CCLP - Earnings call transcript Q1 2020

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Operator

Good morning, and welcome to CSI Compressco LP's First Quarter 2020 Earnings Conference Call. The speakers for today's call are Brady Murphy, President of CSI Compressco LP; Elijio Serrano, Chief Financial Officer for CSI Compressco LP and also for TETRA Technologies, Inc., which is the general partner of CSI Compressco LP; and Jacek Mucha, Vice President of Finance and Treasurer for TETRA Technologies and CSI Compressco LP. Also in attendance today is Michael Moscoso, Vice President of Finance for CSI Compressco LP. [Operator Instructions] Please note that this event is being recorded.

I will now like to turn the conference call over to Mr. remarks. opening for Mucha ahead. go Please

Jacek Mucha

may you, Kate. CSI I you joining be conference and uncertainties, like may a are be deemed Good first quarter morning, to call are assumption a this Compressco's These factors. that call. These remind thank statements the statements XXXX that subject to or to for forward-looking. you on statements Thank by the contain Compressco, results would of are certain partnership. based which and number CSI of many risks control of and number made beyond analysis are conference of based on are

You are may not results differ of cautioned materially from future in are statements. guarantees performance, those and forward-looking actual such that that projected statements the

the refer for or press coverage distribution financial other course we EBITDA, measures. call, to adjusted margins, period. prepared measures. information These the Please our in or results to our morning’s gross backlog, public not cash considered the GAAP the flow, GAAP, should release cash financial may free refer are for the be complete reconciliation to non-GAAP to measures website leverage ratio of of and substitute for within addition, a distributable EBITDA, ratio, flow, accordance reconciliations nearest In this with in context financial non-GAAP financial of

to and In Friday, addition planned to with on posted filed on as out morning, X, website, our that our Form May this announcement or press is be release the earlier XXXX. our XX-Q went before SEC

now will over With Brady. turn to it that, I

Brady Murphy

our conference first and good morning XXXX Well, Thank call. everyone. for Jacek, thank joining you you, quarter

flow environment impacting more to who discuss then business, recap how our cash our a and of provide quarter turn give our liquidity. it the current on will sheet, performance, market is balance I'll over details Elijio, and first

keep strides all extraordinary for Let pandemic. customers as the comment families and have made business to many our our our crisis. start during with the responded with about as our We've and times, way these pleased while first team employees, customers. a to their COVID-XX ensuring I'm the valued management safe employees me possible continuity

implemented employees and we together. keep has working time navigate partnership conditions as on this guidelines certain The safe our to

Disease from Safety the and guidelines and and keep the changes Health to following Prevention safest We’ll monitor Center working our in of in are continue guidelines Control the Administration and We the Occupational environment possible. we’ll to the and period. communicate to new would all members of all recommendations with continued I families during their this efforts unprecedented have employees all their our the become personally organization like they available. of for thank our as of employees will

to our and QX well the first oil profit COVID-XX with and Compression for line due Turning margin pandemic quarter. levels. disruption fourth and quarter, the services quarter businesses subsequent market results. performed increased from the revenue, at the the gross end to collapse expectations in segment the deterioration Compressco’s our price first relatively of and CSI Despite gross sequentially

the in quarter. of of margins fourth contributed $XX.X in of gross XXXX up XX.X% basis million and gross the XX.X% services from points Compression quarter margin XXX were

the finalized customers was and sharply their declined decline of aftermarket While quarter, slowdown from aftermarket services the business, new equipment and fourth deliveries budgets. sales capital from as equipment timing to seasonal majority

and million, EBITDA sequentially down to lower quarter activity aftermarket adjusted aforementioned due First services sales. $XX.X equipment adjusted was $X.X million primarily

basis points to However quarter. adjusted for EBITDA profitability increased XX.X% sequentially the by XXX

in first of lift our new from quarter. as deploying and drive majority a centralized to focused XX,XXX key gas gas into and liquids existing a South continue vast for drive Texas. the financing, additions added lift for customer with clusters around horsepower, the equipment of We the services centralized these lease The Basin capital to help Permian production in efficient being demand combination deployed also of horsepower expenditures new effective added and of the cost operating trend means compression accounts

industry is in has customers to over unique and faster a in of also comes that is world, response makes move was the the second supply. lack in of which and oil downturn this downturn. things and our a to quarter, visibility met this The recently and eventually spending years it in businesses to unprecedented XXXX drop the As our demand changed hard recover. This also rapid speed steep several the low will demand predict shut production cut with by oil very drop into it following with for of and unique is we our capital oil dramatically. deep downturn price to when wells much more The

