USA Compression Partners, LP (NYSE: USAC) (“USA Compression” or
the “Partnership”) announced today its financial and operating
results for third-quarter 2023.
Financial Highlights
- Record total revenues of $217.1 million for third-quarter 2023,
compared to $179.6 million for third-quarter 2022.
- Net income was $20.9 million for third-quarter 2023, compared
to $9.6 million for third-quarter 2022. Net income for
third-quarter 2023 includes a $3.4 million gain on derivative
instrument.
- Net cash provided by operating activities was $50.1 million for
third-quarter 2023, compared to $49.2 million for third-quarter
2022.
- Adjusted EBITDA was $130.2 million for third-quarter 2023,
compared to $109.2 million for third-quarter 2022.
- Distributable Cash Flow was $71.6 million for third-quarter
2023, compared to $55.2 million for third-quarter 2022.
- Distributable Cash Flow Coverage was 1.39x for third-quarter
2023, compared to 1.07x for third-quarter 2022.
- Announced cash distribution of $0.525 per common unit for
third-quarter 2023, consistent with third-quarter 2022.
Operational Highlights
- Average horsepower utilization was 93.6% for third-quarter
2023, compared to 90.3% for third-quarter 2022.
- Record average revenue-generating horsepower of 3.36 million
for third-quarter 2023, compared to 3.09 million for third-quarter
2022.
- Record average revenue per revenue-generating horsepower per
month of $19.10 for third-quarter 2023, compared to $17.53 for
third-quarter 2022.
“I am pleased to report our third-quarter results continued the
trend of improving financial and operational results and highlight
our employees’ commitment to create value for all USA Compression
stakeholders. Our third-quarter achievements again featured
consecutive-quarter record-setting revenues, Adjusted EBITDA,
Distributable Cash Flow, and Distributable Cash Flow Coverage,”
commented Eric D. Long, USA Compression’s President and Chief
Executive Officer.
“These record quarterly financial results were driven by strong
operational performance including continued sequential-quarter
improvements to fleet utilization and per-horsepower average
revenue, as well as record average revenue-generating horsepower of
approximately 3.36 million. We believe our third-quarter
performance is directly attributable to our employees’ ability to
deliver meaningful and recognized value to our customers and a
continued tightening in the large-horsepower compression market.
The tight compression market, coupled with continuing growth in the
oil and natural gas markets, provides a solid base for the demand
of our services which we believe will support the continued
improvement of our balance sheet and financial condition.”
Expansion capital expenditures were $62.5 million, maintenance
capital expenditures were $7.2 million, and cash interest expense,
net was $41.4 million for third-quarter 2023.
On October 12, 2023, the Partnership announced a third-quarter
cash distribution of $0.525 per common unit, which corresponds to
an annualized distribution rate of $2.10 per common unit. The
distribution will be paid on November 3, 2023, to common
unitholders of record as of the close of business on October 23,
2023.
On October 27, 2023, the tranche of warrants with the right to
purchase 10,000,000 common units with a strike price of $19.59 per
common unit was exercised in full by the holders. The exercise of
the warrants will be net settled by the Partnership for
approximately 2,360,000 common units. These warrants were part of
the preferred equity financing undertaken in 2018 in connection
with the acquisition of CDM Resource Management.
Operational and
Financial Data
Three Months Ended
September 30,
2023
June 30, 2023
September 30,
2022
Operational data:
Fleet horsepower (at period end) (1)
3,735,490
3,716,177
3,711,205
Revenue-generating horsepower (at period
end) (2)
3,395,630
3,346,657
3,128,845
Average revenue-generating horsepower
(3)
3,356,008
3,309,758
3,090,910
Revenue-generating compression units (at
period end)
4,251
4,220
4,034
Horsepower utilization (at period end)
(4)
93.9
%
93.7
%
90.9
%
Average horsepower utilization (for the
period) (4)
93.6
%
93.4
%
90.3
%
Financial data ($ in thousands, except
per horsepower data):
Total revenues
$
217,085
$
206,920
$
179,613
Average revenue per revenue-generating
horsepower per month (5)
$
19.10
$
18.65
$
17.53
Net income
$
20,902
$
23,584
$
9,612
Operating income
$
60,954
$
51,427
$
45,103
Net cash provided by operating
activities
$
50,072
$
87,871
$
49,209
Gross margin
$
78,056
$
76,959
$
61,388
Adjusted gross margin (6)
$
142,157
$
136,998
$
120,160
Adjusted gross margin percentage (7)
65.5
%
66.2
%
66.9
%
Adjusted EBITDA (6)
$
130,164
$
124,998
$
109,156
Adjusted EBITDA percentage (7)
60.0
%
60.4
%
60.8
%
Distributable Cash Flow (6)
$
71,574
$
67,038
$
55,181
Distributable Cash Flow Coverage Ratio
(6)
1.39
x
1.30
x
1.07
x
____________________________________
(1)
Fleet horsepower is horsepower for
compression units that have been delivered to the Partnership (and
excludes units on order). As of September 30, 2023, the Partnership
had 100,000 large horsepower on order for delivery, all of which is
expected to be delivered within the next twelve months and 62,500
large horsepower of which is expected to be delivered by year-end
2023.
