Good morning, and welcome to CSI Compressco LP's first quarter 2023 earnings conference call. The speakers for today's call are John Jackson, Chief Executive Officer of CSI Compressco LP, and Jonathan Byers, Chief Financial Officer of CSI Compressco LP. Rob Price, Chief Operating Officer, is also in attendance. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star then one on your touchtone phone. To withdraw your question, please press Star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Byers for opening remarks. Please go ahead, sir. Thank you, Vaishnavi. Good morning, and thank you for joining CSI Compressco's first quarter 2023 results conference call. I'd like to remind you that this conference call may contain statements that are or may be deemed to be forward-looking. These statements are based on certain assumptions and analyses made by CSI Compressco and are based on a number of factors. These statements are subject to a number of risks and uncertainties, many of which are beyond the control of the partnership. You're cautioned that such statements are not guarantees of future performance and that actual results may differ materially from those projected in the forward-looking statements. In addition, in the course of the call, we may refer to EBITDA, gross margin, adjusted EBITDA, free cash flow, distributable cash flow, distribution coverage ratio, leverage ratio, utilization, or other non-GAAP financial measures. Please refer to this morning's press release or to our public website for a reconciliation of non-GAAP financial measures to the nearest GAAP measures. 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 earlier this morning, as posted on our website, our Form 10-Q will be filed later today. Please note that the information provided on this call speaks only to management's views as of today and may no longer be accurate at the time of replay. I'll now turn the call over to John. Thanks. Good morning, thank you for joining our call today. Let's start off with the results for the first quarter of 2023. This quarter continues the multi-quarter trend of increasing contract services revenue, higher fleet utilization, EBITDA growth, excluding the effect of asset sales, and improving net leverage metrics. Q1 was a slight improvement in EBITDA from Q4, despite the first quarter typically being our slowest quarter each year. This usually results from lower AMS activity in Q1 as people return from the holidays, winter weather, which usually leads to increased costs and a bit of catch-up work in the workman spending from the holidays. Our fleet utilization continued to climb higher as we reached 87.4%. The nuances around our utilization are that our reciprocating horsepower, representing over 80% of our fleet, has a utilization of 93.3%, and our large horsepower fleet, as defined as being all horsepower over 1,000 horsepower, is just under 95% utilized. We do not include horsepower that is contracted but not deployed in our utilization numbers. We have additional horsepower contracted that is not yet deployed because of customer timing, make-ready work, so on, that is occurring on the unit. That equipment, when deployed, would increase our total fleet utilization to approximately 90%. This is meant to give some additional color to our utilization as we near full utilization on our reciprocating fleet. As far as our overall natural gas compression market goes, we're continuing to see 2-5-year terms on new and existing large horsepower units. The larger the horsepower, the longer the term. Generally, that's 700 horsepower and up in that category that we're seeing those multi-year contracts. The market rate for large horsepower has continued to increase, and as a result, we continue to pursue opportunities to move our fleet to current market pricing while pursuing term extensions as contracts come up for renewal. We value longer terms in our contracts, along with price protection from inflation. They're providing more predictable and stable cash flows for longer periods of time. I want to offer some general thoughts on this cycle as compared to the past. In past cycles, as delivery times for engines have moved to 9 to 12 months or longer, we have usually seen the contract service companies unable to contract significant units that far in advance and therefore acquire engines and fabrication slots without a home yet for those units. In this cycle, that is not the case. There is very little speculative building occurring in the contract service space. We believe that's a significant change from prior cycles, and as a result, there will not be a large number of orphaned units being built without a home should there be a slowdown in the future. In addition, producers are less eager to own as large a portion of their compression needs as in past cycles and are willing to contract further into the future related to contract compression than has generally been the case. For example, CSI Compressco has signed orders for a number of new build compression units, some of which will be delivered as far out as the third quarter of 2024. The supply side of the market for medium to large horsepower is almost fully utilized right now despite the lower gas price environment, in part