we experiencing their excess as releases are on through market only reduce horsepower equipment compression but units in utilization equipment also to cost. lower or put pressures not customers to customer the standby, requests try pricing With

to the During accelerated final we all April weeks through and May. has three March experienced and in which

is end points biggest is rich shut-ins This March end in of U.S. XXXX. from end speed of quarter to driven a our by downturn XX.X% resilient you high business been of which As mostly has services site in plays. the shale as is liquid all-time occurring customers This far to market of the the so and impact at mentioned at rapid downturns. as our difference expect this dropped of XXX the at well which XX% utilization would more the started typically near basis the than well the

quarter horsepower mainly to well the publicly nearly shale operators our compression from impact we Today end services the XX% we we've grow. XX that to and U.S. their traded of operations heard plans shut-in who expect shut-ins larger units. of will announced expect the number over second By

will the rates. from that rest which released will units from units going XX% and A be operating portion be are of standby to

of which utilization of end quarter the XX% XXXX-XXXX We low second expect our approach for by the entire downturn will point the the was the fleet.

reached the downturn port low utilization. we downturns recent most before XX prior in over the months In it was and the

speed those levels be expect few given We downturn. magnitude the of current the months to at a and within

we units utilized as Please not standby auto note when utilization we rate. is from the repair exclude client our a standby horsepower of under calculation on service do do being billed rates. But that count

Prior normal downturn roughly downturn expect rates, standby on to by end of domestic current this our X% on the in we May. but our in will a business, over standby XX% have be course that horsepower we horsepower the of domestic of rates of

additional units already to added horsepower. QX the our new expect committed compressor do delivered We equipment, XX,XXX In we any our to add fleet to equipment XX beyond be not to equipment with X,XXX-plus been Almost our we've approximately quarter. equipment category of in since of in the accounts for of horsepower horsepower which fleet. the the the added beginning active XX% second XXXX all has

outlook to complete lack past closure of over equipment, for backlog. to anticipated Given equipment of Texas. facility near in new as shut that quarter demand fabrication our fabrication of down the poor of The of we've is the months and operations remaining compression third Midland new the the happen decided to orders in mid-term we early several XXXX

First in for expected of million quarter March shipped year. our $X new orders was most only be million, to sales were equipment was the the second quarter which of and this $XX of backlog as

to the fabrication estate of real business. come for requirements. with demand will along facility an new When outsourcing future the market the fleet to our we returns use relationship in sell We the our for exit we and as Midland acre fleet XX expect fabrication additions,

have free downturn, every to to with and order to cost generate and quickly remain Unfortunately positive flow. respond in adjust we profitable structure cash

liquidity. and to While preserve to what length understand of control levers we cannot reduce pool the the cost we downturn,

also expenditures to for acted We've market and discretionary our and suppliers’ for swiftly with initiatives. many program. the key salary year, conditions our the headcount implemented updated and spending all supply cost-cutting implemented Board across the reductions, and Directors’ cut XXX-(k) reduced reduced new many terms and capital travel of of matching components current retainers, We've cash the suspended chain. negotiating We're pricing

foreseeable downturn in the our keeping is immediate and quarter intact summary, our safe with and of very through our internal consistent to to fundamentals gas increasing that we centralized successfully support for business years many of lift our will production performance our expectations, focus first we realized come, navigating in and be future, a are but gas this environment. The and responsibly. In currently volumes different but employees was on

first to progress continue results the years two on laid forward. foundation good we'll last challenge move results a Our out and how over quarter tech and have is and the market

I’ll Elijio. now to turn it over

Elijio Serrano

Thank Brady. you,

that flow. or We earnings range Let came announced pre-announced me EBITDA first we our cash to of quarter we’ve touch sheet, SEC, of on end lower a on few filed million balance with first items XX. I'll $XX.X of at and $XX.X million liquidity in the the touch Adjusted preannounced. $XX.X April on then, million that recently the

second equipment was small new moved as to the America customer lower quarter, impact from delayed we to this slightly first a of on shipment was large EBITDA. but in shipment a delayed - of the adjusted the the Latin that a impact Revenue

also in non-cash our close to Midland the facility. $X.X down fabrication carrying We value write its incurred our of charge plans million inventory facility to this related given and a

which Also on X-K days NASDAQ rules. units a SEC we under rule on XX listing required of April XX, common Market maintain minimum indicating NASDAQ notified the NASDAQ continued consecutive the for to $X, by XXXX traded is listing that we have an below filed with were price Global closing the a that partnership’s the

regain days compliance. from with the Under the NASDAQ to date listing of partnership rules, notification calendar the the XXX