(2)
Revenue-generating horsepower is
horsepower under contract for which the Partnership is billing a
customer.
(3)
Calculated as the average of the month-end
revenue-generating horsepower for each of the months in the
period.
(4)
Horsepower utilization is calculated as
(i) the sum of (a) revenue-generating horsepower; (b) horsepower in
the Partnership’s fleet that is under contract but is not yet
generating revenue; and (c) horsepower not yet in the Partnership’s
fleet that is under contract but not yet generating revenue and
that is subject to a purchase order, divided by (ii) total
available horsepower less idle horsepower that is under repair.
Horsepower utilization based on
revenue-generating horsepower and fleet horsepower was 90.9%,
90.1%, and 84.3% at September 30, 2023, June 30, 2023, and
September 30, 2022, respectively.
Average horsepower utilization based on
revenue-generating horsepower and fleet horsepower was 90.0%,
89.0%, and 83.4% for the three months ended September 30, 2023,
June 30, 2023, and September 30, 2022, respectively.
(5)
Calculated as the average of the result of
dividing the contractual monthly rate, excluding standby or other
temporary rates, for all units at the end of each month in the
period by the sum of the revenue-generating horsepower at the end
of each month in the period.
(6)
Adjusted gross margin, Adjusted EBITDA,
Distributable Cash Flow, and Distributable Cash Flow Coverage Ratio
are all non-U.S. generally accepted accounting principles
(“Non-GAAP”) financial measures. For the definition of each
measure, as well as reconciliations of each measure to its most
directly comparable financial measures calculated and presented in
accordance with GAAP, see “Non-GAAP Financial Measures” below.
(7)
Adjusted gross margin percentage and
Adjusted EBITDA percentage are calculated as a percentage of
revenue.
Liquidity and Long-Term
Debt
As of September 30, 2023, the Partnership was in compliance with
all covenants under its $1.6 billion revolving credit facility. As
of September 30, 2023, the Partnership had outstanding borrowings
under the revolving credit facility of $813.1 million, $786.9
million of availability and, subject to compliance with the
applicable financial covenants, available borrowing capacity of
$434.3 million. As of September 30, 2023, the outstanding aggregate
principal amount of the Partnership’s 6.875% senior notes due 2026
and 6.875% senior notes due 2027 was $725.0 million and $750.0
million, respectively.
Total Leverage Ratio Calculation
The Partnership’s Seventh Amended and Restated Credit Agreement,
dated as of December 8, 2021 (the “Credit Agreement”) includes a
financial covenant for Total Leverage Ratio (as defined in the
Credit Agreement). The Partnership’s Total Leverage Ratio as of
September 30, 2023 was 4.21x, compared to 4.51x as of June 30,
2023. The reduction in the Partnership’s Total Leverage Ratio from
the second-quarter 2023 to the third-quarter 2023 was due in part
to the Partnership’s adding back $5.9 million in recurring tax
expenses, consistent with the calculation of EBITDA under the
Credit Agreement but which the Partnership had not added back in
previous quarters. This tax add back increased EBITDA, which is the
denominator of the Total Leverage Ratio calculation. Financial
covenants in the Credit Agreement permit a maximum leverage ratio
of not greater than 5.50 to 1.00 through September 30, 2023, and
5.25 to 1.00 thereafter (with certain exceptions for an increase in
the event of a Specified Acquisition (as defined in the Credit
Agreement)). If the Partnership had not implemented this tax add
back, the Partnership’s Total Leverage Ratio as of September 30,
2023, would have been 4.40x.
