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    USAC
    Earnings call· Mar 2026(Q1 FY26)

    USA Compression Partners Q1 FY26 earnings call USAC

    May 5, 2026 Source

    Executive summary

    USA Compression Partners Q1 FY26 — Strong Integration and Record Pricing Amidst Extended Lead Times

    USA Compression Partners delivered a strong quarter, successfully integrating the J-W Power acquisition and a new ERP system while achieving record pricing. The company is proactively addressing extended engine lead times by placing multi-year orders, positioning itself for continued horsepower growth. Management remains bullish on contract compression demand, driven by natural gas and LNG market expansion, and is focused on operational efficiencies and strategic capital allocation.

    Highlights

    5

    • Average pricing reached an all-time high of $22.73 per horsepower, representing a 5% sequential increase and 8% year-over-year growth.

    • Achieved a distribution coverage of 1.72x, demonstrating strong financial performance.

    • Successfully integrated J-W Power operations and new ERP systems, laying the foundation for future growth and efficiency.

    • Contracted over 90% of the 110,000 new horsepower expected to be added to the fleet in 2026.

    • Reported a Total Recordable Incident Rate (TRIR) of 0.39 in 2025, a 50% reduction from 2024 and well below the BLS industry average of 0.70.

    Concerns

    4

    • New engine lead times have tripled from 50 weeks to approximately 150 weeks, posing a challenge for near-term business continuity and long-term planning.

    • Q1 utilization decreased to 91.9% after incorporating the J-W Power acquisition, which included idle units.

    • Anticipate the leverage ratio to tick higher in Q2 before trending back lower by year-end, following new horsepower deliveries.

    • Expect lubricant costs to increase in the second half of the year if oil prices remain at current high levels.

    Guidance & targets

    7
    CategoryTargetConfidence
    Adjusted EBITDA
    $770 million to $800 million
    high materiality
    High
    Distributable Cash Flow (DCF)
    $480 million to $510 million
    high materiality
    High
    Maintenance Capital Expenditures
    $60 million to $70 million
    medium materiality
    High
    Expansion Capital Expenditures
    $230 million to $250 million
    high materiality
    High
    Debt-to-EBITDA Ratio
    3.75x
    high materiality
    High
    Annual New Contract Compression Growth
    in excess of 100,000 horsepower each year
    medium materiality
    High
    Annual Run Rate Synergies from J-W Integration
    $10 million to $20 million
    medium materiality
    High

    Operational metrics

    23
    Total Recordable Incident Rate (TRIR)
    0.3950% reduction from 2024
    FY25

    Reflects strong safety performance.

    Small Horsepower Utilization Growth
    nearly 10%YoY
    Q1 FY26

    Indicates momentum in the small horsepower class.

    Average Revenue per Horsepower per Month
    $22.735% QoQ, 8% YoY
    Q1 FY26

    Increased pricing to an all-time high.

    Adjusted Gross Margin
    64.4%
    Q1 FY26

    Reported for the first quarter.

    Net Income
    $38.3 million
    Q1 FY26

    Consolidated financial result, excludes first 11 days of J-W Power.

    Operating Income
    $91.4 million
    Q1 FY26

    Consolidated financial result, excludes first 11 days of J-W Power.

    Net Cash Provided by Operating Activities
    $86.1 million
    Q1 FY26

    Consolidated financial result.

    Cash Interest Expense (net)
    $47.1 million
    Q1 FY26

    Consolidated financial result.

    Leverage Ratio (Debt-to-EBITDA)
    3.74x
    Q4 FY25

    At the end of the fourth quarter. Near-term target is 3.75x.

    Total Fleet Horsepower
    4.931 millionadded approximately 1.037 million horsepower QoQ
    Q1 FY26 end

    Reflects the J-W Power acquisition.

    Average Utilization
    91.9%decrease compared to prior quarter
    Q1 FY26

    Reflects the J-W Power acquisition, which included idle units.

    Expansion Capital Expenditures
    $26.4 million
    Q1 FY26

    Reported for the first quarter.

    Maintenance Capital Expenditures
    $9.2 million
    Q1 FY26

    Reported for the first quarter, lower than expected due to SAP implementation.

    Distribution Coverage
    1.72x
    Q1 FY26

    Increased from prior period.

    New Engine Lead Times
    approximately 150 weekstripled from 50 weeks
    Current

    Significant extension impacting planning.

    Package Component Lead Times
    well inside of engine lead times
    Current

    Monitored for ordering when needed.

    J-W Manufacturing Capacity
    100,000 to 125,000 horsepower
    Annual

    Capacity of the acquired manufacturing facility.

    Engine Costs as % of Total Skid Costs
    25% to 40%
    Current

    Engine costs represent a significant portion of total skid costs.

    Oil-Directed Rig Count
    flat
    This year

    Producers showing more optimism for 12-month horizon.

    CPI-U Increase
    almost 100 bps
    Recent

    Impacts CPI-U based contracts.

    LNG Capacity Locked In
    15% to 20%
    Current

    Refers to global LNG capacity.

    JKM Spot Price
    $16vs $9-$10 in Jan/Feb
    Recent

    Compared to U.S. Henry Hub prices.

    Henry Hub Spot Price
    $2.80 to $3.00vs $2.80-$3.20 in Jan/Feb
    Recent

    Compared to JKM prices.

