USA Compression Partners, LP (USAC) | Investment Case

1. Company Snapshot

1.a. Company Description

USA Compression Partners, LP, a growth-oriented Delaware limited partnership that provides natural gas compression services in terms of total compression fleet horsepower.The company offers compression services to oil companies and independent producers, processors, gatherers, and transporters of natural gas and crude oil, as well as operates stations.It primarily focuses on providing natural gas compression services to infrastructure applications, including centralized natural gas gathering systems and processing facilities.

The company was founded in 1998 and is headquartered in Austin, Texas.

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1.b. Last Insights on USAC

USA Compression Partners' recent performance was driven by strong Q3 earnings, record revenues of $250.3 million, and net income of $34.5 million. The company's acquisition of J-W Power for $860 million expanded its horsepower fleet to 4.4 million, boosting scale in key U.S. energy regions. Additionally, USAC raised its full-year EBITDA guidance and demonstrated strong utilization, positioning it for sustained distributable cash flow growth. A 9.3% yield and increased institutional holdings, including a 15.9% stake increase by Corient Private Wealth LLC, further support the company's positive outlook.

1.c. Company Highlights

Last Price	26.56
Change Percentage	2.43%
Open	26.6
Previous Close	25.93
Market Cap ( Millions)	3259
Volume	150950
Year High	28.79
Year Low	21.59
M A 50	24.71
M A 200	24.23

FCF Yield	10.09%
Dividend Yield	7.91%
ROE	-178.66%
Debt / Equity	-9.51%
Net Debt / EBIDTA	0.35%
Price To Book	-29.21
Price Earnings Ratio	29.52
Price To FCF	9.91
Price To sales	3.26
EV / EBITDA	5.41

2. USA Compression Partners, LP Posts Record Adjusted EBITDA, Eyes Growth in 2026

USA Compression Partners, LP reported a strong financial performance for the fourth quarter and full-year 2025, with a record $613.8 million full-year adjusted EBITDA and distributable cash flow of $385.7 million. The company's fourth-quarter adjusted gross margins came in at 66.8%, and its fourth-quarter net income was $27.8 million. The actual EPS for the quarter was $0.2236, missing analyst estimates of $0.28. Revenue growth is expected to be 9.2% next year, according to analyst estimates.

Publication Date: Feb -18

                                    📋 Highlights
                                    Record Financial Performance:
                                                Full-year 2025 adjusted EBITDA reached $613.8M, with distributable cash flow of $385.7M, reflecting strong operational execution.
JW Power Acquisition Synergies:
                                                Anticipated $10-20M annual synergies by 2027, enhancing margins and operational efficiency post-acquisition.
2026 Guidance:
                                                Projected adjusted EBITDA of $770-800M and distributable cash flow of $480-510M, with $230-250M allocated for expansion capital, including 100,000 new horsepower.
Capital Allocation Strategy:
                                                2026 maintenance capital of $60-70M and expansion capital of $230-250M, targeting 1.6x+ distribution coverage ratio and 3.75x leverage ratio.
Operational Enhancements:
                                                $10-20M annual cost savings from JW acquisition synergies and $230-250M expansion CapEx for telemetry upgrades to improve fleet efficiency.

                                

Operational Highlights

The company recently closed the JW Power acquisition, expanding its reach across the US. The acquisition is expected to bring in approximately $10-20 million in annual run-rate synergies by 2027, leading to improvements in operating margins and G&A. The company is working to optimize route management, inventory, contracts, and operational structures to realize these synergies, as stated by Christopher Wauson, Chief Operating Officer.

Guidance and Outlook

The company provided guidance for 2026, forecasting adjusted EBITDA of $770-800 million and distributable cash flow of $480-510 million. Maintenance capital is forecasted to be $60-70 million, and expansion capital is forecasted to be $230-250 million, including approximately 100,000 new horsepower and panel upgrades for improved telemetry practices. The company's leverage ratio at the end of the fourth quarter was 4.0x, and it is targeting a leverage ratio of 3.75x in the near term.

Valuation and Metrics

With a P/E Ratio of 28.82 and an EV/EBITDA of 5.28, the company's valuation metrics indicate a premium for its growth prospects. The Dividend Yield is 8.1%, which is attractive for income-seeking investors. The company's ROIC is 12.15%, indicating a decent return on invested capital. The Net Debt / EBITDA ratio is currently at 0.0, suggesting a healthy debt profile.

Growth Strategy

The company is focused on growing its business, with plans to add approximately 100,000 new horsepower in 2026. The majority of the horsepower will be delivered in the back half of the year, with some trickling in in Q3. The company is also investing in panel upgrades, unit upgrades, and dashboards to improve efficiency and reduce site visits, as explained by Christopher Wauson.

3. NewsRoom

USA Compression Partners LP Announces Filing of 2025 Annual Report on Form 10-K

Feb -17

Source: businesswire.com

USA Compression Partners, LP Common Units (USAC) Q4 2025 Earnings Call Transcript

Feb -17

Source: seekingalpha.com

USA Compression (USAC) Q4 Earnings: Taking a Look at Key Metrics Versus Estimates

Feb -17

Source: zacks.com

USA Compression Partners Reports Fourth-Quarter 2025 Results and Provides 2026 Outlook; Achieves Record Results

Feb -17

Source: businesswire.com

USA Compression to Report Q4 Earnings: What's in Store for the Stock?

