USA Compression Partners Reports Fourth Quarter 2021 Results; Provides 2022 Outlook

AUSTIN, Texas--()--USA Compression Partners, LP (NYSE: USAC) (“USA Compression” or the “Partnership”) announced today its financial and operating results for the fourth quarter 2021.

Fourth Quarter 2021 Highlights

  • Total revenues were $159.9 million for the fourth quarter 2021, compared to $158.4 million for the fourth quarter 2020.
  • Net income was $3.1 million for the fourth quarter 2021, compared to a net loss of $1.5 million for the fourth quarter 2020.
  • Net cash provided by operating activities was $81.1 million for the fourth quarter 2021, compared to $97.5 million for the fourth quarter 2020.
  • Adjusted EBITDA was $99.2 million for the fourth quarter 2021, compared to $98.3 million for the fourth quarter 2020.
  • Distributable Cash Flow was $52.0 million for the fourth quarter 2021, compared to $50.5 million for the fourth quarter 2020.
  • Announced cash distribution of $0.525 per common unit for the fourth quarter 2021, consistent with the fourth quarter 2020.
  • Distributable Cash Flow Coverage was 1.02x for the fourth quarter 2021, compared to 0.99x for the fourth quarter 2020.

“The fourth quarter of 2021 wrapped up a year in which USA Compression maintained the stable cash flows and attractive operating margins for which our large horsepower fleet has become known,” commented Eric D. Long, USA Compression’s President and Chief Executive Officer. “While the domestic economy found strength as the year progressed, the broader energy industry continued to deal with political and regulatory uncertainty and a general moderation of activity levels by participants across the sector. However, the need for energy, especially natural gas, not only stabilized, but strengthened, and USA Compression was able to successfully operate through the uncertainty and position itself for 2022.”

“We saw signs of increased demand from our customers, including increased quoting for compression services as well as more frequent discussions regarding projects in 2022. During the fourth quarter, we increased our revenue generating horsepower by approximately 45,000 horsepower. At the same time, we have increased our service rates where applicable and plan to continue this effort during 2022. These efforts helped maintain both Adjusted gross margin and Adjusted EBITDA percentages at consistent levels.”

“In terms of capital spending, we concluded the year with expansion capital expenditures of approximately $40 million, in line with our guidance at the beginning of 2021. For 2022, we expect to spend approximately $115 million in expansion capital, which reflects a modest amount of new build units for new compressor stations with the balance earmarked for reconfiguration and make-ready activities to return idle equipment to active status throughout the year.”

“Overall, we expect 2022 to see increased activity on the part of our customers, based on budget increases throughout the industry. Drilling rigs and capital directed at crude oil continue to pick up, taking advantage of strong prices, which in turn is having a positive effect on associated gas production. And as we’ve witnessed lately on both a domestic and global stage, natural gas continues to play a critical role as a long-term, abundant fuel, and we expect the United States to play an important role in supplying natural gas to the world. And with it, we expect demand for our compression services to continue.”

Expansion capital expenditures were $14.3 million, maintenance capital expenditures were $4.7 million and cash interest expense, net was $30.1 million for the fourth quarter 2021.

On January 13, 2022, the Partnership announced a fourth quarter cash distribution of $0.525 per common unit, which corresponds to an annualized distribution rate of $2.10 per common unit. The distribution was paid on February 4, 2022 to common unitholders of record as of the close of business on January 24, 2022.

Operational and Financial Data

 

Three Months Ended

 

Year Ended

 

December 31,
2021

 

September 30,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Operational data:

 

 

 

 

 

 

 

 

 

Fleet horsepower (at period end) (1)

 

3,689,018

 

 

 

3,687,601

 

 

 

3,726,181

 

 

 

3,689,018

 

 

 

3,726,181

 

Revenue generating horsepower (at period end) (2)

 

2,964,206

 

 

 

2,919,362

 

 

 

2,997,262

 

 

 

2,964,206

 

 

 

2,997,262

 

Average revenue generating horsepower (3)

 

2,950,623

 

 

 

2,914,100

 

 

 

3,004,069

 

 

 

2,951,013

 

 

 

3,139,732

 

Revenue generating compression units (at period end)

 

3,942

 

 

 

3,928

 

 

 

3,968

 

 

 

3,942

 

 

 

3,968

 

Horsepower utilization (at period end) (4)

 

82.7

%

 

