USA Compression Partners, LP (NYSE: USAC) (“USA Compression” or
the “Partnership”) announced today its financial and operating
results for second-quarter 2024.
Financial Highlights
- Record total revenues of $235.3 million for second-quarter
2024, compared to $206.9 million for second-quarter 2023.
- Net income was $31.2 million for second-quarter 2024, compared
to $23.6 million for second-quarter 2023.
- Net cash provided by operating activities was $96.7 million for
second-quarter 2024, compared to $87.9 million for second-quarter
2023.
- Adjusted EBITDA was $143.7 million for second-quarter 2024,
compared to $125.0 million for second-quarter 2023.
- Distributable Cash Flow was $85.9 million for second-quarter
2024, compared to $67.0 million for second-quarter 2023.
- Distributable Cash Flow Coverage was 1.40x for second-quarter
2024, compared to 1.30x for second-quarter 2023.
- Paid cash distribution of $0.525 per common unit for
second-quarter 2024, consistent with second-quarter 2023.
Operational Highlights
- Record average revenue-generating horsepower of 3.52 million
for second-quarter 2024, compared to 3.31 million for
second-quarter 2023.
- Average horsepower utilization of 94.7% for second-quarter
2024, compared to 93.4% for second-quarter 2023.
- Record average revenue per revenue-generating horsepower per
month of $20.29 for second-quarter 2024, compared to $18.65 for
second-quarter 2023.
Updated 2024 Outlook
- Raised 2024 net income outlook to a range of $105.0 million to
$125.0 million from $95.0 million to $115.0 million.
- Raised 2024 Adjusted EBITDA outlook to a range of $565.0
million to $585.0 million from $555.0 million to $575.0
million.
- Raised 2024 Distributable Cash Flow outlook to a range of
$345.0 million to $365.0 million from $340.0 million to $360.0
million.
“Our second-quarter financial and operational results reflected
another strong quarter of execution from our high-quality and
diversified asset base. Our second-quarter 2024 results continued
to deliver growth and again achieved record-setting revenues and
Adjusted EBITDA, while maintaining our sector-leading margin, as
well as a new record for exit utilization of 95%,” commented Eric
D. Long, USA Compression’s President and Chief Executive
Officer.
“Demand for our high-quality compression services remained high,
backed by a strong and stable contract compression market, and was
reflected by a 2% sequential-quarter increase in average revenue
per-horsepower which rose to a record $20.29, and a record 3.54
million of revenue-generating horsepower exiting the quarter,
driven by our focus on key oil-producing basins with associated
gas.”
“Our view of the long-term fundamentals of the natural gas
industry remains strong, driven in the near term by forecasted
increases in LNG exports and pipeline exports to Mexico. While the
convergence between hydrocarbons and electrons has begun, electric
grid capacity remains strained, and we believe will remain so for
the foreseeable future. The dramatic increases in projected
incremental electric power requirements driven by AI, data centers,
and continued electrification across sectors and industries, will
compete with the basic electric needs of consumers for the coming
years. Use of Dual-DriveTM hybrid compression with dual fuel
(natural gas/electric) driver redundancy will help assure that our
compressors will run during periods of grid instability. We believe
this bright macroenvironment backdrop will allow us to strengthen
our financial profile and provide value to our unitholders.”
“Lastly, our updated 2024 outlook reflects the anticipated
results of our increased expansion capital expenditure plan for
2024. We plan to spend $195 million to $205 million in expansion
capital expenditures, an increase from our original plan of $115
million to $125 million, which is primarily due to new compression
unit deliveries scheduled for delivery in 2023 but delayed until
the first half of 2024, certain opportunistic horsepower
acquisitions, and costs related to the continued idle to active
fleet conversion.”
Expansion capital expenditures were $67.0 million, maintenance
capital expenditures were $8.9 million, and cash interest expense,
net was $46.6 million for second-quarter 2024.
On July 11, 2024, the Partnership announced a second-quarter
cash distribution of $0.525 per common unit, which corresponds to
an annualized distribution rate of $2.10 per common unit. The
distribution was paid on August 2, 2024, to common unitholders of
record as of the close of business on July 22, 2024.
