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USA Compression's (USAC) Stock Up Since Q3 Earnings Beat

Zacks Equity Research
·4 min read

The USA Compression Partners, LP USAC stock has gained 12.6% since its third-quarter earnings announcement on Nov 3. Apart from a better-than-expected bottom line, investors welcomed the increased distributable cash flow (“DCF”) and EBITDA guidance.

What Did USA Compression Partners’ Earnings Unveil?

USA Compression Partners reported third-quarter 2020 adjusted net loss per unit of 6 cents, narrower than the Zacks Consensus Estimate of a loss of 8 cents. The outperformance reflected the firm’s cost-cutting initiatives and stability in business.

However, the bottom line compared unfavorably with the year-ago adjusted profit of 2 cents due to lower utilization.

Revenues of $161.7 million were 8% below the year-ago quarter and missed the Zacks Consensus Estimate of $163 million due to lower-than-expected revenue-generating horsepower capacity, which, at 3,042,786 horsepower, fell short of the Zacks Consensus Estimate of 3,100,000 horsepower.

Adjusted EBITDA remained essentially unchanged year over year at $103.9 million. The partnership’s distributable cash flow rose from $54.9 million in the prior-year quarter to $56.9 million.

The partnership reported operating cash flow of $48.2 million in the quarter. This marked a decline from the $61.3 million that it had generated in the prior-year quarter. But gross operating margin, at 71.1%, marked an improvement over the year-ago period’s 67.3%.

In the third quarter, the partnership’s revenue-generating horsepower capacity decreased 6.6% from last year’s corresponding period to 3,042,786 horsepower.  Moreover, the average monthly revenue per horsepower fell to $16.62 from $16.73 in the third quarter of 2019. Further, USA Compression Partners’ average quarterly horsepower utilization rate came in at 83.9%, down from 93.9% in the year-ago period.

USA Compression Partners, LP Price, Consensus and EPS Surprise

USA Compression Partners, LP Price, Consensus and EPS Surprise
USA Compression Partners, LP Price, Consensus and EPS Surprise

USA Compression Partners, LP price-consensus-eps-surprise-chart | USA Compression Partners, LP Quote


DCF, Capex & Balance Sheet

USA Compression Partners reported that its DCF available to limited partners for the third quarter totaled $56.9 million (providing 1.12X distribution coverage), up 3.6% from the year-ago level. Notably, on Oct 15, the partnership announced third-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis).

USA Compression Partners spent $15.3 million on growth capex, which included the purchase of 11,000 new horsepower.The partnership’s maintenance capex consisted of $4.7million.

As of Sep 30, 2020, the partnership had $1.9 billion in net long-term debt. Net debt-to-capitalization was approximately 82.9%.


USA Compression Partners increased its growth capital spending guidance to $90-$100 million for 2020. The previous range was from $80 million to $90 million. The partnership is now projecting full-year DCF between $210 million and $220 million, up from $195-$215 million before. Meanwhile it sees adjusted EBITDA of $405-$415 million (compared to $395-$415 million earlier).

Zacks Rank & Stock Picks

USA Compression Partners carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Antero Resources AR, Matador Resources Company MTDR and CrossAmerica Partners LP CAPL that carry a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over 30 days, Antero Resources has seen the Zacks Consensus Estimate for 2020 improve 29.3%.

Over 30 days, Matador Resources has seen the Zacks Consensus Estimate for 2020 surge 169.2%.

The 2020 Zacks Consensus Estimate for CrossAmerica Partners indicates 464.71% earnings per unit growth over 2019.

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