USA Compression Partners, LP
For the period ended Sep 30, 2025. Filed Nov 5, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 5, 2025
USAC$24.97+3.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-06.
0001522727-25-000044
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperating HighlightsFinancial Results of OperationsLiquidity and Capital ResourcesNon-GAAP Financial MeasuresCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-05.
0001522727-25-000079
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperating HighlightsFinancial Results of OperationsLiquidity and Capital ResourcesNon-GAAP Financial MeasuresThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 146 previous paragraphs and 151 current paragraphs.
85 unchanged; 57 reworded; 8 added; 3 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
•the macroeconomic, regulatory or other potential effects of a prolonged government shutdown;
Current report
The 2.7% decreases in revenue-generating compression units for both the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, primarily were due to (i) small-horsepower units coming off contract, offset by (ii) deployment of new and redeployment of previously idle large-horsepower units.
Current report
Nine months ended September 30, 2025, compared to the nine months ended September 30, 2024
Current report
Adjusted gross margin. The $15.2 million increase in Adjusted gross margin for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, was due to a $10.3 million increase in revenues and a $4.9 million decrease in cost of operations, exclusive of depreciation and amortization.
Current report
The $31.0 million increase in Adjusted gross margin for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, was due to a $41.1 million increase in revenues, offset by a $10.0 million increase in cost of operations, exclusive of depreciation and amortization.
Current report
On August 27, 2025, the Partnership amended and restated its existing credit agreement by entering into the Credit Agreement. The Credit Agreement matures on August 27, 2030, except that (1) if more than $50.0 million of the Senior Notes 2027 are outstanding on June 2, 2027, the Credit Agreement will mature on June 2, 2027 and (2) if more than $50.0 million of the Senior Notes 2029 are outstanding on December 14, 2028, the Credit Agreement will mature on December 14, 2028.
Current report
The Credit Agreement provides for an asset-based revolving credit facility to be made available to the Partnership in an aggregate amount of up to $1.75 billion (subject to availability under our borrowing base), with further potential increase of up to $300 million. Borrowings under the Credit Agreement will bear interest at a per annum interest rate equal to, at the Partnership’s option, either the Alternate Base Rate, one-month SOFR (which shall only be available for swingline loans made under the Credit Agreement), Daily Simple SOFR or SOFR plus, in each case, the applicable margin. “Alternate Base Rate” means the greatest of (1) the prime rate, (2) the federal funds effective rate plus 0.50% and (3) one-month SOFR rate plus 1.00%. The applicable margin for borrowings varies (a) in the case of Daily Simple SOFR and SOFR loans, from 1.75% to 2.50% per annum and (b) in the case of Alternate Base Rate loans and one-month SOFR loans, from 0.75% to 1.50% per annum, and will be determined based on a total leverage ratio pricing grid. In addition, the Partnership is required to pay commitment fees based on the daily unused amount of the Credit Agreement in an amount per annum equal to 0.25%. Amounts borrowed and repaid under the Credit Agreement may be re-borrowed. The Partnership must also maintain, on a consolidated basis, as of the last day of each fiscal quarter a Total Leverage Ratio (as defined in the Credit Agreement) of not greater than 5.50 to 1.00 or less than 0.00 to 1.00, an Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 2.50 to 1.00 and a Secured Leverage Ratio (as defined in the Credit Agreement) of not greater than 3.00 to 1.00 or less than 0.00 to 1.00. The Credit Agreement also contains various customary representations and warranties, affirmative covenants and events of default.
Current report
The Senior Notes 2027 accrued interest at the rate of 6.875% per year. Interest on the Senior Notes 2027 was payable semi-annually in arrears on each of March 1 and September 1. On September 15, 2025, we provided notice to the holders of our Senior Notes 2027 that, contingent on receipt of the proceeds from the Senior Notes 2033, the Senior Notes 2027 would be redeemed in full at par, plus accrued and unpaid interest, on October 15, 2025 (the “Redemption”). The Redemption was completed on October 15, 2025. For additional information on the Redemption, see Note 16 to our unaudited condensed consolidated financial statements in Part I, Item 1 “Financial Statements” of this report.
Removed paragraphs (3)
Previous report
Six months ended June 30, 2025, compared to the six months ended June 30, 2024
Previous report
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.
Previous report
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.
Reworded paragraphs (57)
Previous wording
•changes in general economic conditions, including inflation, supply chain disruptions, or tariff impacts;
Current wording
•changes in general economic conditions, including inflation, supply chain disruptions, trade tensions or tariff impacts;
Previous wording
(1)Fleet horsepower is horsepower for compression units that have been delivered to us and excludes 14,985 and 19,915 of non-marketable horsepower as of June 30, 2025 and 2024, respectively. As of June 30, 2025, we had 39,800 large horsepower on order for delivery, all of which is expected to be delivered within the next 12 months.
