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USA Compression Partners, LP (USAC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered record revenue ($250.3M), net income ($34.5M), Adjusted EBITDA ($160.3M), DCF ($103.8M), and coverage (1.61x), supported by strong pricing ($21.46/HP/month) and 94% average utilization .
  • Management raised and tightened FY25 guidance: Adjusted EBITDA to $610–$620M and DCF to $370–$380M; expansion capex lowered to $115–$125M while maintenance capex held at $38–$42M .
  • Financing actions (upsized $1.75B ABL and 2033 notes issuance) reduced borrowing costs; CFO expects over $10M annualized interest savings, improving strategic flexibility and liquidity (leverage 3.9x) .
  • Operating momentum should extend into 2026 as most new 2025 horsepower is deployed in Q4 and lead times for large orders stretch past 60 weeks, supporting pricing stability and contracted growth .
  • No S&P Global consensus estimates were available to assess beats/misses for Q3 2025; comparisons focus on sequential and year-over-year trajectories [Functions:GetEstimates returned no data].

What Went Well and What Went Wrong

What Went Well

  • Record financials across revenue ($250.3M), Adjusted EBITDA ($160.3M), and DCF ($103.8M); DCF coverage rose to 1.61x, indicating enhanced distribution sustainability .
  • Pricing reached an all-time high ($21.46 per HP/month); CFO cited one-time and ongoing cost savings (centralized procurement, healthcare true-up, sales tax refund) driving adjusted gross margin to 69.3% .
  • Balance sheet/liquidity improved: ABL upsized to $1.75B (maturity 2030), redemption of 2027 notes via new 2033 notes, supporting lower borrowing costs and >$10M annualized interest savings .

What Went Wrong

  • Utilization modestly lower vs prior year (average 94.0% vs 94.6% in Q3 2024); revenue-generating horsepower averaged 3.55M vs 3.56M a year ago, reflecting flattish active horsepower .
  • Elevated margins benefited partly from one-time items (healthcare true-up, sales tax refund); management expects margins to normalize closer to trailing twelve-month rates .
  • Interest expense (net) remained high ($47.1M), and leverage expected to marginally increase at year-end as growth projects are funded, despite longer-term interest savings .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Total Revenues ($USD Millions)$239.968 $250.125 $250.256
Operating Income ($USD Millions)$75.676 $76.608 $83.937
Net Income ($USD Millions)$19.327 $28.559 $34.488
Diluted Net Income per Common Unit ($USD)$0.13 $0.22 $0.26
Interest Expense, Net ($USD Millions)$49.361 $47.674 $47.066
Gross Margin ($USD Millions)$90.917 $92.785 $102.083
Adjusted Gross Margin ($USD Millions)$158.154 $163.626 $173.305
Adjusted Gross Margin %65.9% 65.4% 69.3%
Adjusted EBITDA ($USD Millions)$145.690 $149.482 $160.265
Adjusted EBITDA %60.7% 59.8% 64.0%
Distributable Cash Flow ($USD Millions)$86.606 $89.926 $103.845
DCF Coverage (x)1.41x 1.40x 1.61x
Distributions per Common Unit ($USD)$0.525 $0.525 $0.525

Segment Revenue Breakdown

Revenue Segment ($USD Millions)Q3 2024Q2 2025Q3 2025
Contract Operations$220.518 $227.277 $227.990
Parts and Service$5.756 $6.507 $5.370
Related Party$13.694 $16.341 $16.896
Total Revenues$239.968 $250.125 $250.256

Operational KPIs

KPIQ3 2024Q2 2025Q3 2025
Avg Rev per HP per Month ($)$20.60 $21.31 $21.46
Avg Revenue-Generating HP (Millions)3.561 3.551 3.549
Avg Utilization (%)94.6% 94.4% 94.0%
Fleet HP (Period End)3,862,445 3,858,508 3,872,918
Revenue-Generating HP (Period End)3,570,508 3,538,668 3,562,472

Guidance Changes

MetricPeriodPrevious Guidance (as of Q2 2025)Current Guidance (as of Q3 2025)Change
Adjusted EBITDA ($USD Millions)FY 2025$590–$610 $610–$620 Raised & tightened
Distributable Cash Flow ($USD Millions)FY 2025$350–$370 $370–$380 Raised & tightened
Expansion Capital Expenditures ($USD Millions)FY 2025$120–$140 $115–$125 Lowered
Maintenance Capital Expenditures ($USD Millions)FY 2025$38–$42 $38–$42 Maintained
Distribution per Common Unit ($USD)Q3 2025$0.525 (steady policy) $0.525 Maintained