Operational and Financial
Data
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
Operational data:
Fleet horsepower (at period end) (1)
3,851,970
3,833,715
3,716,177
Revenue-generating horsepower (at period
end) (2)
3,538,683
3,497,457
3,346,657
Average revenue-generating horsepower
(3)
3,515,483
3,473,007
3,309,758
Revenue-generating compression units (at
period end)
4,251
4,249
4,220
Horsepower utilization (at period end)
(4)
95.0
%
94.8
%
93.7
%
Average horsepower utilization (for the
period) (4)
94.7
%
94.8
%
93.4
%
Financial data ($ in thousands, except
per horsepower data):
Total revenues
$
235,313
$
229,276
$
206,920
Average revenue per revenue-generating
horsepower per month (5)
$
20.29
$
19.96
$
18.65
Net income
$
31,238
$
23,573
$
23,584
Operating income
$
77,372
$
66,872
$
51,427
Net cash provided by operating
activities
$
96,741
$
65,917
$
87,871
Gross margin
$
91,838
$
90,953
$
76,959
Adjusted gross margin (6)
$
157,151
$
154,204
$
136,998
Adjusted gross margin percentage (7)
66.8
%
67.3
%
66.2
%
Adjusted EBITDA (6)
$
143,673
$
139,395
$
124,998
Adjusted EBITDA percentage (7)
61.1
%
60.8
%
60.4
%
Distributable Cash Flow (6)
$
85,863
$
86,589
$
67,038
Distributable Cash Flow Coverage Ratio
(6)
1.40
x
1.41
x
1.30
x
____________________________________
(1)
Fleet horsepower is horsepower
for compression units that have been delivered to the
Partnership.
(2)
Revenue-generating horsepower is
horsepower under contract for which the Partnership is billing a
customer.
(3)
Calculated as the average of the
month-end revenue-generating horsepower for each of the months in
the period.
(4)
Horsepower utilization is
calculated as (i) the sum of (a) revenue-generating horsepower; (b)
horsepower in the Partnership’s fleet that is under contract but is
not yet generating revenue; and (c) horsepower not yet in the
Partnership’s fleet that is under contract but not yet generating
revenue and that is expected to be delivered, divided by (ii) total
available horsepower less idle horsepower that is under repair.
Horsepower utilization based on revenue-generating horsepower and
fleet horsepower was 91.9%, 91.2%, and 90.1% at June 30, 2024,
March 31, 2024, and June 30, 2023, respectively. Average horsepower
utilization based on revenue-generating horsepower and fleet
horsepower was 91.2%, 91.0%, and 89.0% for the three months ended
June 30, 2024, March 31, 2024, and June 30, 2023, respectively.
(5)
Calculated as the average of the
result of dividing the contractual monthly rate, excluding standby
or other temporary rates, for all units at the end of each month in
the period by the sum of the revenue-generating horsepower at the
end of each month in the period.
(6)
Adjusted gross margin, Adjusted
EBITDA, Distributable Cash Flow, and Distributable Cash Flow
Coverage Ratio are all non-U.S. generally accepted accounting
principles (“Non-GAAP”) financial measures. For the definition of
each measure, as well as reconciliations of each measure to its
most directly comparable financial measures calculated and
presented in accordance with GAAP, see “Non-GAAP Financial
Measures” below.
(7)
Adjusted gross margin percentage
and Adjusted EBITDA percentage are calculated as a percentage of
revenue.
Liquidity and Long-Term
Debt
As of June 30, 2024, the Partnership was in compliance with all
covenants under its $1.6 billion revolving credit facility. As of
June 30, 2024, the Partnership had outstanding borrowings under the
revolving credit facility of $756.2 million and, after accounting
for outstanding letters of credit in the amount of $0.5 million,
$843.3 million of remaining unused availability, of which, due to
restrictions related to compliance with the applicable financial
covenants, $424.4 million was available to be drawn. As of June 30,
2024, the outstanding aggregate principal amount of the
Partnership’s 6.875% senior notes due 2027 and 7.125% senior notes
due 2029 was $750.0 million and $1.0 billion, respectively.
