USA pression Partners(USAC) - 2024 Q2 - Quarterly Results

Q2 2024 Earnings Release USA Compression Partners reported strong Q2 2024 results, with record revenues and Adjusted EBITDA, and raised its full-year 2024 guidance, reflecting robust market demand and strategic capital investments Financial & Operational Highlights USA Compression reported record financial and operational results for the second quarter of 2024, with total revenues increasing by 13.7% year-over-year to $235.3 million and achieving record average revenue-generating horsepower of 3.52 million Q2 2024 vs. Q2 2023 Financial Highlights | Metric | Q2 2024 (USD) | Q2 2023 (USD) | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $235.3 million | $206.9 million | +13.7% | | Net Income | $31.2 million | $23.6 million | +32.2% | | Adjusted EBITDA | $143.7 million | $125.0 million | +15.0% | | Distributable Cash Flow | $85.9 million | $67.0 million | +28.2% | | DCF Coverage | 1.40x | 1.30x | +0.10x | Q2 2024 vs. Q2 2023 Operational Highlights | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Avg. Revenue-Generating Horsepower | 3.52 million | 3.31 million | +6.3% | | Avg. Horsepower Utilization | 94.7% | 93.4% | +1.3% | | Avg. Revenue per HP per Month | $20.29 | $18.65 | +8.8% | Management Commentary & 2024 Outlook Management highlighted strong execution, achieving record revenues and Adjusted EBITDA, and raised full-year 2024 guidance for net income, Adjusted EBITDA, and Distributable Cash Flow, supported by an increased expansion capital expenditure plan - The CEO noted that demand for high-quality compression services remains high, driven by a focus on key oil-producing basins with associated gas[4] - Long-term fundamentals for natural gas are considered strong, with near-term drivers including forecasted increases in LNG exports and pipeline exports to Mexico, alongside rising electric power demand from AI, data centers, and general electrification[4] Updated Full-Year 2024 Guidance | Metric | Previous Guidance (USD) | Updated Guidance (USD) | | :--- | :--- | :--- | | Net Income | $95.0 million - $115.0 million | $105.0 million - $125.0 million | | Adjusted EBITDA | $555.0 million - $575.0 million | $565.0 million - $585.0 million | | Distributable Cash Flow | $340.0 million - $360.0 million | $345.0 million - $365.0 million | - The company increased its 2024 expansion capital expenditure plan to $195 million - $205 million, up from $115 million - $125 million, primarily due to new unit deliveries delayed from 2023, opportunistic horsepower acquisitions, and costs for converting idle fleet to active status[4] Liquidity and Capital Resources As of June 30, 2024, USA Compression was in compliance with all debt covenants, with $756.2 million outstanding on its $1.6 billion revolving credit facility and $1.75 billion in total senior notes outstanding Debt and Liquidity Profile (as of June 30, 2024) | Item | Amount (USD) | | :--- | :--- | | Revolving Credit Facility Capacity | $1.6 billion | | Borrowings under Credit Facility | $756.2 million | | Remaining Unused Availability | $843.3 million | | 6.875% Senior Notes due 2027 | $750.0 million | | 7.125% Senior Notes due 2029 | $1.0 billion | - The Partnership was in compliance with all covenants under its revolving credit facility as of June 30, 2024[7] Financial Statements This section presents the unaudited condensed consolidated financial statements for Q2 2024, including statements of operations, selected balance sheet data, and statements of cash flows, providing a detailed view of the company's financial performance and position Statements of Operations For Q2 2024, total revenues were $235.3 million, driving operating income to $77.4 million and net income to $31.2 million, with diluted net income per common unit at $0.23 Key Income Statement Data (in thousands) | Line Item | Q2 2024 (USD thousands) | Q2 2023 (USD thousands) | | :--- | :--- | :--- | | Total Revenues | $235,313 | $206,920 | | Operating Income | $77,372 | $51,427 | | Net Income | $31,238 | $23,584 | | Diluted Net Income per Common Unit | $0.23 | $0.11 | Balance Sheet Data As of June 30, 2024, the company reported total assets of approximately $2.82 billion, with net long-term debt at $2.48 billion and a total partners' deficit of $61.2 million Selected Balance Sheet Data (as of June 30, 2024, in thousands) | Item | Amount (USD thousands) | | :--- | :--- | | Total assets | $2,821,605 | | Long-term debt, net | $2,484,053 | | Total partners' deficit | $(61,168) | Statements of Cash Flows In Q2 2024, net cash from operating activities was $96.7 million, while net cash used in investing activities was $48.1 million and financing activities used $48.6 million Cash Flow Summary (in thousands) | Cash Flow Activity | Q2 2024 (USD thousands) | Q2 2023 (USD thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $96,741 | $87,871 | | Net cash used in investing activities | $(48,142) | $(64,448) | | Net cash provided by (used in) financing activities | $(48,598) | $(23,398) | Non-GAAP Financial Measures & Reconciliations The report includes non-GAAP financial measures like Adjusted Gross Margin, Adjusted EBITDA, and Distributable Cash Flow, with definitions and detailed reconciliations to GAAP counterparts, useful for evaluating operating performance and profitability - Adjusted gross margin is used as a supplemental measure of operating profitability, excluding depreciation and amortization[12] - Adjusted EBITDA is a primary tool for management to evaluate results of operations, assessing financial performance without regard to financing methods or capital structure[15] - Distributable Cash Flow (DCF) is considered an important measure of operating performance to compare cash generation to the cash distributions the Partnership expects to pay its common unitholders[18] Reconciliation of Net Income to Adjusted EBITDA (Q2 2024, in thousands) | Item | Amount (USD thousands) | | :--- | :--- | | Net income | $31,238 | | Interest expense, net | $48,828 | | Depreciation and amortization | $65,313 | | Income tax expense | $463 | | EBITDA | $145,842 | | Adjustments (Unit-based comp, gain on derivative, etc.) | $(2,169) | | Adjusted EBITDA | $143,673 | Reconciliation of Net Income to Distributable Cash Flow (Q2 2024, in thousands) | Item | Amount (USD thousands) | | :--- | :--- | | Net income | $31,238 | | Adjustments (Depreciation, non-cash items, etc.) | $63,519 | | Distributions on Preferred Units | $(4,387) | | Maintenance capital expenditures | $(8,892) | | Distributable Cash Flow | $85,863 | Forward-Looking Statements This section contains cautionary language regarding forward-looking statements, advising against undue reliance and listing numerous risk factors that could cause actual results to differ materially from projections - The company cautions that forward-looking statements are not guarantees of future performance and are subject to known and unknown risks and uncertainties[22] - Key risk factors include changes in economic conditions for crude oil and natural gas, competition, changes in capital availability and cost, renegotiation of customer contracts, and information technology risks like cyberattacks[22]