due to continued and increased demand for compression and associated gas plays having oil as the driver for activity. Finally, the cost of a new build unit, at least in the large horsepower category, has increased approximately 40%-50% in the last 2+ years and continues to rise based on price pressures from OEMs and fabricators. While the contract compression sector has exhibited capital discipline during most of this expansion, the cost increase of new units is an additional force to governor of how much horsepower is being built. The recent significant increase in the cost to fabricate new equipment means that you can only build two-thirds of the horse that you could build two years ago. The flip side to that is the installed base of compression equipment is worth a lot more today than it was two years ago. The compression assets that exist in the contract compression space today, especially large horsepower, should be worth 30%-50% more than that same asset was two years ago, three years ago in the market, and the market rates for contract compression support that premise. As we look to the remainder of 2023, we still like our full year guidance on EBITDA of $125-$135 and our year-end Net Leverage guidance of 5.2-4.8. The trends we've seen over the last few quarters of a tight supply and increasing demand, we expect to continue based on customer conversations. We will have additional positive pricing adjustments throughout the remainder of the year and continue to deploy our new build units as they are delivered from fabrication. We expect our AMS business to ramp up from Q1 activity levels, as is typical. We have a robust pipeline of both awarded work and bids we are pursuing. The work is short-term in duration and as far as award timing to completion, we usually have a 2-3 month backlog of work and a hard backlog. The quote backlog gives us confidence that consistent work with reasonable margins will be there throughout the year. Overall, we remain bullish about the macro environment and longevity of the cycle. We continue to focus on returns and deleveraging versus absolute growth. We will maintain a focused approach to capital allocation by adapting to the market and pursuing the best options for long-term value creation. This will continue to lead to improving returns and increased options for value creation for all the stakeholders in CSI Compressco. We believe this cycle will continue longer and stronger as we believe in the long-term fundamentals of natural gas. I'll now turn the call over to Jonathan Byers. Thanks, John. For the first quarter of 2023, CSI Compressco reported adjusted EBITDA $30.7 million, compared to $26.9 million in the first quarter of 2022, 14% increase. Our Contract Services Revenue grew 11% year-over-year from $62.8 million in the first quarter of 2022 to $69 million, driven by continued improvement utilization and pricing, particularly among our large horsepower. Year-over-year, our utilization increased to 87.4% from 81.4% in the first quarter of 2022. Our AMS revenue grew 35% year-over-year and was 16% below the prior quarter, with fairly typical seasonality for this line of business, as John explained. Distributable Cash Flow was $12.5 million compared to $10.3 million in the first quarter of 2022. We'll pay our first quarter distribution of $0.01 on May 15th with the times. Our total liquidity, cash on hand plus outstanding ABL capacity, was $51.9 million on March 31st, 2023. As of May 2nd, our total liquidity was $32.2 million, which compares to $46.4 million at the year-end in 2022. Note that we made our $23.6 million semi-annual bond interest payment on April. As John noted, our EBITDA and capital spending guidance for 2023 remain unchanged. We anticipate exiting the year with a Net Leverage Ratio of 4.8x-5.2x. We're executing on our plan to reduce our overall leverage while growing the business. Our Net Leverage continues to step down from our Q3 2021 peak of 6.8 times to 5.3 times as of the end of Q1 2023. If you annualize our Q1 2023 EBITDA, we have a Net Leverage Ratio of 5.2 times. Most of our debt is fixed rate. This has helped us in a rising interest rate environment, resulting in minimal impact on our overall interest expense. In 2023, we plan to reduce overall growth capital spend relative to prior years and emphasize debt reduction, liquidity, and to generate free cash flow. We'll now open the call to questions. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Selman Akyol with Stifel. Please go ahead. Thank you. Good morning. Morning. Let me just start out with sort of contract tenor, if you will. If you had to look at your overall fleet, can you say how long you've got it deployed for? Well, what I can tell you, let me give it to you this way. It's just how much it's kind of segmented out a little bit. If we were to look at December 2021, we had about 50% of our contracts on month to month and 50% under some level of term, be it 3 months or 2 years. At that time, we had about 9% of our fleet was over 1-year term remaining and about 1% was over 2 years. Today, we have about a little over 70% of our fleet is on term and little less than 30% is month to month. Of that, 32% is, have 1 year or longer and 9% is 2 years or longer. It's