USA Compression's Q4 Earnings Lag Estimates, Revenues Top
USA Compression Partners USAC reported a fourth-quarter adjusted net profit of 18 cents per common unit, which missed the Zacks Consensus Estimate of 26 cents, due to higher total costs and other expenses.However, the metric improved from the year-ago quarter's adjusted net profit of 10 cents per common unit on the back of a higher-than-expected revenue-generating capacity.
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The largest independent provider of natural gas compression services generated revenues of $246 million, improving 1.7% from the year-ago quarter’s level and beating the Zacks Consensus Estimate of $242 million. This growth was due to a 9.3% increase in overall revenues, a 5% rise in contract operations and a massive 169% increase in related-party revenues.
USA Compression Partners, LP Price, Consensus and EPS Surprise
USA Compression Partners, LP price-consensus-eps-surprise-chart | USA Compression Partners, LP Quote
Adjusted EBITDA increased 12.2% to $155.5 million and surpassed our estimate of $143.1 million.
Distributable cash flow decreased from $96.3 million in the prior-year quarter to $79.9 million. The company reported a net income worth $25.4 million compared with $12.8 million a year ago.
The oil and gas equipment and services company reported net operating cash flow of $130.2 million in the fourth quarter, up from the prior-year quarter’s $91.6 million.
Adjusted gross operating margin of 68.4% marked an increase from the year-ago period’s 67.5%.
Notably, on Jan. 16, USAC declared a cash distribution of 52.5 cents per unit ($2.10 on an annualized basis) in the fourth quarter. The distribution was paid on Feb. 7, 2025, to its common unitholders of record as of Jan. 27. This distribution amount remained unchanged from the last quarter, indicating the company's commitment to providing consistent returns to its unit holders year over year.
The company’s revenue-generating capacity increased 4.5% year over year to 3.56 million horsepower, surpassing the Zacks Consensus Estimate of 3.49 million horsepower by 2%.
Further, the average monthly revenue per horsepower rose to $20.85 from $19.52 in the fourth quarter of 2023. The figure was below our estimate of $20.95.
Meanwhile, USA Compression’s average quarterly horsepower utilization rate was 94.5% up from 94.1% a year ago.
USAC’s DCF, Cost, Capex & Balance Sheet
USAC’s distributable cash flow available to limited partners totaled $86.6 million (providing 1.56X distribution coverage), up 20.5% from the year-ago level.
The company reported $171.4 million in costs and expenses, up 9.5% from the year-ago quarter’s $156.5 million. It spent $37.6 million on growth capex. Maintenance capex amounted to $8.2 million.
As of Dec. 31, 2024, USA Compression had a net long-term debt of $2.5 billion.
USAC’s Guidance
USA Compression expects adjusted EBITDA to be in the range of $590 million to $610 million and distributable cash flow to be between $350 million and $370 million for 2025.
The company also expects expansion capital expenditures to range from $120 million to $140 million and maintenance capital expenditures to be between $38 million and $42 million for 2025.
USAC currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Important Earnings at a Glance
While we have discussed USAC’s fourth-quarter results in detail, let us take a look at three other key reports of this space.
Oil and gas equipment and services provider Liberty Energy LBRT reported a fourth-quarter 2024 adjusted net income of 10 cents per share, which marginally beat the Zacks Consensus Estimate of 9 cents, due to a year-over-year decrease in costs and expenses. However, the bottom line underperformed the year-ago quarter’s reported figure of 54 cents, due to poor equipment and service execution, along with lower activity.
As of Dec. 31, Liberty had approximately $20 million in cash and cash equivalents. The pressure pumper’s long-term debt of $190.5 million represented a debt-to-capitalization of 8.8%.
Another oil and gas equipment and services provider Halliburton Company HAL posted a fourth-quarter 2024 adjusted net income per share of 70 cents, same as the Zacks Consensus Estimate but below the year-ago quarter’s profit of 86 cents (adjusted). The numbers indicated softer activity in the region of North America, partly offset by improved fluid work in the Gulf of Mexico.
As of Dec. 31, 2024, the company had approximately $2.6 billion in cash/cash equivalents and $7.2 billion in long-term debt, representing a debt-to-capitalization ratio of 40.4. The company generated $1.5 billion of cash flow from operations in the fourth quarter, leading to a free cash flow of $1.1 billion.
Energy infrastructure provider Kinder Morgan KMI reported fourth-quarter adjusted earnings per share of 32 cents, shy of the Zacks Consensus Estimate of 33 cents. The lower-than-expected quarterly earnings were primarily due to decreased volumes on certain systems, asset divestitures and lower crude, CO2 and NGL volumes. KMI’s fourth-quarter DCF was $1.3 billion, up from $1.2 billion a year ago.
As of Dec. 31, 2024, Kinder Morgan reported $88 million in cash and cash equivalents. Its long-term debt amounted to $29.8 billion at the quarter-end. For 2025, Kinder Morgan anticipates a net income of $2.8 billion, up 8% from the prior-year level, and an adjusted EPS of $1.27, up 10%. The company expects to declare dividends of $1.17 per share, up 2% from the prior-year figure. It also anticipates budgeted adjusted EBITDA of $8.3 billion, up 4% from the previous-year level.
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