Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — 2024 J.P. Morgan Global High Yield & Leveraged Finance Conference
32 slides from Usa Compression Partners, Lp's conference presentation, Feb 26, 2024
Slide 1: USA Compression Partners, LP
USA Compression Partners, LP 2024 J.P. Morgan Global High Yield & Leveraged Finance Conference February 26-28, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements related to the operations of USA Compression Partners, LP (the “Partnership” or “USAC”) that are based on management’s current expectations, estimates, and projections about its operations. You can identify many of thes
Slide 3: Why USAC: From the Perspective of a Note Holder
Why USAC: From the Perspective of a Note Holder 25+ Year Proven Track Record Founded in 1998/public since 2013 – long history of high and stable fleet utilization and History EBITDA across multiple cycles – long track record of stability and balanced growth – supportive long-term JPMorgan-led ABL sy
Slide 4: Why USAC: Macro Facts
Why USAC: Macro Facts 2023 Actuals6 Revenue: $846 million | Adjusted EBITDA: $512 million | Net Income: $68 million Financial DCF: $281 million | DCF Coverage Ratio: 1.48x (Q4-23) : 1.35x (FY-23) Highlights Leverage Ratio8: 4.10x (Q4-23) and declining over previous eight quarters 2024 Outlook6 Adjus
Slide 5: Fourth-Quarter Highlights
Fourth-Quarter Highlights Operational and Financial Accomplishments Q-o-Q leverage trending down to leverage Record target of <4.0x, leverage was 4.1x at the end of Near-Record Q4 20238 Average revenue- Utilization generating HP Capital-efficient, opportunistic, and accretive organic growth 3.41
Slide 6: USAC Overview
USAC Overview Large-Horsepower Strategy Vital to Natural Gas Infrastructure, Production, and Delivery to Market Centers; Focused on Long-Term, Fixed-Fee, Take-or-Pay Contracts Business / Strategy Overview USAC Market Statistics5 ● Compression services provided across geographically • IPO: 1/2013 (NY
Slide 7: Financial Strategy Outlook
Financial Strategy Outlook Experienced Management Focused on Improving Balance Sheet ● Large-horsepower infrastructure installations require compression over long lifecycles leading to recurring revenue streams and longer contract tenors Maintain Stability ● Shortage of large-horsepower equipment ex
Slide 8: USAC's Asset Base Supports Declining Leverage
USAC’s Asset Base Supports Declining Leverage USAC Historical Leverage8 Cumulative Pre-CDM Acquisition Non-Predecessor12 Post-CDM Acquisition12,14 Leverage Capex Ratio $2,250 5.50 $2,000 5.00 $1,750 4.50 $1,500 4.00 5.50 $1,250 3.50 5.00 $1,000 3.00 4.50 5.18 $750 4.90 4.84 4.76 2.50 4.00 4.63 4.51
Slide 9: Stable Cash Flows Throughout Commodity Cycles
Stable Cash Flows Throughout Commodity Cycles USAC Adjusted EBITDA6 ($MM) Pre-CDM Acquisition Non-Predecessor12 Post-CDM Acquisition12,14 Horsepower Nominal pandemic- HH Nat Gas Utilization induced utilization $/MMBTU Growth during decline and swift up cycles 100.0% $10 recovery thereafter 90.0% $9
Slide 10: Capitalization Overview
Capitalization Overview Capitalization as of December 31, 2023 Maturity Profile 20 $1.6B Revolving Credit Facility due 2026; drawn as of 12/31/23 6.875% Senior Unsecured Notes due 2026 ($MM) % of cap 6.875% Senior Unsecured Notes due 2027 18 9.75% Series A Preferred Equity (convertible) Cash and cas
Slide 11: USAC Lending History
USAC Lending History Debt Milestones Throughout USAC History 1998: 2004: First ABL 2010-2012: 2013: $198M 2018: $1.7B 2015: Upsized 2019: Issued Founded by $110M Upsized ABL IPO proceeds CDM ABL $1.1B $750M 2027 CEO Eric Long $110M reduce debt acquisition, issued $725M Sr Notes with private $600M
Slide 12: Best in Class Operator of Large-Horsepower Compression
Best in Class Operator of Large-Horsepower Compression Adjusted EBITDA / Revenue-generating HP6,21 Adjusted gross margin %6,22 $160 70% $150 $153 66% 60% $140 56% 50% 55% $137 $130 $133 $132 46% 40% $120 30% $110 $100 20% USAC AROC KGS CCLP USAC AROC KGS CCLP Adjusted EBITDA ($ in thousands)6,23 Rev
Slide 13: Operational and Financial Performance
Operational and Financial Performance Average Revenue-generating HP (000s) Revenue ($MM) Pre-CDM Acquisition Non-Predecessor12 Post-CDM Acquisition12,14 Pre-CDM Acquisition Non-Predecessor12 Post-CDM Acquisition12,14 4,000 $1,000 3,279 3,329 $846 3,140 3,067 2,951 3,000 2,760 $800 $705 $698 $668 $63
Slide 14: Appendix
Appendix USA COMPRESSION
Slide 15: Notes to Presentation
Notes to Presentation 1 As compared to Alerian Midstream Energy Select Index constituents; as of February 19, 2024. 2 Adjusted Investment to Date. Per Tiger Asset Intelligent Compression Fleet Valuation report dated January 26, 2024. 3 Adjusted Net Book Value. Per Tiger Asset Intelligent Compression
Slide 16: Notes to Presentation (continued)
Notes to Presentation (continued) 19 Based on 101.0 million common units outstanding and a closing unit price of $22.83 as of December 29, 2023. 20 The Revolving Credit Facility matures on December 8, 2026, except that if any portion of the 6.875% Senior Unsecured Notes due 2026 are outstanding on D
Slide 17: USAC Ownership Structure
USAC Ownership Structure7 Energy Transfer LP Public Unitholders USA Compression GP, LLC 37% 55% Preferred (our general partner) Unitholders Non-econ GP; Preferred 8% Units USA Compression Partners, LP Issuer of Notes Borrower under ABL facility Wholly-Owned USA Compression Operating Finance Corp. Su
Slide 18: Preferred Unitholder Partial Conversion of Preferred Units
Preferred Unitholder Partial Conversion of Preferred Units • On Friday, January 12, 2024, EIG Veteran Equity Aggregator, L.P. and FS Specialty Lending Fund (collectively “EIG”) elected to convert 40,000 Series A Perpetual Preferred Units (the “Preferred Units”) of the Partnership into Common Units r
Slide 19: Illustrative Examples of Potential Preferred Unit Conversions
Illustrative Examples of Potential Preferred Unit Conversions Three Months Ended December 31, 2023 As Reported Pro Forma26 ($ in thousands) 8% Conversion18 50% Assumption27 100% Assumption 27 Distributable Cash Flow ("DCF")6 $ 79,888 $ 79,888 $ 79,888 Pro Forma increase upon Preferred Unit Conversio
Slide 20: Compression is Vital to Natural Gas Infrastructure
Compression is Vital to Natural Gas Infrastructure USAC Focus on Midstream Applications: Provides Operational / Cash Flow Stability with Strong Counterparties Wellhead (Gas & Oil) Midstream Downstream Uses: Gas Lift Regional Gathering Interstate Pipelines Gas Reinjection Central Delivery Point Trunk
Slide 21: Large-Horsepower Gas Applications Drive Revenue Stability
Large-Horsepower Gas Applications Drive Revenue Stability Compression Unit Size Matters USAC Focus: Gas Compression Industry: Key Characteristics by Size28 Small - Large X Large XX Large XXX Large Commentary Medium Compression 400 – 1,000 – 1,500 – 2,300 – More Unit 0 – 400 HP horsepower HP Range 1,
Slide 22: USAC Customer Overview