Full-Year 2024 Outlook
USA Compression is updating its full-year 2024 guidance as
follows:
- Net income range of $105.0 million to $125.0 million;
- A forward-looking estimate of net cash provided by operating
activities is not provided because the items necessary to estimate
net cash provided by operating activities, in particular the change
in operating assets and liabilities, are not accessible or
estimable at this time. The Partnership does not anticipate changes
in operating assets and liabilities to be material, but changes in
accounts receivable, accounts payable, accrued liabilities, and
deferred revenue could be significant, such that the amount of net
cash provided by operating activities would vary substantially from
the amount of projected Adjusted EBITDA and Distributable Cash
Flow;
- Adjusted EBITDA range of $565.0 million to $585.0 million;
and
- Distributable Cash Flow range of $345.0 million to $365.0
million.
Conference Call
The Partnership will host a conference call today beginning at
11:00 a.m. Eastern Time (10:00 a.m. Central Time) to discuss
second-quarter 2024 performance. The call will be broadcast live
over the internet. Investors may participate by audio webcast, or
if located in the U.S. or Canada, by phone. A replay will be
available shortly after the call via the “Events” page of USA
Compression’s Investor Relations website.
By Webcast:
Connect to the webcast via the “Events”
page of USA Compression’s Investor Relations website at
https://investors.usacompression.com. Please log in at least 10
minutes in advance to register and download any necessary
software.
By Phone:
Dial (888) 440-5655 at least 10 minutes
before the call and ask for the USA Compression Partners Earnings
Call or conference ID 8970064.
About USA Compression Partners,
LP
USA Compression Partners, LP is one of the nation’s largest
independent providers of natural gas compression services in terms
of total compression fleet horsepower. USA Compression partners
with a broad customer base composed of producers, processors,
gatherers, and transporters of natural gas and crude oil. USA
Compression focuses on providing midstream natural gas compression
services to infrastructure applications primarily in high-volume
gathering systems, processing facilities, and transportation
applications. More information is available at
usacompression.com.
Non-GAAP Financial
Measures
This news release includes the Non-GAAP financial measures of
Adjusted gross margin, Adjusted EBITDA, Distributable Cash Flow,
and Distributable Cash Flow Coverage Ratio.
Adjusted gross margin is defined as revenue less cost of
operations, exclusive of depreciation and amortization expense.
Management believes Adjusted gross margin is useful to investors as
a supplemental measure of the Partnership’s operating
profitability. Adjusted gross margin primarily is impacted by the
pricing trends for service operations and cost of operations,
including labor rates for service technicians, volume, and per-unit
costs for lubricant oils, quantity and pricing of routine
preventative maintenance on compression units, and property tax
rates on compression units. Adjusted gross margin should not be
considered an alternative to, or more meaningful than, gross margin
or any other measure presented in accordance with GAAP. Moreover,
the Partnership’s Adjusted gross margin, as presented, may not be
comparable to similarly titled measures of other companies. Because
the Partnership capitalizes assets, depreciation and amortization
of equipment is a necessary element of its cost structure. To
compensate for the limitations of Adjusted gross margin as a
measure of the Partnership’s performance, management believes it
important to consider gross margin determined under GAAP, as well
as Adjusted gross margin, to evaluate the Partnership’s operating
profitability.
Management views Adjusted EBITDA as one of its primary tools for
evaluating the Partnership’s results of operations, and the
Partnership tracks this item on a monthly basis as an absolute
amount and as a percentage of revenue compared to the prior month,
year-to-date, prior year, and budget. The Partnership defines
EBITDA as net income (loss) before net interest expense,
depreciation and amortization expense, and income tax expense
(benefit). The Partnership defines Adjusted EBITDA as EBITDA plus
impairment of compression equipment, impairment of goodwill,
interest income on capital leases, unit-based compensation expense
(benefit), severance charges, certain transaction expenses, loss
(gain) on disposition of assets, loss on extinguishment of debt,
loss (gain) on derivative instrument, and other. Adjusted EBITDA is
used as a supplemental financial measure by management and external
users of the Partnership’s financial statements, such as investors
and commercial banks, to assess:
- the financial performance of the Partnership’s assets without
regard to the impact of financing methods, capital structure, or
the historical cost basis of the Partnership’s assets;
- the viability of capital expenditure projects and the overall
rates of return on alternative investment opportunities;
- the ability of the Partnership’s assets to generate cash
sufficient to make debt payments and pay distributions; and
- the Partnership’s operating performance as compared to those of
other companies in its industry without regard to the impact of
financing methods and capital structure.
