CSI Compressco LP (NASDAQ:CCLP) Q2 2018 Earnings Conference Call - Final Transcript
Aug 08, 2018 • 10:30 am ET
Good morning, and welcome to CSI Compressco LP's Second Quarter 2018 Earnings Conference Call. The speakers for today's call are Owen Serjeant, President; and Elijio Serrano, CFO. All participants will be in a listen only mode. (Operator Instructions) After today's presentation there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded.
I will now turn the conference over to Mr. Serjeant. Please go ahead.
Thank you, Michelle. Good morning, and thank you for joining CSI Compressco's second quarter 2018 results conference call.
(Forward-Looking Cautionary Statement)
In addition, in the course of the call, we may refer to EBITDA, adjusted EBITDA, free cash flow, distributable cash flow, distribution coverage ratio, backlog or other non-GAAP financial measures. Please refer to this morning's press release or to our public website for reconciliations of non-GAAP financial measures to the nearest GAAP measure. These reconciliations are not a substitute for financial information prepared in accordance with GAAP and should be considered within the context of our complete financial results for the period. In addition to our press release announcement that went out early this morning and as posted on our website, our Form 10-Q is planned to be filed with the SEC on or before August 9, 2018.
I will start with an overview of our performance, then turn the call over to Elijio Serrano, our CFO, who will provide more details on our financial results and projections. I'm pleased to report significant EBITDA improvements in Q2 over Q1. The CCLP team has undertaken a series of initiatives to get better prices for our equipment and services, deploy equipments previously idle and invest capital in high-return opportunities. We have continued to focus on improving efficiencies in our field operations, at our fabrication facility, at our aftermarket distribution centers and in the back office, all supported by our newly implemented ERP system. This quarter reflected the impact on our financial results from those efforts and efficiency improvements. We believe that there are further benefits coming as we continue on these initiatives into the future.
The upturn of the compression market in North America continues to be strong. Our customers are demanding more compression equipment and services from CCLP, and we've been able to adjust and quickly respond to those demands. Let me walk you through our three business segments: Compression Services, new units and aftermarket; and describe how they are performing and continuing to improve in these strong market conditions.
Firstly, our Compression Services business segment continues to be very robust. To address the increasingly growing demand from our customers for our Compression Services equipment, we decided to increase our 2018 projected total capital expenditures to be between $110 million and $120 million, inclusive of $18 million to $20 million for maintenance capital expenditures. This is an increase of $20 million from the guidance we provided earlier this year. This year, via the strong capital expenditure, we anticipate that we'll be adding approximately 130,000 horsepower to our fleet. Of this,