Delaware
|
94-3450907
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification No.)
|
|
|
24955 Interstate 45 North
|
|
The Woodlands,
|
|
TX
|
77380
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
COMMON UNITS REPRESENTING LIMITED
PARTNERSHIP INTERESTS |
CCLP
|
NASDAQ
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☒
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☒
|
|
|
Emerging growth company
|
☐
|
CSI Compressco LP
|
|
Table of Contents
|
|
|
Page
|
PART I—FINANCIAL INFORMATION
|
|
|
|
|
|
PART II—OTHER INFORMATION
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Revenues:
|
|
|
|
|
|
||
Compression and related services
|
$
|
65,765
|
|
|
$
|
63,060
|
|
Aftermarket services
|
17,970
|
|
|
13,614
|
|
||
Equipment sales
|
6,544
|
|
|
26,762
|
|
||
Total revenues
|
90,279
|
|
|
103,436
|
|
||
Cost of revenues (excluding depreciation and amortization expense):
|
|
|
|
|
|||
Cost of compression and related services
|
31,608
|
|
|
32,621
|
|
||
Cost of aftermarket services
|
16,245
|
|
|
11,260
|
|
||
Cost of equipment sales
|
6,700
|
|
|
24,219
|
|
||
Total cost of revenues
|
54,553
|
|
|
68,100
|
|
||
Depreciation and amortization
|
19,908
|
|
|
18,532
|
|
||
Impairments and other charges
|
5,371
|
|
|
—
|
|
||
Selling, general, and administrative expense
|
10,256
|
|
|
10,665
|
|
||
Interest expense, net
|
13,169
|
|
|
13,299
|
|
||
Series A Preferred fair value adjustment (income) expense
|
—
|
|
|
1,304
|
|
||
Other (income) expense, net
|
440
|
|
|
(381
|
)
|
||
Loss before income tax provision
|
(13,418
|
)
|
|
(8,083
|
)
|
||
Provision (benefit) for income taxes
|
212
|
|
|
4,373
|
|
||
Net loss
|
$
|
(13,630
|
)
|
|
$
|
(12,456
|
)
|
General partner interest in net loss
|
$
|
(192
|
)
|
|
$
|
(177
|
)
|
Common units interest in net loss
|
$
|
(13,438
|
)
|
|
$
|
(12,279
|
)
|
|
|
|
|
|
|||
Net loss per common unit:
|
|
|
|
||||
Basic
|
$
|
(0.28
|
)
|
|
$
|
(0.26
|
)
|
Diluted
|
$
|
(0.28
|
)
|
|
$
|
(0.26
|
)
|
Weighted average common units outstanding:
|
|
|
|
||||
Basic
|
47,176,640
|
|
|
46,830,605
|
|
||
Diluted
|
47,176,640
|
|
|
46,830,605
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Net loss
|
$
|
(13,630
|
)
|
|
$
|
(12,456
|
)
|
Foreign currency translation adjustment, net of tax of $0 in 2020 and 2019
|
(353
|
)
|
|
272
|
|
||
Comprehensive loss
|
$
|
(13,983
|
)
|
|
$
|
(12,184
|
)
|
|
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
|
|
|
Partners' Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Partners' Capital
|
|||||||||||||
|
|
|
||||||||||||||||
|
|
|
Limited Partners
|
|
|
|||||||||||||
|
General
Partner
