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USA Compression (USAC) Shares Barely Move Since Q3 Earnings Lag

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USA Compression Partners, LP (USAC - Free Report) shares have gone up by 0.9% since its third-quarter earnings announcement on Nov 1.

This slight rise could be attributed to the Austin, TX-based independent natural gas compression services provider’s sales for the reported quarter, which increased on a year-over-year basis.

Behind the Earnings Headlines

USA Compression reported a third-quarter 2022 net loss of 3 cents per common unit, lagging the Zacks Consensus Estimate of a profit of 2 cents due to higher total costs and other expenses.

However, the loss was narrower than the year-ago quarter’s loss of 8 cents per share. This favorable comparison was due to the partnership posting a net income of $9.6 million in the third quarter of 2022 compared with the net income of $4.1 million for the same period last year.

Revenues of $179.6 million were approximately 13.23% higher than the year-ago quarter’s reading of $158.6 million.

Adjusted EBITDA increased about 9.6% to approximately $109.2 million from last year’s third-quarter figure of $99.6 million. Moreover, the partnership’s distributable cash flow rose from $51.9 million in the prior-year quarter to $55.2 million.

The firm reported operating cash flow of $49.2 million in the quarter, up from the $45.3 million generated in the prior-year quarter. However, its gross operating margin of 66.9% declined from the year-ago period’s 69%.

In the third quarter, USA Compression Partners’ revenue-generating horsepower capacity increased by about 6% to 3,090,910 horsepower from the level recorded in the corresponding period of last year.  Average monthly revenues per horsepower were $17.53, higher than the year-ago quarter’s figure of $16.62.

USAC’s average quarterly horsepower utilization rate came in at 90.3%, higher than 82.3% in the year-ago period.

DCF, Capex & Balance Sheet

USA Compression Partners’ distributable cash flow (DCF) available to limited partners for the third quarter equaled $55.2 million (providing 1.07X distribution coverage), up 6.2% from the year-ago level.

On Oct 13, the firm announced a third-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis). The distribution was paid out on Nov 4, 2022 to common unitholders of record as of Oct 24, 2022.

It spent $46.7 million as growth capex. The partnership’s maintenance capex amounted to $8.1 million.

As of September 2022, USA Compression Partners had about $2.08 billion of net long-term debt.

Guidance

For 2022, USAC updated its distributable cash flow guidance from the earlier $213-$233 million range to the $215-$225 million range. The partnership also updated the adjusted EBITDA outlook from the $406-$426 million range to the $420 -$430 million band.

Additionally, the company now expects 2022 net income in the range of $30-$40 million from the previous $33 million-$53 million guidance range.

Zacks Rank & Recent Energy Releases

USA Compression Partners currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Let’s take a look at some key energy releases so far.

Europe’s largest oil company, Shell plc (SHEL - Free Report) , reported underwhelming third-quarter earnings. The bottom line of $2.58 per share missed the Zacks Consensus Estimate of $2.68. The underperformance reflects lower production and a pullback in refining margins from second-quarter highs.

However, SHEL’s results were better than the year-earlier quarter’s adjusted profit of $1.06 per ADS, backed by stronger commodity prices. Meanwhile, Shell repurchased $5 billion of shares in the third quarter.

The energy group also announced that it completed the $6-billion buyback program scheduled for the third quarter of 2022.

Schlumberger (SLB - Free Report) , the largest oilfield contractor, announced third-quarter earnings of 63 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 55 cents. SLB recorded total revenues of $7.5 billion, outpacing the Zacks Consensus Estimate by 4.7%.

Schlumberger’s solid quarterly earnings resulted from strong activities in land and offshore resources in North America and Latin America. In good news for investors, SLB generated free cash flow of $1.1 billion during the period.

Meanwhile, the energy infrastructure provider, Kinder Morgan (KMI - Free Report) , reported third-quarter 2022 adjusted earnings per share of 25 cents, missing the Zacks Consensus Estimate of 29 cents. The disappointing bottom line could be attributed to lower pipeline volumes of gasoline and diesel fuel, partially offset by higher contributions from KMI’s natural gas pipelines and CO2 segments.

As of Sep 30, 2022, Kinder Morgan reported $483 million in cash and cash equivalents. The company’s long-term debt amounted to $29 billion, resulting in a debt to capitalization of 49.6%. For 2022, KMI expects a dividend of $1.11 per share, suggesting an increase of 3% from the prior-year reported figure.

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