease agreement, we have the ability to extend the lease for five successive five-year periods at base rental rates to be determined at the time of each extension.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Operating lease expense | $ | $ | |||||||||||||||||||||
| Short-term lease expense | |||||||||||||||||||||||
| Total lease expense | $ | $ | |||||||||||||||||||||
Supplemental cash flow information:
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In Thousands) | |||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows - operating leases | $ | $ | |||||||||
| Right-of-use assets obtained in exchange for lease obligations: | |||||||||||
| Operating leases | $ | $ | |||||||||
Supplemental balance sheet information:
| March 31, 2021 | December 31, 2020 | ||||||||||
| (In Thousands) | |||||||||||
| Operating leases: | |||||||||||
| Operating lease right-of-use assets | $ | $ | |||||||||
| Accrued liabilities and other | $ | $ | |||||||||
| Operating lease liabilities | |||||||||||
| Total operating lease liabilities | $ | $ | |||||||||
Additional operating lease information:
| March 31, 2021 | December 31, 2020 | ||||||||||
| Weighted average remaining lease term: | |||||||||||
| Operating leases | |||||||||||
| Weighted average discount rate: | |||||||||||
| Operating leases | % | % | |||||||||
13
| Operating Leases | |||||||||||
| (In Thousands) | |||||||||||
| Remainder of 2021 | $ | ||||||||||
| 2022 | |||||||||||
| 2023 | |||||||||||
| 2024 | |||||||||||
| 2025 | |||||||||||
| Thereafter | |||||||||||
| Total lease payments | |||||||||||
| Less imputed interest | ( | ||||||||||
| Total lease liabilities | $ | ||||||||||
NOTE 6 – INVESTMENTS
Following the closing of the GP Sale, we continue to own approximately 10.9 % of the outstanding CSI Compressco common units. In addition, we are party to agreements in which Standard Lithium has the right to explore, produce and extract lithium in our Arkansas leases as well as additional potential resources in the Mojave region of California. The Company receives cash and stock of Standard Lithium (TSXV: SLL) under the terms of the arrangements. The cash and stock component of consideration received is initially recorded as unearned income based on the quoted market price at the time the stock is received, then recognized in income over the contract term. See Note 9 - “Fair Value Measurements” for further information.
Our investments as of March 31, 2021 and December 31, 2020, consist of the following:
| March 31, 2021 | December 31, 2020 | ||||||||||
| (In Thousands) | |||||||||||
Investment in CSI Compressco | $ | $ | |||||||||
| Investment in Standard Lithium | |||||||||||
| Total Investments | |||||||||||
NOTE 7 – LONG-TERM DEBT AND OTHER BORROWINGS
Consolidated long-term debt as of March 31, 2021 and December 31, 2020, consists of the following:
| Scheduled Maturity | March 31, 2021 | December 31, 2020 | ||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||
| TETRA | ||||||||||||||||||||
| Asset-based credit agreement | September 10, 2023 | $ | $ | |||||||||||||||||
Term credit agreement (1) | September 10, 2025 | |||||||||||||||||||
| Total long-term debt | $ | $ | ||||||||||||||||||
(1) Net of unamortized discount of $5.3 million and $5.5 million as of March 31, 2021 and December 31, 2020, respectively, and net of unamortized deferred financing costs of $7.8 million and $8.2 million as of March 31, 2021 and December 31, 2020, respectively.
As of March 31, 2021, we had no outstanding balance and $6.9 million in letters of credit against our asset-based credit agreement (“ABL Credit Agreement”). Because there was no outstanding balance on this ABL Credit Agreement, associated deferred financing costs of $0.9 million as of March 31, 2021, were classified as other long-term assets on the accompanying consolidated balance sheet. As of March 31, 2021, subject to compliance with the
14
NOTE 8 – COMMITMENTS AND CONTINGENCIES
Litigation
We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or other proceedings in excess of any amounts accrued has been incurred that is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.
Contingencies of Discontinued Operations
In early 2018, we closed the Maritech Asset Purchase and Sale Agreement with Orinoco Natural Resources, LLC (“Orinoco”) that provided for the purchase by Orinoco of Maritech’s remaining oil and gas properties and related assets. Also in early 2018, we closed the Maritech Membership Interest Purchase and Sale Agreement with Orinoco that provided for the purchase by Orinoco of all of the outstanding membership interests in Maritech.
Under the Maritech Asset Purchase and Sale Agreement, Orinoco assumed all of Maritech’s decommissioning liabilities related to the leases sold to Orinoco (the “Orinoco Lease Liabilities”) and, under the Maritech Membership Interest Purchase and Sale Agreement, Orinoco assumed all other liabilities of Maritech, including the decommissioning liabilities associated with the oil and gas properties previously sold by Maritech (the “Legacy Liabilities”), subject to certain limited exceptions unrelated to the decommissioning liabilities. To the extent that Maritech or Orinoco fails to satisfy decommissioning liabilities associated with any of the Orinoco Lease Liabilities or the Legacy Liabilities, we may be required to satisfy such liabilities under third party indemnity agreements and corporate guarantees that we previously provided to the U.S. Department of the Interior and other parties, respectively.
Pursuant to a Bonding Agreement entered into as part of these transactions (the “Bonding Agreement”), Orinoco provided non-revocable performance bonds in an aggregate amount of $46.8 million to cover the performance by Orinoco and Maritech of the asset retirement obligations of Maritech (the “Initial Bonds”) and agreed to replace, within 90 days following the closing, the Initial Bonds with other non-revocable performance bonds, meeting certain requirements, in the aggregate sum of $47.0 million (collectively, the “Interim Replacement Bonds”). Orinoco further agreed to replace, within 180 days following the closing, the Interim Replacement Bonds with a maximum of three non-revocable performance bonds in the aggregate sum of $47.0 million, meeting certain requirements (the “Final Bonds”). Among the other requirements of the Final Bonds was that they must provide coverage for all of the asset retirement obligations of Maritech instead of only relating to specific properties. In the event Orinoco does not provide the Interim Replacement Bonds or the Final Bonds, Orinoco is required to make certain cash escrow payments to us.
The payment obligations of Orinoco under the Bonding Agreement were guaranteed by Thomas M. Clarke and Ana M. Clarke pursuant to a separate guaranty agreement (the “Clarke Bonding Guaranty Agreement”). Orinoco has not delivered such replacement bonds and neither it nor the Clarkes has made any of the agreed upon cash escrow payments and we filed a lawsuit against Orinoco and the Clarkes to enforce the terms of the Bonding Agreement and the Clarke Bonding Guaranty Agreement. A summary judgment was initially granted in favor of Orinoco and the Clarkes which dismissed our claims against Orinoco under the Bonding Agreement and against the Clarkes under the Clarke Bonding Guaranty Agreement. We filed an appeal and also asked the trial court to grant a new trial on the summary judgment or to modify the judgment because we believe this judgment should not have
15
been granted. On November 5, 2019, the trial court signed an order granting our motion for new trial and vacating the prior order granting summary judgment for Orinoco and the Clarkes. The parties are awaiting direction from the court on a new scheduling order and/or trial setting. The Initial Bonds, which are non-revocable, remain in effect.
If we become liable in the future for any decommissioning liability associated with any property covered by either an Initial Bond or an Interim Replacement Bond while such bonds are outstanding and the payment made to us under such bond is not sufficient to satisfy such liability, the Bonding Agreement provides that Orinoco will pay us an amount equal to such deficiency and if Orinoco fails to pay any such amount, such amount must be paid by the Clarkes under the Clarke Bonding Guaranty Agreement. However, if the Final Bonds or the full amount of the escrowed cash have been provided, neither Orinoco nor the Clarkes would be liable to pay us for any such deficiency. Our financial condition and results of operations may be negatively affected if Orinoco is unable to cover any such deficiency or if we become liable for a significant portion of the decommissioning liabilities.
