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USA Compression Partners Second Quarter 2020 Results

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   |    Tuesday,August 04,2020

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

Second Quarter 2020 Highlights

• Total revenues were $168.7 million for the second quarter 2020, compared to $173.7 million for the second quarter 2019.
• Net income was $2.7 million for the second quarter 2020, compared to $9.9 million for the second quarter 2019.
• Net cash provided by operating activities was $97.4 million for the second quarter 2020, compared to $99.8 million for the second quarter 2019.
• Adjusted EBITDA was $105.5 million for the second quarter 2020, compared to $104.7 million for the second quarter 2019.
• Distributable Cash Flow was $58.7 million for the second quarter 2020, compared to $54.1 million for the second quarter 2019.
• Announced cash distribution of $0.525 per common unit for the second quarter 2020, consistent with the second quarter 2019.
• Distributable Cash Flow Coverage was 1.15x for the second quarter 2020, compared to 1.14x for the second quarter 2019.

Eric D. Long, CEO, commented: “USA Compression reported a solid second quarter, driven by the stability of our large horsepower business model, a strong customer base and the benefits of certain cost saving and capital spending decisions taken at the end of the first quarter. Business activity, while reduced from earlier in the year and the recent past, continues to reflect the resiliency of natural gas demand in this country. Based on what we are hearing from our customers, we are optimistic that as the remainder of the year plays out, we will see relative stability going forward and potentially some pickup towards the end of 2020.

“We continue to manage through extraordinary times in the energy industry. While we are seeing general business activity picking up as different areas of the country open back up from pandemic-related lockdowns, the general consensus seems to be that things didn’t get as bad as many had feared. During the past quarter, we worked with our customers, as we have in previous times of market weakness, to serve as a flexible service provider for their compression requirements. Our current expectations are for the third quarter to represent the low point of this cycle, and we are focused on managing through that period and positioning USA Compression for future quarters.

“The long-term future for natural gas demand in this country continues to be favorable, and our services fit right in the middle of that dynamic. As some producing areas start to see declines in natural gas volumes, especially in associated gas regions, we expect other areas will make up for any decreases, all in an effort to provide balance to the supply / demand equation. As we noted in past down cycles when gas production comes back online without supportive drilling activity, additional compression services are generally needed to maintain natural gas delivery capability as reservoir pressures decline. This and other factors are the basis for expected improvement for compression services as we look toward 2021. We will continue to be prudent in our capital spending, and look for ways to use our existing fleet of assets to serve customer needs.”

Expansion capital expenditures were $22.8 million, maintenance capital expenditures were $4.4 million and cash interest expense, net was $29.9 million for the second quarter 2020.

On July 21, 2020, the Partnership announced a second 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 August 10, 2020 to common unitholders of record as of the close of business on July 31, 2020. For the second quarter 2020, the Partnership’s Distributable Cash Flow Coverage was 1.15x.

Liquidity & Debt

As of June 30, 2020, the Partnership was in compliance with all covenants under its $1.6 billion revolving credit facility. As of June 30, 2020, the Partnership had outstanding borrowings under the revolving credit facility of $447.8 million, $1.2 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $151.1 million. As of June 30, 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 $600.0 million to $580.0 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.