USAC Customer Overview Top 10 Customers: Diverse Counterparties and Long-Term Relationships % of Length of Low revenue concentration risk – top Customer Rev29 relationship Total HP30 10 customers are 39% of total revenue Major O&G 11% > 10 Years 308K Independent Public E&P 7% > 20 Years 240K 6 o
Slide 23: Attractive USAC Contract Terms & Billing Practices
Attractive USAC Contract Terms & Billing Practices USAC Standard Compression Services Contract Profile32 ● Contracts are 100% fixed fee (i.e. contract stipulates a fixed $/month), not tied to either volumetric throughput or direct commodity price exposure ● Include annual CPI-U escalator on the anni
Slide 24: U.S. Natural Gas Production Fueled by International Demand
U.S. Natural Gas Production Fueled by International Demand U.S. LNG Export and Natural Gas Production Forecast Through 205010 140 50 Total approved export 130 capacity of 44 bcf/d prior to 45 U.S. pause on new LNG 120 projects 40 Natural Gas Production (bcf/d) 110 35 LNG Exports (bcf/d) 100 30 90 25
Slide 25: High Yield Trading Performance
High Yield Trading Performance 52-week high yield trading performance (YTW%) HHUB J.P. Morgan HY Index J.P. Morgan HY Energy Index J.P. Morgan HY Midstream Index USAC 6.875% due 2026 USAC 6.875% due 2027 AROC 6.250% due 2028 10.00% $5.50 $5.00 9.50% $4.50 9.00% $4.00 8.50% $3.50 8.00% $3.00 $2.50 7.
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2023 Adjusted gross margin ($ in thousands) Full Year Q4 Q3 Q2 Q1 Total revenues $ 846,178 $ 225,049 $ 217,085 $ 206,920 $ 197,124 Cost of operations, exclusive of depreciation and amortization (284,708) (73,193) (74,928) (69,922) (66,665) Depreciation and amortization (246,
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations 14 12 Post-CDM Acquisition Pre-CDM Acquisition Non-Predecessor Years Ended December 31, $ in thousands 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Net income (loss) $ 68,268 $ 30,318 $ 10,279 $ (594,732) $ 39,132 $ (10,551) $ 11,440 $ 12,935 $ (154,273) $ 24,946 $
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2023 Distributable Cash Flow ($ in thousands) Full Year Q4 Q3 Q2 Q1 Net income $ 68,268 $ 12,841 $ 20,902 $ 23,584 $ 10,941 Non-cash interest expense 7,279 1,819 1,819 1,819 1,822 Depreciation and amortization 246,096 62,470 64,101 60,039 59,486 Non-cash income tax expense (
Slide 29: Non-GAAP Reconciliations for Illustrative Examples
Non-GAAP Reconciliations for Illustrative Examples Three Months Ended December 31, 2023 As Reported Pro Forma26 $ in thousands 8% Conversion 18 50% Assumption27 100% Assumption 27 Net income $ 12,841 $ 12,841 $ 12,841 Non-cash interest expense 1,819 1,819 1,819 Depreciation and amortization 62,470 6
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2024 Guidance Δ to 2024 Guidance 2024 Guidance 2023 Actual Midpoint Δ% Net income $95.0 to $115.0 million Plus: Interest expense, net 184.0 million Plus: Depreciation and amortization 260.0 million Plus: Income tax expense 1.0 million EBITDA $540.0 million to $560.0 million
Slide 31: Basis of Presentation; Explanation of Non-GAAP Financial Measures
Basis of Presentation; Explanation of Non-GAAP Financial Measures This presentation includes the non-U.S. generally accepted accounting principles (“non-GAAP”) financial measures of Adjusted gross margin, Adjusted EBITDA, Distributable Cash Flow, and Distributable Cash Flow Coverage Ratio. Adjusted
Slide 32: Investor Relations Contact Information
Investor Relations Contact Information IR@usacompression.com 31 © 2024 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
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