USA Compression Grows Revenue 37% as J-W Deal Dilutes Margins
USA Compression Partners posted second-quarter revenue of $342.1 million, up 36.8% from a year earlier, as the J-W Power Acquisition expanded its compression fleet but pressured margins.
USA Compression Partners (USAC) reported second-quarter revenue of $342.1 million, up 36.8% from $250.1 million a year earlier and up 3.3% from $331.3 million in the first quarter. Net income rose to $45.7 million from $28.6 million a year earlier, a 59.9% increase, and climbed 19.1% from $38.3 million in the prior quarter.
The growth traces to the J-W Power Acquisition, which closed January 12, 2026, and added more than 0.8 million horsepower to the company's active fleet. Average revenue-generating horsepower reached 4.45 million in the second quarter, up 25.3% from 3.55 million a year earlier, while total fleet horsepower grew from 3.89 million at the end of 2025 to 4.95 million by the close of the second quarter. The deal also opened a new revenue stream: parts and service revenue reached $22.1 million in the second quarter, compared with $6.5 million a year earlier.
The acquisition's lower-margin assets showed up in profitability metrics. Adjusted EBITDA rose 29.2% year-over-year to $193.2 million, but Adjusted EBITDA margin fell to 56.5% from 59.8% a year earlier and from 56.9% in the first quarter, part of a decline from 61.2% in the fourth quarter of 2025. Adjusted gross margin percentage followed the same path, dropping to 63.5% from 65.4% a year earlier, tied to the J-W Power fleet's lower-margin profile.
Pricing kept climbing even as margins compressed. Average revenue per revenue-generating horsepower per month rose to $22.84 in the second quarter from $21.31 a year earlier, marking a fifth consecutive quarter of sequential gains. Utilization moved the other way, slipping to 92.0% from 94.4% a year earlier as the newly acquired J-W fleet ran at lower utilization than the pre-acquisition base of roughly 94.5%.
Cash generation reflected the acquisition's integration costs. Distributable Cash Flow fell to $125.3 million from $130.8 million in the first quarter, even as it rose from $89.9 million a year earlier, and the Distributable Cash Flow Coverage Ratio slipped to 1.65x from 1.72x sequentially. SG&A expense, which had spiked to $35.4 million in the first quarter from $12.9 million a year earlier on transaction and integration costs, fell back to $28.9 million in the second quarter. Transaction expenses tied to the J-W deal dropped to $1.0 million from $3.8 million, and severance, retention and relocation charges fell to $1.7 million from $4.1 million, indicating integration costs are winding down. Net cash from operating activities, after falling to $86.1 million in the first quarter from $139.5 million in the fourth quarter of 2025, rebounded to $145.7 million in the second quarter.
Cash interest expense continued rising as the company carries debt taken on to fund the acquisition, reaching $47.4 million in the second quarter from $47.1 million in the first quarter and $43.4 million in the fourth quarter of 2025.
USA Compression confirmed full-year 2026 guidance unchanged from prior quarters, projecting Adjusted EBITDA of $770 million to $800 million and Distributable Cash Flow of $480 million to $510 million.