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USA Compression (USAC) Stock Rises 7% Despite Wider Q1 Loss

Zacks Equity Research
·4 min read

USA Compression Partners, LP USAC stock has risen 7.1% since the first-quarter 2022 earnings announcement on May 3.

The stock price surged despite USA Compression’s first-quarter loss being wider than the Zacks Consensus Estimate. However, this rise can be attributed to an increase in revenues and operating profit, highlighting a better performance.

Behind the Earnings Headlines

USA Compression reported a first-quarter 2022 net loss of 9 cents per common unit, wider than the Zacks Consensus Estimate of a loss of 4 cents, due to higher total costs and expenses.

However, the loss was narrower than the year-ago quarter’s loss of 12 cents per share. This favorable comparison was due to the partnership posting a net income of $3.25 million for the first quarter of 2022 compared with the net income of just $371,000 for the same period last year.

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Revenues of $163.4 million were approximately 3.7% higher than the year-ago quarter’s reading of $157.5 million.

Adjusted EBITDA decreased about 1.13% to $98.4 million from the last year’s first-quarter figure of $99.6 million. Moreover, the partnership’s distributable cash flow also declined from $52.6 million in the prior-year quarter to $50.1 million.

The firm reported operating cash flow of $35.1 million in the quarter, down from the $39.6 million generated in the prior-year quarter. Also, its gross operating margin of 67.1% declined from the year-ago period’s 69.1%.

In the first quarter, USA Compression Partners’ revenue-generating horsepower capacity decreased about 0.5% to 2,978,422 horsepower from the level recorded in the corresponding period of last year.  Average monthly revenues per horsepower were $16.87, higher than the year-ago quarter’s figure of $16.60. USAC’s average quarterly horsepower utilization rate came in at 84.9%, higher than 83.1% in the year-ago period.

USA Compression Partners, LP Price, Consensus and EPS Surprise

USA Compression Partners, LP Price, Consensus and EPS Surprise
USA Compression Partners, LP Price, Consensus and EPS Surprise

USA Compression Partners, LP price-consensus-eps-surprise-chart | USA Compression Partners, LP Quote

DCF, Capex & Balance Sheet

USA Compression Partners’ DCF available to limited partners for the first quarter equaled $50.1 million (providing 0.98X distribution coverage), down 4.7% from the year-ago level. On Apr 14, the firm announced a first-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis). The distribution was paid out on May 6, 2022 to common unitholders of record as of Apr 25, 2022.

It spent $20.1 million as growth capex. The partnership’s maintenance capex amounted to $5.8 million.

As of Mar 31, 2022, USA Compression Partners had $2.02 billion of net long-term debt.

Guidance

For 2022, USAC maintained its DCF guidance of $213 million to $233 million. It still estimates the adjusted EBITDA outlook within the $406-$426 million range.

Additionally, the firm still expects its net income for the year in the range of $33 million-$53 million.

Zacks Rank & Key Picks

USA Compression Partners currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy space are Ranger Oil ROCC, Murphy USA MUSA and PDC Energy PDCE, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ranger Oil’s 2022 earnings is projected at $14.14 per share, which is an increase of a massive 158% from the projected year-ago earnings of $5.48.

Ranger Oil beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being around 56.4%. ROCC stock has increased 101.9% in a year.

Murphy USA is valued at around $6.16 billion. The Zacks Consensus Estimate for Murphy USA’s 2022 earnings per share has been revised upward by about 47.3% over the past 60 days from $11.42 to $16.82.

Murphy USA beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being 49.1%. MUSA stock has increased 90.2% in a year.

PDC Energy’s stock price has increased 75.6% in a year. The Zacks Consensus Estimate for PDC Energy’s 2022 earnings has been revised about 36.4% upward over the past 60 days from $13.08 per share to $17.84.

The Zacks Consensus Estimate for PDCE’s 2022 earnings is pegged at $17.84 per share, up 123.3% from the projected year-ago earnings of $7.99.


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