USA Compression Partners LP

Good morning. Welcome to USA Compression Partners' first quarter 2025 earnings conference call. During today's call, all parties will be in a listen-only mode. At the conclusion of management's prepared remarks, the call will be open for Q&A. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. This conference is being recorded today, May 6, 2025. I now would like to turn the call over to Chris Porter, Vice President, General Counsel, and Secretary.

Good morning, everyone, and thank you for joining us. This morning we released our operational and financial results for the quarter ending March 31, 2025. You can find a copy of our earnings release as well as a recording of this call in the investor relations section of our website During this call, our management will reference certain non-GAAP measures. You will find definitions and reconciliations of these non-GAAP measures to the most comparable U.S. GAAP measures in our earnings release. As a reminder, our conference call will include forward-looking statements. These statements are based on management's current beliefs and include projections and expectations regarding our future performance and other forward-looking matters. Actual results may differ materially from these statements. Please review the risk factors included in this morning's earnings relief and in other public filings. Please note that information provided on this call speaks only to managers' views as of today, May 6, 2025, and may no longer be accurate at the time of a replay. I will now turn the call over to Clint Green, President and CEO of USA Compression.

Thank you, Chris. Good morning, everyone, and thank you for joining our call. This morning, we released our first quarter 2025 results. We're extremely pleased that we were once again able to deliver strong revenues, adjusted gross margin, and average horsepower utilization, leading to a record average revenue per horsepower per month for the quarter. On the operational front, we continue to improve top-line revenue per generating horsepower with new and recontracted rates moving higher, benefiting from continued tightness in the markets. In Q1, we ordered approximately 40,000 new horsepower, the majority of which will be delivered before year end. We are also evaluating opportunities for the remaining new horsepower to be delivered before year end. Additionally, we are actively responding to 2026 proposals and anticipate more rateable quarterly increases to new horsepower next year. Finally, we have completed the idle to active initiative that commenced early last year. Although our total active horsepower was essentially flat on a sequential quarter basis, our large horsepower continues to be close to fully utilized. Going forward, we expect our most significant gains in horsepower will occur as we continue our disciplined growth strategy of acquiring large horsepower, barring significant changes in small horsepower utilization. Since our last call in February, commodity prices have softened considerably tied to tariff-driven market uncertainty. However, thus far in Q1, we have seen key upstream companies in the Permian and the Northeast reaffirm their full-year capital and production targets, but also provide the market capital allocation options in the case that low commodity prices persist. On the gas demand side, Amazon, Microsoft, and NVIDIA reaffirmed that the data center market remains strong, and both Range and EQT highlighted incremental power demand growth in the Northeast. where USA holds the largest contract compression fleet, totaling around 900,000 horsepower. At USAC, we are actively monitoring the daily movement on tariffs and see a potential for minimal impacts to our parts and materials business once we begin to work through current inventories. On the capital front, we do not anticipate a tariff impact to our 2025 new horsepower cost, as costs were locked in at the time of order placement. Looking forward, it is too early to tell. Many of the capital components of our business are tied directly to U.S. manufacturing entities who source steel evenly from both international and domestic markets. We would expect those entities to work through inventories and then decide if a contract rate in excess of historical increases is reasonable and justified if a tempered market outlook exists. As our investors know, the compression business is sustained by long-term agreements and is less susceptible to short-term commodity prices. Nonetheless, we keep a watchful eye on our industry and the potential impacts to slow production from current market uncertainty given the natural gas and crude oil are a feedstock for so many things that we use every day. At this time, we believe we can maintain our adjusted operating margins for the foreseeable future, which have consistently been around 67%. remaining an even-handed partner for our customers to enhance their value and ours. On the personnel front, I want to highlight Chris Wasson's promotion to Chief Operating Officer, a recognition that is well-deserved, given his long-standing leadership in our Permian operations and 26 years' experience in the compression industry. Chris is joining us on the call today. On to the shared services front, we have fully transitioned IT and HR functions in Q1 and remain on track for a Q1 2026 ERP implementation that should yield meaningful improvements in daily management of the business. With that, I will turn the call over to Chris Paulson, our Chief Financial Officer, to discuss our first quarter highlights and 2025 guidance in more detail.