Interest-rate Swap Modification
In October 2023, the Partnership modified its existing
interest-rate swap to continue to manage interest-rate risk
associated with the floating-rate Credit Agreement. The notional
principal amount under the modified interest-rate swap remains $700
million and the termination date was extended from April 1, 2025 to
December 31, 2025. Under the original interest-rate swap, the
Partnership paid a fixed interest rate of 3.785% and received
floating interest rate payments that were indexed to the one-month
SOFR. Under the modified interest-rate swap, the Partnership pays a
fixed interest rate of 3.9725% and continues to receive floating
interest rate payments that are indexed to the one-month SOFR.
Full-Year 2023 Outlook
USA Compression is updating its full-year 2023 guidance as
follows:
- Net income range of $73.0 million to $83.0 million;
- A forward-looking estimate of net cash provided by operating
activities is not provided because the items necessary to estimate
net cash provided by operating activities, in particular the change
in operating assets and liabilities, are not accessible or
estimable at this time. The Partnership does not anticipate changes
in operating assets and liabilities to be material, but changes in
accounts receivable, accounts payable, accrued liabilities, and
deferred revenue could be significant, such that the amount of net
cash provided by operating activities would vary substantially from
the amount of projected Adjusted EBITDA and Distributable Cash
Flow;
- Adjusted EBITDA range of $500.0 million to $510.0 million;
and
- Distributable Cash Flow range of $270.0 million to $280.0
million.
Conference Call
The Partnership will host a conference call today beginning at
11:00 a.m. Eastern Time (10:00 a.m. Central Time) to discuss
third-quarter 2023 performance. The call will be broadcast live
over the internet. Investors may participate by audio webcast, or
if located in the U.S. or Canada, by phone. A replay will be
available shortly after the call via the “Events” page of USA
Compression’s Investor Relations website.
By Webcast:
Connect to the webcast via the “Events”
page of USA Compression’s Investor Relations website at
https://investors.usacompression.com. Please log in at least 10
minutes in advance to register and download any necessary
software.
By Phone:
Dial (888) 440-5655 at least 10 minutes
before the call and ask for the USA Compression Partners Earnings
Call or conference ID 8970064.
About USA Compression Partners,
LP
USA Compression Partners, LP is one of the nation’s largest
independent providers of natural gas compression services in terms
of total compression fleet horsepower. USA Compression partners
with a broad customer base composed of producers, processors,
gatherers, and transporters of natural gas and crude oil. USA
Compression focuses on providing midstream natural gas compression
services to infrastructure applications primarily in high-volume
gathering systems, processing facilities, and transportation
applications. More information is available at
usacompression.com.
Non-GAAP Financial
Measures
This news release includes the Non-GAAP financial measures of
Adjusted gross margin, Adjusted EBITDA, Distributable Cash Flow,
and Distributable Cash Flow Coverage Ratio.
Adjusted gross margin is defined as revenue less cost of
operations, exclusive of depreciation and amortization expense.
Management believes Adjusted gross margin is useful to investors as
a supplemental measure of the Partnership’s operating
profitability. Adjusted gross margin primarily is impacted by the
pricing trends for service operations and cost of operations,
including labor rates for service technicians, volume, and per-unit
costs for lubricant oils, quantity and pricing of routine
preventative maintenance on compression units, and property tax
rates on compression units. Adjusted gross margin should not be
considered an alternative to, or more meaningful than, gross margin
or any other measure presented in accordance with GAAP. Moreover,
the Partnership’s Adjusted gross margin, as presented, may not be
comparable to similarly titled measures of other companies. Because
the Partnership capitalizes assets, depreciation and amortization
of equipment is a necessary element of its cost structure. To
compensate for the limitations of Adjusted gross margin as a
measure of the Partnership’s performance, management believes it
important to consider gross margin determined under GAAP, as well
as Adjusted gross margin, to evaluate the Partnership’s operating
profitability.
