USA pression Partners(US:USAC)2021-05-04 19:07Financial Data and Key Metrics Changes - Total revenues for Q1 2021 were $158 million, essentially flat compared to Q4 2020 [19][46] - Adjusted EBITDA for Q1 was approximately $100 million, resulting in an adjusted EBITDA margin of 63.2%, which is more than 1 percentage point better than the previous quarter [19][46] - Average utilization for the quarter was 83.1%, slightly up from 83.0% in Q4 [20][47] - Average pricing across the fleet increased to $16.60 per horsepower per month, up from $16.55 in the previous quarter [23][47] - Distributable cash flow (DCF) to limited partners was $53 million, with a coverage ratio of 1.03x, slightly improved from Q4 [24][46] Business Line Data and Key Metrics Changes - Core contract operations revenues contributed approximately $155.5 million, while parts and service revenue was around $2 million [47] - Growth spending decreased approximately 60% from Q4 levels to $4.2 million, primarily for reconfiguration of idle equipment [23] Market Data and Key Metrics Changes - The company noted a continued stability in crude oil and natural gas prices, with expectations for a pickup in activity in the latter half of 2021 [7][9] - A third-party analysis predicts U.S. natural gas production could set a record at 93.3 Bcf per day in 2022, rising to over 100 Bcf per day in 2024 [26] - The North American and Pacific regions saw a decrease in inventories by an estimated 89 million barrels in Q1, contrasting with a build of 36 million barrels in the same quarter last year [31] Company Strategy and Development Direction - The company focuses on stable demand-driven large horsepower natural gas compression services, maintaining capital discipline and returning capital to unitholders during uncertain times [12][13] - The management believes that the worst is behind them, with improving prospects for the global and domestic economies [14] - The company is exploring hybrid compression technology and is actively considering retrofitting its fleet with dual-drive technology [54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the energy markets, noting that natural gas demand remains robust, driven by electric power generation and exports [10][26] - There is a cautious approach to capital spending among operators, with a focus on maintaining production volumes amid regulatory uncertainties [25][34] - The company expects to benefit from the transition to cleaner energy, with natural gas playing a critical role in the energy mix [58] Other Important Information - The company has returned over $1.1 billion to unitholders through 33 consecutive quarters of distributions since its IPO in January 2013 [13] - The total fleet horsepower remained flat at approximately 3.7 million horsepower, with no new units ordered for 2021 [46][47] Q&A Session Summary Question: Can you provide insights on the upper end of your current guidance range given the expected strength in compression? - Management indicated that they are maintaining guidance due to lingering uncertainties and will update as more clarity emerges [52] Question: What is the company's stance on electric or hybrid compression? - Management noted that while electric compression has its challenges, they are exploring hybrid technology and its applicability to their fleet [53][54] Question: Is there interest in a potential drop-down of Enable compression units to USA Compression? - Management stated that it is uncertain at this time and will depend on the completion of the acquisition by Energy Transfer [55]