Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — 2021 J.P. Morgan Global High Yield & Leveraged Finance Conference
32 slides from Usa Compression Partners, Lp's conference presentation, Mar 2, 2021
Slide 1: USA Compression Partners, LP
USA Compression Partners, LP 2021 J.P. Morgan Global High Yield & Leveraged Finance Conference March 2-3, 2021
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements relating to the operations of USA Compression Partners, LP (the “Partnership”) that are based on management’s current expectations, estimates and projections about its operations. You can identify many of these forward-looking statemen
Slide 3: Important Note Regarding Non-Predecessor Information
Important Note Regarding Non-Predecessor Information On April 2, 2018, the Partnership consummated the acquisition of CDM Resource Management LLC and CDM Environmental & Technical Services LLC, which together represent the CDM Compression Business (the “USA Compression Predecessor”), from Energy Tra
Slide 4: USAC Overview
USAC Overview USA COMPRESSION
Slide 5: USAC Overview
USAC Overview Large Horsepower Strategy Critical for Domestic Natural Gas Infrastructure Business Snapshot USAC Market Statistics ■ USAC provides compression services across a ■ Public since 1/2013 (NYSE: USAC) geographically–diversified operating area ■ Current Unit Price: $14.56 ■ 22+ year history
Slide 6: Q4 2020 Recap
Q4 2020 Recap Solid Conclusion to 2020 ■ Q4 2020 fleet HP of 3.7 million / average revenue generating HP of 3.0 million ■ Q4 2020 average horsepower utilization of 83% Operational Update ■ Quote activity continues to pick up; customer sentiment improving ■ ~7,500 large HP delivered in Q4 2020 ■ Q4 G
Slide 7: USAC Operates Critical Assets with Positive Fundamentals
USAC Operates Critical Assets with Positive Fundamentals Natural Gas Has Proven Itself as a Long-Term Fuel; Compression is Critical! ■ Bullish on demand for natural gas, both in US and globally Supportive Macro: Gas Isn’t ■ LNG exports, petchem feedstock and power gen driving continued gas usage Goi
Slide 8: Why Focus on Midstream Compression?
Why Focus on Midstream Compression? Operational / Cash Flow Stability with Strong Counterparties Wellhead (Gas & Oil) Midstream Downstream Uses Gas Lift Regional Gathering Interstate Pipelines Gas Reinjection Central Delivery Point Trunkline Gathering Processing Plants Gas Storage Customer Base Broa
Slide 9: USAC Customer Overview
USAC Customer Overview Top 20 Customers: Diverse Counterparties & Long-Term Relationships % of Length of % of Length of Customer Rev(1) relationship Total HP Customer Rev(1) relationship Total HP Independent Public E&P 8% > 10 years 299K Independent Public E&P 2% > 10 Years 39K Major O&G 4% > 5 year
Slide 10: Business Model Allows for Prudent Capital Spending
Business Model Allows for Prudent Capital Spending….. Historical Balance Between Capital Spending and Cash Flow Stability ■ Large HP focus ideally suited for growth and stability ■ Assets provide growth based on marketplace demands ■ Ability to rein in spending and operate for stable cash flow when
Slide 11: Leading to Cash Flow and Asset Stability Through Cycles
…..Leading to Cash Flow and Asset Stability Through Cycles Post-CDM Pre-CDM Acquisition Non-Predecessor (1) Acquisition (2) Horsepower HH Nat Gas Utilization $ /MMBTU Utilization degradation similar to past cycles, but over shorter timeframe 100.0% $14 90.0% $12 80.0% Horsepower utilization average:
Slide 12: Leverage Reduction / Stability Over Time & Throughout Cycles
Leverage Reduction / Stability Over Time & Throughout Cycles USAC’s Asset Base Supports Leverage Stability ■ As a public partnership, USAC has decreased leverage since being privately held ■ Continued prudent management of leverage to suit business stability USAC Historical Leverage(1) Pre-CDM 8.0x
Slide 13: Diversification – The "Right" Operating Regions
Diversification – The “Right” Operating Regions Dry Gas Areas Have Seen Increased Activity Lately Rockies = Northeast = ~5% ~25% Mid- Continent = ~13% Permian/ Louisiana / Delaware Basin = East TX = ~35% ~6% Gulf Coast = ~16% Note: Regional % breakdowns represent active fleet horsepower at December
Slide 14: Key Credit Highlights
Key Credit Highlights ■ 22+ year history focused on large HP applications using standardized, flexible equipment Focused ■ Compression services is substantially all we do; geographic diversity enhances business stability Business Model ■ Fully-integrated CDM acquisition further strengthened asset ba
Slide 15: Natural Gas: Not Going Away!