April days normal pandemic, toward with from not June market counted on relief resulting temporarily announced April period to that NASDAQ compliance that companies period. suspended conditions listed be between impact to XX, XX, providing day of a the the the compliance XXXX, XXXX XXXX states change However and been has the XXX rule XX, effect due will the which COVID-XX

a of of must common XXXX, period And partnerships it but unit to units a expiration dollar the will XXX XX the Starting prior December XX, the trading of closing is dollar a consecutive on to least days partnership for July compliance the price compliance, per to XXXX. minimum the still on assuming period be extended below regain regain compliance, have at the rule. days X, of

any XX, price listed does debt remain reporting not It notice to our default of under compliance in business reverse this note any If important or not by CSI remains our with Compressco’s requirements does ongoing evaluate and partnership the split unit NASDAQ improved $X affect December regain credit and SEC all with to has credit in, will that agreement. unit actively to partnerships operations to is or we in and agreements. a The not NASDAQ. it XXXX, compliance over result on reporting

on first offer bond the XXXX, eligible notes to to outstanding deadline from notes X.XX% On and secured holders we unsecured to due notes senior their X.XX% and April newly to XX, personally a due X.XX% certain exchange issued of commenced unsecured release any Also secured all X, for senior we an secondly XXXX. May senior extending XX issued XX. April X.X% May press XXXX due

was deadline communicated remains May unchanged. second originally on The XX

earnings any related to press of process call and we our everyone X-K process exchange address America questions our be for During our previously to to that Form or debt this managing this bondholders related is questions proposed please not our morning's Bank from Any issued ask directed filing. read will that this will Contact releases us.

sheet, capital structure. million. half on second from approximately the requirements will flow Let balance amount first first growth fulfill that In customer of in and This the total previously me were we our $X touch committed quarter, to. year capital now will and the cash

evaluate $XX reducing this million. We expenditures and as million capital the this be year year between further for maintenance are And progresses. we’ll to $XX

and technology be million. approximately $X.X EBITDA. the $X the the year, to was operating in the second flow capital down expect of fourth $X million million from cash quarter XX% million total in lower will $X efficiencies per Investments be expenditures between the quarter half first In improve Distributable to quarter. we from

the in coverage was year. times times coverage fourth last of the from distributable XX Our quarter cash over ratio down flow XX nearly

in Cash $XXX,XXX sequentially to operating per improved due in the flow were capital primarily or to unit. from million. activities was $X.XX quarter This working $XX.X improvements distributions paid

the the of which and total March, notes in net net year outstanding December, million was mature the at notes are $XXX XXXX. XXXX, of end million mature August that that secured are $XXX the million, debt of end $XXX - the At unsecured total

million contain of as at ABL and covenants. million $X.X unsecured The on secured cash $XXX was same of period million. XX, not time hand did maintenance bonds Our revolver and approximately XXXX balance any was $X the March

base borrowing also million. asset Compressco $XX has of revolver, current CSI million base a a $XX approximately with

of Before -- letters the end outstanding, out credit first The which XXXX. June was million ABL $X letters at of quarter. drawn matures of the

above this ratio ability we no the are million are restrictions the If of fixed revolver. are requires us time, we on ratio, coverage there on charge below have one availability $X Our ABL minimum revolver. we time. of to must If a one borrow to a borrowing on maintain our

and CSI first end therefore end a of at no of high the We ratio are times XXXX. time, from currently at X leverage restrictions. have to above one X quarter Compressco’s of improved XXXX, the net the QX of down times

