USA Compression Q4 Revenue Surpasses Market Predictions, Eyes Bright 2024 Amid Tight Compression Market

USA Compression Partners, LP USAC reported fourth-quarter fiscal 2023 total revenue growth of 18.4% year-over-year to $225.049 million, beating the consensus of $220.80 million.

Earnings per unit was $0.02 for the quarter, up from a loss per unit of $(0.09) in Q4 2022. Net income for the quarter included a $10.5 million loss on derivative instrument.

Adjusted gross margin was 67.5%, up 220 bps YoY. The operating income improved to $68.54 million (+46.8% Y/Y), margin expanded by 590 bps to 30.5%. Adjusted EBITDA margin expanded by 216 bps to 61.6%.

USAC's net cash provided by operating activities for the fiscal totaled $271.99 million, compared to $260.59 million in 2022.

Q4 Distributable Cash Flow was $79.9 million compared to $60.6 million in the same quarter in 2022. Distributable Cash Flow Coverage was 1.48x versus 1.18x.

USAC's Q4 Average horsepower utilization was 94.1% compared to 91.3% YoY. Average revenue-generating horsepower of 3.41 million for the quarter 2023 versus 3.17 million last year.

The company recorded Q4 average revenue per revenue-generating horsepower per month of $19.52, up from $17.81 a year ago.

“As we turn to 2024, we believe the large-horsepower compression market will continue to be historically tight as crude oil and natural gas production is expected to grow in the key basins in which we operate, and capital discipline is expected to remain prevalent in the oil and gas industry. We look forward to continuing to deliver high-quality service to our customers, and remain focused on improving our financial condition and returning value to our stakeholders," commented Eric D. Long, USA Compression's President and Chief Executive Officer.

2024 Outlook: USA Compression expects net income of $95 million-$115 million, Adjusted EBITDA of $555 million-$575 million, and Distributable Cash Flow range of $310 million-$330 million.

Price Action: USAC shares are trading lower by 1.32% at $23.58 on the last check Tuesday.