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Why Is USA Compression (USAC) Up 3.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for USA Compression Partners (USAC - Free Report) . Shares have added about 3.6% in that time frame, outperforming the S&P 500.

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

USA Compression’s Q4 Loss Wider Than Expected

USA Compression Partners reported fourth-quarter 2021 net loss per common unit of 9 cents, wider than the Zacks Consensus Estimate of a loss of 7 cents, attributable to higher total other expense.

However, the loss was narrower than the year-ago quarter’s loss per share of 14 cents. This favorable comparison was due to the partnership posting a net income was $3.1 million for the fourth quarter 2021, in comparison to a net loss of $1.5 million for the same period last year.

Revenues of $159.9 million were approximately 1% higher than the year-ago quarter’s reading of $158.4 million.

Adjusted EBITDA increased by about 0.92% to $99.2 million from last year’s fourth-quarter figure of $98.3 million. Moreover, the partnership’s distributable cash flow rose from $50.5 million in the prior-year quarter to $52 million.

The firm reported an operating cash flow of $81 million in the quarter, down from $97.5 million generated in the prior-year quarter. Also, its gross operating margin of 68.1% declined from the year-ago period’s 68.4%.

In the fourth quarter, the firm’s revenue-generating horsepower capacity decreased about 1.7% to 2,950,623 horsepower from the level recorded in the corresponding period of last year.  The average monthly revenue per horsepower was $16.62, a bit above the year-ago quarter’s figure of $16.55. USA Compression Partners’ average quarterly horsepower utilization rate came in at 82.9%, slightly below 83% in the year-ago period.

DCF, Capex & Balance Sheet

USA Compression Partners’ DCF available to limited partners for the fourth quarter equaled $52 million (providing 1.02X distribution coverage), up 2.9% from the year-ago level. On Jan 13, the firm announced a fourth-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis).

It spent $14.3 million as growth capex. The partnership’s maintenance capex amounted to $4.7 million.

As of Dec 31, 2021, the firm had $1.97 billion of net long-term debt. Net debt-to-capitalization was 95.1%.

Guidance

For 2022, USA Compression Partners projects DCF between $213 million and $233 million. It estimates an adjusted EBITDA within the width of $406-$426 million. Additionally, the firm expects its net income for the year to be in the range of $33.0 million to $53.0 million.

USA Compression Partners expressed confidence in the health of the U.S. economy and saw improved customer demand/pricing for its compression services. At the same time, the partnership cautioned about the uncertainty and moderation of activity levels by operators across the broader sector.

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.


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