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01/11 03:33
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several concerns: EPS missed expectations, commodity price fluctuations, and market uncertainty. Despite a disciplined growth strategy and shareholder return framework, the leverage ratio remains high, and expansion capital expenditures are back-end loaded, indicating potential delays. The Q&A section highlights vague management responses and a cautious approach to debt refinancing. These factors, combined with a market cap of $2.79 billion, suggest a moderate negative impact on the stock price, likely resulting in a 2% to 8% decline over the next two weeks.
EPS $0.14 EPS, down from expectations of $0.22.
Average Revenue per Horsepower $21.06 per average horsepower, a 1% increase sequentially and a 6% increase year-over-year.
Adjusted Gross Margin Nearly 67%, consistent with previous quarters.
Net Income $20.5 million, year-over-year change not specified.
Operating Income $69.4 million, year-over-year change not specified.
Net Cash Provided by Operating Activities $54.7 million, year-over-year change not specified.
Cash Interest Expense Net $45.1 million, year-over-year change not specified.
Leverage Ratio 4.08 times, year-over-year change not specified.
Total Fleet Horsepower Approximately 3.9 million horsepower, unchanged from the prior quarter.
Revenue Generating Horsepower Flat on a sequential quarter basis and up 2% from a year ago.
Average Utilization 94.4%, in-line with the prior quarter of 94.5%.
Expansion Capital Expenditures $22.2 million, year-over-year change not specified.
Maintenance Capital Expenditures $10.9 million, increased to a level consistent with regular minor overhaul cycles.
New Horsepower Ordered: In Q1, we ordered approximately 40,000 new horsepower, the majority of which will be delivered before year-end.
Average Revenue per Horsepower: We achieved a record average revenue per horsepower per month for the quarter.
Market Demand: Key upstream companies in the Permian and the Northeast reaffirmed their full-year capital and production targets.
Data Center Market Strength: Amazon, Microsoft, and NVIDIA reaffirm that the data center market remains strong.
Power Demand Growth: Range and EQT highlighted incremental power demand growth in the Northeast.
Average Utilization Rate: Our average utilization for the first quarter was 94.4%, in-line with the prior quarter of 94.5%.
Adjusted Gross Margins: Our first quarter adjusted gross margins were nearly 67%.
Capital Expenditures: First quarter 2025 expansion capital expenditures were $22.2 million.
Personnel Changes: Chris Wauson was promoted to Chief Operating Officer.
ERP Implementation: We remain on track for a Q1 2026 ERP implementation that should yield meaningful improvements.
Earnings Expectations: USA Compression Partners, LP missed earnings expectations with reported EPS of $0.14 compared to expectations of $0.22.
Commodity Price Fluctuations: Commodity prices have softened considerably due to tariff-driven market uncertainty, which could impact production and revenue.
Tariff Impacts: The company is monitoring daily movements on tariffs, which may have minimal impacts on parts and materials business once current inventories are worked through.
Market Uncertainty: There is potential for slow production due to current market uncertainty surrounding natural gas and crude oil prices.
Debt Refinancing: The high-yield market has seen increased pricing, leading to a cautious approach towards debt refinancing, with the company opting to wait for improved borrowing costs.
Leverage Ratio: The leverage ratio is currently at 4.08 times, with expectations of a marginal increase later in the year as new growth projects are funded.
Capital Expenditures: Expansion capital expenditures are back-end loaded, with potential delays in new horsepower delivery affecting capital budget updates.
New Horsepower Orders: In Q1, USA Compression ordered approximately 40,000 new horsepower, with the majority expected to be delivered before year-end.
Idle to Active Initiative: The company has completed the idle to active initiative that commenced early last year.
Disciplined Growth Strategy: USA Compression aims for disciplined growth by acquiring large horsepower, with expectations for significant gains in horsepower.
Shared Services Transition: The company has fully transitioned IT and HR functions in Q1 and is on track for a Q1 2026 ERP implementation.
Adjusted EBITDA Guidance: The company maintains its adjusted EBITDA range of $590 million to $610 million for 2025.
Distributable Cash Flow Guidance: The distributable cash flow range is set at $350 million to $370 million for 2025.
Expansion Capital Expenditures: Expansion capital expenditures are projected to be between $120 million and $140 million for 2025.
Maintenance Capital Expenditures: Maintenance capital expenditures are expected to be between $38 million and $42 million for 2025.
Leverage Ratio Guidance: The company aims to maintain a leverage ratio at or below 4 times debt to EBITDA.
Shareholder Return Framework: USAC emphasizes a disciplined growth strategy and an industry-leading return of capital framework.
Equity Volatility Mitigation: Equity volatility is mitigated by a large shareholder in Energy Transfer, ensuring cost efficiency through shared services.
The earnings call highlights strong financial metrics, including record active horsepower, improved leverage, and significant interest savings. While macroeconomic uncertainties and increased lead times pose risks, the company's strategic focus on dry gas markets and consistent pricing trends are positive indicators. The Q&A section reveals confidence in managing growth without significant additional investments. Given the market cap, the stock price is likely to react positively, although not overwhelmingly, due to the balanced outlook and strong operational performance.
The earnings call summary highlights stable financial metrics with consistent gross margins and no significant year-over-year changes. The Q&A indicates stable demand and cost conditions but lacks clarity on G&A costs and CapEx timing. The guidance remains unchanged, and no major catalysts are present. Given the market cap of $2.79 billion, the stock is likely to remain neutral with a movement between -2% to 2%.
The earnings call reveals several concerns: EPS missed expectations, commodity price fluctuations, and market uncertainty. Despite a disciplined growth strategy and shareholder return framework, the leverage ratio remains high, and expansion capital expenditures are back-end loaded, indicating potential delays. The Q&A section highlights vague management responses and a cautious approach to debt refinancing. These factors, combined with a market cap of $2.79 billion, suggest a moderate negative impact on the stock price, likely resulting in a 2% to 8% decline over the next two weeks.
The earnings call summary provides a mixed outlook. Financial performance is stable, with slight growth in revenue per horsepower and strong adjusted gross margins. However, guidance remains unchanged, and Q&A reveals uncertainties in fleet expansion and refinancing. The market strategy and expenses are managed well, but there's no significant positive catalyst. The company's leverage ratio is stable but not improving, and there's no mention of shareholder returns. Given the $2.79 billion market cap and lack of strong catalysts, the stock price is likely to remain stable, resulting in a neutral sentiment.
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