A month has gone by since the last earnings report for USA Compression Partners (USAC). Shares have added about 3.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is USA Compression due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
USA Compression’s Q2 Loss Wider Than Estimates, Sales Up
USA Compression reported a a second-quarter 2022 net loss of 3 cents per common unit, marginally wider than the Zacks Consensus Estimate of a loss of 2 cents, due to higher total costs and expenses.
However, the loss was narrower than the year-ago quarter’s loss of 10 cents per share. This favorable comparison was due to the partnership posting a net income of $9.1 million for the second quarter of 2022 compared with the net income of just $2.7 million for the same period last year.
Revenues of $171.5 million were approximately 9.5% higher than the year-ago quarter’s reading of $156.6 million.
Adjusted EBITDA increased about 5.4% to $105.4 million from the last year’s second-quarter figure of $99.9 million. Moreover, the partnership’s distributable cash flow rose from $52.5 million in the prior-year quarter to $55.6 million.
The firm reported operating cash flow of $94.2 million in the quarter, down from the $99.5 million generated in the prior-year quarter. Also, its gross operating margin of 67.8% declined from the year-ago period’s 70.9%.
In the second quarter, USA Compression Partners’ revenue-generating horsepower capacity increased about 2.8% to 3,027,886 horsepower from the level recorded in the corresponding period of last year. Average monthly revenues per horsepower were $17.20, higher than the year-ago quarter’s figure of $16.55. USAC’s average quarterly horsepower utilization rate came in at 87.9%, higher than 82.4% in the year-ago period.
DCF, Capex & Balance Sheet
USA Compression Partners’ DCF available to limited partners for the second quarter equaled $55.6 million (providing 1.08X distribution coverage), up 5.9% from the year-ago level. On Jul 14, the firm announced a second-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis). The distribution will be paid out on Aug 5, 2022 to common unitholders of record as of Jul 25, 2022.
It spent $32.2 million as growth capex. The partnership’s maintenance capex amounted to $6.1 million.
As of June 2022, USA Compression Partners had about $2.02 billion of net long-term debt.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 100% due to these changes.
At this time, USA Compression has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise USA Compression has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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