USA Compression Partners, LP (NYSE: USAC) (“USA Compression” or
the “Partnership”) announced today its financial and operating
results for fourth-quarter 2022.
Fourth-Quarter 2022 Highlights
- Record total revenues of $190.1 million for fourth-quarter
2022, compared to $159.9 million for fourth-quarter 2021.
- Net income was $8.4 million for fourth-quarter 2022, compared
to $3.1 million for fourth-quarter 2021.
- Net cash provided by operating activities was $82.1 million for
fourth-quarter 2022, compared to $81.1 million for fourth-quarter
2021.
- Adjusted EBITDA of $113.0 million for fourth-quarter 2022,
compared to $99.2 million for fourth-quarter 2021.
- Distributable Cash Flow of $60.6 million for fourth-quarter
2022, compared to $52.0 million for fourth-quarter 2021.
- Paid cash distribution of $0.525 per common unit for
fourth-quarter 2022, consistent with fourth-quarter 2021.
- Distributable Cash Flow Coverage was 1.18x for fourth-quarter
2022, compared to 1.02x for fourth-quarter 2021.
“Our fourth-quarter results were indicative of the vital
importance of natural gas compression within the midstream and
broader energy-market value chain. We again experienced
sequential-quarter increases in revenues, Adjusted EBITDA, and
revenue-generating horsepower, along with continued improvements to
pricing,” commented Eric D. Long, USA Compression’s President and
Chief Executive Officer. “Additionally, our fourth-quarter results
featured a quarterly record for revenue. This record quarterly
result was made possible by sequential-quarter improvements to our
fleet utilization, which surpassed a 91-percent exit rate for the
fourth quarter, and by continued improvements to our
quarter-over-quarter average price per horsepower per month. Our
fourth-quarter performance further reduced our leverage ratio while
generating distribution coverage of 1.18 times, representing a more
than 10% improvement over third-quarter 2022.”
Expansion capital expenditures were $46.1 million, maintenance
capital expenditures were $3.7 million, and cash interest expense,
net was $36.2 million for the fourth-quarter 2022.
On January 12, 2023, the Partnership announced a fourth-quarter
cash distribution of $0.525 per common unit, which corresponds to
an annualized distribution rate of $2.10 per common unit. The
distribution was paid on February 3, 2023, to common unitholders of
record as of the close of business on January 23, 2023.
Operational and
Financial Data
Three Months Ended
Year Ended
December 31,
2022
September 30,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Operational data:
Fleet horsepower (at period end) (1)
3,716,854
3,711,205
3,689,018
3,716,854
3,689,018
Revenue-generating horsepower (at period
end) (2)
3,199,548
3,128,845
2,964,206
3,199,548
2,964,206
Average revenue-generating horsepower
(3)
3,171,899
3,090,910
2,950,623
3,067,279
2,951,013
Revenue-generating compression units (at
period end)
4,116
4,034
3,942
4,116
3,942
Horsepower utilization (at period end)
(4)
91.8
%
90.9
%
82.7
%
91.8
%
82.7
%
Average horsepower utilization (for the
period) (4)
91.3
%
90.3
%
82.9
%
88.6
%
82.7
%
Financial data ($ in thousands, except
per horsepower data):
Total revenues
$
190,112
$
179,613
$
159,943
$
704,598
$
632,645
Average revenue per revenue-generating
horsepower per month (5)
$
17.81
$
17.53
$
16.62
$
17.35
$
16.60
Net income
$
8,366
$
9,612
$
3,105
$
30,318
$
10,279
Operating income
$
46,693
$
45,103
$
36,336
$
169,293
$
140,872
Net cash provided by operating
activities
$
82,099
$
49,209
$
81,057
$
260,590
$
265,425
Gross margin
$
64,237
$
61,388
$
49,698
$
233,585
$
199,487
Adjusted gross margin (6)
$
124,119
$
120,160
$
108,945
$
470,262
$
438,256
Adjusted gross margin percentage (7)
65.3
%
66.9
%
68.1
%
66.7
%
69.3
%
Adjusted EBITDA (6)
$
112,991
$
109,156
$
99,205
$
425,978
$
398,380
Adjusted EBITDA percentage (7)
59.4
%
60.8
%
62.0
%
60.5
%
63.0
%
Distributable Cash Flow (6)
$
60,596
$
55,181
$
52,039
$
221,499
$
209,128
____________________________________
(1)
Fleet horsepower is horsepower for
compression units that have been delivered to the Partnership (and
excludes units on order). As of December 31, 2022, the Partnership
had 165,000 large horsepower on order for delivery during 2023.
(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 86.1%,
84.3%, and 80.4% at December 31, 2022, September 30, 2022, and
December 31, 2021, respectively.
