[Performance Overview](index=1&type=section&id=Performance%20Overview) USA Compression reported record revenues and Adjusted EBITDA for Q3 2024, driven by strong operational execution and higher pricing in a tightening market [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company achieved record total revenues of $240.0 million, a 10.5% increase year-over-year, with significant growth in Adjusted EBITDA and Distributable Cash Flow despite a slight decrease in net income Q3 2024 vs. Q3 2023 Financial Highlights | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $240.0 million | $217.1 million | +10.5% | | Net Income | $19.3 million | $20.9 million | -7.7% | | Adjusted EBITDA | $145.7 million | $130.2 million | +11.9% | | Distributable Cash Flow | $86.6 million | $71.6 million | +20.9% | | DCF Coverage | 1.41x | 1.39x | +0.02x | | Net Cash from Operations | $48.5 million | $50.1 million | -3.2% | [Operational Highlights](index=1&type=section&id=Operational%20Highlights) Operational metrics showed strong year-over-year improvement, with record average revenue-generating horsepower, increased revenue per horsepower per month, and improved utilization Q3 2024 vs. Q3 2023 Operational Highlights | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Avg. Revenue-Generating Horsepower | 3.56 million | 3.36 million | +6.0% | | Avg. Revenue per HP per Month | $20.60 | $19.10 | +7.9% | | Average Horsepower Utilization | 94.6% | 93.6% | +1.0 p.p. | [Management Commentary](index=1&type=section&id=Management%20Commentary) The CEO highlighted the record-setting quarter, attributing it to strong operational execution and a tightening market, leading to increased full-year 2024 expansion capital expenditure guidance - CEO Clint Green noted that record revenues and Adjusted EBITDA were driven by **record revenue-generating horsepower** and **pricing**, reflecting a tight compression services market expected to persist[4](index=4&type=chunk) - Full-year 2024 expansion capital expenditure guidance was increased to a range of **$240.0 million to $250.0 million**[5](index=5&type=chunk) [Financial Condition and Shareholder Returns](index=1&type=section&id=Financial%20Condition%20and%20Shareholder%20Returns) As of September 30, 2024, the Partnership maintained compliance with debt covenants, with substantial credit facility availability, and declared a consistent quarterly cash distribution [Liquidity and Long-Term Debt](index=3&type=section&id=Liquidity%20and%20Long-Term%20Debt) At the end of Q3 2024, the company maintained compliance with all debt covenants, with $641.8 million available on its revolving credit facility and $1.75 billion in senior notes outstanding - As of September 30, 2024, the Partnership was in compliance with all debt covenants[8](index=8&type=chunk) - Outstanding borrowings under the revolving credit facility were **$803.2 million**, with **$641.8 million** available to be drawn[8](index=8&type=chunk) - Total outstanding senior notes amounted to **$1.75 billion**, split between 6.875% notes due 2027 (**$750.0 million**) and 7.125% notes due 2029 (**$1.0 billion**)[8](index=8&type=chunk) [Capital Expenditures and Distributions](index=1&type=section&id=Capital%20Expenditures%20and%20Distributions) For Q3 2024, the company reported expansion and maintenance capital expenditures, alongside a consistent quarterly cash distribution of $0.525 per common unit Q3 2024 Expenditures and Distribution | Item | Amount | | :--- | :--- | | Expansion Capital Expenditures | $34.1 million | | Maintenance Capital Expenditures | $9.1 million | | Cash Interest Expense, net | $47.1 million | | Quarterly Cash Distribution per Unit | $0.525 | [Full-Year 2024 Outlook](index=3&type=section&id=Full-Year%202024%20Outlook) USA Compression confirmed its full-year 2024 guidance, projecting Net Income, Adjusted EBITDA, and Distributable Cash Flow within specified ranges Full-Year 2024 Guidance | Metric | Guidance Range | | :--- | :--- | | Net Income | $105.0 million to $125.0 million | | Adjusted EBITDA | $565.0 million to $585.0 million | | Distributable Cash Flow | $345.0 million to $365.0 million | [Financial Statements](index=6&type=section&id=Financial%20Statements) The condensed consolidated financial statements detail the company's performance, showing increased revenue but a slight net income decrease due to higher interest expense and derivative losses [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Total revenues for Q3 2024 increased to $240.0 million, though net income decreased to $19.3 million, primarily impacted by higher interest expense and derivative losses Q3 2024 vs. Q3 2023 Statement of Operations (in thousands) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Revenues | $239,968 | $217,085 | | Operating Income | $75,676 | $60,954 | | Interest Expense, net | ($49,361) | ($43,257) | | Net Income | $19,327 | $20,902 | | Basic and Diluted EPS | $0.13 | $0.09 | [Selected Balance Sheet Data](index=7&type=section&id=Selected%20Balance%20Sheet%20Data) As of September 30, 2024, the company reported total assets of $2.80 billion, net long-term debt of $2.53 billion, and a total partners' deficit of $107.3 million Balance Sheet Data as of September 30, 2024 (in thousands) | Item | Amount | | :--- | :--- | | Total Assets | $2,803,627 | | Long-term Debt, net | $2,532,398 | | Total Partners' Deficit | ($107,254) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities slightly decreased to $48.5 million in Q3 2024, with net cash used in investing and financing activities at $28.4 million and $20.0 million respectively Q3 2024 vs. Q3 2023 Cash Flows (in thousands) | Activity | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $48,481 | $50,072 | | Net Cash used in Investing Activities | ($28,379) | ($48,082) | | Net Cash used in Financing Activities | ($20,032) | ($2,015) | [Non-GAAP Financial Measures and Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) The report utilizes non-GAAP measures like Adjusted EBITDA and Distributable Cash Flow, providing definitions and reconciliations to offer a comprehensive view of operational profitability and cash generation [Definitions of Non-GAAP Measures](index=3&type=section&id=Definitions%20of%20Non-GAAP%20Measures) The company defines key non-GAAP metrics including Adjusted Gross Margin, Adjusted EBITDA, and Distributable Cash Flow, which provide supplemental information on operating profitability and distribution capacity - **Adjusted gross margin:** Defined as revenue less cost of operations, excluding depreciation and amortization[14](index=14&type=chunk) - **Adjusted EBITDA:** Used to assess financial performance without regard to financing methods, capital structure, or historical cost basis[17](index=17&type=chunk) - **Distributable Cash Flow (DCF):** An important measure of operating performance used to compare cash flows generated to cash distributions expected to be paid to common unitholders[22](index=22&type=chunk) [Reconciliation of Adjusted EBITDA](index=10&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA) Adjusted EBITDA for Q3 2024 was reconciled to $145.7 million from net income, with key adjustments for interest expense, depreciation, amortization, and derivative losses Reconciliation of Net Income to Adjusted EBITDA for Q3 2024 (in thousands) | Description | Amount | | :--- | :--- | | **Net Income** | **$19,327** | | Interest expense, net | $49,361 | | Depreciation and amortization | $67,237 | | Income tax expense | $793 | | **EBITDA** | **$136,718** | | Unit-based compensation expense | $2,669 | | Loss (gain) on derivative instrument | $6,218 | | Other adjustments | $85 | | **Adjusted EBITDA** | **$145,690** | [Other Information](index=3&type=section&id=Other%20Information) This section provides details for the investor conference call and includes standard forward-looking statement disclaimers outlining potential risks that could affect future results [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) A conference call was hosted on November 5, 2024, at 11:00 a.m. Eastern Time to discuss third-quarter results, accessible via webcast and phone - A conference call was scheduled for 11:00 a.m. Eastern Time on November 5, 2024, to discuss Q3 performance[10](index=10&type=chunk) - Access was provided via webcast on the company's investor relations website or by phone[11](index=11&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) The release contains forward-looking statements, including the 2024 outlook, subject to various risks and uncertainties such as economic conditions, interest rate changes, and competitive pressures - The news release contains forward-looking statements, including the 'Full-Year 2024 Outlook,' which are not guarantees of future performance[26](index=26&type=chunk) - Known material risks include changes in economic conditions for crude oil and natural gas, interest rate changes, competitive conditions, and information technology risks like cyberattacks[26](index=26&type=chunk)

USA Compression Partners (USAC) is set to release third-quarter results on Nov. 5, 2024. The Zacks Consensus Estimate for earnings is pegged at 20 cents per share and that for revenues is pinned at $238.37 million.Let us delve into the factors that are likely to have influenced this oil and gas equipment and service provider’s performance in the to-be-reported quarter. But first, it is worth taking a look at USAC’s performance in the last reported quarter.Stay up-to-date with all quarterly releases: See Zac ...