Current wording
(1)Fleet horsepower is horsepower for compression units that have been delivered to us and excludes 14,985 and 23,030 of non-marketable horsepower as of September 30, 2025 and 2024, respectively. As of September 30, 2025, we had 28,900 large horsepower on order for delivery, all of which is expected to be delivered within the next 12 months.
Previous wording
(7)Horsepower utilization is calculated as (i) the sum of (a) revenue-generating horsepower, (b) horsepower in our fleet that is under contract but is not yet generating revenue, and (c) horsepower not yet in our fleet that is under contract but not yet generating revenue and that is expected to be delivered, divided by (ii) total available horsepower less idle horsepower that is under repair. Horsepower utilization based on revenue-generating horsepower and fleet horsepower as of June 30, 2025 and 2024, was 91.7% and 91.9%, respectively.
Current wording
(7)Horsepower utilization is calculated as (i) the sum of (a) revenue-generating horsepower, (b) horsepower in our fleet that is under contract but is not yet generating revenue, and (c) horsepower not yet in our fleet that is under contract but not yet generating revenue and that is expected to be delivered, divided by (ii) total available horsepower less idle horsepower that is under repair. Horsepower utilization based on revenue-generating horsepower and fleet horsepower as of September 30, 2025 and 2024, was 92.0% and 92.4%, respectively.
Previous wording
(8)Calculated as the average utilization for the months in the period based on utilization at the end of each month in the period. Average horsepower utilization based on revenue-generating horsepower and fleet horsepower for the three months ended June 30, 2025 and 2024, was 91.9% and 91.2%, respectively. Average horsepower utilization based on revenue-generating horsepower and fleet horsepower for the six months ended June 30, 2025 and 2024, was 91.9% and 91.1%, respectively.
Current wording
(8)Calculated as the average utilization for the months in the period based on utilization at the end of each month in the period. Average horsepower utilization based on revenue-generating horsepower and fleet horsepower for the three months ended September 30, 2025 and 2024, was 91.8% and 92.3%, respectively. Average horsepower utilization based on revenue-generating horsepower and fleet horsepower for the nine months ended September 30, 2025 and 2024, was 91.9% and 91.5%, respectively.
Previous wording
The 5.0% and 5.3% increases in average revenue per revenue-generating horsepower per month for the three and six months ended June 30, 2025, respectively, compared to the three and six months ended June 30, 2024, primarily was due to 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.
Current wording
The 4.2% and 4.9% increases in average revenue per revenue-generating horsepower per month for the three and nine months ended September 30, 2025, respectively, compared to the three and nine months ended September 30, 2024, primarily was due to 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.
Previous wording
The 2.1% and 2.4% increases in average horsepower per revenue-generating compression unit for the three and six months ended June 30, 2025, respectively, compared to the three and six months ended June 30, 2024, primarily was due to an increase in large-horsepower compression units deployed.
Current wording
The 2.3% increases in average horsepower per revenue-generating compression unit for both the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, primarily was due to an increase in large-horsepower compression units deployed.
Previous wording
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.
Current wording
Contract operations revenue. The $7.5 million increase in contract operations revenue for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily was due to (i) a 4.2% 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, partially offset by (ii) a $1.7 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 (iii) a $1.4 million decrease in revenue attributable to natural gas treating services.
Previous wording
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.
Current wording
Parts and service revenue. The $0.4 million decrease in parts and service revenue for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily was due to a decrease 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.
Previous wording
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.
Current wording
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 $3.2 million increase in related-party revenue for the three months ended September 30, 2025, compared to the three months ended September 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 and an overall increase in compression services and parts and service revenue from entities affiliated with Energy Transfer.
Previous wording
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.
Current wording
Cost of operations, exclusive of depreciation and amortization. The $4.9 million decrease in cost of operations, exclusive of depreciation and amortization, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily was due to (i) a $4.7 million decrease in fluids expense driven by decreased pricing, (ii) a $2.9 million decrease in non-income taxes resulting from a prior year sales tax refund receipt, offset by (iii) a $1.9 million increase in direct labor costs due to increased operating headcount and higher employee costs, (iv) a $1.0 million increase in parts expense associated with higher cost and usage, and (v) a $0.7 million increase in retail parts and service expenses.
Previous wording
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.
Current wording
Depreciation and amortization expense. The $4.0 million increase in depreciation and amortization expense for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily was due to overhauls and major improvements to compression units.
Previous wording
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.
Current wording
Selling, general, and administrative expense. The $1.3 million increase in selling, general, and administrative expense for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily was due to (i) a $2.4 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, (ii) a $0.4 million increase in insurance and other administrative expenses and (iii) a $0.3 million increase in outside services and professional fees, partially offset by (iv) a $1.4 million decrease in unit-based compensation expense attributable to lower unit-based compensation expense resulting from the forfeiture and vesting of certain awards by certain former senior management and 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 September 30, 2025 and (v) a $0.7 million decrease in employee related expenses due to decreased administrative headcount and lower employee costs.
Previous wording
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.
Current wording
Impairment of assets. The $0.6 million impairment of assets for the three months ended September 30, 2025 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.
Previous wording
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.
Current wording
As a result of our evaluation during the three months ended September 30, 2025, we retired five compression units, with approximately 2,900 of aggregate horsepower, that previously were used to provide compression services in our business.
Previous wording
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.
Current wording
Interest expense, net. The $2.3 million decrease in interest expense, net for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily was due to lower weighted-average interest rates under the Credit Agreement and lower aggregate borrowings.
Previous wording
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.
Current wording
Loss on derivative instrument. The $6.2 million loss on derivative instrument for the three months ended September 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.
Previous wording
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.
Current wording
Contract operations revenue. The $18.0 million increase in contract operations revenue for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily was due to (i) a 4.9% 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, (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 produced within the U.S., partially offset by (iii) a $18.7 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 $6.7 million decrease in revenue attributable to natural gas treating services.
Previous wording
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.
Current wording
Parts and service revenue. The $0.1 million decrease in parts and service revenue for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily was due to a decrease 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.
Previous wording
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.
Current wording
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 $23.2 million increase in related-party revenue for the nine months ended September 30, 2025, compared to the nine months ended September 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.
Previous wording
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.
Current wording
Cost of operations, exclusive of depreciation and amortization. The $10.0 million increase in cost of operations, exclusive of depreciation and amortization, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily was due to (i) a $8.4 million increase in direct labor costs due to increased operating headcount associated with increased average revenue-generating horsepower and higher employee costs, (ii) a $6.2 million increase in parts expense resulting from higher costs and increased usage associated with increased average revenue-generating horsepower, (iii) a $2.2 million increase in retail parts and service expenses, for which a corresponding increase in parts and service revenue also occurred, offset by (iv) a $5.3 million decrease in fluids expense driven by decreased pricing and (v) a $2.8 million decrease in non-income taxes due to a prior year sales tax refund receipt.
Previous wording
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.
Current wording
Depreciation and amortization expense. The $16.7 million increase in depreciation and amortization expense for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily was due to overhauls and major improvements to compression units.
Previous wording
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.
Current wording
Selling, general, and administrative expense. The $3.9 million decrease in selling, general, and administrative expense for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily was due to (i) a $7.7 million decrease in unit-based compensation expense attributable to lower unit-based compensation expense resulting from the forfeiture and vesting of certain awards by certain former senior management and 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 September 30, 2025, (ii) a $2.1 million decrease in employee related expenses due to decreased administrative headcount and lower employee costs, and (iii) a $0.6 million decrease in professional fees primarily related to an initiative to improve business performance, partially offset by (iv) a $4.2 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 $2.0 million increase in insurance and other administrative expenses.
Previous wording
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.
Current wording
Impairment of assets. The $7.5 million and $0.3 million impairments of assets for the nine months ended September 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.
Previous wording
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.
Current wording
As a result of our evaluations during the nine months ended September 30, 2025 and 2024, we retired 26 and two compression units, respectively, with approximately 19,000 and 1,300 aggregate horsepower, respectively, that previously were used to provide compression services in our business.
Previous wording
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.
Current wording
Interest expense, net. The $2.7 million decrease in interest expense, net for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily was due to lower weighted-average interest rates under the Credit Agreement and decreased aggregate borrowings.
Previous wording
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.
Current wording
Loss on extinguishment of debt. The $5.0 million loss on extinguishment of debt for the nine months ended September 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.
Previous wording
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.
Current wording
Gain on derivative instrument. The $5.7 million gain on derivative instrument for the nine months ended September 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.
Previous wording
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.
Current wording
Income tax expense. The $2.6 million increase in income tax expense for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily was related to a charge of $2.9 million. We believe that this amount 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 for additional information regarding our IRS audit for the years 2019 and 2020.
Previous wording
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.
Current wording
Gross margin. The $11.2 million increase in gross margin for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, was due to (i) a $10.3 million increase in revenues and (ii) a $4.9 million decrease in cost of operations, exclusive of depreciation and amortization, offset by (iii) a $4.0 million increase in depreciation and amortization.
Previous wording
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.
Current wording
The $14.4 million increase in gross margin for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, was due to (i) a $41.1 million increase in revenues, offset by (ii) a $10.0 million increase in cost of operations, exclusive of depreciation and amortization, and (iii) a $16.7 million increase in depreciation and amortization.
Previous wording
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.
Current wording
Adjusted EBITDA. The $14.6 million increase in Adjusted EBITDA for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily was due to a $15.2 million increase in Adjusted gross margin, offset by a $0.4 million increase in selling, general, and administrative expenses, excluding unit-based compensation expense, transaction expenses, and severance charges and other employee costs.
Previous wording
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.
Current wording
The $30.5 million increase in Adjusted EBITDA for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily was due to a $31.0 million increase in Adjusted gross margin.
Previous wording
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.
Current wording
DCF. The $17.2 million increase in DCF for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily was due to (i) a $14.6 million increase in Adjusted EBITDA, (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 $2.2 million decrease in cash interest expense, net, offset by (iv) a $2.0 million decrease in cash received on derivative instrument.
Previous wording
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.
Current wording
The $23.4 million increase in DCF for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily was due to (i) a $30.5 million increase in Adjusted EBITDA, (ii) a $4.9 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 $2.8 million decrease in cash interest expense, net, offset by (iv) a $7.8 million increase in maintenance capital expenditures and (v) a $6.9 million decrease in cash received on derivative instrument.
Previous wording
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.
Current wording
DCF Coverage Ratio. The increase in DCF Coverage Ratio for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 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.
Previous wording
We classify capital expenditures as maintenance or expansion on an individual-asset basis. Over the long term, we expect that our maintenance capital expenditure requirements will continue to increase as the overall size and age of our fleet increases. Our aggregate maintenance capital expenditures for the six months ended June 30, 2025 and 2024, were $22.6 million and $14.6 million, respectively. We currently plan to spend between $38.0 million and $42.0 million in maintenance capital expenditures for the year 2025, including parts consumed from inventory.
Current wording
We classify capital expenditures as maintenance or expansion on an individual-asset basis. Over the long term, we expect that our maintenance capital expenditure requirements will continue to increase as the overall size and age of our fleet increases. Our aggregate maintenance capital expenditures for the nine months ended September 30, 2025 and 2024, were $31.6 million and $23.8 million, respectively. We currently plan to spend between $38.0 million and $42.0 million in maintenance capital expenditures for the year 2025, including parts consumed from inventory.
Previous wording
Without giving effect to any equipment that we may acquire pursuant to any future acquisitions, we currently plan to spend between $120.0 million and $140.0 million in expansion capital expenditures for the year 2025. Our expansion capital expenditures for the six months ended June 30, 2025 and 2024, were $40.3 million and $171.8 million, respectively.
Current wording
Without giving effect to any equipment that we may acquire pursuant to any future acquisitions, we currently plan to spend between $115.0 million and $125.0 million in expansion capital expenditures for the year 2025. Our expansion capital expenditures for the nine months ended September 30, 2025 and 2024, were $77.6 million and $205.9 million, respectively.
Previous wording
As of June 30, 2025, we had binding commitments to purchase $44.9 million worth of additional compression units and serialized parts, all of which is expected to be settled within the next 12 months.
Current wording
As of September 30, 2025, we had binding commitments to purchase $33.7 million worth of additional compression units and serialized parts, all of which is expected to be settled within the next 12 months.
Previous wording
The following table summarizes our sources and uses of cash for the six months ended June 30, 2025 and 2024 (in thousands):
Current wording
The following table summarizes our sources and uses of cash for the nine months ended September 30, 2025 and 2024 (in thousands):
Previous wording
Net cash provided by operating activities. The $16.2 million increase in net cash provided by operating activities for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily was due to (i) a $35.8 million decrease in inventory purchases and (ii) a $9.2 million increase in net income excluding non-cash charges, partially offset by (iii) a $29.4 million increase in interest payments due to the timing of payments related to our refinance of our Senior Notes 2026.
Current wording
Net cash provided by operating activities. The $43.6 million increase in net cash provided by operating activities for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily was due to (i) a $55.5 million decrease in inventory purchases and (ii) a $19.7 million increase in net income excluding non-cash charges, partially offset by (iii) a $23.9 million increase in interest payments due to the timing of payments related to our refinance of our Senior Notes 2026 and (iv) a $7.7 million increase in other working capital.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Income tax expense. The $1.6 million increase in income tax expense for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily was related to a charge of $1.9 million. We believe that this amount, together with amounts previously accrued, 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 for additional information regarding our IRS audit for the years 2019 and 2020.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Adjusted gross margin is a non-GAAP financial measure. We define Adjusted gross margin as revenue less cost of operations, exclusive of depreciation and amortization expense. We believe Adjusted gross margin is useful to investors as a supplemental measure of our operating profitability. Management uses adjusted gross margin to assess operating performance as compared to historical results, budget and forecast amounts, expected return on capital investment, and our competitors.