THE WOODLANDS, Texas,
May 4, 2020 /PRNewswire/ -- CSI
Compressco LP ("CSI Compressco" or the "Partnership") (NASDAQ:
CCLP) announced today first quarter 2020 results.
![CSI Compressco LP Logo CSI Compressco LP Logo](https://mma.prnewswire.com/media/431423/CSI_Compressco_LP_Logo.jpg)
CSI Compressco's consolidated revenues for the quarter ended
March 31, 2020 were $90 million,
down 27% from the fourth quarter of 2019 due to lower equipment
sales and weaker aftermarket services activity. Compression
services revenue increased sequentially by 1% on the addition to
the fleet of 22,160 horsepower of new equipment. Compared to
the first quarter of 2019, revenue was down 13% also due to lower
equipment sales. Net loss for the quarter ended March 31, 2020
was $13.6 million compared to a net
loss of $2.0 million in the fourth
quarter of 2019 and a net loss of $12.5
million for the first quarter of 2019. Net loss per diluted
common unit for first quarter 2020 was $0.28 as compared to a net loss per diluted
common unit of $0.04 in the fourth
quarter of 2019 and a net loss per diluted common unit of
$0.26 in the first quarter of 2019.
Net loss in the first quarter of 2020 included $6.0 million of unusual items, primarily related
to impairment of long-lived assets and inventory related to the
planned closure of our Midland
fabrication facility. First quarter Adjusted EBITDA was
$27.8 million, down $6.9 million from the fourth quarter 2019 due to
weaker aftermarket services activity and lower equipment sales.
This press release includes the following financial measures
that are not presented in accordance with generally accepted
accounting principles in the United
States ("GAAP"): Adjusted EBITDA, Adjusted EBITDA Margin,
distributable cash flow, distribution coverage ratio, free cash
flow, and net leverage ratio. Please see Schedules B-E for
reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP measures.
First Quarter 2020
Brady Murphy, President of CSI
Compressco commented, "In the first quarter of 2020, our business
continued to perform well despite the unprecedented deterioration
in market conditions that started in the month of March. The impact
of the COVID-19 pandemic and crude oil oversupply on the global
energy markets has been dramatic. Our customers have reacted
quickly to the downturn by significantly reducing capital budgets
and scaling back drilling and completion activities. This downturn
is unique in that we are seeing pressure on both the demand side
from the slowdown in the global economies and the supply side from
several years of excess production. Unlike previous downturns,
production shut-ins due to oversupply and lack of storage are
occurring and will be having a meaningful impact to our business.
The speed of this downturn is much faster, and the lack of
visibility makes it hard to predict when things will eventually
recover. With excess compression horsepower in the industry, we
expect to see lower service equipment utilization, additional
client requests to put service units on stand-by, and pricing
pressures as customers try to reduce their costs. We started seeing
all three of these issues towards the end of March and they have
accelerated into April and May. By the end of May 2020, we expect up to 20% of our domestic
horsepower to be impacted by customers shutting-in production,
either by going to stand-by rates or through equipment
returns. Prior to the current downturn, approximately 2% of
our domestic fleet horsepower was on standby. Given the
magnitude of the shut-ins that our customers are communicating to
us, we expect the amount of horsepower to be put on standby by the
end of May to be above 10% of our domestic fleet. We expect
utilization to quickly approach the low point of the 2014-2016
downturn of 75.2%.
"As the world adjusts to the COVID-19 pandemic, the Partnership
has implemented guidelines to keep our employees and clients safe
while meeting our clients' requirements. We have developed
operating practices that allow us to effectively monitor remotely a
large percentage of our business and found alternate supply sources
for key components to ensure that our clients' equipment is
properly running and maintained.
"While we cannot control the demand or supply for oil and gas or
the length and severity of the COVID-19 pandemic, we have acted
swiftly and with a sense of urgency to reduce our cost structure.
The Partnership has already implemented or is in the process of
implementing the following cost cutting actions: (1) reduction in
capital expenditures from $75.8
million in 2019 to a forecast of between $28 million and $35
million in 2020; (2) U.S. employee pay reductions; (3)
headcount reductions at corporate and field levels; (4) 20%
reduction in Board of Directors cash retainers; (5) reduction of
all discretionary expenditures; (6) suspension of the employer
401(k) matching program; and (7) negotiated reductions in
expenditures with many of our suppliers.
"In addition, we have made the decision to close our fabrication
operations in Midland, Texas,
which should be completed by the end of the second quarter or early
third quarter of this year. We will look towards selling our
38-acre Midland facility and real
estate. When the market returns and along with it demand for new
service fleet additions, we expect to use an outsourcing
relationship for the fabrication of our future requirements.
"During the quarter we added 22,160 additional horsepower to our
service fleet to fulfill prior customer commitments, focused around
centralized gas lift, with the vast majority of the new additions
being deployed into existing clusters of equipment in the Permian
Basin and in South Texas. We
continue to have some additional commitments for new service
equipment to be delivered in the second quarter of 2020, but beyond
that, our commitments are minimal and at this time we do not
anticipate any second half growth capital expenditures.
"Distributable cash flow in the first quarter of 2020 was
$8.7 million, down 44% from the
fourth quarter of 2019, resulting in a distribution coverage ratio
of 18.3x compared to 32.5x in the fourth quarter of 2019.
"In summary, the compression and related services business
remained steady in the early parts of the first quarter of 2020,
while the equipment sales and aftermarket services business
declined. We realize going forward we are in a very different
market environment. The fundamentals of our business to support
increasing volumes of gas production and centralized gas lift will
be intact for many years to come, but in the immediate and
foreseeable future we are focused on navigating the Partnership
through this downturn successfully and responsibly."
Unaudited results of operations for the quarter ended
March 31, 2020 compared to the prior quarter and the
corresponding prior year quarter are presented in the table
below.
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|
|
|
|
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Three Months
Ended
|
|
|
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|
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Mar 31,
2020
|
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Dec 31,
2019
|
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Mar 31,
2019
|
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Q1-2020 v
Q4-2019
|
|
Q1-2020 v
Q1-2019
|
|
(In Thousands, Except
Ratios, and Percentages)
|
Net income
(loss)
|
$
|
(13,630)
|
|
|
$
|
(1,957)
|
|
|
$
|
(12,456)
|
|
|
(596)
|
%
|
|
(9)
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%
|
Adjusted
EBITDA
|
$
|
27,762
|
|
|
$
|
34,708
|
|
|
$
|
26,805
|
|
|
(20)
|
%
|
|
4
|
%
|
Distributable cash
flow
|
$
|
8,728
|
|
|
$
|
15,505
|
|
|
$
|
6,298
|
|
|
(44)
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%
|
|
39
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%
|
Quarterly cash
distribution per unit
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
—
|
%
|
|
—
|
%
|
Distribution coverage
ratio
|
|
18.3x
|
|
|
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32.5x
|
|
|
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13.2x
|
|
|
|
|
|
Fleet growth capital
expenditures(1)
|
$
|
2,781
|
|
|
$
|
10,516
|
|
|
$
|
17,578
|
|
|
(74)
|
%
|
|
(84)
|
%
|
Net cash provided by
(used in) operating activities
|
$
|
13,357
|
|
|
$
|
(90)
|
|
|
$
|
31,632
|
|
|
(14,941)
|
%
|
|
(58)
|
%
|
Free cash
flow
|
$
|
6,874
|
|
|
$
|
(4,410)
|
|
|
$
|
8,480
|
|
|
(256)
|
%
|
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(19)
|
%
|
|
|
(1)
|
Includes capital
expenditures paid by TETRA in 2019 under backstop financing
agreement.
|
Compression and Related Services
Compression Service gross margins of 51.9% increased 30 basis
points from 51.6% in the fourth quarter of 2019 and contributed
$34.2 million of gross margin in the
quarter.