In early 2018, we also closed the sale of our Offshore Division to Epic Companies, LLC (“Epic Companies,” formerly known as Epic Offshore Specialty, LLC). Part of the consideration we received was a promissory note of Epic Companies in the original principal amount of $7.5 million (the “Epic Promissory Note”). At the end of August 2019, Epic Companies filed for bankruptcy and we recorded a reserve of $7.5 million for the full amount of the promissory note, including accrued interest, and certain other receivables in the amount of $1.5 million during the quarter ended September 30, 2019. The Epic Promissory Note became due on December 31, 2019 and neither Epic nor the Clarkes made payment. TETRA filed a lawsuit against the Clarkes on January 15, 2020 for breach of the promissory note guaranty agreement. In September 2020, the court granted TETRA’s Motion for Summary Judgment and entered Final Judgment in our favor, dismissing counterclaims by the Clarkes and awarded TETRA $7.9 million in damages. The Clarkes have filed an appeal which we will defend. We cannot provide any assurance the Clarkes will pay the judgment or that they will not file for bankruptcy protection. If the Clarkes do file for bankruptcy protection, we likely would be unable to collect all, or even a significant portion of, the judgment owed to us.
NOTE 9 – FAIR VALUE MEASUREMENTS
Financial Instruments
Investments
Our retained investment in CSI Compressco and our investment in Standard Lithium are recorded based on the quoted market stock price in active markets (a Level 1 fair value measurement). The stock component of consideration received for our arrangement with Standard Lithium is initially recorded as unearned income based on the quoted market price at the time the stock is received, then recognized in income over the contract term. The unearned income associated with the stock component of this agreement is not significant as of March 31, 2021 or December 31, 2020. Changes in the value of stock are recorded in other income (expense) in our consolidated statements of operations
Warrants
The Warrants are valued using a Black Scholes option valuation model that includes implied volatility of the trading price (a Level 3 fair value measurement).
Recurring and nonrecurring fair value measurements by valuation hierarchy as of March 31, 2021 and December 31, 2020, are as follows:
| Fair Value Measurements Using | ||||||||||||||||||||||||||
| Total as of | Quoted Prices in Active Markets for Identical Assets or Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||||||||
| Description | March 31, 2021 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||
Investment in CSI Compressco | $ | $ | $ | $ | ||||||||||||||||||||||
| Investment in Standard Lithium | ||||||||||||||||||||||||||
| Warrants liability | ( | ( | ||||||||||||||||||||||||
| Net asset | $ | |||||||||||||||||||||||||
16
| Fair Value Measurements Using | ||||||||||||||||||||||||||
| Total as of | Quoted Prices in Active Markets for Identical Assets or Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||||||||
| Description | December 31, 2020 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||
| Investment in Standard Lithium | $ | $ | $ | |||||||||||||||||||||||
| Warrants liability | ( | ( | ||||||||||||||||||||||||
| Net asset | $ | |||||||||||||||||||||||||
The fair values of cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, short-term borrowings and long-term debt pursuant to TETRA’s ABL Credit Agreement and term credit agreement approximate their carrying amounts. See Note 7 - “Long-Term Debt and Other Borrowings” for further discussion.
NOTE 10 – NET INCOME (LOSS) PER SHARE
The following is a reconciliation of the weighted average number of common shares outstanding with the number of shares used in the computations of net income (loss) per common and common equivalent share:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
Number of weighted average common shares outstanding | |||||||||||||||||||||||
Assumed exercise of equity awards and warrants | |||||||||||||||||||||||
Average diluted shares outstanding | |||||||||||||||||||||||
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NOTE 11 – INDUSTRY SEGMENTS
We manage our operations through two Divisions: Completion Fluids & Products and Water & Flowback Services.
Summarized financial information concerning the business segments is as follows:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Revenues from external customers | |||||||||||||||||||||||
| Product sales | |||||||||||||||||||||||
| Completion Fluids & Products Division | $ | $ | |||||||||||||||||||||
| Water & Flowback Services Division | |||||||||||||||||||||||
| Consolidated | $ | $ | |||||||||||||||||||||
| Services | |||||||||||||||||||||||
| Completion Fluids & Products Division | $ | $ | |||||||||||||||||||||
| Water & Flowback Services Division | |||||||||||||||||||||||
| Consolidated | $ | $ | |||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Completion Fluids & Products Division | $ | $ | |||||||||||||||||||||
| Water & Flowback Services Division | |||||||||||||||||||||||
| Consolidated | $ | $ | |||||||||||||||||||||
| Income (loss) before taxes | |||||||||||||||||||||||
| Completion Fluids & Products Division | $ | $ | |||||||||||||||||||||
| Water & Flowback Services Division | ( | ( | |||||||||||||||||||||
| Interdivision eliminations | |||||||||||||||||||||||
Corporate Overhead(1) | ( | ( | |||||||||||||||||||||
| Consolidated | $ | ( | $ | ||||||||||||||||||||
(1) Amounts reflected include the following general corporate expenses:
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| General and administrative expense | $ | $ | |||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Warrants fair value adjustment (income) expense | ( | ||||||||||||||||||||||
| Other general corporate income, net | ( | ||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and accompanying notes included in this Quarterly Report. In addition, the following discussion and analysis also should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 5, 2021 (“2020 Annual Report”). This discussion includes forward-looking statements that involve certain risks and uncertainties.
Business Overview
We are a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, comprehensive water management, frac flowback and production well testing. We operate through two reporting segments organized into two Divisions - Completion Fluids & Products and Water & Flowback Services. In January, we announced our commitment to pursue low carbon energy initiatives that would leverage our fluids and aqueous chemistry core competencies, our significant bromine and lithium resources and technologies, and our leading calcium chloride production capabilities.
The first quarter of 2020 reflects the last full quarter before the COVID-19 pandemic. After declining to historic lows during 2020 due to depressed oil prices resulting from Russia and Saudi Arabia’s price war and the COVID-19 pandemic, toward the end of the year activity levels in the North America onshore business began to recover. This trend of increasing activity continued through the first quarter of 2021 as oil prices crossed $50 per barrel in early January, reached $60 per barrel in mid-February and remained in that range for the remainder of the quarter. Although activity continued to trend upward, historic cold temperatures during February temporarily caused a complete shutdown to activity in several southern states, which significantly impacted our onshore business.
Our Completion Fluids and Products business saw lower fluids sales in the North Sea and Middle East, while in the Gulf of Mexico, some planned customer completion activities were deferred to the second quarter. However, despite lower offshore activity levels, revenue increased sequentially from the fourth quarter, primarily driven by increased calcium chloride sales due to winter weather and improving oil and gas demand. Our supply chain strengths and diversification helped to mitigate the impacts of the weather on product manufacturing and sales. Early signs of a potential global economic recovery emerged in January, driven by the rollout of COVID-19 vaccines, and continued fiscal stimulus policies. These factors should further improve the oil demand outlook which, together with continued discipline from United States operators is expected to provide support for oil and gas prices and increasing offshore activity both in the Gulf of Mexico and Internationally during the second and third quarters.
As activity levels increase and the recovery progresses, we are continuing to tightly manage our cost structure. Most of the cost reduction initiatives executed in response to unprecedented industry conditions last year remain in effect as of the end of the first quarter.