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A month has gone by since the last earnings report for USA Compression Partners (USAC) . Shares have added about 2% in that time frame, underperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is USA Compression due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. USA Compression Q2 Earnings & Rev ...

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USA Compression Partners (USAC) reported a second-quarter adjusted net profit of 21 cents per common unit, which beat the Zacks Consensus Estimate of 17 cents due to its improved pricing and utilization. The metric also improved significantly from the year-ago quarter's adjusted net profit of 8 cents per share on the back of a higher-than-expected, revenue-generating capacity. The largest independent provider of natural gas compression services generated revenues of $235.3 million, improving 13.7% from the ...

Financial Data and Key Metrics Changes - The company reported record revenues, adjusted gross margin, adjusted EBITDA, average revenue generating horsepower, and average revenue per revenue generating horsepower for Q2 2024 [4][20] - Period end utilization reached an all-time high of 95%, with large horsepower units over 1,000 horsepower utilized at 99% [4][5] - The leverage ratio decreased to 4.23x, aligning with the long-term goal of 3.75x to 4.25x [5] Business Line Data and Key Metrics Changes - Revenue increased by 3% sequentially and 14% year-over-year, driven by higher utilization and pricing improvements, averaging $20.29 for the second quarter [16] - The total fleet horsepower at the end of the quarter was approximately 3.9 million horsepower, with a 1% increase in revenue generating horsepower due to the conversion of idle units to active status [18] Market Data and Key Metrics Changes - The company anticipates steady and growing opportunities as customers maintain capital discipline to support increasing oil and natural gas demand [7] - The electrification of the Permian Basin is projected to create additional power generation requirements, with power demand expected to grow significantly by 2030 [11][12] Company Strategy and Development Direction - The company focuses on capital structure management, including refinancing senior notes and exiting Series A preferred units before considering changes to the distribution policy [9] - The long-term outlook for the natural gas compression market remains positive, driven by strong demand for power generation and LNG exports [10][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the natural gas compression market, citing strong demand drivers and the company's ability to convert idle equipment to active status [7][20] - The company is cautious about growth due to potential regulatory changes stemming from upcoming elections, which could impact the energy sector [26] Other Important Information - The company plans to beta test dual drive compression units that can generate power, allowing for opportunistic sales back to the grid [13] - The company has maintained a strong commitment to safety and continues to improve safety programs and culture [14] Q&A Session Summary Question: Compression equipment lead times and sourcing delays - Management indicated that lead times for equipment remain around 30 to 40 weeks for engines, with no significant changes in delivery times [22][23] Question: Elevated CapEx spend levels and long-term growth - Management acknowledged the uncertainty in the energy sector due to upcoming elections but remains optimistic about growth opportunities [24][25] Question: Order book build and growth CapEx into next year - Management expressed optimism about demand and indicated that they are accelerating capital expenditures to optimize existing assets [28][29] Question: Operating cost inflation and its impact - Management noted that inflation, particularly in labor, is affecting operating costs, but they expect some costs to roll off as units are deployed [30][31] Question: Percentage of units associated with gas lift - Approximately 40% to 50% of units are associated with gas lift, primarily in the Permian Basin [40] Question: Interest rate hedge and potential gains - Management indicated that monetizing the hedge is an opportunity that will be discussed with the board [41] Question: Changes in distribution policy post-preferred extinguishing - Management clarified that any changes to the distribution policy will be at the board's discretion and not automatically assumed [44] Question: Customer movement towards owning compression equipment - Management noted that various factors influence customer decisions, and there is no significant trend towards purchasing equipment instead of outsourcing [46][49]

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[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the reporting period [Financial Statements](index=5&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for USA Compression Partners, LP as of March 31, 2024, and for the three months then ended. It includes the balance sheets, statements of operations, changes in partners' capital, and statements of cash flows, along with detailed notes explaining the basis of presentation and significant accounting policies [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2024, shows total assets of $2.80 billion, an increase from $2.74 billion at year-end 2023, primarily driven by increases in property and equipment and inventories, while total liabilities also increased to $2.66 billion from $2.55 billion, mainly due to a rise in long-term debt Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total current assets** | $248,790 | $226,447 | | **Property and equipment, net** | $2,291,153 | $2,237,625 | | **Total assets** | **$2,804,217** | **$2,736,760** | | **Total current liabilities** | $173,724 | $187,502 | | **Long-term debt, net** | $2,462,530 | $2,336,088 | | **Total liabilities** | **$2,662,387** | **$2,553,711** | | **Preferred Units** | $431,402 | $476,334 | | **Partners' deficit** | ($289,572) | ($293,285) | [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2024, total revenues increased to $229.3 million from $197.1 million in the prior-year period, with net income rising significantly to $23.6 million compared to $10.9 million in Q1 2023, and net income attributable to common unitholders improving to $19.2 million, or $0.19 per unit, from a net loss of $1.2 million, or ($0.01) per unit, in the same period last year Three Months Ended March 31, (in thousands, except per unit amounts) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | **Total revenues** | $229,276 | $197,124 | | **Operating income** | $66,872 | $51,057 | | **Interest expense, net** | ($46,666) | ($39,790) | | **Net income** | $23,573 | $10,941 | | **Net income (loss) attributable to common unitholders' interests** | $19,185 | ($1,246) | | **Basic and diluted net income (loss) per common unit** | $0.19 | ($0.01) | | **Distributions declared per common unit** | $0.525 | $0.525 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first quarter of 2024, net cash provided by operating activities increased to $65.9 million from $42.3 million in Q1 2023, while net cash used in investing activities rose to $98.6 million due to higher capital expenditures, and net cash provided by financing activities was $32.7 million, driven by the issuance of new senior notes, partially offset by debt repayments and investments for a legal defeasance Cash Flow Summary for Three Months Ended March 31, (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $65,917 | $42,338 | | **Net cash used in investing activities** | ($98,573) | ($40,861) | | **Net cash provided by (used in) financing activities** | $32,653 | ($1,506) | | **Decrease in cash and cash equivalents** | ($3) | ($29) | - Capital expenditures, net, increased significantly to **$98.6 million** in Q1 2024 from **$41.4 million** in Q1 2023[20](index=20&type=chunk) - Financing activities in Q1 2024 included proceeds of **$1.0 billion** from the issuance of new senior notes and a **$748.8 million** investment in government securities for the legal defeasance of the Senior Notes 2026[20](index=20&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the Partnership's accounting policies and specific financial statement items, covering business organization, revenue recognition, debt obligations including the issuance of new Senior Notes and defeasance of old ones, preferred unit conversions, commitments, and contingencies such as tax audits - The Partnership provides natural gas compression services under fixed-term contracts in major U.S. shale plays. Its general partner is wholly owned by Energy Transfer LP[25](index=25&type=chunk)[26](index=26&type=chunk) - On March 18, 2024, the Partnership issued **$1.0 billion** of 7.125% Senior Notes due 2029. Proceeds were used to legally defease the **$725.0 million** Senior Notes due 2026, resulting in a **$5.0 million** loss on extinguishment of debt[71](index=71&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - In January and April 2024, holders converted a total of **320,000 Preferred Units** into common units, reducing future preferred distribution obligations[87](index=87&type=chunk)[88](index=88&type=chunk) - The Partnership is under a U.S. federal income tax audit for the 2019 and 2020 tax years, with a potential loss range estimated from **$0 to approximately $26.9 million**[106](index=106&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial condition and results of operations for the first quarter of 2024, highlighting strong operational performance with increased revenue-generating horsepower and higher pricing driving a 16.3% year-over-year revenue increase, and covering liquidity, capital resources, debt management activities, and a detailed breakdown of non-GAAP financial measures like Adjusted EBITDA and Distributable Cash Flow (DCF), which both showed significant growth [Operating Highlights](index=25&type=section&id=Operating%20Highlights) Operational metrics for Q1 2024 showed strong growth compared to Q1 2023, with revenue-generating horsepower increasing by 7.3% to 3.5 million HP, average revenue per revenue-generating horsepower per month rising by 9.7% to $19.96, and horsepower utilization at period end improving to 94.8% from 92.7% Key Operating Metrics Comparison (Three Months Ended March 31) | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Fleet horsepower (at period end) | 3,833,715 | 3,725,111 | 2.9% | | Revenue-generating horsepower (at period end) | 3,497,457 | 3,260,535 | 7.3% | | Average revenue per revenue-generating HP per month | $19.96 | $18.19 | 9.7% | | Horsepower utilization (at period end) | 94.8% | 92.7% | 2.1% | - The growth in operating metrics was primarily driven by the addition and deployment of new, large-horsepower compression units to meet increased demand from higher U.S. oil and gas production levels[122](index=122&type=chunk) [Financial Results of Operations](index=26&type=section&id=Financial%20Results%20of%20Operations) For Q1 2024, total revenues increased 16.3% to $229.3 million, and operating income grew 31.0% to $66.9 million compared to Q1 2023, with net income surging 115.5% to $23.6 million, driven by higher contract operations revenue from increased horsepower and better pricing, and costs of operations also rising but at a slower rate than revenue, leading to improved margins Results of Operations (in thousands) | Line Item | Q1 2024 | Q1 2023 | % Increase | | :--- | :--- | :--- | :--- | | **Total revenues** | $229,276 | $197,124 | 16.3% | | Cost of operations | $75,072 | $66,665 | 12.6% | | **Operating income** | $66,872 | $51,057 | 31.0% | | Interest expense, net | ($46,666) | ($39,790) | 17.3% | | **Net income** | $23,573 | $10,941 | 115.5% | - The **$29.6 million** increase in contract operations revenue was due to a **9.7%** increase in average revenue per revenue-generating horsepower per month and a **7.1%** increase in average revenue-generating horsepower[125](index=125&type=chunk) - Selling, general, and administrative expenses increased by **$3.7 million**, primarily due to higher professional fees, increased unit-based compensation expense, and higher employee-related costs[131](index=131&type=chunk) - A loss on extinguishment of debt of **$5.0 million** was recognized in Q1 2024 due to the legal defeasance of the Senior Notes 2026[136](index=136&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The Partnership's primary liquidity sources are cash from operations and borrowings under its Credit Agreement, with net cash from operations at $65.9 million in Q1 2024, and the company spending $104.8 million on expansion capital expenditures, while as of March 31, 2024, it had $429.3 million of available borrowing capacity under its revolving credit facility, having issued $1.0 billion in new Senior Notes due 2029 and used the proceeds to defease its 2026 notes and pay down the revolver - The company plans to spend between **$115.0 million** and **$125.0 million** in expansion capital expenditures and approximately **$32.0 million** in maintenance capital expenditures for the full year 2024[149](index=149&type=chunk)[150](index=150&type=chunk) - As of March 31, 2024, the Partnership had **$736.1 million** outstanding under its Credit Agreement, with **$429.3 million** available to be drawn[156](index=156&type=chunk) - In March 2024, the company issued **$1.0 