Overall service fleet utilization rate declined 350 basis points
from the end of the fourth quarter of 2019 to 86.5% at the end of
March 2020. As of March 31, 2020, aggregate service
compressor fleet horsepower was 1,195,186 and aggregate service
fleet horsepower in service was 1,033,256 (we define the
overall service fleet utilization rate as the aggregate service
compressor fleet horsepower in service divided by the aggregate
service compressor fleet horsepower as of such date). We do
not exclude idle horsepower under repair from our calculation of
utilization rates, but we do count units on standby as utilized
when the client is being billed a standby service rate. Utilization
of our high-horsepower units (over 1,000 hp) declined from 97.9% at
the end of 2019 to 93.5% at the end of the first quarter 2020. We
expect that our customers' move to scale-back drilling and
completion activity and to shut-in oil and gas production will put
pressure on utilization for gathering system and centralized gas
lift applications. In 2019 we added new compressor units with over
119,000 aggregate horsepower. In the near-term, we do not expect to
add any additional equipment to our fleet beyond equipment already
committed to be delivered in the second quarter.
Aftermarket Services and Equipment Sales
In the first quarter of 2020, equipment sales were $6.5 million, down $27.7
million from the fourth quarter of 2019 due to timing of
deliveries from our backlog and a decrease in customer demand,
which was consistent with our expectations discussed on our last
earnings call. First quarter aftermarket services revenue of
$18.0 million decreased $6.1 million sequentially as customer demand
weakened, some due to turmoil in the market and some due to
seasonally low spending, which is typical in the first quarter of
the year. First quarter orders for new equipment sales totaled
$2.0 million. The backlog was
$30.3 million as of March 31,
2020, most of which is expected to be delivered in the second
quarter of this year.
Balance Sheet
As of March 31, 2020, we had $296
million of unsecured bonds outstanding that mature in
August 2022 and $350 million of first lien secured bonds
outstanding that mature in April
2025. The indentures for the secured and the unsecured bonds
do not contain any maintenance covenants. The Partnership has a
$50 million asset-based revolver
("ABL") with a current borrowing base of approximately $25 million before outstanding letters of credit,
of which $3 million was drawn at the
end of the first quarter. Cash on hand at March 31, 2020 was
$7.4 million. In the event the
Partnership does not maintain $5
million minimum availability under the ABL, the ABL requires
the Partnership to maintain a fixed charge coverage ratio of 1x
until the minimum availability is reestablished. Currently, the
Partnership has in excess of $5
million available under the ABL and therefore the fixed
charge ratio covenant is not applicable. The ABL expires at the end
of June 2023. As the Partnership came out of the previous
downturn of 2014 to 2016, we negotiated the elimination of
maintenance covenants in CSI Compressco's credit facility, except
for the ABL fixed charge coverage ratio described above, in order
to give us more flexibility to navigate through future downturns.
CSI Compressco's net leverage ratio improved to 5.0x at the end of
the first quarter 2020 but is expected to increase as the downturn
progresses.
The Partnership issued a press release on Friday, May 1st regarding its ongoing bond
exchange offer. The statements in the paragraph above do not give
effect to the exchange offer, if it is completed. There can be no
assurance the exchange offer will be completed. For more details
please see the Form 8-K filed on May 1,
2020 and the related exhibits.
Capital Expenditures 2020 Expectations
We anticipate total year capital expenditures to be in the range
of $28 million to $35 million, including:
(a) $5 million to $8 million for growth capital
to fulfill certain client obligations, of which approximately
$4 million was incurred in the first
quarter with the remainder expected to be incurred primarily in the
second quarter; (b) $20 million to $22
million for maintenance capital expenditures; and (c) $3
million to $5 million for technology investment to
improve operating efficiencies.
First Quarter 2020 Cash Distribution on Common Units
On April 20, 2020, CSI Compressco
announced that the board of directors of its general partner
declared a cash distribution attributable to the first quarter of
2020 of $0.01 per outstanding common
unit, which will be paid on May 15,
2020, to common unitholders of record as of the close of
business on May 1, 2020. The
distribution coverage ratio for the first quarter of 2020 was
18.3x.
Conference Call
CSI Compressco will host a conference call to discuss first
quarter 2020 results today, May 4, 2020, at 9:30 a.m. Eastern Time. The phone number for
the call is 1-866-374-8397. The conference call will also be
available by live audio webcast and may be accessed through CSI
Compressco's website at www.csicompressco.com. An audio
replay of the conference call will be available at 1-877-344-7529,
conference number 10138620, for one week following the conference
call and the archived webcast will be available through CSI
Compressco's website for thirty days following the conference
call.
