USA Compression Partners Q2 Earnings Call Highlights

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Sun, August 9, 2026 at 4:03 PM GMT+3 7 min read

Key Points

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Second-quarter revenue rose 37% to $342.1 million, while contract operations revenue increased 34% to $304.9 million, driven by the J-W acquisition and higher revenue per horsepower. USA Compression reaffirmed its 2026 adjusted EBITDA, distributable cash flow and capital-spending guidance.
The company plans to add more than 500,000 horsepower by 2030, supported by confidence in natural-gas demand and long equipment lead times. About 50% of units scheduled for delivery in 2027 and a mid-teens percentage of 2028 units are already contracted.
J-W integration is progressing, including manufacturing, fleet standardization and technology investments, though the acquisition has temporarily reduced margins. Management is prioritizing excess cash flow for fleet expansion, maintaining leverage discipline and evaluating only accretive acquisitions.

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USA Compression Partners (NYSE:USAC) reported higher second-quarter revenue and maintained its full-year financial outlook as the company continued integrating the J-W acquisition, expanded its fleet planning and cited extended equipment lead times and customer demand visibility.

For the quarter ended June 30, 2026, the contract compression provider reported total revenue of $342.1 million, up 37% from $250.1 million in the prior-year period. Contract operations revenue increased 34% to $304.9 million, driven primarily by the addition of J-W horsepower and higher average revenue per revenue-generating horsepower, Chief Financial Officer Chris Paulsen said.

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Net income was $45.7 million and operating income was $100.4 million. Net cash provided by operating activities totaled $145.7 million, while net cash interest expense was $47.4 million.

Fleet Expansion and Contracting Activity

Chief Executive Officer Clint Green said the company expects average annual new-horsepower growth of about 2.5% through 2029. Including roughly 850,000 active horsepower acquired from J-W, the plan calls for adding more than 500,000 horsepower by 2030.

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Green said the expansion reflects management's confidence in natural-gas demand growth and USA Compression's ability to maintain market share. He also cited long lead times for certain new engines, which can reach approximately 200 weeks, or nearly four years.

"When you show up with specific multi-year deployment plan, customers can grow with you," Green said, adding that customers are seeking providers with the commitment and capital to meet their future compression requirements.

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Chief Operating Officer Chris Wauson said USA Compression has already contracted about 50% of new units scheduled for delivery in 2027 and a mid-teens percentage of units planned for 2028. He said contracting capacity two years ahead of delivery is atypical and reflects customer confidence in longer-term production growth.

While the company experienced elevated equipment stops during the second quarter, Wauson said request-for-proposal activity remained healthy and the company entered the second half with a healthy pipeline of customer contracts.

Total fleet horsepower was approximately 4.95 million at quarter-end.
Average active horsepower was about 4.45 million.
Average utilization was 92%, reflecting the blended impact of the J-W fleet.
Average revenue per revenue-generating horsepower per month was $22.84, up 0.5% sequentially and 7% year over year.

J-W Integration, Manufacturing and Technology Investments

Management said integration of J-W remains underway following the company's February implementation of SAP. Green said the larger combined organization is capturing labor and cost synergies as it standardizes fleet operations, while also integrating commercial practices related to pricing, contracting and customer service.

J-W's manufacturing facilities provide USA Compression with the ability to package its own compression equipment, Green said. In response to an analyst question, he said the manufacturing facility can currently build about 100,000 to 125,000 horsepower annually, with an additional 20,000 to 60,000 horsepower potentially supplied through other facilities or shops.

That capability gives the company flexibility because it can commit to engines while delaying orders for compressors and other components, according to Green. He said the company has equipment secured through 2029 and expects to consider 2030 requirements soon.

Management also highlighted investments in fleet telemetry, real-time data capabilities and artificial intelligence. Green said the company expects to reach a critical mass of connected assets in 2027, enabling more predictive maintenance, more efficient field-service routing and fewer unplanned downtime events.

Wauson said adjusted margins declined as expected following the J-W acquisition because manufacturing and aftermarket services carry lower contract-services margins. He said management expects the technology investments to contribute to modest quarter-over-quarter margin improvement later in 2026 and into 2027.

Costs, Capital Spending and Outlook

USA Compression reported an adjusted gross margin of 63.5% in the second quarter. The company's leverage ratio was 3.72 times at quarter-end, just below its near-term target of 3.75 times debt to EBITDA.

Second-quarter expansion capital expenditures were $46.8 million, primarily for new units, while maintenance capital expenditures were $16.9 million. Paulsen said maintenance activity accelerated from the first quarter and is expected to trend toward the company's full-year projections.

The company reaffirmed its 2026 outlook for adjusted EBITDA of $770 million to $800 million, distributable cash flow of $480 million to $510 million, maintenance capital expenditures of $60 million to $70 million, and expansion capital expenditures of $230 million to $250 million.

Wauson said the company expects incremental lube-oil costs of approximately $1 million per month during the second half as contracts are updated to reflect higher oil prices. USA Compression does not have a direct contractual pass-through for changes in lubricant prices, he said, but is seeking to recover higher costs as contracts renew. Green added that the company has CPI-U escalators intended to offset inflation.

Distribution, Financing and M&A

Paulsen said the company's current priority for excess cash flow is funding its planned new-horsepower growth rather than changing its distribution policy. Any distribution change would require board approval, he said, while the company also aims to preserve a prudent leverage profile.

The company has ample liquidity under its asset-based lending facility and will consider accessing debt markets opportunistically, Paulsen said. He noted that the company's ABL borrowing rate is below 6%, while longer-term financing was approximately 50 basis points higher at the time of the call.

Green said USA Compression continues to evaluate acquisition opportunities but will remain disciplined, with any transaction needing to be accretive and strategically appropriate. Management said it sees opportunities in growth-oriented and underserved basins, including the Permian, dry-gas regions and the Rockies.

In closing remarks, Green said management sees strong RFQ activity and expects U.S. natural-gas demand to reach about 140 billion cubic feet per day by the end of 2031, up more than 30 Bcf per day from 2025 averages. He said LNG demand growth is expected to account for 18 Bcf to 20 Bcf per day of that increase.

About USA Compression Partners (NYSE:USAC)

USA Compression Partners (NYSE: USAC) is a Houston-based master limited partnership specializing in natural gas compression services for oil and gas producers. The company offers a full suite of midstream compression solutions designed to enhance production flow and optimize field operations. Its core activities include the design, engineering, fabrication, installation, operation and maintenance of natural gas compression equipment onshore across key U.S. basins.

USA Compression's product and service offerings encompass new equipment deployment, aftermarket parts and component sales, field service support, and instrumentation and control systems.

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