Management believes Adjusted EBITDA provides useful information
to investors because, when viewed in conjunction with the
Partnership’s GAAP results and the accompanying reconciliations, it
may provide a more complete assessment of the Partnership’s
performance as compared to considering solely GAAP results.
Management also believes that external users of the Partnership’s
financial statements benefit from having access to the same
financial measures that management uses to evaluate the results of
the Partnership’s business.
Adjusted EBITDA should not be considered an alternative to, or
more meaningful than, net income (loss), operating income (loss),
cash flows from operating activities, or any other measure
presented in accordance with GAAP. Moreover, the Partnership’s
Adjusted EBITDA, as presented, may not be comparable to similarly
titled measures of other companies.
Distributable Cash Flow is defined as net income (loss) plus
non-cash interest expense, non-cash income tax expense (benefit),
depreciation and amortization expense, unit-based compensation
expense (benefit), impairment of compression equipment, impairment
of goodwill, certain transaction expenses, severance charges, loss
(gain) on disposition of assets, loss on extinguishment of debt,
change in fair value of derivative instrument, proceeds from
insurance recovery, and other, less distributions on Preferred
Units and maintenance capital expenditures.
Distributable Cash Flow should not be considered an alternative
to, or more meaningful than, net income (loss), operating income
(loss), cash flows from operating activities, or any other measure
presented in accordance with GAAP. Moreover, the Partnership’s
Distributable Cash Flow, as presented, may not be comparable to
similarly titled measures of other companies.
Management believes Distributable Cash Flow is an important
measure of operating performance because it allows management,
investors, and others to compare the cash flows that the
Partnership generates (after distributions on Preferred Units but
prior to any retained cash reserves established by the
Partnership’s general partner and the effect of the Distribution
Reinvestment Plan) to the cash distributions that the Partnership
expects to pay its common unitholders.
Distributable Cash Flow Coverage Ratio is defined as the
period’s Distributable Cash Flow divided by distributions declared
to common unitholders in respect of such period. Management
believes Distributable Cash Flow Coverage Ratio is an important
measure of operating performance because it permits management,
investors, and others to assess the Partnership’s ability to pay
distributions to common unitholders out of the cash flows the
Partnership generates. The Partnership’s Distributable Cash Flow
Coverage Ratio, as presented, may not be comparable to similarly
titled measures of other companies.
This news release also contains a forward-looking estimate of
Adjusted EBITDA and Distributable Cash Flow projected to be
generated by the Partnership for its 2024 fiscal year. A
forward-looking estimate of net cash provided by operating
activities and reconciliations of the forward-looking estimates of
Adjusted EBITDA and Distributable Cash Flow to net cash provided by
operating activities are not provided because the items necessary
to estimate net cash provided by operating activities, in
particular the change in operating assets and liabilities, are not
accessible or estimable at this time. The Partnership does not
anticipate changes in operating assets and liabilities to be
material, but changes in accounts receivable, accounts payable,
accrued liabilities, and deferred revenue could be significant,
such that the amount of net cash provided by operating activities
would vary substantially from the amount of projected Adjusted
EBITDA and Distributable Cash Flow.
See “Reconciliation of Non-GAAP Financial Measures” for Adjusted
gross margin reconciled to gross margin, Adjusted EBITDA reconciled
to net income and net cash provided by operating activities, and
net income and net cash provided by operating activities reconciled
to Distributable Cash Flow and Distributable Cash Flow Coverage
Ratio.
