MIDLAND, Texas, Aug. 5, 2016 /PRNewswire/ -- CSI Compressco
LP (CSI Compressco or the Partnership) (NASDAQ: CCLP) today
announced second quarter 2016 consolidated results. Highlights of
the second quarter 2016 results include:
- Second quarter net loss of $4.7
million
- Second quarter Adjusted EBITDA(1) of $24.8 million
- Second quarter net cash provided from operating activities of
$20.5 million
- Second quarter free cash flow(1) of $18.0 million
- Second quarter cash distribution of $0.3775 per unit
- Second quarter distribution coverage ratio(1) of
1.19x
- Continued reduction in SGA expenditures
|
|
|
|
|
|
|
June 30,
2016
|
|
June 30,
2016
|
|
Three Months
Ended
|
|
vs.
|
|
vs.
|
|
June 30,
2016
|
|
March 31,
2016
|
|
June 30,
2015
|
|
March 31,
2016
|
|
June 30,
2015
|
|
(In Thousands, Except
Ratios, and Percentages)
|
Net income
(loss)
|
$
|
(4,680)
|
|
|
$
|
(105,349)
|
|
|
$
|
1,163
|
|
|
96 %
|
|
(502)%
|
Adjusted
EBITDA(1)
|
$
|
24,799
|
|
|
$
|
25,442
|
|
|
$
|
31,525
|
|
|
(3)%
|
|
(21)%
|
Distributable cash
flow(1)
|
$
|
15,207
|
|
|
$
|
14,232
|
|
|
$
|
20,568
|
|
|
7 %
|
|
(26)%
|
Cash distribution per
unit annualized
|
$
|
1.51
|
|
|
$
|
1.51
|
|
|
$
|
2.00
|
|
|
—
|
|
|
(25)%
|
Distribution coverage
ratio(1)
|
1.19x
|
|
1.11x
|
|
1.19x
|
|
—
|
|
|
—
|
|
Fleet capital
expenditures
|
$
|
8
|
|
|
$
|
436
|
|
|
$
|
19,610
|
|
|
(98)%
|
|
(100)%
|
Net cash provided by
operating activities
|
$
|
20,469
|
|
|
$
|
15,095
|
|
|
$
|
19,721
|
|
|
36 %
|
|
4 %
|
Free cash
flow(1)
|
$
|
18,016
|
|
|
$
|
13,742
|
|
|
$
|
(213)
|
|
|
31 %
|
|
—
|
|
|
|
(1)
|
Adjusted EBITDA,
distributable cash flow, distribution coverage ratio, and free cash
flow are non-GAAP financial measures that are defined and
reconciled to the nearest GAAP financial measure on Schedules B and
C in this press release.
|
Consolidated revenues for the quarter ended June 30, 2016 were $76.1
million compared to $81.7
million for the first quarter of 2016 and $126.5 million for the second quarter of 2015.
Loss before tax for the quarter ended June
30, 2016 was $(4.1) million
compared to loss before tax of $(104.7)
million for the first quarter of 2016 and income before tax
of $1.5 million for the second
quarter of 2015.
As of June 30, 2016 compression
services fleet horsepower totaled 1,130,134 horsepower. As of that
date, the fleet utilization rate was 75.8%. 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
June 30, 2016 compared to the prior
quarter and the prior year period, and unaudited results of
operations for the six month period ended June 30, 2016 compared to the prior year period
are presented in the accompanying financial tables.
Timothy A. Knox, President of CSI
Compressco, commented, "As was the case in the prior two quarters,
we were free cash flow positive for the second quarter 2016.
In the second quarter we had free cash flow of $18 million before the quarterly distribution and
$5 million after the distribution.
With our continued focus on cost, SGA expenditures in the second
quarter were down $2 million compared
to the prior quarter, and to the lowest level since prior to the
acquisition of Compressor Systems in August of 2014.
Maintenance capital expenditures for the second quarter were
$1.4 million, almost 40% below prior
quarter levels. Distributable cash flow increased sequentially by
$1 million, and the distribution
coverage ratio improved from 1.11x in the prior quarter to 1.19x in
the second quarter of 2016.
"In the second quarter of 2016 we entered into an amendment of
our senior secured credit agreement which increases the maximum
leverage ratio to 5.50x through the third quarter of 2016, then
increasing to 5.75x through third quarter 2017, with additional
step-downs following. This proactive measures addresses leverage
concerns, and is one of many actions taken in dealing with the
continued impact of the prolonged downturn. As of June 30, 2016 the Partnership had $236 million outstanding on its $340 million revolving credit facility.
"Our total capital expenditure forecast for 2016 remains between
$20 million and $25 million as was
indicated in the prior quarter. Of this, $12
million remains forecast for maintenance capital,
$6 million is directed at the
EnterpriseOne implementation, and up to $7
million allocated for other growth activities. We will
continue our focus on maximizing the existing compression services
fleet utilization, and with the improvement in natural gas prices
we may selectively invest in opportunities with the proper
financial return."