On January 29, 2021 as previously announced in our 2020 Annual Report, we closed the sale of the general partner of CSI Compressco, including incentive distribution rights (“IDRs”) in CSI Compressco and approximately 23.1% of the outstanding limited partner interests in CSI Compressco, referred to as the “GP Sale.” We recorded a book gain of $120.6 million during the first quarter of 2021 in connection with the GP Sale. This gain, most of which was non-cash, was a function of CSI Compressco having a negative carrying value within our consolidated balance sheet due to our share of cumulative losses and distributions. We have reflected the operations of our former Compression Division as discontinued operations for all periods presented. Following the closing of the transaction, we continue to own approximately 10.9% of the outstanding CSI Compressco common units. See Note 2 – “Discontinued Operations” in the Notes to Consolidated Financial Statements for further information.
During the quarter, we used proceeds from the GP sale and available cash on hand to pay down $29.3 million on our term loan, which matures in September 2025.
19
Results of Operations
The following information should be read in conjunction with the Consolidated Financial Statements and the associated Notes contained elsewhere in this report.
Three months ended March 31, 2021 compared with three months ended March 31, 2020.
Consolidated Comparisons
| Three Months Ended March 31, | Period to Period Change | ||||||||||||||||||||||
| 2021 | 2020 | 2021 vs 2020 | % Change | ||||||||||||||||||||
| (In Thousands, Except Percentages) | |||||||||||||||||||||||
| Revenues | $ | 77,324 | $ | 132,704 | $ | (55,380) | (41.7) | % | |||||||||||||||
| Gross profit | 7,869 | 29,037 | (21,168) | (72.9) | % | ||||||||||||||||||
Gross profit as a percentage of revenue | 10.2 | % | 21.9 | % | |||||||||||||||||||
| General and administrative expense | 20,012 | 20,348 | (336) | (1.7) | % | ||||||||||||||||||
General and administrative expense as a percentage of revenue | 25.9 | % | 15.3 | % | |||||||||||||||||||
| Interest expense, net | 4,404 | 5,292 | (888) | (16.8) | % | ||||||||||||||||||
| Warrants fair value adjustment expense | 323 | (338) | 661 | (195.6) | % | ||||||||||||||||||
| Other (income) expense, net | (5,095) | 22 | (5,117) | NM(1) | |||||||||||||||||||
| (Loss) income before taxes and discontinued operations | (11,775) | 3,713 | (15,488) | (417.1) | % | ||||||||||||||||||
Loss before taxes and discontinued operations as a percentage of revenue | (15.2) | % | 2.8 | % | |||||||||||||||||||
| Provision for income taxes | 168 | 721 | (553) | (76.7) | % | ||||||||||||||||||
| (Loss) income before discontinued operations | (11,943) | 2,992 | (14,935) | (499.2) | % | ||||||||||||||||||
| Discontinued operations: | |||||||||||||||||||||||
| Income (loss) from discontinued operations, net of taxes | 120,990 | (13,368) | 134,358 | NM | |||||||||||||||||||
| Net income (loss) | 109,047 | (10,376) | 119,423 | NM | |||||||||||||||||||
| (Income) loss attributable to noncontrolling interest | (333) | 8,825 | (9,158) | (103.8) | % | ||||||||||||||||||
| Net income (loss) attributable to TETRA stockholders | $ | 108,714 | $ | (1,551) | $ | 110,265 | NM | ||||||||||||||||
(1) Percent change is not meaningful
Consolidated revenues and gross profit during the current year quarter decreased compared to the prior year quarter for both the Completion Fluids and Products and Water & Flowback Services divisions due to the ongoing COVID-19 pandemic and associated decreases in oil demand and oilfield services activity. Gross profit as a percentage of revenue declined primarily due to a combination of product mix, as well as fixed costs including rent, depreciation and amortization, which do not vary with revenue. In addition, our revenues were significantly impacted by historic cold weather during February, which temporarily shut down operations in several southern states. See Divisional Comparisons section below for additional discussion.
Consolidated general and administrative expenses for the current year quarter include $3.4 million of additional expense related to the effect of significant stock price appreciation on certain long-term incentive compensation awards, as well as $1.7 million of higher professional fees, primarily related to the GP Sale. Despite the impact of these additional expenses, consolidated general and administrative costs decreased during the current year quarter compared to the prior year quarter due to the cost reduction actions taken during the last twelve months, as well as a lower provision for bad debt expense of $1.0 million and decreased general expenses of $0.6 million.
Consolidated other (income) expense, net, was $5.1 million of other income during the current year quarter compared to $0.02 million of other expense during the prior year quarter. The increase in other income in the current year period was primarily due to $4.0 million related to unit and stock price appreciation of our investments in CSI Compressco and Standard Lithium. In addition, other (income) expense, net, includes foreign currency gains of $0.9 million in the current year quarter compared to foreign currency losses of $0.2 million in the prior year
20
quarter. These increases in other income were partially offset by a decrease of $0.6 million in gains associated with the sale of assets.
Our consolidated provision for income taxes during the three-month period ended March 31, 2021 is attributable to taxes in certain foreign jurisdictions and Texas gross margin taxes. Our consolidated effective tax rate for the three-month period ended March 31, 2021 of negative 1.4% was primarily the result of losses generated in entities for which no related tax benefit has been recorded. The losses generated by these entities do not result in tax benefits due to offsetting valuation allowances being recorded against the related net deferred tax assets. We establish a valuation allowance to reduce the deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Included in our deferred tax assets are net operating loss carryforwards and tax credits that are available to offset future income tax liabilities in the United States as well as in certain non-U.S. jurisdictions.
Income from discontinued operations, net of taxes, was $121.0 million compared to a loss of $13.4 million for the prior year quarter. The current year income includes a $120.6 million primarily non-cash accounting gain from the deconsolidation of CSI Compressco. This gain is offset by a $0.01 million tax provision after taking into consideration utilization of net operating loss and credit carryforwards. The results of CSI Compressco were consolidated through transaction close on January 29, 2021. Our current-year results do not include CSI Compressco depreciation or amortization as the assets were considered held for sale.
Our income (loss) attributable to noncontrolling interest improved from an $8.8 million loss in the prior year quarter to $0.3 million of income for the first 29 days of January primarily due to the GP Sale in January 2021, and no depreciation or amortization recognized by TETRA for CSI Compressco in the current year.
Divisional Comparisons
Completion Fluids & Products Division
| Three Months Ended March 31, | Period to Period Change | ||||||||||||||||||||||
| 2021 | 2020 | 2021 vs 2020 | % Change | ||||||||||||||||||||
| (In Thousands, Except Percentages) | |||||||||||||||||||||||
| Revenues | $ | 46,522 | $ | 75,237 | $ | (28,715) | (38.2) | % | |||||||||||||||
| Gross profit | 11,650 | 25,964 | (14,314) | (55.1) | % | ||||||||||||||||||
Gross profit as a percentage of revenue | 25.0 | % | 34.5 | % | |||||||||||||||||||
| General and administrative expense | 4,306 | 5,934 | (1,628) | (27.4) | % | ||||||||||||||||||
General and administrative expense as a percentage of revenue | 9.3 | % | 7.9 | % | |||||||||||||||||||
| Interest income, net | (138) | (154) | 16 | (10.4) | % | ||||||||||||||||||
| Other (income) expense, net | (1,528) | 788 | (2,316) | (293.9) | % | ||||||||||||||||||
| Income before taxes | $ | 9,010 | $ | 19,396 | $ | (10,386) | (53.5) | % | |||||||||||||||
Income before taxes as a percentage of revenue | 19.4 | % | 25.8 | % | |||||||||||||||||||
The decrease in Completion Fluids & Products Division revenues during the current year quarter compared to the prior year quarter was primarily due to lower activity in the North Sea and deferral of activity in the Gulf of Mexico as several projects were delayed into future quarters. In addition, the prior year quarter benefited from a large international order.