Management views Adjusted EBITDA as one of its primary tools for
evaluating the Partnership’s results of operations, and the
Partnership tracks this item on a monthly basis as an absolute
amount and as a percentage of revenue compared to the prior month,
year-to-date, prior year, and budget. The Partnership defines
EBITDA as net income (loss) before net interest expense,
depreciation and amortization expense, and income tax expense
(benefit). The Partnership defines Adjusted EBITDA as EBITDA plus
impairment of compression equipment, impairment of goodwill,
interest income on capital leases, unit-based compensation expense
(benefit), severance charges, certain transaction expenses, loss
(gain) on disposition of assets, loss (gain) on derivative
instrument, and other. Adjusted EBITDA is used as a supplemental
financial measure by management and external users of the
Partnership’s financial statements, such as investors and
commercial banks, to assess:
- the financial performance of the Partnership’s assets without
regard to the impact of financing methods, capital structure, or
the historical cost basis of the Partnership’s assets;
- the viability of capital expenditure projects and the overall
rates of return on alternative investment opportunities;
- the ability of the Partnership’s assets to generate cash
sufficient to make debt payments and pay distributions; and
- the Partnership’s operating performance as compared to those of
other companies in its industry without regard to the impact of
financing methods and capital structure.
Management believes Adjusted EBITDA provides useful information
to investors because, when viewed in conjunction with the
Partnership’s GAAP results and the accompanying reconciliations, it
may provide a more complete assessment of the Partnership’s
performance as compared to considering solely GAAP results.
Management also believes that external users of the Partnership’s
financial statements benefit from having access to the same
financial measures that management uses to evaluate the results of
the Partnership’s business.
Adjusted EBITDA should not be considered an alternative to, or
more meaningful than, net income (loss), operating income (loss),
cash flows from operating activities, or any other measure
presented in accordance with GAAP. Moreover, the Partnership’s
Adjusted EBITDA, as presented, may not be comparable to similarly
titled measures of other companies.
Distributable Cash Flow is defined as net income (loss) plus
non-cash interest expense, non-cash income tax expense (benefit),
depreciation and amortization expense, unit-based compensation
expense (benefit), impairment of compression equipment, impairment
of goodwill, certain transaction expenses, severance charges, loss
(gain) on disposition of assets, change in fair value of derivative
instrument, proceeds from insurance recovery, and other, less
distributions on the Partnership’s Series A Preferred Units
(“Preferred Units”) and maintenance capital expenditures.
Distributable Cash Flow should not be considered an alternative
to, or more meaningful than, net income (loss), operating income
(loss), cash flows from operating activities, or any other measure
presented in accordance with GAAP. Moreover, the Partnership’s
Distributable Cash Flow, as presented, may not be comparable to
similarly titled measures of other companies.
Management believes Distributable Cash Flow is an important
measure of operating performance because it allows management,
investors, and others to compare the cash flows that the
Partnership generates (after distributions on the Partnership’s
Preferred Units but prior to any retained cash reserves established
by the Partnership’s general partner and the effect of the
Distribution Reinvestment Plan) to the cash distributions that the
Partnership expects to pay its common unitholders.
Distributable Cash Flow Coverage Ratio is defined as the
period’s Distributable Cash Flow divided by distributions declared
to common unitholders in respect of such period. Management
believes Distributable Cash Flow Coverage Ratio is an important
measure of operating performance because it permits management,
investors, and others to assess the Partnership’s ability to pay
distributions to common unitholders out of the cash flows the
Partnership generates. The Partnership’s Distributable Cash Flow
Coverage Ratio, as presented, may not be comparable to similarly
titled measures of other companies.
This news release also contains a forward-looking estimate of
Adjusted EBITDA and Distributable Cash Flow projected to be
generated by the Partnership for its 2023 fiscal year. A
forward-looking estimate of net cash provided by operating
activities and reconciliations of the forward-looking estimates of
Adjusted EBITDA and Distributable Cash Flow to net cash provided by
operating activities are not provided because the items necessary
to estimate net cash provided by operating activities, in
particular the change in operating assets and liabilities, are not
accessible or estimable at this time. The Partnership does not
anticipate changes in operating assets and liabilities to be
material, but changes in accounts receivable, accounts payable,
accrued liabilities, and deferred revenue could be significant,
such that the amount of net cash provided by operating activities
would vary substantially from the amount of projected Adjusted
EBITDA and Distributable Cash Flow.
See “Reconciliation of Non-GAAP Financial Measures” for Adjusted
gross margin reconciled to gross margin, Adjusted EBITDA reconciled
to net income and net cash provided by operating activities, and
net income and net cash provided by operating activities reconciled
to Distributable Cash Flow and Distributable Cash Flow Coverage
Ratio.