However, we mentioned this to for increase decline earlier. expect the earnings Brady reasons as

uncertainty the withdrew our our plans. Given previously more will full issuing revenue in total earnings clarity we year market, issued year guidance until the and we guidance, their from get not and customers on be

building Brady process However, facilities. that releasing our of for the we following areas. gas to our significant amounts parties any from mentioned operations fabrication gas stopped new closing have sale are equipment staff. not expect pressure fabrication customers Midland and to we on drilling one, we and our earnings third added have Number if backlog the and

look will Therefore, guarantee estate any or to expect and market, that second we after from the minimal. new be real the sale. buildings, EBITDA sale revenue to quarter a of units in this We but sell we cannot the

customers demands December XXX customers parts utilization their aftermarket part for decline March began majority in of declined by well. Number represented the reduce was in this their as are from segment excess that the in horsepower pressure equipment services is that last seeing to increasing the as points of returning basis network. vast March our from and pricing already components three, fleet and two, we Number our for our and

was that into May. rationalization the expectations accelerated The cutback capacity materialize of to drilling completions first to horsepower activity. as April network relation future are in no their on longer volume going This and mainly and has quarter they

in to to and horsepower rationalize online their when turn advance they quickly tend this the capacity. is Operators networks a there market, volumes of in and coming excess have wealth

to minimal - - from customers in equipment impact place quarter from sharing go equipment requests asking standby their sharing first saw impact for to price request us The minimal and rates. from concessions to or the

the this. to both of put or up are an second be us, XX% for return amount standby that to and given We of requests technically equipment already the concessions standby that that either are telling production lack quarter space for It given on the will horsepower the of accelerate expect of was and customers the price to severity expectation to or in us put seeing cutbacks the lack on our demand of storage. our

the This significantly fleet will impact last our large horsepower downturn. more than we experienced in

of in the very horsepower last will number that let doing were gas that As downturn are a centralized gathering or shut lift or be small centralized they had large impacted. wells units

will their back will on to they online. do return needs longer standby leave back want network until this are and they to wealth those fee customers new compression and bringing means the in them wells anticipate that anticipate We that believe on suspended world that the us to want customers the to, believe Turning line demobilization all comes and return to units the be equipment. that and if it to a downturn, We be in prepared shut if ask so. units, go pay

utilization operating is amount unit a the rate, full on us, returned If we when some reporting Eurolife considerate less is do our the to consider build Eurolife not ratios. to our a reporting we customer continue unit than utilization when standby If and percentages. we

rolling an Our or XXXX contracts Most contracts. additions are majority of them the one of year year’s of a with annual are duration on basis. less more vast of other one

this we've the flow clearly cost unlike what and last going earnings experienced will but unit in to reduce will downturn. this We cash by, stand impact

of at utilized was end which were March of at end end December. fleet XX% to also the The to last the at our slightly at approximately compares of value of active XX% the the at and of XX.X% compares March units utilization December the Total which XX.X% XX.X% of to and over represent Valley the at the cycle. end of utilization cycle. large XX.X% last This the XX% compares

any as go time, on horsepower downturn. we units little of in around have in quarter of the to horsepower XX% this to previously next see X% severity on of the standby rates maybe our now at And but mentioned standby over reflecting point horsepower our we expect larger

Therefore be to the impact to more we being expected mid-sized Wells to small operators. not and is cycle more shut-in be to this and are - restricted given revenue the shut-in how our much is by expected earnings are severe production that currently customers.

our of have This In international larger our $XX EBITDA cycle declined of million are per a shut-in lease to minimum Between wells. of our and financing to compares outflows to the cash expenditures, our were capitalized quarterly interest million. large independent Some run adjusted announced $XX.X major stronger valley million obligations $XX.X cash a rate with in EBITDA super maintenance quarter. and expense, last plants $XX.X first of $XX taxes, capital point the million. adjusted of quarter million low customers

cut on continue assets rate costs look we downturn is where bottom extent will goes monetize and unprecedented we to the clear. as to not as you the to and that will can utilization manage aggressively do this yet to equipment We declined we standby

cost reduce to on flow. is to objective earnings cash the of lower minimize impact Our

that’s the the must line or quickly wells The able customers slow economies questions. being With be we’ll for up open to of US down line global back reported. that, bring to working been production reported been rebound have shut-in buildup they recently the and and inventory number for through on recently

Operator

James. from question Praveen from Raymond Go Narra ahead. [Operator Instructions] Our first is

Brady Murphy

Praveen?

Elijio Serrano

Good morning, Praveen.

Brady Murphy

Praveen. unmute we’ll have to back next go the Operator, might You let's Praveen. to come to and one

Operator

Okay.

Baird. from DiRubbio Go ahead. Brian from is question next Our

Brian DiRubbio

if you under you me Good you of let mind contract have what know percentage for revenues could morning. you, Couple don't currently? of questions

Brady Murphy

question a it's services whether compression the contract, contract. is only on everything month-to-month under the is So, side

Brian DiRubbio

Probably I guess the long-term?

