Executive Summary

USAC delivered record Q4 results: revenue $245.9M, Adjusted EBITDA $155.5M, DCF $96.3M, and DCF coverage 1.56x; diluted net income per common unit was $0.18. Performance was driven by record average revenue per HP of $20.85, record average revenue‑generating HP of 3.56M, and 94.5% average utilization .
Sequential trends were positive: revenue +2% q/q to $245.9M and Adjusted EBITDA +7% q/q to $155.5M; y/y, revenue grew ~9% and Adjusted EBITDA ~12%. Q4 margin included a ~$3M net sales tax credit that boosted results, while underlying pricing and utilization trends remain constructive .
2025 outlook: Adjusted EBITDA $590–$610M, DCF $350–$370M; expansion capex $120–$140M (back‑end loaded) and maintenance capex $38–$42M. Management targets at least ~$5M annualized savings from Energy Transfer shared services with full implementation by Jan 2026, with ERP phase 1 beginning in 2025 .
Balance sheet and capital allocation: leverage fell to ~4.02x; management will evaluate opportunistic actions on the 2027 notes after call premiums roll off in Sept 2025 and aims to keep leverage near or below current levels while funding growth .
Estimate context: S&P Global consensus for Q4 2024 could not be retrieved due to data limits; therefore, we cannot quantify beats/misses versus Street estimates (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

Pricing power and volume: record average revenue per HP ($20.85) and record average revenue‑generating HP (3.56M) alongside 94.5% average utilization supported another quarter of record revenue and Adjusted EBITDA; “tight contract compression service space” cited as backdrop .
Margin/cash strength: Adjusted EBITDA margin reached 63.2% and net cash from operations hit a quarterly record of $130.2M; DCF rose to $96.3M with 1.56x coverage, supporting capital returns and deleveraging .
Strategic efficiency: management outlined ET shared services migration, ERP phase 1 in 2025, and at least ~$5M annualized savings with full implementation by Jan 2026; leverage improved to ~4.02x .

What Went Wrong

One‑time lift: Q4 benefited from a ~$3M net sales tax credit, inflating quarterly margin; management cautioned on interpreting annualized Q4 run‑rates .
Interest burden still high: net interest expense of ~$48.6M in Q4 (though down ~$0.7M q/q cash interest), reflecting a still‑elevated cost of capital environment .
External risks/uncertainty: steel tariffs and broader macro/regulatory outcomes (including LNG permitting cadence) remain uncertain and could affect equipment costs and customer plans .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Total revenues ($M)	$225.0	$240.0	$245.9
Net income ($M)	$12.8	$19.3	$25.4
Diluted net income per common unit ($)	$0.02	$0.13	$0.18
Adjusted EBITDA ($M)	$138.6	$145.7	$155.5
Adjusted EBITDA margin (%)	61.6%	60.7%	63.2%
Net cash from operating activities ($M)	$91.6	$48.5	$130.2
DCF ($M)	$79.9	$86.6	$96.3
DCF coverage (x)	1.48x	1.41x	1.56x

Segment revenue breakdown ($M):

Revenue line	Q4 2023	Q3 2024	Q4 2024
Contract operations	$212.3	$220.5	$223.0
Parts & service	$6.8	$5.8	$6.9
Related party	$6.0	$13.7	$16.1
Total revenues	$225.0	$240.0	$245.9

Key operating and cash KPIs:

KPI	Q4 2023	Q3 2024	Q4 2024
Avg revenue‑generating HP (M)	3.41	3.56	3.56
Avg revenue per HP per month ($)	19.52	20.60	20.85
Avg utilization (%)	94.1%	94.6%	94.5%
DCF ($M)	79.9	86.6	96.3
DCF coverage (x)	1.48x	1.41x	1.56x
Expansion capex ($M)	—	34.1	37.6
Maintenance capex ($M)	6.6	9.1	8.2
Cash interest exp., net ($M)	—	47.1	46.4

Note: Q4 2024 included a ~$3M net sales tax credit that lifted margins .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA ($M)	FY 2025	N/A	590 – 610	New FY25 guide
Distributable Cash Flow ($M)	FY 2025	N/A	350 – 370	New FY25 guide
Expansion capex ($M)	FY 2025	N/A	120 – 140	New FY25 guide
Maintenance capex ($M)	FY 2025	N/A	38 – 42	New FY25 guide
Distribution per unit ($/qtr)	Q4 2024	$0.525 (maintained)	$0.525 (paid Feb 7, 2025)	Maintained

Context: FY 2024 guidance was last confirmed at Adjusted EBITDA $565–$585M and DCF $345–$365M; FY 2025 implies modest growth off 2024 levels, with new HP largely back‑half 2025 and more benefit in 2026 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Pricing	Record pricing ($20.29/Q2; $20.60/Q3); tight market supports further increases	Record $20.85; customers favor longer renewals; price escalators on month‑to‑month	Improving/stable
Utilization/HP	~95% utilization; large HP effectively fully utilized; avg HP grew	94.5% avg utilization; avg rev‑gen HP at record 3.56M	Stable high
Macro/LNG/AI	Long‑term bullish: LNG, Mexico exports, AI/data centers driving gas demand, ERCOT power needs	Lift of LNG permit freeze; gas demand to grow ~15 Bcf/d over 5 years; electrification/data centers positive	Strengthening
Electrification/Dual‑Drive	Dual‑Drive positioned; exploring power generation to grid; details limited	Supportive of electric compression but mindful of infra limits; focus on customer needs; dual‑drive optionality	Gradual adoption
Capex cadence	Raised 2024 expansion capex; idle‑to‑active conversions; lead times steady	2025 expansion capex $120–$140M, back‑end loaded; new HP ~1.5% active HP increase	Back‑half weighted
Leverage/ABL/Notes	Leverage trending down (4.23x Q2); interest hedge monetization discussed	Leverage ~4.02x; evaluating 2027 notes when call premium falls; size/structure of ABL under review	Deleveraging optionality
ET shared services/ERP	Announced move to ET shared services (Q3)	Minimum ~$5M annualized savings by Jan 2026; ERP phase 1 in 2025	Cost tailwind
Tariffs/regulatory	—	Steel tariff implications under evaluation; too early to quantify	Watchlist risk

Management Commentary

“Record‑setting revenues and Adjusted EBITDA… driven by improved operational efficiencies… record average revenue per‑horsepower of $20.85 and record revenue‑generating horsepower of 3.56 million” — Clint Green, CEO .
“We anticipate an expansion capital range of $120–$140 million… largely back‑end loaded… expect the Energy Transfer shared services model to begin taking effect… anticipate a reduction in back‑office costs” .
“Our sales teams continue to build upon pricing improvements up to an all‑time high… fourth quarter adjusted gross margins were over 68%… leverage ratio declined to a record low of 4.02x” — Chris Paulsen, CFO .
“Q4 benefited from a net sales tax credit of approximately $3 million… guidance reflects price increases in Q1, modest CPI‑linked increases thereafter, and new horsepower delivered in Q4” — CFO .

Q&A Highlights

2025 capex/back‑end load: Management prioritizes capital discipline to keep leverage from stepping up; expansion capex is concentrated in H2’25, with benefit ramping into 2026 .
Distribution coverage and potential growth: Coverage improving; any change in payout will balance cycle resilience and capital structure—no threshold disclosed .
Guidance context: Annualizing Q4 overstates 2025 given ~$3M Q4 tax credit; upside could come from earlier HP deliveries, bigger price increases, or faster turnarounds .
Steel tariffs/costs: Too early to assess impact; monitoring implications for compression equipment and broader upstream/midstream spend .
Payback/returns: New build decisions anchored to paybacks within contract term and returns exceeding cost of capital; leading‑edge pricing not disclosed .
Adjacent services: Expect growth in third‑party service division (customer‑owned equipment) in 2025 .
Balance sheet actions: ABL size/structure under review; 2027 notes are the first fixed‑rate lever to pull once call premiums fall in Sept 2025; monitoring Fed path .

Estimates Context

We attempted to pull S&P Global consensus estimates for Q4 2024 (revenue, EBITDA, EPS) but were unable to retrieve due to an SPGI daily request limit. As a result, we cannot quantify beats/misses versus Street for this quarter (S&P Global data unavailable).

Key Takeaways for Investors

Core KPIs continue to compound: record revenue, EBITDA, DCF, pricing, and active HP at high utilization underpin durable cash generation and distribution coverage (1.56x) while deleveraging progresses to ~4.0x .
2025 guide is prudent and back‑half weighted; the more pronounced cash uplift likely shows in 2026 as contracted new HP comes online, setting up medium‑term EBITDA visibility .
Tangible cost synergy/capability uplift: ET shared services and ERP rollout offer at least ~$5M annualized savings from Jan 2026 and improved operating visibility in 2025 .
Macro remains favorable: LNG/export pipeline expansions, electrification, and AI/data center power demand should sustain compression needs, particularly in Permian/Mid‑Continent/Gulf Coast .
Watch items: tariff policy and cost inflation (engines/steel), interest expense sensitivity, and cadence of HP deliveries; Q4 tax credit (~$3M) is non‑recurring .
Trading setup: absence of confirmed Street beat/miss data caps near‑term catalyst clarity, but record KPIs, improving leverage, and cost‑out narrative support constructive sentiment; incremental upside could come from earlier HP deployment and stronger pricing in 2025 .

References

Q4 2024 8‑K earnings release and exhibits:
Q4 2024 earnings call transcript:
Q3 2024 8‑K release and data:
Q3 2024 press release:
Q2 2024 8‑K release and transcript:

USA Compression Partners, LP (USAC)·Q4 2024 Earnings Summary