Usa Compression Partners, Lp · NYSE:USAC
Usa Compression Partners, Lp — Citi One-on-One Midstream & New Energy Infrastructure Conference 2024
37 slides from Usa Compression Partners, Lp's conference presentation, Aug 13, 2024
Slide 1: USA Compression Partners, LP
USA Compression Partners, LP Citi One-on-One Midstream & New Energy Infrastructure Conference August 13, 2024
Slide 2: Forward-looking statements and USAC Ownership Structure
This presentation contains forward-looking statements related to the operations of the Partnership that are based on management’s current expectations, estimates, and projections about its operations. You can identify many of these forward-looking statements by words such as “believe,” “expect,” “in
Slide 3: Agenda
Agenda I. Company overview II. Financial overview III. Appendix 3 © 2024 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 4: Company overview
Company overview 4 © 2024 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 5: USA Compression at a Glance
USA Compression at a Glance 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 Statistics4 Fleet HP Statistics2 ● Compression services provided acro
Slide 6: Why USAC: From the Perspective of a Unitholder
Why USAC: From the Perspective of a Unitholder 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 – proven and conservative founder-led manag
Slide 7: Simplifying Capital Structure
Simplifying Capital Structure ● USAC opportunistically completed its $1 billion issuance of 7.125% 5-year Unsecured Senior Notes on March 18, 2024 ● Excellent timing with issuance at 291bps spread to benchmark Treasury, near recent lows last seen in January 2022 ● Moody’s Ratings upgraded last issua
Slide 8: USAC History
USAC History Milestones Throughout USAC History 2015: 2018: 2019: 2024: 2024: 1998: Dec 2010: 2013: Upsized ABL $1.7B CDM Issued Issued $1.0B $320MM of Founded by Riverstone $198MM IPO $1.1B acquisition; $750MM 7.125% 2029 $500MM CEO Eric Long acquires proceeds issued 6.875% 2027 Sr Notes; Preferred
Slide 9: Compression is Vital to Natural Gas Infrastructure
Compression is Vital to Natural Gas Infrastructure USAC Focus on Midstream Applications: Provides Operational / Cash Flow Stability with Strong Counterparties Wellhead (Gas & Oil) Midstream Downstream Uses: Gas Lift Regional Gathering Interstate Pipelines Gas Reinjection Central Delivery Point Trunk
Slide 10: Stable Cash Flows Throughout Commodity Cycles
Stable Cash Flows Throughout Commodity Cycles USAC Adjusted EBITDA3 ($MM) Pre-CDM Acquisition Non-Predecessor10 Post-CDM Acquisition10,11 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 11: USAC Customer Overview
USAC Customer Overview Top 10 Customers: Diverse Counterparties and Long-Term Relationships % of Length of ✓ Low revenue concentration risk – top Customer Rev12 relationship Total HP13 10 customers are 42% of total revenue Major O&G 12% > 10 Years 301K Independent Public E&P 6% > 20 Years 218K ✓ 6 o
Slide 12: USAC's Asset Base Supports Declining Leverage
USAC’s Asset Base Supports Declining Leverage USAC Historical Leverage8 Cumulative Pre-CDM Acquisition Non-Predecessor10 Post-CDM Acquisition10,11 Leverage Capex Ratio $2,500 5.50 $2,250 5.00 $2,000 4.50 $1,750 4.00 $1,500 5.50 3.50 $1,250 5.00 3.00 $1,000 4.50 5.18 2.50 4.90 4.84 4.76 $750 4.00 4.6
Slide 13: USAC Key Highlights
USAC Key Highlights 1 Focused business model executing targeted strategy 2 Demonstrated margin and cash flow stability through cycle 3 Key component of critical natural gas infrastructure 4 Strong, reliable counterparties with long-term relationships 5 Long-lived economic assets with high utilizatio
Slide 14: Financial overview
Financial overview 14 © 2024 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL
Slide 15: 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 16: Second-Quarter Highlights
Second-Quarter Highlights Operational and Financial Accomplishments ✓ 46 consecutive quarters of distributions (USAC has never cut its distribution) Record Record ✓ Returned >$1.8 billion to unitholders since IPO Average revenue- $ per revenue- generating HP generating HP ✓ Ample distribution covera
Slide 17: Operational and Financial Performance
Operational and Financial Performance Average Revenue-generating HP (000s) Revenue ($MM) Pre-CDM Acquisition Non-Predecessor10 Post-CDM Acquisition10,11 Pre-CDM Acquisition Non-Predecessor10 Post-CDM Acquisition10,11 4,000 $1,000 3,434 3,473 3,515 3,279 $846 3,140 3,067 2,951 $800 3,000 2,760 $698 $
Slide 18: Best in Class Operator of Large-Horsepower Compression
Best in Class Operator of Large-Horsepower Compression Adjusted EBITDA / Revenue-generating HP3,16 Adjusted gross margin %3,17 $160 70% $159 $150 67% 60% $146 61% $140 $143 58% $130 50% $120 40% $110 $100 30% USAC AROC KGS USAC AROC KGS Adjusted EBITDA ($ in thousands)3,18 Revenue-generating HP YoY
Slide 19: History of Stable Distributions and Strong Returns to Unitholders
History of Stable Distributions and Strong Returns to Unitholders History of stable distributions paid through commodity price cycles Pre-CDM Acquisition Non-Predecessor10 Post-CDM Acquisition10,11 $2.20 $2.09 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.10 $2.01 $2.00 $1.80 $1.60 $1.40 $1.20
