USA Compression Partners, LP

Three months ended June 30, 2025, compared to the three months ended June 30, 2024

The following table summarizes our results of operations for the periods presented (dollars in thousands):

*Not meaningful

Contract operations revenue. The $3.6 million increase in contract operations revenue for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily was due to (i) a 5.0% increase in average revenue per revenue-generating horsepower per month as a result of higher market-based rates on newly deployed and redeployed compression units, and CPI-based and other market-based price increases on existing customer contracts that occur as market conditions permit and (ii) a 1.0% increase in average revenue-generating horsepower as a result of increased demand for our services, commensurate with an overall increase in crude oil and natural gas production in the onshore U.S., partially offset by (iii) a $9.1 million decrease in contract operations revenue from existing customers acquired by Energy Transfer since the previous period that are now classified as related-party revenue in the current period and (iv) a $2.5 million decrease in revenue attributable to natural gas treating services.

Average revenue per revenue-generating horsepower per month associated with our compression services provided on a month-to-month basis did not differ significantly from the average revenue per revenue-generating horsepower per month associated with our compression services provided under contracts in their primary term during the period.

Parts and service revenue. The $0.7 million increase in parts and service revenue for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily was due to an increase in maintenance work performed on units outside the scope of our core maintenance activities and in directly reimbursable freight and crane charges that are the financial responsibility of the customers. Demand for retail parts and services fluctuates from period to period based on varying customer needs.

Related-party revenue. Related-party revenue was earned through related-party transactions that occur in the ordinary course of business with various affiliated entities of Energy Transfer. The $10.5 million increase in related-party revenue for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily was due to revenue recognized from existing customers acquired by Energy Transfer since the previous period that are now classified as related-party revenue in the current period.

Cost of operations, exclusive of depreciation and amortization. The $8.3 million increase in cost of operations, exclusive of depreciation and amortization, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily was due to (i) a $3.5 million increase in direct expenses, primarily driven by increased spending on parts resulting from higher costs and increased usage associated with increased average revenue-generating horsepower, (ii) a $3.2 million increase in direct labor costs due to increased operating headcount associated with increased average revenue-generating horsepower and higher employee costs, and (iii) a $0.9 million increase in retail parts and service expenses.

Depreciation and amortization expense. The $5.5 million increase in depreciation and amortization expense for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily was due to overhauls and major improvements to compression units.

Selling, general, and administrative expense. The $1.3 million decrease in selling, general, and administrative expense for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily was due to (i) a $2.2 million decrease in unit-based compensation expense attributable to a reversal of unit-based compensation expense resulting from the forfeiture of certain awards by certain former senior management and to mark-to-market changes to our unit-based compensation liability that occurred as a result of changes to our per-unit trading price as of June 30, 2025 and (ii) a $0.8 million decrease in employee related expenses due to decreased administrative headcount and lower employee costs, partially offset by (iii) a $0.9 million increase in insurance and other administrative expenses, (iv) a $0.4 million increase in severance charges and other employee costs primarily related to the departure of certain senior management as well as retention and relocation payments related to the shared services integration during the current period, and (v) a $0.2 million increase in outside services and professional fees.

Impairment of assets. The $3.2 million and $0.3 million impairments of assets for the three months ended June 30, 2025 and 2024, respectively, primarily resulted from our evaluation of the future deployment of our idle fleet under current market conditions. The primary circumstances supporting this impairment were: (i) unmarketability of certain compression units into the foreseeable future, (ii) excessive maintenance costs associated with certain fleet assets, and (iii) prohibitive retrofitting costs that likely would prevent certain compression units from securing customer acceptance. These compression units were written down to their estimated salvage values, if any.

As a result of our evaluation during the three months ended June 30, 2025 and 2024, we retired four and two compression units, respectively, with approximately 5,900 and 1,300 of aggregate horsepower, respectively, that previously were used to provide compression services in our business.

Interest expense, net. The $1.2 million decrease in interest expense, net for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily was due to lower weighted-average interest rates under the Credit Agreement, partially offset by increased aggregate borrowings.

Gain on derivative instrument. The $3.1 million gain on derivative instrument for the three months ended June 30, 2024, resulted from the change in fair value of the interest-rate swap due to changes in the interest-rate forward curve and cash received during the period. This interest-rate swap was terminated in August 2024; see Note 7 to our unaudited condensed consolidated financial statements in Part I, Item 1 “Financial Statements” of this report for additional information on this interest-rate swap and termination.

