What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-04 compared with 2020-11-03 · 119 added, 265 removed, 388 unchanged (50% of the section changed)

3 unchanged sentences

(in thousands)

September 30,

2021 December 31,

12 unchanged sentences

Identifiable intangible assets, net 326,446 333,791

Goodwill — 619,411

Other assets 10,805 11,955

22 unchanged sentences

(in thousands, except per unit amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Contract operations $ 152,525 $ 172,794

6 unchanged sentences

Selling, general and administrative 13,800 12,385

Loss (gain) on disposition of assets 1,686 ( 1,975 ) ( 115 ) ( 389 )

Gain on disposition of assets ( 1,255 ) ( 1,014 )

Impairment of compression equipment 2,550 —

4 unchanged sentences

Interest expense, net ( 32,288 ) ( 32,478 )

Other 20 21 67 53

Total other expense ( 32,263 ) ( 32,455 )

3 unchanged sentences

distributions on Preferred Units ( 12,187 ) ( 12,187 )

Net income (loss) attributable to common and Class B unitholders’ interests $ ( 5,669 ) $ 1,127 $ ( 629,821 ) $ ( 6,712 )

Net income (loss) attributable to:

Common units $ ( 5,669 ) $ 2,084 $ ( 629,821 ) $ 1,043

Class B Units $ — $ ( 957 ) $ — $ ( 7,755 )

Weighted average common units outstanding – basic 96,882 94,625 96,776 91,648

Weighted average common units outstanding – diluted 96,882 94,846 96,776 91,817

Weighted average Class B Units outstanding – basic and diluted — 2,017 — 4,921

Basic and diluted net income (loss) per common unit $ ( 0.06 ) $ 0.02 $ ( 6.51 ) $ 0.01

Basic and diluted net loss per Class B Unit $ — $ ( 0.47 ) $ — $ ( 1.58 )

Net loss attributable to common unitholders’ interests $ ( 11,816 ) $ ( 614,648 )

Weighted average common units outstanding – basic and diluted 96,989 96,707

Basic and diluted net loss per common unit $ ( 0.12 ) $ ( 6.36 )

Distributions declared per common unit for respective periods $ 0.525 $ 0.525

3 unchanged sentences

(in thousands, except per unit amounts)

For the Nine Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

Common units Warrants Total

7 unchanged sentences

Partners’ capital ending balance, March 31, 2021 $ 261,835 $ 13,979 $ 275,814

Vesting of phantom units 659 — 659

Distributions and DERs, $ 0.525 per unit

( 50,801 ) — ( 50,801 )

Issuance of common units under the DRIP 612 — 612

Unit-based compensation for equity classified awards 56 — 56

Net loss attributable to common unitholders’ interests ( 9,504 ) — ( 9,504 )

Partners’ capital ending balance, June 30, 2020 443,659 13,979 457,638

Vesting of phantom units 20 — 20

Distributions and DERs, $ 0.525 per unit

( 50,874 ) — ( 50,874 )

Issuance of common units under the DRIP 499 — 499

Unit-based compensation for equity classified awards 55 — 55

Net loss attributable to common unitholders’ interests ( 5,669 ) — ( 5,669 )

Partners' capital ending balance, September 30, 2020 $ 387,690 $ 13,979 $ 401,669

USA COMPRESSION PARTNERS, LP

Unaudited Condensed Consolidated Statements of Changes in Partners’ Capital

(in thousands, except per unit amounts)

For the Nine Months Ended September 30, 2019

Common units Class B Units Warrants Total

For the Three Months Ended March 31, 2020

Common units Warrants Total

Partners’ capital ending balance, December 31, 2019 $ 1,166,619 $ 13,979 $ 1,180,598

4 unchanged sentences

Unit-based compensation for equity classified awards 55 — 55

Net loss attributable to common and Class B unitholders’ interests ( 2,088 ) ( 3,512 ) — ( 5,600 )

Net loss attributable to common unitholders’ interests ( 614,648 ) — ( 614,648 )

Partners’ capital ending balance, March 31, 2020 $ 502,637 $ 13,979 $ 516,616

Vesting of phantom units 539 — — 539

Distributions and DERs, $ 0.525 per unit

( 47,351 ) — — ( 47,351 )

Issuance of common units under the DRIP 227 — — 227

Unit-based compensation for equity classified awards 41 — — 41

Net income (loss) attributable to common and Class B unitholders’ interests 1,047 ( 3,286 ) — ( 2,239 )

Partners’ capital ending balance, June 30, 2019 1,197,532 68,348 13,979 1,279,859

Vesting of phantom units 30 — — 30

Distributions and DERs, $ 0.525 per unit

( 47,373 ) — — ( 47,373 )

Issuance of common units under the DRIP 236 — — 236

Unit-based compensation for equity classified awards 41 — — 41

Net income (loss) attributable to common and Class B unitholders’ interests 2,084 ( 957 ) — 1,127

Conversion of Class B Units to common units 67,391 ( 67,391 ) — —

Partners' capital ending balance, September 30, 2019 $ 1,219,941 $ — $ 13,979 $ 1,233,920

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

4 unchanged sentences

Amortization of debt issuance costs 2,281 1,986

Unit-based compensation expense 4,071 7,930

Deferred income tax expense 350 352

Unit-based compensation expense (benefit) 4,182 ( 1,829 )

Deferred income tax expense (benefit) ( 99 ) 123

Gain on disposition of assets ( 1,255 ) ( 1,014 )

6 unchanged sentences

Other assets 706 754

Other liabilities 1,829 ( 8 )

Accounts payable 1,316 5,036

8 unchanged sentences

Proceeds from revolving credit facility 190,511 250,008

Proceeds from issuance of senior notes — 750,000

Payments on revolving credit facility ( 161,633 ) ( 193,408 )

5 unchanged sentences

Net cash used in financing activities ( 35,309 ) ( 8,015 )

Decrease in cash and cash equivalents ( 8 ) ( 97 )

Increase (decrease) in cash and cash equivalents 97 ( 8 )

Cash and cash equivalents, beginning of period 2 10

8 unchanged sentences

Financing costs included in accounts payable and accrued liabilities $ 139 $ 268

Conversion of Class B Units to common units $ — $ 67,391

See accompanying notes to unaudited condensed consolidated financial statements.