Brady Murphy

entire or month-to-month contract our more years to contract. a annual year the but our with roll year essentially fleet us one contract deployed we renew Everything basis, then we more customers and of given ask XXXX A rolling is on uncertainty. it off question one becomes of or XXXX one contract. in out contract or an that basis, multi-year their to during renew it a else Everything was or the expect on

how do this expect units commit to cycle they'll units, all in on to go equipment. clarity have that on the the contracts month-to-month as how for the - us I long the to uncertainty large given do

Brian DiRubbio

the it. are over to going out break coming mobilization you that fee, Got And the quarters?

Brady Murphy

The are essentially mobilization through customer. the fees to passed

For the big unit, they it we that. and per build reimburse the us customer will range $XX,XXX to from for $XX,XXX anywhere and it month to

essentially mobilization demobilization. no in the So margin there’s or the

Brian DiRubbio

how And you sort Okay. downturn of think had last can the we versus mix about idle in returned? the of

Brady Murphy

to earlier mentioned go is XX% on that is to be excess going but amount of of in we run X% we horsepower. standby shut-ins given of amount I our the at that that in any standby on equipment point about think time, that of the

utilization, with that equipment was the mentioned XX.X% cycle that comments downturn valley in utilized all the last at of was for respect to total the we Now to it XX.X%. equal

Brian DiRubbio

That includes correct? standby

Brady Murphy

That last a utilization I XX% bottom in is units downturn. the And big correct. hit the that earlier mentioned of

Brian DiRubbio

on percentage was can again utilized, Brady, used? you color actively includes was that But what on further versus standby, that Okay. any standby so sort of provide being

Brady Murphy

was seen X% standby. we've that around historically on Yes,

Brian DiRubbio

Okay.

last the I guess. through halt X% that So cycle

Brady Murphy

if essentially of we returning number equipment the in didn't few capacity. Correct. shut-in saw the they think horsepower being cycle, standby. they needed They last at Because wells were very

much historically go-round We more have we but expected to of equivalent standby up seen X%. be this

Brian DiRubbio

occurred release Any it for downturn, see is possible experienced. was was what working mature last pretty year? the capital it in that In a you think I sort capital XXXX, a XXXX to in working Okay. this commentary of guys and specifically release company the there

Brady Murphy

it's versus if current published review because tied think the little No, current in liabilities sheet in quick we total release, a total the the assets cash, payables our of cash you got a minus And in our we've working Brian capital process, don't done have up then of important job get managing balance invoice lot managing we do press very to balance that and the up good capital. and a out we net quickly. sheet networking tied of very working see process collection capital. We've you

benefit of don't I significantly business the as down monetizing us So, working expect slows to capital.

Brian DiRubbio

Okay.

de difficulty] about pay million two dividend, the [technical $X quarterly I a explain Just guess amount rationale sort this know you're Can is minimis more, but of you the it given a seeing why to that year. I at the basis, it's point? stresses just continuing you're it of

Brady Murphy

Directors right our and three the in unitholders turned last analysis we continue view the we of the at with the in place Board have to it and elected not Right. market market, not in distribution, do that our a realized also for other our properly that to when increase also board per recognized sheet. this do many wanted the for a shy unit we'll of and yield leave we as it That started the reduced recognized with improve, and strengthen and need minimum balance we reducing robust times about distribution that and But Board that to and earnings a were a did then on distribution. is very a quarterly penny discussion our we has to now, downturn

Brian DiRubbio

don't in interest $X but the on saving a you're know to proposed offer, I million years almost Yes. on you Okay. the so the want only dividend. discuss exchange, spending exchange little about just two cash about

why with in by still understand your about was that only dividend the increase So, exchange to offer? I'm liquidity when trying cash million will paid $X

Brady Murphy

representative. I on such And going exchange Bank avoid of questions to earlier to we're this any to did the just discussing mentioned call, comments our but America reference related

Operator

Seeve from Go is ahead. question Eric from next GoldenTree. Our

Eric Seeve

few a questions. got I've

as units profitability regular know operation standby, - sense also contract as with us during and expenses something operating unit I obviously to of standby? lower but impact on they're the a standby, the The to your transitions is from a to on is Can give per converge respect they seeing declined. go that first you what revenue

