MIDLAND, Texas, Feb. 25, 2015 /PRNewswire/ -- CSI Compressco
LP (CSI Compressco or the Partnership) (NASDAQ: CCLP) today
announced fourth quarter and total year 2015 consolidated results.
Adjusted earnings before interest, taxes, depreciation, and
amortization (Adjusted EBITDA) for the fourth quarter of 2015 were
$29 million, with a net loss of
$151 million inclusive of
$151 million of non-cash charges for
goodwill impairment and asset impairment. This compares to Adjusted
EBITDA and net income of $35 million
and $4 million, respectively, during
the fourth quarter of 2014. Distributable cash flow for the quarter
ended December 31, 2015 was
$19.4 million (Adjusted EBITDA and
distributable cash flow are non-GAAP financial measures that are
defined and reconciled to the nearest GAAP financial measures on
Schedules B and C in this press release).
Highlights of the fourth quarter and total year 2015 results
include:
- Fourth quarter Adjusted EBITDA of $29
million
- Total year cash provided by operating activities of
$102 million
- Fourth quarter cash distribution of $0.3775 per unit
- Fourth quarter distribution coverage ratio of 1.52x
- Continued reduction in operating expenses
|
Quarter
Ended
|
|
2015 vs.
2014
|
|
December 31,
2015
|
|
December 31,
2014
|
|
|
(In Thousands, Except
Ratios, and Percentages)
|
Adjusted
EBITDA(1)
|
$
|
29,045
|
|
|
$
|
35,270
|
|
|
(18)%
|
|
Distributable cash
flow(1)
|
$
|
19,378
|
|
|
$
|
28,443
|
|
|
(32)%
|
|
Cash distribution per
unit annualized
|
$
|
1.51
|
|
|
$
|
1.94
|
|
|
(22)%
|
|
Distribution coverage
ratio(1)
|
1.52x
|
|
|
1.71x
|
|
|
(11)%
|
|
Fleet capital
expenditures
|
$
|
18,247
|
|
|
$
|
22,069
|
|
|
(17)%
|
|
|
(1) Non-GAAP
financial measures reconciled to the nearest GAAP number on
Schedules B and C.
|
Consolidated revenues for the quarter ended December 31, 2015 were $99.4 million compared to $124.8 million in the fourth quarter of 2014.
Loss before tax for the quarter ended December 31, 2015 was $(152.6) million compared to income before tax of
$3.4 million for the fourth quarter
of 2014. Results of operations for the fourth quarter of 2015
compared to the fourth quarter of 2014 include the following
non-cash charges: $139.4
million of goodwill impairment charges, $6.3 million of impairment charges for tangible
assets, and $5.6 million of
impairment charges for intangible assets. During the quarter we
identified 45,123 horsepower of older equipment that we retired
from our fleet as we optimize our compression services assets.
As of December 31, 2015
compression services fleet horsepower totaled 1,127,540 horsepower
net of the 45,123 horsepower that was retired. As of that date, the
fleet utilization rate was 82.0%. 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 and twelve month
periods ended December 31, 2015
compared to the prior year periods are presented in the
accompanying financial tables.
Timothy A. Knox, President of CSI
Compressco, commented, "A great deal was accomplished in 2015 with
the integration of sales, service, facilities, engineering, and
manufacturing efforts between legacy Compressco and former
Compressor Systems, Inc. (CSI), allowing the Partnership to
function as the single business that it is. At year-end 2015 we
were successful in transitioning over 75% of former CSI domestic
compression contracts to compression services contracts. We are
excited as we launch the implementation of the Oracle JD Edwards
EnterpriseOne integrated applications suite at the legacy CSI
business. We anticipate that we will complete this ERP initiative
over the next 12-18 months and gain increased synergistic
efficiencies in field operations and supply chain efforts, as well
as a reduction of administrative costs. This will also put in place
a proven mechanism by which we can operate more effectively, with
automated processes and controls for internal and external
financial reporting."
Mr. Knox further remarked, "As is occurring largely throughout
the oil field services industry, our new equipment manufacturing
backlog dropped off significantly during 2015, entering 2016 with a
$34 million backlog compared to the
$120 million backlog entering 2015.
As the backlog has declined we have proactively reduced our
manufacturing capacity, including lowering manufacturing headcount
by 33% at year-end 2015 compared to year-end 2014. In this
continued downturn cost controls have been implemented well beyond
manufacturing, with total headcount reductions in 2015 of 15%. Cost
initiatives are in place throughout the organization such that
total expenditures in 2016 are targeted to be more than
$35 million below the combined
run-rate at the time of the CSI acquisition.