|
|
Common
Unitholders
|
|
|
|||||||||||||
|
Amount
|
|
Units
|
|
Amount
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at December 31, 2019
|
$
|
180
|
|
|
47,079
|
|
|
$
|
63,384
|
|
|
$
|
(14,573
|
)
|
|
$
|
48,991
|
|
Net Loss
|
(192
|
)
|
|
—
|
|
|
(13,438
|
)
|
|
—
|
|
|
$
|
(13,630
|
)
|
|||
Distributions ($0.01 per unit)
|
(7
|
)
|
|
—
|
|
|
(471
|
)
|
|
—
|
|
|
$
|
(478
|
)
|
|||
Equity compensation
|
—
|
|
|
—
|
|
|
229
|
|
|
—
|
|
|
$
|
229
|
|
|||
Vesting of Phantom Units
|
—
|
|
|
213
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|||
Translation adjustment, net of taxes of $0
|
—
|
|
|
—
|
|
|
—
|
|
|
(353
|
)
|
|
$
|
(353
|
)
|
|||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|||
Balance at March 31, 2020
|
$
|
(19
|
)
|
|
47,292
|
|
|
$
|
49,704
|
|
|
$
|
(14,926
|
)
|
|
$
|
34,759
|
|
|
Partners' Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Partners' Capital
|
|||||||||||||
|
|
|
||||||||||||||||
|
|
|
Limited Partners
|
|
|
|||||||||||||
|
General
Partner
|
|
Common
Unitholders
|
|
|
|||||||||||||
|
Amount
|
|
Units
|
|
Amount
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at December 31, 2018
|
$
|
505
|
|
|
45,769
|
|
|
$
|
81,984
|
|
|
$
|
(15,086
|
)
|
|
$
|
67,403
|
|
Net loss
|
(177
|
)
|
|
—
|
|
|
(12,279
|
)
|
|
$
|
—
|
|
|
$
|
(12,456
|
)
|
||
Distributions ($0.01 per unit)
|
(6
|
)
|
|
—
|
|
|
(470
|
)
|
|
—
|
|
|
(476
|
)
|
||||
Equity compensation, net
|
—
|
|
|
—
|
|
|
312
|
|
|
—
|
|
|
312
|
|
||||
Vesting of Phantom Units
|
—
|
|
|
117
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Conversions of Series A Preferred
|
—
|
|
|
1,113
|
|
|
3,048
|
|
|
—
|
|
|
3,048
|
|
||||
Translation adjustment, net of taxes of $0
|
—
|
|
|
—
|
|
|
—
|
|
|
272
|
|
|
272
|
|
||||
Other
|
—
|
|
|
—
|
|
|
(69
|
)
|
|
—
|
|
|
(69
|
)
|
||||
Balance at March 31, 2019
|
$
|
322
|
|
|
46,999
|
|
|
$
|
72,526
|
|
|
$
|
(14,814
|
)
|
|
$
|
58,034
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Operating activities:
|
|
|
|
|
|
||
Net income (loss)
|
$
|
(13,630
|
)
|
|
$
|
(12,456
|
)
|
Reconciliation of net income (loss) to cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
19,908
|
|
|
18,532
|
|
||
Impairments and other charges
|
5,371
|
|
|
—
|
|
||
Provision for deferred income taxes
|
8
|
|
|
1,466
|
|
||
Series A Preferred Unit distributions and adjustments
|
—
|
|
|
2,437
|
|
||
Equity compensation expense
|
324
|
|
|
365
|
|
||
Provision for doubtful accounts
|
222
|
|
|
56
|
|
||
Amortization of deferred financing costs
|
670
|
|
|
600
|
|
||
Other non-cash charges and credits
|
(85
|
)
|
|
54
|
|
||
