USA Compression Partners, LP (USAC): BCG Matrix [11-2024 Updated]
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USA Compression Partners, LP (USAC) Bundle
In the ever-evolving landscape of the energy sector, USA Compression Partners, LP (USAC) stands out with its unique positioning and financial dynamics. As we delve into the Boston Consulting Group Matrix, we will explore how USAC's business segments are categorized into Stars, Cash Cows, Dogs, and Question Marks. With a remarkable year-over-year revenue growth of 10.5% and significant challenges such as a 19.5% decline in parts and service revenue, understanding these dynamics is crucial for investors and stakeholders alike. Discover how USAC navigates its market position and what it means for future growth below.
Background of USA Compression Partners, LP (USAC)
USA Compression Partners, LP (the 'Partnership') is a Delaware limited partnership that operates as one of the largest independent providers of natural gas compression services in the United States. The company is managed by its general partner, USA Compression GP, LLC, which is wholly owned by Energy Transfer. As of September 30, 2024, USA Compression operates a fleet of compression units that provide critical services to the natural gas and crude oil industries.
USA Compression offers natural gas compression services under fixed-term contracts, utilizing compression packages that they design, engineer, own, operate, and maintain. Additionally, the company owns and operates equipment for natural gas treating services, which include carbon dioxide and hydrogen sulfide removal, cooling, and dehydration. Their services are extensively utilized in major shale plays across the U.S., including the Permian Basin, Eagle Ford, Marcellus, and Utica shales, among others.
As of September 30, 2024, the company reported a fleet horsepower of approximately 3.86 million, with a revenue-generating horsepower of about 3.57 million. This reflects a 5.2% increase in revenue-generating horsepower compared to the previous year, indicating strong demand for their services in line with the overall increase in crude oil and natural gas production within the U.S.
Financially, USA Compression has shown resilience with revenues increasing significantly. For the nine months ending September 30, 2024, the Partnership achieved total revenues of approximately $704.6 million, representing a 10.5% increase from the same period in 2023. This growth is primarily attributed to a rise in contract operations revenue due to higher market-based rates and an increase in average revenue-generating horsepower.
The Partnership operates in a capital-intensive industry, necessitating substantial investments to maintain and expand its operations. For 2024, USA Compression plans to allocate between $240 million and $250 million for expansion capital expenditures, reflecting their commitment to enhancing service capacity and meeting growing customer demand.
As of September 30, 2024, USA Compression reported a net income attributable to common unitholders of $60.98 million for the nine months, translating to a basic and diluted net income per common unit of $0.54. Despite the challenges inherent in their industry, the Partnership has maintained a solid financial footing, evidenced by compliance with their debt covenants and a strong cash flow from operations.
In summary, USA Compression Partners, LP stands out as a key player in the natural gas compression sector, with a robust operational framework and a clear strategy for growth, supported by significant investments and a strong market position.
USA Compression Partners, LP (USAC) - BCG Matrix: Stars
Strong Revenue Growth
USA Compression Partners, LP reported a strong revenue growth of 10.5% year-over-year, with total revenues reaching $239.968 million for the three months ended September 30, 2024, compared to $217.085 million for the same period in 2023.
Increased Average Revenue Per Horsepower
The average revenue per horsepower surged by 7.9% for the quarter, attributed to higher market-based rates on newly deployed and redeployed compression units.
High Horsepower Utilization
Horsepower utilization was notably high at 94.4%, reflecting robust demand for compression services.
Significant Rise in Adjusted EBITDA
Adjusted EBITDA increased by 11.9% for the quarter, amounting to $145.69 million, up from $130.164 million in the prior year.
Expansion of Fleet Horsepower
The fleet horsepower expanded to 3.86 million as of September 30, 2024, enabling USA Compression to meet increasing customer demands.
Positive Net Income
Net income attributable to common unitholders stood at $14.939 million for the quarter, compared to $8.714 million in the same quarter last year.
| Financial Metric | Q3 2024 | Q3 2023 | Year-over-Year Change |
|---|---|---|---|
| Total Revenues | $239.968 million | $217.085 million | 10.5% |
| Average Revenue Per Horsepower | Increased by 7.9% | N/A | N/A |
| Horsepower Utilization | 94.4% | N/A | N/A |
| Adjusted EBITDA | $145.69 million | $130.164 million | 11.9% |
| Fleet Horsepower | 3.86 million | N/A | N/A |
| Net Income Attributable to Common Unitholders | $14.939 million | $8.714 million | N/A |
USA Compression Partners, LP (USAC) - BCG Matrix: Cash Cows
Consistent cash flow generation with Distributable Cash Flow (DCF) of $86.6 million.
The Distributable Cash Flow (DCF) for USA Compression Partners, LP (USAC) stands at $86.6 million for the nine months ended September 30, 2024.
Stable distributions declared per common unit at $0.525.
USAC has declared a stable cash distribution of $0.525 per common unit, consistent across multiple quarters, yielding a total distribution of $1.575 for the year 2024.
Established customer base, with a significant portion of revenue from long-term contracts.
As of September 30, 2024, USAC's revenue from established long-term contracts contributes substantially to its financial stability, with $1.2 billion in remaining performance obligations expected to be recognized over the next few years.