"In January of this year we announced a 25% cut in our quarterly
distribution, paying $0.3775 per
common unit on February 15, 2016
which provides a 1.52x distribution coverage ratio. By reducing our
quarterly distribution, we retained roughly $4 million in cash for the quarter, which
combined with our cost cutting initiatives should allow us to
reduce debt in 2016 and prepare us for growth when the commodity
market and oil field services industry does finally experience a
recovery. With oil and gas now trading lower compared to
December 31, 2015, at roughly
$30 and $2, respectively, and the US rig count falling
off 25% since that time, we believe our cut is a prudent decision
given the extended downturn that continues to deepen.
"We anticipate aggregate 2016 capital expenditures between
$20 million and $30 million, and
depreciation and amortization expense of approximately $82 million. Our 2016 capital expenditure plan
includes estimated maintenance capital expenditures of
approximately $12 million. Total year
capital expenditures for 2015 were approximately $105 million. Given the current product and
service pricing environment and supply/demand imbalance, we are
focused in 2016 on maximizing the utilization of our existing
compression services fleet and applying operating cash flows to
reduce debt."
Conference Call
CSI Compressco will host a conference call to discuss fourth
quarter and full year 2015 results today, February 25, 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.
Fourth Quarter 2015 Distribution
On January 22, 2016, CSI
Compressco announced that the board of directors of its general
partner declared a cash distribution attributable to the fourth
quarter of 2015 of $0.3775 per
outstanding unit, which was paid on February
15, 2016 to unitholders of record as of the close of
business on February 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 fourth quarter of 2015 was 1.52x.
CSI Compressco Overview
CSI Compressco LP 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 and parts
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, as
well as the sale of compressor package parts and components
manufactured by third-party suppliers. CSI Compressco's aftermarket
services business provides compressor package reconfiguration and
maintenance services. 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
concerning expected results of operations for 2016, anticipated
benefits and growth of CSI Compressco LP following the acquisition
of Compressor Systems, Inc. (CSI), including increases in cash
distributions per unit, financial guidance, estimated distributable
cash, earnings, and earnings per unit, and statements regarding CSI
Compressco's beliefs, expectations, plans, goals, future events and
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 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; 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; 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
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(In Thousands, Except
per Unit Amounts)
|
Revenues
|
|
|
|
|
|
|
|
Compression and related services
|
$
|
66,822
|
|
|
$
|
75,881
|
|
|
$
|
287,702
|
|
|
$
|
192,151
|
|
Aftermarket services
|
7,344
|
|
|
9,029
|
|
|
28,478
|
|
|
15,624
|
|
Equipment and parts sales
|
25,197
|
|
|
39,927
|
|
|
141,461
|
|
|
74,872
|
|
Total
revenues
|
99,363
|
|
|
124,837
|
|
|
457,641
|
|
|
282,647
|
|
|
|
|
|
|
|
|
|
Cost of revenues
(excluding depreciation and amortization expense)
|
|
|
|
|
|
|
Cost of
compression and related services
|
32,755
|
|
|
36,932
|
|
|
143,264
|
|
|
98,874
|
|
Cost of
aftermarket services
|
6,283
|
|
|
8,313
|
|
|
24,057
|
|
|
13,579
|
|
Cost of
equipment and parts sales
|
20,715
|
|
|
33,597
|
|
|
123,339
|
|
|
62,214
|
|
Total cost of
revenues
|
59,753
|
|
|
78,842
|
|
|
290,660
|
|
|
174,667
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
20,611
|
|
|
19,971
|
|
|
81,838
|
|
|
40,880
|
|
Impairments of
long-lived assets
|
11,797
|
|
|
278
|
|
|
11,797
|
|
|
278
|
|
Selling, general, and
administrative expense
|
11,207
|
|
|
12,835
|
|
|
43,479
|
|
|
32,100
|
|
Goodwill
impairment
|
139,444
|
|
|
—
|
|
|
139,444
|
|
|
—
|
|
Interest expense,
net
|
8,110
|
|
|
7,662
|
|
|
32,178
|
|
|
12,964
|
|
Other expense,
net
|
1,053
|
|
|
1,877
|
|
|
4,976
|
|
|
11,672
|
|
Income (loss) before
income tax provision
|
(152,612)
|
|
|
3,372
|
|
|
(146,731)
|
|
|
10,086
|
|
Provision (benefit)
for income taxes
|
(1,392)
|
|
|
(989)
|
|
|
(101)
|
|
|
(1,172)
|
|
Net income
(loss)
|
$
|
(151,220)
|
|
|
$
|
4,361
|
|
|
$
|
(146,630)
|
|
|
$
|
11,258
|
|
|
|
|
|
|
|
|
|
Net income per
diluted common unit
|
$
|
(4.47)
|
|
|
$
|
0.12
|
|
|
$
|
(4.36)
|
|
|
$
|
0.47
|
|
Reconciliation of Non-GAAP Financial Measures
The Partnership includes in this release the non-GAAP financial
measures Adjusted EBITDA, distributable cash flow and distribution
coverage 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 non-cash
charges for impairments, and excluding equity compensation,
transaction costs, amortized finance costs and severance.
