USA Compression Partners Q3 2025 Earnings Report

USA Compression Partners EPS Results

• Actual EPS: $0.26
• Consensus EPS: $0.22
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: N/A

USA Compression Partners Revenue Results

• Actual Revenue: $250.26 million
• Expected Revenue: $250.23 million
• Beat/Miss: Beat by +$23.00 thousand
• YoY Revenue Growth: N/A

USA Compression Partners Announcement Details

• Quarter: Q3 2025
• Date: 11/5/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, November 5, 2025
• Conference Call Time: 11:00AM ET

USA Compression Partners (NYSE:USAC) LP (NYSE: USAC) is a publicly traded master limited partnership that provides natural gas compression services to customers across the United States. The company supports the movement of natural gas through gathering, processing, transmission, storage and related midstream systems.

USA Compression owns and operates a fleet of natural gas compression equipment, including large reciprocating compressors and associated infrastructure. Its services help maintain the pressure needed to transport natural gas from production areas to processing facilities, pipelines, storage locations and end markets. The company primarily serves producers, processors, gatherers, marketers and interstate and intrastate pipeline operators.

The partnership operates in major U.S. oil and gas regions and is headquartered in Austin, Texas. USA Compression Partners was formed in 1998 and completed its initial public offering in 2013. The company is led by President and Chief Executive Officer Eric D. McGinnis.

USA Compression Partners Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Company reported a strong Q3 with revenues > $250,000,000, adjusted EBITDA > $160,000,000, DCF ~ $104,000,000, 94% utilization and improved leverage of 3.9x with DCF coverage of 1.6x.
• Positive Sentiment: Management raised and tightened 2025 guidance — adjusted EBITDA now targeted at $610M–$620M and DCF at $370M–$380M, while reducing 2025 expansion capex to $115M–$125M.
• Positive Sentiment: Completed two refinancings (ABL upsized to $1.75B and senior notes refinanced) that lower borrowing costs and are expected to deliver over $10,000,000 of annualized interest savings while increasing liquidity and tenor.
• Negative Sentiment: Several Q3 margin gains were driven by one‑time items (healthcare true‑up and a sales tax refund) and management cautions that future margins should track the trailing‑12‑month rate rather than the elevated Q3 level.
• Positive Sentiment: Company expects to deploy most 2025 new horsepower in Q4, projects year‑end active fleet of roughly 3.6M HP with >40k HP growth in Northeast/Central and notes >60‑week lead times on large orders, signaling continued market demand.

Presentation

[Operator]

Good morning. Welcome to the USA Compression Partners' third quarter 2025 earnings conference call. During today's call, all parties will be in a listen-only mode. At the conclusion of management's prepared remarks, the call will be open for Q&A. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. This conference is being recorded today, November 5th, 2025. I now would like to turn the call over to Chris Porter, Vice President, General Counsel, and Secretary. Mr. Porter, you may begin.

[Chris Porter, VP, General Counsel, and Secretary at USA Compression Partners]

Good morning, everyone, and thank you for joining us. With me today is Clint Green, President and CEO, Chris Paulsen, Vice President and CFO, and Chris Watson, Vice President and COO. This morning, we released our operational and financial results for the quarter ending September 30, 2025. You can find a copy of our earnings release as well as a recording of this call in the investor relations section of our website at usacompression.com. During this call, our management will reference certain non-GAAP measures. You will find definitions and reconciliations of these non-GAAP measures to the most comparable U.S. GAAP measures in our earnings release. As a reminder, our conference call will include forward-looking statements. These statements are based on management's current beliefs and include projections and expectations regarding our future performance and other forward-looking matters. Actual results may differ materially from these statements.

[Chris Porter, VP, General Counsel, and Secretary at USA Compression Partners]

Please review the risk factors included in this morning's earnings release and in our other public filings. Please note that information provided in this call speaks only to management's views as of today, November 5th, 2025, and may no longer be accurate at the time of the replay. I will now turn the call over to Clint Green, President and CEO of USA Compression Partners.

