USA Compression Partners, LP (USAC)

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USA Compression Partners LP (USAC)

Q4 2012 Earnings Call

February 26, 2013 10:00 am ET


J. Gregory Holloway – Vice President, General Counsel and Secretary

Eric D. Long – President and Chief Executive Officer

Joseph C. Tusa, Jr. – Vice President and Chief Financial Officer


James M. Rollyson – Raymond James & Associates, Inc.

Sharon Lui – Wells Fargo Advisors LLC

Ted J. Durbin – Goldman Sachs & Co.



Welcome to the USA Compression Partners LP’s Fourth Quarter and Full Year 2012 Earnings Conference Call. During today’s call, USA Compression Partners LP may be referred to as USA Compression or USAC. At this time, I would like to inform you that this conference is being recorded. We will be facilitating a question-and-answer session after management’s remarks. (Operator Instructions)

I would now like to turn the call over to Mr. Greg Holloway, General Counsel. Sir, you may proceed.

J. Gregory Holloway

Well, thanks, Kandith. Also would you let people know and perhaps that’s what I’m doing right here now that this call will be available on our website for the next eight days. Are there any other instructions Kandith on that?


No, sir. But I can add that in.

J. Gregory Holloway

Okay, thanks. Well, welcome everybody to our call. As most of you know, yesterday afternoon, we released our financial results for the fourth quarter and the full year ended December 31, 2012. Copies of our earnings release may be obtained at our website, which is During this call, USA Compression will discuss certain non-GAAP measures in reviewing our performance such as adjusted EBITDA, gross operating margins, and distributable cash flow. You will find definitions and the reconciliation of these measures to GAAP measures, in the summary pages of the earnings release on our website.

I want to remind listeners that the news release issued yesterday afternoon by USAC, our officers prepared remarks on this conference call and the related question-and-answer session including forward-looking statements. These forward-looking statements includes projections, and expectations of our performance and represents USA Compression’s current beliefs, various factors could cause results to differ materially from those projected in the forward-looking statements. Information concerning the risks, challenges and uncertainty that could cause actual results to differ materially from those in the forward-looking statements can be found in our press release, as well as in our finalized year perspective as filed with the Securities and Exchange Commission on January 16, 2013, and those set forth from time to time in our other filings with the SEC, all of which are available on our website at Except this required by law USA Compression expressly disclaims any intention or obligation to revise or update any forward-looking statements.

You host for this mornings call is Eric Long, President and Chief Executive Officer of USA Compression, I will now turn the call over to Eric.

Eric D. Long

Thank you Greg and good morning to everyone. With me today along with Greg Holloway, our General Counsel is Jody Tusa, CFO of USA Compression. On today’s call I will review our performance for the fourth quarter and full year results for 2012 and provide commentary on our growth opportunities for 2013.

Starting with our performance, we’ve reported record levels of revenue for both the fourth quarter and the full year 2012. Revenue for the fourth quarter of 2012 was $31.8 million compared to $28.4 million for the fourth quarter of 2011.

Revenue for the full-year 2012 was $118.8 million, an increase of 20% over the $98.7 million, we reported in 2011. Adjusted EBITDA for the fourth quarter of 2012 was $16.8 million versus $14.1 million for the fourth quarter of 2011, and with $63.5 million for 2012 compared to $51.3 million for 2011.

We believe we will continue to see significant growth in our revenues, and adjusted EBITDA as a result of the additional capital expenditures we invested in new compression units in 2012, and with expected to be invested in 2013.

We added 200,000 horsepower of new compression units to our fleet in 2012, and end of the year with approximately 920,000 total fleet horsepower, making USA Compression one of the largest independent providers of compression services in the U.S.

In addition our horsepower utilization rates remain strong throughout 2012 at well above 90%. We continue to see strong demand for our contract compression services throughout the shale in unconventional plays, in which we operate, but especially in the Marcellus, and Eagle Ford shale’s and the Mississippi Lime in Granite Wash areas. Based on continued strong demand signals from our customers, we have ordered approximately 87,000 horsepower of new compression units, scheduled for delivery predominately over the first half of this year, of which 51.7% is currently under customer contracts.

Our 2013 financial guidance contemplates the addition of 100,000 horsepower of new compression units, but we will continue to evaluate our customer demand to determine whether to increase the size of our compression unit purchases for this year. Our revenue generating horsepower increased from 649,285 horsepower at the end of 2011 to 794,324 horsepower at the end of 2012 due to the additional horsepower we placed into service in the Marcellus, Fayetteville, Woodford and Eagle Ford shale plays as well as the Mississippi Lime in Granite Wash areas. We expect our growth in 2013 to primarily in the liquid rich portions of shale and unconventional plays.

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