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Introduction & Market Context
USA Compression Partners LP (NYSE:USAC) released its second quarter 2025 earnings presentation on August 6, highlighting record revenue performance and strong utilization rates. The company, which provides compression services for natural gas transportation, reported sequential improvement from its first quarter results when it missed EPS expectations but maintained its full-year guidance.
USAC shares closed at $23.38 prior to the presentation, trading significantly above its 52-week low of $21.12 but well below its high of $30.10. The company continues to position itself as a beneficiary of increasing natural gas demand, particularly from LNG exports and electrification trends.
Quarterly Performance Highlights
USA Compression reported record quarterly revenue of $250.1 million for Q2 2025, representing a 7% year-over-year increase and a sequential improvement from the $245.2 million reported in Q1. The company achieved this growth while maintaining exceptional fleet utilization rates of 94% overall and 98% for large horsepower units.
As shown in the following quarterly highlights:
Other key financial metrics included Adjusted EBITDA of $149.5 million, up 4% year-over-year, and a distribution coverage ratio of 1.40x, indicating strong cash flow generation relative to distributions. The company also reported record revenue per horsepower of $21.31, a 5% increase from the previous year, demonstrating pricing power in the compression services market.
This performance represents a rebound from Q1 2025, when the company reported an EPS of $0.14 against expectations of $0.23, which had triggered a negative market reaction at the time.
Strategic Positioning
USA Compression emphasized its strategic positioning to capitalize on projected natural gas demand growth in the United States. The company highlighted forecasts showing U.S. gas demand increasing from 103 bcf/d in 2024 to potentially 127 bcf/d by 2030, driven primarily by LNG exports and increased electrification.
The following chart illustrates this projected demand growth and USAC’s strategic positioning:
The company noted that over 60% of its active fleet is deployed in the Permian Basin and along the Gulf Coast, regions expected to benefit most from increased natural gas exports. Additionally, USAC maintains a leading market position in the Northeast, which is anticipated to experience significant in-basin growth from electrification projects.
Based on industry projections, approximately 3.3 million additional horsepower of compression capacity will be required to meet incremental U.S. natural gas demand, creating substantial growth opportunities for the company.
Operational and Financial Performance Trends
USA Compression’s presentation highlighted consistent improvement across key operational and financial metrics since 2022. The company has steadily increased its average revenue-generating horsepower while improving financial performance.
The following chart demonstrates these positive trends:
The data shows average revenue-generating horsepower increasing from 3,067,000 in 2022 to 3,554,000 in the first half of 2025. Adjusted EBITDA has grown from $426 million in 2022 to $299 million in just the first half of 2025, with full-year 2025 guidance maintained at $590-610 million. Distributable cash flow has similarly improved from $221 million in 2022 to a projected $350-370 million for 2025.
Capital expenditures have been managed strategically, with 2025 total capex projected at $111-125 million, significantly lower than the $243 million spent in 2024 and $275 million in 2023.
Shareholder Returns and Competitive Positioning
The presentation emphasized USA Compression’s strong performance relative to industry peers and broader market indices. The company reported a three-year total shareholder return of 87%, outperforming both the Alerian MLP ETF (78%) and the S&P 500 Value index (70%).
As illustrated in the following comparison:
USAC also highlighted its attractive yield of 9%, which compares favorably to the Alerian MLP ETF (8%), S&P U.S. High Yield Corporate Bond Index (7%), S&P U.S. Investment Grade Corporate Bond Index (5%), and S&P 500 Value (2%). This positioning reinforces the company’s appeal to income-focused investors in the current market environment.
Capital Structure Improvements
During the quarter, USA Compression continued to optimize its capital structure through the conversion of preferred units. The company reported that 100,000 preferred units were converted into approximately 5 million common units during Q2 2025.
The presentation detailed the impact of these conversions:
In total, 84% of EIG’s preferred units (420,000 out of 500,000) have now been converted to common units. The company noted that these conversions have minimal impact on its financial metrics while enhancing common unitholder liquidity. The conversion slightly increases total distributions by approximately $149,000 per quarter while modestly reducing the distributable cash flow coverage ratio from 1.40x to 1.38x on a pro forma basis.
The company’s capital structure also benefits from recent credit rating improvements, with Moody’s upgrading USAC’s corporate and unsecured debt rating in February 2025. The company faces no debt maturities until December 2026, providing financial flexibility.
Forward Outlook
USA Compression maintained its full-year 2025 guidance, projecting adjusted EBITDA of $590-610 million and distributable cash flow of $350-370 million. Capital expenditures are expected to range from $111-125 million for the year, with $40 million already spent in the first half.
The company remains well-positioned to benefit from structural tailwinds in the natural gas industry, particularly increased demand from LNG exports and electrification projects. With high utilization rates, strategic positioning in key growth regions, and a stable financial structure, USA Compression appears confident in its ability to maintain its operational momentum through the remainder of 2025.
Full presentation:
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