Average horsepower utilization based on
revenue-generating horsepower and fleet horsepower was 85.4%,
83.4%, and 80.0% for the three months ended December 31, 2022,
September 30, 2022, and December 31, 2021, respectively. Average
horsepower utilization based on revenue-generating horsepower and
fleet horsepower was 82.9% and 79.8% for the years ended December
31, 2022 and 2021, 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)
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.
(7)
Adjusted gross margin percentage and
Adjusted EBITDA percentage are calculated as a percentage of
revenue.
Liquidity and Long-Term
Debt
As of December 31, 2022, the Partnership was in compliance with
all covenants under its $1.6 billion revolving credit facility. As
of December 31, 2022, the Partnership had outstanding borrowings
under the revolving credit facility of $646.0 million, $954.0
million of availability and, subject to compliance with the
applicable financial covenants, available borrowing capacity of
$333.1 million. As of December 31, 2022, 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 2023 Outlook
USA Compression is providing its full-year 2023 guidance as
follows:
- Net income range of $75.0 million to $95.0 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 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 $490.0 million to $510.0 million;
and
- Distributable Cash Flow range of $260.0 million to $280.0
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 2022 performance. The call will be broadcast live
over the internet. Investors may participate by audio webcast, or
if located in the U.S. or Canada, by phone. A replay will be
available shortly after the call via the “Events” page of USA
Compression’s Investor Relations website.
By Webcast:
Connect to the webcast via the “Events”
page of USA Compression’s Investor Relations website at
https://investors.usacompression.com. Please log in at least 10
minutes in advance to register and download any necessary
software.
By Phone:
Dial (888) 440-5655 at least 10 minutes
before the call and ask for the USA Compression Partners Earnings
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 Adjusted gross margin is useful to investors as
a supplemental measure of the Partnership’s operating
profitability. Adjusted gross margin is primarily impacted 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
or any other measure presented in accordance with GAAP. Moreover,
the Partnership’s 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 cost structure. To
compensate for the limitations of Adjusted gross margin as a
measure of the Partnership’s performance, management believes it
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 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 leases, 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 the Partnership’s 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
the 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 Adjusted EBITDA provides useful information
to investors because, when viewed in conjunction with the
Partnership’s GAAP results and the accompanying reconciliations, it
may provide a more complete assessment of the Partnership’s
performance as compared to considering solely GAAP results.
Management also believes that external users of the Partnership’s
financial statements benefit from having access to the same
financial measures that management uses to evaluate 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
presented in accordance with GAAP. Moreover, the Partnership’s
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 an alternative
to, or more meaningful than, net income (loss), operating income
(loss), cash flows from operating activities, or any other measure
presented in accordance with GAAP. 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 the cash flows that 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 that the
Partnership expects to pay its common unitholders.
Distributable Cash Flow Coverage Ratio is defined as the
period’s 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 permits management,
investors, and others to assess the Partnership’s ability to pay
distributions to common unitholders out of 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 for its 2023 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 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 and net cash provided by operating activities, and
net income 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 2023 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 general economic conditions, including inflation or
supply chain disruptions and changes in economic conditions of the
crude oil and natural gas industries, including any impact from the
ongoing military conflict involving Russia and Ukraine;
- 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;
- competitive conditions in the Partnership’s industry, including
competition for employees in a tight labor market;
- changes in the availability and cost of capital, including
changes to interest rates;
- renegotiation of material terms of customer contracts;
- actions taken by the Partnership’s customers, competitors, and
third-party operators;
- 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 certain 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,
2022
September 30,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Revenues:
Contract operations
$
180,558
$
171,019
