THE WOODLANDS, Texas,
Feb. 28, 2017 /PRNewswire/
-- CSI Compressco LP ("CSI Compressco" or the "Partnership")
(NASDAQ: CCLP) today announced fourth quarter and full year 2016
consolidated financial results. Highlights include:
- Fourth quarter net loss of $12.1
million, including $2.1
million favorable non-cash fair market adjustment to the
Series A Preferred equity
- Fourth quarter Adjusted EBITDA(1) of $21.7 million, including $2.6 million in unusual costs related to
equipment sales, and a $0.7 million
charge to field inventory
- Fourth quarter net cash provided from operating activities of
$15.9 million
- Fourth quarter free cash flow(1) of $12.9 million
- Fourth quarter cash distribution of $0.3775 per common unit, unchanged from prior
quarter
- Fourth quarter and full year 2016 distribution coverage
ratios(1) of 0.68x and 0.99x, respectively
- Fourth quarter Equipment Sales orders received totaling
$20.3 million
- Compression fleet utilization increased by 1.2% in fourth
quarter compared to prior quarter
- Continued management of SGA expenditures
- Multiple office locations consolidated into primary business
office in The Woodlands, TX
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Dec 31, 2016
vs.
Sept 30,
2016
|
|
Dec 31, 2016
vs.
Dec 31,
2015
|
|
Dec 31,
2016
|
|
Sept 30,
2016
|
|
Dec 31,
2015
|
|
|
|
(In Thousands, Except
Ratios, and Percentages)
|
Net income
(loss)
|
$
|
(12,138)
|
|
|
$
|
(15,971)
|
|
|
$
|
(151,220)
|
|
|
24 %
|
|
|
92 %
|
|
Adjusted
EBITDA(1)
|
$
|
21,682
|
|
|
$
|
23,967
|
|
|
$
|
31,873
|
|
|
(10) %
|
|
|
(32)%
|
|
Distributable cash
flow(1)
|
$
|
8,798
|
|
|
$
|
12,715
|
|
|
$
|
19,378
|
|
|
(31) %
|
|
|
(55)%
|
|
Quarterly Cash
distribution per unit
|
$
|
0.3775
|
|
|
$
|
0.3775
|
|
|
$
|
0.3775
|
|
|
— %
|
|
|
— %
|
|
Distribution coverage
ratio(1)
|
|
0.68x
|
|
|
|
0.99x
|
|
|
|
1.52x
|
|
|
—
|
|
|
—
|
|
Fleet growth capital
expenditures
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,247
|
|
|
— %
|
|
|
(100)%
|
|
Net cash provided by
operating activities
|
$
|
15,922
|
|
|
$
|
9,958
|
|
|
$
|
38,351
|
|
|
60 %
|
|
|
(58)%
|
|
Free cash
flow(1)
|
$
|
12,865
|
|
|
$
|
6,162
|
|
|
$
|
19,077
|
|
|
109 %
|
|
|
(33) %
|
|
|
|
(1)
|
Adjusted EBITDA,
distributable cash flow, distribution coverage ratio, and free cash
flow are non-GAAP financial measures that are reconciled to the
nearest GAAP financial measure on Schedules B and C to this press
release.
|
Consolidated revenues for the quarter ended December 31, 2016 were $82.9 million compared to $70.7 million for the third quarter of 2016 and
$99.4 million for the fourth quarter
of 2015. Loss before tax for the quarter ended December 31, 2016 was $11.8 million compared to loss before tax of
$15.8 million for the third quarter
of 2016 and loss before tax of $152.6
million for the fourth quarter of 2015, which included a
$139.4 million goodwill
impairment.
As of December 31, 2016,
compression services fleet horsepower totaled 1,114,312 horsepower
and the fleet utilization rate was 76.4%. We define the fleet
utilization rate as the aggregate compressor package horsepower in
service divided by the aggregate compressor package fleet
horsepower as of a given date.
Unaudited results of operations for the three month period ended
December 31, 2016 compared to the
prior quarter and the prior year quarter, and unaudited results of
operations for the twelve month period ended December 31, 2016 compared to the prior year
period are presented in the accompanying financial tables.
Timothy A. Knox, President of CSI
Compressco, commented, "Cash flow from operations was positive in
the fourth quarter of 2016 with free cash flow of $12.9 million prior to our quarterly
distribution. SGA expenditures for the quarter were
$8.5 million, $0.7 million lower than in the prior quarter,
demonstrating effective management controls and showing signs of
stabilization at this level after accounting for legal fees
associated with our convertible preferred equity issuance in the
third quarter of 2016. This is $2.7
million below the SGA spending level of the prior year
quarter. Maintenance capital expenditures for the fourth
quarter were $4.8 million, an
increase from the prior quarter as necessary work was
conducted. Full year gross capital expenditures for 2016 were
$18.4 million, of which $11.4 million was maintenance capital, in line
with our target and consistent with that of the prior year,
$6.6 million was related to our ERP
system development project, and $0.4
million was directed toward limited growth
initiatives. Distributable cash flow for the fourth quarter
of 2016 was $8.8 million, providing a
0.68x distribution coverage ratio for the $0.3775 per common unit quarterly distribution.
The full year distribution coverage ratio of 0.99x occurred despite
the challenging market.
"As of December, 31, 2016, 851,733 horsepower of our compression
services fleet was generating revenue, with fleet utilization
increased by 1.2% compared to prior quarter and the first quarterly
increase in utilized horsepower since the first quarter of
2015. Fourth quarter 2016 compression services results
included a $0.7 million cost to
adjust field inventories. During the fourth quarter of 2016
we received equipment sales orders totaling $20.3 million, an amount of bookings comparable
to the previous five quarters combined and the highest level of
quarterly bookings since 2014. We believe this is an
indication that the increased level of inquiries experienced the
past six months is beginning to translate into project execution
and spending by our customers. We carried an additional
$1.3 million of existing backlog
forward, entering 2017 with a total of $21.6
million in equipment sales backlog. Fourth quarter
2016 equipment sales results included $2.6
million in cost overruns on two highly customized
international projects that were both brought to conclusion during
the quarter. These are the first such cost overruns
experienced in recent years.
"As we enter 2017 seeing what we believe are early signs of
recovery throughout the oil and gas industry, we will continue with
a conservative approach to capital spending, continuing our efforts
to maximize the utilization of existing assets and searching for
opportunities to capture appropriate financial return on new
investments. Our 2017 business plan calls for $15.0 million to $30.0 million of total capital
expenditures, prior to asset disposals and associated
proceeds. This includes an estimated $10 million to $13 million of maintenance capital
expenditures, and approximately $2.4
million in continued investment in our ERP system
implementation. We will monitor the market throughout the
year and may adjust our plans for growth as opportunities
arise."
Conference Call
CSI Compressco will host a conference call to discuss fourth
quarter and full year 2016 results today, February 28, 2017, at 10:30 a.m. Eastern Time. The phone number for the
call is 866-374-8397. The conference will also be available by live
audio webcast and may be accessed through the CSI Compressco
website at www.csicompressco.com.
Fourth Quarter 2016 Cash Distribution on Common Units
On January 20, 2017, CSI
Compressco announced that the board of directors of its general
partner declared a cash distribution attributable to the fourth
quarter of 2016 of $0.3775 per
outstanding common unit, which was paid on February 14, 2017 to common unitholders of record
as of the close of business on February 1, 2017. The
distribution coverage ratio (which is a Non-GAAP Financial Measure
defined and reconciled to the closest GAAP financial measure below)
for the fourth quarter of 2016 was 0.68x.
CSI Compressco Overview
CSI Compressco is a provider of compression services and
equipment for natural gas and oil production, gathering,
transportation, processing, and storage. CSI Compressco's
compression and related services business includes a fleet of
approximately 6,000 compressor packages providing in excess of 1.1
million in aggregate horsepower, utilizing a full spectrum of low-,
medium-, and high-horsepower engines. CSI Compressco also provides
well monitoring and automated sand separation services in
conjunction with compression services in Mexico. CSI Compressco's equipment sales
business includes the fabrication and sale of standard compressor
packages, custom-designed compressor packages, and oilfield fluid
pump systems designed and fabricated primarily at our facility in
Midland, Texas. CSI Compressco's
aftermarket business provides compressor package reconfiguration
and maintenance services as well as the sale of compressor package
parts and components manufactured by third-party suppliers. CSI
Compressco's customers comprise a broad base of natural gas and oil
exploration and production, mid-stream, transmission, and storage
companies operating throughout many of the onshore producing
regions of the United States as
well as in a number of foreign countries, including Mexico, Canada, and Argentina. CSI Compressco is managed by CSI
Compressco GP Inc., which is an indirect, wholly owned subsidiary
of TETRA Technologies, Inc. (NYSE: TTI).
Forward Looking Statements
This press release contains "forward-looking statements" and
information based on our beliefs and those of our general partner,
CSI Compressco GP Inc. Forward-looking statements in this press
release are identifiable by the use of the following 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". These forward-looking statements include statements,
other than statements of historical fact, concerning the recovery
of the oil and gas industry and CSI Compressco's strategy, future
operations, financial position, estimated revenues, negotiations
with our bank lenders, projected costs and other statements
regarding CSI Compressco's beliefs, expectations, plans, prospects,
and other future events and performance. Such forward-looking
statements reflect our current views with respect to future events
and financial performance and are based on assumptions that we
believe to be reasonable but such forward-looking statements are
subject to numerous risks and uncertainties, including, but not
limited to: economic and operating conditions that are outside of
our control, including the supply, demand, and prices of crude oil
and natural gas; the levels of competition we encounter; the
activity levels of our customers; the availability of adequate
sources of capital to us; our ability to comply with contractual
obligations, including those under our financing arrangements; our
operational performance; the loss of our management; risks related
to acquisitions and our growth strategy, including our 2014
acquisition of Compressor Systems, Inc.; the availability of raw
materials and labor at reasonable prices; risks related to our
foreign operations; the effect and results of litigation,
regulatory matters, settlements, audits, assessments, and
contingencies; or potential material weaknesses in the future;
information technology risks, including the risk of cyberattack;
and other risks and uncertainties contained in our Annual Report on
Form 10-K and our other filings with the U.S. Securities and
Exchange Commission ("SEC"), which are available free of charge on
the SEC website at www.sec.gov. The risks and uncertainties
referred to above are generally beyond our ability to control and
we cannot predict all the risks and uncertainties that could cause
our actual results to differ from those indicated by the
forward-looking statements. If any of these risks or uncertainties
materialize, or if any of the underlying assumptions prove
incorrect, actual results may vary from those indicated by the
forward-looking statements, and such variances may be material. All
subsequent written and oral forward-looking statements made by or
attributable to us or to persons acting on our behalf are expressly
qualified in their entirety by reference to these risks and
uncertainties. You should not place undue reliance on
forward-looking statements. Each forward-looking statement speaks
only as of the date of the particular statement, and we undertake
no obligation to update or revise any forward-looking statements we
may make, except as may be required by law.
Schedule A -
Income Statement
|
|
Results of
Operations (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
Dec 31,
2016
|
|
Sept 30,
2016
|
|
Dec 31,
2015
|
|
Dec 31,
2016
|
|
Dec 31,
2015
|
|
(In Thousands, Except
per Unit Amounts)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Compression and
related services
|
$
|
51,395
|
|
|
$
|
53,103
|
|
|
$
|
66,800
|
|
|
$
|
224,736
|
|
|
$
|
287,680
|
|
Aftermarket
services
|
6,900
|
|
|
8,286
|
|
|
11,906
|
|
|
33,303
|
|
|
46,921
|
|
Equipment
sales
|
24,573
|
|
|
9,325
|
|
|
20,657
|
|
|
53,324
|
|
|
123,040
|
|
Total
revenues
|
$
|
82,868
|
|
|
$
|
70,714
|
|
|
$
|
99,363
|
|
|
$
|
311,363
|
|
|
$
|
457,641
|
|
Cost of revenues
(excluding
depreciation and
amortization expense):
|
|
|
|
|
|
|
|
Cost of compression
and related services
|
$
|
28,628
|
|
|
$
|
26,961
|
|
|
$
|
32,755
|
|
|
$
|
117,154
|
|
|
$
|
142,327
|
|
Cost of aftermarket
services
|
5,730
|
|
|
5,735
|
|
|
9,981
|
|
|
25,362
|
|
|
39,232
|
|
Cost of equipment
sales
|
24,337
|
|
|
7,830
|
|
|
17,017
|
|
|
48,744
|
|
|
109,101
|
|
Total cost of
revenues
|
$
|
58,695
|
|
|
$
|
40,526
|
|
|
$
|
59,753
|
|
|
$
|
191,260
|
|
|
$
|
290,660
|
|
Depreciation and
amortization
|
17,107
|
|
|
17,822
|
|
|
20,611
|
|
|
72,123
|
|
|
81,838
|
|
Impairments of
long-lived assets
|
2,357
|
|
|
—
|
|
|
11,797
|
|
|
10,223
|
|
|
11,797
|
|
Selling, general, and
administrative expense
|
8,530
|
|
|
9,279
|
|
|
11,207
|
|
|
36,222
|
|
|
43,479
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
139,444
|
|
|
92,334
|
|
|
139,444
|
|
Interest expense,
net
|
10,621
|
|
|
9,762
|
|
|
8,807
|
|
|
38,055
|
|
|
34,964
|
|
Series A Preferred
fair value adjustment
|
(2,162)
|
|
|
7,198
|
|
|
—
|
|
|
5,036
|
|
|
—
|
|
Other expense,
net
|
(510)
|
|
|
1,898
|
|
|
356
|
|
|
2,383
|
|
|
2,190
|
|
Income (loss) before
income tax provision
|
$
|
(11,770)
|
|
|
$
|
(15,771)
|
|
|
$
|
(152,612)
|
|
|
$
|
(136,273)
|
|
|
$
|
(146,731)
|
|
Provision (benefit)
for income taxes
|
368
|
|
|
200
|
|
|
(1,392)
|
|
|
1,865
|
|
|
(101)
|
|
Net income
(loss)
|
$
|
(12,138)
|
|
|
$
|
(15,971)
|
|
|
$
|
(151,220)
|
|
|
$
|
(138,138)
|
|
|
$
|
(146,630)
|
|
Net income (loss) per
basic and diluted common unit
|
$
|
(0.36)
|
|
|
$
|
(0.47)
|
|
|
$
|
(4.47)
|
|
|
$
|
(4.07)
|
|
|
$
|
(4.36)
|
|
Reconciliation of Non-GAAP Financial Measures
The Partnership includes in this release the non-GAAP financial
measures Adjusted EBITDA, distributable cash flow, distribution
coverage ratio, and free cash flow. Adjusted EBITDA is used as a
supplemental financial measure by the Partnership's management
to:
- assess the Partnership's ability to generate available cash
sufficient to make distributions to the Partnership's unitholders
and general partner;
- evaluate the financial performance of its assets without regard
to financing methods, capital structure or historical cost
basis;
- measure operating performance and return on capital as compared
to those of our competitors;
- determine the Partnership's ability to incur and service debt
and fund capital expenditures; and
- monitor the financial performance measure used in the
Partnership's bank credit facility financial covenant.
The Partnership defines Adjusted EBITDA as earnings before
interest, taxes, depreciation and amortization, and before certain
non-cash charges consisting of impairments, bad debt expense
attributable to bankruptcy of customer, non-cash costs of
compressors sold, equity compensation, fair value adjustments of
our Preferred Units, gain on extinguishment of debt, administrative
expenses under the Omnibus Agreement paid in equity using common
units and excluding acquisition and transaction costs, and
severance expense.
Distributable cash flow is used as a supplemental financial
measure by the Partnership's management as it provides important
information relating to the relationship between our financial
operating performance and our cash distribution capability.
Additionally, the Partnership uses distributable cash flow in
setting forward expectations and in communications with the board
of directors of our general partner. The Partnership defines
distributable cash flow as Adjusted EBITDA less current income tax
expense, maintenance capital expenditures, interest expense, and
severance expense, plus non-cash interest expense.
The Partnership believes that the distribution coverage ratio
provides important information relating to the relationship between
the Partnership's financial operating performance and its cash
distribution capability. The Partnership defines the distribution
coverage ratio as the ratio of distributable cash flow to the total
quarterly distribution payable, which includes, as applicable,
distributions payable on all outstanding common units, the general
partner interest, and the general partner's incentive distribution
rights.
The Partnership defines free cash flow as net cash provided by
operating activities less capital expenditures, net of sales
proceeds. Management primarily uses this metric to assess our
ability to retire debt, evaluate our capacity to further invest and
grow, and measure our performance as compared to our peer group of
companies.
These non-GAAP financial measures should not be considered an
alternative to net income, operating income, cash flows from
operating activities or any other measure of financial performance
presented in accordance with GAAP. These non-GAAP financial
measures may not be comparable to Adjusted EBITDA, distributable
cash flow, free cash flow or other similarly titled measures of
other entities, as other entities may not calculate these non-GAAP
financial measures in the same manner as CSI Compressco. Management
compensates for the limitation of these non-GAAP financial measures
as an analytical tool by reviewing the comparable GAAP measures,
understanding the differences between the measures and
incorporating this knowledge into management's decision making
process. Furthermore, these non-GAAP measures should not be viewed
as indicative of the actual amount of cash that CSI Compressco has
available for distributions or that the Partnership plans to
distribute for a given period, nor should they be equated to
available cash as defined in the Partnership's partnership
agreement.
The following table reconciles net income (loss) to Adjusted
EBITDA, distributable cash flow and distribution coverage ratio for
the three month periods ended December 31,
2016, September 30, 2016 and
December 31, 2015, and twelve month
periods ended December 31, 2016 and
December 31, 2015:
Schedule B -
Reconciliation of Net Income to Adjusted EBITDA, Distributable Cash
Flow and Distribution Coverage Ratio
|
|
Results of
Operations (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
Dec 31,
2016
|
|
Sept 30,
2016
|
|
Dec 31,
2015
|
|
Dec 31,
2016
|
|
Dec 31,
2015
|
|
(In
Thousands)
|
Net income
(loss)
|
$
|
(12,138)
|
|
|
$
|
(15,971)
|
|
|
$
|
(151,220)
|
|
|
$
|
(138,138)
|
|
|
$
|
(146,630)
|
|
Interest expense,
net
|
10,621
|
|
|
9,762
|
|
|
8,807
|
|
|
38,055
|
|
|
34,964
|
|
Provision for income
taxes
|
368
|
|
|
200
|
|
|
(1,392)
|
|
|
1,865
|
|
|
(101)
|
|
Depreciation and
amortization
|
17,107
|
|
|
17,822
|
|
|
20,611
|
|
|
72,123
|
|
|
81,838
|
|
Impairments of
long-lived assets
|
2,357
|
|
|
—
|
|
|
11,797
|
|
|
10,223
|
|
|
11,797
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
139,444
|
|
|
92,334
|
|
|
139,444
|
|
Bad debt expense
attributable to bankruptcy of customer
|
—
|
|
|
728
|
|
|
—
|
|
|
728
|
|
|
—
|
|
Non-cash costs of
compressors sold
|
3,941
|
|
|
890
|
|
|
2,836
|
|
|
6,772
|
|
|
3,441
|
|
Equity
compensation
|
792
|
|
|
775
|
|
|
505
|
|
|
3,028
|
|
|
2,164
|
|
Series A Preferred
transaction costs
|
85
|
|
|
3,046
|
|
|
—
|
|
|
3,131
|
|
|
—
|
|
Series A Preferred
fair value adjustments
|
(2,162)
|
|
|
7,198
|
|
|
—
|
|
|
5,036
|
|
|
—
|
|
Gain on
extinguishment of debt
|
(865)
|
|
|
(540)
|
|
|
—
|
|
|
(1,405)
|
|
|
—
|
|
Omnibus expense paid
in equity
|
1,576
|
|
|
—
|
|
|
—
|
|
|
1,576
|
|
|
—
|
|
CSI acquisition
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
208
|
|
Severance
|
—
|
|
|
57
|
|
|
485
|
|
|
562
|
|
|
772
|
|
Adjusted
EBITDA
|
$
|
21,682
|
|
|
$
|
23,967
|
|
|
$
|
31,873
|
|
|
$
|
95,890
|
|
|
$
|
127,897
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Current income tax
expense
|
608
|
|
|
258
|
|
|
471
|
|
|
1,835
|
|
|
504
|
|
Maintenance capital
expenditures
|
4,840
|
|
|
2,771
|
|
|
3,429
|
|
|
11,359
|
|
|
11,298
|
|
Interest
expense
|
10,621
|
|
|
9,762
|
|
|
8,807
|
|
|
38,055
|
|
|
34,964
|
|
Severance
|
—
|
|
|
57
|
|
|
485
|
|
|
562
|
|
|
772
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
Non-cash items
included in interest expense
|
3,185
|
|
|
1,596
|
|
|
697
|
|
|
6,873
|
|
|
2,786
|
|
Distributable cash
flow
|
$
|
8,798
|
|
|
$
|
12,715
|
|
|
$
|
19,378
|
|
|
$
|
50,952
|
|
|
$
|
83,145
|
|
|
|
|
|
|
|
|
|
|
|
Cash distribution
attributable to period
|
$
|
12,870
|
|
|
$
|
12,799
|
|
|
$
|
12,784
|
|
|
$
|
51,237
|
|
|
$
|
64,535
|
|
Distribution coverage
ratio
|
0.68x
|
|
|
0.99x
|
|
|
1.52x
|
|
|
0.99x
|
|
|
1.29x
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles cash from operations to free cash
flow for the three month periods ended December 31, 2016, September 30, 2016 and December 31, 2015, and twelve month periods ended
December 31, 2016 and December 31, 2015:
Schedule C -
Reconciliation of Net Cash Provided by Operating Activities
Operations to Free Cash Flow
|
|
Results of
Operations (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
Dec 31,
2016
|
|
Sept 30,
2016
|
|
Dec 31,
2015
|
|
Dec 31,
2016
|
|
Dec 31,
2015
|
|
(In
Thousands)
|
Net cash provided by
operating activities
|
$
|
15,922
|
|
|
$
|
9,958
|
|
|
$
|
38,351
|
|
|
$
|
61,444
|
|
|
$
|
101,893
|
|
Capital expenditures,
net of sales proceeds
|
(3,057)
|
|
|
(3,796)
|
|
|
(19,274)
|
|
|
(10,659)
|
|
|
(95,272)
|
|
Free cash
flow
|
$
|
12,865
|
|
|
$
|
6,162
|
|
|
$
|
19,077
|
|
|
$
|
50,785
|
|
|
$
|
6,621
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/csi-compressco-lp-announces-fourth-quarter-and-full-year-2016-results-300414612.html
SOURCE CSI Compressco LP