Six months ended June 30, 2025, compared to the six months ended June 30, 2024

The following table summarizes our results of operations for the periods presented (dollars in thousands):

*Not meaningful

Contract operations revenue. The $10.5 million increase in contract operations revenue for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was due to (i) a 5.3% increase in average revenue per revenue-generating horsepower per month, as a result of higher market-based rates on newly deployed and redeployed compression units, and CPI-based and other market-based price increases on existing customer contracts that occur as market conditions permit and (ii) a 1.7% increase in average revenue-generating horsepower as a result of increased demand for our services, commensurate with an overall increase in crude oil and natural gas produced within the U.S., partially offset by (iii) a $17.1 million decrease in contract operations revenue from existing customers acquired by Energy Transfer since the previous period that are now classified as related-party revenue in the current period and (iv) a $5.2 million decrease in revenue attributable to natural gas treating services.

Average revenue per revenue-generating horsepower per month associated with our compression services provided on a month-to-month basis did not differ significantly from the average revenue per revenue-generating horsepower per month associated with our compression services provided under contracts in their primary term during the period.

Parts and service revenue. The $0.3 million increase in parts and service revenue for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was due to an increase in maintenance work performed on units outside the scope of our core maintenance activities and in directly reimbursable freight and crane charges that are the financial responsibility of the customers. Demand for retail parts and services fluctuates from period to period based on varying customer needs.

Related-party revenue. Related-party revenue was earned through related-party transactions that occur in the ordinary course of business with various affiliated entities of Energy Transfer. The $20.0 million increase in related-party revenue for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was due to revenue recognized from existing customers acquired by Energy Transfer since the previous period that are now classified as related-party revenue in the current period.

Cost of operations, exclusive of depreciation and amortization. The $14.9 million increase in cost of operations, exclusive of depreciation and amortization, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was due to (i) a $6.5 million increase in direct labor costs due to increased operating headcount associated with increased average revenue-generating horsepower and higher employee costs, (ii) a $6.0 million increase in direct expenses, primarily driven by increased spending on parts resulting from higher costs and increased usage associated with increased average revenue-generating horsepower, (iii) a $1.5 million increase in retail parts and service expenses, for which a corresponding increase in parts and service revenue also occurred, and (iv) a $0.4 million increase in outside maintenance costs due to increased use of third-party labor during the current period.

Depreciation and amortization expense. The $12.7 million increase in depreciation and amortization expense for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was due to overhauls and major improvements to compression units.

Selling, general, and administrative expense. The $5.2 million decrease in selling, general, and administrative expense for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was due to (i) a $6.3 million decrease in unit-based compensation expense attributable to a reversal of unit-based compensation expense resulting from the forfeiture of certain awards by certain former senior management and to mark-to-market changes to our unit-based compensation liability that occurred as a result of changes to our per-unit trading price as of June 30, 2025, (ii) a $1.4 million decrease in employee related expenses due to decreased administrative headcount and lower employee costs, and (iii) a $0.9 million decrease in professional fees primarily related to an initiative to improve business performance, partially offset by (iv) a $1.8 million increase in severance charges and other employee costs primarily related to the departure of certain senior management as well as retention and relocation payments related to the shared services integration during the current period and (v) a $1.7 million increase in insurance and other administrative expenses.

Impairment of assets. The $6.9 million and $0.3 million impairments of assets for the six months ended June 30, 2025 and 2024, respectively, primarily resulted from our evaluation of the future deployment of idle fleet under current market conditions. The primary circumstances supporting these impairments were: (i) unmarketability of certain compression units into the foreseeable future, (ii) excessive maintenance costs associated with certain fleet assets, and (iii) prohibitive retrofitting costs that likely would prevent certain compression units from securing customer acceptance. These compression units were written down to their estimated salvage values, if any.

As a result of our evaluations during the six months ended June 30, 2025 and 2024, we retired 21 and two compression units, respectively, with approximately 16,100 and 1,300 aggregate horsepower, respectively, that previously were used to provide compression services in our business.

Interest expense, net. The $0.5 million decrease in interest expense, net for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was due to lower weighted-average interest rates under the Credit Agreement, partially offset by increased aggregate borrowings.