Elijio Serrano

of couple Eric. Yes, points a

for make keep First that, we competitive customers, rates into going to purposes. standby avoid we're getting our of the concession tight. we is magnitude to that The that one want to

so the if does for on regular units with of a operating standby We that process, we pretty to standby refill of associated standby don't of pretty purposes. much rates maintenance to question and cost we in and as lube then it the don't and prefer of and go to costs do go Recognize relative to cost. change we all it so a with we unit, avoid also oil. the the have get can eliminate in magnitude becomes go part the much monthly not but need full out the gauze that maintaining unit reduction rate not components, related and competitive from into that those we’re out shutted We rate eliminate to we

Eric Seeve

Maybe you to or just sense you can or directionally just speaking talk numbers? know magnitude of order without

Elijio Serrano

coming in we pull on to that the requested speed EBITDA, guidance to customers the have shut-in, pull question put becomes and and clearly because of standby in we months. the the you customers they're The impact of that out of the go guidance point back our earnings, could that clearly and it units where mentioned magnitude fleet the decline up when It’ll to significant the understood it'll could that it’ll revenue. standby XX% equipment impact we to back number saw be impact come earlier on from

Eric Seeve

being more going with I back in small seeing the large talk and units you. in versus medium the get moved you're to that smaller that? sent the provide sized what presume color about you're to different can And bit larger medium versus the consistent the the little you you are in can terms more difference and standby are Okay. any more on is a of Thank seeing -

Elijio Serrano

almost on that million super on statement making. about the the unit and the they the pressure X I big produced oil be think XX% - barrels your believed that this suggest Clearly of see total here in see cycle. with will for majors cycle independents severe Yes, it from the you've It's that is that going even is as which is of standbys our the magnitude United of our cuts big articles some didn’t we in pressure recent more we'll last some last would and from of than the the cycle, to probably units In accurate. of I the that customers, there’s our much any seen that they're large be fleet. U.S. States production. share as production the

Eric Seeve

the be Okay. large you standby? to likely and are this to the more And smaller finding units for versus - returned likely mid-size units

Elijio Serrano

Yes.

see to I than and in units last comparable small see cases big I we'll the think on most units suggest that that returned. units downturn, we'll probably mid-size and return, would more go standby

Eric Seeve

us gathering a are proportion start for rough Okay. per but about you me. field being or gas just can rough lastly gas you us markets Thank you. appreciating versus working think is or lift versus production what to oil give give And Can then however end fleet a of sense on of that it? the impacted, compression these production you all

Brady Murphy

that mean supports years the for we've single couple been lift, gas production. gas that liquids especially of lift units. is horsepower, deployed of Eric, of oil Brady. over the last fleet we was XX% has unit that production, which I have our having capital the gas lower two liquid targeted years, liquids toward production, for the clearly portion targeted a Most horsepower this compression But last production. deployed we've of still said

Eric Seeve

terms of of that out units ballpark rough recent that for there just just what us terms I most totality? fleet activity you put appreciate - give in implication entire activity, of the breakdown What you the the a is what the are - fleet time but the - how for fleet. whole a of the Can But minority that’s much is is? at still in

Elijio Serrano

almost the first horsepower. of XXX,XXX to deployed And of over XX% Brady we XXXX XXXX, this lift. and part Eric, So between was that mentioned gas year, that centralize

XXX,XXX So, horsepower. X.X of fleet out horsepower assume about of XXX,XXX our to million

Brady Murphy

was of it to had a lift not - a we portion units not couple big we last gas had prior And applications. but years, the our centralized big - of

Elijio Serrano

matter And the it doing world the then Eric, shut gas gets whether centralized gas when well. down in, doesn't for also is centralized shut unit that lift, it’s or gatherings

Operator

Our Selman from Akyol Go next question is from ahead. Stifel.

Selman Akyol

you, sharing. Thank all you very the and guys much color that appreciate are

was I about any to want think sort When utilization, by. to stand - the coming so of down sort a then good XX% it I think quarter, thought of large few at in by said heard you sure was okay, it the just to I correctly. then, end things So, of to and XX.X% make go

So, to can XX of I’m - I it to that’s there? we should where understand guess or already something kind bottom would the I might been incorporated? take trying just see be that

Elijio Serrano

the both We mentioned progression the it the of last to went there, the for from XX.X% horsepower. March So, that was it cycle, XX% value for at unit December big is that XX.X%. X,XXX

unit it standby We on the our a on not and also of utilization. we're it unit a part returned, count is we utilization. if is is If mentioned that some building amount, customer

standby significantly they’re utilized would that on units is to one not are to account be also on from business our determine many of there operating this to but impact I since on the going and factor that rates into So to utilization be Selman at recognize lower take rates, suggest going the downturn, rates.

from amount think built giving even be the several we those are of value approach severity units I do going significant because standby if So or utilization is some these. more XX% cycle, the to last the

Selman Akyol

guess end close, me, I the, the was And understood, I question you rate appreciate can other of - can with is Fully your April? now for utilization April you the at what give and that.