Natural Gas: Not Going Away! k—— COMPRESSION
Slide 16: Resilient US Natural Gas Demand in 2020
Resilient US Natural Gas Demand in 2020 2020 Nat Gas Demand Off Slightly from 2019 ■ Natural gas continues to play an important role in the US & global economy ■ Natural gas is a critical fuel for economy: power generation, industrial feedstock and residential/commercial demand = 90%+ of usage ■ 202
Slide 17: Longer Term Natural Gas Demand Growing
Longer Term Natural Gas Demand Growing Driven by Industrial Use and LNG Exports ■ Consumption growth between 2020 and 2050 concentrated in exports and industrial use: – Net exports (primarily LNG) add 4.7 Tcf/year by 2050 • January 2021 saw record LNG volumes for 3rd consecutive month – Industrial u
Slide 18: Natural Gas Remains Critical to US Electricity Production
Natural Gas Remains Critical to US Electricity Production Renewables Becoming More Important, But Nat Gas Remains Vital for Electricity ■ More electricity in the US is produced from natural gas than any other fuel ■ Natural gas share projected to decline slightly, but remains critical for US electri
Slide 19: Natural Gas Production
Natural Gas Production E&P Activity Pullback in 2020 Expected to Impact Near-Term Natural Gas Production ■ Following COVID and OPEC actions in Spring 2020, E&P activity curtailment negatively affected gas volumes – Q2 2020 saw ~5% decline before stabilizing for remainder of the year – Forward years
Slide 20: Appendix
Appendix USA COMPRESSION
Slide 21: Organizational Chart
Organizational Chart Energy Transfer Combined, the Energy Family Transfer family owns ~47% of USAC Public Unitholders USA Compression GP, LLC (our general partner) 52.6% 39.2% LP LP Non-econ Preferred GP; Unitholders 8.2% LP Preferred Units USA Compression Partners, LP Note: Percentages reflect USAC
Slide 22: Large Horsepower Gas Applications Drive Stability
Large Horsepower Gas Applications Drive Stability Compression Unit Size Matters USAC Focus: Gas Compression Industry: Key Characteristics by Size 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 1,000 HP 1,5
Slide 23: Balancing Distribution Stability and Leverage
Balancing Distribution Stability and Leverage Annualized Distributions per Common Unit Pre-CDM Stability in Distribution through the cycle Acquisition Non- Predecessor (1)(2) Post-CDM $2.50 Acquisition (2)(4) $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.00 $1.50 Q1 2018
Slide 24: Operational and Financial Performance
Operational and Financial Performance Avg. Revenue Generating HP (000s) Revenue ($MM) Post-CDM Post-CDM Pre-CDM Acquisition Non-Predecessor (1) Pre-CDM Acquisition Non-Predecessor (1) Acquisition (1)(2) Acquisition (1)(2) 4,000 $800 $698 $668 3,279 3,140 $584 3,000 2,760 $600 2,000 $400 1,409 1,378
Slide 25: Macro Thesis: The "Shift to Shale"
Macro Thesis: The “Shift to Shale” Shale Gas Expected to Continue to be the Primary Source of US Natural Gas ■ Shale Dominance: Production from shale shadows ■ Shale gas is typically produced at lower wellhead all other sources pressures (0-50 PSIG) in contrast to conventional gas – 2020 est. ~29 Tc
Slide 26: Compression Throughout the Value Chain
Compression Throughout the Value Chain Midstream Compression Offers Cash Flow & Customer Stability Lower (Sm. Volumes) Pressure Regime Higher (Lg. Volumes) Crude Oil Wells Rate-Base Applications • Gas Lift Midstream Applications • Interstate Pipeline • Gas Reinjection • Regional Gathering • Trunklin
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations 27 © 2021 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations 28 © 2021 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 29: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. Notes: Represents the results of operations of the USA Compression Predecessor only for the three months ended March 31, 2018 and the results of operations of the Partnership, which includes the USA Compression Predecessor, for the nine months ended December 31, 201
Slide 30: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. 30 © 2021 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 31: Non-GAAP Reconciliations, cont'd.
Non-GAAP Reconciliations, cont’d. 2021 Guidance Net income $0.0 to $20.0 million Plus: Interest expense, net 130.0 million Plus: Depreciation and amortization 241.0 million Plus: Income tax expense 1.0 million EBITDA $372.0 million to $392.0 million Plus: Unit-based compensation expense 13.0 million
Slide 32: Basis of Presentation; Explanation of Non-GAAP Financial Measures
Basis of Presentation; Explanation of Non-GAAP Financial Measures This presentation includes the non-GAAP financial measures of Adjusted gross margin, Adjusted EBITDA, Distributable Cash Flow and Distributable Cash Flow Coverage Ratio. EBITDA, a measure not defined under U.S. generally accepted acco
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