Loss on extinguishment of debt. The $5.0 million loss on extinguishment of debt for the six months ended June 30, 2024 resulted from the satisfaction and discharge of the Senior Notes 2026, which constituted a legal defeasance under GAAP (the “Defeasance”). This loss consists of the write-off of deferred financing costs of $4.3 million and the difference between (i) the purchase price of U.S. government securities of $748.8 million, which were used for the Defeasance, and (ii) the aggregate outstanding principal balance and accrued interest of the Senior Notes 2026 of $748.1 million at the time of Defeasance.

Gain on derivative instrument. The $11.9 million gain on derivative instrument for the six months ended June 30, 2024 resulted from the change in fair value of the interest-rate swap due to changes in the interest-rate forward curve and cash received during the period. This interest-rate swap was terminated in August 2024; see Note 7 to our unaudited condensed consolidated financial statements in Part I, Item 1 “Financial Statements” of this report for additional information on this interest-rate swap and termination.

Income tax expense. The $1.0 million increase in income tax expense for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was related to a charge of $1.0 million which we believe is a reasonable estimate of the potential loss from the aggregate final imputed underpayment for the years 2019 and 2020 with the IRS, see Note 13 to our unaudited condensed consolidated financial statements under Part I, Item 1 “Financial Statements” of this report.

Other Financial Data

The following table summarizes other financial data for the periods presented (dollars in thousands):

(1)Adjusted gross margin, Adjusted EBITDA, Distributable Cash Flow (“DCF”), and DCF Coverage Ratio are all non-GAAP financial measures. Definitions of each measure, as well as reconciliations of each measure to its most directly comparable financial measure(s) calculated and presented in accordance with GAAP, can be found below under the caption “Non-GAAP Financial Measures”.

(2)Adjusted gross margin percentage and Adjusted EBITDA percentage are calculated as a percentage of revenue.

Gross margin. The $0.9 million increase in gross margin for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was due to (i) a $14.8 million increase in revenues, offset by (ii) an $8.3 million increase in cost of operations, exclusive of depreciation and amortization, and (iii) a $5.5 million increase in depreciation and amortization.

The $3.2 million increase in gross margin for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was due to (i) a $30.8 million increase in revenues, offset by (ii) a $14.9 million increase in cost of operations, exclusive of depreciation and amortization, and (iii) a $12.7 million increase in depreciation and amortization.

Adjusted gross margin. The $6.5 million increase in Adjusted gross margin for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was due to a $14.8 million increase in revenues, offset by an $8.3 million increase in cost of operations, exclusive of depreciation and amortization.

The $15.9 million increase in Adjusted gross margin for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was due to a $30.8 million increase in revenues, offset by a $14.9 million increase in cost of operations, exclusive of depreciation and amortization.

Adjusted EBITDA. The $5.8 million increase in Adjusted EBITDA for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily was due to a $6.5 million increase in Adjusted gross margin, offset by a $0.7 million increase in selling, general, and administrative expenses, excluding unit-based compensation expense, transaction expenses, and severance charges and other employee costs.

The $15.9 million increase in Adjusted EBITDA for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was due to a $15.9 million increase in Adjusted gross margin.

DCF. The $4.1 million increase in DCF for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily was due to (i) a $6.5 million increase in Adjusted gross margin, (ii) a $2.4 million decrease in distributions on Preferred Units due to the conversion of 100,000 Preferred Units to 4,997,126 common units, and (iii) a $1.1 million decrease in cash interest expense, net, offset by (iv) a $2.8 million increase in maintenance capital expenditures, (v) a $2.5 million decrease in cash received on derivative instrument, and (vi) a $0.7 million increase in selling, general, and administrative expenses, excluding unit-based compensation expense, transaction expenses, and severance charges and other employee costs.

The $6.2 million increase in DCF for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was due to (i) a $15.9 million increase in Adjusted gross margin, (ii) a $2.4 million decrease in distributions on Preferred Units due to the conversion of 100,000 preferred units to 4,997,126 common units, and (iii) a $0.7 million decrease in cash interest expense, net, offset by (iv) a $7.9 million increase in maintenance capital expenditures and (v) a $4.9 million decrease in cash received on derivative instrument.

DCF Coverage Ratio. The DCF Coverage Ratio for the three months ended June 30, 2025 equaled the DCF Coverage Ratio for the three months ended June 30, 2024, as the increase in DCF for the period was offset by increased distributions due to an increase in the number of common units. The increase in DCF Coverage Ratio for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was due to the increase in DCF for the period, partially offset by increased distributions due to an increase in the number of common units.