Slide 20: Partial Conversions of Preferred Units
Preferred Unitholder Partial Conversions of Preferred Units • During 2024, EIG Veteran Equity Aggregator, L.P. and FS Specialty Lending Fund (collectively “EIG”) converted an aggregate of 320,000 Series A Perpetual Preferred Units (the “Preferred Units”) of the Partnership into Common Units represen
Slide 21: Why USAC: Macro Facts and Financial Highlights
Why USAC: Macro Facts Q2 2024 Actuals3 Revenue: $235 million | Adjusted EBITDA: $144 million | Net Income: $31 million Financial DCF: $86 million | DCF Coverage Ratio: 1.40x Leverage Ratio8: 4.23x Highlights 2024 Guidance3 Adjusted EBITDA: $565 - $585 million | DCF: $345 - $365 million USAC acquired
Slide 22: Appendix
Appendix —— COMPRESSION
Slide 23: Large HP Compression is NOT an Oil Field Service
Large HP Compression is NOT an Oil Field Service Large HP Strategy Has Proven Itself More Stable Over Cycles Large HP Small HP Nature of Gathering Systems, Central Delivery Well-head Service Application: Points, Processing Facilities Asset Churn: Large infrastructure applications Commodity sensitivi
Slide 24: Large HP Gas Applications Drive Revenue Stability
Large HP Gas Applications Drive Revenue Stability Compression Unit Size Matters USAC Focus: Gas Compression Industry: Key Characteristics by Size22 Small - Large X Large XX Large XXX Large Commentary Medium Compression More 400 – 1,000 – 1,500 – 2,300 – Unit 0 – 400 HP horsepower HP Range 1,000 HP 1
Slide 25: Dual-Drive Natural Gas Compression
Dual-Drive Natural Gas Compression Natural Gas Compression Powered by Natural Gas or Electricity in a Single Unit Dual-Drive Compression Delivers: ✓ Lower invested capital with attractive returns ✓ Lower operating expenses ✓ 99% average runtime ✓ Lower CO2 and methane emissions USAC currently only p
Slide 26: Attractive USAC Contract Terms & Billing Practices
Attractive USAC Contract Terms & Billing Practices USAC Standard Compression Services Contract Profile2 ● Contracts are 100% fixed fee (i.e. contract stipulates a fixed $/month), not tied to either volumetric throughput or direct commodity price exposure ● Include annual CPI-U escalator on the anniv
Slide 27: Illustrative Examples of Potential Preferred Unit Conversions
Illustrative Examples of Potential Preferred Unit Conversions Three Months Ended June 30, 2024 24 As Reported Pro Forma 25 ($ in thousands) 64% Converted 100% Assumption Distributable Cash Flow ("DCF") 3 $ 85,863 $ 85,863 Pro Forma increase upon Preferred Unit Conversion - 4,387 DCF $ 85,863 $ 90,25
Slide 28: 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 Midstream Applications Rate-Base Applications • Gas Lift • Regional Gathering • Interstate Pipeline • Gas Reinjection • Gas Proc
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2024 2023 Adjusted gross margin ($ in thousands) Q2 Q1 Q2 Total revenues $ 235,313 $ 229,276 $ 206,920 Cost of operations, exclusive of depreciation and amortization (78,162) (75,072) (69,922) Depreciation and amortization (65,313) (63,251) (60,039) Gross margin $ 91,838 $ 9
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Post-CDM Acquisition10,11 Pre-CDM Acquisition Non-Predecessor 10 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 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2024 2023 2022 2021 Distributable Cash Flow ($ in thousands) YTD Q2 Q1 FY Q4 Q3 Q2 Q1 FY FY Net income $ 54,811 $ 31,238 $ 23,573 $ 68,268 $ 12,841 $ 20,902 $ 23,584 $ 10,941 $ 30,318 $ 10,279 Non-cash interest expense 4,252 2,257 1,995 7,279 1,819 1,819 1,819 1,822 7,265 9,
Slide 32: Non-GAAP Reconciliations for Illustrative Examples
Non-GAAP Reconciliations for Illustrative Examples Three Months Ended June 30, 2024 As Reported Pro Forma24 25 $ in thousands 64% Converted 100% Assumption Net income $ 31,238 $ 31,238 Non-cash interest expense 2,257 2,257 Depreciation and amortization 65,313 65,313 Non-cash income tax expense 37 37
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2024 Guidance 2024 Guidance Net income $105.0 to $125.0 million Plus: Interest expense, net 188.0 million Plus: Depreciation and amortization 260.0 million Plus: Income tax expense 2.0 million EBITDA $555.0 million to $575.0 million Plus: Unit-based compensation expense and
Slide 34: Notes to Presentation
Notes to Presentation 1 As of August 6, 2024, Energy Transfer LP held 46.1 million common units, including 8.0 million common units held by USA Compression GP, LLC (the Partnership’s general partner), public unitholders held 70.9 million common units, and the Partnership had 117.0 million common uni
Slide 35: Notes to Presentation (continued)
Notes to Presentation (continued) 18 Adjusted EBITDA for quarter ended March 31, 2024. Per SEC filings for AROC and KGS. 19 As of March 31, 2024, compared to as of March 31, 2023. Represents revenue-generating horsepower for USAC and KGS, and total operating horsepower for AROC. Statistics for AROC
Slide 36: 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 37: Investor Relations Contact Information
Investor Relations Contact Information IR@usacompression.com 37 © 2024 USA COMPRESSION PARTNERS, LP | CONFIDENTIAL