CSI Compressco LP Optimistic About 2Q 2019 Results

Despite posting a $2.9 million net loss for the second quarter of 2019, Houston’s CSI Compressco LP remains optimistic that the company is headed in the right direction as revenue increased sequentially by 31 percent, according to a company press release.

The company posted a net loss of $12.5 million in the first quarter of 2019.

CSI Compressco’s distributable cash flow increased sequentially by 150 percent to $15.7 million while achieving record high compression services gross margins and utilization since the acquisition of Compressor Systems, Inc. in 2014.

Revenues for the quarter ended June 30, 2019 were $136 million compared to $103 million for the first quarter of 2019 and $100 million for the second quarter of 2018.  The revenue increases were primarily from new equipment sales and stronger aftermarket services activity.

What does leadership have to say about the improvements?

“The second quarter was our strongest sequential improvement in quarterly earnings since the downturn,” said Brady Murphy, Interim President of CSI Compressco. “We achieved several record highs, driven by continued and consistent improvements in compression services, aftermarket services and new unit sales.  Adjusted EBITDA increased sequentially by 22 percent and was the highest Adjusted EBITDA since the fourth quarter of 2014.”

Market demand for the company’s compression services appears to be strengthening. The company reported an improvement of 450 bps from the first quarter of 2019 in gross margin for compression services. The company’s press release attributed this growth to several factors including better pricing, deployment of new compression units at pricing which is generating 20 percent returns on capital, an improved focus of new capital on core customers and realized cost initiatives.

Aftermarket services revenue of $18.2 million increased $4.6 million sequentially, or 34 percent, due to the timing of major overhaul completions of customers’ equipment during the quarter.

“Our aftermarket services and equipment sales businesses experienced a strong rebound in the second quarter, consistent with our expectations,” said Murphy.

Second quarter orders for new equipment sales were $18 million, a significant increase over the $11 million in the first quarter of 2019.  Due to delays in new unit sales orders in the first half of the year, the company expects third and fourth quarter equipment sales will be slightly lower than previously expected but higher than first quarter levels.

 

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