CSI Compressco LP (CCLP) Misses Q4 EPS by 3c, Offers Guidance

CSI Compressco LP (NASDAQ: CCLP) reported Q4 EPS of ($0.04), $0.03 worse than the analyst estimate of ($0.01). Revenue for the quarter came in at $124 million versus the consensus estimate of $121.5 million.

GUIDANCE:

CSI Compressco LP sees FY2020 revenue of $430-460 million, versus the consensus of $467.2 million.

• For 2020, we expect total year net loss to be between $20.7 million and $28.5 million. We expect revenue to be between $430 million and $460 million and Adjusted EBITDA to be between $125 million and $140 million. We expect the first quarter of 2020 to be softer than the fourth quarter of 2019 due to the timing of equipment sales and aftermarket services activity levels.
• Maintenance capital expenditures are expected to be between $23 million and $25 million reflecting the addition of almost 190,000 horsepower to our service fleet over the last two years. We expect to limit our growth capital to be less than 50% of distributable cash flow and are targeting growth capital expenditures to be between $20 million and $25 million. We also expect to allocate $4 million to $6 million of capital expenditures for technology investments to continue to improve fleet reliability and with higher compression services margins through efficiencies in our business. We will continue to benefit from and enhance the functionality of our ERP system that we believe to be best in class in the industry. Lastly, we have launched an initiative to evolve our telemetry system to further improve remote monitoring of our units and utilize predictive maintenance to further improve run time and reduce costs. In total, capital expenditures are expected to be between $47 million and $56 million.
• We expect distributable cash flow to be between $51 million and $62 million and our distribution coverage ratio to be between 26x and 32x. After funding the above noted growth and technology capital investments of $27 million to $31 million, we expect to use the balance of distributable cash flow to reduce outstanding debt, primarily through open market purchases of our outstanding unsecured senior notes, beginning in the second quarter of 2020. We remain committed to improving our leverage metrics in the near term toward our target net leverage ratio of 4.5x, consistent with what was originally communicated at the May 2018 investor conference we hosted in New York City. We believe that as the net leverage ratio improves and we continue to attain our financial goals, we will create value to our equity holders and protect CSI Compressco during periods of market uncertainty. An improved net leverage ratio should also better position us to refinance the unsecured senior notes, which mature in August 2022.

For earnings history and earnings-related data on CSI Compressco LP (CCLP) click here.

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