[Clint Green, President and CEO at USA Compression Partners]

Thanks, Chris, and good morning. Thank you all for joining our call. We are pleased to deliver another solid quarter with revenues of over $250 million, adjusted EBITDA over $160 million, and DCF approaching $104 million, with strong margins and consistent utilization resulting in improved leverage ratio of 3.9 times and DCF coverage ratio of 1.6 times. Based on year-to-date performance, we have increased our 2025 ranges for EBITDA and DCF guidance. This increase in guidance is a result of management's commitment to effective cost management and operational discipline. This includes certain one-time impacts that Chris Paulsen will discuss later in the call. Additionally, we will deploy most of our 2025 new unit horsepower in Q4, setting the foundation for continued momentum in 2026. We are in the process of finalizing our 2026 capital budget, which we anticipate releasing in February.

[Clint Green, President and CEO at USA Compression Partners]

We expect that new horsepower will exceed 2025 levels given continued natural gas demand and new projects both expanding takeaway capacity and increased localized demand in the Permian and Northeast. We have already committed to several deliveries in Q2 and Q3 of 2026. Notably, we have recently seen lead times increase to more than 60 weeks for larger orders. Although US producers are still evaluating macro market conditions to arrive at their appropriate capital budgets for 2026, we continue to see growth opportunities in the markets we operate. We expect our active horsepower in the Northeast and Central regions to grow by more than 40,000 horsepower before the end of 2025 relative to Q2. This is partially due to contracting 300 small horsepower units that will draw from idle capacity and increase small horsepower utilization to nearly 80% over the coming months. These contracts include a 36-month initial term.

[Clint Green, President and CEO at USA Compression Partners]

This deployment, coupled with Q4 new unit deliveries to the Permian, will bring our projected year-end active fleet to roughly 3.6 million horsepower. Turning to SG&A, we now expect to realize the majority of the $5 million of shared services annualized savings in 2025 ahead of the 2026 timeline shared on our last call. These savings have and will continue to come from cost improvements seen through centralized IT efforts and other savings due to economies of scale. For example, Q3 benefited from a one-time healthcare cost true-up, reflecting a lower monthly per-employee healthcare cost than previously estimated. We expect 2026 G&A to grow modestly off of our new baseline, reflecting typical wage inflation and modest investments in new commercial and financial capabilities. Finally, we are pleased that both our bank syndicate and long-term investors continue to recognize the quality of the compression market.

[Clint Green, President and CEO at USA Compression Partners]

In Q3, we refinanced our ABL and our 2027 senior notes, significantly reducing our weighted average borrowing cost and improved strategic flexibility. With that, I will turn the call over to Chris Paulsen, our Chief Financial Officer, for a detailed financial update.

[Chris Paulsen, CFO at USA Compression Partners]

Thanks, Clint. In Q3, our sales team continued to build upon pricing improvements up to an all-time high averaging $21.46 per horsepower for the third quarter, a 1% increase in sequential quarters, and a 4% increase compared to a year ago. Average active horsepower remained flattish compared to Q2 at 3.55 million. Our third-quarter adjusted gross margins were higher at 69.3%, in large part due to the realization of both one-time and ongoing cost savings tied to our centralized procurement processes, employee healthcare savings, and one-time sales tax refund recognized at the completion of a prior year's sales tax audit. While Q3 gross margins were partially elevated due to one-time true-up and cost savings, going forward, we expect margins to stay consistent with our trailing 12-month rate.

[Chris Paulsen, CFO at USA Compression Partners]

Regarding the consolidated financial results, our third-quarter 2025 net income was $34.5 million, operating income was $83.9 million, net cash provided by operating activities was $75.9 million, and cash interest expense net was $44.9 million. Our leverage ratio at the end of the third quarter was 3.9 times. As you may recall, our leverage ratio is determined in accordance with our ABL definition, which remained consistent with our latest refinancing and is calculated as funded debt divided by the latest quarter annualized adjusted EBITDA. Turning to operational results, our total fleet horsepower at the end of the quarter was approximately 3.9 million horsepower, essentially flat versus the prior quarter. Our average utilization for the third quarter was 94%, consistent with the prior quarter. Third quarter 2025 expansion capital expenditures were $37.3 million, and our maintenance capital expenditures were $9 million.

[Chris Paulsen, CFO at USA Compression Partners]

Expansion capital spending in Q3 primarily consisted of new units, and we expect that to be the same in Q4. Turning to 2025 guidance, we have increased and tightened our Adjusted EBITDA range to $610 million-$620 million, increasing the midpoint of the range by approximately $15 million. We have also increased our DCF range to $370 million-$380 million, reduced our expansion capital range to $115 million-$125 million, and maintained our maintenance capital between $38 million and $42 million. Approximately $11 million of expansion capital tied to late December deliveries is now expected to be realized in 2025 instead of January 2026, as stated in our Q2 call, and therefore is factored into our 2025 capital range.

