Q2 2024 USA Compression Partners LP Earnings Call Transcript
Key Points
- USA Compression Partners LP (USAC) reported record revenues, adjusted gross margin, adjusted EBITDA, and average revenue per revenue-generating horsepower for Q2 2024.
- The company achieved an all-time high period-end utilization rate of 95%, with large horsepower units over 1,000 horsepower effectively fully utilized at 99%.
- USAC's leverage ratio continued its downward trend, reducing to 4.23 times, aligning with their long-term goal of 3.75 to 4.25 times.
- The company increased its financial guidance for the full year 2024, with higher ranges for net income, adjusted EBITDA, and distributable cash flow.
- USAC is exploring innovative opportunities, such as beta testing dual drive compression units to generate power, potentially selling power back to the grid when electricity prices are attractive.
- Higher cash interest expense was reported, primarily due to increased average outstanding borrowings.
- The company faces ongoing inflationary pressures, particularly in labor costs, which have not yet cooled.
- There are long lead times for acquiring new compression equipment, with deliveries for units still in the 30- to 40-week range for engines.
- The upcoming election cycle introduces uncertainty, with potential regulatory changes that could significantly impact the energy sector.
- USAC's growth CapEx is up, driven by the need to optimize existing assets and meet customer demand, which may strain financial resources.
Good morning. Welcome to USA Compression Partners second quarter '24 earnings conference call. (Operator Instructions) This conference is being recorded today, August 6, 2024. I now would like to turn the call over to Chris Porter, Vice President, General Counsel and Secretary.
Good morning, everyone, and thank you for joining us. This morning, we released our operational and financial results for the quarter ending June 30, 2024. You can find a copy of our earnings release as well as 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 US 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 belief and include projections and expectations
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