(Gain) loss on sale of property, plant, and equipment
|
7
|
|
|
(26
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|||
Accounts receivable
|
(7,364
|
)
|
|
5,992
|
|
||
Inventories
|
(12,102
|
)
|
|
(11,990
|
)
|
||
Prepaid expenses and other current assets
|
(1,160
|
)
|
|
(567
|
)
|
||
Accounts payable and accrued expenses
|
21,625
|
|
|
27,442
|
|
||
Other
|
(437
|
)
|
|
(273
|
)
|
||
Net cash provided by operating activities
|
13,357
|
|
|
31,632
|
|
||
Investing activities:
|
|
|
|
|
|||
Purchases of property, plant, and equipment, net
|
(6,483
|
)
|
|
(23,152
|
)
|
||
Net cash used in investing activities
|
(6,483
|
)
|
|
(23,152
|
)
|
||
Financing activities:
|
|
|
|
|
|||
Proceeds from long-term debt
|
15,501
|
|
|
—
|
|
||
Payments of long-term debt
|
(16,000
|
)
|
|
(2
|
)
|
||
Cash redemptions of Preferred Units
|
—
|
|
|
(9,399
|
)
|
||
Distributions
|
(478
|
)
|
|
(476
|
)
|
||
Other financing activities
|
(886
|
)
|
|
—
|
|
||
Advances from affiliate
|
—
|
|
|
2,402
|
|
||
Net cash used in financing activities
|
(1,863
|
)
|
|
(7,475
|
)
|
||
Effect of exchange rate changes on cash
|
35
|
|
|
7
|
|
||
Increase (decrease) in cash and cash equivalents
|
5,046
|
|
|
1,012
|
|
||
Cash and cash equivalents at beginning of period
|
2,370
|
|
|
15,858
|
|
||
Cash and cash equivalents at end of period
|
$
|
7,416
|
|
|
$
|
16,870
|
|
Supplemental cash flow information:
|
|
|
|
|
|||
Interest paid
|
$
|
10,823
|
|
|
$
|
10,727
|
|
Income taxes paid
|
$
|
36
|
|
|
$
|
648
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Total
|
||||||||||||
|
(In Thousands)
|
||||||||||||||||||||||
Compression service contracts remaining performance obligations
|
$
|
38,720
|
|
|
$
|
15,941
|
|
|
$
|
2,026
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
56,741
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In Thousands)
|
||||||
Unearned income, beginning of period
|
$
|
9,505
|
|
|
$
|
24,898
|
|
Additional unearned income
|
23,545
|
|
|
48,955
|
|
||
Revenue recognized
|
(5,624
|
)
|
|
(24,557
|
)
|
||
Unearned income, end of period
|
$
|
27,426
|
|
|
$
|
49,296
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In Thousands)
|
||||||
Compression and related services
|
|
|
|
||||
U.S.
|
$
|
57,275
|
|
|
$
|
54,018
|
|
International
|
8,490
|
|
|
9,042
|
|
||
|
65,765
|
|
|
63,060
|
|
||
Aftermarket services
|
|
|
|
||||
U.S.
|
17,285
|
|
|
13,332
|
|
||
International
|
685
|
|
|
282
|
|
||
|
17,970
|
|
|
13,614
|
|
||
Equipment sales
|
|
|
|
||||
U.S.
|
6,038
|
|
|
26,166
|
|
||
International
|
506
|
|
|
596
|
|
||
|
6,544
|
|
|
26,762
|
|
||
Total Revenue
|
|
|
|
||||
U.S.
