cclp-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to______

Commission File Number 001-35195

CSI Compressco LP

(Exact name of registrant as specified in its charter)


Delaware			94-3450907
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

1735 Hughes Landing Boulevard, Suite 200
The Woodlands,
TX			77380
(Address of Principal Executive Offices)			(Zip Code)

(832) 365-2257

(Registrant’s Telephone Number, Including Area Code)

_______________________________________________________________________

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
COMMON UNITS REPRESENTING LIMITED PARTNERSHIP INTERESTS	CCLP	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 30, 2023, there were 141,995,028 Common Units outstanding.


CSI Compressco LP
Table of Contents
			Page
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Operations			1
Consolidated Statements of Comprehensive Loss			2
Consolidated Balance Sheets			3
Consolidated Statements of Partners’ Capital			4
Consolidated Statements of Cash Flows			6
Notes to Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3. Quantitative and Qualitative Disclosures about Market Risk			30
Item 4. Controls and Procedures			30

PART II—OTHER INFORMATION
Item 1. Legal Proceedings			30
Item 1A. Risk Factors			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			31
Item 3. Defaults Upon Senior Securities			31
Item 4. Mine Safety Disclosures			31
Item 5. Other Information			31
Item 6. Exhibits			32
SIGNATURES			33

CERTAIN REFERENCES IN THIS QUARTERLY REPORT

References in this Quarterly Report to “CSI Compressco,” “we,” “our,” “us,” “the Partnership” or like terms refer to CSI Compressco LP and its wholly owned subsidiaries. References to “CSI Compressco GP” or “our general partner” refer to our general partner, CSI Compressco GP LLC. References to “Spartan” refer to Spartan Energy Partners LP and its controlled subsidiaries.

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

CSI Compressco LP

Consolidated Statements of Operations

(In Thousands, Except Unit and Per Unit Amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues:
Contract services	$	71,457	$	67,492	$	211,625	$	194,647
Aftermarket services	23,686		23,192		62,246		52,273
Equipment rentals	4,197		3,869		13,084		10,987
Equipment sales	367		342		902		1,522
Total revenues	99,707		94,895		287,857		259,429
Cost of revenues (excluding depreciation and amortization expense):
Cost of contract services	35,153		34,793		107,747		99,418
Cost of aftermarket services	18,202		18,056		49,340		42,051
Cost of equipment rentals	555		563		1,665		1,530
Cost of equipment sales	411		66		867		683
Total cost of revenues	54,321		53,478		159,619		143,682
Depreciation and amortization	19,256		19,867		57,193		58,572
Impairments and other charges	—		135		—		135

Selling, general, and administrative expense	11,686		10,731		33,956		32,483

Interest expense, net of capitalized interest of $3 and $13 in 2023 and $119 and $300 in 2022	13,410		12,615		40,472		37,552

Other expense, net	1,772		1,661		1,065		2,530
Loss before taxes and discontinued operations	(738)		(3,592)		(4,448)		(15,525)
Provision for income taxes	209		940		1,685		2,497
Loss from continuing operations	(947)		(4,532)		(6,133)		(18,022)
Income from discontinued operations, net of taxes	—		81		—		173
Net loss	$	(947)	$	(4,451)	$	(6,133)	$	(17,849)

General partner interest in net loss	$	(4)	$	(21)	$	(28)	$	(84)
Common units interest in net loss	$	(943)	$	(4,430)	$	(6,105)	$	(17,765)


Basic and diluted net loss per common unit:	$	(0.01)	$	(0.03)	$	(0.04)	$	(0.13)



Weighted average common units outstanding:
Basic	141,995,028		141,213,944		141,868,154		141,067,185
Diluted	141,995,028		141,213,944		141,868,154		141,067,185

See Notes to Consolidated Financial Statements

Table of Contents

CSI Compressco LP

Consolidated Statements of Comprehensive Loss

(In Thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(947)	$	(4,451)	$	(6,133)	$	(17,849)
Foreign currency translation adjustment, net of tax of $0 in 2023 and 2022	(11)		(228)		(11)		(313)
Comprehensive loss	$	(958)	$	(4,679)	$	(6,144)	$	(18,162)

See Notes to Consolidated Financial Statements

Table of Contents

CSI Compressco LP

Consolidated Balance Sheets

(In Thousands, Except Unit Amounts)


	September 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	15,502	$	8,475

Trade accounts receivable, net of allowance for credit losses of $365 as of September 30, 2023 and $736 as of December 31, 2022	54,864		65,085
Trade receivable - affiliate	608		948
Inventories	46,715		45,902


Prepaid expenses and other current assets	7,123		7,905

Total current assets	124,812		128,315
Property, plant, and equipment:
Land and building	7,227		7,227
Compressors and equipment	1,126,515		1,103,657
Vehicles	8,749		8,640
Construction in progress	31,410		37,183
Total property, plant, and equipment	1,173,901		1,156,707
Less accumulated depreciation	(651,838)		(611,734)
Net property, plant, and equipment	522,063		544,973
Other assets:

Intangible assets, net of accumulated amortization of $38,846 as of September 30, 2023 and $36,627 as of December 31, 2022	16,921		19,140
Operating lease right-of-use assets	25,028		27,205
Deferred tax assets	3		3
Other assets	3,412		2,767
Total other assets	45,364		49,115
Total assets	$	692,239	$	722,403
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Accounts payable	$	22,408	$	34,589
Unearned income	3,955		2,590
Accrued liabilities and other	56,112		47,076



Total current liabilities	82,475		84,255
Other liabilities:
Long-term debt, net	619,341		634,016
Deferred tax liabilities	1,034		1,245

Operating lease liabilities	16,504		19,419
Other long-term liabilities	7,532		8,742
Total other liabilities	644,411		663,422
Commitments and contingencies
Partners' capital:
General partner interest	(1,667)		(1,618)
Common units (141,995,028 units issued and outstanding at September 30, 2023 and 141,237,462 units issued and outstanding at December 31, 2022)	(18,563)		(9,250)
Accumulated other comprehensive loss	(14,417)		(14,406)
Total partners' capital	(34,647)		(25,274)
Total liabilities and partners' capital	$	692,239	$	722,403

See Notes to Consolidated Financial Statements

Table of Contents

CSI Compressco LP

Consolidated Statements of Partners’ Capital

(In Thousands)

(Unaudited)


	Partners’ Capital					Accumulated Other Comprehensive Loss		Total Partners’ Capital

			Limited Partners
	General Partner		Common Unitholders
	Amount		Units	Amount

Balance at December 31, 2022	$	(1,618)	141,237	$	(9,250)	$	(14,406)	$	(25,274)
Net loss	(12)		—	(2,601)		—		(2,613)
Distributions ($0.01 per unit)	(7)		—	(1,414)		—		(1,421)
Equity compensation, net	—		—	75		—		75
Vesting of Phantom Units	—		758	—		—		—
Translation adjustment, net of taxes of $0	—		—	—		—		—


Balance at March 31, 2023	$	(1,637)	141,995	$	(13,190)	$	(14,406)	$	(29,233)
Net loss	(12)		—	(2,561)		—		(2,573)
Distributions ($0.01 per unit)	(7)		—	(1,420)		—		(1,427)



Equity compensation, net	—		—	514		—		514
Vesting of Phantom Units	—		—	—		—		—




Balance at June 30, 2023	$	(1,656)	141,995	$	(16,657)	$	(14,406)	$	(32,719)
Net loss	(4)		—	(943)		—		(947)
Distributions ($0.01 per unit)	(7)		—	(1,420)		—		(1,427)



Equity compensation, net	—		—	457		—		457
Vesting of Phantom Units	—		—	—		—		—


Translation adjustment, net of taxes of $0	—		—	—		(11)		(11)

Balance at September 30, 2023	$	(1,667)	141,995	$	(18,563)	$	(14,417)	$	(34,647)

Table of Contents


	Partners’ Capital					Accumulated Other Comprehensive Income (Loss)		Total Partners’ Capital

			Limited Partners
	General Partner		Common Unitholders
	Amount		Units	Amount

Balance at December 31, 2021	$	(1,486)	140,386	$	17,049	$	(14,404)	$	1,159
Net loss	(31)		—	(6,539)		—		(6,570)
Distributions ($0.01 per unit)	(7)		—	(1,404)		—		(1,411)
Equity compensation, net	—		—	52		—		52
Vesting of Phantom Units	—		828	—		—		—
Translation adjustment, net of taxes of $0	—		—	—		12		12


Balance at March 31, 2022	$	(1,524)	141,214	$	9,158	$	(14,392)	$	(6,758)
Net loss	(32)		—	(6,796)		—		(6,828)
Distributions ($0.01 per unit)	(7)		—	(1,412)		—		(1,419)
Equity compensation, net	—		—	431		—		431

Translation adjustment, net of taxes of $0	—		—	—		(97)		(97)


Balance at June 30, 2022	$	(1,563)	141,214	$	1,381	$	(14,489)	$	(14,671)
Net loss	(21)		—	(4,430)		—		(4,451)
Distributions ($0.01 per unit)	(7)		—	(1,412)		—		(1,419)
Equity compensation, net	—		—	459		—		459

Translation adjustment, net of taxes of $0	—		—	—		(228)		(228)


Balance at September 30, 2022	$	(1,591)	141,214	$	(4,002)	$	(14,717)	$	(20,310)

See Notes to Consolidated Financial Statements

Table of Contents

CSI Compressco LP

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)


	Nine Months Ended September 30,
	2023		2022
Operating activities:
Net loss	$	(6,133)	$	(17,849)
Reconciliation of net loss to cash provided by operating activities:
Depreciation and amortization	57,193		58,572
Impairments and other charges	—		135

Provision (benefit) for deferred income taxes	(372)		211



Equity compensation expense	1,046		941
Recovery for doubtful accounts	(1)		(427)
Amortization of deferred financing costs	117		307


Other non-cash charges and credits	151		125
Gain on sale of property, plant, and equipment	1,770		425

Changes in operating assets and liabilities:
Accounts receivable	10,501		(8,943)
Inventories

SEC Form 10-Q filed by CSI Compressco LP