 

83.0

%

 

 

82.8

%

 

 

82.7

%

 

 

82.8

%

Average horsepower utilization (for the period) (4)

 

82.9

%

 

 

82.3

%

 

 

83.0

%

 

 

82.7

%

 

 

86.8

%

 

 

 

 

 

 

 

 

 

 

Financial data ($ in thousands, except per horsepower data):

 

 

 

 

 

 

 

 

 

Revenue

$

159,943

 

 

$

158,627

 

 

$

158,367

 

 

$

632,645

 

 

$

667,683

 

Average revenue per revenue generating horsepower per month (5)

$

16.62

 

 

$

16.62

 

 

$

16.55

 

 

$

16.60

 

 

$

16.71

 

Net income (loss) (6)

$

3,105

 

 

$

4,115

 

 

$

(1,474

)

 

$

10,279

 

 

$

(594,732

)

Operating income (loss) (6)

$

36,336

 

 

$

36,631

 

 

$

31,193

 

 

$

140,872

 

 

$

(464,852

)

Net cash provided by operating activities

$

81,057

 

 

$

45,297

 

 

$

97,547

 

 

$

265,425

 

 

$

293,198

 

Gross margin

$

49,698

 

 

$

50,203

 

 

$

48,480

 

 

$

199,487

 

 

$

222,776

 

Adjusted gross margin (7)

$

108,945

 

 

$

109,468

 

 

$

108,276

 

 

$

438,256

 

 

$

461,744

 

Adjusted gross margin percentage

 

68.1

%

 

 

69.0

%

 

 

68.4

%

 

 

69.3

%

 

 

69.2

%

Adjusted EBITDA (7)

$

99,205

 

 

$

99,634

 

 

$

98,293

 

 

$

398,380

 

 

$

413,898

 

Adjusted EBITDA percentage

 

62.0

%

 

 

62.8

%

 

 

62.1

%

 

 

63.0

%

 

 

62.0

%

Distributable Cash Flow (7)

$

52,039

 

 

$

51,973

 

 

$

50,467

 

 

$

209,128

 

 

$

220,766

 

________________________

(1)

Fleet horsepower is horsepower for compression units that have been delivered to the Partnership (and excludes units on order). As of December 31, 2021, the Partnership had 25,000 large horsepower on order for delivery during 2022. Subsequent to December 31, 2021, the Partnership ordered an additional 50,000 large horsepower for delivery during 2022.

(2)

Revenue generating horsepower is horsepower under contract for which the Partnership is billing a customer.

(3)

Calculated as the average of the month-end revenue generating horsepower for each of the months in the period.

(4)

Horsepower utilization is calculated as (i) the sum of (a) revenue generating horsepower; (b) horsepower in the Partnership’s fleet that is under contract but is not yet generating revenue; and (c) horsepower not yet in the Partnership’s fleet that is under contract but not yet generating revenue and that is subject to a purchase order, divided by (ii) total available horsepower less idle horsepower that is under repair.

 

 

Horsepower utilization based on revenue generating horsepower and fleet horsepower was 80.4%, 79.2% and 80.4% at December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

 

 

Average horsepower utilization based on revenue generating horsepower and fleet horsepower was 80.0%, 79.0% and 80.6% for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively. Average horsepower utilization based on revenue generating horsepower and fleet horsepower was 79.8% and 84.5% for the years ended December 31, 2021 and 2020, respectively.

(5)

Calculated as the average of the result of dividing the contractual monthly rate, excluding standby or other temporary rates, for all units at the end of each month in the period by the sum of the revenue generating horsepower at the end of each month in the period.

(6)

The Partnership’s net loss and operating loss for the year ended December 31, 2020 included a $619.4 million impairment charge due to the asset carrying amount exceeding fair value as of March 31, 2020. The impairment charge did not impact the Partnership’s cash flows, liquidity position or compliance with debt covenants.

(7)

Adjusted gross margin, Adjusted EBITDA and Distributable Cash Flow are all non-U.S. generally accepted accounting principles (“Non-GAAP”) financial measures. For the definition of each measure, as well as reconciliations of each measure to its most directly comparable financial measures calculated and presented in accordance with GAAP, see “Non-GAAP Financial Measures” below.