|
80,598
|
|
|
93,516
|
|
||
International
|
9,681
|
|
|
9,920
|
|
||
|
$
|
90,279
|
|
|
$
|
103,436
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(In Thousands)
|
||||||
Parts and supplies
|
$
|
33,388
|
|
|
$
|
42,814
|
|
Work in progress
|
29,900
|
|
|
13,223
|
|
||
Total inventories
|
$
|
63,288
|
|
|
$
|
56,037
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
|
(In Thousands)
|
||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows - operating leases
|
$
|
2,216
|
|
|
$
|
1,174
|
|
|
|
|
|
||||
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
||||
Operating leases
|
$
|
7,626
|
|
|
$
|
2,487
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
(In Thousands)
|
|
|
||||
Operating leases:
|
|
|
|
||||
Operating right-of-use asset
|
$
|
27,374
|
|
|
$
|
21,006
|
|
|
|
|
|
||||
Accrued liabilities and other
|
$
|
7,667
|
|
|
$
|
6,706
|
|
Operating lease liabilities
|
18,903
|
|
|
13,822
|
|
||
Total operating lease liabilities
|
$
|
26,570
|
|
|
$
|
20,528
|
|
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||
Weighted average remaining lease term:
|
|
|
|
||
Operating leases
|
4.90 Years
|
|
|
4.51 Years
|
|
|
|
|
|
||
Weighted average discount rate:
|
|
|
|
||
Operating leases
|
9.05
|
%
|
|
8.73
|
%
|
|
Operating Leases
|
||
|
(In Thousands)
|
||
|
|
||
Remainder of 2019
|
$
|
7,160
|
|
2020
|
7,622
|
|
|
2021
|
5,499
|
|
|
2022
|
3,295
|
|
|
2023
|
3,257
|
|
|
Thereafter
|
6,503
|
|
|
Total lease payments
|
33,336
|
|
|
Less imputed interest
|
(6,766
|
)
|
|
Total lease liabilities
|
$
|
26,570
|
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
|
|
Scheduled Maturity
|
|
(In Thousands)
|
||||||
Credit Agreement (presented net of the unamortized deferred financing costs of $0.8 million as of March 31, 2020 and $0.9 million as of December 31, 2019)
|
|
June 2023
|
|
$
|
2,184
|
|
|
$
|
2,622
|
|
7.25% Senior Notes (presented net of the unamortized discount of $1.5 million as of March 31, 2020 and $1.7 million as of December 31, 2019 and unamortized deferred financing costs of $2.6 million as of March 31, 2020 and $2.8 million as of December 31, 2019)
|
|
August 2022
|
|
291,863
|
|
|
291,444
|
|
||
7.50% Senior Secured Notes (presented net of the unamortized deferred financing costs of $5.6 million as of March 31, 2020 and $5.8 million as of December 31, 2019)
|
|
April 2025
|
|
344,382
|
|
|
344,172
|
|
||
|
|
|
|
638,429
|
|
|
638,238
|
|
||
Less current portion
|
|
|
|
—
|
|
|
—
|
|
||
Total long-term debt
|
|
|
|
$
|
638,429
|
|
|
$
|
638,238
|
|
|
|
US Dollar Notional Amount
|
|
Traded Exchange Rate
|
|
Settlement Date
|
||
|
|
(In Thousands)
|
|
|
|
|
||
Forward sale Mexican peso
|
|
$
|
4,974
|
|
|
24.40
|
|
4/21/2020
|
Foreign currency derivative contracts
|
|
Balance Sheet
|
|
Fair Value at
|
||||||
|
Location
|
|
March 31, 2020
|
|
December 31, 2019
|
|||||
|
|
|
|
(In Thousands)
|
||||||
Forward sale contracts
|
|
Current liabilities
|
|
(155
|
)
|
|
(53
|
)
|
||
Net asset (liability)
|
|
|
|
$
|
(155
|
)
|
|
$
|
(53
|
)
|
|
|
|
Fair Value Measurements Using
|
||||||||||||
Description
|
Total as of
March 31, 2020 |
|
Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
|
(In Thousands)
|
||||||||||||||
Midland manufacturing facility and related assets
|
$
|
19,646
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,646
|
|
Liability for foreign currency derivative contracts
|
(155
|
)
|
|
—
|
|
|
(155
|
)
|
|
—
|
|
||||
|
$
|
19,491
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|||||||||
|
|
|
Quoted Prices in Active Markets for Identical Assets or Liabilities
(Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|||||
Description
|
Total as of
December 31, 2019 |
|
|
|
||||||||
|
(In Thousands)
|
|||||||||||
Liability for foreign currency derivative contracts
|
(53
|
)
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
|
$
|
(53
|
)
|
|
|
|
|
|
|
•
|
assess our ability to generate available cash sufficient to make distributions to our common unitholders and general partner;
|
•
|
evaluate the financial performance of our 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 our ability to incur and service debt and fund capital expenditures.
