Yahoo Finance USA Compression (USAC) Down 6.2% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for USA Compression Partners (USAC). Shares have lost about 6.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is USA Compression due for a breakout? 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 catalysts.
USA Compression Posts Fourth Quarter Loss, revenues Beat
USA Compression Partners, LP reported a fourth-quarter 2022 net loss of 4 cents per common unit, lagging the Zacks Consensus Estimate of a profit of 6 cents due to higher total costs and other expenses that was up 28.5% year over year.
However, the loss was narrower than the year-ago quarter’s loss of 9 cents per share. This favourable comparison was due to the partnership posting a net income of $8.4 million in the fourth quarter of 2022, compared with a net income of $3.1 million for the same period last year as pricing and utilization improved.
Revenues of $190.1 million were approximately 18.9% higher than the year-ago quarter’s reading of $159.9 million and beat the Zacks Consensus Estimate of $180 million.
Adjusted EBITDA increased about 14% to approximately $113 million from last year’s Fourth-quarter figure of $99.2 million. Moreover, the partnership’s distributable cash flow rose from $52 million in the prior-year quarter to $60.6 million.
The firm reported an operating cash flow of $82.1 million in the quarter, up from the $81.1 million generated in the prior-year quarter. However, its gross operating margin of 65.3% declined from the year-ago period’s 68.1%.
In the fourth quarter, USA Compression Partners’ revenue-generating horsepower capacity increased by about 7.4% to 3,171,899 horsepower from the level recorded in the corresponding period of last year. Average monthly revenues per horsepower were $17.81, higher than the year-ago quarter’s figure of $16.62.
USAC’s average quarterly horsepower utilization rate came in at 91.3%, higher than 82.9% in the year-ago period.
DCF, Capex & Balance Sheet
USA Compression Partners’ distributable cash flow (DCF) available to limited partners for the fourth quarter equalled $60.6 million up 16.4% from the year-ago level.
On Jan 12, 2023, the firm announced a fourth-quarter cash distribution of 52.50 cents per unit ($2.10 on an annualized basis). The distribution was paid out on Feb 3, 2023, to common unitholders of record as of Jan 23, 2023.
It spent $46.1 million on growth capex. The partnership’s maintenance capex amounted to $3.7 million.
As of Dec 31, 2022, USA Compression Partners had about $2.1 billion of net long-term debt.
Guidance
For 2023, USAC anticipates distributable cash flow in the $260-$280 million range. The partnership also expects adjusted EBITDA in the $490-510 million range.
Furthermore, the company now anticipates 2023 net income in the $75-$95 million range.
USA Compression Partners LP is confident in the long-term demand for natural gas and plans to pursue growth opportunities in the oil and gas industry. They aim to expand their compression unit fleet and optimize operations for increased profitability. However, the company acknowledge the potential risks and uncertainties of the industry, including commodity price fluctuations, regulatory changes, and competition.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -66.67% due to these changes.
VGM Scores
At this time, USA Compression has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise USA Compression has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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USA Compression Partners, LP (USAC) : Free Stock Analysis Report