Liquidity and Long-Term Debt

As of December 31, 2021, the Partnership was in compliance with all covenants under its $1.6 billion revolving credit facility. As of December 31, 2021, the Partnership had outstanding borrowings under the revolving credit facility of $516.3 million, $1.1 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $261.9 million. As of December 31, 2021, 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 2022 Outlook

USA Compression is providing its full-year 2022 guidance as follows:

  • Net income range of $33.0 million to $53.0 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 $406.0 million to $426.0 million; and
  • Distributable Cash Flow range of $213.0 million to $233.0 million.

     

Conference Call

The Partnership will host a conference call today beginning at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) to discuss fourth quarter 2021 performance. The call will be broadcast live over the Internet. Investors may participate either by phone or audio webcast.

By Phone:

 

Dial 888-394-8218 inside the U.S. and Canada at least 10 minutes before the call and ask for the USA Compression Partners Earnings Call. Investors outside the U.S. and Canada should dial 323-701-0225. The conference ID for both is 9375377.

 

 

 

 

 

A replay of the call will be available through February 25, 2022. Callers inside the U.S. and Canada may access the replay by dialing 888-203-1112. Investors outside the U.S. and Canada should dial 719-457-0820. The conference ID for both is 9375377.

 

 

 

By Webcast:

 

Connect to the webcast via the “Events” page of USA Compression’s Investor Relations website at http://investors.usacompression.com. Please log in at least 10 minutes in advance to register and download any necessary software. A replay will be available shortly after the call.

About USA Compression Partners, LP

USA Compression Partners, LP is a growth-oriented Delaware limited partnership that is one of the nation’s largest independent providers of natural gas compression services in terms of total compression fleet horsepower. USA Compression partners with a broad customer base composed of producers, processors, gatherers and transporters of natural gas and crude oil. USA Compression focuses on providing natural gas compression services to infrastructure applications primarily in high-volume gathering systems, processing facilities and transportation applications. More information is available at usacompression.com.

Non-GAAP Financial Measures

This news release includes the Non-GAAP financial measures of Adjusted gross margin, Adjusted EBITDA, Distributable Cash Flow and Distributable Cash Flow Coverage Ratio.

Adjusted gross margin is defined as revenue less cost of operations, exclusive of depreciation and amortization expense. Management believes that Adjusted gross margin is useful as a supplemental measure to investors of the Partnership’s operating profitability. Adjusted gross margin is impacted primarily by the pricing trends for service operations and cost of operations, including labor rates for service technicians, volume and per unit costs for lubricant oils, quantity and pricing of routine preventative maintenance on compression units and property tax rates on compression units. Adjusted gross margin should not be considered an alternative to, or more meaningful than, gross margin, its most directly comparable GAAP financial measure, or any other measure of financial performance presented in accordance with GAAP. Moreover, Adjusted gross margin as presented may not be comparable to similarly titled measures of other companies. Because the Partnership capitalizes assets, depreciation and amortization of equipment is a necessary element of its costs. To compensate for the limitations of Adjusted gross margin as a measure of the Partnership’s performance, management believes that it is important to consider gross margin determined under GAAP, as well as Adjusted gross margin, to evaluate the Partnership’s operating profitability.

Management views Adjusted EBITDA as one of its primary tools for evaluating the Partnership’s results of operations, and the Partnership tracks this item on a monthly basis both as an absolute amount and as a percentage of revenue compared to the prior month, year-to-date, prior year and budget. The Partnership defines EBITDA as net income (loss) before net interest expense, depreciation and amortization expense, and income tax expense (benefit). The Partnership defines Adjusted EBITDA as EBITDA plus impairment of compression equipment, impairment of goodwill, interest income on capital lease, unit-based compensation expense (benefit), severance charges, certain transaction expenses, loss (gain) on disposition of assets and other. Adjusted EBITDA is used as a supplemental financial measure by management and external users of its financial statements, such as investors and commercial banks, to assess:

  • the financial performance of the Partnership’s assets without regard to the impact of financing methods, capital structure or historical cost basis of the Partnership’s assets;
  • the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities;
  • the ability of the Partnership’s assets to generate cash sufficient to make debt payments and pay distributions; and
  • the Partnership’s operating performance as compared to those of other companies in its industry without regard to the impact of financing methods and capital structure.

Management believes that Adjusted EBITDA provides useful information to investors because, when viewed with GAAP results and the accompanying reconciliations, it provides a more complete understanding of the Partnership’s performance than GAAP results alone. Management also believes that external users of its financial statements benefit from having access to the same financial measures that management uses in evaluating the results of the Partnership’s business.

Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income (loss), operating income (loss), cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP as measures of operating performance and liquidity. Moreover, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

Distributable Cash Flow is defined as net income (loss) plus non-cash interest expense, non-cash income tax expense (benefit), depreciation and amortization expense, unit-based compensation expense (benefit), impairment of compression equipment, impairment of goodwill, certain transaction expenses, severance charges, loss (gain) on disposition of assets, proceeds from insurance recovery and other, less distributions on the Partnership’s Series A Preferred Units (“Preferred Units”) and maintenance capital expenditures.

Distributable Cash Flow should not be considered as an alternative to, or more meaningful than, net income (loss), operating income (loss), cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance and liquidity. Moreover, the Partnership’s Distributable Cash Flow as presented may not be comparable to similarly titled measures of other companies.

Management believes Distributable Cash Flow is an important measure of operating performance because it allows management, investors and others to compare basic cash flows the Partnership generates (after distributions on the Partnership’s Preferred Units but prior to any retained cash reserves established by the Partnership’s general partner and the effect of the Distribution Reinvestment Plan) to the cash distributions the Partnership expects to pay its common unitholders.

Distributable Cash Flow Coverage Ratio is defined as Distributable Cash Flow divided by distributions declared to common unitholders in respect of such period. Management believes Distributable Cash Flow Coverage Ratio is an important measure of operating performance because it allows management, investors and others to gauge the Partnership’s ability to pay distributions to common unitholders using the cash flows the Partnership generates. The Partnership’s Distributable Cash Flow Coverage Ratio as presented may not be comparable to similarly titled measures of other companies.

This news release also contains a forward-looking estimate of Adjusted EBITDA and Distributable Cash Flow projected to be generated by the Partnership in its 2022 fiscal year. A forward-looking estimate of net cash provided by operating activities and reconciliations of the forward-looking estimates of Adjusted EBITDA and Distributable Cash Flow to net cash provided by operating activities are 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.

See “Reconciliation of Non-GAAP Financial Measures” for Adjusted gross margin reconciled to gross margin, Adjusted EBITDA reconciled to net income (loss) and net cash provided by operating activities, and net income (loss) and net cash provided by operating activities reconciled to Distributable Cash Flow and Distributable Cash Flow Coverage Ratio.

Forward-Looking Statements

Some of the information in this news release may contain forward-looking statements. These statements can be identified by the use of forward-looking terminology including “may,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “continue,” “if,” “project,” “outlook,” “will,” “could,” “should,” or other similar words or the negatives thereof, and include the Partnership’s expectation of future performance contained herein, including as described under “Full-Year 2022 Outlook.” These statements discuss future expectations, contain projections of results of operations or of financial condition, or state other “forward-looking” information. You are cautioned not to place undue reliance on any forward-looking statements, which can be affected by assumptions used or by known risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors noted below and other cautionary statements in this news release. The risk factors and other factors noted throughout this news release could cause actual results to differ materially from those contained in any forward-looking statement. Known material factors that could cause the Partnership’s actual results to differ materially from the results contemplated by such forward-looking statements include:

  • changes in the long-term supply of and demand for crude oil and natural gas, including as a result of the severity and duration of world health events, including the COVID-19 pandemic, related economic repercussions, actions taken by governmental authorities and other third parties in response to such events and the resulting disruption in the oil and gas industry and impact on demand for oil and gas;
  • changes in general economic conditions, including inflation, and changes in economic conditions of the crude oil and natural gas industries;
  • competitive conditions in the Partnership’s industry, including competition for employees in a tight labor market;
  • renegotiation of material terms of customer contracts;
  • actions taken by the Partnership’s customers, competitors and third-party operators;
  • changes in the availability and cost of capital, including changes to interest rates;
  • operating hazards, natural disasters, epidemics, pandemics (such as COVID-19), weather-related impacts, casualty losses and other matters beyond the Partnership’s control;
  • operational challenges relating to COVID-19 and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of the Partnership’s employees, remote work arrangements, performance of contracts and supply chain disruptions;
  • the deterioration of the financial condition of the Partnership’s customers, which may result in the initiation of bankruptcy proceedings with respect to customers;
  • the restrictions on the Partnership’s business that are imposed under the Partnership’s long-term debt agreements;
  • information technology risks including the risk from cyberattacks;
  • the effects of existing and future laws and governmental regulations;
  • the effects of future litigation;
  • the Partnership’s ability to realize the anticipated benefits of acquisitions; and
  • other factors discussed in the Partnership’s filings with the SEC.