Conference Call
CSI Compressco will host a conference call to discuss second
quarter 2016 results today, August 5,
2016, at 10:30 am 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.compressco.com.
Second Quarter 2016 Distribution
On July 22, 2016, CSI Compressco
announced that the board of directors of its general partner
declared a cash distribution attributable to the second quarter of
2016 of $0.3775 per outstanding unit,
which will be paid on August 15, 2016
to unitholders of record as of the close of business on
August 1, 2016. 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 2016 was 1.19x.
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 over
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 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; risks associated with a material
weakness in our internal control over financial reporting and the
consequences we may encounter if we are unable to remediate that
material weakness or if we identify other 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
|
|
Six Months
Ended
|
|
June 30,
2016
|
|
March 31,
2016
|
|
June 30,
2015
|
|
June 30,
2016
|
|
June 30,
2015
|
|
(In Thousands, Except
per Unit Amounts)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Compression and
related services
|
$
|
57,827
|
|
|
$
|
62,411
|
|
|
$
|
72,826
|
|
|
$
|
120,238
|
|
|
$
|
148,114
|
|
Aftermarket
services
|
9,530
|
|
|
8,587
|
|
|
9,070
|
|
|
18,117
|
|
|
23,323
|
|
Equipment
sales
|
8,732
|
|
|
10,694
|
|
|
44,569
|
|
|
19,426
|
|
|
57,917
|
|
Total
revenues
|
$
|
76,089
|
|
|
$
|
81,692
|
|
|
$
|
126,465
|
|
|
$
|
157,781
|
|
|
$
|
229,354
|
|
Cost of revenues
(excluding depreciation and amortization expense):
|
|
|
|
|
|
|
|
Cost of compression
and related services
|
$
|
29,760
|
|
|
$
|
31,805
|
|
|
$
|
37,490
|
|
|
$
|
61,565
|
|
|
$
|
74,468
|
|
Cost of aftermarket
services
|
7,279
|
|
|
6,618
|
|
|
7,184
|
|
|
13,897
|
|
|
19,063
|
|
Cost of equipment
sales
|
6,624
|
|
|
9,953
|
|
|
40,011
|
|
|
16,577
|
|
|
51,261
|
|
Total cost of
revenues
|
$
|
43,663
|
|
|
$
|
48,376
|
|
|
$
|
84,685
|
|
|
$
|
92,039
|
|
|
$
|
144,792
|
|
Depreciation and
amortization
|
18,742
|
|
|
18,452
|
|
|
20,629
|
|
|
37,194
|
|
|
40,617
|
|
Impairments of
long-lived assets
|
—
|
|
|
7,866
|
|
|
—
|
|
|
7,866
|
|
|
—
|
|
Selling, general, and
administrative expense
|
8,183
|
|
|
10,230
|
|
|
10,554
|
|
|
18,413
|
|
|
21,803
|
|
Goodwill
Impairment
|
—
|
|
|
92,334
|
|
|
—
|
|
|
92,334
|
|
|
—
|
|
Interest expense,
net
|
8,870
|
|
|
8,802
|
|
|
8,658
|
|
|
17,672
|
|
|
17,260
|
|
Other expense,
net
|
707
|
|
|
288
|
|
|
473
|
|
|
995
|
|
|
1,016
|
|
Income (loss) before
income tax provision
|
$
|
(4,076)
|
|
|
$
|
(104,656)
|
|
|
$
|
1,466
|
|
|
$
|
(108,732)
|
|
|
$
|
3,866
|
|
Provision (benefit)
for income taxes
|
604
|
|
|
693
|
|
|
303
|
|
|
1,297
|
|
|
895
|
|
Net income
(loss)
|
$
|
(4,680)
|
|
|
$
|
(105,349)
|
|
|
$
|
1,163
|
|
|
$
|
(110,029)
|
|
|
$
|
2,971
|
|
Net income (loss) per
diluted common unit
|
$
|
(0.14)
|
|
|
$
|
(3.11)
|
|
|
$
|
0.02
|
|
|
$
|
(3.28)
|
|
|
$
|
0.07
|
|
Reconciliation of Non-GAAP Financial Measures
The Partnership includes in this release the non-GAAP financial
measures Adjusted EBITDA, Adjusted EBITDA as calculated for
financial covenant purposes, distributable cash flow, distribution
coverage ratio, and free cash flow. Adjusted EBITDA and Adjusted
EBITDA as calculated for financial covenant purposes are used as
supplemental financial measures 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 non-cash
charges for impairments and non-cash costs of compressors sold, and
excluding equity compensation, transaction costs, and severance
expense.
The Partnership defines Adjusted EBITDA as calculated for
financial covenant purposes as Adjusted EBITDA plus provision for
doubtful accounts and other adjustments provided for in our credit
facility definition of Consolidated EBITDA. This non-GAAP
measure is only presented for the current quarterly period because
Adjusted EBITDA for other periods referenced in this report has
approximated Adjusted EBIDTA as calculated for financial covenant
purposes.