Completion Fluids & Products Division gross profit during the current year quarter decreased compared to the prior year quarter due to lower revenue and product mix. Completion Fluids & Products Division profitability in future periods will continue to be affected by the mix of its products and services, market demand for our products and services, drilling and completions activity and commodity prices.
The Completion Fluids & Products Division reported a decrease in pretax earnings compared to the prior year period primarily due to the substantial reduction in gross profit described above. General and administrative expense levels decreased compared to the prior year quarter mainly due to decreased wage and benefit related expenses of $1.3 million and a decrease in general expenses of $0.3 million. Other (income) expense, net changed from $0.8 million expense in the prior year quarter to $1.5 million of income in the current year quarter. The increase
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in other income was primarily due to $1.3 million from our investment in Standard Lithium, most of which was represented by an increase in the Standard Lithium stock price. In addition, foreign currency losses were $1.0 million lower in the current year quarter compared to the prior year quarter.
Water & Flowback Services Division
| Three Months Ended March 31, | Period to Period Change | ||||||||||||||||||||||
| 2021 | 2020 | 2021 vs 2020 | % Change | ||||||||||||||||||||
| (In Thousands, Except Percentages) | |||||||||||||||||||||||
| Revenues | $ | 30,802 | $ | 57,467 | $ | (26,665) | (46.4) | % | |||||||||||||||
| Gross profit (loss) | (3,615) | 3,267 | (6,882) | (210.7) | % | ||||||||||||||||||
Gross profit (loss) as a percentage of revenue | (11.7) | % | 5.7 | % | |||||||||||||||||||
| General and administrative expense | 2,686 | 6,334 | (3,648) | (57.6) | % | ||||||||||||||||||
General and administrative expense as a percentage of revenue | 8.7 | % | 11.0 | % | |||||||||||||||||||
| Interest income, net | (522) | (9) | (513) | NM | |||||||||||||||||||
| Other income, net | (299) | (814) | 515 | (63.3) | % | ||||||||||||||||||
| Income (loss) before taxes | $ | (5,480) | $ | (2,244) | $ | (3,236) | 144.2 | % | |||||||||||||||
Income (loss) before taxes as a percentage of revenue | (17.8) | % | (3.9) | % | |||||||||||||||||||
Although customer activity levels continued to increase from recent lows in response to an improving commodity price environment, they remained well below the level of a year ago and therefore Water & Flowback Services Division revenues decreased significantly compared to the prior year quarter. Additionally, the current year quarter was negatively impacted by severe weather that caused extended shut downs in certain locations.
The Water & Flowback Services Division reported a gross loss during the current year quarter compared to the prior year quarter gross profit primarily due to lower revenues resulting from the decreased activity levels described above. In addition, we incurred start-up costs associated with a ramp up in activity levels.
The Water & Flowback Services Division reported an increase in pretax loss compared to the prior year period primarily due to the reduction in gross profit described above, partially offset by a decrease in general and administrative expense. General and administrative expense levels decreased compared to the prior year quarter primarily due to decreased salary and benefit related expenses of $2.3 million and a decrease in bad debt expense of $1.0 million.
Corporate Overhead
| Three Months Ended March 31, | Period to Period Change | ||||||||||||||||||||||
| 2021 | 2020 | 2021 vs 2020 | % Change | ||||||||||||||||||||
| (In Thousands, Except Percentages) | |||||||||||||||||||||||
| Depreciation and amortization | $ | 169 | $ | 194 | $ | (25) | (12.9) | % | |||||||||||||||
| General and administrative expense | 13,020 | 8,080 | 4,940 | 61.1 | % | ||||||||||||||||||
| Interest expense, net | 5,064 | 5,455 | (391) | (7.2) | % | ||||||||||||||||||
| Warrants fair value adjustment (income) expense | 323 | (338) | 661 | (195.6) | % | ||||||||||||||||||
| Other (income) expense, net | (3,268) | 48 | (3,316) | NM | |||||||||||||||||||
| Loss before taxes | $ | (15,308) | $ | (13,439) | $ | (1,869) | (13.9) | % | |||||||||||||||
Corporate Overhead pretax loss increased during the current year quarter compared to the prior year due to higher general and administrative expense, partially offset by higher other income.
General and administrative expense increased primarily due to higher salary and employee expenses of $3.2 million. Although base salary expense was lower, significant appreciation in our stock price during the quarter resulted in $3.4 million of additional expense related to certain long-term incentive compensation awards. General
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and administrative expense was also higher due to increased professional fees of $1.9 million, primarily related to the GP Sale.
Corporate other (income) expense, net changed from $0.05 million expense in the prior year quarter to $3.3 million income in the current year quarter. This change was primarily due to a $2.9 million increase in the market value of the CSI Compressco units we continue to own following the closing of the GP Sale.
How we Evaluate Operations
We use U.S. GAAP financial measures such as revenues, gross profit, income (loss) before taxes, and net cash provided by operating activities, as well as certain non-GAAP financial measures, including Adjusted EBITDA, as performance measures for our business.
Adjusted EBITDA. We view Adjusted EBITDA as one of our primary management tools, and we track it on a monthly basis, both in dollars and as a percentage of revenues (typically compared to the prior month, prior year period, and to budget). We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, impairments and certain other non-cash charges and non-recurring adjustments.
Adjusted EBITDA is used as a supplemental financial measure by our management to:
•evaluate the financial performance of our assets without regard to financing methods, capital structure, or historical cost basis; and
•determine our ability to incur and service debt and fund capital expenditures.
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The following table reconciles net income (loss) to Adjusted EBITDA for the periods indicated:
| Three Months Ended | ||||||||||||||||||||||||||||||||
| March 31, 2021 | ||||||||||||||||||||||||||||||||
| Net Income (Loss), as reported | Tax Provision | Income (Loss) Before Tax, as Reported | Impairments & Special Charges | Adjusted Income (Loss) Before Tax | Interest Expense, Net | Adjusted Depreciation & Amortization | Adjusted Equity Comp. Expense | Adjusted EBITDA | ||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
Completion Fluids & Products Division | $ | 9,010 | $ | 462 | $ | 9,472 | $ | (138) | $ | 1,705 | $ | — | $ | 11,039 | ||||||||||||||||||
Water & Flowback Services Division | (5,480) | — | (5,480) | (522) | 6,899 | — | 897 | |||||||||||||||||||||||||
Eliminations and other | 3 | — | 3 | — | (3) | — | — | |||||||||||||||||||||||||
Subtotal | 3,533 | 462 | 3,995 | (660) | 8,601 | — | 11,936 | |||||||||||||||||||||||||
| Corporate G&A | (13,020) | 5,835 | (7,185) | — | — | 962 | (6,223) | |||||||||||||||||||||||||
| Other | (2,288) | 323 | (1,965) | 5,064 | 169 | — | 3,268 | |||||||||||||||||||||||||
TETRA excluding Discontinued Operations | $ | (11,943) | $ | 168 | $ | (11,775) | $ | 6,620 | $ | (5,155) | $ | 4,404 | $ | 8,770 | $ | 962 | $ | 8,981 | ||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||
| March 31, 2020 | ||||||||||||||||||||||||||||||||
| Net Income (Loss), as reported | Tax Provision | Income (Loss) Before Tax, as Reported | Impairments & Special Charges | Adjusted Income (Loss) Before Tax | Interest Expense, Net | Depreciation & Amortization | Equity Comp. Expense | Adjusted EBITDA | ||||||||||||||||||||||||
| (In Thousands) | ||||||||||||||||||||||||||||||||
Completion Fluids & Products Division | $ | 19,396 | $ | 450 | $ | 19,846 | $ | (154) | $ | 1,934 | $ | — | $ | 21,626 | ||||||||||||||||||
Water & Flowback Services Division | (2,244) | 1,607 | (637) | (9) | 7,425 | — | 6,779 | |||||||||||||||||||||||||
Eliminations and other | 5 | — | 5 | — | (4) | — | 1 | |||||||||||||||||||||||||
Subtotal | 17,157 | 2,057 | 19,214 | (163) | 9,355 | — | 28,406 | |||||||||||||||||||||||||
| Corporate G&A | (8,081) | 411 | (7,670) | — | — | 1,145 | (6,525) | |||||||||||||||||||||||||
| Other | (5,363) | (338) | (5,701) | 5,455 | 197 | — | (49) | |||||||||||||||||||||||||
TETRA excluding Discontinued Operations | $ | 2,992 | $ | 721 | $ | 3,713 | $ | 2,130 | $ | 5,843 | $ | 5,292 | $ | 9,552 | $ | 1,145 | $ | 21,832 | ||||||||||||||
Adjusted EBITDA is a financial measure that is not in accordance with U.S. GAAP and should not be considered an alternative to net income, operating income, cash provided by operating activities, or any other measure of financial performance presented in accordance with U.S. GAAP. This measure may not be comparable to similarly titled financial metrics of other companies, as other companies may not calculate Adjusted EBITDA in the same manner as we do. Management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable U.S. GAAP measures, understanding the differences between the measures, and incorporating this knowledge into management’s decision-making processes.