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In Thousands)
|
||||||
Net loss
|
$
|
(13,630
|
)
|
|
$
|
(12,456
|
)
|
Provision (benefit) for income taxes
|
212
|
|
|
4,373
|
|
||
Depreciation and amortization
|
19,908
|
|
|
18,532
|
|
||
Impairments and other charges
|
5,371
|
|
|
—
|
|
||
Interest expense, net
|
13,169
|
|
|
13,299
|
|
||
Equity compensation
|
324
|
|
|
365
|
|
||
Series A Preferred redemption premium
|
—
|
|
|
448
|
|
||
Series A Preferred fair value adjustments
|
—
|
|
|
1,304
|
|
||
Severance
|
272
|
|
|
—
|
|
||
Non-cash cost of compressors sold
|
1,809
|
|
|
940
|
|
||
Other
|
327
|
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
27,762
|
|
|
$
|
26,805
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In Thousands)
|
||||||
Cash flow from operating activities
|
$
|
13,357
|
|
|
$
|
31,632
|
|
Changes in current assets and current liabilities
|
(562
|
)
|
|
(20,604
|
)
|
||
Deferred income taxes
|
(8
|
)
|
|
(1,466
|
)
|
||
Other non-cash charges
|
(814
|
)
|
|
(684
|
)
|
||
Interest expense, net
|
13,169
|
|
|
13,299
|
|
||
Series A Preferred accrued paid in kind distributions
|
—
|
|
|
(685
|
)
|
||
Provision for income taxes
|
212
|
|
|
4,373
|
|
||
Severance
|
272
|
|
|
—
|
|
||
Non-cash cost of compressors sold
|
1,809
|
|
|
940
|
|
||
Other
|
327
|
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
27,762
|
|
|
$
|
26,805
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(In Thousands)
|
||||||
Cash from operations
|
$
|
13,357
|
|
|
$
|
31,632
|
|
Capital expenditures, net of sales proceeds
|
(6,483
|
)
|
|
(23,152
|
)
|
||
Free cash flow
|
$
|
6,874
|
|
|
$
|
8,480
|
|
|
March 31,
|
||||
|
2020
|
|
2019
|
||
Horsepower
|
|
|
|
||
Total horsepower in fleet
|
1,195,186
|
|
|
1,167,164
|
|
Total horsepower in service
|
1,033,256
|
|
|
1,017,452
|
|
Total horsepower utilization rate
|
86.5
|
%
|
|
87.2
|
%
|
|
Three Months Ended March 31,
|
|||||||||||||||||||
|
|
|
|
|
Period-to-Period Change
|
|
Percentage of Total Revenues
|
Period-to-Period Change
|
||||||||||||
Consolidated Results of Operations
|
2020
|
|
2019
|
|
2020 vs. 2019
|
|
2020
|
|
2019
|
|
2020 vs. 2019
|
|||||||||
|
(In Thousands)
|
|
|
|
|
|
|
|||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Compression and related services
|
$
|
65,765
|
|
|
$
|
63,060
|
|
|
$
|
2,705
|
|
|
72.8
|
%
|
|
61.0
|
%
|
|
4.3
|
%
|
Aftermarket services
|
17,970
|
|
|
13,614
|
|
|
4,356
|
|
|
19.9
|
%
|
|
13.2
|
%
|
|
32.0
|
%
|
|||
Equipment sales
|
6,544
|
|
|
26,762
|
|
|
(20,218
|
)
|
|
7.2
|
%
|
|
25.9
|
%
|
|
(75.5
|
)%
|
|||
Total revenues
|
90,280
|
|
|
103,436
|
|
|
(13,157
|
)
|
|
100.0
|
%
|
|
100.0
|
%
|
|
(12.7
|
)%
|
|||
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of compression and related services
|
31,608
|
|
|
32,621
|
|
|
(1,013
|
)
|
|
35.0
|
%
|
|
31.5
|
%
|
|
(3.1
|
)%
|
|||
Cost of aftermarket services
|
16,245
|
|
|
11,260
|
|
|
4,985
|
|
|
18.0
|
%
|
|
10.9
|
%
|
|
44.3
|
%
|
|||
Cost of equipment sales
|
6,700
|
|
|
24,219
|
|
|
(17,519
|
)
|
|
7.4
|
%
|
|
23.4
|
%
|
|
(72.3
|
)%
|
|||
Total cost of revenues
|
54,553
|
|
|
68,100
|
|
|
(13,547
|
)
|
|
60.4
|
%
|
|
65.8
|
%
|
|
(19.9
|
)%
|
|||
Depreciation and amortization
|
19,908
|
|
|
18,532
|
|
|
1,376
|
|
|
22.1
|
%
|
|
17.9
|
%
|
|
7.4
|
%
|
|||
Impairments and other charges
|
5,371
|
|
|
—
|
|
|
5,371
|
|
|
5.9
|
%
|
|
—
|
%
|
|
100.0
|
%
|
|||
Selling, general, and administrative expense
|
10,256
|
|
|
10,665
|
|
|
(409
|
)
|
|
11.4
|
%
|
|
10.3
|
%
|
|
(3.8
|
)%
|
|||
Interest expense, net
|
13,169
|
|
|
13,299
|
|
|
(130
|
)
|
|
14.6
|
%
|
|
12.9
|
%
|
|
(1.0
|
)%
|
|||