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 5,200 compressor packages providing approximately 1.20 million
in aggregate horsepower, utilizing a full spectrum of low-, mid-
and high-horsepower engines. CSI Compressco also provides well
monitoring and automated sand separation services in conjunction
with compression and related services in Mexico. CSI
Compressco designs and sells standard compressor packages and
custom-designed compressor packages. 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," "expectations," "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, including
anticipated reductions in demand from our customers, reductions in
capital expenditures, SG&A and direct operating costs, the
planned closure and potential sale of our Midland,
Texas fabrication facility, commodity prices and demand for
CSI Compressco's equipment and services and other statements
regarding CSI Compressco's beliefs, expectations, plans, prospects
and other future events, performance, and other statements that are
not purely historical. 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 condition that are outside of our control,
including the trading price of our common units; the severity and
duration of the COVID-19 pandemic and related economic
repercussions and the resulting negative impact on the demand
for oil and gas , operational challenges relating to the COVID-19
pandemic and efforts to mitigate the spread of the virus, including
logistical challenges, remote work arrangements, and supply chain
disruptions, other global or national health concerns; the current
significant surplus in the supply of oil and the ability of OPEC
and other oil producing nations to agree on and comply with supply
limitations; the duration and magnitude of the unprecedented
disruption in the oil and gas industry; the levels of competition
we encounter; our dependence upon a limited number of customers and
the activity levels of our customers; our ability to replace our
contracts with our customers, which are generally short-term
contracts; the availability of adequate sources of capital to us;
our existing debt levels and our ability to obtain additional
financing; our ability to continue to make cash distributions, or
increase cash distributions from current levels, after the
establishment of reserves, payment of debt service and other
contractual obligations; the restrictions on our business that are
imposed under our long-term debt agreements; our operational
performance; the credit and risk profile of TETRA Technologies,
Inc.; ability of our general partner to retain key personnel; risks
related to acquisitions and our growth strategy; 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
|
|
Mar 31,
2020
|
|
Dec 31,
2019
|
|
Mar 31,
2019
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
Compression and
related services
|
$
|
65,765
|
|
|
$
|
65,188
|
|
|
$
|
63,060
|
|
Aftermarket
services
|
17,970
|
|
|
24,094
|
|
|
13,614
|
|
Equipment
sales
|
6,544
|
|
|
34,260
|
|
|
26,762
|
|
Total
revenues
|
$
|
90,279
|
|
|
$
|
123,542
|
|
|
$
|
103,436
|
|
Cost of revenues
(excluding depreciation and amortization expense):
|
|
|
|
|
|
Cost of compression
and related services
|
$
|
31,608
|
|
|
$
|
31,568
|
|
|
$
|
32,621
|
|
Cost of aftermarket
services
|
16,245
|
|
|
19,916
|
|
|
11,260
|
|
Cost of equipment
sales
|
6,700
|
|
|
30,489
|
|
|
24,219
|
|
Total cost of
revenues
|
$
|
54,553
|
|
|
$
|
81,973
|
|
|
$
|
68,100
|
|
Depreciation and
amortization
|
19,908
|
|
|
20,618
|
|
|
18,532
|
|
Impairments of
long-lived assets
|
5,371
|
|
|
—
|
|
|
—
|
|
Insurance
recoveries
|
—
|
|
|
(230)
|
|
|
—
|
|
Selling, general, and
administrative expense
|
10,256
|
|
|
10,125
|
|
|
10,665
|
|
Interest expense,
net
|
13,169
|
|
|
13,498
|
|
|
13,299
|
|
Series A Preferred
fair value adjustment
|
—
|
|
|
—
|
|
|
1,304
|
|
Other expense,
net
|
440
|
|
|
(532)
|
|
|
(381)
|
|
Income (loss) before
income tax provision
|
$
|
(13,418)
|
|
|
$
|
(1,910)
|
|
|
$
|
(8,083)
|
|
Provision (benefit)
for income taxes
|
212
|
|
|
47
|
|
|
4,373
|
|
Net income
(loss)
|
$
|
(13,630)
|
|
|
$
|
(1,957)
|
|
|
$
|
(12,456)
|
|
Net income (loss) per
diluted common unit
|
$
|
(0.28)
|
|
|
$
|
(0.04)
|
|
|
$
|
(0.26)
|
|
Reconciliation of Non-GAAP Financial Measures
The Partnership includes in this release the non-GAAP financial
measures Adjusted EBITDA, Adjusted EBITDA margin, distributable
cash flow, distribution coverage ratio, free cash flow, and net
leverage ratio. 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; and
- determine the Partnership's ability to incur and service debt
and fund capital expenditures.
