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USA Compression Partners, LP (USAC)·Q2 2025 Earnings Summary

Executive Summary

  • Record revenue and pricing; Q2 2025 total revenues rose to $250.1M with record average revenue per revenue‑generating horsepower of $21.31; Adjusted EBITDA was $149.5M and DCF $89.9M, with coverage of 1.40x .
  • Guidance maintained: FY25 Adjusted EBITDA $590–$610M; DCF $350–$370M; expansion capex $120–$140M (incl. $21M non‑compression); maintenance capex $38–$42M .
  • EPS of $0.22 per common unit; sequential improvement in operating income and cash from operations, aided by lower SG&A and favorable working capital .
  • Versus estimates: S&P Global consensus unavailable; external consensus pointed to a modest beat on revenue and EPS (actual $250.13M vs $246.74M; $0.22 vs $0.21) — a small positive surprise, reinforcing the “steady execution” narrative .
  • Call tone constructive: demand visibility extends into 2026, with AI/data center power buildouts and natural gas growth cited as secular drivers; leverage targeted at or below ~4x as growth projects are back‑end loaded .

What Went Well and What Went Wrong

What Went Well

  • Record pricing and revenue: average revenue per horsepower increased to $21.31 (+5% YoY); revenues reached $250.1M; Adjusted EBITDA and DCF both grew YoY .
  • Strong operating cash flow: net cash from operations jumped to $124.2M (from $54.7M in Q1), supported by working capital tailwinds; DCF coverage held at 1.40x .
  • Demand narrative: management highlighted robust RFQ activity and demand visibility into 2026; CEO: “record‑setting quarter… strong demand across both oil and gas producing basins” ; call emphasized AI/data center power needs as a long‑term tailwind .

What Went Wrong

  • Net income declined YoY: $28.6M vs $31.2M in Q2 2024; Adjusted EBITDA margin compressed to 59.8% (from 61.1% last year) .
  • Utilization modestly lower YoY: average utilization 94.4% vs 94.7% in Q2 2024; period‑end utilization 94.2% vs 95.0% .
  • Impairment and continued high interest expense: Q2 impairment of $3.2M; net interest expense of $47.7M; leverage expected to tick up as capex is back‑end loaded .

Financial Results

Income Statement and Cash Metrics (USD Millions unless noted)

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($M)$245.892 $245.234 $250.125
Operating Income ($M)$74.529 $69.391 $76.608
Net Income ($M)$25.437 $20.512 $28.559
Basic & Diluted EPS ($/unit)$0.18 $0.14 $0.22
Gross Margin ($M)$99.259 $93.223 $92.785
Adjusted Gross Margin ($M)$168.214 $163.616 $163.626
Adjusted EBITDA ($M)$155.524 $149.514 $149.482
Adjusted EBITDA Margin (%)63.2% 61.0% 59.8%
Net Cash from Operations ($M)$130.195 $54.651 $124.244
Distributable Cash Flow ($M)$96.259 $88.695 $89.926
DCF Coverage (x)1.56x 1.44x 1.40x

Notes: EPS figures reflect basic/diluted net income per common unit.

Revenue Breakdown (USD Millions)

ComponentQ4 2024Q1 2025Q2 2025
Contract Operations$222.985 $224.975 $227.277
Parts and Service$6.854 $5.094 $6.507
Related Party$16.053 $15.165 $16.341
Total Revenues$245.892 $245.234 $250.125

KPIs

KPIQ4 2024Q1 2025Q2 2025
Avg Rev per Revenue‑Generating HP per month ($)$20.85 $21.06 $21.31
Avg Revenue‑Generating HP (MM HP)3.56 3.56 3.55
Avg Utilization (%)94.5% 94.4% 94.4%
Fleet Horsepower (period end)3,862,102 3,859,920 3,858,508
Revenue‑Generating HP (period end)3,567,842 3,559,624 3,538,668
Units (period end)4,269 4,213 4,190