Liquidity and Capital Resources
We believe that our capital structure allows us to meet our financial obligations despite current uncertain operating conditions and financial markets. Our liquidity at the end of first quarter was $81.1 million. Liquidity is defined as unrestricted cash plus availability under the revolving credit facility. Information about the terms and covenants of our debt agreements can be found in our 2020 Annual Report and in Note 7 - Long Term Debt and Other Borrowings.
As of March 31, 2021, subject to compliance with the covenants, borrowing base requirements, and other provisions of the agreement that may limit borrowings, we had $26.9 million of availability under the ABL Credit Agreement. The amounts we may borrow under the ABL Credit Agreement are derived from our accounts receivable and certain inventory. Decreases in the amount of our accounts receivable and the value of our inventory would result in reduced borrowing availability under the ABL Credit Agreement.
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Our consolidated sources and uses of cash, including cash activity from our former Compression Division, during the three months ended March 31, 2021 and 2020 are as follows:
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In Thousands) | |||||||||||
| Operating activities | $ | 5,825 | $ | 22,176 | |||||||
| Investing activities | (4,301) | (10,615) | |||||||||
| Financing activities | (29,887) | 1,138 | |||||||||
Operating Activities
Consolidated cash flows provided by operating activities decreased $16.4 million compared to the first three months of 2020. Current year cash flows provided by operating activities include $0.9 million generated by CSI Compressco in January prior to closing of the GP Sale, compared to $13.4 million during the three-month period ending March 31, 2020. Operating cash flows decreased primarily due to including the results of CSI Compressco for one month during the current year compared to three months during the prior year, as well as a decrease in revenue, partially offset by the effect of working capital movements, particularly related to management of inventory levels. We continue to monitor customer credit risk in the current environment and focus on serving larger capitalized oil and gas operators and national oil companies.
Investing Activities
Total cash capital expenditures during the first three months of 2021 were $6.8 million as we adjusted to current market conditions. Our Water & Flowback Services Division spent $3.4 million on capital expenditures, primarily to maintain, automate and upgrade its water management and flowback equipment fleet. Our Completion Fluids & Products Division spent $0.3 million on capital expenditures. Our former Compression Division spent $3.0 million in January of 2021 primarily to maintain its compression fleet.
Historically, a significant majority of our planned capital expenditures have been related to identified opportunities to grow and expand our existing businesses. However, such expenditures have recently been, and may continue to be, postponed or canceled as we are reviewing all capital expenditure plans carefully in an effort to conserve cash. We currently have no long-term capital expenditure commitments. The deferral of capital projects could affect our ability to expand our operations in the future.
If the forecasted demand for our products and services increases or decreases, the amount of planned expenditures on growth and expansion may be adjusted.
Financing Activities
As a result of TETRA’s strong cash flow from operations in 2020 and the proceeds from the GP Sale, during the first quarter of 2021, we repaid $29.3 million on our term credit agreement. We may supplement our existing cash balances and cash flow from operating activities with short-term borrowings, long-term borrowings, issuances of equity and debt securities, and other sources of capital. We are aggressively managing our working capital and capital expenditure needs in order to maximize our liquidity in the current environment.
Long-Term Debt
Asset-Based Credit Agreement. The ABL Credit Agreement provides for a senior secured revolving credit facility of up to $100.0 million, subject to a borrowing base to be determined by reference to the value of inventory and accounts receivable, and includes a sublimit of $20.0 million for letters of credit and a swingline loan sublimit of $10.0 million. The amounts we may borrow under the ABL Credit Agreement are derived from our accounts receivable and certain inventory. Changes in demand for our products and services have an impact on our eligible accounts receivable, which could result in significant changes to our borrowing base and therefore our availability under our ABL Credit Agreement. Availability under our ABL Credit Agreement has reduced compared to the prior year quarter due to our customers’ reduced activity levels. The ABL Credit Agreement is scheduled to mature on
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September 10, 2023. As of April 30, 2021, we have no amounts outstanding under our ABL Credit Agreement and $6.9 million in letters of credit.
Term Credit Agreement. The term credit agreement is scheduled to mature on September 10, 2025. As of April 30, 2021, $184.2 million in aggregate principal amount of our term credit agreement is outstanding. Our term credit agreement requires us to offer to prepay a percentage of Excess Cash Flow (as defined in the term credit agreement) following the conclusion of each calendar year. Within five business days of filing our Annual Report Form 10-K for the year ending December 31, 2021, the minimum amount we will be required to offer to prepay pursuant to this obligation is $8.2 million.
Other Sources and Uses
In addition to the aforementioned credit facilities, we fund our respective short-term liquidity requirements from cash generated by our respective operations and from short-term vendor financing. Should additional capital be required, the ability to raise such capital through the issuance of additional debt or equity securities may currently be limited. Instability or volatility in the capital markets at the times we need to access capital may affect the cost of capital and the ability to raise capital for an indeterminable length of time. If it is necessary to issue additional equity to fund our capital needs, additional dilution of our common stockholders will occur. We periodically evaluate engaging in strategic transactions and may consider divesting non-core assets where our evaluation suggests such transaction is in the best interest of our business. In challenging economic environments, we may experience increased delays and failures by customers to pay our invoices. Given the nature and significance of the pandemic and disruption in the oil and gas industry, we could experience delayed customer payments and payment defaults associated with customer liquidity issues and bankruptcies. If our customers delay paying or fail to pay us a significant amount of our outstanding receivables, it could have an adverse effect on our liquidity. An increase of aged unpaid receivable would also negatively affect our borrowing availability under the ABL Credit Agreement.
Off Balance Sheet Arrangements
As of March 31, 2021, we had no “off balance sheet arrangements” that may have a current or future material effect on our consolidated financial condition or results of operations.