Feb -11

Source: zacks.com

USA Compression Partners (USAC) to Release Quarterly Earnings on Tuesday

Feb -10

Source: defenseworld.net

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Jan -26

Source: gurufocus.com

2 Highest Yielding Quality MLPs To Include In Retirement Portfolios

Jan -26

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.53%)

6. Segments

Contract Operations

Expected Growth: 4.5%

USA Compression Partners, LP's 4.5% growth in Contract Operations is driven by increasing demand for natural gas infrastructure, expansion of existing contracts, and new business wins. Additionally, the company's focus on operational efficiency, cost savings, and strategic acquisitions contribute to its growth momentum.

Parts and Service

Expected Growth: 4.8%

USA Compression Partners, LP's 4.8% growth in Parts and Service is driven by increasing demand for natural gas infrastructure, rising production volumes, and a growing fleet of compression units. Additionally, the company's focus on aftermarket services, including maintenance and repair, contributes to the segment's growth.

Related Party

Expected Growth: 5.2%

USA Compression Partners, LP's 5.2% growth is driven by increasing demand for natural gas infrastructure, strategic acquisitions, and expansion of services to existing customers. Additionally, the partnership's focus on operational efficiency and cost savings initiatives have contributed to its growth. Furthermore, the growing need for compression services in the Permian Basin and other key shale plays has also supported the company's growth.

7. Detailed Products

Natural Gas Compression Services

USA Compression Partners, LP provides natural gas compression services to customers in the oil and gas industry, enabling them to transport natural gas through pipelines.

Infrastructure Services

The company offers infrastructure services, including the installation, operation, and maintenance of compression facilities, pipelines, and other related infrastructure.

Equipment Sales

USA Compression Partners, LP sells compression equipment, including compressors, engines, and other related equipment, to customers in the oil and gas industry.

Parts and Service

The company provides parts and service support for compression equipment, including maintenance, repair, and overhaul services.

Engineering and Design Services

USA Compression Partners, LP offers engineering and design services for compression facilities and infrastructure, including design, engineering, and project management.

8. USA Compression Partners, LP's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for USA Compression Partners, LP is moderate due to the availability of alternative services and products in the energy industry.

Bargaining Power Of Customers

The bargaining power of customers for USA Compression Partners, LP is low due to the company's strong market position and limited customer concentration.

Bargaining Power Of Suppliers

The bargaining power of suppliers for USA Compression Partners, LP is moderate due to the presence of multiple suppliers and the company's ability to negotiate prices.

Threat Of New Entrants

The threat of new entrants for USA Compression Partners, LP is low due to the high barriers to entry in the energy industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for USA Compression Partners, LP is high due to the competitive nature of the energy industry, with multiple players competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	92.79%
Debt Cost	7.37%
Equity Weight	7.21%
Equity Cost	9.98%
WACC	7.56%
Leverage	1286.73%

11. Quality Control: USA Compression Partners, LP passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

USA Compression Partners

A-Score: 6.8/10

Value: 6.0

Growth: 5.2

Quality: 5.9

Yield: 10.0

Momentum: 6.0

Volatility: 7.7

1-Year Total Return ->

Archrock

A-Score: 5.6/10

Value: 3.9

Growth: 4.9

Quality: 5.9

Yield: 8.0

Momentum: 5.0

Volatility: 6.0

1-Year Total Return ->

NOV

A-Score: 5.4/10

Value: 7.7

Growth: 5.4

Quality: 5.0

Yield: 4.0

Momentum: 5.0

Volatility: 5.0

1-Year Total Return ->

Liberty Energy

A-Score: 5.0/10

Value: 7.8

Growth: 8.1

Quality: 4.6

Yield: 3.0

Momentum: 4.0

Volatility: 2.3

1-Year Total Return ->

Weatherford

A-Score: 4.7/10

Value: 5.9

Growth: 7.2

Quality: 6.1

Yield: 1.0

Momentum: 4.0

Volatility: 4.0

1-Year Total Return ->

Cactus

A-Score: 4.4/10

Value: 5.5

Growth: 4.4

Quality: 8.1

Yield: 2.0

Momentum: 1.5

Volatility: 5.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-5.47%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.56%

USA Compression Partners, LP - US90290N1090

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on USAC

1.c. Company Highlights

Expensive

Higher Yield

Medium Volatility

Earnings Beats

Less Volatile

Earnings Miss

Revenues Miss

Fairly Valued

Stable Momentum

Revenues Beats

Average Quality

2. USA Compression Partners, LP Posts Record Adjusted EBITDA, Eyes Growth in 2026

Operational Highlights

Guidance and Outlook

Valuation and Metrics

Growth Strategy

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.53%)

6. Segments

Contract Operations

Expected Growth: 4.5%

Parts and Service

Expected Growth: 4.8%

Related Party

Expected Growth: 5.2%

7. Detailed Products

Natural Gas Compression Services

Infrastructure Services

Equipment Sales

Parts and Service

Engineering and Design Services

8. USA Compression Partners, LP's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: USA Compression Partners, LP passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

26.56$

Current Price

26.56$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA