THE WOODLANDS, Texas,
Aug. 8, 2017 /PRNewswire/ -- CSI
Compressco LP ("CSI Compressco" or the "Partnership") (NASDAQ:
CCLP) announced second quarter 2017 consolidated financial
results.
Second Quarter highlights include:
- Revenue increased 15% to $75
million on stronger equipment and aftermarket sales
- Compression fleet utilization improved 190 basis points to
78.9% at June 30, 2017 compared to
March 31, 2017
- Aftermarket services revenue of $10.5
million increased by 12% compared to Q1-2017
- New equipment sales orders of $12
million with a quarter-end backlog of $24 million
- Net loss of $6.4 million, which
includes a $5.5 million favorable
non-cash fair market value adjustment to the Series A
Preferred
- Adjusted EBITDA(1) was $19.5
million, which compares to Q1-2017 adjusted EBITDA of
$19.9 million (first quarter adjusted
EBITDA was benefitted by the settlement of $1.7 million of certain G&A expenses using
common units, while similar second quarter G&A expenses were
settled in cash).
- Net cash provided from operating activities of $9.5 million, up $7.7
million from Q1-2017
- Cash distribution of $0.1875 per
common unit
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
June 30,
2017
|
|
March 31,
2017
|
|
June 30,
2016
|
|
Q2-17
vs.
Q1-17
|
|
Q2-17
vs.
Q2-16
|
|
(In Thousands, Except
Ratios, and Percentages)
|
Net income
(loss)
|
$
(6,372)
|
|
$
(15,593)
|
|
$
(4,680)
|
|
59 %
|
|
(36)%
|
Adjusted
EBITDA(1)
|
$
19,505
|
|
$
19,873
|
|
$
24,799
|
|
(2)%
|
|
(21)%
|
Distributable cash
flow(1)
|
$
5,768
|
|
$
7,093
|
|
$
15,207
|
|
(19)%
|
|
(62)%
|
Quarterly cash
distribution per unit
|
$
0.1875
|
|
$
0.1875
|
|
$
0.3775
|
|
—
|
|
(50)%
|
Distribution coverage
ratio(1)
|
0.85x
|
|
1.09x
|
|
1.19x
|
|
—
|
|
—
|
Fleet capital
expenditures
|
$
—
|
|
$
—
|
|
$
8
|
|
—
|
|
(100)%
|
Net cash provided by
operating activities
|
$
9,533
|
|
$
1,821
|
|
$
20,469
|
|
424 %
|
|
(53)%
|
Free cash
flow(1)
|
$
5,271
|
|
$
(5,394)
|
|
$
18,016
|
|
198 %
|
|
(71)%
|
|
(1) Non-GAAP
financial measures reconciled to the nearest GAAP number on
Schedules B and C.
|
Consolidated revenues for the quarter ended June 30, 2017, were $75.3
million compared to $65.6
million for the first quarter of 2017 and $76.1 million for the second quarter of 2016,
with equipment sales increasing $8.9
million sequentially and $5.8
million year-over-year. Pre-tax loss for the quarter
ended June 30, 2017 was $5.8 million, inclusive of a favorable
$5.5 million non-cash adjustment to
the fair market value of the Series A Preferred, compared to
$14.8 million loss for the first
quarter of 2017 and $4.1 million loss
for the second quarter of 2016.
As of June 30, 2017, aggregate
compression services fleet horsepower totaled 1,094,739 horsepower
and the fleet utilization rate was 78.9%. Utilization of our
highest horsepower segment, equipment of 801 and higher horsepower,
was 89.6% at the end of June 2017. 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. We do not exclude idle
horsepower under repair or horsepower that is otherwise impaired
from our calculation of utilization rate.
Unaudited results of operations for the quarter ended
June 30, 2017 compared to the prior
quarter and the corresponding prior year quarter are presented in
the accompanying financial tables.
Stuart M. Brightman, President
and Chairman of the Board of CSI Compressco, commented,
"Utilization of our fleet continued the positive trend from earlier
this year, especially with the larger horsepower equipment for
gathering systems in West Texas,
South Texas and the Mid-Con
markets. Demand for large horsepower equipment is strong and
is affording us the opportunity to redeploy idle equipment and
begin discussions on higher pricing. We are also seeing an
increased demand for aftermarket services as our customers are
responding to the higher associated gas volumes by catching up
maintenance on their equipment and rebuilding parts inventory
levels.
"As of June 30, 863,557 horsepower
of our total compression services fleet was generating revenue, an
increase of 10,357 horsepower compared to prior quarter end.
This marks the third consecutive quarter of improvement in both
horsepower generating revenue and fleet utilization, and is the
largest increase in the past three quarters. Aftermarket
services revenues remained strong in the second quarter at
$10.5 million. During the second
quarter we received new equipment sales orders totaling
$12 million, bringing our total
backlog to $24 million at the end of
June, all of which we expect to deliver in the second half of
2017. Subsequent to the end of the second quarter, we have
received another $7 million of
purchase orders for new equipment that is not included in the
stated backlog, with very encouraging indications of additional
quoted opportunities.
"On August 1, we launched our
fully integrated ERP system that automates our quote to cash
process and streamlines our business processes. Our sales
team and field technicians are now all electronically connected
with real time visibility to all resources, automated resource
scheduling and improved parts management. We expect this new
system to generate more than $4.0
million of annualized cost savings in addition to making
significant improvements in working capital management through
visibility throughout the organization of all parts and
supplies. Additionally, our invoicing to customers will occur
automatically on a daily basis and is expected to improve days
sales outstanding."
Forward-Looking Guidance
Our total capital expenditure forecast for 2017 is $25 million to $30 million compared to our prior
guidance of $15 million to $30
million, which is inclusive of maintenance capital
expenditures that are projected to be $15
million to $20 million for the year.
Conference Call
CSI Compressco will host a conference call to discuss second
quarter 2017 results today, August 8, 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 CSI Compressco's website at
www.csicompressco.com.
Second Quarter 2017 Cash Distribution on Common Units
On July 21, 2017, CSI Compressco
announced that the board of directors of its general partner
declared a cash distribution attributable to the second quarter of
2017 of $0.1875 per outstanding
common unit, which will be paid on August
14, 2017 to common unitholders of record as of the close of
business on August 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 second quarter of
2017 was .85X.
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 more
than 5,800 compressor packages providing approximately 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 news 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 news
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 verbal 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
|
|
Six Months
Ended
|
|
June 30,
2017
|
|
March 31,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
|
(in Thousands, Except
per Unit Amounts)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Compression and
related services
|
$
50,256
|
|
$
50,497
|
|
$
57,827
|
|
$
100,753
|
|
$
120,238
|
Aftermarket
services
|
10,529
|
|
9,387
|
|
9,530
|
|
19,916
|
|
18,117
|
Equipment
sales
|
14,530
|
|
5,668
|
|
8,732
|
|
20,198
|
|
19,426
|
Total
revenues
|
75,315
|
|
65,552
|
|
76,089
|
|
140,867
|
|
157,781
|
Cost of revenues
(excluding depreciation and amortization expense):
|
|
|
|
|
|
|
|
|
Cost of compression
and related services
|
28,803
|
|
29,043
|
|
29,760
|
|
57,846
|
|
61,565
|
Cost of aftermarket
services
|
8,461
|
|
7,622
|
|
7,279
|
|
16,083
|
|
13,897
|
Cost of equipment
sales
|
13,321
|
|
5,396
|
|
6,624
|
|
18,717
|
|
16,577
|
Total cost of
revenues
|
50,585
|
|
42,061
|
|
43,663
|
|
92,646
|
|
92,039
|
Depreciation and
amortization
|
17,204
|
|
17,295
|
|
18,742
|
|
34,499
|
|
37,194
|
Impairments of
long-lived assets
|
—
|
|
—
|
|
—
|
|
—
|
|
7,866
|
Selling, general, and
administrative expense
|
8,230
|
|
8,766
|
|
8,183
|
|
16,996
|
|
18,413
|
Goodwill
Impairment
|
—
|
|
—
|
|
—
|
|
—
|
|
92,334
|
Interest expense,
net
|
10,449
|
|
10,383
|
|
8,870
|
|
20,832
|
|
17,672
|
Series A Preferred
fair value adjustment
|
(5,528)
|
|
1,865
|
|
—
|
|
(3,663)
|
|
—
|
Other expense,
net
|
141
|
|
(38)
|
|
707
|
|
103
|
|
995
|
Income (loss) before
income tax provision
|
(5,766)
|
|
(14,780)
|
|
(4,076)
|
|
(20,546)
|
|
(108,732)
|
Provision (benefit)
for income taxes
|
606
|
|
813
|
|
604
|
|
1,419
|
|
1,297
|
Net income
(loss)
|
$
(6,372)
|
|
$
(15,593)
|
|
$
(4,680)
|
|
$
(21,965)
|
|
$
(110,029)
|
|
|
|
|
|
|
|
|
|
|
Net income per
diluted common unit
|
$
(0.21)
|
|
$
(0.46)
|
|
$
(0.14)
|
|
$
(0.63)
|
|
$
(3.25)
|
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, administrative expenses under the Omnibus
Agreement paid in equity using common units, severance expense, and
software implementation 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 June 30,
2017, March 31, 2017,
June 30, 2016, and the six-month
periods ended June 30, 2017 and
2016:
Schedule B -
Reconciliation of Net Income to Adjusted EBITDA, Distributable Cash
Flow and Distribution Coverage Ratio
|
|
Results of
Operations (unaudited)
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2017
|
|
March 31,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
|
(In
Thousands)
|
|
|
|
|
Net income
(loss)
|
$
(6,372)
|
|
$
(15,593)
|
|
$
(4,680)
|
|
$
(21,965)
|
|
$
(110,029)
|
Interest expense,
net
|
10,449
|
|
10,383
|
|
8,870
|
|
20,832
|
|
17,672
|
Provision for income
taxes
|
606
|
|
813
|
|
604
|
|
1,419
|
|
1,297
|
Depreciation and
amortization
|
17,204
|
|
17,295
|
|
18,742
|
|
34,499
|
|
37,194
|
Impairments of
long-lived assets
|
—
|
|
—
|
|
—
|
|
—
|
|
7,866
|
Goodwill
Impairment
|
—
|
|
—
|
|
—
|
|
—
|
|
92,334
|
Non-cash cost of
compressors sold
|
2,015
|
|
2,316
|
|
176
|
|
4,331
|
|
1,941
|
Equity
Compensation
|
935
|
|
956
|
|
825
|
|
1,891
|
|
1,461
|
Series A Preferred
transaction costs
|
—
|
|
37
|
|
—
|
|
37
|
|
—
|
Series A Preferred
fair value adjustments
|
(5,528)
|
|
1,865
|
|
—
|
|
(3,663)
|
|
—
|
Omnibus expense paid
in equity
|
—
|
|
1,746
|
|
—
|
|
1,746
|
|
—
|
Severance
|
—
|
|
55
|
|
262
|
|
55
|
|
505
|
Software
implementation
|
196
|
|
—
|
|
—
|
|
196
|
|
—
|
Adjusted
EBITDA
|
$
19,505
|
|
$
19,873
|
|
$
24,799
|
|
$
39,378
|
|
$
50,241
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Current income tax
expense
|
479
|
|
691
|
|
421
|
|
1,170
|
|
969
|
Maintenance capital
expenditures
|
5,698
|
|
4,580
|
|
1,435
|
|
10,278
|
|
3,748
|
Interest
Expense
|
10,449
|
|
10,383
|
|
8,870
|
|
20,832
|
|
17,672
|
Severance
|
—
|
|
55
|
|
262
|
|
55
|
|
505
|
|
|
|
|
|
|
|
|
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
Non-cash interest
expense
|
2,890
|
|
2,929
|
|
1,396
|
|
5,819
|
|
2,092
|
Distributable cash
flow
|
$
5,769
|
|
$
7,093
|
|
$
15,207
|
|
$
12,862
|
|
$
29,439
|
|
|
|
|
|
|
|
|
|
|
Cash distribution
attributable to period
|
$
6,765
|
|
$
6,512
|
|
$
12,784
|
|
$
13,858
|
|
$
25,568
|
|
|
|
|
|
|
|
|
|
|
Distribution coverage
ratio
|
0.85x
|
|
1.09x
|
|
1.19x
|
|
0.93x
|
|
1.15x
|
The following table reconciles net cash provided by operating
activities to free cash flow for the three month periods ended
June 30, 2017, March 31, 2017, June 30,
2017, and the six-month periods ended June 30, 2017 and 2016:
Schedule C -
Reconciliation of Net Cash Provided by Operating Activities to Free
Cash Flow
|
|
Results of
Operations (unaudited)
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2017
|
|
March 31,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
|
(In
Thousands)
|
Cash from
operations
|
9,533
|
|
1,821
|
|
20,469
|
|
11,354
|
|
35,564
|
Capital expenditures,
net of sales proceeds
|
(4,262)
|
|
(7,215)
|
|
(2,453)
|
|
(11,477)
|
|
(3,806)
|
Free cash
flow
|
5,271
|
|
(5,394)
|
|
18,016
|
|
(123)
|
|
31,758
|
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SOURCE CSI Compressco LP