7 unchanged sentences

We primarily provide compression services in a number of shale plays throughout the U.S., including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara and Fayetteville shales.

USA Compression GP, LLC, a Delaware limited liability company, serves as our general partner and is referred to herein as the “General Partner.” The General Partner is wholly-owned by ETO.

USA Compression GP, LLC, a Delaware limited liability company, serves as our general partner and is referred to herein as the “General Partner.” As of March 31, 2021, the General Partner was wholly-owned by ETO.

On April 1, 2021, Energy Transfer LP (“ET”), ETO and certain of their affiliates consummated an internal reorganization.

In connection with the reorganization, ETO merged with and into ET, with ET surviving the merger (the “ETO Merger”).

As a result of the ETO Merger, the General Partner became wholly-owned by ET.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Partnership and its operating subsidiaries, all of which are wholly-owned by us.

3 unchanged sentences

In the opinion of our management, such financial information reflects all normal recurring adjustments necessary for a fair presentation of these interim unaudited condensed consolidated financial statements in accordance with GAAP.

Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC.

8 unchanged sentences

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest.

Trade accounts receivable are recorded at the invoiced amount.

Allowance for Credit Losses

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (“Topic 326”):

Measurement of Credit Losses on Financial Instruments .

On January 1, 2020, we adopted Topic 326 using the modified retrospective approach, which was effective for interim and annual reporting periods beginning on or after December 15, 2019.

Topic 326 requires immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets.

To adopt Topic 326, we evaluated our allowance for credit losses related to our two financial assets measured at amortized cost:

We evaluate our allowance for credit losses related to our two financial assets measured at amortized cost:

(i) trade accounts receivable and (ii) net investment in lease related to our sales-type lease discussed further in Note 7.

Due to the short-term nature of our trade accounts receivable, we consider the amortized cost to be the same as the carrying amount of the receivable, excluding the allowance for credit losses.

There was no cumulative effect adjustment to partners’ capital upon adoption.

Due to the short-

term nature of our trade accounts receivable, we consider the amortized cost to be the same as the carrying amount of the receivable, excluding the allowance for credit losses.

Our determination of the allowance for credit losses requires us to make estimates and judgments regarding our customers’ ability to pay amounts due and is the same process for both of our financial assets as they have similar risk characteristics.

We continuously evaluate the financial strength of our customers based on collection experience, the overall business climate in which our customers operate and specific identification of customer credit losses and make adjustments to the allowance as necessary.

Our evaluation of our customers’ financial strength is based on the aging of their respective receivables balance, customer correspondence, financial information and third-party credit ratings.

Our evaluation of the business climate in which our customers operate is based on a review of various publicly available materials regarding our customers’ industries, including the solvency of various companies in the industry.

We continuously evaluate the financial strength of our customers and the overall business climate in which our customers operate and make adjustments to the allowance for credit losses as necessary.

We evaluate the financial strength of our customers by reviewing the aging of their receivables, our collection experience with the customer, correspondence, financial information and third-party credit ratings.

We evaluate the business climate in which our customers operate by reviewing various publicly available materials regarding our customers’ industry, including the solvency of various companies in the industry.

Inventories consist of serialized and non-serialized parts used primarily on compression units.

6 unchanged sentences

Ordinary maintenance and repairs are charged to cost of operations, exclusive of depreciation and amortization.

When property and equipment is retired or sold, its carrying value and the related accumulated depreciation are removed from our accounts and any associated gains or losses are recorded on our statements of operations in the period of sale or disposition.

Capitalized interest is calculated by multiplying the Partnership’s monthly effective interest rate on outstanding debt by the amount of qualifying costs, which include upfront payments to acquire certain compression units.

Capitalized interest was $ 6,000 and $ 0.2 million for the three and nine months ended September 30, 2020, respectively, and $ 0.1 million and $ 0.5 million for the three and nine months ended September 30, 2019 , respectively.

When property and equipment is retired or sold, its carrying value and the related accumulated depreciation are removed from our accounts and any associated gains or losses are recorded on the unaudited condensed consolidated statements of operations in the period of sale or disposition.

Capitalized interest is calculated by multiplying our monthly effective interest rate on outstanding debt by the amount of qualifying costs, which include upfront payments to acquire certain compression units.

Capitalized interest was $ 3,000 and $ 142,000 for the three months ended March 31, 2021 and 2020, respectively.

Impairment of Long-Lived Assets

5 unchanged sentences

The fair value of the asset is measured using quoted market prices or, in the absence of quoted market prices, based on an estimate of discounted cash flows, the expected net sale proceeds compared to the other similarly configured fleet units we recently sold or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use.

Refer to Note 5 for more detailed information about impairment charges during the three and nine months ended September 30, 2020 and 2019.

Refer to Note 5 for more detailed information about impairment charges during the three months ended March 31, 2021 and 2020.

Identifiable Intangible Assets

1 unchanged sentence

The estimated useful lives of our intangible assets range from 15 to 25 years.

Goodwill represents consideration paid in excess of the fair value of the identifiable net assets acquired in a business combination.

Goodwill is not amortized, but is reviewed for impairment annually based on the carrying values as of October 1, or more frequently if impairment indicators arise that suggest the carrying value of goodwill may not be recovered.

Refer to Note 5 for more detailed information about goodwill impairment charges during the nine months ended September 30, 2020.

Revenue Recognition

19 unchanged sentences

Level 3 inputs are unobservable inputs for the asset or liability.