The Partnership defines Adjusted EBITDA as earnings before
interest, taxes, depreciation and amortization, and before certain
non-cash charges, including impairments, bad debt expense
attributable to bankruptcy of customer, equity compensation,
non-cash costs of compressors sold, fair value adjustments of our
Preferred Units that were issued in late 2016 and redeemed for cash
on August 8, 2019, gain on
extinguishment of debt, write-off of unamortized financing costs,
Preferred Units redemption premium and excluding, severance and
other non-recurring or unusual expenses or charges.
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.
The Partnership defines net leverage ratio as net debt (the sum
of the carrying value of long-term and short-term debt on its
consolidated balance sheet, less cash, excluding restricted cash on
the consolidated balance sheet and excluding outstanding letters of
credit) divided by Adjusted EBITDA for Net Leverage Calculation
(Adjusted EBITDA as reported externally adjusted for certain items
to comply with its credit agreement) for the trailing twelve month
period. Management primarily uses this metric to assess the
Partnership's ability to borrow, reduce debt, add to cash balances,
pay distributions, and fund investing and financing activities.
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, gross margin,
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.
Schedule B - Reconciliation of Net Income to Adjusted EBITDA,
Distributable Cash Flow and Distribution Coverage Ratio
The following table reconciles net income (loss) to Adjusted
EBITDA, distributable cash flow and distribution coverage ratio for
the three-month periods ended March 31, 2020,
December 31, 2019 and March 31, 2019:
Results of
Operations (unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
Mar 31,
2020
|
|
Dec 31,
2019
|
|
Mar 31,
2019
|
|
(In
Thousands)
|
Net income
(loss)
|
$
|
(13,630)
|
|
|
$
|
(1,957)
|
|
|
$
|
(12,456)
|
|
Interest expense,
net
|
13,169
|
|
|
13,498
|
|
|
13,299
|
|
Provision for income
taxes
|
212
|
|
|
47
|
|
|
4,373
|
|
Depreciation and
amortization
|
19,908
|
|
|
20,618
|
|
|
18,532
|
|
Impairments of
long-lived assets
|
5,371
|
|
|
—
|
|
|
—
|
|
Non-cash cost of
compressors sold
|
1,809
|
|
|
2,182
|
|
|
940
|
|
Equity
compensation
|
324
|
|
|
320
|
|
|
365
|
|
Series A Preferred
redemption premium
|
—
|
|
|
—
|
|
|
448
|
|
Series A Preferred
fair value adjustments
|
—
|
|
|
—
|
|
|
1,304
|
|
Severance
|
272
|
|
|
—
|
|
|
—
|
|
Other
|
327
|
|
|
—
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
27,762
|
|
|
$
|
34,708
|
|
|
$
|
26,805
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
Current income tax
expense
|
204
|
|
|
467
|
|
|
2,907
|
|
Maintenance capital
expenditures
|
6,490
|
|
|
6,774
|
|
|
5,729
|
|
Interest
expense
|
13,169
|
|
|
13,498
|
|
|
13,299
|
|
Severance and