Critical Accounting Policies and Estimates
There have been no material changes or developments in the evaluation of the accounting estimates and
the underlying assumptions or methodologies pertaining to our Critical Accounting Policies and Estimates disclosed
in our 2020 Annual Report. In preparing our consolidated financial statements, we make assumptions, estimates, and judgments that affect the amounts reported. These judgments and estimates may change as new events occur, as new information is acquired, and as changes in our operating environments are encountered. Actual results are likely to differ from our current estimates, and those differences may be material.
Commitments and Contingencies
Litigation
For information regarding litigation, see - Note 8 “Commitments and Contingencies” in the Notes to Consolidated Financial Statements.
Long-Term Debt
For information on our credit agreements, see Note 7 - “Long-Term Debt and Other Borrowings” in the Notes to Consolidated Financial Statements.
Leases
We have operating leases for some of our transportation equipment, office space, warehouse space, operating locations, and machinery and equipment. Our leases have remaining lease terms ranging from 1 to 16 years. See Note 1 - “Organization, Basis of Presentation and Summary of Significant Accounting Policies” and Note 5 - “Leases” in the Notes to Consolidated Financial Statements for further information our lease obligations.
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Product Purchase Obligations
In the normal course of our Completion Fluids & Products Division operations, we enter into supply agreements with certain manufacturers of various raw materials and finished products. Some of these agreements have terms and conditions that specify a minimum or maximum level of purchases over the term of the agreement. Other agreements require us to purchase the entire output of the raw material or finished product produced by the manufacturer. Our purchase obligations under these agreements apply only with regard to raw materials and finished products that meet specifications set forth in the agreements. We recognize a liability for the purchase of such products at the time we receive them. As of March 31, 2021, the aggregate amount of the fixed and determinable portion of the purchase obligation pursuant to our Completion Fluids & Products Division’s supply agreements was approximately $83.0 million, including $7.1 million for the remainder of 2021, $9.5 million per year from 2022 to 2025 and $37.9 million thereafter, extending through 2029.
Cautionary Statement for Purposes of Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements in this Quarterly Report are identifiable by the use of the following words, the negative of such words, and other similar words: “anticipates”, “assumes”, “believes”, “budgets”, “could”, “estimates”, “expects”, “forecasts”, “goal”, “intends”, “may”, “might”, “plans”, “predicts”, “projects”, “schedules”, “seeks”, “should”, “targets”, “will”, and “would”.
Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to, those described in Part II, “Item 1A. Risk Factors” and elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2020, and those described from time to time in our future reports filed with the SEC.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not Applicable.
Item 4. Controls and Procedures.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2021, the end of the period covered by this quarterly report.
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II
OTHER INFORMATION
27
Item 1. Legal Proceedings.
We are named defendants in several lawsuits and respondents in certain governmental proceedings arising in the ordinary course of business. While the outcome of lawsuits or other proceedings against us cannot be predicted with certainty, management does not consider it reasonably possible that a loss resulting from such lawsuits or other proceedings in excess of amounts accrued has been incurred that is expected to have a material adverse impact on our financial condition, results of operations, or liquidity.
Item 1A. Risk Factors.
As of the date of this filing, TETRA and its operations continue to be subject to the risk factors previously disclosed in the “Risk Factors” sections contained in the 2020 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) None.
(b) None.
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Publicly Announced Plans or Programs(1) | ||||||||||||||||||||||
| January 1 – January 31, 2021 | — | $ | — | — | $ | 14,327,000 | ||||||||||||||||||||
| February 1 – February 28, 2021 | 177,452 | (2) | 2.53 | — | 14,327,000 | |||||||||||||||||||||
| March 1 – March 31, 2021 | — | — | — | 14,327,000 | ||||||||||||||||||||||
| Total | 177,452 | — | $ | 14,327,000 | ||||||||||||||||||||||
(1)In January 2004, our Board of Directors authorized the repurchase of up to $20 million of our common stock. Purchases will be made from time to time in open market transactions at prevailing market prices. The repurchase program may continue until the authorized limit is reached, at which time the Board of Directors may review the option of increasing the authorized limit.
(2)Shares we received in connection with the exercise of certain employee stock options or the vesting of certain shares of employee restricted stock. These shares were not acquired pursuant to the stock repurchase program.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
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Item 6. Exhibits.
Exhibits:
| 10.1* | |||||
| 31.1* | |||||
| 31.2* | |||||
| 32.1** | |||||
| 32.2** | |||||
| 101.SCH+ | XBRL Taxonomy Extension Schema Document. | ||||
| 101.CAL+ | XBRL Taxonomy Extension Calculation Linkbase Document. | ||||
| 101.DEF+ | XBRL Taxonomy Extension Definition Linkbase Document. | ||||
| 101.LAB+ | XBRL Taxonomy Extension Label Linkbase Document. | ||||
| 101.PRE+ | XBRL Taxonomy Extension Presentation Linkbase Document. | ||||
| 104* | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL documents | ||||
* Filed with this report.
** Furnished with this report.
+ Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the three-month periods ended March 31, 2021 and 2020; (ii) Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2021 and 2020; (iii) Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020; (iv) Consolidated Statements of Equity for the three-month periods ended March 31, 2021 and 2020 ; (v) Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2021 and 2020; and (vi) Notes to Consolidated Financial Statements for the three months ended March 31, 2021.
29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TETRA Technologies, Inc. | |||||||||||
| Date: | May 5, 2021 | By: | /s/Brady M. Murphy | ||||||||
| Brady M. Murphy | |||||||||||
| President and Chief Executive Officer | |||||||||||
| Principal Executive Officer | |||||||||||
| Date: | May 5, 2021 | By: | /s/Elijio V. Serrano | ||||||||
| Elijio V. Serrano | |||||||||||
| Senior Vice President and Chief Financial Officer | |||||||||||
| Principal Financial Officer | |||||||||||
| Date: | May 5, 2021 | By: | /s/Richard D. O’Brien | ||||||||
| Richard D. O’Brien | |||||||||||
| Vice President – Finance and Global Controller | |||||||||||
| Principal Accounting Officer | |||||||||||
30
Exhibit 10.1
Blackstone Alternative Credit Advisors LP
345 Park Avenue, 31st Floor
New York, NY 10154
345 Park Avenue, 31st Floor
New York, NY 10154
March 29, 2021
Tetra Technologies, Inc.
24955 Interstate 45 North
The Woodlands, TX 77380
24955 Interstate 45 North
The Woodlands, TX 77380
RE: Consent to Credit Agreement for Excess Cash Flow
Ladies and Gentlemen:
This letter agreement (this “Letter Agreement”) is delivered to you in connection with that certain Credit Agreement dated as of September 10, 2018, as amended, among TETRA Technologies, Inc., a Delaware corporation (the “Borrower”), each lender from time to time party thereto, and Wilmington Trust, National Association, as Administrative Agent (the “Credit Agreement”). Unless otherwise defined herein, capitalized terms shall have the meanings set forth in the Credit Agreement.
1.Excess Cash Flow. The Borrower has requested that the undersigned Lenders consent to the following amendments to the Credit Agreement:
(a) Amend Section 2.04(b)(i) of the Credit Agreement to delete the existing clause (i) and replace it in its entirety with the following:
“(i) (x) For the fiscal year ending December 31, 2020, on or prior to April 5, 2021, the Borrower shall make an offer to the Lenders to prepay an aggregate principal amount of Committed Loans on a pro rata basis in an amount equal to $17,500,000.00;
(y) For the fiscal year ending December 31, 2021, within five (5) Business Days after financial statements have been delivered pursuant to Section 6.01(b) and the related officer’s certificate has been delivered pursuant to Section 6.02 for such fiscal year, the Borrower shall make an offer to the Lenders to prepay an aggregate principal amount of Committed Loans on a pro rata basis in an amount equal to the greater of (A)(1) 50% (such percentage as it may be reduced as described below, the “ECF Percentage”) of Excess Cash Flow, if any, for the fiscal year covered by such financial statements minus (2) any voluntary prepayments of Committed Loans (or any Permitted Refinancing Indebtedness thereof) during such fiscal year or during the period between the end of such fiscal year and the date by which any such prepayment is due (without duplication of any such credit in any prior or subsequent fiscal year) pursuant to Section 2.04(a) to the extent such prepayments are not funded with the proceeds of long-term Indebtedness; provided that (I) the ECF Percentage shall be 25% if the Leverage Ratio determined as of the last day of the fiscal year covered by such financial statements is less than 2.00 to 1.00 and greater than or equal to 1.50 to 1.00 and (II) the ECF Percentage shall be 0% if the Leverage Ratio determined as of the last day of the fiscal year covered by such financial statements is less than 1.50 to 1.00 and (B) $8,157,000.00; and
(z) Commencing with the fiscal year ending December 31, 2022, within five (5) Business Days after financial statements have been delivered pursuant to Section 6.01(b) and the
|US-DOCS\122035634.5||
related officer’s certificate has been delivered pursuant to Section 6.02 for such fiscal year, the Borrower shall make an offer to the Lenders to prepay an aggregate principal amount of Committed Loans on a pro rata basis in an amount equal to (A) 50% of Excess Cash Flow, if any, for the fiscal year covered by such financial statements minus (B) any voluntary prepayments of Committed Loans (or any Permitted Refinancing Indebtedness thereof) during such fiscal year or during the period between the end of such fiscal year and the date by which any such prepayment is due (without duplication of any such credit in any prior or subsequent fiscal year) pursuant to Section 2.04(a) to the extent such prepayments are not funded with the proceeds of long-term Indebtedness; provided that (1) the ECF Percentage shall be 25% if the Leverage Ratio determined as of the last day of the fiscal year covered by such financial statements is less than 2.00 to 1.00 and greater than or equal to 1.50 to 1.00 and (2) the ECF Percentage shall be 0% if the Leverage Ratio determined as of the last day of the fiscal year covered by such financial statements is less than 1.50 to 1.00.”
(b)Amend the definition of “Excess Cash Flow” in Section 1.01 of the Credit Agreement to delete the existing clause (a)(iii) thereof and replace it in its entirety with the following:
“(iii) the average amount of the decrease, if any, in Consolidated Adjusted Working Capital for (x) such fiscal year and (y) the preceding fiscal year; provided that for the purposes of calculating Excess Cash Flow for the fiscal year ending December 31, 2021, the Consolidated Adjusted Working Capital amount for the fiscal year ending December 31, 2020 shall equal $27,127,000.00; and”
(c)Amend the definition of “Excess Cash Flow” in Section 1.01 of the Credit Agreement to delete the existing clause (b)(iv) thereof and replace it in its entirety with the following:
“(iv) the average amount of the increase, if any, in Consolidated Adjusted Working Capital for (x) such fiscal year and (y) the preceding fiscal year; provided that for the purposes of calculating Excess Cash Flow for the fiscal year ending December 31, 2021, the Consolidated Adjusted Working Capital amount for the fiscal year ending December 31, 2020 shall equal $27,127,000.00; and”
The amendments set forth in clauses (a) through (c) above, collectively, the “ECF Amendments.”
2.Consent and Waiver. Subject to the occurrence of the Effective Date, the undersigned Lenders hereby (a) consent to the ECF Amendments and (b) waive any Default or Event of Default arising from (i) the Borrower’s failure to make an offer to the Lenders to prepay the Committed Loans pursuant to Section 2.04(b)(i) of the Credit Agreement for the fiscal year ending December 31, 2020 or (ii) the Borrower’s failure to provide notice of any such Default or Event of Default pursuant to Section 6.01(f) of the Credit Agreement, in each case, between March 12, 2021 and the date hereof.
3.Conditions Precedent. The waivers and consent granted in Section 2 above shall not be effective until the earliest date (the “Effective Date”) on which each of following conditions is satisfied:
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i.due execution and delivery to the Lenders of this Letter Agreement by each of the Borrower, the Lenders constituting at least the Required Lenders and the Administrative Agent; and
ii.each representation and warranty set forth in Section 4 of this Letter Agreement shall be true and correct in all respects on the Effective Date.
4.Representations and Warranties. The Borrower hereby represents and warrants that, as of the Effective Date:
iii.all representations and warranties made by any Loan Party contained herein or in the other Loan Documents are true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the Effective Date (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties are true and correct in all material respects as of such earlier date and except where such representations and warranties are qualified by materiality, Material Adverse Effect, or similar language, in which case such representation or warranty are true and correct in all respects after giving effect to such qualification);
iv.the Borrower has all requisite power and authority to enter into this Letter Agreement;
v. the execution and delivery of this Letter Agreement by the Borrower has been duly authorized by all necessary action on the part of the Borrower;
vi.the execution, delivery and performance by the Borrower of this Letter Agreement does not and will not violate any applicable governmental rules or any contractual obligation of the Borrower and will not result in, or require, the creation or imposition of any Lien on any of the Borrower’s properties or revenues pursuant to any applicable governmental rules or any such contractual obligation;
vii.this Letter Agreement has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors’ rights generally and except as enforceability may be limited by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law);
viii.no consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person that has not been obtained and in full force and effect is required in connection with the transactions contemplated herein or the execution, delivery, performance, validity or enforceability of this Letter Agreement by the Borrower; and
ix.after giving effect to the waivers set forth herein, no Defaults or Events of Default exist or are continuing under the Credit Agreement as of the date of this Letter Agreement.
5.Limited Consent. The consent and waiver set forth herein is a one-time consent and waiver and is limited precisely as written and shall not be deemed to be a consent under or waiver of any other
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term or condition in the Credit Agreement or any of the other Loan Documents, which shall remain in full force and effect and are hereby ratified and confirmed. From and after the date of this Letter Agreement, all references in the Loan Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement after giving effect to this Letter Agreement, and each reference to “hereof,” “hereunder,” “herein” or “hereby” and each other similar reference and each reference to “this Agreement” and each other similar reference contained in the Credit Agreement shall from and after the date hereof refer to the Credit Agreement as amended hereby.
6.Authorization by Lenders. The undersigned Lenders, which constitute not less than the Required Lenders under the Credit Agreement, hereby (a) authorize and instruct the Administrative Agent to execute and deliver this Letter Agreement, and (b) acknowledge and agree that the instruction set forth herein constitutes an instruction and request from the Lenders under the Loan Documents, including Section 9.03 of the Credit Agreement.