Forward-Looking
Statements
Some of the information in this news release may contain
forward-looking statements. These statements can be identified by
the use of forward-looking terminology including “may,” “believe,”
“expect,” “intend,” “anticipate,” “estimate,” “continue,” “if,”
“project,” “outlook,” “will,” “could,” “should,” or other similar
words or the negatives thereof, and include the Partnership’s
expectation of future performance contained herein, including as
described under “Full-Year 2023 Outlook.” These statements discuss
future expectations, contain projections of results of operations
or of financial condition, or state other “forward-looking”
information. You are cautioned not to place undue reliance on any
forward-looking statements, which can be affected by assumptions
used or by known risks or uncertainties. Consequently, no
forward-looking statements can be guaranteed. When considering
these forward-looking statements, you should keep in mind the risk
factors noted below and other cautionary statements in this news
release. The risk factors and other factors noted throughout this
news release could cause actual results to differ materially from
those contained in any forward-looking statement. Known material
factors that could cause the Partnership’s actual results to differ
materially from the results contemplated by such forward-looking
statements include:
- changes in general economic conditions, including inflation or
supply chain disruptions and changes in economic conditions of the
crude oil and natural gas industries, including any impact from the
ongoing military conflict involving Russia and Ukraine;
- changes in the long-term supply of and demand for crude oil and
natural gas, including as a result of actions taken by governmental
authorities and other third parties in response to world health
events, and the resulting disruption in the oil and gas industry
and impact on demand for oil and gas;
- competitive conditions in the Partnership’s industry, including
competition for employees in a tight labor market;
- changes in the availability and cost of capital, including
changes to interest rates;
- renegotiation of material terms of customer contracts;
- actions taken by the Partnership’s customers, competitors, and
third-party operators;
- operating hazards, natural disasters, epidemics, pandemics,
weather-related impacts, casualty losses, and other matters beyond
the Partnership’s control;
- the deterioration of the financial condition of the
Partnership’s customers, which may result in the initiation of
bankruptcy proceedings with respect to certain customers;
- the restrictions on the Partnership’s business that are imposed
under the Partnership’s long-term debt agreements;
- information technology risks including the risk from
cyberattacks, cybersecurity breaches, and other disruptions to the
Partnership’s information systems;
- the effects of existing and future laws and governmental
regulations;
- the effects of future litigation;
- factors described in Part I, Item 1A (“Risk Factors”) of the
Partnership’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2022, which was filed with the Securities and Exchange
Commission (the “SEC”) on February 14, 2023, Part II, Item 1A
(“Risk Factors”) of the Partnership’s Quarterly Report on Form 10-Q
for the quarter ended March 31, 2023, which was filed with the SEC
on May 2, 2023, and subsequently filed reports; and
- other factors discussed in the Partnership’s filings with the
SEC.
All forward-looking statements speak only as of the date of this
news release and are expressly qualified in their entirety by the
foregoing cautionary statements. Unless legally required, the
Partnership undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events, or otherwise. Unpredictable or unknown factors not
discussed herein also could have material adverse effects on
forward-looking statements.