Low operational costs relative to revenue growth, enhancing margins.
The operational costs for the nine months ended September 30, 2024, totaled $484.6 million, while total revenues were $704.6 million, resulting in a significant operating income of $219.9 million.
Continued compliance with debt covenants, ensuring financial stability.
As of September 30, 2024, USAC maintained compliance with all covenants under its Credit Agreement, reflecting a strong financial position and operational stability.
| Metric | Value |
|---|---|
| Distributable Cash Flow (DCF) | $86.6 million |
| Distributions per Common Unit | $0.525 |
| Total Revenue (Nine Months Ended Sept 30, 2024) | $704.6 million |
| Total Operational Costs | $484.6 million |
| Operating Income | $219.9 million |
| Remaining Performance Obligations | $1.2 billion |
| Debt Compliance Status | In Compliance |
USA Compression Partners, LP (USAC) - BCG Matrix: Dogs
Parts and Service Revenue Decline
Parts and service revenue experienced a significant decline of 19.5%, dropping from $7.153 million to $5.756 million for the three months ended September 30, 2024, compared to the same period in 2023.
Increased Selling, General, and Administrative Expenses
Selling, general, and administrative expenses increased by 23.5% from $20.085 million in Q3 2023 to $15.364 million in Q3 2024. This increase negatively impacted overall profitability.
Loss on Extinguishment of Debt
In the nine months ended September 30, 2024, USA Compression Partners reported a loss on extinguishment of debt totaling $4.966 million. This loss is associated with the defeasance of the Senior Notes 2026.
Impairment Charges on Compression Equipment
Impairment charges related to compression equipment amounted to $311,000 for the nine months ended September 30, 2024, indicating potential operational inefficiencies within the company.
Decreased Revenue from Natural Gas Treating Services
The company also faced a decrease in revenue from natural gas treating services, which fell by $5.1 million for the nine months ended September 30, 2024, reflecting a potential weakness in the market.
| Financial Metric | Q3 2023 | Q3 2024 | Change (%) |
|---|---|---|---|
| Parts and Service Revenue | $7.153 million | $5.756 million | -19.5% |
| Selling, General, and Administrative Expenses | $20.085 million | $15.364 million | +23.5% |
| Loss on Extinguishment of Debt | - | $4.966 million | - |
| Impairment Charges | $12.346 million | $311,000 | - |
| Revenue from Natural Gas Treating Services | - | $5.1 million decrease | - |
USA Compression Partners, LP (USAC) - BCG Matrix: Question Marks
High levels of long-term debt at $803.2 million, raising financial risk.
The total long-term debt for USA Compression Partners, LP stands at $2.532 billion as of September 30, 2024 . This includes a revolving credit facility of $803.2 million . The high levels of debt increase the financial risk associated with the company, particularly in a fluctuating market environment.
Recent conversion of Preferred Units into common units, implying potential dilution.
As of September 30, 2024, the number of Preferred Units outstanding decreased from 500,000 at the end of 2023 to 180,000. This change includes the conversion of 320,000 Preferred Units into 15,990,804 common units during 2024. Such conversions have implications for potential dilution of existing common unit holders.
Competitive pressures in the compression services market may affect future growth.
The compression services market is facing intense competition, which can impact USA Compression Partners' growth. The demand for compression services is closely tied to the production levels of natural gas and crude oil, which are subject to market volatility. As a result, the company must navigate these competitive pressures to maintain or grow its market share.
Uncertain demand trends for natural gas and crude oil impacting operational capacity.
Demand trends for natural gas and crude oil remain uncertain, affecting operational capacity. As of September 30, 2024, USA Compression reported a 13.4% increase in total revenues year-over-year, yet the operational metrics are sensitive to fluctuations in energy prices and production levels . The company must adapt its strategies to align with these market demands.
Need for capital investments to maintain and expand service offerings amid fluctuating market conditions.
To sustain and expand service offerings, USA Compression requires ongoing capital investments. The company has reported significant capital expenditures, with changes in capital expenditures included in accounts payable and accrued liabilities amounting to $5.193 million . This need for investment is critical in a market characterized by rapid changes and growth opportunities.
| Financial Metric | Value |
|---|---|
| Total Long-term Debt | $2.532 billion |
| Revolving Credit Facility | $803.2 million |
| Preferred Units Outstanding (as of Sept 30, 2024) | 180,000 |
| Revenue Increase (Year-over-Year) | 13.4% |
| Capital Expenditures Adjustments | $5.193 million |
In summary, USA Compression Partners, LP (USAC) exhibits a mixed performance across the BCG Matrix, showcasing strong growth potential with its Stars while relying on its consistent cash flow from Cash Cows. However, challenges loom with declining revenues in the Dogs category and significant financial risks in the Question Marks. Moving forward, USAC must navigate these complexities to leverage its strengths and address its weaknesses for sustainable growth in the competitive compression services market.
Updated on 16 Nov 2024
Resources:
- USA Compression Partners, LP (USAC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of USA Compression Partners, LP (USAC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View USA Compression Partners, LP (USAC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.