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USA pression Partners(USAC) - 2024 Q4 - Earnings Call Transcript
USACUSA pression Partners(USAC)2025-02-11 21:24
Financials
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Financial Data and Key Metrics Changes - The company reported record revenues, adjusted gross margin, adjusted EBITDA, distributable cash flow, and average revenue per revenue-generating horsepower for Q4 2024 and the full year [8][21] - Q4 2024 net income was 25.4million,operatingincomewas25.4 million, operating income was 74.5 million, and net cash provided by operating activities was 130.2million[22]−Theleverageratiodeclinedtoarecordlowof4.02times[22]BusinessLineDataandKeyMetricsChanges−Theaverageactivehorsepowerreachedanall−timehighof3.56million,contributingtoarevenueincreaseof2130.2 million [22] - The leverage ratio declined to a record low of 4.02 times [22] Business Line Data and Key Metrics Changes - The average active horsepower reached an all-time high of 3.56 million, contributing to a revenue increase of 2% sequentially and 9% year-over-year [21] - The total fleet horsepower at the end of Q4 was approximately 3.9 million, flat compared to the prior quarter but up 4% year-over-year [23] Market Data and Key Metrics Changes - The company anticipates a 15% growth in overall U.S. natural gas demand over the next five years, driven by LNG growth and increased power demand [15] - The company is well-positioned in key markets, particularly the Permian Basin, which is expected to support near-term growth [14][16] Company Strategy and Development Direction - The company plans to focus on new unit deliveries and fleet enhancements in 2025, with a significant portion of growth capital allocated to these areas [10] - Organizational changes include moving headquarters from Austin to Dallas and adopting a shared service model with Energy Transfer, expected to yield at least 5 million in annualized savings [11] Management's Comments on Operating Environment and Future Outlook - Management remains bullish on the crude oil and natural gas macro backdrop, expecting continued support from the new administration for U.S. energy development [14] - The company is optimistic about the anticipated growth in natural gas demand and infrastructure build-out in the Permian Basin [15][16] Other Important Information - The company expects to see significant savings from shared services and is implementing an ERP system to improve business processes [11][10] - Expansion capital expenditures for Q4 2024 were 37.6million,withmaintenancecapitalexpendituresat37.6 million, with maintenance capital expenditures at 8.2 million [24] Q&A Session Summary Question: CapEx and Growth Outlook - The company is maintaining a disciplined approach to leverage while planning for growth, with a focus on sustaining a lower leverage ratio [35] Question: 2025 Guidance Context - Q4 benefited from a net sales tax credit, but management is optimistic about maintaining margin and utilization trends into 2025 [46] Question: Adjacent Business Opportunities - The company is focusing on its third-party service division, which involves servicing customer-owned equipment [52] Question: Gross Margin and Pricing Trends - Customers are favoring longer contract renewals, and there is uncertainty regarding the impact of steel tariffs on costs [60][61] Question: Capital Allocation and Debt Management - The company aims to stop borrowing to fund distributions and is focused on managing debt measures relative to business capacity [81]