Forward-Looking
Statements
Some of the information in this news release may contain
forward-looking statements. These statements can be identified by
the use of forward-looking terminology including “may,” “believe,”
“expect,” “intend,” “anticipate,” “estimate,” “continue,” “if,”
“project,” “outlook,” “will,” “could,” “should,” or other similar
words or the negatives thereof, and include the Partnership’s
expectation of future performance contained herein, including as
described under “Full-Year 2024 Outlook.” These statements discuss
future expectations, contain projections of results of operations
or of financial condition, or state other “forward-looking”
information. You are cautioned not to place undue reliance on any
forward-looking statements, which can be affected by assumptions
used or by known risks or uncertainties. Consequently, no
forward-looking statements can be guaranteed. When considering
these forward-looking statements, you should keep in mind the risk
factors noted below and other cautionary statements in this news
release. The risk factors and other factors noted throughout this
news release could cause actual results to differ materially from
those contained in any forward-looking statement. Known material
factors that could cause the Partnership’s actual results to differ
materially from the results contemplated by such forward-looking
statements include:
- changes in economic conditions of the crude oil and natural gas
industries, including any impact from the ongoing military conflict
involving Russia and Ukraine or the conflict in the Middle
East;
- changes in general economic conditions, including inflation or
supply chain disruptions;
- changes in the long-term supply of and demand for crude oil and
natural gas, including as a result of, actions taken by
governmental authorities and other third parties in response to
world health events, and the resulting disruption in the oil and
gas industry and impact on demand for oil and gas;
- competitive conditions in the Partnership’s industry, including
competition for employees in a tight labor market;
- changes in the availability and cost of capital, including
changes to interest rates;
- renegotiation of material terms of customer contracts;
- actions taken by the Partnership’s customers, competitors, and
third-party operators;
- operating hazards, natural disasters, epidemics, pandemics,
weather-related impacts, casualty losses, and other matters beyond
the Partnership’s control;
- the deterioration of the financial condition of the
Partnership’s customers, which may result in the initiation of
bankruptcy proceedings with respect to certain customers;
- the restrictions on the Partnership’s business that are imposed
under the Partnership’s long-term debt agreements;
- information technology risks, including the risk from
cyberattacks, cybersecurity breaches, and other disruptions to the
Partnership’s information systems;
- the effects of existing and future laws and governmental
regulations;
- the effects of future litigation;
- factors described in Part I, Item 1A (“Risk Factors”) of the
Partnership’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2023, which was filed with the Securities and Exchange
Commission (the “SEC”) on February 13, 2024, and subsequently filed
reports; and
- other factors discussed in the Partnership’s filings with the
SEC.
All forward-looking statements speak only as of the date of this
news release and are expressly qualified in their entirety by the
foregoing cautionary statements. Unless legally required, the
Partnership undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events, or otherwise. Unpredictable or unknown factors not
discussed herein also could have material adverse effects on
forward-looking statements.
USA COMPRESSION PARTNERS,
LP
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except for per
unit amounts – Unaudited)
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
Revenues:
Contract operations
$
223,643
$
218,104
$
196,982
Parts and service
5,827
5,460
4,102
Related party
5,843
5,712
5,836
Total revenues
235,313
229,276
206,920
Costs and expenses:
Cost of operations, exclusive of
depreciation and amortization
78,162
75,072
69,922
Depreciation and amortization
65,313
63,251
60,039
Selling, general, and administrative
14,173
22,827
14,950
Loss (gain) on disposition of assets
(18
)
1,254
309
Impairment of compression equipment
311
—
10,273
Total costs and expenses
157,941
162,404
155,493
Operating income
77,372
66,872
51,427
Other income (expense):
Interest expense, net
(48,828
)
(46,666
)
(42,045
)
Loss on extinguishment of debt
—
(4,966
)
—
Gain on derivative instrument
3,131
8,771
14,550
Other
26
34
57
Total other expense
(45,671