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 amortization of finance costs.
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,
2016, March 31, 2016, and
June 30, 2015, and the six month
periods ended June 30, 2016 and
June 30, 2015:
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,
2016
|
|
March 31,
2016
|
|
June 30,
2015
|
|
June 30,
2016
|
|
June 30,
2015
|
|
(In
Thousands)
|
Net income
(loss)
|
$
|
(4,680)
|
|
|
$
|
(105,349)
|
|
|
$
|
1,163
|
|
|
$
|
(110,029)
|
|
|
$
|
2,971
|
|
Interest expense,
net
|
8,870
|
|
|
8,802
|
|
|
8,658
|
|
|
17,672
|
|
|
17,260
|
|
Provision for income
taxes
|
604
|
|
|
693
|
|
|
303
|
|
|
1,297
|
|
|
895
|
|
Depreciation and
amortization
|
18,742
|
|
|
18,452
|
|
|
20,629
|
|
|
37,194
|
|
|
40,617
|
|
Impairments of
long-lived assets
|
—
|
|
|
7,866
|
|
|
—
|
|
|
7,866
|
|
|
—
|
|
Goodwill
impairment
|
—
|
|
|
92,334
|
|
|
—
|
|
|
92,334
|
|
|
—
|
|
Non-cash cost of
compressors sold
|
176
|
|
|
1,765
|
|
|
—
|
|
|
1,941
|
|
|
206
|
|
Equity
compensation
|
825
|
|
|
636
|
|
|
727
|
|
|
1,461
|
|
|
1,204
|
|
CSI acquisition
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
208
|
|
Severance
|
262
|
|
|
243
|
|
|
45
|
|
|
505
|
|
|
244
|
|
Adjusted
EBITDA(1)
|
$
|
24,799
|
|
|
$
|
25,442
|
|
|
$
|
31,525
|
|
|
$
|
50,241
|
|
|
$
|
63,605
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Current income tax
expense
|
421
|
|
|
548
|
|
|
917
|
|
|
969
|
|
|
1,329
|
|
Maintenance capital
expenditures
|
1,435
|
|
|
2,313
|
|
|
2,033
|
|
|
3,748
|
|
|
4,204
|
|
Interest
expense
|
8,870
|
|
|
8,802
|
|
|
8,658
|
|
|
17,672
|
|
|
17,260
|
|
Severance
|
262
|
|
|
243
|
|
|
45
|
|
|
505
|
|
|
244
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
Amortization of
finance costs included in interest expense
|
1,396
|
|
|
696
|
|
|
696
|
|
|
2,092
|
|
|
1,392
|
|
Distributable cash
flow
|
$
|
15,207
|
|
|
$
|
14,232
|
|
|
$
|
20,568
|
|
|
$
|
29,439
|
|
|
$
|
41,960
|
|
|
|
|
|
|
|
|
|
|
|
Cash distribution
attributable to period
|
$
|
12,784
|
|
|
$
|
12,784
|
|
|
$
|
17,293
|
|
|
$
|
25,568
|
|
|
$
|
34,391
|
|
Distribution coverage
ratio
|
1.19x
|
|
1.11x
|
|
1.19x
|
|
1.15x
|
|
1.22x
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted
EBITDA as calculated for financial covenant purposes is reconciled
to Adjusted EBITDA as follows;
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
24,799
|
|
|
|
|
|
|
|
|
|
Provision for
doubtful accounts and other adjustments provided for in Credit
Facility definition of Consolidated EBITDA
|
1,956
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as
calculated for financial covenants
|
$
|
26,755
|
|
|
|
|
|
|
|
|
|
The following table reconciles cash from operations to free cash
flow for the three month periods ended June
30, 2016, March 31, 2016 and
June 30, 2015, and six month periods
ended June 30, 2016 and June 30, 2015:
Schedule C –
Reconciliation of Net Cash Provided by Operating Activities
Operations to Free Cash Flow
|
|
|
|
|
|
|
|
|
|
Results of
Operations (unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June 30,
2016
|
|
March 31,
2016
|
|
June 30,
2015
|
|
June 30,
2016
|
|
June 30,
2015
|
|
(In
Thousands)
|
Net cash provided by
operating activities
|
$
|
20,469
|
|
|
$
|
15,095
|
|
|
$
|
19,721
|
|
|
$
|
35,564
|
|
|
$
|
52,202
|
|
Capital expenditures,
net of sales proceeds
|
(2,453)
|
|
|
(1,353)
|
|
|
(19,934)
|
|
|
(3,806)
|
|
|
(57,092)
|
|
Free cash
flow
|
$
|
18,016
|
|
|
$
|
13,742
|
|
|
$
|
(213)
|
|
|
$
|
31,758
|
|
|
$
|
(4,890)
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/csi-compressco-lp-announces-second-quarter-2016-results-300309733.html
SOURCE CSI Compressco LP