    Industry KPIs

    6
    MetricValueDetails
    Rpo backlogEngines for 2027, 2028, and a portion of 2029
    FCF CAPEX leverageDCF $480M-$510M (FY26 guide); Expansion Capex $230M-$250M (FY26 guide); Maintenance Capex $60M-$70M (FY26 guide); Net Debt/EBITDA 3.74x (Q4 FY25)USD
    M a integration progress$10 million to $20 millionUSD
    Aftermarket installed baseapproximately 10%%
    Orders bookings by segmentover 90%%
    Data center new energy revenue capacity—

    Orderbook & backlog

    2
    New Horsepower Contractedover 90% of 110,000 horsepowerQ1 FY26

    more than double new horsepower deployed in 2025

    Expected to be added to the fleet in 2026.

    Engine Orders for Future GrowthEngines for 2027, 2028, and a portion of 2029Q1 FY26

    Orders placed for engines and package components to support consistent annual growth in excess of 100,000 horsepower. 2028 orders are nearly entirely weighted to large 3600 series engines.

    Deals & partnerships

    1
    J-W PowerAcquisition of compression assets and manufacturing capabilities.

    Closed on January 12, 2026. Added approximately 1.037 million horsepower to the fleet. Included manufacturing capabilities and AMS operations. Q1 earnings exclude impact for the first 11 days of the quarter.

    Risks & headwinds

    4
    Extended Engine Lead TimesCurrent and future years

    Tripled from 50 weeks to approximately 150 weeks

    Mitigation: Proactively placed orders for engines and package components for 2027, and engines for 2028 and a portion of 2029; exploring other engine manufacturers as options.

    Increased Lubricant CostsSecond half of 2026

    Expected to increase

    Mitigation: Focus on minimizing cost increases, driving efficiencies, and addressing pricing with customers as contracts expire and renew (many are CPI-U based).

    Leverage Ratio FluctuationQ2 2026

    Anticipated to tick higher in Q2

    Mitigation: Expected to trend back lower by year-end; company is in a strong position to access capital markets later this year for debt consistency.

    Lower Gross Margin from Acquired J-W AssetsOngoing

    J-W company in aggregate has lower gross margin than legacy asset base

    Mitigation: Focus on a gross margin push, improving structural costs, and efficiency of the J-W organization in the face of an inflationary oil environment.

    What to watch in Q2 FY26

    5

    Leverage Ratio Trend

    Q2 FY26 and year-end FY26
    Current3.74x (Q4 FY25)
    TargetTick higher in Q2, then trend back lower by year-end

    Why it matters

    Indicates progress towards the near-term debt-to-EBITDA target of 3.75x and balance sheet health.

    While we hit this target for the quarter, we anticipate it will tick higher in Q2 as we take delivery of new horsepower that trend back lower by year-end.

    Q&A highlights

    8

    How did Q1 results compare to internal expectations post-J-W integration, and why was guidance maintained despite strong results?

    Management stated that Q1 results were in line with their expectations for the J-W integration model. They are happy with the process and excited about future prospects.

    “I mean I feel like we're in line with where we thought we would be as we put this model together late last year and decided to move forward with the acquisition.”

    asked by Nate Pendleton · answered by Micah Green

    2 min read6 chapters

    Detailed Narrative

    01

    J-W Power Acquisition and Integration

    The acquisition of J-W Power closed on January 12, 2026, and its integration has been a primary focus. The company has integrated combined operations and established new reporting structures, with management expressing satisfaction with the sophistication of J-W's operations, particularly in manufacturing and customer interaction. The integration is expected to yield $10 million to $20 million in annual run rate synergies by year-end 2027.

    02

    ERP System Implementation

    On February 1, 2026, USA Compression completed the integration of its legacy data into a new SAP ERP system. This transition was executed smoothly, though it temporarily deferred maintenance capital expenditures for a few weeks in February. The successful implementation is seen as a foundational step for future operational efficiency and potential acquisition opportunities.

    03

    Extended Lead Times and Proactive Ordering

    New engine lead times have significantly extended from 50 weeks to approximately 150 weeks. In response, the company has proactively placed orders for engines and package components for 2027, and engines for 2028 and a portion of 2029. This strategy aims to ensure consistent new contract compression growth of over 100,000 horsepower annually, leveraging J-W's manufacturing capabilities.

    04

    Market Dynamics and Demand Outlook

    Management observes increased optimism from producers over a 12-month horizon due to an improved commodity backdrop. They are bullish on contract compression, driven by growing demand for natural gas, particularly for LNG exports and data center power. Five new LNG facilities are expected to come online within the next 24 months, which is anticipated to significantly increase demand for U.S. natural gas.

    05

    Operational Efficiency and Cost Management

    The company is focused on minimizing cost increases, particularly for lubricants, which are expected to rise in the second half of the year if oil prices remain high. They plan to address these cost increases through driving efficiencies and adjusting pricing as contracts renew, many of which are CPI-U based. Lower churn rates in Q1 reflect the tight market conditions, positioning the company for outsized horsepower growth in the latter half of 2026 and early 2027.

    06

    Safety Performance

    USA Compression highlighted its strong safety record, with a Total Recordable Incident Rate (TRIR) of 0.39 in 2025, a 50% reduction from 2024. This figure is well below the BLS industry average of 0.70, marking 12 consecutive years of outperforming the benchmark.

    AI-generated summary of the company’s earnings call. Not investment advice.