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Usa Compression (USAC)
NYSE:USAC
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USA Compression
(NYSE:USAC)70Outperform
Positive Factors
Market Conditions
USAC stands poised to benefit from macro tailwinds that should continue to drive financial and operational records.
Operational Growth
USAC expects to order new units to be placed in-service and is already working on building a 2026 order book.
Negative Factors
Financial Performance
The partnership's initial FY25 adj EBITDA outlook was underwhelming, especially since annualizing USAC's 4Q24 result after a one-time $3mn tax credit would still imply FY25 EBITDA above the high-end of USAC's guidance range.
USA Compression (USAC) vs. S&P 500 (SPY)
Market Cap
$3.02B
Dividend Yield7.93%
Average Volume (3M)555.49K
Price to Earnings (P/E)35.9
Beta (1Y)0.63
Revenue Growth12.32%
EPS Growth247.77%
CountryUS
Employees854
SectorEnergy
Sector Strength57
IndustryFossil Fuels
Share Statistics
EPS (TTM)0.72
Shares Outstanding117,528,970
10 Day Avg. Volume406,556
30 Day Avg. Volume555,488
Financial Highlights & Ratios
PEG Ratio0.14
Price to Book (P/B)N/A
Price to Sales (P/S)3.27
Price to Cash Flow (P/CF)6.00
P/FCF Ratio7.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$27.75Price Target Upside8.02% Upside
Rating ConsensusHold
Number of Analyst Covering5
USA Compression Business Overview & Revenue Model
Company DescriptionUSA Compression Partners, LP (USAC) is a leading provider of natural gas compression services. The company is focused on large-horsepower applications primarily in non-conventional shale plays, serving a broad customer base across the oil and gas sector. USAC offers compression solutions that are essential for the extraction, processing, and transportation of natural gas, ensuring efficient and reliable operations for its clients.
How the Company Makes MoneyUSA Compression makes money through leasing natural gas compression equipment and providing related services to its customers, which are primarily oil and gas companies. The company enters into long-term contracts with its clients, where it charges fees based on the horsepower of the equipment leased and the duration of the service agreement. Revenue is also generated from maintenance and operational support services that are often bundled with equipment leases. Key factors contributing to its earnings include the strategic placement of its equipment in high-demand shale regions, the reliability and efficiency of its compression systems, and its ability to maintain strong customer relationships through consistent service. Significant partnerships with major energy producers can enhance its revenue streams by securing long-term contracts and expanding service offerings.
USA Compression Financial Statement Overview
Summary
USA Compression exhibits strong revenue growth and improved net profitability, highlighting a positive trajectory in its income statement. However, the balance sheet reveals high leverage with minimal equity, posing financial stability risks. Despite these concerns, the company's cash flow is robust, with significant operating and free cash flow, indicating strong cash management and operational efficiency. Overall, the financial health is mixed, with strengths in cash flow and income growth offset by balance sheet leverage concerns.Income Statement
The company has demonstrated strong revenue growth, with an increase from $846 million in 2023 to $950 million in 2024. The gross profit margin is notably high at 100% due to total revenue equaling gross profit, indicating no cost of goods sold. Net profit margin improved to 8.63% in 2024, showcasing enhanced profitability. However, the EBITDA margin dropped significantly from 57.39% in 2023 to 16.37% in 2024, indicating rising operating expenses. Overall, strong revenue growth and improved net profitability contribute to a solid income statement performance.75
Positive
Balance Sheet
The company's balance sheet shows a concerning debt-to-equity ratio of 0.42 in 2024, compared to 12.84 in 2023, due to a significant decrease in stockholders' equity. The equity ratio is weak at 1.01% in 2024, indicating high leverage with most assets financed by debt. Although liabilities decreased, the minimal equity base raises concerns about financial stability. This high leverage poses a potential risk to financial health and flexibility.40
Negative
Cash Flow
Operating cash flow increased to $341 million in 2024 from $271 million in 2023, reflecting robust cash generation. The free cash flow growth rate is impressive, and the operating cash flow to net income ratio of 4.16 in 2024 indicates strong cash-generating capabilities relative to net income. The company's ability to generate free cash flow and manage capital expenditures effectively supports a strong cash flow position.85
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 950.45M | 846.18M | 704.60M | 632.64M | 667.68M | Gross Profit |
| 372.97M | 315.37M | 233.59M | 199.49M | 222.78M | EBIT |
| 294.45M | 231.98M | -64.28M | -95.26M | -76.09M | EBITDA |
| 560.03M | 485.65M | 406.06M | 379.85M | -225.40M | Net Income Common Stockholders |
| 82.03M | 68.27M | 30.32M | 10.28M | -594.73M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 14.00K | 11.00K | 35.00K | -18.55M | 2.00K | Total Assets |
| 2.75B | 2.74B | 2.67B | 2.77B | 2.95B | Total Debt |
| 11.68M | 2.35B | 2.12B | 1.99B | 1.95B | Net Debt |
| 11.66M | 2.35B | 2.12B | 2.01B | 1.95B | Total Liabilities |
| 2.72B | 2.55B | 2.78B | 2.77B | 2.13B | Stockholders Equity |
| 27.76M | 183.05M | -116.30M | 578.42M | 814.96M |
| Cash Flow | Free Cash Flow | |||
| 341.33M | 33.36M | 126.37M | 220.21M | 184.13M | Operating Cash Flow |
| 341.33M | 271.88M | 260.59M | 265.43M | 293.20M | Investing Cash Flow |
| -202.01M | -232.65M | -129.94M | -39.19M | -105.10M | Financing Cash Flow |
| -139.32M | -39.26M | -130.61M | -226.24M | -188.11M |
USA Compression Technical Analysis
Neutral
25.69
Price Trends
25.59
Positive
23.95
Positive
22.93
Positive
Market Momentum
0.19
Positive
39.74
Neutral
10.19
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For USAC, the sentiment is Neutral. The current price of 25.69 is below the 20-day moving average (MA) of 27.86, above the 50-day MA of 25.59, and above the 200-day MA of 22.93, indicating a neutral trend. The MACD of 0.19 indicates Positive momentum. The RSI at 39.74 is Neutral, neither overbought nor oversold. The STOCH value of 10.19 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for USAC.
USA Compression Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $72.16B | 12.50 | 20.52% | 6.22% | 12.71% | 6.74% | |
76 Outperform | $285.78M | 17.78 | 6.40% | ― | 40.03% | 601.30% | |
72 Outperform | $44.00B | 35.16 | 49.34% | 1.53% | 6.45% | 56.33% | |
71 Outperform | $70.24B | 31.70 | 17.89% | 3.30% | 8.06% | -30.11% | |
70 Outperform | $3.02B | 35.86 | 295.50% | 7.93% | 12.32% | 247.77% | |
65 Neutral | $58.56B | 18.13 | 17.82% | 4.13% | 24.16% | -6.58% | |
57 Neutral | $8.34B | 5.35 | -5.98% | 7.29% | 0.20% | -69.45% |
* Energy Sector Average
Performance Comparison
USAC
USA Compression
25.69
1.06
4.30%
EPD
Enterprise Products Partners
33.32
7.21
27.61%
NGS
Natural Gas Services Group
22.88
5.10
28.68%
OKE
Oneok
93.79
19.62
26.45%
TRGP
Targa Resources
190.01
87.81
85.92%
WMB
Williams Co
56.80
21.84
62.47%
USA Compression Earnings Call Summary
Earnings Call Date: Feb 11, 2025 | % Change Since: -12.14% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The earnings call highlighted record-breaking financial performance and operational efficiency, with a strong outlook for future growth in the natural gas market. However, there are concerns about the timing of capital spending and challenges with electrification efforts.Highlights
Record Financial Performance
USA Compression Partners delivered record revenues, adjusted gross margin, adjusted EBITDA, distributable cash flow, and average revenue per horsepower for the quarter and the full year 2024.
Operational Efficiency and Utilization
Achieved a record 94.6% average horsepower utilization for the full year. Focus on converting idle units to active status contributed to revenue-generating horsepower increase by approximately 200,000 year-over-year.
Leverage and Financial Health
Leverage ratio declined to a record low of 4.02 times, indicating a significant improvement in financial stability.
Future Growth and Market Position
Bullish outlook on crude oil and natural gas with anticipated growth of 15% in natural gas demand over the next five years. Plans for infrastructure build-out to support natural gas growth.
Cost Management and Savings
Organizational changes and shared service model expected to yield a minimum of $5 million in annualized savings by 2026.
Lowlights
Back-end Loaded Capital Spending
New horsepower and capital spend in 2025 are back-end loaded, potentially delaying cash flow increases until 2026.
Challenges with Electrification
While supportive of electric compression, challenges remain with infrastructure and power needs, especially in regions like the Permian.
Flat Revenue Generating Horsepower
Revenue-generating horsepower remained flat on a sequential quarter basis, indicating limited immediate growth potential.
Company Guidance
During USA Compression Partners' fourth quarter 2024 earnings call, the company provided detailed guidance and metrics for the coming year. They reported record revenues, adjusted gross margin, adjusted EBITDA, and distributable cash flow for the year, with a leverage ratio approaching four times. Their average horsepower utilization was a record 94.6% for the year. For 2025, they anticipate an adjusted EBITDA range of $590 million to $610 million and distributable cash flow between $350 million to $370 million. Expansion capital is expected to range from $120 million to $140 million, with most new horsepower additions back-end loaded in the year. They project a 1.5% increase in active horsepower, predominantly in the Permian region. Maintenance capital is anticipated to range between $38 million and $42 million. The company also mentioned expecting minimum annualized savings of $5 million from organizational changes and shared services, with full implementation anticipated by January 2026.USA Compression Corporate Events
Executive/Board Changes
USA Compression Appoints Julie McEwen as VP and Controller
Neutral
Feb 28, 2025
On February 27, 2025, USA Compression GP, LLC, the general partner of USA Compression Partners, LP, announced the appointment of Julie A. McEwen as Vice President and Controller, effective March 4, 2025. Ms. McEwen, who has been with the Partnership since 2011, previously served as Controller and Director of SEC Reporting. Her appointment reflects a continuation of her leadership within the company, with no changes to her compensation or any familial or business arrangements influencing her selection.
Business Operations and Strategy
USA Compression Engages Investors at J.P. Morgan Conference
Neutral
Feb 20, 2025
USA Compression Partners, LP announced its participation in the J.P. Morgan Global Leveraged Finance Conference on February 24 and 25. During this event, senior management planned to engage with the investment community, with presentation materials made available on the company’s website. This move signifies the company’s efforts to engage with investors and potentially strengthen its market position.
Other
USA Compression to Attend Goldman Sachs Conference
Neutral
Jan 6, 2025
USA Compression Partners announced its participation in the Goldman Sachs Energy, CleanTech & Utilities Conference set for January 8, where senior management will engage with the investment community. The event aims to enhance investor relations, with presentation materials accessible on the company’s website, potentially influencing stakeholder perceptions and market positioning.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.