Notes: Management expects a modest year-end leverage uptick as back-end loaded growth projects are funded, with target ≤4.0x maintained .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Pricing per HP$21.06 (Q1) and $21.31 (Q2), record levels $21.46, all-time high; spot trends consistent into late-2025/2026 Improving and stable
Cost Savings & SG&AQ1 SG&A elevated ($18.862M); Q2 SG&A fell ($12.896M) One-time healthcare true-up and sales tax refund; ongoing centralized procurement savings; margins to normalize Baseline improving; one-time uplift in Q3
Leverage & RefinancingABL at $1.6B (Q2); preference conversion increased common units ABL upsized to $1.75B, 2033 notes priced; >$10M annualized interest savings; leverage 3.9x Liquidity and cost of capital improving
Growth/DeploymentQ1 ordered ~40k HP for H2’25 Most 2025 new HP deploying in Q4; lead times >60 weeks for large orders Back-end loaded growth; supply tightness
Regional TrendsBroad footprint; record pricing across basins Northeast/Central HP to grow >40k; small HP utilization approaching ~80%; Permian deliveries in Q4 Diversifying growth beyond Permian
Technology/ERPNo prior ERP mentionERP implementation targeted early 2026; shared services model synergies Operational sophistication increasing
Regulatory/TaxCash tax accrual (Q1/Q2 footnotes) Incremental cash tax expense estimated re 2019–2020 imputed underpayment Issue being quantified and reserved

Management Commentary

  • “Third-quarter results reflect the continuous improvement mindset… meaningful savings across SG&A, key operating expense lines, and interest expense” — Clint Green, President & CEO .
  • “Pricing improvements, up to an all-time high averaging $21.46 per horsepower… adjusted gross margins higher at 69.3% due to one-time and ongoing cost savings… while margins were partially elevated, we expect margins to stay consistent with our trailing twelve-month rate” — Chris Paulson, CFO .
  • “We will deploy most of our 2025 new unit horsepower in Q4, setting the foundation for continued momentum in 2026… lead times increase to more than sixty weeks for larger orders” — Clint Green .
  • “We extended and expanded our ABL to $1.75B… called our $750M 2027 notes in favor of 2033 notes… on track to realize over $10M annualized interest savings and increase liquidity” — Chris Paulson ; corroborated by press releases .

Q&A Highlights

  • Dry gas exposure and geographic diversification: Management emphasized established presence in dry gas basins (Northeast, Oklahoma, Gulf Coast) and ability to redeploy or add equipment without major basin facility investments .
  • Pricing dynamics: Spot pricing trends consistent with fleet average; confidence in sustaining dollar-per-horsepower revenue into late-2025/2026 .

Estimates Context

  • S&P Global consensus for Q3 2025 (Revenue, EBITDA, EPS) was unavailable at the time of research; as a result, we cannot classify beats/misses relative to consensus for the quarter [Functions:GetEstimates returned no data].
  • Given the raised FY25 guidance and record Q3 metrics, Street models may need to adjust higher on EBITDA/DCFs and consider lower interest expense run-rate from refinancings .

Key Takeaways for Investors

  • Pricing power persists; $21.46/HP/month and high utilization underpin record EBITDA/DCFs — supportive for maintaining the $0.525/unit distribution and coverage >1.6x .
  • FY25 guidance raised/tightened; back-end loaded deployments in Q4 suggest sequential momentum into 2026 and support for estimate revisions upward on EBITDA/DCFs .
  • Financing actions lower cost of capital and expand liquidity (ABL to $1.75B; 2033 notes), with >$10M annualized interest savings — positive for free cash flow and leverage trajectory (target ≤4x) .
  • One-time Q3 margin tailwinds (healthcare true-up, sales tax refund) should be normalized in forward modeling; focus on sustainable cost efficiencies (procurement, shared services) .
  • Supply tightness (lead times >60 weeks) and contracted deliveries support pricing stability and deployment visibility; regional diversification (Northeast/Central + Permian) broadens growth drivers .
  • Monitor incremental cash tax accruals tied to 2019–2020 imputed underpayment; current estimates incorporated in DCF reconciliations .
  • Near-term trading: Guidance raise + interest savings are catalysts; medium-term thesis centers on durable pricing/utilization, disciplined capex, and deleveraging while sustaining distributions .

Additional Relevant Press Releases (Q3 2025)

  • Q3 2025 distribution announcement ($0.525 per unit; paid Nov 7) .
  • $750M 6.250% senior notes due 2033 pricing for redemption of 2027 notes .
  • Upsized credit facility to $1.75B, maturity extended to August 2030 .

Appendix: Reconciliations and Balance Sheet Highlights

  • Q3 2025 Balance Sheet: Total assets $2,659.214M; long-term debt, net $2,529.382M; total partners’ deficit $(150.214)M; common units outstanding 122,685,471 .
  • Adjusted EBITDA reconciliation and DCF reconciliation detailed in 8-K Exhibit 99.1 .