Elijio Serrano

of publishing March toward has and start return, numbers May. mention gained times very to the really the the back the April and in not prefer equipment monthly pricing acceleration standby we that into the but the did pressure several we accelerated No, it traction

Operator

next Our question Praveen Go is from Raymond from James. Narra ahead.

Praveen Narra

that tell. anything maybe about and mute. I from guess seen about see competitive Sorry we not what place? normally pressure have taken don't guys like. early competitors you downturns can that? has any we to this is the historical too equipment competitive the in to like know undercut talk replace to I or trying But if just Or dynamic

Elijio Serrano

stays along mentioned So, the past I've envision in to that the lines our swindling. everybody business Praveen be under that I

pressure costs of We down We're undercutting customers their the rates. price of not out to asking time network the volumes or the us. equipment to mobilization equipment. out reduce returning by it high to terms customers us in have seeing customers. concessions, trying We're a swap swap our It's to difficult seeing for equipment very shut place related to own simply from and set standby demobilization equipment and and takes work try with given

Brady Murphy

Yes.

that. I’ll just Praveen, think a to little more I add

downturn competitors clearly going or don't happen, think that see more as will will their stay really some on - will not certainly in is that a we of maybe We're pressures it regards. traditionally, compressed particularly that's eventually pressures there want competitive recovery. I but ensure when location rapid know this some to competitive believe we hope that we happen, to units in

Praveen Narra

Right.

of replaced downturn? gains, by those that downturn, what So in away. I it think much go guess guess else? how if we I how fair for customers guess, contract, just those it's some that give seems I since the about so somebody pricing customer less seen about last assume being think And removed the we've given is But from gets the this we under of should willing Or you're gains that reductions? to pricing about increase question to

Brady Murphy

what’s it’s of three say has to place terms on you pass and sure negotiation discounting a the it’s all clearly that collectively. standby, pressure seen customer-by-customer, on point, in we've the Praveen, can Yes. on but contract what’s negotiation single would pricing your digits including in taken We're - now high at mentioned. really give as right that to - I this in we've for discounts I customer what and pricing mean all between would

Praveen Narra

you're And seeing is intense you is particularly pressures? talk about more I then say on Obviously, that are it's that any but where place Okay. tough can that the weak there if large regional discrepancies areas to you're or horsepower seeing? could, units, strong, any

Brady Murphy

including where has several shut-ins seeing pressures impacted announce think to I where intense we've see been going by you're is you're the shut-ins the and announced most that. the Permian

you've you where look addition deployed at in some if Texas, seen horsepower, pressure and seeing most and XX% know we're Mid-Con from still major our effect. the the most Those think between As shut-ins. and perhaps that areas you Bakken shut-ins where is Permian the the in over I South of are

Praveen Narra

I last guess And Okay. for then me. just one

has long have period then and determined return customers standby as have of how of standby, guess, then you terms decide that sort the In damage? or on they go when to to assessing a just last asked And seen on have indefinite? to they secondarily, expect the gone the standby the using anybody standby unit it is time who somewhat I

Brady Murphy

customers any seen then and around units. the to standby return turn and haven't We go

in duration, pretty relates in don't of into it still et terms to it's honestly cetera. the place as have rates that. The negotiated think I we visibility getting clear early and negotiated process standbys days

it's I to we pinpoint QX, into more for when beyond most QX customers sure, through really think to will to talk last but tough try this that likely Praveen.

Operator

Lui next Go ahead. Our question Sharon Fargo. from from Wells is

Sharon Lui

Just previous the when believe XX%, of of of timing? you about trough quarter, quarter second end thinking question the the third is the you're in could this or terms reach terms in of, levels I you by thinking guess something of what's timing that

Elijio Serrano

U.S. if and buildup allowing economies to too. predict, on Sharon, really issue the rebounding, an answer But inventory by me tell back when can longer inventory right in it's the going I to to… have an you rebound the the if those you economy place coronavirus, it's move to the now, U.S. is really from and oil no to through be a global give to hard going line driven wealth can bring operators and

Sharon Lui

your the could levels think on longer than previous expectations, below, trough last do previous utilization you cycle? be I Based and Okay. guess

Elijio Serrano

going be extend it, can again it rebound oil environment operators of dependent inventory trying and depend going the it's really In and when evasive the on I'm at of oil is those my Yes. the And when really see economies period in if back a longer they're continues, for oil. you’re not operators to to but remain time. opinion economies line, on shut-ins bring to on wealth moving buildup and consuming we start

Sharon Lui

of should we you neutral the impact Do next quarters the about over its or fab how I And about few think closures? financial think guess think the from how Okay. cash that? should we

Elijio Serrano

have So of at revenue seen the peak-to-valley as the and cycle. lowest million on $XX a we be the be million as valley downturn fabrication as the of peak last facility, high as $XXX at

We negative getting it of to this EBITDA we're have not the will flow negative get our end completed going from close to into to XX% any X% second intention, flow. cash to the generated We that business. so That margins the it and negative is decision bring quarter we on that anywhere target fabrication by EBITDA and naturally cash made avoid the business. or impact on to with is down

Sharon Lui

And I realize SG&A, your guidance of to the you're guess for that quarter? in still Okay. going the corporate terms third XX% cut is expectation by

Elijio Serrano

Yes. get with aggressive. eliminations, benefit incredibly will We're We're that manage If moving even going and our salary that's with down more with things to target. aggressively reductions. right slow staff we cuts, aggressively more, now

Operator

Baird. is Go question ahead. from Our from DiRubbio next Brian

Brian DiRubbio

with costs Just two business? about we fabrication closing quick any thinking follow-ups. should there associated the one-time Are be

Brady Murphy

mentioned to we charge facility, the in in not see script to we $X.X properly press Also write-down utilized non-cash write-down and we of think operations. We'll a earnings some also that also will Brian, based arrangement be release of the value incurred the million the we that the as that on that Yes. and severance-related value expenses. probably

Brian DiRubbio

no cash almost the but is Any of severance? cash irrelevant sense sense, not for would cost what this at Okay, be point.

Brady Murphy

not I think significant our impact It be enough liquidity to will position.

Brian DiRubbio

fair the this CapEx And I the CapEx, mean year, is even I at or any Okay. there on minimum of you lower give point? that cut you just finally but know the for guidance rest as way could that is

Brady Murphy

delay the is talked sure of see operate there that swapping CapEx primarily and of So the if are every equipment that number make every years, on continue And maintenance are number those that out years. rebuilding units is efficiently operating, which about try are And the defined certain that to active. compressors on engines to cycles. the pretty out we'll failures to networks we effectively we much those,

is appropriate that So that, number dropping then guided upgrade more regulated this not that clearly gets level. the the equipment or results if we have schedule we schedule gets units that did in through maintenance they're equipment to have defined If for think to for go and returned those more the the shut commission.

Operator

Eric question Seeve next GoldenTree. is ahead. Our from Go from Instructions] [Operator

Eric Seeve

wondering you you could that is what and was a and governs - sounded You was could comments that guys ratio if repeat access some there made about liquidity revolver. the those it access? relevant the like I repeat

Elijio Serrano

Good question, Eric. Yes.

is which a basis - that, the basis we got $X based that on all facility of that the from domestic. inventory, $XX we’ve determines and primarily of So, million about million. million. borrowing borrowing approximately AR $XX And deduct are And credit letters

If greater to a million, have ratio minimum is we than If on times, than $X our if ABL. fixed X coverage it's charge using any restrictions than X, X. have we greater the of don't were less have availability

any have above time, We do are the we restrictions and currently not X on ABL.

Eric Seeve

Okay. And coverage CapEx? fixed over by charge interest EBITDA declined

Brady Murphy

ABL is million. about just which interest the on expense, No, $XX

Operator

like over I question-and-answer Murphy closing to Brady remark. turn would for to our concludes the back now session. This conference

Brady Murphy

our taking join for you you to interest Compressco, Thank very morning us call. appreciate our in CSI and this call. your concludes much. time We for thank This

CSI Compressco (CCLP) 4 May 202020 Q1 Earnings call transcript