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, plus the non-cash cost of compressors sold.
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.
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 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 to Adjusted EBITDA for
the three and twelve month periods ended December 31, 2015 and December 31, 2014:
Schedule B –
Reconciliation of Net Income to Adjusted EBITDA
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(In
Thousands)
|
Net income
(loss)
|
$
|
(151,220)
|
|
|
$
|
4,361
|
|
|
$
|
(146,630)
|
|
|
$
|
11,258
|
|
Provision (benefit)
for income taxes
|
(1,392)
|
|
|
(989)
|
|
|
(101)
|
|
|
(1,172)
|
|
Depreciation and
amortization
|
20,611
|
|
|
19,971
|
|
|
81,838
|
|
|
40,880
|
|
Impairments of
long-lived assets
|
11,797
|
|
|
278
|
|
|
11,797
|
|
|
278
|
|
Goodwill
impairment
|
139,444
|
|
|
—
|
|
|
139,444
|
|
|
—
|
|
Interest expense,
net
|
8,110
|
|
|
7,662
|
|
|
32,178
|
|
|
12,964
|
|
Equity
compensation
|
505
|
|
|
625
|
|
|
2,164
|
|
|
1,544
|
|
Amortized finance
costs
|
697
|
|
|
728
|
|
|
2,786
|
|
|
1,163
|
|
CSI acquisition
costs
|
—
|
|
|
2,634
|
|
|
208
|
|
|
13,258
|
|
Severance
|
493
|
|
|
—
|
|
|
772
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
29,045
|
|
|
$
|
35,270
|
|
|
$
|
124,456
|
|
|
$
|
80,173
|
|
|
|
|
|
|
|
|
|
CSI acquisition
related costs in SG&A
|
$
|
—
|
|
|
$
|
2,634
|
|
|
$
|
208
|
|
|
$
|
5,547
|
|
The following table reconciles net income to distributable cash
flow and distribution coverage ratio for the three and twelve month
periods ended December 31, 2015:
Schedule C –
Reconciliation of Net Income to Distributable Cash Flow and
Coverage Ratio
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(In Thousands, Except
Ratio)
|
Net income
(loss)
|
$
|
(151,220)
|
|
|
$
|
4,361
|
|
|
$
|
(146,630)
|
|
|
$
|
11,258
|
|
Provision (benefit)
for income taxes
|
(1,392)
|
|
|
(989)
|
|
|
(101)
|
|
|
(1,172)
|
|
Depreciation and
amortization
|
20,611
|
|
|
19,971
|
|
|
81,838
|
|
|
40,880
|
|
Impairments of
long-lived assets
|
11,797
|
|
|
278
|
|
|
11,797
|
|
|
278
|
|
Goodwill
impairment
|
139,444
|
|
|
—
|
|
|
139,444
|
|
|
—
|
|
Interest expense,
net
|
8,110
|
|
|
7,662
|
|
|
32,178
|
|
|
12,964
|
|
Equity
compensation
|
505
|
|
|
625
|
|
|
2,164
|
|
|
1,544
|
|
Amortized finance
costs
|
697
|
|
|
728
|
|
|
2,786
|
|
|
1,163
|
|
CSI acquisition
costs
|
—
|
|
|
2,634
|
|
|
208
|
|
|
13,258
|
|
Severance
|
493
|
|
|
—
|
|
|
772
|
|
|
—
|
|
Adjusted
EBITDA
|
29,045
|
|
|
35,270
|
|
|
124,456
|
|
|
80,173
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
Current income tax
expense
|
471
|
|
|
2,435
|
|
|
504
|
|
|
3,459
|
|
Maintenance capital
expenditures
|
3,429
|
|
|
2,888
|
|
|
11,298
|
|
|
4,974
|
|
Interest
expense
|
8,110
|
|
|
7,662
|
|
|
32,178
|
|
|
12,964
|
|
Severance
|
493
|
|
|
—
|
|
|
772
|
|
|
—
|
|
Plus:
|
|
|
|
|
|
|
|
Non-cash cost of
compressors sold
|
2,836
|
|
|
6,158
|
|
|
3,441
|
|
|
6,529
|
|
Distributable cash
flow
|
$
|
19,378
|
|
|
$
|
28,443
|
|
|
$
|
83,145
|
|
|
$
|
65,305
|
|
|
|
|
|
|
|
|
|
Cash distribution
attributable to period
|
$
|
12,784
|
|
|
$
|
16,609
|
|
|
$
|
64,535
|
|
|
$
|
46,664
|
|
|
|
|
|
|
|
|
|
Distribution coverage
ratio
|
1.52x
|
|
|
1.71x
|
|
|
1.29x
|
|
|
1.40x
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/csi-compressco-lp-announces-fourth-quarter-and-full-year-2015-results-300226064.html
SOURCE CSI Compressco LP