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Why Is USA Compression (USAC) Down 6.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for USA Compression Partners (USAC - Free Report) . Shares have lost about 6.1% 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 the most recent earnings report in order to get a better handle on the important drivers.

USA Compression Q3 Earnings Lag, Revenues Top Estimates

USA Compression Partners, LP reported third-quarter 2023 net profit of 9 cents per common unit, lagging the Zacks Consensus Estimate of 11 cents due to higher total costs and other expenses. However, the metric improved significantly from the year-ago quarter's loss of 3 cents. This was backed by net income of $20.9 million compared with $9.6 million a year ago.

Revenues of $217 million were up 20.9% from the year-ago quarter’s level and beat the Zacks Consensus Estimate of $208 million.

Adjusted EBITDA increased 19.2% to $130.2 million and came ahead of our estimate of $129.5 million. Distributable cash flow reduced from $71.6 million in the prior-year quarter to $55.2 million.

USAC reported operating cash flow of $50.1 million in the third quarter, increasing from the prior-year quarter’s $49.2 million. Gross operating margin of 65.5% marked a decrease from the year-ago period’s 66.9%.

USAC’s revenue-generating capacity increased 8.7% to 3.36 million horsepower year over year. The figure beat our estimate of 3.34 million horsepower. Further, average monthly revenue per horsepower rose to $19.10 from $17.53 in the third quarter of 2023.

Meanwhile, USA Compression’s average quarterly horsepower utilization rate came in at 93.6%, up from 90.3% a year ago.

DCF, Cost, Capex & Balance Sheet

USAC’s Distributable cash flow available to limited partners totaled $71.6 million (providing 1.39x distribution coverage), up 29.7% from the year-ago levels.

Notably, on Oct 12, it announced third-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis). The distribution will be paid out on Nov 3, 2023, to common unitholders of record as of Oct 23, 2023.

It reported $156.1 million in costs and expenses, up 16.1% from the year-ago quarter’s $134.5 million.

It spent $62.5 million on growth capex. Maintenance capex amounted to $7.2 million.

As of Sep 30, 2023, USA Compression had net long-term debt of $2.3 billion.


For 2023, USAC anticipates distributable cash flow in the $270-$280 million range. Management expects adjusted EBITDA in the band of $500-$510 million.

The company anticipates 2023 net income in the $73-$83 million range.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -7.69% due to these changes.

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. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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


Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, 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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