Compressco occasionally uses numerical measures in press releases, earnings conference calls and other forums which are or may be considered Non-GAAP Financial Measures. We have provided below for your reference supplemental financial disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation. This supplemental financial disclosure should be considered within the context of our complete audited financial results for the given period, which are available on the SEC Filings page of our website.
Distributable Cash Flow
EBITDA
EBITDA is used as a supplemental financial measure by the Partnership’s management to: assess the Partnership’s ability to generate available cash sufficient to make distributions to the Partnership’s unitholders and general partner; evaluate the financial performance of its assets without regard to financing methods, capital structure or historical cost basis; measure operating performance and return on capital as compared to those of other companies in the production enhancement business; and, determine the Partnership’s ability to incur and service debt and fund capital expenditures. The Partnership defines EBITDA as earnings before interest, taxes, depreciation and amortization. The following table reconciles net income to EBITDA for the three and twelve month periods ended December 31, 2012 and December 31, 2011:
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Three Months Ended
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Twelve Months Ended
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December 31,
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December 31,
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2012
|
2011
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2012
|
2011
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(In Thousands)
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Net income
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$4,899
|
$3,123
|
$16,331
|
$7,257
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Provision for income taxes
|
957
|
1,058
|
3,353
|
1,905
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Depreciation and amortization
|
3,506
|
3,069
|
13,227
|
12,521
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Interest (income) expense, net
|
23
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(50)
|
25
|
5,052
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EBITDA
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$9,385
|
$7,200
|
$32,936
|
$26,735
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Distributable Cash Flow
Distributable cash flow is used as a supplemental financial measure by the Partnership’s management as it provides important information relating to the relationship between the Partnership’s financial operating performance and its cash distribution capability. Additionally, the Partnership uses distributable cash flow in setting forward expectations and in communications with the board of directors of its general partner. The Partnership defines distributable cash flow as EBITDA less current income tax expense and maintenance capital expenditures, plus the non-cash cost of compressors sold and equity compensation expense. The Partnership also calculates the ratio of distributable cash flow to the total cash distributed (the distribution coverage ratio) as it provides important information relating to the relationship between the Partnership’s financial operating performance and its cash distribution capability. The Partnership defines the distribution coverage ratio as the ratio of distributable cash flow to the total quarterly distribution payable on all outstanding common and subordinated units and the general partner interest. The following table reconciles net income to distributable cash flow and distribution coverage ratio for the three and twelve month periods ended December 31, 2012:
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Three Months Ended
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Twelve Months Ended
|
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December 31, 2012
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December 31, 2012
|
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(In Thousands)
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|||
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Net income
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$4,899 | $16,331 | |
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Provision for income taxes
|
957 | 3,353 | |
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Depreciation and amortization
|
3,506 | 13,227 | |
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Interest (income) expense
|
23 | 25 | |
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EBITDA
|
9,385 | 32,936 | |
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Less:
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Current income tax benefit (expense)
|
362 | (1,423) | |
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Maintenance capital expenditures
|
(425) | (730) | |
| Interest expense | (23) | (25) | |
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Plus:
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Non-cash cost of compressors sold
|
59 | 127 | |
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Equity compensation
|
592 | 1,905 | |
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Distributable cash flow
|
$9,950 | $32,790 | |
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Cash distribution attributable to period
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$6,660 | $25,252 | |
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Distribution coverage ratio
|
1.49x | 1.30x | |