7.Miscellaneous.
a.By executing and delivering a copy hereof, (i) the Borrower agrees that all Committed Loans shall be guaranteed and secured pursuant to the Collateral Documents in accordance with the terms and provisions thereof and (ii) the Borrower hereby (A) reaffirms its prior grant and the validity of the Liens granted by it pursuant to the Collateral Documents, (B) agrees that, notwithstanding the effectiveness of this Letter Agreement, after giving effect to this Letter Agreement, the guaranty pursuant to the Collateral Documents and the Liens created pursuant to the Collateral Documents for the benefit of the Secured Parties continue to be in full force and effect and (C) affirms, acknowledges and confirms all of its obligations and liabilities under the Loan Documents to which it is a party, in each case after giving effect to this Letter Agreement, all as provided in such Loan Documents, and acknowledges and agrees that such obligations and liabilities continue in full force and effect in respect of, and to secure, the Obligations under the Credit Agreement and the other Loan Documents, in each case after giving effect to this Letter Agreement.
b.Except as expressly set forth in Section 2 above, each undersigned Lender hereby expressly reserves all of the respective rights, powers, privileges and remedies of the Secured Parties under the Credit Agreement and the other Loan Documents, applicable law and/or equity. No oral representation or course of dealing or conduct on the part of any of the undersigned, or any of their respective officers, employees or agents, and no failure or delay by any of the Secured Parties with respect to the exercise of any right, power, privilege or remedy under the Credit Agreement or the other Loan Documents or applicable law or equity, shall operate as a waiver thereof, and the single or partial exercise of any such right, power, privilege or remedy shall not preclude any later exercise of any other right, power, privilege or remedy. Except as expressly set forth in Section 2 above, the undersigned are not waiving any existing or future Defaults or Events of Default.
c.Borrower agrees to reimburse on demand the Lenders and the Administrative Agent for all necessary reasonable fees and expenses, including from legal counsel actually incurred in connection with this Letter Agreement, including, without limitation, any amendments, modifications, and supplements hereto, and acknowledges that each of the Lenders and the Administrative Agent shall be entitled to all of its rights, privileges,
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protections, immunities and indemnities set forth in the Credit Agreement and the other Loan Documents in connection with this Letter Agreement.
d.This Letter Agreement is, and shall be, one of the Loan Documents as referred to and defined in the Credit Agreement, and the provisions of Section 10.14 and Section 10.15 thereof shall apply to this Letter Agreement, mutatis mutandis. This Letter Agreement, together with the Loan Documents, reflects the entire understanding of the parties with respect to the matters contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. This Letter Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page of this Letter Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Letter Agreement.
[Remainder of page intentionally left blank.
Signature pages follow.]
Signature pages follow.]
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Very truly yours,
REQUIRED LENDERS:
BGSL JACKSON HOLE FUNDING LLC
By: Blackstone Secured Lending Fund,
as sole member
as sole member
By: /s/ D. Sean Cort
Name: D. Sean Cort
Title: Authorized Signatory
Name: D. Sean Cort
Title: Authorized Signatory
EMERALD DIRECT LENDING 1 LIMITED PARTNERSHIP
By: Blackstone Alternative Credit Advisors LP
as investment manager
as investment manager
By: /s/ D. Sean Cort
Name: D. Sean Cort
Title: Authorized Signatory
Name: D. Sean Cort
Title: Authorized Signatory
GSO BARRE DES ECRINS MASTER FUND SCSp
By: Blackstone Alternative Credit Advisors LP, its Investment Adviser
By: /s/ D. Sean Cort
Name: D. Sean Cort
Title: Authorized Signatory
Name: D. Sean Cort
Title: Authorized Signatory
Signature Page to
Letter Agreement
Letter Agreement
|US-DOCS\122035634.5||
GSO BROOME STREET LLC
By: GSO Orchid Fund LP, its member
By: GSO Orchid Associates LLC, its general partner
By: /s/ D. Sean Cort
Name: D. Sean Cort
Title: Authorized Signatory
Name: D. Sean Cort
Title: Authorized Signatory
EMERALD SPRING STREET LP
By: Blackstone Alternative Credit Advisors LP, its Investment Manager
By: /s/ D. Sean Cort
Name: D. Sean Cort
Title: Authorized Signatory
Name: D. Sean Cort
Title: Authorized Signatory
BGSL BRECKENRIDGE FUNDING LLC
By: Blackstone Secured Lending Fund, as sole member
By: /s/ D. Sean Cort
Name: D. Sean Cort
Title: Authorized Signatory
Name: D. Sean Cort
Title: Authorized Signatory
Signature Page to
Letter Agreement
Letter Agreement
|US-DOCS\122035634.5||
BCRED DENALI PEAK FUNDING LLC
By: Blackstone Private Credit Fund, its sole member
By: /s/ D. Sean Cort
Name: D. Sean Cort
Title: Authorized Signatory
Name: D. Sean Cort
Title: Authorized Signatory
BCRED SIRIS PEAK FUNDING LLC
By: Blackstone Private Credit Fund, its sole member
By: /s/ D. Sean Cort
Name: D. Sean Cort
Title: Authorized Signatory
Name: D. Sean Cort
Title: Authorized Signatory
BCRED TWIN PEAKS
By: Blackstone Private Credit Fund LP, its sole member
By: /s/ D. Sean Cort
Name: D. Sean Cort
Title: Authorized Signatory
Name: D. Sean Cort
Title: Authorized Signatory
Signature Page to
Letter Agreement
Letter Agreement
|US-DOCS\122035634.5||
CPPIB Credit Investments III Inc.
By: /s/ Geoffrey Souter_________________
Name: Geoffrey Souter
Title: Authorized Signatory
Name: Geoffrey Souter
Title: Authorized Signatory
By: /s/ Paul Shopiro______________________
Name: Paul Shopiro
Title: Authorized Signatory
Name: Paul Shopiro
Title: Authorized Signatory
By: /s/ Sharon Li_____________________
Name: Sharon Li
Title: Authorized Signatory
Name: Sharon Li
Title: Authorized Signatory
Signature Page to
Letter Agreement
Letter Agreement
|US-DOCS\122035634.5||
Acknowledged and agreed:
BORROWER:
TETRA TECHNOLOGIES, INC.
By: /s/ Brady M. Murphy
Name: Brady M. Murphy
Title: President and CEO
Name: Brady M. Murphy
Title: President and CEO
Signature Page to
Letter Agreement
Letter Agreement
|US-DOCS\122035634.5||
Acknowledged and agreed:
WILMINGTON TRUST, NATIONAL ASSOCIATION, as
Administrative Agent
Administrative Agent
By: /s/ Jeffery Rose
Name: Jeffery Rose
Title: Vice President
Signature Page to
Letter Agreement
Letter Agreement
|US-DOCS\122035634.5||
Exhibit 31.1
Certification Pursuant to
Rule 13a-14(a) or 15d-14(a) of the Exchange Act
As Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Brady M. Murphy, certify that:
1.I have reviewed this report on Form 10-Q for the fiscal quarter ended March 31, 2021, of TETRA Technologies, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
| Date: | May 5, 2021 | /s/Brady M. Murphy | ||||||
| Brady M. Murphy | ||||||||
| President and | ||||||||
| Chief Executive Officer | ||||||||
Exhibit 31.2
Certification Pursuant to
Rule 13a-14(a) or 15d-14(a) of the Exchange Act
As Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Elijio V. Serrano, certify that:
1.I have reviewed this report on Form 10-Q for the fiscal quarter ended March 31, 2021, of TETRA Technologies, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
| Date: | May 5, 2021 | /s/Elijio V. Serrano | ||||||
| Elijio V. Serrano | ||||||||
| Senior Vice President and Chief Financial Officer | ||||||||
Exhibit 32.1
Certification Pursuant to
18 U.S.C. Section 1350
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of TETRA Technologies, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brady M. Murphy, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: | May 5, 2021 | /s/Brady M. Murphy | ||||||
| Brady M. Murphy | ||||||||
| President and Chief Executive Officer | ||||||||
| TETRA Technologies, Inc. | ||||||||
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
Certification Pursuant to
18 U.S.C. Section 1350
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of TETRA Technologies, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Elijio V. Serrano, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Dated: | May 5, 2021 | /s/Elijio V. Serrano | ||||||
| Elijio V. Serrano | ||||||||
| Senior Vice President and Chief Financial Officer | ||||||||
| TETRA Technologies, Inc. | ||||||||
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.