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USA Compression (USAC) Down 1.9% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for USA Compression Partners (USAC - Free Report) . Shares have lost about 1.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is USA Compression due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

USA Compression’s Q2 Loss Narrower Than Expected

USA Compression Partners reported second-quarter 2021 net loss per common unit of 10 cents, narrower than the Zacks Consensus Estimate of a loss of 13 cents, attributable to lower costs and expenses.

However, the loss was wider than the year-ago quarter’s loss per share of 6 cents. The unfavorable comparisons were due to lower-than-expected revenue-generating horsepower capacity, which came in at 2,944,909 horsepower, falling short of the Zacks Consensus Estimate of 3,007,000 horsepower.

Revenues of $157 million were 7.1% lower than the year-ago quarter’s reading and also missed the Zacks Consensus Estimate of $160 million.

Adjusted EBITDA was down 5.2% to $100 million. Moreover, the partnership’s distributable cash flow fell from $58.7 million in the prior-year quarter to $52.5 million.

The firm reported an operating cash flow of $99.5 million in the quarter, up from $97.4 million generated in the prior-year quarter. Also, gross operating margin of 70.9% improved from the year-ago period’s 70.4%.

In the second quarter, the firm’s revenue-generating horsepower capacity decreased 7.7% to 2,944,909 horsepower from the level recorded in the corresponding period of last year.  Further, the average monthly revenue per horsepower fell to $16.55 from $16.79 in the second quarter of 2020. USA Compression Partners’ average quarterly horsepower utilization rate came in at 82.4%, down from 88% in the year-ago period.

DCF, Capex & Balance Sheet

USA Compression Partners’ DCF available to limited partners for the second quarter totaled $52.5 million (providing 1.03X distribution coverage), down 10.6% from the year-ago level. On Jul 15, the firm announced second-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis).

It spent $8.2 million as growth capex. The partnership’s maintenance capex consisted of $5 million.

As of Jun 30, 2021, the firm had $1.93 billion of net long-term debt. Net debt-to-capitalization was 89.9%.

Guidance

For 2021, USA Compression Partners projects DCF between $193 million and $213 million. It estimates adjusted EBITDA within $385-$405 million.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, USA Compression has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

USA Compression has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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