billion** of Senior Notes 2029 and used proceeds for the legal defeasance of the **$725.0 million** Senior Notes 2026, with the remainder reducing borrowings under the Credit Agreement[159](index=159&type=chunk)[161](index=161&type=chunk) [Non-GAAP Financial Measures](index=32&type=section&id=Non-GAAP%20Financial%20Measures) This section provides definitions and reconciliations for key non-GAAP financial measures, including Adjusted Gross Margin, Adjusted EBITDA, and Distributable Cash Flow (DCF), with Adjusted EBITDA increasing 18.0% to $139.4 million and DCF growing 38.3% to $86.6 million for Q1 2024 compared to the prior-year period, and the DCF Coverage Ratio improving to 1.41x from 1.21x Non-GAAP Financial Measures (in thousands) | Measure | Q1 2024 | Q1 2023 | % Increase | | :--- | :--- | :--- | :--- | | **Adjusted gross margin** | $154,204 | $130,459 | 18.2% | | **Adjusted EBITDA** | $139,395 | $118,161 | 18.0% | | **DCF** | $86,589 | $62,613 | 38.3% | DCF Coverage Ratio | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | **DCF** | $86,589 | $62,613 | | **Distributions for DCF Coverage Ratio** | $61,422 | $51,585 | | **DCF Coverage Ratio** | 1.41x | 1.21x | - The increase in DCF was primarily driven by higher Adjusted Gross Margin, a **$7.8 million** decrease in distributions on Preferred Units following conversions, and cash received on a derivative instrument[144](index=144&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Partnership is exposed to several market risks, primarily commodity price risk, interest rate risk, and credit risk, managing interest rate risk on its variable-rate debt through an interest-rate swap on a notional amount of $700 million, while demand for its services is linked to oil and gas production, and credit risk is related to customer receivables - The company does not bear direct exposure to commodity prices but notes that sustained low prices could reduce demand for its compression services[190](index=190&type=chunk) - As of March 31, 2024, the company had **$736.1 million** of variable-rate debt. A **1%** change in the effective interest rate would impact annual interest expense by approximately **$7.4 million**[191](index=191&type=chunk) - To manage interest rate risk, the company has an interest-rate swap with a notional principal of **$700 million**, paying a fixed rate of **3.9725%** and receiving a floating rate indexed to one-month SOFR[193](index=193&type=chunk) [Controls and Procedures](index=39&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the effectiveness of the company's disclosure controls and procedures, concluding that as of March 31, 2024, these controls were effective at a reasonable assurance level, with no material changes to internal control over financial reporting identified during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[197](index=197&type=chunk) - There were no changes in internal control over financial reporting during the first quarter of 2024 that materially affected, or are reasonably likely to materially affect, internal controls[198](index=198&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, and a list of exhibits filed with the report [Legal Proceedings](index=40&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in various claims and litigation in the ordinary course of business, and management does not expect the resolution of these matters to have a material adverse effect, with the report referring to Note 13 for more information on tax contingencies - The company states that the resolution of ordinary course legal proceedings is not expected to have a material adverse effect on its financial position or results[201](index=201&type=chunk) [Risk Factors](index=40&type=section&id=ITEM%201A.%20Risk%20Factors) This section directs investors to the risk factors detailed in the company's 2023 Annual Report on Form 10-K and subsequent SEC filings, with no new risk factors disclosed in this quarterly report - There have been no material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K[202](index=202&type=chunk) [Exhibits](index=40&type=section&id=ITEM%206.%20Exhibits) This section lists the documents filed as exhibits with the Form 10-Q, including certifications by the CEO and CFO, and documents related to the new Senior Notes due 2029 - Exhibits filed with this report include the Indenture for the 7.125% Senior Notes due 2029, CEO and CFO certifications, and Inline XBRL data[203](index=203&type=chunk)[204](index=204&type=chunk)