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($M)FY 2025$590–$610 $590–$610 Maintained
Distributable Cash Flow ($M)FY 2025$350–$370 $350–$370 Maintained
Expansion Capex ($M)FY 2025$120–$140 (incl. ~$21M other) $120–$140 (incl. $21M other) Maintained
Maintenance Capex ($M)FY 2025$38–$42 $38–$42 Maintained
Distribution ($/unit)Q2 2025$0.525 (declared) $0.525 (announced) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/data center power demand“Electrification of everything, driven by AI and data center demand” as a macro tailwind Management highlighted announcements of large gas‑tied data center complexes; reinforced natural gas as essential to meet power needs Strengthening narrative
Pricing/contractingRecord avg revenue per HP and tight market ; record pricing continued into Q1 Record $21.31/HP/month; recontracting rate up; visibility into 2026 RFQs Positive
Capex timing/deliveryOrdered ~40,000 HP for back‑half 2025 placements Some new compression deliveries push into Q1 2026; expansion capex update expected on Q3 call Back‑end loaded
Leverage/capital structureRevolver compliance, notes outstanding; strong OCF Target leverage ≤ ~4x; expect marginal increase as growth is funded; subsequent ABL upsized to $1.75B (post‑Q2) Stable access; improved terms
Shared services integration (Energy Transfer)Expected back‑office cost reductions starting 2025 Benefits reiterated; operational alignment highlighted on call Executing

Management Commentary

  • CEO prepared remarks: “record‑setting quarter for revenues and average revenue per‑horsepower of $21.31… strong demand across both oil and gas producing basins” .
  • Demand drivers: detailed on call, including announcements of multi‑GW gas‑tied data center complexes supporting the case for natural gas compression .
  • Guidance stance: “We maintain our adjusted EBITDA range of $590M to $610M… DCF $350M to $370M… expansion capex $120M to $140M; maintenance $38M to $42M” .
  • Financial discipline: CFO reiterated leverage target at or below ~4x while funding back‑half projects; subsequent to Q2, the ABL was upsized to $1.75B and extended to 2030, with expected interest savings .

Q&A Highlights

  • Demand and basin dynamics: Management described demand as broad‑based across oil and gas producing basins; opportunities “flattish” near‑term in some areas but structurally robust overall .
  • Recontracting and visibility: Recontracting rate up; RFQ activity signals strong visibility into 2026 .
  • Capex timing: Some new compression deliveries are shifting into Q1 2026; expansion capex update to be provided on Q3 call .
  • Leverage/dividends: Leverage expected to marginally rise later in 2025 as back‑end projects are funded, but target remains ≤ ~4x; dividend maintained at $0.525 per unit for Q2 .

Estimates Context

  • S&P Global consensus (Revenue, EPS, EBITDA) for Q2 2025 was unavailable via our feed; comparisons to SPGI cannot be made.
  • External context: Investing.com reported revenue forecast of $246.74M vs actual $250.13M and EPS forecast of $0.21 vs actual $0.22 — both modest beats, consistent with the “steady execution” message .
  • Seeking Alpha noted EPS of $0.25 with a beat, likely referencing a different EPS basis; press release GAAP EPS was $0.22 — investors should align basis when comparing estimate frameworks .

Key Takeaways for Investors

  • Pricing power intact: record $21.31/HP/month and resilient utilization underpin revenue growth; watch for continued pricing carry into H2 .
  • Cash generation strong: $124.2M CFO in Q2 provides flexibility to fund growth and sustain the distribution; DCF coverage at 1.40x .
  • Guidance credible and maintained: FY25 Adjusted EBITDA and DCF ranges held; capex timing pushing some growth into Q1 2026 may smooth near‑term leverage trajectory .
  • Structural demand tailwinds: AI/data center buildouts and LNG/Gulf Coast gas growth support multi‑year compression demand; visibility extends into 2026 RFQs .
  • Capital access improving: Post‑Q2 ABL upsized to $1.75B through 2030, positioning for lower interest costs and ample liquidity for fleet investments .
  • Estimate beat likely modest: With SPGI consensus unavailable, external comps point to small revenue/EPS beats; the stock narrative should lean on execution and demand visibility rather than headline beats .
  • Near‑term trading: Limited controversy; incremental catalysts include Q3 expansion capex update, additional data center announcements, and any pricing updates; medium‑term thesis hinges on sustained pricing/utilization and disciplined leverage management .

Additional Q2‑Related Items

  • Q2 distribution declared at $0.525 per unit; qualified notice issued for withholding treatment to foreign holders .
  • Preferred Unit conversion: 100,000 Series A Preferred Units converted into 4,997,126 common units in June, reducing preferred distributions and impacting EPS/share count .
  • Liquidity: As of June 30, 2025, $770.6M drawn on revolver; $735.1M available to be drawn (covenant‑restricted availability) .