Series A Preferred fair value adjustment (income) expense
|
—
|
|
|
1,304
|
|
|
(1,304
|
)
|
|
—
|
%
|
|
1.3
|
%
|
|
(100.0
|
)%
|
|||
Other (income) expense, net
|
440
|
|
|
(381
|
)
|
|
821
|
|
|
0.5
|
%
|
|
(0.4
|
)%
|
|
(215.5
|
)%
|
|||
Loss before income taxes
|
(13,418
|
)
|
|
(8,083
|
)
|
|
(5,335
|
)
|
|
(14.9
|
)%
|
|
(7.8
|
)%
|
|
66.0
|
%
|
|||
Provision for income taxes
|
212
|
|
|
4,373
|
|
|
(4,161
|
)
|
|
0.2
|
%
|
|
4.2
|
%
|
|
(95.2
|
)%
|
|||
Net loss
|
$
|
(13,630
|
)
|
|
$
|
(12,456
|
)
|
|
$
|
(1,174
|
)
|
|
(15.1
|
)%
|
|
(12.0
|
)%
|
|
9.4
|
%
|
|
Three Months Ended March 31,
|
||||||
|
(In Thousands)
|
||||||
|
2020
|
|
2019
|
||||
Operating activities
|
$
|
13,357
|
|
|
$
|
31,632
|
|
Investing activities
|
(6,483
|
)
|
|
(23,152
|
)
|
||
Financing activities
|
(1,863
|
)
|
|
(7,475
|
)
|
|
|
Payments Due
|
||||||||||||||||||||||||||
|
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||||
|
|
(In Thousands)
|
||||||||||||||||||||||||||
Long-term debt
|
|
$
|
649,430
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
295,930
|
|
|
$
|
3,500
|
|
|
$
|
—
|
|
|
$
|
350,000
|
|
Interest on debt
|
|
$
|
185,387
|
|
|
$
|
35,779
|
|
|
$
|
47,705
|
|
|
$
|
40,593
|
|
|
$
|
26,310
|
|
|
$
|
26,250
|
|
|
$
|
8,750
|
|
Operating leases
|
|
$
|
33,336
|
|
|
7,160
|
|
|
7,622
|
|
|
5,499
|
|
|
3,295
|
|
|
3,257
|
|
|
6,503
|
|
||||||
Affiliate financing obligation
|
|
$
|
13,618
|
|
|
2,261
|
|
|
3,015
|
|
|
3,015
|
|
|
3,015
|
|
|
2,312
|
|
|
—
|
|
||||||
Total contractual cash obligations
|
|
$
|
881,771
|
|
|
$
|
45,200
|
|
|
$
|
58,342
|
|
|
$
|
345,037
|
|
|
$
|
36,120
|
|
|
$
|
31,819
|
|
|
$
|
365,253
|
|
•
|
economic and operating conditions that are outside of our control, including the trading price of our common units;
|
•
|
the current significant surplus in the supply of oil and the ability of the OPEC + to agree on and comply with supply limitations; the duration and magnitude of the unprecedented disruption in the oil and gas industry currently, which is negatively impacting our business;
|
•
|
the availability of adequate sources of capital to us;
|
•
|
our existing debt levels and our flexibility 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 dependence upon a limited number of customers and the activity levels of our customers;
|
•
|
the levels of competition we encounter;
|
•
|
our ability to replace our contracts with customers, which are generally short-term contracts;
|
•
|
the availability of raw materials and labor at reasonable prices;
|
•
|
risks related to acquisitions and our growth strategy;
|
•
|
our operational performance;
|
•
|
risks related to our foreign operations;
|
•
|
the credit and risk profile of TETRA;
|
•
|
the ability of our general partner to retain key personnel;
|
•
|
information technology risks including the risk from cyberattack;
|
•
|
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, protecting the health and well-being of our employees, remote work arrangements, performance of contracts, and supply chain disruptions;
|
•
|
other global or national health concerns;
|
•
|
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 the material weakness in our internal control over financial reporting or if we identify other material weaknesses in the future;
|
•
|
the effect and results of litigation, regulatory matters, settlements, audits, assessments, and contingencies, and
|
•
|
other risks and uncertainties under “Item 1A. Risk Factors” in our 2019 Annual Report, and as included in 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.
|
Period
|
|
Total Number
of Units Purchased
|
|
Average
Price
Paid per Unit
|
|