As of September 30, 2020, our financial instruments consisted primarily of cash and cash equivalents, trade accounts receivable, trade accounts payable and long-term debt.

As of March 31, 2021, our financial instruments consisted primarily of cash and cash equivalents, trade accounts receivable, trade accounts payable and long-term debt.

The book values of cash and cash equivalents, trade accounts receivable and trade accounts payable are representative of fair value due to their short-term maturities.

2 unchanged sentences

The following table summarizes the aggregate principal amount and fair value of our Senior Notes 2026 and Senior Notes 2027 (in thousands):

September 30,

2021 December 31,

6 unchanged sentences

(3) Trade Accounts Receivable

The allowance for credit losses, which was $ 5.2 million and $ 2.5 million as of September 30, 2020 and December 31, 2019, respectively, is our best estimate of the amount of probable credit losses included in our existing accounts receivable.

The allowance for credit losses, which was $ 3.5 million and $ 5.0 million as of March 31, 2021 and December 31, 2020, respectively, is our best estimate of the amount of probable credit losses included in our existing accounts receivable.

The following summarizes activity within our trade accounts receivable allowance for credit losses balance (in thousands):

3 unchanged sentences

Writeoffs charged against the allowance ( 191 )

Balance as of September 30, 2020 $ 5,204

______________________

(1) There was no provision for expected credit losses recognized during the three months ended September 30, 2020.

Low crude oil prices, driven by decreased demand for and global oversupply of crude oil as a result of the COVID-19 pandemic, is the primary factor contributing to the increase to the allowance for credit losses for the nine months ended September 30, 2020.

We cannot predict the duration of these conditions or the severity of their impact on our customers and the collectability of their accounts receivable.

Balance as of March 31, 2021 $ 3,541

For the three months ended March 31, 2021, we recognized a $ 1.3 million reversal of our provision for expected credit losses.

Improved market conditions for customers due to a recovery in crude oil prices was the primary factor contributing to the decrease to the allowance for credit losses for the three months ended March 31, 2021.

For the three months ended March 31, 2020, we recognized a $ 1.5 million provision for expected credit losses.

Low crude oil prices, driven by decreased demand for and global oversupply of crude oil as a result of the COVID-19 pandemic, was the primary factor contributing to the higher allowance for credit losses for the three months ended March 31, 2020.

(4) Inventories

Components of inventories are as follows (in thousands):

September 30,

2021 December 31,

5 unchanged sentences

Property and equipment consisted of the following (in thousands):

September 30,

2021 December 31,

14 unchanged sentences

Leasehold improvements 5 years

Depreciation expense on property and equipment and loss (gain) on disposition of assets were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Depreciation expense on property and equipment and gain on disposition of assets were as follows (in thousands):

Three Months Ended March 31,

Depreciation expense $ 53,685 $ 51,417

Loss (gain) on disposition of assets 1,686 ( 1,975 ) ( 115 ) ( 389 )

As of September 30, 2020 and December 31, 2019, there was $ 1.8 million and $ 11.4 million , respectively, of property and equipment purchases in accounts payable and accrued liabilities.

Gain on disposition of assets 1,255 1,014

As of March 31, 2021 and December 31, 2020, there was $ 2.0 million and $ 2.8 million , respectively, of property and equipment purchases in accounts payable and accrued liabilities.

On a quarterly basis, we evaluate the future deployment of our idle fleet under current market conditions.

For the three and nine months ended September 30, 2020, we determined to retire 16 and 27 compressor units, respectively, for a total of approximately 3,900 and 9,000 horsepower, respectively, that were previously used to provide compression services in our business.

As a result, we recorded impairments of compression equipment of $ 1.7 million and $ 5.6 million for the three and nine months ended September 30, 2020, respectively.

For the nine months ended September 30, 2019, we determined to retire 14 compressor units, for a total of approximately 4,700 horsepower, that were previously used to provide compression services in our business.

As a result, we recorded an impairment of compression equipment of $ 3.2 million for the nine months ended September 30, 2019.

For the three months ended March 31, 2021, we determined to retire 12 compressor units for a total of approximately 5,600 horsepower that were previously used to provide compression services in our business.

As a result, we recorded an impairment of compression equipment of $ 2.6 million for the three months ended March 31, 2021.

The primary causes for these impairments were:

1 unchanged sentence

These compression units were written down to their respective estimated salvage values, if any.

No impairment was recorded for the three months ended September 30, 2019.

No impairment was recorded for the three months ended March 31, 2020.

Identifiable Intangible Assets

3 unchanged sentences

Amortization expense ( 6,526 ) ( 819 ) ( 7,345 )

Net balance as of September 30, 2020 $ 309,479 $ 31,657 $ 341,136

Accumulated amortization of intangible assets was $ 209.5 million and $ 187.5 million as of September 30, 2020 and December 31, 2019, respectively.

Net balance as of March 31, 2021 $ 296,426 $ 30,020 $ 326,446

Accumulated amortization of intangible assets was $ 224.2 million and $ 216.9 million as of March 31, 2021 and December 31, 2020, respectively.

The expected amortization of the intangible assets for each of the five succeeding years is $ 29.4 million.

13 unchanged sentences

Components of other current liabilities included the following (in thousands):

September 30,

2021 December 31,

2 unchanged sentences

Accrued payroll and benefits 7,361 8,416

Accrued capital expenditures 1,821 11,357

Accrued property taxes 8,217 4,116

Accrued unit-based compensation liability 11,529 9,183

______________________

1 unchanged sentence

(7) Lease Accounting

Lessee Accounting

We maintain both finance leases and operating leases, primarily related to office space, warehouse facilities and certain corporate equipment.

Our leases have remaining lease terms of up to ten years , some of which include options that permit renewals for additional periods.

We determine if an arrangement is a lease at inception.