$
153,503
$
673,214
$
609,450
Parts and service
5,297
4,901
3,250
15,729
11,228
Related party
4,257
3,693
3,190
15,655
11,967
Total revenues
190,112
179,613
159,943
704,598
632,645
Costs and expenses:
Cost of operations, exclusive of
depreciation and amortization
65,993
59,453
50,998
234,336
194,389
Depreciation and amortization
59,882
58,772
59,247
236,677
238,769
Selling, general, and administrative
17,436
14,663
13,470
61,278
56,082
Loss (gain) on disposition of assets
(443
)
1,118
(276
)
1,527
(2,588
)
Impairment of compression equipment
551
504
168
1,487
5,121
Total costs and expenses
143,419
134,510
123,607
535,305
491,773
Operating income
46,693
45,103
36,336
169,293
140,872
Other income (expense):
Interest expense, net
(37,991
)
(35,142
)
(32,966
)
(138,050
)
(129,826
)
Other
23
27
19
91
107
Total other expense
(37,968
)
(35,115
)
(32,947
)
(137,959
)
(129,719
)
Net income before income tax expense
8,725
9,988
3,389
31,334
11,153
Income tax expense
359
376
284
1,016
874
Net income
8,366
9,612
3,105
30,318
10,279
Less: distributions on Preferred Units
(12,187
)
(12,188
)
(12,187
)
(48,750
)
(48,750
)
Net loss attributable to common
unitholders’ interests
$
(3,821
)
$
(2,576
)
$
(9,082
)
$
(18,432
)
$
(38,471
)
Weighted average common units outstanding
– basic and diluted
98,051
97,968
97,151
97,780
97,068
Basic and diluted net loss per common
unit
$
(0.04
)
$
(0.03
)
$
(0.09
)
$
(0.19
)
$
(0.40
)
Distributions declared per common unit for
respective periods
$
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, 2022
Selected Balance Sheet data:
Total assets
$
2,665,724
Long-term debt, net
$
2,106,649
Total partners’ deficit
$
(116,299
)
Common units outstanding
98,227,656
USA COMPRESSION PARTNERS,
LP
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands —
Unaudited)
Three Months Ended
Year Ended
December 31,
2022
September 30,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Net cash provided by operating
activities
$
82,099
$
49,209
$
81,057
$
260,590
$
265,425
Net cash used in investing activities
(43,530
)
(43,545
)
(15,522
)
(129,945
)
(39,188
)
Net cash used in financing activities
(38,540
)
(5,658
)
(65,785
)
(130,610
)
(226,239
)
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,
2022
September 30,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Total revenues
$
190,112
$
179,613
$
159,943
$
704,598
$
632,645
Cost of operations, exclusive of
depreciation and amortization
(65,993
)
(59,453
)
(50,998
)
(234,336
)
(194,389
)
Depreciation and amortization
(59,882
)
(58,772
)
(59,247
)
(236,677
)
(238,769
)
Gross margin
$
64,237
$
61,388
$
49,698
$
233,585
$
199,487
Depreciation and amortization
59,882
58,772
59,247
236,677
238,769
Adjusted gross margin
$
124,119
$
120,160
$
108,945
$
470,262
$
438,256
USA COMPRESSION PARTNERS,
LP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
ADJUSTED EBITDA TO NET INCOME
AND NET CASH PROVIDED BY OPERATING ACTIVITIES
(In thousands —
Unaudited)
The following table reconciles Adjusted
EBITDA to net income 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,
2022
September 30,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Net income
$
8,366
$
9,612
$
3,105
$
30,318
$
10,279
Interest expense, net
37,991
35,142
32,966
138,050
129,826
Depreciation and amortization
59,882
58,772
59,247
236,677
238,769
Income tax expense
359
376
284
1,016
874
EBITDA
$
106,598
$
103,902
$
95,602
$
406,061
$
379,748
Interest income on capital lease
—
—
—
—
48
Unit-based compensation expense (1)
6,178
3,008
3,599
15,894
15,523
Transaction expenses (2)
—
—
34
27
34
Severance charges
107
624
78
982
494
Loss (gain) on disposition of assets
(443
)
1,118
(276
)
1,527
(2,588
)
Impairment of compression equipment
(3)
551
504
168
1,487
5,121
Adjusted EBITDA
$
112,991
$
109,156
$
99,205
$
425,978
$
398,380
Interest expense, net
(37,991
)
(35,142
)
(32,966
)
(138,050
)
(129,826
)
Non-cash interest expense
1,814
1,814
2,899
7,265
9,765
Income tax expense
(359
)
(376
)
(284
)
(1,016
)
(874
)
Interest income on capital lease
—
—
—
—
(48
)
Transaction expenses
—
—
(34
)
(27
)
(34
)
Severance charges
(107
)
(624
)
(78
)
(982
)
(494
)
Other
65
(33
)
(241
)
(851
)
(2,742
)
Changes in operating assets and
liabilities
5,686
(25,586
)
12,556
(31,727
)
(8,702
)
Net cash provided by operating
activities
$
82,099
$
49,209
$
81,057
$
260,590
$
265,425
____________________________________
(1)
For the three months ended December 31,
2022, September 30, 2022, and December 31, 2021, unit-based
compensation expense included $1.0 million, $1.1 million, and $1.0
million, respectively, of cash payments related to quarterly
payments of distribution equivalent rights on outstanding phantom
unit awards and $0.2 million, $1.1 million, and less than $0.1
million, respectively, related to the cash portion of any
settlement of phantom unit awards upon vesting. For the years ended
December 31, 2022, and 2021, unit-based compensation expense
included $4.4 million and $4.2 million, respectively, of cash
payments related to quarterly payments of distribution equivalent
rights on outstanding phantom unit awards and $1.3 million and $0.3
million, respectively, related to the cash portion of any
settlement of phantom unit awards upon vesting. The remainder of
unit-based compensation expense 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
decrease the carrying value of long-lived assets with recorded
values that are not expected to be recovered through future cash
flows.
