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-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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