All forward-looking statements speak only as of the date of this news release and are expressly qualified in their entirety by the foregoing cautionary statements. Unless legally required, the Partnership undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.

 

USA COMPRESSION PARTNERS, LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per unit amounts Unaudited)

 

 

Three Months Ended

 

Year Ended

 

December 31,
2021

 

September 30,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Revenues:

 

 

 

 

 

 

 

 

 

Contract operations

$

153,503

 

 

$

151,622

 

 

$

151,775

 

 

$

609,450

 

 

$

644,194

 

Parts and service

 

3,250

 

 

 

4,122

 

 

 

3,347

 

 

 

11,228

 

 

 

11,117

 

Related party

 

3,190

 

 

 

2,883

 

 

 

3,245

 

 

 

11,967

 

 

 

12,372

 

Total revenues

 

159,943

 

 

 

158,627

 

 

 

158,367

 

 

 

632,645

 

 

 

667,683

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of operations, exclusive of depreciation and amortization

 

50,998

 

 

 

49,159

 

 

 

50,091

 

 

 

194,389

 

 

 

205,939

 

Depreciation and amortization

 

59,247

 

 

 

59,265

 

 

 

59,796

 

 

 

238,769

 

 

 

238,968

 

Selling, general and administrative

 

13,470

 

 

 

13,524

 

 

 

14,565

 

 

 

56,082

 

 

 

59,981

 

Loss (gain) on disposition of assets

 

(276

)

 

 

48

 

 

 

261

 

 

 

(2,588

)

 

 

146

 

Impairment of compression equipment

 

168

 

 

 

 

 

 

2,461

 

 

 

5,121

 

 

 

8,090

 

Impairment of goodwill

 

 

 

 

 

 

 

 

 

 

 

 

 

619,411

 

Total costs and expenses

 

123,607

 

 

 

121,996

 

 

 

127,174

 

 

 

491,773

 

 

 

1,132,535

 

Operating income (loss)

 

36,336

 

 

 

36,631

 

 

 

31,193

 

 

 

140,872

 

 

 

(464,852

)

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(32,966

)

 

 

(32,222

)

 

 

(32,336

)

 

 

(129,826

)

 

 

(128,633

)

Other

 

19

 

 

 

18

 

 

 

19

 

 

 

107

 

 

 

86

 

Total other expense

 

(32,947

)

 

 

(32,204

)

 

 

(32,317

)

 

 

(129,719

)

 

 

(128,547

)

Net income (loss) before income tax expense

 

3,389

 

 

 

4,427

 

 

 

(1,124

)

 

 

11,153

 

 

 

(593,399

)

Income tax expense

 

284

 

 

 

312

 

 

 

350

 

 

 

874

 

 

 

1,333

 

Net income (loss)

 

3,105

 

 

 

4,115

 

 

 

(1,474

)

 

 

10,279

 

 

 

(594,732

)

Less: distributions on Preferred Units

 

(12,187

)

 

 

(12,188

)

 

 

(12,187

)

 

 

(48,750

)

 

 

(48,750

)

Net loss attributable to common unitholders’ interests

$

(9,082

)

 

$

(8,073

)

 

$

(13,661

)

 

$

(38,471

)

 

$

(643,482

)

 

 

 

 

 

 

 

 

 

 

Weighted average common units outstanding – basic and diluted

 

97,151

 

 

 

97,085

 

 

 

96,936

 

 

 

97,068

 

 

 

96,816

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per common unit

$

(0.09

)

 

$

(0.08

)

 

$

(0.14

)

 

$

(0.40

)

 

$

(6.65

)

 

 

 

 

 

 

 

 

 

 

Distributions declared per common unit

$

0.525

 

 

$

0.525

 

 

$

0.525

 

 

$

2.10

 

 

$

2.10

 

 

USA COMPRESSION PARTNERS, LP

SELECTED BALANCE SHEET DATA

(In thousands, except unit amounts Unaudited)

 

 

December 31, 2021

Selected Balance Sheet data:

 