USA COMPRESSION PARTNERS,
LP
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
DISTRIBUTABLE CASH FLOW TO NET
INCOME AND NET CASH PROVIDED BY OPERATING ACTIVITIES
(Dollars in thousands —
Unaudited)
The following table reconciles
Distributable Cash Flow to net income 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,
2022
September 30,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Net income
$
8,366
$
9,612
$
3,105
$
30,318
$
10,279
Non-cash interest expense
1,814
1,814
2,899
7,265
9,765
Depreciation and amortization
59,882
58,772
59,247
236,677
238,769
Non-cash income tax expense (benefit)
65
(33
)
59
(151
)
(42
)
Unit-based compensation expense (1)
6,178
3,008
3,599
15,894
15,523
Transaction expenses (2)
—
—
34
27
34
Severance charges
107
624
78
982
494
Loss (gain) on disposition of assets
(443
)
1,118
(276
)
1,527
(2,588
)
Impairment of compression equipment
(3)
551
504
168
1,487
5,121
Distributions on Preferred Units
(12,187
)
(12,188
)
(12,187
)
(48,750
)
(48,750
)
Maintenance capital expenditures (4)
(3,737
)
(8,050
)
(4,687
)
(23,777
)
(19,477
)
Distributable Cash Flow
$
60,596
$
55,181
$
52,039
$
221,499
$
209,128
Maintenance capital expenditures
3,737
8,050
4,687
23,777
19,477
Transaction expenses
—
—
(34
)
(27
)
(34
)
Severance charges
(107
)
(624
)
(78
)
(982
)
(494
)
Distributions on Preferred Units
12,187
12,188
12,187
48,750
48,750
Other
—
—
(300
)
(700
)
(2,700
)
Changes in operating assets and
liabilities
5,686
(25,586
)
12,556
(31,727
)
(8,702
)
Net cash provided by operating
activities
$
82,099
$
49,209
$
81,057
$
260,590
$
265,425
Distributable Cash Flow
$
60,596
$
55,181
$
52,039
$
221,499
$
209,128
Distributions for Distributable Cash Flow
Coverage Ratio (5)
$
51,570
$
51,447
$
51,106
$
205,559
$
203,978
Distributable Cash Flow Coverage Ratio
1.18x
1.07x
1.02x
1.08x
1.03x
____________________________________
(1)
For the three months ended
December 31, 2022, September 30, 2022, and December 31, 2021,
unit-based compensation expense included $1.0 million, $1.1
million, and $1.0 million, respectively, of cash payments related
to quarterly payments of distribution equivalent rights on
outstanding phantom unit awards and $0.2 million, $1.1 million, and
less than $0.1 million, respectively, related to the cash portion
of any settlement of phantom unit awards upon vesting. For the
years ended December 31, 2022, and 2021, unit-based compensation
expense included $4.4 million and $4.2 million, respectively, of
cash payments related to quarterly payments of distribution
equivalent rights on outstanding phantom unit awards and $1.3
million and $0.3 million, respectively, related to the cash portion
of any settlement of phantom unit awards upon vesting. The
remainder of the unit-based compensation expense 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
decrease the carrying value of long-lived assets with recorded
values that are not expected to be recovered through future cash
flows.
(4)
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.
(5)
Represents distributions to the holders of
the Partnership’s common units as of the record date.
USA COMPRESSION PARTNERS,
LP
FULL-YEAR 2023 ADJUSTED EBITDA
AND DISTRIBUTABLE CASH FLOW GUIDANCE RANGE
RECONCILIATION TO NET
INCOME
(Unaudited)
Guidance
Net income
$75.0 million to $95.0
million
Plus: Interest expense, net
162.0 million
Plus: Depreciation and amortization
237.0 million
Plus: Income tax expense
1.0 million
EBITDA
$475.0 million to $495.0
million
Plus: Unit-based compensation expense
(1)
15.0 million
Adjusted EBITDA
$490.0 million to $510.0
million
Less: Cash interest expense
154.0 million
Less: Current income tax expense
1.0 million
Less: Maintenance capital expenditures
26.0 million
Less: Distributions on Preferred Units
49.0 million
Distributable Cash Flow
$260.0 million to $280.0
million
____________________________________
(1)
Unit-based compensation expense is based
on the Partnership’s closing per unit price of $19.53 on December
30, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230214005288/en/
Investor Contacts:
USA Compression Partners, LP
Mike Pearl Chief Financial Officer (832) 823-7306
ir@usacompression.com
Julie McEwen Controller (512) 369-1389 ir@usacompression.com
USA Compression Partners (NYSE:USAC)
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