CSI Compressco LP (NASDAQ:CCLP) Q3 2023 Earnings Call Transcript

And if someone wants to put a value on it that they value it more than we do, then we would certainly entertain that, but that doesn’t just apply to the GasJack, that would apply to our rotary fleet, anything we own and operate, it’s a value equation. So I think right now, in the smaller horsepower, there’s a lot of competition. And so to get a value for any of that equipment on a scale that we have, 2,500 units, is going to be hard to find someone that has the financial wherewithal and desire to spend that money on this at that scale. I think we can move a couple of hundred a year out to other people as we revamp them and put them to work and sell them to people and we’ve been fairly successful at that. So right now, our strategy is to take a more measured approach, but we would obviously look at anything that came along, but I don’t expect that to happen.

Brian DiRubbio: Understood. Two quick ones, and that will be for me. Just what percentage of your business today do you think has CPI inflators in place?

John Jackson: So of our — so I look at it in a couple of different ways. So to answer your question in a little more nuance way, I just say of our total revenue — total U.S. revenue because the international is kind of contracted, it’s a different world. But in the U.S. revenue, I would say we’re approaching 30% of our total revenue. But you have to think about this that the CPI inflater only is applied to a multiyear contract. So we also segment and look at it what of our multiyear contracts that are outstanding today have CPI on it, and that’s in the mid-50s. So let’s call it 50%, 55%, give or take, a couple of percent of changes every day, right? So, somewhere in the mid-50s, and I think if you were to go back to this time a year ago, it’d be 5%.

So we just started being able to put these in, in the third quarter of last year. So we’ve moved from a very small percentage to a very large percentage of those contracts that a CPI would be applicable to. Does that make sense, what I said?

Brian DiRubbio: No, I would say as clear as could be. That’s extremely helpful. And then just last question. Time for the backlog with getting new compressors, has that worsened or gotten any better? And where can you maybe help us pin down where the log gem is? Is it solely at Caterpillar, or is it also an Aerial or some of the other providers? Just trying to get a sense of where the large aim is in the supply chain.

Rob Price: This is Rob. I think the lead time on a new compressor package has stayed at least a year out, depending on what side you’re looking. Obviously, in the range that we’re building, we’re only deploying capital on the large horsepower category. So we’re still a year plus out in that segment. And the lead time or the critical path item is the engine, the driver, that limits your ability to get packages quicker unless you can find an engine that somebody else has canceled or something like that, you’re still 55-plus weeks out.

John Jackson: And I think the issue with Caterpillar is they don’t just build engines for the natural gas segment. These same engines get applied to diesel and other…

Jonathan Byers: Construction [indiscernible] marine.

John Jackson: So they’re busy in other segments, and so they’re not allocating more engines to this segment because they’re busy across the spectrum. So, I expect this to remain tight.