USA Compression Partners (NYSE:USAC) used its fourth-quarter 2025 earnings call to highlight record full-year financial results, high fleet utilization, and early integration plans following its recently closed acquisition of J-W Power. Management also introduced 2026 guidance that reflects a full-year contribution from J-W, alongside a larger capital program aimed at expanding horsepower and upgrading fleet telemetry.
Record 2025 results and operational performance
President and CEO Clint Green said 2025 was a “tremendous year” across operations, commercial, and finance, noting the company navigated leadership changes, a headquarters move, a new shared services model, and a new ERP platform. Green said the company posted a total recordable incident rate (TRIR) of 0.39, which he described as about half the industry average.
Acquisition integration and synergy expectations
Green and the leadership team repeatedly emphasized the strategic rationale of the J-W Power acquisition, which closed on January 12. Green said the transaction broadens the company’s reach across major U.S. oil and gas basins and across all horsepower classes, positioning USA Compression as a “clear choice” for operators seeking reliable service.
Chief Operating Officer Chris Wauson said the company has started planning to optimize route management, inventory, contracts, and operational structures in order to begin realizing synergies as early as 2026. He added that USA Compression’s new ERP system is scheduled to go live in the first quarter of 2026 for legacy assets, with J-W assets expected to be integrated during 2026. Wauson said the company expects “modest one-time costs” tied to the transaction in 2026, with “substantial synergy capture” targeted by 2027.
Wauson said the company is still assessing the opportunity, but currently anticipates $10 million to $20 million in annual run-rate synergies achieved by the end of 2027. He said these are expected to come from both operating margin and G&A improvements, with additional potential commercial synergies as the combined company serves a broader customer base.
Wauson also discussed the fleet acquired with J-W, including approximately 200,000 idle horsepower that will be reviewed over the next year. He reiterated the company’s view that about 50,000 horsepower is readily deployable with limited capital spending, while the remainder could be addressed through analysis that may include “potential monetization” of some horsepower. He added that the acquisition included a manufacturing business that provides optionality for third-party sales and internal reconfigurations.
Market backdrop and equipment lead times
Green said the energy macroenvironment stabilized in 2025, but development pace slowed in the Permian as rigs declined in response to lower oil prices. He noted that while oil production flattened in the second half of the year, natural gas volumes continued to rise and ended about 9% higher year-over-year.
Green said USA Compression remains bullish on the Permian longer term and noted that, with the J-W acquisition, the company increased active horsepower in the Permian to around 1.7 million. He also pointed to expanded presence in oil and liquids-rich basins and major natural gas basins including the Marcellus, Utica, and Haynesville, which he said returned to growth in 2025 amid increased local demand, infrastructure debottlenecking, and higher natural gas prices. Management cited an average natural gas price of $3.52 per MMBtu in 2025, a 56% increase from the prior year.
Management also addressed rising lead times for new equipment, which Green said have increased to “over two years.” In Q&A, Green attributed the primary driver to Caterpillar engines, noting demand tied to data centers and generation. He added he expects some form of manufacturer price increase later in 2026, though he said he had not heard of one yet at the time of the call.
Quarterly results, guidance, and capital plans
CFO Chris Paulsen said fourth-quarter pricing rose to an all-time high, averaging $21.69 per horsepower, up 1% sequentially and 4% year-over-year. Average active horsepower increased about 1% versus the third quarter to 3.579 million. Fourth-quarter adjusted gross margins were 66.8%, which Paulsen said was consistent with historical trends.
For the fourth quarter, Paulsen reported:
- Net income: $27.8 million
- Operating income: $76.6 million
- Net cash provided by operating activities: $139.5 million
- Cash interest expense, net: $43.4 million
- Leverage ratio: 4.0x at quarter-end
Fleet metrics at year-end included total fleet horsepower of approximately 3.9 million, with about 21,000 horsepower added versus the prior quarter. Fourth-quarter expansion capital expenditures were $40 million and maintenance capital expenditures were $7.8 million, with expansion spending primarily tied to new units.
For full-year 2025, Paulsen said maintenance capital totaled $39.4 million and expansion capital was $117.6 million, both toward the low end of prior guidance. He also said full-year DCF exceeded recently increased guidance in part due to the final preferred unit conversion in December.
Looking ahead, management’s 2026 outlook—reflecting a full-year contribution from J-W—calls for:
- Adjusted EBITDA: $770 million to $800 million
- Distributable Cash Flow: $480 million to $510 million
- Maintenance capital: $60 million to $70 million
- Expansion capital: $230 million to $250 million
Paulsen said expansion capital includes just over 100,000 new horsepower (more than 2% of active fleet) and panel upgrades aimed at improved telemetry practices, along with approximately $40 million of other capital for vehicles, tools, technology, and related items.
In Q&A, the company further broke down growth spending, stating about $205 million is tied to core compression growth (new units, make-ready, and reconfigurations), with approximately $150 million of that tied to new units. Management said about half of 2026’s new horsepower is already under contract, and Wauson said the remaining capacity is expected to be contracted, primarily with “tier one customers.”
On timing, Green and Wauson said most of the 2026 incremental horsepower is expected to arrive in the back half of the year, with the bulk coming in late third quarter into the fourth quarter.
Paulsen said the company’s budget is designed to improve debt metrics, citing a near-term leverage target of 3.75x debt-to-EBITDA over the next 12 months. He also said that, at current Federal Reserve rates, borrowing costs are about 50 basis points lower using the ABL compared with the most recent notes refinance, and he noted roughly $500 million of capacity excluding an additional $300 million accordion feature. Paulsen also cautioned that the addition of J-W will reduce aggregate gross margins in the near term, with the stated goal of aligning those margins more closely with legacy USA Compression over the next two years as synergies are realized.
In a discussion about distributions, Green said normalized distribution coverage in the fourth quarter was about 1.55x, and management is targeting coverage in the 1.6x+ range in 2026. Green said the company will continue discussions with unit holders on the appropriate approach to distribution growth as coverage expands, while also balancing deleveraging goals.
Management also said it continues to evaluate distributed power opportunities, with Green noting the company has reviewed several potential investments over the past 12 to 18 months but has not pursued them because those evaluated did not meet internal requirements.
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.