)
(42,827
)
(27,438
)
Net income before income tax expense
31,701
24,045
23,989
Income tax expense
463
472
405
Net income
31,238
23,573
23,584
Less: distributions on Preferred Units
(4,387
)
(4,388
)
(12,188
)
Net income attributable to common
unitholders’ interests
$
26,851
$
19,185
$
11,396
Weighted-average common units outstanding
– basic
116,849
102,535
98,271
Weighted-average common units outstanding
– diluted
117,972
103,606
99,694
Basic net income per common unit
$
0.23
$
0.19
$
0.12
Diluted net income per common unit
$
0.23
$
0.19
$
0.11
Distributions declared per common unit for
respective periods
$
0.525
$
0.525
$
0.525
USA COMPRESSION PARTNERS,
LP
SELECTED BALANCE SHEET
DATA
(In thousands, except unit
amounts – Unaudited)
June 30, 2024
Selected Balance Sheet data:
Total assets
$
2,821,605
Long-term debt, net
$
2,484,053
Total partners’ deficit
$
(61,168
)
Common units outstanding
117,007,411
USA COMPRESSION PARTNERS,
LP
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands —
Unaudited)
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
Net cash provided by operating
activities
$
96,741
$
65,917
$
87,871
Net cash used in investing activities
(48,142
)
(98,573
)
(64,448
)
Net cash provided by (used in) financing
activities
(48,598
)
32,653
(23,398
)
USA COMPRESSION PARTNERS,
LP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
ADJUSTED GROSS MARGIN TO GROSS
MARGIN
(In thousands —
Unaudited)
The following table reconciles Adjusted
gross margin to gross margin, its most directly comparable GAAP
financial measure, for each of the periods presented:
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
Total revenues
$
235,313
$
229,276
$
206,920
Cost of operations, exclusive of
depreciation and amortization
(78,162
)
(75,072
)
(69,922
)
Depreciation and amortization
(65,313
)
(63,251
)
(60,039
)
Gross margin
$
91,838
$
90,953
$
76,959
Depreciation and amortization
65,313
63,251
60,039
Adjusted gross margin
$
157,151
$
154,204
$
136,998
USA COMPRESSION PARTNERS,
LP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
ADJUSTED EBITDA TO NET INCOME
AND NET CASH PROVIDED BY OPERATING ACTIVITIES
(In thousands —
Unaudited)
The following table reconciles Adjusted
EBITDA to net income and net cash provided by operating activities,
its most directly comparable GAAP financial measures, for each of
the periods presented:
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
Net income
$
31,238
$
23,573
$
23,584
Interest expense, net
48,828
46,666
42,045
Depreciation and amortization
65,313
63,251
60,039
Income tax expense
463
472
405
EBITDA
$
145,842
$
133,962
$
126,073
Unit-based compensation expense (1)
562
7,769
2,849
Transaction expenses (2)
63
108
—
Severance charges
44
107
44
Loss (gain) on disposition of assets
(18
)
1,254
309
Loss on extinguishment of debt (3)
—
4,966
—
Gain on derivative instrument
(3,131
)
(8,771
)
(14,550
)
Impairment of compression equipment
(4)
311
—
10,273
Adjusted EBITDA
$
143,673
$
139,395
$
124,998
Interest expense, net
(48,828
)
(46,666
)
(42,045
)
Non-cash interest expense
2,257
1,995
1,819
Income tax expense
(463
)
(472
)
(405
)
Transaction expenses
(63
)
(108
)
—
Severance charges
(44
)
(107
)
(44
)
Cash received on derivative instrument
2,466
2,422
1,216
Other
37
60
34
Changes in operating assets and
liabilities
(2,294
)
(30,602
)
2,298
Net cash provided by operating
activities
$
96,741
$
65,917
$
87,871
____________________________________
(1)
For the three months ended June
30, 2024, March 31, 2024, and June 30, 2023, unit-based
compensation expense included $1.0 million, $1.0 million, and $1.1
million, respectively, of cash payments related to quarterly
payments of distribution equivalent rights on outstanding phantom
unit awards. The remainder of unit-based compensation expense for
all periods was related to non-cash adjustments to the unit-based
compensation liability.
(2)
Represents certain expenses
related to potential and completed transactions and other items.
The Partnership believes it is useful to investors to exclude these
expenses.
(3)
This loss on extinguishment of
debt is a result of the satisfaction and discharge of the senior
notes due 2026. This amount represents the write-off of deferred
financing costs of $4.3 million and the difference between (i) the
purchase price of U.S. government securities of $748.8 million used
to redeem the senior notes due 2026 and (ii) the aggregate
outstanding principal balance and accrued interest of the senior
notes due 2026 of $748.1 million at the time of purchase of the
government securities.
(4)
Represents non-cash charges
incurred to decrease the carrying value of long-lived assets with
recorded values that are not expected to be recovered through
future cash flows.