just we have a lot longer and more visibility on a larger portion of our fleet. If we were to go back, I think we probably had, on a revenue basis, we probably had, 15%-20% of our fleet under some kinda term. Two years ago, 2.5 years ago, today we have about 60%, 65% under probably 6 months or longer term. There's just different slices on how you wanna look at it, but what we're seeing is from 2 years ago when we had a 2-year contract or 1-year contract, we're trying to get longer term. Every time we term up multi-year, we're adding the CPI inflator. That's one of the big differences too. Two years ago, we had 0% of our fleet that had an inflator on it. Today, we probably have 15% of our revenue base has an inflator on it today that didn't. Got it. That's very helpful. Then if I think about... It looks like you have about 150,000 horsepower that's idle, if I'm thinking about that correctly. I'm just wondering- Yeah. how much of that would be large horsepower? Maybe you could talk about time to make ready for that as well. Of the 150, I'd say 100 of it is GasJack and rotary screws. Those are more niche-y and nuanced, and there probably won't be a lot of movement in that just based on demand and/or cost to make ready of the unit, depending on what we need to do there. That, that can change. Obviously, if people come in and say, "We wanna sign multi-year deals, and it'll pay for the make ready cost to put that unit back to work," we would consider it. Those, those utilizations sit in the 50%-60% range and have been fairly within that 10% band pretty consistently for the last 3 years. That leaves you 50,000 or so horsepower of, you know, that's the 95%-100% I was quoting earlier of our reciprocating fleet. We're approaching 95% utilization. That leaves you 50,000 horsepower. Of that, probably a third of that is larger horsepower. However, it would require some dollars to spend to make that ready, and we need to find the right application where we wanna spend that money. What I mean is maybe it's a single-stage unit, maybe it's a two-stage unit that would need to be re-cylindered, it would need to have a different engine put on it, whatever. Those are options and opportunities that we look at for electric conversion and/or if we get the right long-term contract on, we would look to spend that money. I would say it's probably 50% of new to reconfigure those the way we want them, and we'll evaluate those as those opportunities come along. I'll tell you this, we have almost all that quoted in different jobs. We're waiting to see if those jobs manifest themselves, and if they do, we'll spend that money. Those jobs are an environment where we would get paid out or, you know, 1.5x what we invest in it in the term of the contract. Got it. Very helpful. Since you mentioned electric, what kind of demand are you seeing out there for electric? For us, it's the, I'd say 1, 2 here and there. When I talk about that, I'm talking about 800 horsepower and up type units. We've had the opportunity to quote on 10, 15 type units new build. I think what we're seeing a little bit of right now is customers are still conflicted on... As I mentioned in my commentary, customers wanna own less compression today than they used to, just generally as a, as a source of capital. That's one where they can free up capital. I think people are debating on the producer side, do I wanna own my electric or not? Do I wanna outsource it? It's, given the nature of electric for us, given the reapplicability of it is less clear long term or less diverse long term, we wanna make sure we get a nice return on the initial contract. New build for us is something we're interested in, but it requires a very high stringent capital discipline allocation and contract terms for us to execute on. As a result, I think we're seeing that across the industry, the customers are trying to decide, does it make sense for me to own it if it's gonna be there 10 years? That's one phase going on. The second phase going on on the electric side is, I think producers are running into a longer timeframe to get this done, more complex timeframe to get this done, and an uncertain availability of grid for a big, huge commitment. You know, the you can put one on, two on, five on, 10 on, but to go say, "I'm gonna electrify 500,000 horsepower," is a big ask. I think people are just not pausing. I think they're reevaluating the speed with which they can do this. A lot of the midsize producers or not some midsize producers, I'd say a lot of producers are dipping less toes in the water, if I might say it that way. They're just like, "Let me try one. Let's get that up and running. Let me try two. Let me try 5. Let me try 10." It's creating some complexity too, as producers try to decide to renew their terms on their existing gas-fired engines. Like, "Okay, great. I can get a, I can get a much better rate on a 3 or 4-year deal. I may electrify in the next 2 years. I don't wanna be stuck with that long of a term. Do I pay up for shorter term when I know so far I've missed every deadline I've set for myself to electrify?" Those are the complexities. That's probably a lot more than you wanted. It's not a very good answer for you. That's just where we are. Got it. Got it. That's helpful. Can you just talk a little bit about what you're seeing on the inflation front? It's moderated quite a bit. We haven't seen a huge bump. I think this year we expect based on conversations we've heard with our OEMs providers, we'll probably have that 4%-8% I expect increase on frames and parts from Cat and Ariel. I'm guessing that's where we'll be, somewhere in that range. We'll see. That's usually about mid-year, so I'd expect in the next 60 days or so, we'll see that. I think there's some talk about the end-of-the-year price increases also. Beyond that, you know, fluids have stabilized over the last couple of quarters. Labor is. You have labor pressure more from a supply side issue than you do rate. You know, cost. I mean, cost of labor is going up, It's going up, I'd say, as normal in the market, you know, 3%, 4%, 5% cost of living increases or merit increases. It's going up from overtime and just the dearth of people. People are having to be pushed more. I mean that in a positive way. People are doing more with what you have to get things done, or you're outsourcing and using outside services to fill the gaps. I'd say generally, inflation's probably in check with the larger, broader U.S. market of that 4%, 5%, 6% that you're seeing quoted. Got it. Last one for me. What are you just seeing from the private companies out there? Are you seeing them lever up and trying to bring on additional units and create capacity, or are you seeing them be pretty well capital disciplined as well? I think they're being very capital disciplined as well, and whether that's 'cause they're levered as far as they can go or whether that's a choice consciously. I think across the compression sector, you're seeing pretty disciplined environment right now. I think that's one thing from past cycles. I mentioned a number of things from past cycles in my commentary, but one thing I didn't mention is in some of the past really big up cycles, you've seen a new entrant. There's no new entrants. There's nobody gonna. You've gotta spend a half a billion dollars to get scale in this space to start making some of these work, unless you're just gonna try and run a 50,000 or 100,000 horsepower business as a mom-and-pop operation. You're just not seeing capital being allocated from private equity firms or from large investors to come in and say, "Hey, let's create a new large horsepower competitor out there." I don't expect to see it either. The discipline's been there, both on the smaller guys, the private side, I'd say, as well as the new capital side. Got it. Thank you so much. You bet. The next question comes from Brian DiRubbio with Baird. Please go ahead. Morning, gentlemen. How are you today? Good. How are you, Brian? Good. Jonathan Byers, just, can you help us understand what needs to happen for you to move from the low end to that EBITDA guide range to the high end? What sort of dynamics we should be focusing on? I mean, I think Given what John said about utilization, we've got a little bit of room to grow there on the large reciprocating horsepower. You know, what's responsible for the range really is how much are we gonna be able to push on price increases on the revenue side, and then on the cost side, it's how much more do inflationary pressures moderate. You know, we've seen I would say probably the most significant moderation on the fluid side, but as John said, we're still tight. You know, we continue to see a little bit of pressure on the parts side. I think some of our price increase issues are we're trying to work with our customers to give them what they want. In some cases, as I mentioned on the electric side, people are trying to figure out if they want to electrify, and they don't want to sign a 3-year contract. They want to sign a 1-year contract or a month-to-month contract for a while. As long as we can have some visibility on what they need to get to where their plans work for them, we're willing to do that. That price delta from a 3-year contract to month to month is pretty wide. For us to predict where our pricing is gonna be over the course of the rest of the year has a fairly wide outcome because of the customer selection. Let's say if I want to stay month to month, we have a lot of contracts coming up for renewal over the last eight months of this year, and if people select a lot of month to month, that's gonna drive a lot more revenue than EBITDA. It's gonna drive a little more volatility in the timing of, you know, when that comes off and when we move it to someone else. If they select longer term, it'll mitigate the price increase a little bit, but it'll give us visibility and stability for multi years out there. That's a piece of it too. When John talks about pricing, there's a lot of nuance in that that's driven by us trying to work with our customer to deliver what they want. Got it. That helps a lot. Just as we think about the capacity additions, I know you're gonna be fairly well disciplined this year on growth CapEx. As we look at the, you know, absolute number of horsepower in your fleet today, how do you see that growing by the end of the year? I would say, we probably see about $10,000-$15,000 in growth. We've got a couple units on order in December that may show