Total Number of Units Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Units that May Yet be Purchased Under the Publicly Announced
Plans or Programs
|
|||
January 1 – January 31, 2020
|
|
—
|
|
|
$
|
—
|
|
|
N/A
|
|
N/A
|
February 1 – February 29, 2020
|
|
—
|
|
|
—
|
|
|
N/A
|
|
N/A
|
|
March 1 – March 31, 2020
|
|
—
|
|
|
—
|
|
|
N/A
|
|
N/A
|
|
Total
|
|
—
|
|
|
|
|
|
N/A
|
|
N/A
|
10.1*
|
|
10.2*
|
|
31.1*
|
|
31.2*
|
|
32.1**
|
|
32.2**
|
|
101.SCH+
|
XBRL Taxonomy Extension Schema Document
|
101.CAL+
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF+
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB+
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE+
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed with this report.
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**
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Furnished with this report.
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+
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Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the three month periods ended March 31, 2020 and 2019; (ii) Consolidated Statements of Comprehensive Income for the three month periods ended March 31, 2020 and 2019; (iii) Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019; (iv) Consolidated Statement of Partners’ Capital for the three month period ended March 31, 2020; (v) Consolidated Statements of Cash Flows for the three month periods ended March 31, 2020 and 2019; and (iv) Notes to Consolidated Financial Statements for the three months ended March 31, 2020.
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CSI COMPRESSCO LP
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By:
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CSI Compressco GP Inc.,
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its General Partner
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Date:
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May 7, 2020
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By:
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/s/Brady M. Murphy
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Brady M. Murphy
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President
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Principal Executive Officer
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Date:
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May 7, 2020
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By:
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/s/Elijio V. Serrano
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Elijio V. Serrano
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Chief Financial Officer
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Principal Financial Officer
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Date:
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May 7, 2020
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By:
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/s/Michael E. Moscoso
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Michael E. Moscoso
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Vice President - Finance
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Principal Accounting Officer
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a.
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Subject to the terms and conditions of this Agreement, from January 9, 2020 through the Termination Date, Employee shall remain employed by the Company and must be generally available to transition Employee’s job duties as requested by the Company.