Operating leases are included in lease right-of-use assets, accrued liabilities and operating lease liabilities in our unaudited condensed consolidated balance sheets.

Finance leases are included in property and equipment, accrued liabilities and other liabilities in our unaudited condensed consolidated balance sheets.

Right-of-use (“ROU”) lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments.

ROU lease assets also include any lease payments made and exclude lease incentives.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Variable costs such as our proportionate share of actual costs for utilities, common area maintenance, property taxes and insurance are not included in the lease liability and are recognized in the period in which they are incurred.

For short-term leases (leases that have terms of twelve months or less upon commencement), lease payments are recognized on a straight line basis and no ROU assets are recorded.

For certain equipment leases, such as office equipment, we account for the lease and non-lease components as a single lease component.

Supplemental balance sheet information related to leases consisted of the following (in thousands):

Assets (liabilities) September 30,

2020 December 31,

Operating leases:

Lease ROU assets $ 23,556 $ 18,317

Accrued liabilities ( 3,111 ) ( 2,451 )

Operating lease liabilities ( 21,980 ) ( 17,343 )

Finance leases:

Property and equipment, gross $ 3,978 $ 7,268

Accumulated depreciation ( 2,862 ) ( 5,845 )

Property and equipment, net 1,116 1,423

Accrued liabilities ( 556 ) ( 774 )

Other liabilities ( 1,130 ) ( 1,550 )

Components of lease expense consisted of the following (in thousands):

Three Months Ended September 30, Nine Months Ended

September 30,

Income Statement Line Item

2020 2019 2020 2019

Operating lease costs:

Operating lease cost Cost of operations, exclusive of depreciation and amortization $ 758 $ 563 $ 2,123 $ 1,218

Operating lease cost Selling, general and administrative 386 312 1,159 787

Total operating lease costs 1,144 875 3,282 2,005

Finance lease costs:

Amortization of lease assets Depreciation and amortization 102 116 307 1,526

Short-term lease costs:

Short-term lease cost Cost of operations, exclusive of depreciation and amortization 104 89 266 233

Short-term lease cost Selling, general and administrative 8 11 36 21

Total short-term lease costs 112 100 302 254

Variable lease costs:

Variable lease cost Cost of operations, exclusive of depreciation and amortization 46 8 208 155

Variable lease cost Selling, general and administrative 249 293 946 1,008

Total variable lease costs 295 301 1,154 1,163

Total lease costs $ 1,653 $ 1,392 $ 5,045 $ 4,948

The weighted average remaining lease terms and weighted average discount rates were as follows:

September 30,

2020 December 31,

Weighted average remaining lease term:

Operating leases 8 years 8 years

Finance leases 4 years 4 years

Weighted average discount rate:

Operating leases 5.0 % 4.9 %

Finance leases 2.6 % 2.6 %

Supplemental cash flow information related to leases consisted of the following (in thousands):

Nine Months Ended September 30,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ ( 3,204 ) $ ( 2,117 )

Operating cash flows from finance leases ( 477 ) ( 673 )

Financing cash flows from finance leases ( 636 ) ( 788 )

ROU assets obtained in exchange for lease obligations:

Operating leases $ 7,663 $ 11,784

Finance leases — 259

Maturities of lease liabilities as of September 30, 2020 consisted of the following (in thousands):

Operating Leases Finance Leases Total

2020 (remainder) $ 1,104 $ 146 $ 1,250

2021 4,207 567 4,774

2022 3,924 398 4,322

2023 3,562 369 3,931

2024 3,345 284 3,629

Thereafter 14,545 — 14,545

Total lease payments 30,687 1,764 32,451

present value discount ( 5,596 ) ( 78 ) ( 5,674 )

Present value of lease liabilities $ 25,091 $ 1,686 $ 26,777

As of September 30, 2020, we have not entered into any additional leases that have not yet commenced.

Lessor Accounting

1 unchanged sentence

The bargain purchase option provides the customer with an option to acquire the equipment at a value significantly less than the fair market value at the end of the lease term in 2021.

We accounted for this option as a sales-type lease resulting in a current installment receivable included in other accounts receivable of $ 4.0 million and $ 4.0 million, and a long-term installment receivable included in other assets of $ 0 and $ 2.9 million as of September 30, 2020 and December 31, 2019, respectively.

As of September 30, 2020, there is no allowance for credit losses on our net investment in the sales-type lease based on our collections experience with the customer.

We accounted for this option as a sales-type lease resulting in a current installment receivable included in other accounts receivable of $ 1.9 million and $ 2.9 million as of March 31, 2021 and December 31, 2020, respectively.

As of March 31, 2021, there is no allowance for credit losses on our net investment in the sales-type lease based on our collections experience with the customer.

Revenue and interest income related to the lease is recognized over the lease term.

1 unchanged sentence

Maintenance revenue and interest income were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Maintenance revenue $ 323 $ 323

Interest income 48 124

Lease payments expected to be received subsequent to September 30, 2020 are as follows (in thousands):

Lease payments expected to be received subsequent to March 31, 2021 are as follows (in thousands):

Lease Payments

2020 (remainder) $ 1,418

Total installment receivables (1) 1,938

1 unchanged sentence

Present value of installment receivables $ 1,878

FASB Accounting Standards Codification (“ASC”) Topic 842 provides lessors with a practical expedient to not separate non-lease components from the associated lease components and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under ASC Topic 606 Revenue from Contracts with Customers (“ASC Topic 606”) and certain conditions are met.

Our contract operations services agreements meet these conditions and we consider the predominant component to be the non-lease components, resulting in the ongoing recognition of revenue following ASC Topic 606 guidance.

______________________

(1) As discussed above, the installment receivable lease term ends in 2021.