up in December, may show up in January. That's why I'm hesitating a little bit. I think. Nope. You know, on a gross, on a gross add basis, it's, you know, it's probably in that 10,000-12,000 horsepower. Then, you know, on the denominator side, we have been pruning our fleet a little bit on the smaller horsepower side. When we got here at the end of 2020 to today, our fleet's only grown about 10,000 horsepower, but we've added about 40,000-45,000 large horsepower and pruned about 30,000-35,000 small horsepower. Great. That's actually really helpful there. Now the prior questions, where you made a comment, John, about, you know, no new large entrants. Given sort of the capital-constrained world we are today, our higher interest rates, our costs to acquire new equipment, you know, do you see opportunities where smaller players just may not be surviving anymore or may need a way out? You know, it's hard to answer that question given no visibility to their cap structure. I would say just in general, I think they're all being, just like us, more conservative and trying to relever themselves in a different, you know, let's actually relever by the standpoint, restructure the cap structure so that you're less levered. You know, if you're paying 3% before on a variable rate borrowing base, you're paying 8% today is a different world. You need to have less leverage to have the same cash flow that you used to have. I think people are taking that to heart. Frankly, I think it's great for the long term for everyone to say, "Let's build a much more sustainable cap structure that can survive any environment and, you know, get back down in that 3 range." I think a lot of people are trying to drive towards that. Some of that's self-selection, saying, "I wanna do that," and some of that's lender selection, saying, "You will do that." I think that's just the nature of the beast of the world we're living in right now, and I think it's, I think it's good and healthy. I think it continues to... All the factors are leading to less people building less horsepower, and therefore the market remaining tight. Nobody's chasing growth just to like, I wanna have units ready to... I wanna have units ready to take a customer away from somebody. That hasn't happened in a year and a half, two years. The only reason we get a new customer if we had the capital or have the capital available, you know, some units free up, is because their current provider can't supply it to them. Not because, "Oh, you're cheaper, I'm gonna come to you." It's like, "Who has it?" That's small, medium, large, everywhere. Got it. Nope, that makes sense. Yes. This may be final question. You know, you've have controlled the company for just a little over two years at this point. You know, any thoughts on, you know, sort of as you're looking forward, you know, things that you can see that you can still improve upon? Just love to get your thoughts there. I think we've made a lot of progress, but we have a lot of things we can improve on. We have, we've had an enormous change in people and personnel and just from normal activity. When you look across the industry, I think we're probably all experiencing 25%-35% turnover. As we, as we look through that, I think we're. We spent a lot of time early on getting our hands around the business. The world was changing rapidly. We're putting a lot of equipment out, doing a lot of make ready. We're seeing that that make ready should start abating. We're turning a lot of our attention, not that we didn't have attention on before, but we're turning more people attention towards, you know, cost containment. Let's operate efficiently. Let's operate our equipment really efficiently. Let's do everything we can to drive the cost structure down and make it more efficient. I think there's room to go there. I think hopefully we'll see that over the course of next year or so as not only revenue hopefully continues to go up with inflation, but also on the cost side that we're able to contain that and capture those positive margins. I think there's a lot of work to do on that. I think, you know, we still have a capital structure environment that we're not on board with totally. We, when we have the opportunity to fix that, we will. We've moved from 2 years ago when you walked in, if you took out the effective asset sales, we were a little over 7 times levered, low 7s, and we're low 5s now. We've taken 2 turns of leverage off. Not saying that's where we wanna be, but that's a big move in 2 years in our mind, and we still have the goal to get inside 4 over the next 1.5-2 years. That's what we continue to drive towards, and I think we can do that. Those are 2 big areas I think for us is continuing to delever and contain and improve on our cost and operating structure. Excellent. I appreciate all the color. Thank you. You bet. You bet. This concludes the question and answer session. I would like to turn the conference back over to John Jackson for any closing remarks. Thanks for joining the call today. We look forward to talking to you next quarter and continuing to build value for all the shareholders. Appreciate it. The conference has now concluded. Thank you for attending today's presentation. You may all now disconnect.