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USA Compression Partners First Quarter 2020 Results

Share Print Bookmark    |    Tuesday,May 05,2020

USA Compression Partners, LP announced today its financial and operating results for the first quarter 2020.

First Quarter 2020 Highlights

• Total revenues were $179.0 million for the first quarter 2020, compared to $170.7 million for the first quarter 2019.
• Net loss was $602.5 million for the first quarter 2020, compared to net income of $6.6 million for the first quarter 2019. The net loss for the first quarter 2020 included a $619.4 million charge due to non-cash impairment of goodwill.
• Net cash provided by operating activities was $50.1 million for the first quarter 2020, compared to $47.8 million for the first quarter 2019.
• Adjusted EBITDA was $106.2 million for the first quarter 2020, compared to $101.4 million for the first quarter 2019.
• Distributable Cash Flow was $54.7 million for the first quarter 2020, compared to $54.9 million for the first quarter 2019.
• Announced cash distribution of $0.525 per common unit for the first quarter 2020, consistent with the first quarter 2019.
• Distributable Cash Flow Coverage was 1.08x for the first quarter 2020, compared to 1.16x for the first quarter 2019.

CEO Eric D. Long commented: “The first quarter reflected the stability of USA Compression’s compression services business model, which is focused on the large horsepower asset class utilized in large infrastructure applications located in attractive, active regions. During the quarter, we stayed consistent to our business strategy, deploying a limited number of new assets selectively to strong counterparties under fixed-fee contracts.

“We certainly find ourselves in unprecedented times, not only for our industry but also worldwide, as we cope with a global pandemic and more specific challenges to the energy industry. As time goes on, we should gain more visibility, but the general uncertainty these dynamics have caused make predicting the future difficult at best, and have led us to take a cautious approach in managing the business. In light of the current environment, we are reducing capital spending and operating expenses to ensure that USA Compression is well-positioned to work through the remainder of 2020 while maintaining safe and reliable operations. While we had initially budgeted for a reduced 2020 capital plan, based on recent market events, we currently plan to reduce further our 2020 growth capital spending by approximately 25%. We have also taken cost-cutting measures across the business, reducing operating expenses by approximately 10%, which we expect will help maintain our strong margins as we work through the present market volatility.

“We continue to believe that the natural gas side of the energy sector is better positioned than other commodities, underpinned by resilient baseload demand and potential for growth as a clean fuel for future energy needs. While the exact extent to which current market factors will affect the domestic natural gas supply/demand balance is uncertain, the expected long-term future demand for natural gas coupled with what we expect will be a meaningful supply decrease from lower associated gas production should drive the natural gas market to rebalance in the not-too-distant future. We expect this dynamic will continue to have a positive impact on the demand for the compression services that USA Compression provides, although our ability to forecast our activity and the future of the market is uncertain.”

Expansion capital expenditures were $46.5 million, maintenance capital expenditures were $8.8 million and cash interest expense, net was $30.5 million for the first quarter 2020.

On April 16, 2020, the Partnership announced a first quarter cash distribution of $0.525 per common unit, which corresponds to an annualized distribution rate of $2.10 per common unit. The distribution will be paid on May 8, 2020 to common unitholders of record as of the close of business on April 27, 2020. For the first quarter 2020, the Partnership’s Distributable Cash Flow Coverage was 1.08x.

Liquidity & Debt

As of March 31, 2020, the Partnership was in compliance with all covenants under its $1.6 billion revolving credit facility. As of March 31, 2020, the Partnership had outstanding borrowings under the revolving credit facility of $459.3 million, $1.1 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $185.9 million. As of March 31, 2020, the outstanding aggregate principal amount of the Partnership’s 6.875% senior notes due 2026 and 6.875% senior notes due 2027 was $725.0 million and $750.0 million, respectively.

Full-Year 2020 Outlook

USA Compression is updating its full-year 2020 guidance as follows:

• Net loss range of $590.0 million to $570.0 million;
• A forward-looking estimate of net cash provided by operating activities is not provided because the items necessary to estimate net cash provided by operating activities, in particular the change in operating assets and liabilities, are not accessible or estimable at this time. The Partnership does not anticipate the changes in operating assets and liabilities to be material, but changes in accounts receivable, accounts payable, accrued liabilities and deferred revenue could be significant, such that the amount of net cash provided by operating activities would vary substantially from the amount of projected Adjusted EBITDA and Distributable Cash Flow;
• Adjusted EBITDA range of $395.0 million to $415.0 million; and
• Distributable Cash Flow range of $195.0 million to $215.0 million.