(8) Long-term Debt

Our long-term debt, of which there is no current portion, consisted of the following (in thousands):

September 30,

2021 December 31,

Revolving credit facility $ 496,898 $ 402,722

Senior Notes 2026, aggregate principal $ 725,000 $ 725,000

2 unchanged sentences

Total senior notes, net 1,454,063 1,453,195

Revolving credit facility 502,688 473,810

Total long-term debt, net $ 1,956,751 $ 1,927,005

Revolving Credit Facility

As of September 30, 2020, we were in compliance with all of our covenants under the Credit Agreement.

As of March 31, 2021, we were in compliance with all of our covenants under the Credit Agreement.

The Credit Agreement has an aggregate commitment of $ 1.6 billion (subject to availability under our borrowing base), with a further potential increase of $ 400 million, and has a maturity date of April 2, 2023, which we expect to maintain for the term.

As of September 30, 2020, we had outstanding borrowings under the Credit Agreement of $ 496.9 million, $ 1.1 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $ 411.8 million.

Our weighted average interest rate in effect for all borrowings under the Credit Agreement as of September 30, 2020 was 3.03 %, with a weighted average interest rate of 3.36 % for the nine months ended September 30, 2020.

There were no letters of credit issued as of September 30, 2020.

As of March 31, 2021, we had outstanding borrowings under the Credit Agreement of $ 502.7 million, $ 1.1 billion of borrowing base availability and, subject to compliance with the applicable financial covenants, available borrowing capacity of $ 203.9 million.

Our weighted average interest rate in effect for all borrowings under the Credit Agreement as of March 31, 2021 was 3.20 %, with a weighted average interest rate of 3.06 % for the three months ended March 31, 2021.

There were no letters of credit issued as of March 31, 2021.

We pay a commitment fee of 0.375 % on the unused portion of the Credit Agreement.

The Credit Agreement was amended on August 3, 2020 (the “Amendment Effective Date”) and amends, among other things, the requirements of certain covenants and the date on which certain covenants in the Credit Agreement must be met from the Amendment Effective Date until the last day of the fiscal quarter ending December 31, 2021 (the “Covenant Relief Period”).

The Credit Agreement permits us to make distributions of available cash to unitholders so long as (i) no default under the facility has occurred, is continuing or would result from the distribution, (ii) immediately prior to and after giving effect to such distribution, we are in compliance with the facility’s financial covenants and (iii) immediately after giving effect to such distribution, we have availability under the Credit Agreement of at least $ 250 million (reverting back to $ 100 million after the Covenant Relief Period).

The Credit Agreement was amended on August 3, 2020 (the “Amendment Effective Date”) to amend, among other things, the requirements of certain covenants and the date on which certain covenants in the Credit Agreement must be met beginning on the Amendment Effective Date until the last day of the fiscal quarter ending December 31, 2021 (the “Covenant Relief Period”).

The Credit Agreement permits us to make distributions of available cash to unitholders so long as (i) no default under the facility has occurred, is continuing or would result from the distribution, (ii) immediately prior to and after giving effect to such distribution, we are in compliance with the facility’s financial covenants and (iii) immediately prior to and after giving effect to such distribution, we have availability under the Credit Agreement of at least $ 250 million (reverting to $ 100 million after the Covenant Relief Period).

The Credit Agreement also contains various financial covenants, including covenants requiring us to maintain:

• a minimum EBITDA to interest coverage ratio of 2.5 to 1.0, determined as of the last day of each fiscal quarter, for the annualized trailing three months;

• a maximum funded debt to EBITDA ratio, determined as of the last day of each fiscal quarter, for the annualized trailing three months of (i) 5.75 to 1.00 for the fiscal quarters ending September 30, 2020 and December 31, 2020, (ii) 5.50 to 1.00 for the fiscal quarters ending March 31, 2021 and June 30, 2021 and (iii) 5.25 to 1.00 for the fiscal quarters ending September 30, 2021 and December 31, 2021 (reverting back to 5.00 to 1.00 after the Covenant Relief Period).

• a maximum funded debt to EBITDA ratio, determined as of the last day of each fiscal quarter, for the annualized trailing three months of (i) 5.50 to 1.00 for the fiscal quarters ending March 31, 2021 and June 30, 2021 and (ii) 5.25 to 1.00 for the fiscal quarters ending September 30, 2021 and December 31, 2021 (reverting to 5.00 to 1.00 after the Covenant Relief Period).

In addition, the amendment provides that the 0.50 increase in maximum funded debt to EBITDA ratio applicable to certain future acquisitions (for the six consecutive month period in which any such acquisition occurs) is only available beginning with the fiscal quarter ending September 30, 2021, and in any case shall not increase the maximum funded debt to EBITDA ratio above 5.50 to 1.00.

In addition, during the Covenant Relief Period, the applicable margin for Eurodollar borrowings is increased from a range of 2.00 % – 2.75 % to a range of 2.25 % – 3.00 %.

The amendment further provides that the Partnership becomes guarantor of the obligations of all other guarantors under the Credit Agreement.

In connection with the Credit Agreement amendment, we incurred arrangement fees, consent fees and other fees in the amount of $ 3.4 million, which were capitalized to loan costs and are amortized over the remaining term of the Credit Agreement.

The amendment further provides that the Partnership becomes guarantor of the secured obligations of all other guarantors under the Credit Agreement.

The Credit Agreement is a “revolving credit facility” that includes a lock box arrangement, whereby remittances from customers are forwarded to a bank account controlled by the administrative agent and are applied to reduce borrowings under the facility.

2 unchanged sentences

(“Finance Corp”), co-issued the Senior Notes 2026.

The Senior Notes 2026 accrue interest at the rate of 6.875 % per year.

The Senior Notes 2026 mature on April 1, 2026 and accrue interest at the rate of 6.875 % per year.

Interest on the Senior Notes 2026 is payable semi-annually in arrears on each of April 1 and October 1.

The indenture governing the Senior Notes 2026 (the “2026 Indenture”) contains certain financial ratios that we must comply with in order to make certain restricted payments as described in the 2026 Indenture.

As of September 30, 2020, we were in compliance with such financial covenants under the 2026 Indenture.

As of March 31, 2021, we were in compliance with such financial covenants under the 2026 Indenture.

The Senior Notes 2026 are fully and unconditionally guaranteed (the “2026 Guarantees”), jointly and severally, on a senior unsecured basis by all of our existing subsidiaries (other than Finance Corp), and will be fully and unconditionally guaranteed, jointly and severally, by each of our future restricted subsidiaries that either borrows under, or guarantees, the Credit Agreement or guarantees certain of our other indebtedness (collectively, the “Guarantors”).

The Senior Notes 2026 and the 2026 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’ and our existing and future senior indebtedness and senior to the Guarantors’ and our future subordinated indebtedness, if any.

The Senior Notes 2026 and the 2026 Guarantees are effectively subordinated in right of payment to all of the Guarantors’ and our existing and future secured debt, including debt under the Credit Agreement and guarantees thereof, to the extent of the value of the assets securing such debt, and are structurally subordinated to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2026.

The Senior Notes 2026 and the 2026 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’, Finance Corp’s, and our existing and future senior indebtedness and senior to the Guarantors’, Finance Corp’s, and our future subordinated indebtedness, if any.

The Senior Notes 2026 and the 2026 Guarantees are effectively subordinated in right of

payment to all of the Guarantors’, Finance Corp’s, and our existing and future secured debt, including debt under the Credit Agreement and guarantees thereof, to the extent of the value of the assets securing such debt, and are structurally subordinated to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2026.

Senior Notes 2027

On March 7, 2019, the Partnership and Finance Corp co-issued the Senior Notes 2027.

The Senior Notes 2027 accrue interest from March 7, 2019 at the rate of 6.875 % per year.

The Senior Notes 2027 mature on September 1, 2027 and accrue interest at the rate of 6.875 % per year.

Interest on the Senior Notes 2027 is payable semi-annually in arrears on each of March 1 and September 1.

The indenture governing the Senior Notes 2027 (the “2027 Indenture”) contains certain financial ratios that we must comply with in order to make certain restricted payments as described in the 2027 Indenture.

As of September 30, 2020, we were in compliance with such financial covenants under the 2027 Indenture.

As of March 31, 2021, we were in compliance with such financial covenants under the 2027 Indenture.

The Senior Notes 2027 are fully and unconditionally guaranteed (the “2027 Guarantees”), jointly and severally, on a senior unsecured basis by the Guarantors.

The Senior Notes 2027 and the 2027 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’ and our existing and future senior indebtedness and senior to the Guarantors’ and our future subordinated indebtedness, if any.

The Senior Notes 2027 and the 2027 Guarantees are effectively subordinated in right of payment to all of the Guarantors’ and our existing and future secured debt, including debt under the Credit Agreement and guarantees thereof, to the extent of the value of the assets securing such debt, and are structurally subordinated to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2027.

The Senior Notes 2027 and the 2027 Guarantees are general unsecured obligations and rank equally in right of payment with all of the Guarantors’, Finance Corp’s, and our existing and future senior indebtedness and senior to the Guarantors’, Finance Corp’s, and our future subordinated indebtedness, if any.

The Senior Notes 2027 and the 2027 Guarantees are effectively subordinated in right of payment to all of the Guarantors’, Finance Corp’s, and our existing and future secured debt, including debt under the Credit Agreement and guarantees thereof, to the extent of the value of the assets securing such debt, and are structurally subordinated to all indebtedness of any of our subsidiaries that do not guarantee the Senior Notes 2027.

We have no assets or operations independent of our subsidiaries, and there are no significant restrictions upon our ability to obtain funds from our subsidiaries by dividend or loan.

2 unchanged sentences

(9) Preferred Units

We had 500,000 Preferred Units outstanding as of September 30, 2020 and December 31, 2019, respectively, with a face value of $ 1,000 per Preferred Unit.

We had 500,000 Preferred Units outstanding as of March 31, 2021 and December 31, 2020, respectively, with a face value of $ 1,000 per Preferred Unit.

The Preferred Units rank senior to the common units with respect to distributions and rights upon liquidation.

8 unchanged sentences

February 5, 2021 $ 24.375

May 8, 2020 24.375

August 10, 2020 24.375

2020 total distributions $ 73.125

Announced Quarterly Distribution

On October 15, 2020, we declared a cash distribution of $ 24.375 per unit on the Preferred Units.

The distribution will be paid on November 6, 2020 to the holders of the Preferred Units of record as of close of business on October 26, 2020.

On April 14, 2021, we declared a cash distribution of $ 24.375 per unit on the Preferred Units.

The distribution will be paid on May 7, 2021 to the holders of the Preferred Units of record as of close of business on April 26, 2021.

Changes in the Preferred Units balance are as follows (in thousands):

3 unchanged sentences

Cash distributions on Preferred Units ( 12,187 )

Balance as of September 30, 2020 $ 477,309

Balance as of March 31, 2021 $ 477,309

Redemption and Conversion Features

The Preferred Units are convertible, at the option of the holder, into common units in accordance with the terms of our Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”) as follows:

one third are convertible on or after April 2, 2021, two thirds are convertible on or after April 2, 2022, and 100 % are convertible on or after April 2, 2023.

The conversion rate for the Preferred Units is the quotient of (a) the sum of (i) $ 1,000 , plus (ii) any unpaid distributions on the applicable Preferred Unit, divided by (b) $ 20.0115 for each Preferred Unit.

On or after April 2, 2023, we have the option to redeem all or any portion of the Preferred Units then outstanding, subject to certain minimum redemption threshold amounts, for a redemption price set forth in the Partnership Agreement.

On or after April 2, 2028, each Preferred Unitholder will have the right to require us to redeem all or a portion of their Preferred Units, subject to certain minimum redemption threshold amounts, for a redemption price set forth in the Partnership Agreement, which we may elect to pay up to 50 % in common units, subject to certain additional limits.

(10) Partners’ Capital

4 unchanged sentences

Issuance of common units under the DRIP 33,981

Number of units outstanding as of September 30, 2020 96,903,066

As of September 30, 2020, ETO held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by ETO.

Class B Unit Conversion

On July 30, 2019, 6,397,965 Class B Units automatically converted into common units on a one-for-one basis, resulting in the issuance of 6,397,965 common units to ETO.

Following the conversion, there are no longer Class B Units outstanding.

Number of units outstanding as of March 31, 2021 97,022,290

As of March 31, 2021, ETO held 46,056,228 common units, including 8,000,000 common units held by the General Partner and controlled by ETO.

Cash Distributions

7 unchanged sentences

February 5, 2021 $ 0.525 $ 50.9 $ 1.1 $ 52.0

May 8, 2020 0.525 50.8 0.9 51.7

August 10, 2020 0.525 50.9 0.8 51.7

2020 total distributions $ 1.575 $ 152.4 $ 2.6 $ 155.0

Announced Quarterly Distribution

On October 15, 2020, we announced a cash distribution of $ 0.525 per unit on our common units.

The distribution will be paid on November 6, 2020 to common unitholders of record as of the close of business on October 26, 2020.

During the nine months ended September 30, 2020, distributions of $ 1.4 million were reinvested under the DRIP resulting in the issuance of 140,318 common units.

As of September 30, 2020 and December 31, 2019, we had two tranches of warrants outstanding, which includes warrants to purchase (i) 5,000,000 common units with a strike price of $ 17.03 per common unit and (ii) 10,000,000 common units with a strike price of $ 19.59 per common unit (collectively, the “Warrants”).

On April 14, 2021, we announced a cash distribution of $ 0.525 per unit on our common units.

The distribution will be paid on May 7, 2021 to common unitholders of record as of the close of business on April 26, 2021.

During the three months ended March 31, 2021, distributions of $ 0.5 million were reinvested under the DRIP resulting in the issuance of 33,981 common units.

As of March 31, 2021 and December 31, 2020, we had two tranches of warrants outstanding, which includes warrants to purchase (i) 5,000,000 common units with a strike price of $ 17.03 per common unit and (ii) 10,000,000 common units with a strike price of $ 19.59 per common unit (collectively, the “Warrants”).

The Warrants may be exercised by the holders at any time before April 2, 2028.

Earnings (Loss) per Unit

The computation of earnings (loss) per unit is based on the weighted average number of participating securities outstanding during the applicable period.

Basic earnings (loss) per unit is determined by dividing net income (loss) allocated to participating securities after deducting the distributions on Preferred Units, by the weighted average number of participating securities outstanding during the period.

Net income (loss) attributable to unitholders is allocated to participating securities based on their respective shares of the distributed and undistributed earnings for the period.

Loss per Unit

The computation of loss per unit is based on the weighted average number of participating securities, which includes our common units and certain equity-based awards, outstanding during the applicable period.

Basic loss per unit is determined by dividing net income (loss) allocated to participating securities after deducting the distributions on Preferred Units, by the weighted average number of participating securities outstanding during the period.

Loss attributable to unitholders is allocated to participating securities based on their respective shares of the distributed and undistributed earnings for the period.

To the extent cash distributions exceed net income (loss) attributable to unitholders for the period, the excess distributions are allocated to all participating securities outstanding based on their respective ownership percentages.

Diluted earnings (loss) per unit are computed using the treasury stock method, which considers the potential issuance of limited partner units associated with our long-term incentive plan and Warrants.

The classes of participating securities include common units, Class B Units prior to July 30, 2019, and certain equity-based compensation awards.

Unvested phantom units and unexercised Warrants are not included in basic earnings per unit, as they are not considered to be participating securities, but are included in the calculation of diluted earnings per unit to the extent they are dilutive, and in the case of Warrants to the extent they are considered “in the money.”

For the three and nine months ended September 30, 2020, approximately 584,000 and 542,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted earnings per common unit because the impact was anti-dilutive and our outstanding Warrants are no t included in the computation as they are not considered “in the money” for either period.

For the three and nine months ended September 30, 2019, approximately 221,000 and 169,000 incremental unvested phantom units, respectively, represented the difference between our basic and diluted weighted average common units

outstanding and our outstanding Warrants are no t included in the computation as they are not considered “in the money” for either period.

Diluted loss per unit is computed using the treasury stock method, which considers the potential issuance of limited partner units associated with our long-term incentive plan and Warrants.

Unvested phantom units and unexercised Warrants are not included in basic loss per unit, as they are not considered to be participating securities, but are included in the calculation of diluted loss per unit to the extent they are dilutive, and in the case of Warrants to the extent they are considered “in the money.”

For the three months ended March 31, 2021 and 2020, approximately 710,000 and 489,000 incremental unvested phantom units, respectively, were excluded from the calculation of diluted loss per unit because the impact was anti-dilutive and our outstanding Warrants are no t included in the computation as they are not considered “in the money” for either period.

(11) Revenue Recognition

1 unchanged sentence

The following table disaggregates our revenue by type of service (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Contract operations revenue $ 155,469 $ 175,902

2 unchanged sentences

The following table disaggregates our revenue by timing of provision of services or transfer of goods (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Services provided over time:

6 unchanged sentences

We record contract assets when we have completed performance under a contract but our right to consideration is not yet unconditional.

We had no contract assets as of September 30, 2020 and December 31, 2019.

We had no contract assets as of March 31, 2021 and December 31, 2020.

Deferred Revenue

1 unchanged sentence

Components of deferred revenue were as follows (in thousands):

Balance sheet location September 30,

Balance sheet location March 31,

2021 December 31,

3 unchanged sentences

______________________

(1) We recognized $ 1.4 million and $ 44.5 million of revenue during the three and nine months ended September 30, 2020, respectively, related to our deferred revenue balance as of December 31, 2019.