USA COMPRESSION PARTNERS,
LP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
DISTRIBUTABLE CASH FLOW TO NET
INCOME AND NET CASH PROVIDED BY OPERATING ACTIVITIES
(Dollars in thousands —
Unaudited)
The following table reconciles
Distributable Cash Flow to net income and net cash provided by
operating activities, its most directly comparable GAAP financial
measures, for each of the periods presented:
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
Net income
$
31,238
$
23,573
$
23,584
Non-cash interest expense
2,257
1,995
1,819
Depreciation and amortization
65,313
63,251
60,039
Non-cash income tax expense
37
60
34
Unit-based compensation expense (1)
562
7,769
2,849
Transaction expenses (2)
63
108
—
Severance charges
44
107
44
Loss (gain) on disposition of assets
(18
)
1,254
309
Loss on extinguishment of debt (3)
—
4,966
—
Change in fair value of derivative
instrument
(665
)
(6,349
)
(13,334
)
Impairment of compression equipment
(4)
311
—
10,273
Distributions on Preferred Units (5)
(4,387
)
(4,388
)
(12,188
)
Maintenance capital expenditures (6)
(8,892
)
(5,757
)
(6,391
)
Distributable Cash Flow
$
85,863
$
86,589
$
67,038
Maintenance capital expenditures
8,892
5,757
6,391
Transaction expenses
(63
)
(108
)
—
Severance charges
(44
)
(107
)
(44
)
Distributions on Preferred Units
4,387
4,388
12,188
Changes in operating assets and
liabilities
(2,294
)
(30,602
)
2,298
Net cash provided by operating
activities
$
96,741
$
65,917
$
87,871
Distributable Cash Flow
$
85,863
$
86,589
$
67,038
Distributions for Distributable Cash Flow
Coverage Ratio (7)
$
61,429
$
61,422
$
51,596
Distributable Cash Flow Coverage Ratio
1.40
x
1.41
x
1.30
x
____________________________________
(1)
For the three months ended June
30, 2024, March 31, 2024, and June 30, 2023, unit-based
compensation expense included $1.0 million, $1.0 million, and $1.1
million, respectively, of cash payments related to quarterly
payments of distribution equivalent rights on outstanding phantom
unit awards. The remainder of unit-based compensation expense for
all periods was related to non-cash adjustments to the unit-based
compensation liability.
(2)
Represents certain expenses
related to potential and completed transactions and other items.
The Partnership believes it is useful to investors to exclude these
expenses.
(3)
This loss on extinguishment of
debt is a result of the satisfaction and discharge of the senior
notes due 2026. This amount represents the write-off of deferred
financing costs of $4.3 million and the difference between (i) the
purchase price of U.S. government securities of $748.8 million used
to redeem the senior notes due 2026 and (ii) the aggregate
outstanding principal balance and accrued interest of the senior
notes due 2026 of $748.1 million at the time of purchase of the
government securities.
(4)
Represents non-cash charges
incurred to decrease the carrying value of long-lived assets with
recorded values that are not expected to be recovered through
future cash flows.
(5)
During 2024, 320,000 Preferred
Units were converted into 15,990,804 common units, all of which
occurred on or prior to the distribution record date for the first
quarter of 2024.
(6)
Reflects actual maintenance
capital expenditures for the periods presented. Maintenance capital
expenditures are capital expenditures made to maintain the
operating capacity of the Partnership’s assets and extend their
useful lives, replace partially or fully depreciated assets, or
other capital expenditures that are incurred in maintaining the
Partnership’s existing business and related cash flow.
(7)
Represents distributions to the
holders of the Partnership’s common units as of the record
date.
USA COMPRESSION PARTNERS,
LP
FULL-YEAR 2024 ADJUSTED EBITDA
AND DISTRIBUTABLE CASH FLOW GUIDANCE RANGE
RECONCILIATION TO NET
INCOME
(Unaudited)
Guidance
Net income
$105.0 million to $125.0
million
Plus: Interest expense, net
188.0 million
Plus: Depreciation and amortization
260.0 million
Plus: Income tax expense
2.0 million
EBITDA
$555.0 million to $575.0
million
Plus: Unit-based compensation expense and
other (1)
16.0 million
Plus: Loss on disposition of assets
1.0 million
Plus: Loss on extinguishment of debt
5.0 million
Less: Gain on derivative instrument
12.0 million
Adjusted EBITDA
$565.0 million to $585.0
million
Less: Cash interest expense
175.0 million
Less: Current income tax expense
2.0 million
Less: Maintenance capital expenditures
32.0 million
Less: Distributions on Preferred Units
18.0 million
Plus: Cash received on derivative
instrument
7.0 million
Distributable Cash Flow
$345.0 million to $365.0
million
____________________________________
(1)
Unit-based compensation expense
is based on the Partnership’s closing per unit price of $23.73 on
June 28, 2024.
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version on businesswire.com: https://www.businesswire.com/news/home/20240806900399/en/
Investor Contact: USA
Compression Partners, LP Investor Relations
ir@usacompression.com
USA Compression Partners (NYSE:USAC)
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