Total assets

$

2,767,979

Long-term debt, net

$

1,973,234

Total partners’ capital

$

101,108

 

 

Common units outstanding

 

97,344,707

 

USA COMPRESSION PARTNERS, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands — Unaudited)

 

 

Three Months Ended

 

Year Ended

 

December 31,
2021

 

September 30,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Net cash provided by operating activities

$

81,057

 

 

$

45,297

 

 

$

97,547

 

 

$

265,425

 

 

$

293,198

 

Net cash used in investing activities

 

(15,522

)

 

 

(13,397

)

 

 

(10,909

)

 

 

(39,188

)

 

 

(105,099

)

Net cash used in financing activities

 

(65,785

)

 

 

(31,652

)

 

 

(86,638

)

 

 

(226,239

)

 

 

(188,107

)

 

USA COMPRESSION PARTNERS, LP

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

ADJUSTED GROSS MARGIN TO GROSS MARGIN

(In thousands — Unaudited)

 

The following table reconciles Adjusted gross margin to gross margin, its most directly comparable GAAP financial measure, for each of the periods presented:

 

 

Three Months Ended

 

Year Ended

 

December 31,
2021

 

September 30,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Total revenues

$

159,943

 

 

$

158,627

 

 

$

158,367

 

 

$

632,645

 

 

$

667,683

 

Cost of operations, exclusive of depreciation and amortization

 

(50,998

)

 

 

(49,159

)

 

 

(50,091

)

 

 

(194,389

)

 

 

(205,939

)

Depreciation and amortization

 

(59,247

)

 

 

(59,265

)

 

 

(59,796

)

 

 

(238,769

)

 

 

(238,968

)

Gross margin

$

49,698

 

 

$

50,203

 

 

$

48,480

 

 

$

199,487

 

 

$

222,776

 

Depreciation and amortization

 

59,247

 

 

 

59,265

 

 

 

59,796

 

 

 

238,769

 

 

 

238,968

 

Adjusted gross margin

$

108,945

 

 

$

109,468

 

 

$

108,276

 

 

$

438,256

 

 

$

461,744

 

 

USA COMPRESSION PARTNERS, LP

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA TO NET INCOME (LOSS) AND NET CASH PROVIDED BY OPERATING ACTIVITIES

(In thousands — Unaudited)

 

The following table reconciles Adjusted EBITDA to net income (loss) and net cash provided by operating activities, its most directly comparable GAAP financial measures, for each of the periods presented:

 

Three Months Ended

 

Year Ended

 

December 31,
2021

 

September 30,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Net income (loss)

$

3,105

 

 

$

4,115

 

 

$

(1,474

)

 

$

10,279

 

 

$

(594,732

)

Interest expense, net

 

32,966

 

 

 

32,222

 

 

 

32,336

 

 

 

129,826

 

 

 

128,633

 

Depreciation and amortization

 

59,247

 

 

 

59,265

 

 

 

59,796

 

 

 

238,769

 

 

 

238,968

 

Income tax expense

 

284

 

 

 

312

 

 

 

350

 

 

 

874

 

 

 

1,333

 

EBITDA

$

95,602

 

 

$

95,914

 

 

$

91,008

 

 

$

379,748

 

 

$

(225,798

)

Interest income on capital lease

 

 

 

 

 

 

 

67

 

 

 

48

 

 

 

383

 

Unit-based compensation expense (1)

 

3,599

 

 

 

3,482

 

 

 

4,329

 

 

 

15,523

 

 

 

8,400

 

Transaction expenses (2)

 

34

 

 

 

 

 

 

 

 

 

34

 

 

 

136

 

Severance charges

 

78

 

 

 

190

 

 

 

167

 

 

 

494

 

 

 

3,130

 

Loss (gain) on disposition of assets

 

(276

)

 

 

48

 

 

 

261

 

 

 

(2,588

)

 

 

146

 

Impairment of compression equipment (3)

 

168

 

 

 

 

 

 

2,461

 

 

 

5,121

 

 

 

8,090

 

Impairment of goodwill (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

619,411

 

Adjusted EBITDA

$

99,205

 

 

$

99,634

 

 

$

98,293

 

 

$

398,380

 

 

$

413,898

 

Interest expense, net

 

(32,966

)

 

 

(32,222

)

 

 

(32,336

)

 

 

(129,826

)

 

 

(128,633

)

Non-cash interest expense

 

2,899

 

 

 

2,288

 

 

 

2,289

 

 

 

9,765

 

 

 

8,402

 

Income tax expense

 

(284

)

 

 

(312

)

 

 

(350

)

 

 

(874

)

 

 

(1,333

)

Interest income on capital lease

 

 

 

 

 

 

 

(67

)

 

 

(48

)

 

 

(383

)

Transaction expenses

 

(34

)

 

 

 

 

 

 

 

 

(34

)

 

 

(136

)

Severance charges

 

(78

)

 

 

(190

)

 

 

(167

)

 

 

(494

)

 

 

(3,130

)

Other

 

(241

)

 

 

(1,118

)

 

 

180

 

 

 

(2,742

)

 

 

4,230

 

Changes in operating assets and liabilities

 

12,556

 

 

 

(22,783

)

 

 

29,705

 

 

 

(8,702

)

 

 

283

 

Net cash provided by operating activities

$

81,057

 

 

$

45,297

 

 

$

97,547

 

 

$

265,425

 

 

$

293,198

 

________________________

(1)

For the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, unit-based compensation expense included $1.0 million, $1.0 million and $0.7 million, respectively, of cash payments related to quarterly payments of distribution equivalent rights on outstanding phantom unit awards. For the years ended December 31, 2021 and 2020, unit-based compensation expense included $4.2 million and $3.2 million, respectively, of cash payments related to quarterly payments of distribution equivalent rights on outstanding phantom unit awards and $0.3 million and $0.5 million, respectively, related to the cash portion of any settlement of phantom unit awards upon vesting. The remainder of the unit-based compensation expense (benefit) for all periods was related to non-cash adjustments to the unit-based compensation liability.

(2)

Represents certain expenses related to potential and completed transactions and other items. The Partnership believes it is useful to investors to exclude these expenses.

(3)

Represents non-cash charges incurred to write down long-lived assets with recorded values that are not expected to be recovered through future cash flows.

(4)

Represents non-cash charges due to the asset carrying amount exceeding fair value as of March 31, 2020.

 

 

USA COMPRESSION PARTNERS, LP

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

DISTRIBUTABLE CASH FLOW TO NET INCOME (LOSS) AND NET CASH PROVIDED BY OPERATING ACTIVITIES

(Dollars in thousands — Unaudited)

 

 

The following table reconciles Distributable Cash Flow to net income (loss) and net cash provided by operating activities, its most directly comparable GAAP financial measures, for each of the periods presented:

 

Three Months Ended

 

Year Ended

 

December 31,
2021

 

September 30,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Net income (loss)

$

3,105

 

 

$

4,115

 

 

$

(1,474

)

 

$

10,279

 

 

$

(594,732

)

Non-cash interest expense

 

2,899

 

 

 

2,288

 

 

 

2,289

 

 

 

9,765

 

 

 

8,402

 

Depreciation and amortization

 

59,247

 

 

 

59,265

 

 

 

59,796

 

 

 

238,769

 

 

 

238,968

 

Non-cash income tax expense (benefit)

 

59

 

 

 

32

 

 

 

180

 

 

 

(42

)

 

 

530

 

Unit-based compensation expense (1)

 

3,599

 

 

 

3,482

 

 

 

4,329

 

 

 

15,523

 

 

 

8,400

 

Transaction expenses (2)

 

34

 

 

 

 

 

 

 

 

 

34

 

 

 

136

 

Severance charges

 

78

 

 

 

190

 

 

 

167

 

 

 

494

 

 

 

3,130

 

Loss (gain) on disposition of assets

 

(276

)

 

 

48

 

 

 

261

 

 

 

(2,588

)

 

 

146

 

Impairment of compression equipment (3)

 

168

 

 

 

 

 

 

2,461

 

 

 

5,121

 

 

 

8,090

 

Impairment of goodwill (4)

 

 

 

 

 

 

 

 

 

 

 

 

 

619,411

 

Distributions on Preferred Units

 

(12,187

)

 

 

(12,188

)

 

 

(12,187

)

 

 

(48,750

)

 

 

(48,750

)

Proceeds from insurance recovery

 

 

 

 

 

 

 

 

 

 

 

 

 

336

 

Maintenance capital expenditures (5)

 

(4,687

)

 

 

(5,259

)

 

 

(5,355

)

 

 

(19,477

)

 

 

(23,301

)

Distributable Cash Flow

$

52,039

 

 

$

51,973

 

 

$

50,467

 

 

$

209,128

 

 

$

220,766

 

Maintenance capital expenditures

 

4,687

 

 

 

5,259

 

 

 

5,355

 

 

 

19,477

 

 

 

23,301

 

Transaction expenses

 

(34

)

 

 

 

 

 

 

 

 

(34

)

 

 

(136

)

Severance charges

 

(78

)

 

 

(190

)

 

 

(167

)

 

 

(494

)

 

 

(3,130

)

Distributions on Preferred Units

 

12,187

 

 

 

12,188

 

 

 

12,187

 

 

 

48,750

 

 

 

48,750

 

Other

 

(300

)

 

 

(1,150

)

 

 

 

 

 

(2,700

)

 

 

3,364

 

Changes in operating assets and liabilities

 

12,556

 

 

 

(22,783

)

 

 

29,705

 

 

 

(8,702

)

 

 

283

 

Net cash provided by operating activities

$

81,057

 

 

$

45,297

 

 

$

97,547

 

 

$

265,425

 

 

$

293,198

 

 

 

 

 

 

 

 

 

 

 

Distributable Cash Flow

$

52,039

 

 

$

51,973

 

 

$

50,467

 

 

$

209,128

 

 

$

220,766

 

 

 

 

 

 

 

 

 

 

 

Distributions for Distributable Cash Flow Coverage Ratio (6)

$

51,106

 

 

$

50,975

 

 

$

50,906

 

 

$

203,978

 

 

$

203,409

 

 

 

 

 

 

 

 

 

 

 

Distributable Cash Flow Coverage Ratio

1.02x

 

1.02x

 

0.99x

 

1.03x

 

1.09x

________________________

(1)

For the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, unit-based compensation expense included $1.0 million, $1.0 million and $0.7 million, respectively, of cash payments related to quarterly payments of distribution equivalent rights on outstanding phantom unit awards. For the years ended December 31, 2021 and 2020, unit-based compensation expense included $4.2 million and $3.2 million, respectively, of cash payments related to quarterly payments of distribution equivalent rights on outstanding phantom unit awards and $0.3 million and $0.5 million, respectively, related to the cash portion of any settlement of phantom unit awards upon vesting. The remainder of the unit-based compensation expense (benefit) for all periods was related to non-cash adjustments to the unit-based compensation liability.

(2)

Represents certain expenses related to potential and completed transactions and other items. The Partnership believes it is useful to investors to exclude these expenses.

(3)

Represents non-cash charges incurred to write down long-lived assets with recorded values that are not expected to be recovered through future cash flows.

(4)

Represents non-cash charges due to the asset carrying amount exceeding fair value as of March 31, 2020.

(5)

Reflects actual maintenance capital expenditures for the periods presented. Maintenance capital expenditures are capital expenditures made to maintain the operating capacity of the Partnership’s assets and extend their useful lives, replace partially or fully depreciated assets, or other capital expenditures that are incurred in maintaining the Partnership’s existing business and related cash flow.

(6)

Represents distributions to the holders of the Partnership’s common units as of the record date.

 

USA COMPRESSION PARTNERS, LP

FULL-YEAR 2022 ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW GUIDANCE RANGE

RECONCILIATION TO NET INCOME

(Unaudited)

 

 

Guidance

Net income

$33.0 million to $53.0 million

Plus: Interest expense, net

129.0 million

Plus: Depreciation and amortization

229.0 million

Plus: Income tax expense

1.0 million

EBITDA

$392.0 million to $412.0 million

Plus: Unit-based compensation expense (1)

14.0 million

Adjusted EBITDA

$406.0 million to $426.0 million

Less: Cash interest expense

120.0 million

Less: Current income tax expense

1.0 million

Less: Maintenance capital expenditures

23.0 million

Less: Distributions on Preferred Units

49.0 million

Distributable Cash Flow

$213.0 million to $233.0 million

________________________

(1)

Unit-based compensation expense is based on the Partnership’s closing per unit price of $17.45 on December 31, 2021.

 

Contacts

USA Compression Partners, LP

Matthew C. Liuzzi
Chief Financial Officer
512-369-1624
ir@usacompression.com

Contacts

USA Compression Partners, LP

Matthew C. Liuzzi
Chief Financial Officer
512-369-1624
ir@usacompression.com