USA COMPRESSION PARTNERS,
LP
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except for per
unit amounts – Unaudited)
Three Months Ended
September 30,
2023
June 30, 2023
September 30,
2022
Revenues:
Contract operations
$
204,716
$
196,982
$
171,019
Parts and service
7,153
4,102
4,901
Related party
5,216
5,836
3,693
Total revenues
217,085
206,920
179,613
Costs and expenses:
Cost of operations, exclusive of
depreciation and amortization
74,928
69,922
59,453
Depreciation and amortization
64,101
60,039
58,772
Selling, general, and administrative
20,085
14,950
14,663
Loss (gain) on disposition of assets
(3,865
)
309
1,118
Impairment of compression equipment
882
10,273
504
Total costs and expenses
156,131
155,493
134,510
Operating income
60,954
51,427
45,103
Other income (expense):
Interest expense, net
(43,257
)
(42,045
)
(35,142
)
Gain on derivative instrument
3,437
14,550
—
Other
23
57
27
Total other expense
(39,797
)
(27,438
)
(35,115
)
Net income before income tax expense
21,157
23,989
9,988
Income tax expense
255
405
376
Net income
20,902
23,584
9,612
Less: distributions on Preferred Units
(12,188
)
(12,188
)
(12,188
)
Net income (loss) attributable to common
unitholders’ interests
$
8,714
$
11,396
$
(2,576
)
Weighted-average common units outstanding
– basic
98,292
98,271
97,968
Weighted-average common units outstanding
– diluted
100,263
99,694
97,968
Basic net income (loss) per common
unit
$
0.09
$
0.12
$
(0.03
)
Diluted net income (loss) per common
unit
$
0.09
$
0.11
$
(0.03
)
Distributions declared per common unit for
respective periods
$
0.525
$
0.525
$
0.525
USA COMPRESSION PARTNERS,
LP
SELECTED BALANCE SHEET
DATA
(In thousands, except unit
amounts – Unaudited)
September 30,
2023
Selected Balance Sheet data:
Total assets
$
2,706,414
Long-term debt, net
$
2,276,449
Total partners’ deficit
$
(250,621
)
Common units outstanding
98,299,245
USA COMPRESSION PARTNERS,
LP
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands —
Unaudited)
Three Months Ended
September 30,
2023
June 30, 2023
September 30,
2022
Net cash provided by operating
activities
$
50,072
$
87,871
$
49,209
Net cash used in investing activities
(48,082
)
(64,448
)
(43,545
)
Net cash used in financing activities
(2,015
)
(23,398
)
(5,658
)
USA COMPRESSION PARTNERS,
LP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
ADJUSTED GROSS MARGIN TO GROSS
MARGIN
(In thousands —
Unaudited)
The following table reconciles Adjusted
gross margin to gross margin, its most directly comparable GAAP
financial measure, for each of the periods presented:
Three Months Ended
September 30,
2023
June 30, 2023
September 30,
2022
Total revenues
$
217,085
$
206,920
$
179,613
Cost of operations, exclusive of
depreciation and amortization
(74,928
)
(69,922
)
(59,453
)
Depreciation and amortization
(64,101
)
(60,039
)
(58,772
)
Gross margin
$
78,056
$
76,959
$
61,388
Depreciation and amortization
64,101
60,039
58,772
Adjusted gross margin
$
142,157
$
136,998
$
120,160
USA COMPRESSION PARTNERS,
LP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
ADJUSTED EBITDA TO NET INCOME
AND NET CASH PROVIDED BY OPERATING ACTIVITIES
(In thousands —
Unaudited)
The following table reconciles Adjusted
EBITDA to net income and net cash provided by operating activities,
its most directly comparable GAAP financial measures, for each of
the periods presented:
Three Months Ended
September 30,
2023
June 30, 2023
September 30,
2022
Net income
$
20,902
$
23,584
$
9,612
Interest expense, net
43,257
42,045
35,142
Depreciation and amortization
64,101
60,039
58,772
Income tax expense
255
405
376
EBITDA
$
128,515
$
126,073
$
103,902
Unit-based compensation expense (1)
8,024
2,849
3,008
Severance charges
45
44
624
Loss (gain) on disposition of assets
(3,865
)
309
1,118
Gain on derivative instrument
(3,437
)
(14,550
)
—
Impairment of compression equipment
(2)
882
10,273
504
Adjusted EBITDA
$
130,164
$
124,998
$
109,156
Interest expense, net
(43,257
)
(42,045
)
(35,142
)
Non-cash interest expense
1,819
1,819
1,814
Income tax expense
(255
)
(405
)
(376
)
Severance charges
(45
)
(44
)
(624
)
Cash received on derivative instrument
2,528
1,216
—
Other
(65
)
34
(33
)
Changes in operating assets and
liabilities
(40,817
)
2,298
(25,586
)
Net cash provided by operating
activities
$
50,072
$
87,871
$
49,209
____________________________________
(1)
For the three months ended September 30,
2023, June 30, 2023, and September 30, 2022, unit-based
compensation expense included $1.1 million, $1.1 million, and $1.1
million, respectively, of cash payments related to quarterly
payments of distribution equivalent rights on outstanding phantom
unit awards and $0, $0, and $1.1 million, respectively, related to
the cash portion of the settlement of phantom unit awards upon
vesting. The remainder of unit-based compensation expense for all
periods was related to non-cash adjustments to the unit-based
compensation liability.
(2)
Represents non-cash charges incurred to
decrease the carrying value of long-lived assets with recorded
values that are not expected to be recovered through future cash
flows.
USA COMPRESSION PARTNERS,
LP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
DISTRIBUTABLE CASH FLOW TO NET
INCOME AND NET CASH PROVIDED BY OPERATING ACTIVITIES
(Dollars in thousands —
Unaudited)
The following table reconciles
Distributable Cash Flow to net income and net cash provided by
operating activities, its most directly comparable GAAP financial
measures, for each of the periods presented:
Three Months Ended
September 30,
2023
June 30, 2023
September 30,
2022
Net income
$
20,902
$
23,584
$
9,612
Non-cash interest expense
1,819
1,819
1,814
Depreciation and amortization
64,101
60,039
58,772
Non-cash income tax expense (benefit)
(65
)
34
(33
)
Unit-based compensation expense (1)
8,024
2,849
3,008
Severance charges
45
44
624
Loss (gain) on disposition of assets
(3,865
)
309
1,118
Change in fair value of derivative
instrument
(909
)
(13,334
)
—
Impairment of compression equipment
(2)
882
10,273
504
Distributions on Preferred Units
(12,188
)
(12,188
)
(12,188
)
Maintenance capital expenditures (3)
(7,172
)
(6,391
)
(8,050
)
Distributable Cash Flow
$
71,574
$
67,038
$
55,181
Maintenance capital expenditures
7,172
6,391
8,050
Severance charges
(45
)
(44
)
(624
)
Distributions on Preferred Units
12,188
12,188
12,188
Changes in operating assets and
liabilities
(40,817
)
2,298
(25,586
)
Net cash provided by operating
activities
$
50,072
$
87,871
$
49,209
Distributable Cash Flow
$
71,574
$
67,038
$
55,181
Distributions for Distributable Cash Flow
Coverage Ratio (4)
$
51,608
$
51,596
$
51,447
Distributable Cash Flow Coverage Ratio
1.39x
1.30x
1.07x
____________________________________
(1)
For the three months ended September 30,
2023, June 30, 2023, and September 30, 2022, unit-based
compensation expense included $1.1 million, $1.1 million, and $1.1
million, respectively, of cash payments related to quarterly
payments of distribution equivalent rights on outstanding phantom
unit awards and $0, $0, and $1.1 million, respectively, related to
the cash portion of the settlement of phantom unit awards upon
vesting. The remainder of unit-based compensation expense for all
periods was related to non-cash adjustments to the unit-based
compensation liability.
(2)
Represents non-cash charges incurred to
decrease the carrying value of long-lived assets with recorded
values that are not expected to be recovered through future cash
flows.
(3)
Reflects actual maintenance capital
expenditures for the periods presented. Maintenance capital
expenditures are capital expenditures made to maintain the
operating capacity of the Partnership’s assets and extend their
useful lives, replace partially or fully depreciated assets, or
other capital expenditures that are incurred in maintaining the
Partnership’s existing business and related cash flow.
(4)
Represents distributions to the holders of
the Partnership’s common units as of the record date.
USA COMPRESSION PARTNERS,
LP
FULL-YEAR 2023 ADJUSTED EBITDA
AND DISTRIBUTABLE CASH FLOW GUIDANCE RANGE
RECONCILIATION TO NET
INCOME
(Unaudited)
Guidance
Net income
$73.0 million to $83.0
million
Plus: Interest expense, net
169.0 million
Plus: Depreciation and amortization
246.0 million
Plus: Income tax expense
1.0 million
EBITDA
$489.0 million to $499.0
million
Plus: Unit-based compensation expense and
other (1)
20.0 million
Plus: Severance charges
1.0 million
Plus: Impairment of compression
equipment
12.0 million
Less: Gain on disposition of assets
4.0 million
Less: Gain on derivative instrument
18.0 million
Adjusted EBITDA
$500.0 million to $510.0
million
Less: Cash interest expense
159.5 million
Less: Current income tax expense
1.0 million
Less: Maintenance capital expenditures
26.0 million
Less: Distributions on Preferred Units
49.0 million
Plus: Cash received on derivative
instrument
5.5 million
Distributable Cash Flow
$270.0 million to $280.0
million
____________________________________
(1)
Unit-based compensation expense is based
on the Partnership’s closing per unit price of $23.86 on September
29, 2023.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231031974478/en/
Investor Contact:
USA Compression Partners, LP
Investor Relations ir@usacompression.com
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