USA pression Partners(US:USAC)2026-02-17 17:02Financial Data and Key Metrics Changes - The company reported a record full-year Adjusted EBITDA of $613.8 million and Distributable Cash Flow (DCF) of $385.7 million, both representing significant achievements for the company [3][11] - In Q4 2025, net income was $27.8 million, operating income was $76.6 million, and net cash provided by operating activities was $139.5 million [10] - The average pricing per horsepower reached an all-time high of $21.69, marking a 1% increase sequentially and a 4% increase year-over-year [10] Business Line Data and Key Metrics Changes - The total fleet horsepower at the end of Q4 was approximately 3.9 million, with an average utilization rate of 94.5% [10][11] - Expansion capital expenditures for Q4 were $40 million, while maintenance capital expenditures were $7.8 million [11] - The company plans to budget approximately 105,000 new horsepower for 2026, representing a 2% increase in active horsepower [6] Market Data and Key Metrics Changes - Natural gas production increased approximately 9% year-over-year, while oil production flattened in the latter half of the year due to lower oil prices [4][5] - The average natural gas price was $3.52 per MMBTU, a 56% increase from the prior year [5] - Lead times for new equipment have increased to over two years, presenting both opportunities and challenges for the company [5] Company Strategy and Development Direction - The acquisition of J-W Power is expected to enhance the company's presence across major oil and gas basins in the U.S. and improve service quality [3][4] - The company aims to achieve annual run-rate synergies of approximately $10 million to $20 million by the end of 2027 through operational optimizations [7][8] - The focus will be on increasing customer retention and extending average contract durations while integrating the J-W assets [8] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the long-term prospects of the Permian Basin despite a slowdown in development pace due to lower oil prices [4] - The company is optimistic about the fundamentals of the compression industry, which continues to maintain strong margins and a disciplined approach to new capital [5] - Management highlighted the importance of managing debt levels and improving distribution coverage, with a target leverage ratio of 3.75x [14][25] Other Important Information - The company has refinanced its ABL and senior notes, significantly reducing borrowing costs and improving strategic flexibility [3][14] - The integration of a new ERP system is planned for Q1 2026, which will facilitate the integration of J-W assets [7] Q&A Session Summary Question: Growth CapEx guidance breakdown - The growth capital budget of $250 million includes approximately $205 million tied to the typical compression business, with $150 million for new units [19][21] Question: Balance sheet improvement and distribution coverage - The company aims for a normalized distribution coverage of 1.55x, with expectations to grow beyond 1.6x in the coming year [25] Question: Timing of new capacity delivery - Most of the new horsepower is expected to come online in the back half of the year, primarily from July onward [28] Question: Impact of lead times on pricing - Lead times for new packages are currently over 120 weeks, which complicates planning but will not affect 2026 growth [37] Question: Evaluation of distributed power space - The company is continuously evaluating opportunities in the distributed power space but has not yet found suitable candidates [33]