[Chris Paulsen, CFO at USA Compression Partners]

As previously discussed, we continue to maintain our leverage ratio and expect it to marginally increase at the end of the year as we fund new growth projects that are backend loaded. Our target remains at or below four times debt to EBITDA. Finally, as Clint mentioned earlier, Q3 was characterized by two major refinancings. First, we extended and expanded our ABL from $1.6 billion to $1.75 billion, reducing our drawn cost by approximately 25 basis points. Second, we called our $750 million 2027 notes at par in favor of the 2033 notes of the same quantum, reducing our interest rate 62.5 basis points. All in all, we are on track to realize over $10 million annualized interest savings given these efforts and based on forecasted rate cuts, all while increasing overall liquidity and extending tenure, and with that, I will turn the call back to Clint for concluding remarks.

[Clint Green, President and CEO at USA Compression Partners]

Thanks, Chris. I want to thank our employees that have worked diligently towards our ERP implementation in early 2026. The collaboration across organizations has been significant and has brought regions and departments closer together. At the same time, we are realizing cost synergies from our new shared services model. The combination of both is improving our control, sophistication, data integrity, and profitability. Therefore, I am excited about the path forward.

[Operator]

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from Nate Pendleton with Texas Capital.

[Nate Pendleton, VP at Texas Capital]

Good morning and congrats on the record quarter. In a sustained slowdown in oil-directed activity, can you speak to your willingness to lean further into compression and dry gas plays in this environment based on the success you just highlighted in your prepared remarks? And then also, would there be any investment in in-basin and facilities required to support any significant increase in gas-directed compression?

[Clint Green, President and CEO at USA Compression Partners]

Yeah. So Nate, thank you for that question. You know, we're already established in the dry gas market. While we have the majority of our operations in the Permian, we're still very large in the Northeast, up in Oklahoma, down on the Gulf Coast. And you know, we see with these demands coming online and these pipelines being built out of West Texas or out of the Permian, we see those plays as a place to, you know, as a growth where we expect to see drilling for gas instead of drilling for gas and, you know, associated gas and oil. And I missed the second part of your question there, Nate. What was that?

[Nate Pendleton, VP at Texas Capital]

Just, would there be any incremental investment needed in the infrastructure and facilities to support any increase in assets deployed there?

[Clint Green, President and CEO at USA Compression Partners]

Well, I mean, you know, we have active horsepower running in those basins, in the other dry gas basins. And so, you know, we can move equipment from anywhere that may slow down to those basins, or we can buy new equipment and install there for operating. I hope that answers your question.

[Nate Pendleton, VP at Texas Capital]

Yeah, it does. Thank you. I was just trying to get at your geographic diversification. It does sound like you're already established there, so it would just be a matter of moving the horsepower in. So definitely, definitely positive.

[Clint Green, President and CEO at USA Compression Partners]

That's exactly right. Thank you.

[Nate Pendleton, VP at Texas Capital]

And then, Clint, if I may, one more. With the strong pricing trends that you guys noted during the quarter, can you speak to recent pricing dynamics and how spot prices are comparing to your fleet average here?

[Chris Wauson, VP at USA Compression Partners]

Yeah, Nate, it's Chris Wauson. I'll take that one. You know, our market has definitely picked up since Q2, so our pricing trends from a dollar per horsepower basis, you know, is going to be consistent into the back half of 2025 into 2026. We feel like our dollar per horsepower revenue is going to be consistent. So we'll just see how everything works out, but that's our feeling right now.

[Nate Pendleton, VP at Texas Capital]

Great. Thanks a lot for taking my questions, and I'll turn it back.

[Operator]

Again, if you would like to ask a question, press star followed by the number one on your telephone keypad. There are no further questions at this time. I'll now turn the conference back over to Clint Green for closing remarks.

[Clint Green, President and CEO at USA Compression Partners]

Yeah, thank you all for joining our call. We appreciate the interest in our company, and y'all have a good day.

[Operator]

This concludes today's conference call. You may now disconnect.

Participants

Executives

• Chris Paulsen, CFO
• Chris Porter, VP, General Counsel, and Secretary
• Clint Green, President and CEO
• Chris Wauson, VP

Analysts

• Nate Pendleton, VP at Texas Capital