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12% Yielding Industry Leader Steps It Up A Big Notch In Q2 2018

Published Fri, 17 Aug 2018 09:15:00 -0400 on Seeking Alpha

If you're looking for a dominant niche player in the high yield space, take a look at USA Compression Partners LP, (USAC), the leading compression company in the US energy industry.
USAC closed on a transformative deal on 4/2/18, in which it acquired CDM, the compression services arm of Energy Transfer Partners LP, (ETP), and Energy Transfer Equities LP, (ETE), valued at approximately $1.8B.
This deal included the following:
The contribution of ETP’s subsidiaries, CDM Resource Management LLC and CDM Environmental & Technical Services LLC, to USAC. The cancellation of the incentive distribution rights in USAC. The conversion of the general partner interest in USAC into a non-economic general partner interest. As part of the transaction, ETE acquired the ownership interests in the general partner of USAC, and approximately 12.5 million USAC common units from USA Compression Holdings. (Source: USAC site)
Both CDM and USAC have a solid customer list, with ~28% overlap. Management has generated ~$20M in synergies from this deal already, beyond what they had anticipated at this stage.
USAC's management also has a long history of avoiding deadbeats - they've written off less than 1% in bad debt over the company's history:
(Source: USAC site)
Earnings: With the CDM assets starting to kick into earnings in Q2 '18, USAC's earnings numbers took off like a rocket, with triple-digit gains year over year for Revenue and EBITDA, in... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ENERGY TRANSFER PARTNERS 21.79   19.3 1.13 2.26 10.46
ENERGY TRANSFER EQUITY 16.82   15.9 1.06 1.22 7.17


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