The market expects Archrock Inc. (AROC) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, if they miss, ...

Company Performance - Archrock Inc. (AROC) closed at $23.44, reflecting a -2.46% change from the previous day, underperforming compared to the S&P 500's 0.61% gain [1] - Prior to the latest trading session, AROC shares had decreased by 3.1%, lagging behind the Oils-Energy sector's gain of 5.17% and the S&P 500's gain of 3.85% [1] Earnings Projections - The upcoming earnings disclosure for Archrock is projected to show earnings per share (EPS) of $0.37, which is a 48% increase from the same quarter last year [2] - Revenue is estimated to be $360.26 million, indicating a 33.17% growth compared to the corresponding quarter of the prior year [2] - Full-year Zacks Consensus Estimates forecast earnings of $1.55 per share and revenue of $1.47 billion, representing year-over-year changes of +47.62% and +27.02%, respectively [3] Analyst Estimates and Valuation - Recent adjustments to analyst estimates for Archrock reflect near-term business trends, with upward revisions indicating analysts' positivity towards the company's operations [4] - The Zacks Rank system, which evaluates estimate changes, currently ranks Archrock at 4 (Sell), following a 4.83% fall in the Zacks Consensus EPS estimate over the past month [6] - Archrock is currently traded at a Forward P/E ratio of 15.55, which is a premium compared to the industry average Forward P/E of 14.94 [7] - The company has a PEG ratio of 1.3, while the Oil and Gas - Field Services industry holds an average PEG ratio of 3.71 [7] Industry Context - The Oil and Gas - Field Services industry, part of the Oils-Energy sector, has a Zacks Industry Rank of 218, placing it in the bottom 12% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

ARCHROCK, INC. February 2024 Forward-Looking Statements All statements in this presentation (and oral statements made regarding the subjects of this presentation) other than historical facts are forward–looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward–looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from ...

Company Performance - Archrock Inc. (AROC) closed at $24.36, reflecting a -2.33% change from the previous day's closing price, underperforming the S&P 500 which gained 0.96% [1] - Over the past month, shares of Archrock have appreciated by 0.65%, underperforming the Oils-Energy sector's gain of 6.67% but outperforming the S&P 500's gain of 0.5% [2] - Analysts expect Archrock to report earnings of $0.38 per share, indicating a year-over-year growth of 52%, with a revenue estimate of $360.26 million, representing a 33.17% increase from the same quarter last year [3] - For the entire fiscal year, earnings are projected at $1.62 per share and revenue at $1.47 billion, reflecting changes of +54.29% and +27.02% respectively from the prior year [4] Analyst Estimates - Recent changes to analyst estimates for Archrock indicate a positive outlook on the company's business operations and profit generation capabilities [5] - The Zacks Rank system, which evaluates estimate changes, currently ranks Archrock at 4 (Sell), with the consensus EPS estimate remaining unchanged over the last 30 days [7] Valuation Metrics - Archrock is trading at a Forward P/E ratio of 15.36, which aligns with the industry average [8] - The company has a PEG ratio of 1.28, compared to the Oil and Gas - Field Services industry's average PEG ratio of 3.65 [9] Industry Context - The Oil and Gas - Field Services industry, part of the Oils-Energy sector, holds a Zacks Industry Rank of 141, placing it in the bottom 43% of over 250 industries [10]

Core Insights - Archrock, Inc. (NYSE: AROC) has experienced a significant share price increase of 30.97% year-over-year [1] - The company's Q1 2025 revenue rose by 29.32% year-over-year, reaching $347.2 million compared to $268.5 million in Q1 2024 [1] Company Performance - Archrock's revenue growth indicates strong operational performance and demand for its natural gas compression services [1] - The increase in revenue from $268.5 million to $347.2 million reflects a robust market position and potential for continued growth in the energy infrastructure sector [1]

```markdown [Part I. Financial Information](index=8&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements (unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Archrock reported significant Q1 2025 growth, with total revenue up **29.3%** to **$347.2 million** and net income up **74.8%** to **$70.9 million**, driven by contract operations and the TOPS Acquisition - The financial statements are unaudited and should be read in conjunction with the 2024 Annual Report on Form 10-K They reflect all normal recurring adjustments necessary for a fair statement of the interim period results[29](index=29&type=chunk) - Subsequent to the quarter's end, on May 1, 2025, the company completed the acquisition of Natural Gas Compression System, Inc. (NGCS) for total consideration of **$352.3 million**, consisting of **$299.3 million** in cash and approximately **2.25 million shares** of common stock[124](index=124&type=chunk) [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to **$3.96 billion** from **$3.82 billion** at year-end 2024, primarily due to property, plant, and equipment growth, while total liabilities rose to **$2.61 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$3,964,732** | **$3,824,205** | | Total current assets | $271,973 | $233,122 | | Property, plant and equipment, net | $3,429,357 | $3,323,830 | | **Total Liabilities** | **$2,614,749** | **$2,500,674** | | Total