tti-20220331

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 March 31, 2022

☐ 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 May 13, 2022, there were 141,213,944 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 Income (Loss)			2
Consolidated Balance Sheets			3
Consolidated Statements of Partners’ Capital			4
Consolidated Statements of Cash Flows			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures about Market Risk			29
Item 4. Controls and Procedures			29

PART II—OTHER INFORMATION
Item 1. Legal Proceedings			29
Item 1A. Risk Factors			29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			29
Item 3. Defaults Upon Senior Securities			30
Item 4. Mine Safety Disclosures			30
Item 5. Other Information			30
Item 6. Exhibits			31
SIGNATURES			32

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. References to “TETRA” refer to TETRA Technologies, Inc. and TETRA’s controlled subsidiaries, other than us.

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 March 31,
	2022		2021
Revenues:
Contract services	$	62,807	$	56,237
Aftermarket services	12,868		11,034
Equipment rentals	3,500		2,025
Equipment sales	837		470
Total revenues	80,012		69,766
Cost of revenues (excluding depreciation and amortization expense):
Cost of contract services	31,040		27,397
Cost of aftermarket services	10,633		9,545
Cost of equipment rentals	516		154
Cost of equipment sales	452		360
Total cost of revenues	42,641		37,456
Depreciation and amortization	19,359		19,134


Selling, general, and administrative expense	10,841		10,301

Interest expense, net of capitalized interest of $78 in 2022 and $34 in 2021	12,381		13,708

Other expense, net	544		294
Loss before taxes and discontinued operations	(5,754)		(11,127)
Provision for income taxes	816		1,706
Loss from continuing operations	(6,570)		(12,833)
Loss from discontinued operations, net of taxes	—		(62)
Net loss	$	(6,570)	$	(12,895)

General partner interest in net loss	$	(31)	$	(179)
Common units interest in net loss	$	(6,539)	$	(12,716)


Basic and diluted net loss per common unit:
Loss from continuing operations per common unit	$	(0.05)	$	(0.27)
Loss from discontinued operations per common unit	—		—
Net loss per common unit	$	(0.05)	$	(0.27)
Weighted average common units outstanding:
Basic	140,770,406		47,723,874
Diluted	140,770,406		47,723,874

See Notes to Consolidated Financial Statements

Table of Contents

CSI Compressco LP

Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Net loss	$	(6,570)	$	(12,895)
Foreign currency translation adjustment, net of tax of $0 in 2022 and 2021	12		57
Comprehensive loss	$	(6,558)	$	(12,838)

See Notes to Consolidated Financial Statements

Table of Contents

CSI Compressco LP

Consolidated Balance Sheets

(In Thousands, Except Unit Amounts)


	March 31, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	17,294	$	6,598

Trade accounts receivable, net of allowance for doubtful accounts of $1,231 as of March 31, 2022 and $1,223 as of December 31, 2021	65,256		53,520

Inventories	38,360		33,271


Prepaid expenses and other current assets	5,985		7,390

Total current assets	126,895		100,779
Property, plant, and equipment:
Land and building	9,087		13,409
Compressors and equipment	1,094,369		1,072,927
Vehicles	8,464		8,469
Construction in progress	14,925		31,968
Total property, plant, and equipment	1,126,845		1,126,773
Less accumulated depreciation	(568,593)		(556,311)
Net property, plant, and equipment	558,252		570,462
Other assets:

Intangible assets, net of accumulated amortization of $34,411 as of March 31, 2022 and $33,672 as of December 31, 2021	21,356		22,095
Operating lease right-of-use assets	29,755		25,898
Deferred tax asset	5		5
Other assets	3,400		3,122
Total other assets	54,516		51,120
Total assets	$	739,663	$	722,361
LIABILITIES AND PARTNERS’ CAPITAL
Current liabilities:
Accounts payable	$	33,945	$	28,958

Accrued liabilities and other	53,235		42,075
Amounts payable to affiliates	682		—

Current liabilities associated with discontinued operations	262		262
Total current liabilities	88,124		71,295
Other liabilities:
Long-term debt, net	630,182		631,141
Deferred tax liabilities	876		819

Operating lease liabilities	21,469		17,648
Other long-term liabilities	5,770		299
Total other liabilities	658,297		649,907
Commitments and contingencies
Partners’ capital:
General partner interest	(1,524)		(1,486)
Common units (141,213,944 units issued and outstanding at March 31, 2022 and 140,386,811 units issued and outstanding at December 31, 2021)	9,158		17,049
Accumulated other comprehensive loss	(14,392)		(14,404)
Total partners’ capital	(6,758)		1,159
Total liabilities and partners’ capital	$	739,663	$	722,361

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 Income (Loss)		Total Partners’ Capital


	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)


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

			Limited Partners
	General Partner		Common Unitholders
	Amount		Units	Amount

Balance at December 31, 2020	$	(885)	47,352	$	(10,055)	$	(14,393)	$	(25,333)
Net loss	(179)		—	(12,716)		—		(12,895)
Distributions ($0.01 per unit)	(7)		—	(477)		—		(484)
Equity compensation, net	—		—	474		—		474
Vesting of Phantom Units	—		619	—		—		—
Consideration for the Spartan acquisition	—		—	26,444		—		26,444
Translation adjustment, net of taxes of $0	—		—	—		57		57
Other	—		—	(141)		—		(141)
Balance at March 31, 2021	$	(1,071)	47,971	$	3,529	$	(14,336)	$	(11,878)

See Notes to Consolidated Financial Statements

Table of Contents

CSI Compressco LP

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Operating activities:
Net loss	$	(6,570)	$	(12,895)
Reconciliation of net loss to cash provided by operating activities:
Depreciation and amortization	19,359		19,134


Provision for deferred income taxes	39		392



Equity compensation expense	52		474
Provision for doubtful accounts	22		149
Amortization of deferred financing costs	125		191


Other non-cash charges and credits	953		42
Gain on sale of property, plant, and equipment	231		(53)

Changes in operating assets and liabilities:
Accounts receivable	(11,805)		(4,678)
Inventories	(7,720)		(3,455)
Prepaid expenses and other current assets	1,105		(3,336)
Accounts payable and accrued expenses	15,194		15,045
Other	785		534
Net cash provided by (used in) operating activities	11,770		11,544
Investing activities:
Purchases of property, plant, and equipment, net	(9,202)		(4,565)
Proceeds from sale of property, plant, and equipment	3,267		157

Acquisition of affiliate from TETRA, net of cash acquired	—		5

Acquisition of business	—		1,169
Net cash used in investing activities	(5,935)		(3,234)
Financing activities:
Proceeds from long-term debt	4,227		11
Payments of long-term debt	(5,568)		(2,521)


Distributions	(1,411)		(484)
Other financing activities	7,612		(156)


Net cash used in financing activities