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a.
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the gross amount of Thirty-One Thousand Dollars ($31,000), less lawful withholdings, in one lump sum payable no sooner than the eighth day after Employee executes this Agreement and no later than March 15, 2020;
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a.
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Employee has been advised and is again hereby advised in this Agreement to consult with an attorney and has had the opportunity to consult with an attorney, before signing this Agreement;
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a.
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Employee acknowledges, represents and warrants that as of the date Employee signs this Agreement Employee has returned all property belonging to the Company or any of the other Released Parties gathered by virtue of Employee’s employment with the Company, including but not limited to: computers, computer equipment, and software; telephones or personal data assistants; other equipment; keys or access cards or devices; credit cards; books or other publications; board materials; current or
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a.
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Employee acknowledges that the Company and its Affiliates have previously provided Employee with Confidential Information. Employee further acknowledges and agrees that the Company and its Affiliates have put in place certain policies and practices to safeguard such Confidential Information, and that as a condition of Employee’s employment with the Company, Employee executed the Employment Agreement with the Company pursuant to which Employee agreed, both during and after Employee’s employment, not to disclose or use for Employee’s benefit or the benefit of others any Confidential Information and to comply with the Company’s and its Affiliates’ policies regarding Confidential Information.
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a.
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Employee agrees that the Company’s and its Affiliate’s goodwill and reputation are assets of great value which were obtained through great costs, time and effort. Employee agrees not to, directly or indirectly communicate or publish any defamatory or disparaging remarks, comments or statements or any knowingly false information (written or oral) concerning the Company or any of the other Released Parties, or any of their officers, directors, employees, customers or clients, operations, business practices and/or products, or cause any other person to communicate or publish such information. Notwithstanding the foregoing, nothing in this Agreement shall be construed as prohibiting Employee from participating in any governmental proceeding.
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a.
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Company makes no commitment or guarantee to Employee that any federal, state, local or other tax treatment will (or will not) apply or be available to any person eligible for benefits under this Agreement and assumes no liability whatsoever for the tax consequences to Employee or to any other person eligible for benefits under this Agreement.
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Employee:
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Date of Grant:
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Number of Performance Phantom Units:
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Performance Period:
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Performance Level*
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DCF per Unit
2020
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DCF per Unit
2021
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DCF per Unit
2022
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Percentage of Each Applicable Year’s Target Phantom Units that become Earned Phantom Units*
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Threshold
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$0.94
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$1.09
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$1.28
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30%
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Target
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$1.17
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$1.37
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$1.60
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100%
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Stretch
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$1.46
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$1.71
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$2.00
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150%
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Over Achievement
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$1.76
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$2.05
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$2.39
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200%
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1.
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I have reviewed this report on Form 10-Q for the fiscal quarter ended March 31, 2020, of CSI Compressco LP;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
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Date:
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May 7, 2020
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/s/Brady Murphy
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Brady M. Murphy
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President of CSI Compressco GP Inc.,
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General Partner of CSI Compressco LP
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(Principal Executive Officer)
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1.
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I have reviewed this report on Form 10-Q for the fiscal quarter ended March 31, 2020, of CSI Compressco LP;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
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Date:
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May 7, 2020
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/s/Elijio V. Serrano
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Elijio V. Serrano
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Chief Financial Officer of CSI Compressco GP Inc.,
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General Partner of CSI Compressco LP
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(Principal Financial Officer)
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Dated:
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May 7, 2020
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/s/Brady M. Murphy
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Brady M. Murphy
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President of CSI Compressco GP Inc.,
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General Partner of CSI Compressco LP
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(Principal Executive Officer)
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Dated:
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May 7, 2020
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/s/Elijio V. Serrano
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Elijio V. Serrano
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Chief Financial Officer of CSI Compressco GP Inc.,
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General Partner of CSI Compressco LP
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(Principal Financial Officer)
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