USA Compression’s Earnings Call Highlights Robust Growth

USA Compression ((USAC)) has held its Q3 earnings call. Read on for the main highlights of the call.

USA Compression Partners recently held an earnings call that conveyed a robust financial performance, highlighted by increased guidance and successful refinancing efforts. Despite these positive developments, the company is facing challenges such as increased lead times for orders and anticipated modest growth in general and administrative expenses.

Strong Financial Performance

USA Compression reported impressive financial results with revenues surpassing $250 million, adjusted EBITDA exceeding $160 million, and distributable cash flow (DCF) nearing $104 million. The company also improved its leverage ratio to 3.9x and maintained a DCF coverage ratio of 1.6x, underscoring its solid financial footing.

Increased Guidance for 2025

The company raised its 2025 EBITDA guidance to a range of $610 million to $620 million and DCF guidance to between $370 million and $380 million. This optimistic outlook is attributed to effective cost management and operational discipline, setting the stage for continued growth.

Pricing Improvements

Pricing reached an all-time high, averaging $21.46 per horsepower, marking a 1% sequential increase and a 4% rise from the previous year. This pricing strength reflects the company’s ability to capitalize on market conditions.

Operational Efficiency Gains

USA Compression achieved $5 million in annualized savings through shared services, driven by centralized IT efforts and economies of scale. These efficiency gains are expected to bolster the company’s operational performance.

Successful Refinancing

The company successfully refinanced its ABL and 2027 senior notes, reducing borrowing costs and enhancing strategic flexibility. This move is projected to result in over $10 million in annualized interest savings, further strengthening the company’s financial position.

Increased Lead Times for Orders

Lead times for larger orders have extended to more than 60 weeks, which could potentially impact future deployments. This challenge highlights the need for strategic planning to manage supply chain constraints.

Anticipated Modest G&A Growth

General and administrative expenses are expected to grow modestly in 2026 due to wage inflation and new investments. This anticipated increase underscores the company’s commitment to investing in its workforce and infrastructure.

Forward-Looking Guidance

Looking ahead, USA Compression expects to deploy new unit horsepower in Q4, paving the way for continued growth into 2026. The company’s active horsepower in the Northeast and Central regions is projected to grow by over 40,000 horsepower by year-end, contributing to a fleet size of approximately 3.6 million horsepower. These developments, along with steady utilization rates, position the company well for future success.

In summary, USA Compression’s earnings call highlighted a strong financial performance with increased guidance and strategic refinancing efforts. While challenges such as increased lead times and modest G&A growth persist, the company’s effective cost management and operational efficiency gains provide a solid foundation for future growth.