(1) We recognized $ 39.3 million of revenue during the three months ended March 31, 2021 related to our deferred revenue balance as of December 31, 2020.

Performance Obligations

As of September 30, 2020, the aggregate amount of transaction price allocated to unsatisfied performance obligations related to our contract operations revenue is $ 522.0 million.

As of March 31, 2021, we had unsatisfied performance obligations related to our contract operations revenue of $ 467.4 million.

We expect to recognize these remaining performance obligations as follows (in thousands):

2020 (remainder) 2021 2022 2023 Thereafter Total

2021 (remainder)

2022 2023 2024 Thereafter Total

Remaining performance obligations $ 229,340 $ 144,444 $ 61,819 $ 24,907 $ 6,894 $ 467,404

(12) Transactions with Related Parties

We provide compression services to entities affiliated with ETO, which as of September 30, 2020 owned approximately 48 % of our limited partner interests and 100 % of the General Partner.

We provide compression services to entities affiliated with ETO, which as of March 31, 2021 owned approximately 47 % of our limited partner interests and 100 % of the General Partner.

Revenue recognized from such affiliated ETO entities on our unaudited condensed consolidated statements of operations were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Related party revenues $ 2,950 $ 3,157

We had $ 19,000 and $ 0.5 million within related party receivables and $ 0 and $ 1,000 within accounts payable on our unaudited condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019, respectively, from such affiliated ETO entities.

Additionally, the Partnership had a $ 44.9 million related party receivable from ETO as of September 30, 2020 and December 31, 2019 related to indemnification for sales tax contingencies incurred by the USA Compression Predecessor.

We had $ 0 and $ 120,000 within related party receivables and $ 6,000 and $ 0 within accounts payable on our unaudited condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively, from such affiliated ETO entities.

Additionally, the Partnership had a $ 44.9 million related party receivable from ETO as of March 31, 2021 and December 31, 2020 related to indemnification for sales tax contingencies.

See Note 13 for more information related to such sales tax contingencies.

1 unchanged sentence

(a) Major Customers

We did not have revenue from any single customer representing 10% or more of total revenue for the three and nine months ended September 30, 2020 or 2019.

We did not have revenue from any single customer representing 10% or more of total revenue for the three months ended March 31, 2021 or 2020.

(b) Litigation

1 unchanged sentence

In management’s opinion, the resolution of such matters is not expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Our future capital commitments are comprised of binding commitments under purchase orders for new compression units and serialized parts ordered but not received.

Those commitments as of September 30, 2020 were $ 6.3 million, which we expect to settle in 2020.

(d) Sales Tax Contingencies

Our compliance with state and local sales tax regulations is subject to audit by various taxing authorities.

The Office of the Texas Comptroller of Public Accounts (“Comptroller”) has claimed that specific operational processes, which we and others in our industry regularly conduct, result in transactions that are subject to state sales taxes.

We and other companies in our industry have disputed these claims based on existing tax statutes which provide for manufacturing exemptions on the transactions in question.

The manufacturing exemptions are based on the fact that our natural gas compression equipment is used in the process of preparing natural gas for ultimate use and sale.

As of September 30, 2020, we have recorded a $ 44.9 million accrued liability and $ 44.9 million related party receivable from ETO related to open audits with the Comptroller.

During January 2020, we entered into a compromise and settlement agreement with the Comptroller for the audit of the USA Compression Predecessor for the period from August 2006 to December 2007 for $ 4.0 million, which was paid by the USA Compression Predecessor’s former owner in February 2020.

Certain taxing authorities have either claimed or issued an assessment that specific operational processes, which we and others in our industry regularly conduct, result in transactions that are subject to state sales taxes.

We and others in our industry have disputed these claims and assessments based on either existing tax statutes or published guidance by the taxing authorities.

We are currently in discussions with the Oklahoma Tax Commission (“OTC”) regarding its assessment.

We believe it is reasonably possible that we could incur losses related to this assessment depending on whether the OTC accepts our position that the transactions are not taxable and we ultimately lose any and all subsequent legal challenges to such determination by the OTC.

We estimate that the range of losses we could incur is from $ 0 to approximately $ 21.6 million, including penalty and interest.

The upper end of this range assumes that all compression services in Oklahoma are taxable, which we believe is remote.

As of March 31, 2021 and December 31, 2020, we have recorded a $ 44.9 million accrued liability and $ 44.9 million related party receivable from ETO related to open audits with the Office of the Texas Comptroller of Public Accounts.

For more information, see Note 17 to the consolidated financial statements included in our 2020 Annual Report.

(14) Recent Accounting Pronouncements

In March 2019, FASB issued ASU 2020-04, Reference Rate Reform (“Topic 848”):

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform (“Topic 848”):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The amendment to Topic 848 provides relief from certain contract modification accounting requirements for the transition away from LIBOR and certain other reference rates.

The amendment to Topic 848 provides relief from certain contract modification accounting requirements for the transition away from the London Interbank Offered Rate and certain other reference rates.

Adoption of the amendments in this update are optional, effective upon issuance and may be adopted during any interim or annual period through December 31, 2022.

We are currently evaluating the impact, if any, of the amendments to Topic 848 on our consolidated financial statements.

Modifications to our Credit Agreement during the effective period of this amendment will be assessed and if the modifications meet the criteria for the optional expedients and exceptions, we intend to adopt Topic 848 and apply the amendments as applicable.

In August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

2 unchanged sentences

The amendments in this update are effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020.

We are currently evaluating the impact, if any, of the amendments to ASU 2020-06 on our consolidated financial statements.

We plan to adopt this new standard on January 1, 2022.

We expect the impact on our disclosures will not be material and there to be no impact to our consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements