USA Compression Q2 Earnings & Revenues Top Estimates

USA Compression Partners USAC reported a second-quarter adjusted net profit of 21 cents per common unit, which beat the Zacks Consensus Estimate of 17 cents due to its improved pricing and utilization. The metric also improved significantly from the year-ago quarter's adjusted net profit of 8 cents per share on the back of a higher-than-expected, revenue-generating capacity.

The largest independent provider of natural gas compression services generated revenues of $235.3 million, improving 13.7% from the year-ago quarter's level and beating the Zacks Consensus Estimate of $233 million. This revenue growth was propelled by a 13.5% year-over-year increase in Contract operations and a notable 42.1% surge in Parts and Service revenues.

Distributable cash flow increased from $67 million in the prior-year quarter to $85.9 million. The company reported a net income worth $31.2 million compared with $23.6 million a year ago.

USAC reported operating cash flow of $96.7 million in the second quarter, up from the prior-year quarter's $87.9 million.

Adjusted gross operating margin of 66.8% marked an increase from the year-ago period's 66.2%.

The company's revenue-generating capacity increased 6.2% year over year to 3.5 million horsepower, surpassing the Zacks Consensus Estimate by 0.1%. The figure came in above our estimate of 3.44 million horsepower.

Further, the average monthly revenue per horsepower rose to $20.29 from $18.65 in the second quarter of 2023. The actual figure was slightly below our estimate of $20.36.

Meanwhile, USA Compression's average quarterly horsepower utilization rate came in at 94.7%, up from 93.4% a year ago.

DCF, Cost, Capex & Balance Sheet

USAC's distributable cash flow available to limited partners totaled $85.9 million (providing 1.4X distribution coverage), up 28.1% from the year-ago level.

Notably, on Jul 11, USAC declared second-quarter cash distribution of 52.5 cents per unit ($2.10 on an annualized basis). The distribution was paid on Aug 2, 2024, to common unitholders of record as of Jul 22.

The company reported $157.9 million in costs and expenses, down 2.7% from the year-ago quarter's $162.4 million. It spent $67 million on growth capex. Maintenance capex amounted to $8.9 million.

As of Jun 30, 2024, USA Compression had a net long-term debt of $2.5 billion.

Guidance

USA Compression has increased its financial projections for 2024. The company now expects net income to range between $105 million and $125 million, up from the previous estimate of $95 million to $115 million.

Adjusted EBITDA is also projected to be higher, with a new range of $565 million to $585 million, compared to the prior outlook of $555 million to $575 million.

Furthermore, the company's management has also raised the expected distributable cash flow for 2024 to a range of $345 million to $365 million, an increase from the previous estimate of $340 million to $360 million.

USAC currently has a Zacks Rank #3 (Hold).

Important Energy Earnings So Far

Let's glance through a couple of energy earnings releases so far.

Liberty Energy LBRT, the Denver-CO-based oil and gas equipment company, announced second-quarter 2024 adjusted earnings of 61 cents per share, which marginally beat the Zacks Consensus Estimate of 60 cents. However, LBRT's bottom line underperformed the year-ago quarter's reported figure of 87 cents due to a year-over-year increase in costs and expenses.

Ahead of the earnings release, Liberty's board of directors announced a cash dividend of 7 cents per common share, payable on Sep 20, 2024, to its stockholders of record as of Sep 6. As part of its shareholder return policy, LBRT repurchased the company's shares worth $30 million at an average price of $20.39 per share in the reported quarter. Liberty returned $41 million to its shareholders through share repurchases and cash dividends.

Houston, TX-based Halliburton Company HAL, an oil and gas equipment and services provider, reported second-quarter 2024 adjusted net income per share of 80 cents, in line with the Zacks Consensus Estimate and above the year-ago quarter profit of 77 cents (adjusted). The robust numbers reflect strength in the international markets.

As of Jun 30, 2024, the company reported $2.1 billion in cash and cash equivalents and $7.6 billion in long-term debt, representing a debt-to-capitalization ratio of 43.2. HAL also bought back $250 million worth of its stock in the April-June period. The company generated $1.1 billion of cash flow from operations in the second quarter, leading to a free cash flow of $793 million.  

Meanwhile, energy infrastructure provider Kinder Morgan KMI reported second-quarter adjusted earnings per share of 26 cents, in line with the Zacks Consensus Estimate. The bottom line was favorably impacted by strong financial contributions from the Natural Gas Pipelines, Products Pipelines and Terminals business segments. Moreover, KMI's second-quarter discounted cash flow (DCF) was $1.10 billion, up from $1.07 billion a year ago.