USA pression Partners(USAC) - 2024 Q3 - Quarterly Results

Performance Overview USA Compression reported record revenues and Adjusted EBITDA for Q3 2024, driven by strong operational execution and higher pricing in a tightening market Financial Highlights The company achieved record total revenues of $240.0 million, a 10.5% increase year-over-year, with significant growth in Adjusted EBITDA and Distributable Cash Flow despite a slight decrease in net income Q3 2024 vs. Q3 2023 Financial Highlights | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $240.0 million | $217.1 million | +10.5% | | Net Income | $19.3 million | $20.9 million | -7.7% | | Adjusted EBITDA | $145.7 million | $130.2 million | +11.9% | | Distributable Cash Flow | $86.6 million | $71.6 million | +20.9% | | DCF Coverage | 1.41x | 1.39x | +0.02x | | Net Cash from Operations | $48.5 million | $50.1 million | -3.2% | Operational Highlights Operational metrics showed strong year-over-year improvement, with record average revenue-generating horsepower, increased revenue per horsepower per month, and improved utilization Q3 2024 vs. Q3 2023 Operational Highlights | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Avg. Revenue-Generating Horsepower | 3.56 million | 3.36 million | +6.0% | | Avg. Revenue per HP per Month | $20.60 | $19.10 | +7.9% | | Average Horsepower Utilization | 94.6% | 93.6% | +1.0 p.p. | Management Commentary The CEO highlighted the record-setting quarter, attributing it to strong operational execution and a tightening market, leading to increased full-year 2024 expansion capital expenditure guidance - CEO Clint Green noted that record revenues and Adjusted EBITDA were driven by record revenue-generating horsepower and pricing, reflecting a tight compression services market expected to persist[4] - Full-year 2024 expansion capital expenditure guidance was increased to a range of $240.0 million to $250.0 million[5] Financial Condition and Shareholder Returns As of September 30, 2024, the Partnership maintained compliance with debt covenants, with substantial credit facility availability, and declared a consistent quarterly cash distribution Liquidity and Long-Term Debt At the end of Q3 2024, the company maintained compliance with all debt covenants, with $641.8 million available on its revolving credit facility and $1.75 billion in senior notes outstanding - As of September 30, 2024, the Partnership was in compliance with all debt covenants[8] - Outstanding borrowings under the revolving credit facility were $803.2 million, with $641.8 million available to be drawn[8] - Total outstanding senior notes amounted to $1.75 billion, split between 6.875% notes due 2027 ($750.0 million) and 7.125% notes due 2029 ($1.0 billion)[8] Capital Expenditures and Distributions For Q3 2024, the company reported expansion and maintenance capital expenditures, alongside a consistent quarterly cash distribution of $0.525 per common unit Q3 2024 Expenditures and Distribution | Item | Amount | | :--- | :--- | | Expansion Capital Expenditures | $34.1 million | | Maintenance Capital Expenditures | $9.1 million | | Cash Interest Expense, net | $47.1 million | | Quarterly Cash Distribution per Unit | $0.525 | Full-Year 2024 Outlook USA Compression confirmed its full-year 2024 guidance, projecting Net Income, Adjusted EBITDA, and Distributable Cash Flow within specified ranges Full-Year 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | Net Income | $105.0 million to $125.0 million | | Adjusted EBITDA | $565.0 million to $585.0 million | | Distributable Cash Flow | $345.0 million to $365.0 million | Financial Statements The condensed consolidated financial statements detail the company's performance, showing increased revenue but a slight net income decrease due to higher interest expense and derivative losses Consolidated Statements of Operations Total revenues for Q3 2024 increased to $240.0 million, though net income decreased to $19.3 million, primarily impacted by higher interest expense and derivative losses Q3 2024 vs. Q3 2023 Statement of Operations (in thousands) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Revenues | $239,968 | $217,085 | | Operating Income | $75,676 | $60,954 | | Interest Expense, net | ($49,361) | ($43,257) | | Net Income | $19,327 | $20,902 | | Basic and Diluted EPS | $0.13 | $0.09 | Selected Balance Sheet Data As of September 30, 2024, the company reported total assets of $2.80 billion, net long-term debt of $2.53 billion, and a total partners' deficit of $107.3 million Balance Sheet Data as of September 30, 2024 (in thousands) | Item | Amount | | :--- | :--- | | Total Assets | $2,803,627 | | Long-term Debt, net | $2,532,398 | | Total Partners' Deficit | ($107,254) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities slightly decreased to $48.5 million in Q3 2024, with net cash used in investing and financing activities at $28.4 million and $20.0 million respectively Q3 2024 vs. Q3 2023 Cash Flows (in thousands) | Activity | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $48,481 | $50,072 | | Net Cash used in Investing Activities | ($28,379) | ($48,082) | | Net Cash used in Financing Activities | ($20,032) | ($2,015) | Non-GAAP Financial Measures and Reconciliations The report utilizes non-GAAP measures like Adjusted EBITDA and Distributable Cash Flow, providing definitions and reconciliations to offer a comprehensive view of operational profitability and cash generation Definitions of Non-GAAP Measures The company defines key non-GAAP metrics including Adjusted Gross Margin, Adjusted EBITDA, and Distributable Cash Flow, which provide supplemental information on operating profitability and distribution capacity - Adjusted gross margin: Defined as revenue less cost of operations, excluding depreciation and amortization[14] - Adjusted EBITDA: Used to assess financial performance without regard to financing methods, capital structure, or historical cost basis[17] - Distributable Cash Flow (DCF): An important measure of operating performance used to compare cash flows generated to cash distributions expected to be paid to common unitholders[22] Reconciliation of Adjusted EBITDA Adjusted EBITDA for Q3 2024 was reconciled to $145.7 million from net income, with key adjustments for interest expense, depreciation, amortization, and derivative losses Reconciliation of Net Income to Adjusted EBITDA for Q3 2024 (in thousands) | Description | Amount | | :--- | :--- | | Net Income | $19,327 | | Interest expense, net | $49,361 | | Depreciation and amortization | $67,237 | | Income tax expense | $793 | | EBITDA | $136,718 | | Unit-based compensation expense | $2,669 | | Loss (gain) on derivative instrument | $6,218 | | Other adjustments | $85 | | Adjusted EBITDA | $145,690 | Other Information This section provides details for the investor conference call and includes standard forward-looking statement disclaimers outlining potential risks that could affect future results Conference Call Details A conference call was hosted on November 5, 2024, at 11:00 a.m. Eastern Time to discuss third-quarter results, accessible via webcast and phone - A conference call was scheduled for 11:00 a.m. Eastern Time on November 5, 2024, to discuss Q3 performance[10] - Access was provided via webcast on the company's investor relations website or by phone[11] Forward-Looking Statements The release contains forward-looking statements, including the 2024 outlook, subject to various risks and uncertainties such as economic conditions, interest rate changes, and competitive pressures - The news release contains forward-looking statements, including the 'Full-Year 2024 Outlook,' which are not guarantees of future performance[26] - Known material risks include changes in economic conditions for crude oil and natural gas, interest rate changes, competitive conditions, and information technology risks like cyberattacks[26]