other
|
599
|
|
|
—
|
|
|
—
|
|
Plus:
|
|
|
|
|
|
Non-cash items
included in interest expense
|
1,428
|
|
|
1,536
|
|
|
1,428
|
|
Distributable cash
flow
|
$
|
8,728
|
|
|
$
|
15,505
|
|
|
$
|
6,298
|
|
|
|
|
|
|
|
Cash distribution
attributable to period
|
$
|
478
|
|
|
$
|
477
|
|
|
$
|
477
|
|
Distribution coverage
ratio
|
18.3x
|
|
|
32.5x
|
|
|
13.2x
|
|
Schedule C - Reconciliation of Net Cash Provided by Operating
Activities Operations to Free Cash Flow
The following table reconciles net cash provided by operating
activities to free cash flow for the three-month periods ended
March 31, 2020, December 31, 2019 and March 31,
2019:
Results of
Operations (unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Mar 31,
2020
|
|
Dec 31,
2019
|
|
Mar 31,
2019
|
|
(In
Thousands)
|
Net cash provided by
operating activities
|
|
$
|
13,357
|
|
|
$
|
(90)
|
|
|
$
|
31,632
|
|
Capital expenditures,
net of sales proceeds
|
|
(6,483)
|
|
|
(4,320)
|
|
|
(23,152)
|
|
Free cash
flow
|
|
$
|
6,874
|
|
|
$
|
(4,410)
|
|
|
$
|
8,480
|
|
Schedule D – Reconciliation to Adjusted
EBITDA Margin (unaudited)
|
Three Months
Ended
|
|
Mar 31,
2020
|
|
Dec 31,
2019
|
|
Mar 31,
2019
|
Consolidated
|
|
|
|
|
|
Revenue
|
90,279
|
|
|
123,542
|
|
|
103,436
|
|
Adjusted EBITDA
(Schedule B)
|
27,762
|
|
|
34,708
|
|
|
26,805
|
|
Adjusted EBITDA
Margin
|
30.8
|
%
|
|
28.1
|
%
|
|
25.9
|
%
|
Schedule E – Reconciliation of Historical Net
Income/(Loss) to Adjusted EBITDA for Net Leverage Ratio
Calculation (unaudited)
|
Twelve Months
Ended
|
|
Mar 31,
2020
|
|
Dec 31,
2019
|
|
Mar 31,
2019
|
Net income
(loss)
|
$
|
(22,147)
|
|
|
$
|
(20,973)
|
|
|
$
|
(33,697)
|
|
Interest expense,
net
|
53,245
|
|
|
53,375
|
|
|
54,451
|
|
Provision for income
taxes
|
(808)
|
|
|
3,353
|
|
|
5,674
|
|
Depreciation and
amortization
|
78,039
|
|
|
76,663
|
|
|
71,665
|
|
Impairments and other
charges
|
8,684
|
|
|
3,313
|
|
|
681
|
|
Goodwill
Impairment
|
—
|
|
|
|
|
—
|
|
Bad debt expense
attributable to bankruptcy of customer
|
1,768
|
|
|
1,768
|
|
|
—
|
|
Non-cash cost of
compressors sold
|
6,892
|
|
|
6,023
|
|
|
4,742
|
|
Equity
Compensation
|
1,023
|
|
|
1,064
|
|
|
1,608
|
|
Series A Preferred
redemption premium
|
1,020
|
|
|
1,468
|
|
|
448
|
|
Series A Preferred
fair value adjustments
|
166
|
|
|
1,470
|
|
|
(1,087)
|
|
Expense for
unamortized finance costs
|
—
|
|
|
—
|
|
|
—
|
|
Sales tax adjustment
affecting prior periods
|
—
|
|
|
|
|
2,110
|
|
Severance
|
390
|
|
|
118
|
|
|
—
|
|
Other
|
957
|
|
|
630
|
|
|
188
|
|
Adjusted
EBITDA
|
$
|
129,229
|
|
|
$
|
128,272
|
|
|
$
|
106,783
|
|
EBITDA adjustments to
comply with Credit Agreement
|
(121)
|
|
|
254
|
|
|
—
|
|
Adjusted EBITDA for
Net Leverage Calculation
|
$
|
129,108
|
|
|
$
|
128,526
|
|
|
$
|
106,783
|
|
|
|
|
|
|
|
Debt
Schedule
|
|
|
|
|
|
7.25% Senior
Notes
|
295,930
|
|
|
295,930
|
|
|
295,930
|
|
7.50% Senior Secured
Notes
|
350,000
|
|
|
350,000
|
|
|
350,000
|
|
Asset Based
Loan
|
3,000
|
|
|
3,500
|
|
|
—
|
|
Letters of
Credit
|
3,017
|
|
|
3,476
|
|
|
—
|
|
Cash on
Hand
|
(7,416)
|
|
|
(2,370)
|
|
|
(16,870)
|
|
Net
Debt
|
$
|
644,531
|
|
|
$
|
650,536
|
|
|
$
|
629,060
|
|
|
|
|
|
|
|
Net Leverage Ratio
(Net Debt/Adjusted EBITDA for Net Leverage
Calculation)
|
5.0x
|
|
|
5.1x
|
|
|
5.9x
|
|
Schedule F – Balance Sheet
|
March 31,
2020
|
|
December 31,
2019
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
7,416
|
|
|
$
|
2,370
|
|
Trade accounts
receivable, net of allowances for doubtful accounts of $3,237 as of
March 31, 2020 and $3,350 as of December 31, 2019
|
71,774
|
|
|
64,724
|
|
Inventories
|
63,288
|
|
|
56,037
|
|
Prepaid expenses and
other current assets
|
5,153
|
|
|
4,162
|
|
Total current
assets
|
147,631
|
|
|
127,293
|
|
Property, plant, and
equipment:
|
|
|
|
Land and
building
|
32,058
|
|
|
35,125
|
|
Compressors and
equipment
|
989,493
|
|
|
976,469
|
|
Vehicles
|
8,875
|
|
|
9,205
|
|
Construction in
progress
|
18,788
|
|
|
26,985
|
|
Total property, plant,
and equipment
|
1,049,214
|
|
|
1,047,784
|
|
Less accumulated
depreciation
|
(421,062)
|
|
|
(405,417)
|
|
Net property, plant,
and equipment
|
628,152
|
|
|
642,367
|
|
Other
assets:
|
|
|
|
Deferred tax
asset
|
24
|
|
|
24
|
|
Intangible assets, net
of accumulated amortization of $28,491 as of March 31, 2020 and
$27,751 as of December 31, 2019
|
27,277
|
|
|
28,017
|
|
Operating lease
right-of-use assets
|
27,374
|
|
|
21,006
|
|
Other
assets
|
3,844
|
|
|
3,539
|
|
Total other
assets
|
58,519
|
|
|
52,586
|
|
Total
assets
|
$
|
834,302
|
|
|
$
|
822,246
|
|
LIABILITIES AND
PARTNERS' CAPITAL
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
48,362
|
|
|
$
|
47,837
|
|
Unearned
income
|
27,426
|
|
|
9,505
|
|
Accrued liabilities
and other
|
38,832
|
|
|
42,581
|
|
Amounts payable to
affiliates
|
14,964
|
|
|
7,704
|
|
Total current
liabilities
|
129,584
|
|
|
107,627
|
|
Other
liabilities:
|
|
|
|
Long-term debt,
net
|
638,429
|
|
|
638,238
|
|
Deferred tax
liabilities
|
986
|
|
|
1,211
|
|
Long-term affiliate
payable
|
11,618
|
|
|
12,324
|
|
Operating lease
liabilities
|
18,903
|
|
|
13,822
|
|
Other long-term
liabilities
|
23
|
|
|
33
|
|
Total other
liabilities
|
669,959
|
|
|
665,628
|
|
Commitments and
contingencies
|
|
|
|
Partners'
capital:
|
|
|
|
General partner
interest
|
(19)
|
|
|
180
|
|
Common units
(47,292,095 units issued and outstanding at March 31, 2020 and
47,078,529 units issued and outstanding at December 31,
2019)
|
49,704
|
|
|
63,384
|
|
Accumulated other
comprehensive income (loss)
|
(14,926)
|
|
|
(14,573)
|
|
Total partners'
capital
|
34,759
|
|
|
48,991
|
|
Total liabilities and
partners' capital
|
$
|
834,302
|
|
|
$
|
822,246
|
|
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SOURCE CSI Compressco LP