current liabilities | $184,627 | $188,604 | | Long-term debt | $2,297,767 | $2,198,376 | | **Total Equity** | **$1,349,983** | **$1,323,531** | [Condensed Consolidated Statements of Operations](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2025, total revenue increased **29.3%** year-over-year to **$347.2 million**, driven by a **34.7%** rise in contract operations revenue, leading to net income growth of **74.8%** to **$70.9 million** Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | **Total Revenue** | **$347,163** | **$268,488** | | Contract operations | $300,397 | $223,051 | | Aftermarket services | $46,766 | $45,437 | | **Income before income taxes** | **$91,986** | **$53,585** | | **Net Income** | **$70,850** | **$40,532** | | **Diluted EPS** | **$0.40** | **$0.26** | | Diluted weighted-average shares | 174,371 | 154,501 | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to **$115.6 million** in Q1 2025 from **$137.7 million** in Q1 2024, while investing activities used **$164.0 million** and financing activities provided **$48.8 million** Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $115,628 | $137,702 | | Net cash used in investing activities | ($164,031) | ($85,923) | | Net cash provided by (used in) financing activities | $48,819 | ($51,962) | | **Net increase (decrease) in cash** | **$416** | **($183)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q1 2025 performance to robust industry fundamentals and the TOPS Acquisition, with contract operations revenue growing **35%** YoY and adjusted gross margin expanding **45%** - Total operating horsepower at period end increased to **4,283,000 HP** in Q1 2025 from **3,593,000 HP** in Q1 2024, with horsepower utilization remaining high at **96%**[128](index=128&type=chunk) - The company plans to spend approximately **$475 million to $540 million** on capital expenditures in 2025, with **$330 million to $370 million** for growth and **$110 million to $120 million** for maintenance[159](index=159&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Consolidated revenue for Q1 2025 increased by **$78.7 million** YoY, primarily driven by a **$77.3 million** increase in contract operations, leading to net income rising to **$70.9 million** Contract Operations Performance (in thousands) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $300,397 | $223,051 | 35% | | Adjusted Gross Margin | $210,598 | $145,308 | 45% | | Adjusted Gross Margin % | 70% | 65% | 5% | Aftermarket Services Performance (in thousands) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $46,766 | $45,437 | 3% | | Adjusted Gross Margin | $11,509 | $10,437 | 10% | | Adjusted Gross Margin % | 25% | 23% | 2% | - Transaction-related costs of **$3.9 million** were incurred in Q1 2025, comprising **$2.9 million** for the NGCS Acquisition and **$1.1 million** for the TOPS Acquisition[148](index=148&type=chunk) - The increase in interest expense was due to a higher average outstanding debt balance, primarily from the 2032 Notes offering[147](index=147&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Primary liquidity sources are cash from operations and the **$1.1 billion** Credit Facility, with Q1 2025 operating cash flow at **$115.6 million** and **$164.0 million** used in investing activities Capital Expenditures (in millions) | Type | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Growth Capital | $139.4 | $77.3 | | Maintenance Capital | $22.8 | $19.5 | - As of March 31, 2025, the company was in compliance with all covenants under its Credit Facility, and all undrawn capacity was available for borrowing[162](index=162&type=chunk) - On April 24, 2025, the Board of Directors declared a quarterly dividend of **$0.19 per share**[160](index=160&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate changes on the variable-rate Credit Facility, with **$507.3 million** outstanding as of March 31, 2025, where a **1%** rate change impacts annual interest expense by **$5.1 million** - As of March 31, 2025, the company had **$507.3 million** of variable interest rate debt outstanding under its Credit Facility[169](index=169&type=chunk) - A **1%** increase or decrease in the effective interest rate would result in an annual change in interest expense of **$5.1 million**[170](index=170&type=chunk) [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[174](index=174&type=chunk) - There were no changes in internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[175](index=175&type=chunk) [Part II. Other Information](index=49&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal actions in the ordinary course of business, but management believes they will not have a material adverse effect on financial position or results - In the ordinary course of business, the company is involved in various pending or threatened legal actions, but does not expect any to have a material adverse effect[177](index=177&type=chunk) [Risk Factors](index=49&type=page&id=Item%201A.%20Risk%20Factors) New risks relate to the NGCS Acquisition, including potential integration difficulties, failure to achieve expected benefits, and assumption of unknown liabilities, which could adversely affect business results - A new risk factor has been added concerning the NGCS Acquisition, stating the company may not achieve expected benefits and could encounter significant difficulties in integration[179](index=179&type=chunk) - Challenges of integration include managing the combined workforce, aligning business practices, and potential for increased costs, liabilities, or diversion of management's attention[181](index=181&type=chunk)[184](index=184&type=chunk) - Acquisitions, including the NGCS deal, involve risks such as assuming unknown liabilities and could potentially reduce the company's ability to make distributions to common stockholders[183](index=183&type=chunk)[185](index=185&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased **513,528 shares**, including **9,161** under its program at **$24.39 per share** and **504,367** withheld for employee tax obligations Share Repurchases and Withholding - Q1 2025 | Description | Number of Shares | Average Price Paid per Share | | :--- | :--- | :--- | | Shares repurchased under program | 9,161 | $24.39 | | Shares withheld for tax obligations | 504,367 | $29.69 | | **Total** | **513,528** | **$29.59** | [Other Information](index=53&type=section&id=Item%205.%20Other%20Information) During Q1 2025, none of the company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[191](index=191&type=chunk) ```

Archrock, Inc. (NYSE:AROC) Q1 2025 - Earnings Conference Call May 6, 2025 10:30 AM ET Company Participants Megan Repine – VP, IR Bradley Childers - President and CEO Doug Aron - CFO of Archrock Conference Call Participants Jim Rollyson - Raymond James Gab Moreen - Mizuho Securities Doug Irwin - Citi Selman Akyol - Stifel Steve Ferazani - Sidoti Nate Pendleton - Texas Capital Operator Speaker 0: Good morning. Welcome to Archrock First Quarter 2025 Conference Call. Your host for today's call is Megan Repine, ...

Financial Data and Key Metrics Changes - Archrock reported a net income of $71 million for Q1 2025, with adjusted net income of $74 million or $0.42 per share, reflecting a significant increase compared to the previous year [25][26] - Adjusted EBITDA for Q1 2025 was $198 million, showing strong underlying business performance [26] - The leverage ratio at the end of the quarter was 3.2 times, down from 3.3 times in the previous quarter, indicating improved financial strength [29] Business Line Data and Key Metrics Changes - Contract operations revenue reached $300 million in Q1 2025, up 5% from Q4 2024 and 35% year-over-year, driven by organic horsepower growth and higher pricing [27] - The aftermarket services segment reported revenue of $47 million, up from $40 million in the previous quarter, with an adjusted gross margin percentage of 25% [28] - Monthly revenue per horsepower increased to a record $23.54 during Q1 2025, with a consistent adjusted gross margin percentage of 70% for two consecutive quarters [19][20] Market Data and Key Metrics Changes - The compression market fundamentals remained strong, with utilization rates at 96% and a substantial contracted backlog for 2025 [11][18] - The company is closely monitoring market developments, particularly regarding OPEC's production actions and their potential impact on natural gas demand [12][13] Company Strategy and Development Direction - Archrock is focused on value-creating industry consolidation, with the integration of Total Operations and Production Services (TOPS) progressing as planned and the recent acquisition of NGCS expected to enhance scale and customer relationships [10][30] - The company plans to maintain a leverage ratio between 3 to 3.5 times while continuing to invest in growth capital expenditures between $330 million and $370 million [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through macroeconomic uncertainties, citing a stable production-oriented business model and strong customer demand for natural gas [12][13] - The company anticipates continued growth in global natural gas demand, supporting infrastructure investments in the U.S. for decades to come [16][17] Other Important Information - Archrock increased its quarterly dividend per share by 15% year-over-year, with a robust dividend coverage of 3.9 times [9][29] - The company has repurchased approximately 977,000 shares at an average price of $23.22 per share, with a remaining capacity of $65 million for additional buybacks [9][29] Q&A Session Summary Question: Impact of macro headwinds on gas and oil growth - Management noted that while some producers are reducing CapEx modestly, the committed backlog for 2025 remains unaffected, ensuring continued growth [36][37] Question: Equipment pricing and tariffs - Management indicated that pricing for equipment is largely locked in for 2025 and that the impact of tariffs on costs is estimated to be in the low single digits [39][40] Question: Decisive actions in response to market conditions - Management emphasized the importance of staying close to customers and highlighted the operational flexibility to adjust CapEx and OpEx as needed [44][45] Question: Pricing assumptions and guidance for NGCS - Management confirmed that there are no changes in pricing strategy and that the acquisition of NGCS can be absorbed without increasing CapEx guidance [48][50] Question: Compression intensity in different basins - Management explained that compression intensity is highest in the Permian, but they have the ability to adjust operations based on where gas production is occurring [57][58] Question: Demand for electric compression - Management stated that about 30% of the new build CapEx budget is still dedicated to electric compression, but availability of power remains a limiting factor [70][71] Question: Positioning for potential slowdowns - Management highlighted the differentiated positioning of the company compared to past cycles, with a more balanced customer base and a younger, higher horsepower fleet [75][76] Question: Contract flexibility and outsourcing trends - Management confirmed that contracts are binding but they work with customers to accommodate changes within limits, and noted an increase in outsourcing among customers [79][81] Question: Pricing of older versus new compression assets - Management indicated that there is no significant pricing differential between new and used equipment within the first few contract applications, although older equipment may see some differences [84][85]

Financial Data and Key Metrics Changes - Archrock reported a net income of $71 million for Q1 2025, with adjusted net income of $74 million or $0.42 per share, reflecting a significant increase compared to the previous year [23][27] - Adjusted EBITDA for Q1 2025 was $198 million, showing strong underlying business performance [23] - The leverage ratio at the end of the quarter was 3.2 times, down from 3.3 times in the previous quarter, indicating improved financial stability [26] Business Line Data and Key Metrics Changes - Contract operations revenue reached $300 million in Q1 2025, up 5% sequentially and 35% year-over-year, driven by organic horsepower growth and higher pricing [24][25] - The aftermarket services segment reported revenues of $47 million, up from $40 million in the previous quarter, with an adjusted gross margin percentage of 25% [26] - Monthly revenue per horsepower increased to a record $23.54 during Q1 2025, with a consistent adjusted gross margin percentage of 70% [17][18] Market Data and Key Metrics Changes - The compression market fundamentals remained strong, with utilization rates at 96% and a substantial contracted backlog for 2025 [10][16] - Archrock is closely monitoring market developments, particularly regarding OPEC's production actions and their potential impact on WTI prices [11][12] Company Strategy and Development Direction - Archrock is focused on value-creating industry consolidation, with the integration of Total Operations and Production Services (TOPS) progressing as planned and the recent acquisition of NGCS expected to enhance scale and customer relationships [8][9] - The company aims to maintain a leverage ratio between 3 to 3.5 times while continuing to invest in growth capital expenditures between $330 million and $370 million for 2025 [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to manage business in various market conditions, citing a stable production-oriented business model and a disciplined capital allocation strategy [12][13] - The long-term outlook remains positive, with expectations for continued growth in global natural gas demand supporting infrastructure investments in the U.S. [14][15] Other Important Information - The quarterly dividend per share was increased by 15% year-over-year, with a robust dividend coverage of 3.9 times [7][27] - Archrock has repurchased approximately 977,000 shares at an average price of $23.22 per share, with a remaining capacity of $65 million for additional buybacks [7][27] Q&A Session Summary Question: Impact of macro headwinds on gas outlook - Management noted that while some producers are adjusting CapEx modestly, the committed backlog for 2025 remains unaffected, indicating stability in deployment plans [33][34] Question: Equipment pricing and tariffs - Management indicated that pricing for orders is locked in, and the estimated impact of tariffs on equipment costs is in the low single-digit range [36][37] Question: Decisive actions in response to market conditions - Management emphasized operational flexibility, with the ability to adjust both OpEx and CapEx quickly in response to market changes [41][42] Question: Pricing assumptions and guidance - Management confirmed no changes in overall pricing strategy, with pricing increases moderating but still reflecting a tight compression market [45][46] Question: NGCS acquisition details - The acquisition is expected to contribute positively to earnings without requiring additional material investment in equipment [50][51] Question: Compression intensity in different basins - Management highlighted that the Permian has the highest compression intensity, but growth in other basins is being observed without a shift away from the Permian [53][54] Question: Demand for electric compression - Approximately 30% of the new build CapEx budget is allocated to electric compression, with demand remaining stable [65][66] Question: Positioning for potential slowdowns - Management noted that the current customer mix and high utilization levels provide a different level of stability compared to previous cycles [68][70]

Core Insights - Archrock Inc. reported revenue of $347.16 million for Q1 2025, a year-over-year increase of 29.3% and a surprise of +1.55% over the Zacks Consensus Estimate of $341.88 million [1] - The company achieved an EPS of $0.42, compared to $0.26 a year ago, with an EPS surprise of +7.69% against the consensus estimate of $0.39 [1] Revenue Breakdown - Aftermarket services revenue was $46.77 million, slightly below the two-analyst average estimate of $49.76 million, reflecting a year-over-year change of +2.9% [4] - Contract operations revenue reached $300.40 million, exceeding the two-analyst average estimate of $292.43 million, with a year-over-year change of +34.7% [4] Gross Margin Analysis - Gross margin for aftermarket services was reported at $11.51 million, slightly above the estimated $11.45 million [4] - Gross margin for contract operations was $210.60 million, surpassing the estimated $204.19 million [4] Stock Performance - Archrock Inc. shares have returned +12.7% over the past month, outperforming the Zacks S&P 500 composite's +0.4% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), indicating potential for outperformance in the near term [3]