Company Overview - Archrock Inc. has transitioned from a broader energy services provider to a specialized pure-play compression services company, focusing on natural gas production, processing, and transportation [11] - The company has undergone an operational transformation over the past decade to enhance performance, safety, customer service, and environmental responsibility [11] Zacks Rank and Style Scores - Archrock is currently rated 3 (Hold) on the Zacks Rank, with a VGM Score of B, indicating a solid position but not a strong buy [12] - The Value Style Score for Archrock is B, supported by a forward P/E ratio of 15.29, making it attractive for value investors [12] - Recent upward revisions in earnings estimates by two analysts for fiscal 2025 have increased the Zacks Consensus Estimate by $0.02 to $1.57 per share [12] - Archrock has demonstrated an average earnings surprise of +6.5%, indicating potential for positive performance [12] Investment Consideration - With a solid Zacks Rank and favorable Value and VGM Style Scores, Archrock is recommended for investors' consideration [13]

Core Viewpoint - Archrock, Inc. has announced the dual listing of its common stock on NYSE Texas, supporting a pro-business initiative in Texas while maintaining its primary listing on the New York Stock Exchange [1][2][3]. Company Overview - Archrock is an energy infrastructure company focused on midstream natural gas compression, committed to safe and environmentally responsible operations [4]. - The company is headquartered in Houston, Texas, and is a leading provider of natural gas compression services across the U.S. [4]. Listing Details - The dual listing on NYSE Texas allows Archrock to trade under the same "AROC" ticker symbol while supporting local business initiatives [1][3]. - The company has a long history with the New York Stock Exchange, dating back to 1997 [2].

Core Insights - Archrock Inc. (AROC) reported second-quarter 2025 earnings per share of 39 cents, exceeding the Zacks Consensus Estimate of 37 cents, and improved from 25 cents in the same quarter last year [1] - Total quarterly revenues reached $383 million, up from $271 million year-over-year, and also surpassed the Zacks Consensus Estimate of $360 million [1] Operational Performance - The company operates through two segments: Contract Operations and Aftermarket Services - Contract Operations segment revenues were $318.3 million, compared to $225.4 million in the prior year, with total operating horsepower increasing to 4.65 million from 3.6 million, achieving a record utilization level of 96% [3][4] - Aftermarket Services segment revenues totaled $64.8 million, up from $45.1 million in the second quarter of 2024 [4] Costs & Expenses - Total cost of sales for the quarter was $146 million, an increase from $114.4 million in the previous year [5] - Depreciation and amortization expenses were reported at $63 million for the quarter [5] Liquidity Position & Capital Expenditure - As of June 30, 2025, Archrock had long-term debt of $2.6 billion and total available liquidity of $675 million [6] - Net capital expenditures for the second quarter amounted to $82.9 million [6] Dividend Payment - Archrock declared a quarterly dividend of 21 cents per share, equating to an annualized rate of $0.84, with a dividend coverage ratio of 3.4x [7] Guidance - The company expects net income for 2025 to be in the range of $249.6 million to $289.6 million, with growth capital expenditures projected between $340 million and $360 million [8]

[Glossary](index=4&type=section&id=Glossary) Provides definitions for key terms and abbreviations used throughout the financial report [Forward-Looking Statements](index=7&type=section&id=Forward-Looking%20Statements) Highlights cautionary language regarding future expectations and potential risks that may cause actual results to differ [Part I. Financial Information](index=8&type=section&id=Part%20I.%20Financial%20Information) Presents Archrock's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents Archrock's unaudited condensed consolidated financial statements, including balance sheets, operations, equity, and cash flows [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents Archrock's financial position, detailing assets, liabilities, and stockholders' equity as of specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | **Assets** | | | | Cash and cash equivalents | $5,861 | $4,420 | | Accounts receivable, net | $179,922 | $132,478 | | Inventory | $106,673 | $89,686 | | Assets held for sale | $70,650 | — | | Total current assets | $376,188 | $233,122 | | Property, plant and equipment, net | $3,660,691 | $3,323,830 | | Goodwill | $124,266 | $52,155 | | Total assets | $4,431,314 | $3,824,205 | | **Liabilities and Stockholders' Equity** | | | | Accounts payable, trade | $80,663 | $57,567 | | Accrued liabilities | $119,358 | $124,105 | | Total current liabilities | $208,079 | $188,604 | | Long-term debt | $2,613,082 | $2,198,376 | | Deferred tax liabilities | $150,063 | $62,505 | | Total liabilities | $3,022,874 | $2,500,674 | | Total equity | $1,408,440 | $1,323,531 | | Total liabilities and equity | $4,431,314 | $3,824,205 | - Total assets increased by approximately **$607.1 million** from December 31, 2024, to June 30, 2025, primarily driven by increases in property, plant and equipment, goodwill, and intangible assets, largely due to acquisitions[19](index=19&type=chunk) - Total liabilities increased by approximately **$522.2 million**, mainly due to a significant rise in long-term debt and deferred tax liabilities[19](index=19&type=chunk) [Condensed Consolidated Statements of Operations](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details Archrock's revenues, expenses, and net income over specific reporting periods, reflecting operational profitability Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue: | | | | | | Contract operations | $318,327 | $225,468 | $618,724 | $448,519 | | Aftermarket services | $64,825 | $45,058 | $111,591 | $90,495 | | Total revenue | $383,152 | $270,526 | $730,315 | $539,014 | | Total cost of sales, exclusive of D&A | $146,038 | $114,436 | $271,094 | $227,179 | | Selling, general and administrative | $36,244 | $31,163 | $73,451 | $62,828 | | Depreciation and amortization | $63,139 | $43,853 | $120,759 | $86,688 | | Interest expense | $41,711 | $27,859 | $79,452 | $55,193 | | Net income | $63,420 | $34,425 | $134,270 | $74,957 | | Basic and diluted EPS | $0.36 | $0.22 | $0.76 | $0.48 | - Total revenue increased by **41.6%** for the three months ended June 30, 2025, and **35.5%** for the six months ended June 30, 2025, compared to the respective prior-year periods, driven by growth in both contract operations and aftermarket services[21](index=21&type=chunk) - Net income significantly increased by **84.2%** for the three months and **79.1%** for the six months ended June 30, 2025, primarily due to higher revenue and gains on asset sales, partially offset by increased operating expenses and interest[21](index=21&type=chunk) [Condensed Consolidated Statements of Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Outlines changes in Archrock's stockholders' equity, including net income, share issuances, and dividends, over specific periods Condensed Consolidated Statements of Equity (in thousands, except shares and per share amounts) | Metric | Balance at March 31, 2025 | Shares Issued for NGCS Acquisition | Net Income | Balance at June 30, 2025 | | :-------------------------------- | :------------------------ | :------------------------------- | :--------- | :----------------------- | | Common Stock (Amount) | $1,863 | $22 | — | $1,858 | | Common Stock (Shares) | 186,223,007 | 2,251,014 | — | 185,783,778 | | Additional Paid-in Capital | $3,885,911 | $52,944 | — | $3,892,168 | | Accumulated Deficit | $(2,401,409) | — | $63,420 | $(2,371,609) | | Treasury Stock (Amount) | $(136,382) | — | — | $(113,977) | | Total Equity | $1,349,983 | $52,966 | $63,420 | $1,408,440 | - Total equity increased from **$1,323.5 million** at December 31, 2024, to **$1,408.4 million** at June 30, 2025, primarily driven by net income and shares issued for the NGCS Acquisition, partially offset by share repurchases and cash dividends[19](index=19&type=chunk)[23](index=23&type=chunk)[26](index=26&type=chunk) - The company issued approximately **2.3 million shares** of common stock for the NGCS Acquisition, valued at **$53.0 million**, contributing to additional paid-in capital[23](index=23&type=chunk)[26](index=26&type=chunk)[93](index=93&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes Archrock's cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $243,099 | $208,353 | | Net cash used in investing activities | $(541,697) | $(173,488) | | Net cash provided by (used in) financing activities | $300,039 | $(35,284) | | Net increase (decrease) in cash and cash equivalents | $1,441 | $(419) | | Cash and cash equivalents, end of period | $5,861 | $919 | - Net cash provided by operating activities increased by **$34.7 million**, primarily due to higher adjusted gross margin and increased activity levels, including impacts from the NGCS and TOPS Acquisitions[29](index=29&type=chunk)[223](index=223&type=chunk) - Net cash used in investing activities significantly increased by **$368.2 million**, mainly due to **$298.5 million** cash paid for the NGCS Acquisition and an **$88.6 million** increase in capital expenditures[29](index=29&type=chunk)[224](index=224&type=chunk) - Financing activities shifted from using **$35.3 million** cash in 2024 to providing **$300.0 million** in 2025, driven by a **$390.3 million** increase in net long-term debt borrowings, partially offset by higher dividends and share repurchases[29](index=29&type=chunk)[225](index=225&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed disclosures and explanations for Archrock's unaudited condensed consolidated financial statements [1. Description of Business and Basis of Presentation](index=13&type=section&id=1.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Outlines Archrock's core business as an energy infrastructure company specializing in natural gas compression services - Archrock, Inc. is an energy infrastructure company focused on midstream natural gas compression, operating in two segments: contract operations and aftermarket services[30](index=30&type=chunk) - The contract operations segment involves designing, owning, operating, and maintaining natural gas compression equipment for customers in the U.S[30](index=30&type=chunk) - The aftermarket services segment provides parts, operations, maintenance, overhaul, and reconfiguration services for customer-owned compression equipment[30](index=30&type=chunk) [2. Recent Accounting Developments](index=13&type=section&id=2.%20Recent%20Accounting%20Developments) Summarizes recently adopted and pending accounting standards updates and their impact on Archrock's financial statements - Archrock adopted ASU 2023-07 (Segment Reporting) retrospectively in 2024, requiring disclosures of significant expenses for each reportable segment[32](index=32&type=chunk) - ASU 2023-05 (Business Combinations – Joint Venture Formations) was adopted in Q1 2025, requiring joint ventures to apply a new basis of accounting upon formation, but had no impact on Archrock's financial statements[33](index=33&type=chunk) - The company is evaluating the impact of ASU 2024-03 (Disaggregation of Income Statement Expenses) and ASU 2023-09 (Income Tax Disclosures), effective for fiscal years beginning after December 15, 2026, and 2024, respectively[34](index=34&type=chunk)[35](index=35&type=chunk) [3. Business Transactions](index=14&type=section&id=3.%20Business%20Transactions) Details significant business transactions, including the NGCS and TOPS Acquisitions, their financial impact, and purchase price allocations - On May 1, 2025, Archrock completed the NGCS Acquisition for **$351.5 million**, acquiring approximately **326,000 operating horsepower** and a **18,000 horsepower backlog**[36](index=36&type=chunk) - The NGCS Acquisition consideration included **$298.5 million** in cash (funded by the Credit Facility) and approximately **2.3 million shares** of common stock valued at **$53.0 million**[36](index=36&type=chunk) NGCS Acquisition Preliminary Purchase Price Allocation (in thousands) | Asset/Liability | Amount | | :-------------------------- | :------- | | Cash | $1,859 | | Accounts receivable | $5,007 | | Inventory | $12,891 | | Property, plant and equipment | $248,463 | | Goodwill | $72,658 | | Intangible assets | $65,430 | | Deferred tax liabilities | $(50,241) | | Purchase price | $351,466 | - The NGCS Acquisition resulted in **$72.7 million** in goodwill, allocated to the contract operations segment and not expected to be deductible for U.S. federal income tax purposes[39](index=39&type=chunk) - Revenue attributable to the NGCS Acquisition from May 1 to June 30, 2025, was **$13.2 million**[41](index=41&type=chunk) - On August 30, 2024, Archrock completed the TOPS Acquisition for **$1,007.7 million**, acquiring approximately **580,000 horsepower**, including **530,000 operating horsepower**[49](index=49&type=chunk)[50](index=50&type=chunk) - The TOPS Acquisition consideration included **$868.7 million** in cash and approximately **6.9 million shares** of common stock valued at **$139.1 million**[49](index=49&type=chunk) - Transaction-related costs for NGCS Acquisition were **$7.6 million** for the six months ended June 30, 2025, and for TOPS Acquisition were **$2.5 million** for the same period[43](index=43&type=chunk)[54](index=54&type=chunk) [4. Inventory](index=19&type=section&id=4.%20Inventory) Details the composition and changes in Archrock's inventory, including parts, supplies, and work in progress Inventory Composition (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :------------------ | | Parts and supplies | $92,913 | $76,505 | | Work in progress | $13,760 | $13,181 | | Total Inventory | $106,673 | $89,686 | - Total inventory increased by **$16.9 million** from December 31, 2024, to June 30, 2025, primarily due to an increase in parts and supplies[62](index=62&type=chunk) [5. Property, Plant and Equipment, Net](index=19&type=section&id=5.%20Property%2C%20Plant%20and%20Equipment%2C%20Net) Provides a breakdown of Archrock's property, plant, and equipment, net of accumulated depreciation, and changes over time Property, Plant and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :------------------ | | Compression equipment, facilities and other | $4,784,256 | $4,392,818 | | Land and buildings | $33,362 | $32,060 | | Transportation and shop equipment | $137,595 | $118,413 | | Computer hardware and software | $78,908 | $78,021 | | Other | $7,983 | $7,411 | | Total Property, plant and equipment | $5,042,104 | $4,628,723 | | Accumulated depreciation | $(1,381,413) | $(1,304,893) | | Property, plant and equipment, net | $3,660,691 | $3,323,830 | - Net property, plant and equipment increased by **$336.9 million** from December 31, 2024, to June 30, 2025, primarily due to additions from the NGCS and TOPS Acquisitions[63](index=63&type=chunk) [6. Investments in Unconsolidated Affiliates](index=19&type=section&id=6.%20Investments%20in%20Unconsolidated%20Affiliates) Details Archrock's equity interests in unconsolidated affiliates, including ECOTEC, Ionada, and FGC Holdco, and their carrying values - Archrock holds a **25% equity interest** in ECOTEC, accounted for using the fair value option, with a fair value of **$14.7 million** as of June 30, 2025, and December 31, 2024[68](index=68&type=chunk)[130](index=130&type=chunk) - The company has a **12% fully diluted ownership equity interest** in Ionada, a carbon capture technology company, with a carrying value of **$5.5 million** as of June 30, 2025[69](index=69&type=chunk)[70](index=70&type=chunk)[132](index=132&type=chunk) - Archrock invested in FGC Holdco, a MaCH4 NRS equipment company, holding a **32% unit interest** and accounting for it using the equity method. The carrying value was **$0.4 million** at June 30, 2025[71](index=71&type=chunk)[73](index=73&type=chunk) - Archrock recognized a loss of **$0.2 million** related to its investment in FGC Holdco for the three and six months ended June 30, 2025[74](index=74&type=chunk) [7. Long-Term Debt](index=23&type=section&id=7.%20Long-Term%20Debt) Provides a detailed breakdown of Archrock's long-term debt, including credit facilities and senior notes, and changes in balances Long-Term Debt Composition (in thousands) | Debt Instrument | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :------------------ | | Credit Facility | $822,250 | $408,325 | | 6.625% senior notes due September 2032 | $691,019 | $690,391 | | 6.25% senior notes due April 2028 | $800,946 | $801,118 | | 6.875% senior notes due April 2027 | $298,867 | $298,542 | | Total Long-Term Debt | $2,613,082 | $2,198,376 | - Total long-term debt increased by **$414.7 million** from December 31, 2024, to June 30, 2025, primarily due to increased borrowings under the Credit Facility[76](index=76&type=chunk) - The Credit Facility's borrowing capacity was increased from **$1.1 billion** to **$1.5 billion** on May 16, 2025, with potential for further increases up to **$2.3 billion**[77](index=77&type=chunk) - Archrock completed a private offering of **$700.0 million** of 6.625% senior notes due September 2032 in August 2024, with net proceeds used for the TOPS Acquisition and 2027 Notes Tender Offer[82](index=82&type=chunk) - A concurrent cash tender offer of **$202.0 million** for the 2027 Notes resulted in a **$3.2 million** debt extinguishment loss in Q3 2024[86](index=86&type=chunk) [8. Commitments and Contingencies](index=27&type=section&id=8.%20Commitments%20and%20Contingencies) Outlines Archrock's self-insurance programs, tax audit accruals, and ongoing legal actions, assessing their potential financial impact - Archrock is substantially self-insured for workers' compensation and employee group health claims, and for property damage to offshore assets[89](index=89&type=chunk) - As of June 30, 2025, **$7.5 million** was accrued for non-income-based tax audits, with **$4.4 million** having an offsetting indemnification asset[90](index=90&type=chunk)[91](index=91&type=chunk) - The company is involved in various legal actions but believes any ultimate liability will not materially adversely affect its financial position, results of operations, or cash flows[92](index=92&type=chunk) [9. Stockholders' Equity](index=27&type=section&id=9.%20Stockholders%27%20Equity) Details changes in Archrock's common stock, additional paid-in capital, accumulated deficit, and treasury stock - Archrock issued approximately **2.3 million common shares** for the NGCS Acquisition (May 1, 2025) and **6.9 million common shares** for the TOPS Acquisition (August 30, 2024), impacting common stock and additional paid-in capital[93](index=93&type=chunk)[95](index=95&type=chunk) - A public underwriting offering in July 2024 generated **$255.7 million** in net proceeds from the sale of approximately **12.7 million shares**, used to fund a portion of the TOPS Acquisition[96](index=96&type=chunk) - The Board of Directors approved an increase of **$50.0 million** to the Share Repurchase Program in April 2025, bringing available capacity to **$58.9 million** as of June 30, 2025[97](index=97&type=chunk)[98](index=98&type=chunk) Share Repurchases and Withheld Shares (in thousands, except per share amounts) | Activity | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------------------------------ | :------------------------------- | :----------------------------- | | Shares repurchased under Share Repurchase Program | 1,226,954 shares ($28,822) | 1,236,115 shares ($29,045) | | Shares withheld related to net settlement of equity awards | 601 shares ($14) | 504,968 shares ($14,988) | | Total | 1,227,555 shares ($28,836) | 1,741,083 shares ($44,033) | Cash Dividends Declared and Paid (in thousands, except per share amounts) | Period | Dividends per Common Share | Dividends Paid | | :----- | :------------------------- | :------------- | | 2025 Q2 | $0.190 | $33,620 | | 2025 Q1 | $0.190 | $34,185 | | 2024 Q4 | $0.175 | $30,690 | | 2024 Q3 | $0.165 | $27,865 | | 2024 Q2 | $0.165 | $25,819 | | 2024 Q1 | $0.165 | $26,000 | - On July 24, 2025, the Board declared a quarterly dividend of **$0.21 per share**, payable August 12, 2025[102](index=102&type=chunk) [10. Revenue from Contracts with Customers](index=31&type=section&id=10.%20Revenue%20from%20Contracts%20with%20Customers) Analyzes Archrock's revenue by segment and source, detailing performance obligations and receivables from customer contracts Revenue from Contracts with Customers by Segment and Source (in thousands) | Revenue Source | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Contract operations:** | | | | | | 0 – 1,000 horsepower per unit | $108,670 | $45,334 | $210,902 | $90,661 | | 1,001 – 1,500 horsepower per unit | $106,354 | $94,687 | $207,956 | $190,357 | | Over 1,500 horsepower per unit | $103,155 | $85,290 | $199,571 | $167,155 | | Total contract operations revenue | $318,327 | $225,468 | $618,724 | $448,519 | | **Aftermarket services:** | | | | | | Services | $33,107 | $25,675 | $59,162 | $51,113 | | OTC parts and components sales | $29,846 | $19,383 | $50,557 | $39,382 | | Total aftermarket services revenue | $64,825 | $45,058 | $111,591 | $90,495 | | Total revenue | $383,152 | $270,526 | $730,315 | $539,014 | - Contract operations revenue increased by **41.2%** for the three months and **37.9%** for the six months ended June 30, 2025, compared to the prior year, with significant growth across all horsepower categories[103](index=103&type=chunk) - Aftermarket services revenue grew by **43.9%** for the three months and **23.3%** for the six months ended June 30, 2025, driven by increased services and OTC parts sales[103](index=103&type=chunk) - Remaining performance obligations for the contract operations segment totaled **$933.7 million** as of June 30, 2025, to be recognized through 2030[107](index=107&type=chunk) - Receivables from contracts with customers, net, increased to **$171.6 million** at June 30, 2025, from **$126.3 million** at December 31, 2024[108](index=108&type=chunk) [11. Long-Lived and Other Asset Impairment](index=32&type=section&id=11.%20Long-Lived%20and%20Other%20Asset%20Impairment) Discusses impairment charges on Archrock's idle compression fleet and assets classified as held for sale, reflecting valuation adjustments Compression Fleet Impairment Review (dollars in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Idle compressors retired from active fleet | 30 | 40 | 50 | 65 | | Horsepower of idle compressors retired | 12,000 | 32,000 | 17,000 | 46,000 | | Impairment recorded on idle compressors | $2,110 | $4,401 | $3,082 | $6,969 | - Impairment charges on idle compressors decreased due to increased customer demand and higher equipment utilization[179](index=179&type=chunk)[200](index=200&type=chunk) - A write-down of **$8.7 million** was recorded for assets classified as held for sale during the three and six months ended June 30, 2025, to adjust their carrying value to estimated fair value less costs to sell[116](index=116&type=chunk)[150](index=150&type=chunk) [12. Restructuring Charges](index=34&type=section&id=12.%20Restructuring%20Charges) Details Archrock's restructuring charges, including property disposal and severance costs, and future expected expenses - Archrock incurred **$0.1 million** in restructuring charges for property disposal costs during Q2 2025, related to exiting uneconomical facilities[117](index=117&type=chunk)[181](index=181&type=chunk) - Total restructuring charges for the six months ended June 30, 2025, were **$0.8 million**, comprising **$0.6 million** in severance costs and **$0.2 million** in property disposal costs[120](index=120&type=chunk)[202](index=202&type=chunk) - The company expects to incur an additional **$1.0 million to $2.0 million** in restructuring charges over the next twelve months[117](index=117&type=chunk) [13. Income Taxes](index=34&type=section&id=13.%20Income%20Taxes) Discusses the impact of recent tax law changes, the effective tax rate, and unrecognized tax benefits on Archrock's financial statements - The OB3 Tax Law, signed July 4, 2025, made permanent certain elements of the Tax Cuts and Jobs Act, including reinstating depreciation/amortization add-back for business interest expense, 100% bonus depreciation, and full expensing for domestic R&E expenditures[121](index=121&type=chunk)[123](index=123&type=chunk) - The year-to-date effective tax rate for the six months ended June 30, 2025, differed from the statutory rate primarily due to state taxes, unrecognized tax benefits, and executive compensation limitations, offset by equity-settled long-term incentive compensation benefits[124](index=124&type=chunk) - Archrock believes it is reasonably possible that **$3.7 million** of unrecognized tax benefits will be reduced by June 30, 2026, due to audit settlements or statute of limitations expirations[125](index=125&type=chunk) [14. Earnings Per Common Share](index=36&type=section&id=14.%20Earnings%20Per%20Common%20Share) Presents the calculation of Archrock's basic and diluted earnings per common share, reflecting net income and share counts Earnings Per Common Share Calculation (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to common stockholders | $62,934 | $33,990 | $132,379 | $73,777 | | Basic earnings per common share | $0.36 | $0.22 | $0.76 | $0.48 | | Diluted net income attributable to common stockholders | $62,918 | $33,852 | $132,827 | $73,554 | | Diluted earnings per common share | $0.36 | $0.22 | $0.76 | $0.48 | | Weighted-average common shares outstanding (Basic) | 175,007 | 154,496 | 174,513 | 154,342 | | Weighted-average common shares outstanding (Diluted) | 175,264 | 154,785 | 174,821 | 154,648 | - Basic and diluted EPS increased significantly for both the three-month and six-month periods ended June 30, 2025, reflecting higher net income[129](index=129&type=chunk) - The weighted-average common shares outstanding (basic and diluted) increased year-over-year, partly due to shares issued for acquisitions[129](index=129&type=chunk) [15. Fair Value Measurements](index=37&type=section&id=15.%20Fair%20Value%20Measurements) Details Archrock's fair value measurements for investments, impaired assets, and fixed rate debt, including valuation methodologies - The fair value of the investment in ECOTEC remained **$14.7 million** as of June 30, 2025, and December 31, 2024, with no unrealized gains or losses recognized[130](index=130&type=chunk) - The fair value of the impaired compression fleet was **$0.4 million** at June 30, 2025, down from **$1.0 million** at December 31, 2024, with estimated net sale proceeds averaging **$50 per horsepower**[134](index=134&type=chunk) - The fair value of fixed rate debt was **$1,817.0 million** at June 30, 2025, compared to its carrying amount of **$1,790.8 million**[137](index=137&type=chunk) - The estimated fair value less costs to sell for the disposal group classified as assets held for sale was **$70.7 million** as of June 30, 2025[139](index=139&type=chunk)[151](index=151&type=chunk) [16. Related Party Transactions](index=40&type=section&id=16.%20Related%20Party%20Transactions) Reports Archrock's transactions with related parties, including purchases from affiliates and revenue from customers with affiliated board members - Purchases from unconsolidated affiliate ECOTEC were **$0.2 million** and **$0.3 million** for the three and six months ended June 30, 2025, respectively[140](index=140&type=chunk) - Archrock committed to purchase a minimum of **$64.3 million** of MaCH4 NRS equipment from FGC Holdco through March 31, 2026, with purchases of **$1.2 million** and **$3.1 million** for the three and six months ended June 30, 2025, respectively[141](index=141&type=chunk) - Revenue from Hilcorp, a customer with an affiliated board member, was **$10.6 million** and **$21.7 million** for the three and six months ended June 30, 2025, respectively[143](index=143&type=chunk) [17. Segment Information](index=40&type=section&id=17.%20Segment%20Information) Provides financial data for Archrock's operating segments, contract operations and aftermarket services, with performance evaluated by adjusted gross margin - Archrock operates in two U.S. segments: contract operations and aftermarket services, with performance evaluated primarily based on adjusted gross margin[144](index=144&type=chunk)[145](index=145&type=chunk) Segment Revenue and Adjusted Gross Margin (in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Revenue:** | | | | | | Contract Operations | $318,327 | $225,468 | $618,724 | $448,519 | | Aftermarket Services | $64,825 | $45,058 | $111,591 | $90,495 | | Total Revenue | $383,152 | $270,526 | $730,315 | $539,014 | | **Adjusted Gross Margin:** | | | | | | Contract Operations | $222,175 | $146,190 | $432,773 | $291,498 | | Aftermarket Services | $14,939 | $9,900 | $26,448 | $20,337 | | Total Adjusted Gross Margin | $237,114 | $156,090 | $459,221 | $311,835 | - Contract operations adjusted gross margin increased by **52.0%** for the three months and **48.5%** for the six months ended June 30, 2025, with the margin percentage rising from **65% to 70%**[146](index=146&type=chunk)[168](index=168&type=chunk)[191](index=191&type=chunk) - Aftermarket services adjusted gross margin increased by **50.9%** for the three months and **30.0%** for the six months ended June 30, 2025, with the margin percentage rising from **22% to 23-24%**[146](index=146&type=chunk)[172](index=172&type=chunk)[193](index=193&type=chunk) [18. Assets Held for Sale](index=42&type=section&id=18.%20Assets%20Held%20for%20Sale) Details the disposal group classified as assets held for sale, including compressors and customer agreements, and the subsequent sale transaction - As of June 30, 2025, Archrock classified a disposal group, including **155 compressors** (approximately **47,000 horsepower**) and related customer agreements, as assets held for sale[149](index=149&type=chunk) - A write-down of **$8.7 million** was recorded to adjust the carrying value of the disposal group to its estimated fair value less costs to sell, which was **$70.7 million**[150](index=150&type=chunk)[151](index=151&type=chunk) - The sale of this disposal group to Flowco for **$71.0 million** in cash was completed on August 1, 2025[152](index=152&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on Archrock's financial condition and results of operations, including key metrics, non-GAAP measures, and liquidity [OVERVIEW](index=44&type=section&id=OVERVIEW) Provides a high-level summary of Archrock's business, operating segments, key performance indicators, and non-GAAP financial measures - Archrock is a premier provider of natural gas compression services and a leading supplier of aftermarket services in the U.S., operating in contract operations and aftermarket services segments[155](index=155&type=chunk) Operating Highlights (horsepower in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total available horsepower (period end) | 4,843 | 3,806 | 4,843 | 3,806 | | Total operating horsepower (period end) | 4,651 | 3,601 | 4,651 | 3,601 | | Average operating horsepower | 4,467 | 3,605 | 4,371 | 3,607 | | Horsepower utilization (Spot) | 96 % | 95 % | 96 % | 95 % | | Horsepower utilization (Average) | 96 % | 95 % | 96 % | 95 % | - Total available and operating horsepower significantly increased year-over-year, reflecting the impact of the NGCS and TOPS Acquisitions[156](index=156&type=chunk)[158](index=158&type=chunk) - Horsepower utilization remained high at **96%** for both spot and average metrics in 2025, up from **95%** in 2024[156](index=156&type=chunk) - Adjusted gross margin, a non-GAAP measure, is used by management to evaluate segment performance, focusing on current operating performance by excluding depreciation, amortization, SG&A, financing, and taxes[160](index=160&type=chunk)[162](index=162&type=chunk) [RESULTS OF OPERATIONS](index=46&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes Archrock's financial performance, including revenue, net income, and segment-specific results, for current and prior periods - Total revenue increased to **$383.2 million** (Q2 2025) and **$730.3 million** (YTD Q2 2025), up from **$270.5 million** and **$539.0 million** respectively, driven by growth in both contract operations and aftermarket services[164](index=164&type=chunk) - Net income rose to **$63.4 million** (Q2 2025) and **$134.3 million** (YTD Q2 2025), compared to **$34.4 million** and **$75.0 million**, respectively, primarily due to higher adjusted gross margin and gains on asset sales[165](index=165&type=chunk)[167](index=167&type=chunk) Contract Operations Performance (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $318,327 | $225,468 | $618,724 | $448,519 | | Cost of sales, exclusive of D&A | $96,152 | $79,278 | $185,951 | $157,021 | | Adjusted gross margin | $222,175 | $146,190 | $432,773 | $291,498 | | Adjusted gross margin percentage | 70 % | 65 % | 70 % | 65 % | - Contract operations revenue increased by **$92.9 million** (Q2) and **$170.2 million** (YTD Q2), mainly due to the NGCS and TOPS Acquisitions, higher rates, and increased average operating horsepower[169](index=169&type=chunk)[189](index=189&type=chunk) - Cost of sales for contract operations increased due to acquired units and headcount, with employee compensation up **$11.2 million** (Q2) and **$20.4 million** (YTD Q2)[170](index=170&type=chunk)[190](index=190&type=chunk) Aftermarket Services Performance (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $64,825 | $45,058 | $111,591 | $90,495 | | Cost of sales, exclusive of D&A | $49,886 | $35,158 | $85,143 | $70,158 | | Adjusted gross margin | $14,939 | $9,900 | $26,448 | $20,337 | | Adjusted gross margin percentage | 23 % | 22 % | 24 % | 22 % | - Aftermarket services revenue increased due to higher parts sales (including non-recurring overhauled engines), increased service activity, and more maintenance service contracts[173](index=173&type=chunk)[194](index=194&type=chunk) - SG&A expenses increased by **$5.1 million** (Q2) and **$10.6 million** (YTD Q2), driven by higher employee compensation, professional fees, and IT expenses[176](index=176&type=chunk)[196](index=196&type=chunk) - Depreciation and amortization increased by **$19.3 million** (Q2) and **$34.1 million** (YTD Q2) due to fixed asset additions from the TOPS and NGCS Acquisitions[177](index=177&type=chunk)[197](index=197&type=chunk) - Interest expense increased by **$13.9 million** (Q2) and **$24.3 million** (YTD Q2) due to a higher average outstanding long-term debt balance from the 2032 Notes offering and Credit Facility borrowings for acquisitions[183](index=183&type=chunk)[203](index=203&type=chunk) - Gain on sale of assets, net, increased significantly to **$4.3 million** (Q2) and **$11.6 million** (YTD Q2) from **$0.6 million** and **$3.0 million**, respectively, primarily from compression asset sales[185](index=185&type=chunk)[205](index=205&type=chunk) Provision for Income Taxes (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes | $22,433 | $13,055 | $43,569 | $26,108 | | Effective tax rate | 26 % | 27 % | 24 % | 26 % | [LIQUIDITY AND CAPITAL RESOURCES](index=56&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Assesses Archrock's ability to meet financial obligations and fund operations, detailing cash flows, capital expenditures, and debt facilities - Archrock's primary liquidity sources are operating cash flows and borrowing availability under its Credit Facility, which are believed to be sufficient for future needs[208](index=208&type=chunk) - The contract operations business is capital intensive, with requirements for operating expenses, growth and maintenance capital expenditures, debt interest, dividends, and share repurchases[210](index=210&type=chunk)[212](index=212&type=chunk) - Growth capital expenditures were **$206.7 million** (YTD Q2 2025), up from **$139.7 million** (YTD Q2 2024)[213](index=213&type=chunk) - Maintenance capital expenditures were **$55.2 million** (YTD Q2 2025), up from **$44.9 million** (YTD Q2 2024), due to increased maintenance activities and acquired units[214](index=214&type=chunk) - Projected capital expenditures for 2025 are **$485 million to $520 million**, including **$340 million to $360 million** for growth and **$110 million to $120 million** for maintenance[215](index=215&type=chunk) - The Credit Facility's borrowing capacity was increased to **$1.5 billion** in May 2025, with all undrawn capacity available as of June 30, 2025[217](index=217&type=chunk)[219](index=219&type=chunk) - Net cash provided by operating activities increased to **$243.1 million** (YTD Q2 2025) from **$208.4 million** (YTD Q2 2024)[222](index=222&type=chunk)[223](index=223&type=chunk) - Net cash used in investing activities increased to **$541.7 million** (YTD Q2 2025) from **$173.5 million** (YTD Q2 2024), primarily due to the NGCS Acquisition and higher capital expenditures[222](index=222&type=chunk)[224](index=224&type=chunk) - Net cash provided by financing activities was **$300.0 million** (YTD Q2 2025), a significant shift from **$35.3 million** used in the prior year, driven by increased long-term debt borrowings[222](index=222&type=chunk)[225](index=225&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Archrock is exposed to market risks from variable interest rates on its Credit Facility, with **$822.3 million** in indebtedness as of June 30, 2025 - A **1%** increase or decrease in the effective interest rate on the Credit Facility's outstanding balance would result in an annual change of **$8.2 million** in interest expense[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated Archrock's disclosure controls and procedures as of June 30, 2025, concluding they were effective for timely and accurate reporting - No material changes occurred in internal control over financial reporting during the last fiscal quarter[231](index=231&type=chunk) [Part II. Other Information](index=61&type=section&id=Part%20II.%20Other%20Information) Contains additional disclosures not included in the financial statements, such as legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) Archrock is involved in various legal actions, but management believes ultimate liability will not materially affect financial position or results [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors focus on the NGCS Acquisition, including integration difficulties, failure to achieve benefits, and unknown liabilities - Risks related to the NGCS Acquisition include difficulties in integrating NGCS's business and workforce, potential increases in costs, and the inability to achieve expected benefits[236](index=236&type=chunk) - Acquisitions, including NGCS, carry risks such as assuming unknown liabilities, inability to obtain satisfactory title to assets, and significant changes like asset impairment or restructuring charges[239](index=239&type=chunk)[241](index=241&type=chunk) - Failure to realize anticipated benefits from the NGCS Acquisition could adversely affect Archrock's business, results of operations, financial condition, and stock price[237](index=237&type=chunk)[238](index=238&type=chunk) [Item 2. Unregistered Sales of Equity Securities by Issuer and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20by%20Issuer%20and%20Use%20of%20Proceeds) Details Archrock's purchase of equity securities, including repurchased shares and those withheld for tax obligations related to equity awards Purchase of Equity Securities by the Issuer (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs | | :------------------------ | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------------- | | April 1, 2025 — April 30, 2025 | 918,057 | $23.17 | 918,057 | $66,397 | | May 1, 2025 — May 31, 2025 | 144,048 | $24.20 | 143,447 | $62,925 | | June 1, 2025 — June 30, 2025 | 165,450 | $24.63 | 165,450 | $58,850 | | Total | 1,227,555 | $23.49 | 1,226,954 | | - The Share Repurchase Program was increased by an additional **$50.0 million** in April 2025, with **$58.9 million** of available capacity remaining as of June 30, 2025[245](index=245&type=chunk) [Item 3. Defaults Upon Senior Securities](index=64&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Confirms no defaults upon senior securities occurred during the reporting period [Item 4. Mine Safety Disclosures](index=64&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that mine safety disclosures are not applicable to Archrock's operations [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) Confirms no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed or furnished as part of the Form 10-Q report, including corporate governance documents, acquisition agreements, and certifications [Signatures](index=66&type=section&id=Signatures) Contains the required signatures for the Form 10-Q report, confirming its submission on behalf of Archrock, Inc. by authorized officers

Financial Data and Key Metrics Changes - Archrock recorded record adjusted EPS and adjusted EBITDA during the quarter, with adjusted EPS increasing by nearly 70% and adjusted EBITDA by more than 60% compared to 2024 [6][22] - The company maintained a low quarter-end leverage ratio of 3.3x, reflecting stability in cash flows and prudent acquisition financing [6][25] - Quarterly dividend per share was raised by 11% compared to the prior quarter and 27% compared to a year ago, with robust dividend coverage of 3.4x [7][26] Business Line Data and Key Metrics Changes - Contract operations revenue reached $318 million, up 6% sequentially and 41% year-over-year, driven by horsepower growth and higher pricing [23] - The aftermarket services segment reported revenue of over $60 million, the highest level since 2018, reflecting high demand for service work and contract maintenance [17][24] - Monthly revenue per horsepower reached a new record of $23.75, marking the fifteenth consecutive quarter of increases [17] Market Data and Key Metrics Changes - The demand for U.S. natural gas production is expected to increase significantly, with projections of an incremental 20 to 30 Bcf per day by 2030 [11] - The Permian basin is anticipated to see gas production volumes grow by more than 30% by 2030, outpacing oil volume growth [12] - Archrock operates more than 2.6 million horsepower in the Permian, with expectations of continued high utilization rates [14] Company Strategy and Development Direction - Archrock aims to solidify its position as the compression partner of choice, focusing on building a modern, scalable, and geographically diverse fleet [9] - The company plans to maintain a leverage ratio between 3 to 3.5 times to support its growth strategy and adapt to market conditions [20] - Investments in new build horsepower and capital expenditures are expected to continue, with a narrowed guidance for growth CapEx between $340 million and $360 million for 2025 [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market, citing strong demand for LNG exports and power generation needs as key drivers for growth [8][10] - The company anticipates continued high levels of utilization for its existing fleets and growth opportunities for new build equipment [10][14] - Management noted that the operational transformation and investments in high-quality assets are driving consistent success [28] Other Important Information - Archrock completed the sale of approximately 155 compressors for $71 million, which will help fund new build equipment investments [16] - The company has repurchased 2.7 million shares at an average price of $18.84 per share since the inception of its buyback program [7] Q&A Session Summary Question: Outlook for capacity additions in 2026 and beyond - Management indicated that the order book reflects inherent growth, with customers ordering equipment ahead of schedule due to increasing demand for natural gas [32][34] Question: Outlook for pricing and contract terms - Pricing is expected to continue increasing in the mid-single digits, with contract terms remaining stable at three to five years [35][36] Question: Update on customer activity in the Permian and other basins - The Permian remains the leading source of orders, but there is also activity in other basins like Eagle Ford and Haynesville [44] Question: Impact of tariffs on business - Management does not expect a material impact from tariffs, as the supply chain is predominantly U.S.-based [47] Question: Elasticity of demand for horsepower amid rig count drops - The order book is considered durable, with expectations for minimal shifts in spending levels [51][52] Question: Competitive dynamics outside the Permian - Archrock is viewed as the partner of choice for customers, which enhances planning cycles and operational dependability [54] Question: Capital allocation strategy moving forward - Management expects to grow both dividends and buybacks, with a focus on returning capital to investors [60][61]

Financial Data and Key Metrics Changes - Archrock recorded record adjusted EPS and adjusted EBITDA during Q2 2025, with adjusted EPS increasing by nearly 70% and adjusted EBITDA by more than 60% compared to 2024 [6][22] - The company maintained a low quarter-end leverage ratio of 3.3x, reflecting stability in cash flows and prudent acquisition financing [6][25] - Quarterly dividend per share was raised by 11% compared to the prior quarter and 27% compared to a year ago, with robust dividend coverage of 3.4x [7][27] Business Line Data and Key Metrics Changes - Contract operations revenue reached $318 million in Q2 2025, up 6% sequentially and 41% year-over-year, driven by horsepower growth and higher pricing [23] - The aftermarket services segment reported revenue of over $60 million, the highest level since 2018, reflecting high demand for service work and contract maintenance [17][24] - Monthly revenue per horsepower reached a new record of $23.75 during Q2 2025, with adjusted gross margin percentage maintained at approximately 70% for three consecutive quarters [17][24] Market Data and Key Metrics Changes - The demand for U.S. natural gas production is expected to increase significantly, with an incremental 20 to 30 Bcf a day needed by 2030 [11] - The Permian basin is projected to see gas production volumes grow by more than 30% by 2030, outpacing oil volume growth [12] - Archrock operates more than 2.6 million horsepower in the Permian, with expectations for continued high utilization rates [14] Company Strategy and Development Direction - Archrock aims to solidify its position as the compression partner of choice, with a modern, scalable, and geographically diverse fleet [9] - The company plans to maintain a leverage ratio between 3 to 3.5 times to support its growth strategy and adapt to market conditions [20] - Investments in new build horsepower and capital expenditures are expected to continue, with a narrowed guidance for growth CapEx in 2025 between $340 million and $360 million [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market, anticipating growing LNG exports and power generation needs to drive demand for natural gas [8] - The company expects to grow its business and profits through the rest of 2025 and into 2026 and beyond, supported by strong customer demand [7][20] - Management noted that the compression market is stable, reinforced by capital discipline from customers [15] Other Important Information - Archrock completed the sale of approximately 155 compressors for $71 million, which will help fund new build equipment investments [16] - The company has a substantial contracted backlog for the second half of 2025 and is booking units for 2026 delivery [17] - Archrock's capital allocation framework remains focused on prudent and returns-based investments [18] Q&A Session Summary Question: Outlook for capacity additions in 2026 and beyond - Management indicated that the order book reflects inherent growth, with customers ordering equipment ahead of schedule [32][34] Question: Outlook for pricing and contract terms - Pricing is expected to increase in the mid-single digits, with contract terms remaining stable at three to five years [36][38] Question: Customer activity in the Permian and other basins - The Permian continues to lead the order book, but there is also activity in other basins like Eagle Ford and Haynesville [44] Question: Impact of tariffs on business - Management does not expect a material impact from tariffs, as the supply chain is predominantly U.S.-based [46] Question: Capital allocation strategy moving forward - The company expects to grow profits and return capital to investors through dividends and buybacks, with a focus on price sensitivity [60][62] Question: Strength in aftermarket services - The aftermarket service business has performed well, driven by market demand and customer maintenance efforts [70] Question: Shift in order book mix towards gas drive - There is a slight shift towards gas drive due to power availability issues, but the overall transition is not drastic [72] Question: Activity in the Haynesville basin - Management noted incremental demand in the Haynesville, supporting the business of major midstream operators [81]

Core Insights - Archrock Inc. reported revenue of $383.15 million for the quarter ended June 2025, marking a year-over-year increase of 41.6% and exceeding the Zacks Consensus Estimate of $360.26 million by 6.36% [1] - The company's EPS for the same period was $0.39, up from $0.25 a year ago, and also surpassed the consensus EPS estimate of $0.37 by 5.41% [1] Revenue Breakdown - Aftermarket services revenue was $64.83 million, significantly higher than the two-analyst average estimate of $50.24 million, reflecting a year-over-year change of 43.9% [4] - Contract operations revenue reached $318.33 million, exceeding the average estimate of $309.38 million based on two analysts, with a year-over-year increase of 41.2% [4] Gross Margin Analysis - Gross margin for aftermarket services was reported at $14.94 million, compared to the estimated $11.63 million by two analysts [4] - Gross margin for contract operations was $222.18 million, slightly above the average estimate of $216.61 million based on two analysts [4] Stock Performance - Over the past month, Archrock Inc. shares have returned -9%, while the Zacks S&P 500 composite has seen a +0.6% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Archrock Inc. reported quarterly earnings of $0.39 per share, exceeding the Zacks Consensus Estimate of $0.37 per share, and showing an increase from $0.25 per share a year ago, indicating a positive earnings surprise of +5.41% [1] Financial Performance - The company achieved revenues of $383.15 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 6.36% and up from $270.53 million year-over-year [2] - Over the last four quarters, Archrock has exceeded consensus EPS estimates three times and topped consensus revenue estimates three times as well [2] Stock Performance and Outlook - Archrock shares have declined approximately 9.7% since the beginning of the year, contrasting with the S&P 500's gain of 6.1% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] Earnings Estimate Revisions - The trend for earnings estimate revisions for Archrock was unfavorable prior to the earnings release, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $377.37 million, and for the current fiscal year, it is $1.54 on revenues of $1.47 billion [7] Industry Context - The Oil and Gas - Field Services industry, to which Archrock belongs, is currently ranked in the bottom 8% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Management Commentary and Outlook](index=1&type=section&id=Management%20Commentary%20and%20Outlook) Archrock delivered strong Q2 2025 performance, completing the NGCS acquisition, growing operating horsepower, and maintaining a record 96% utilization rate, while raising EBITDA guidance and increasing shareholder returns - Archrock delivered strong Q2 2025 performance, completing the NGCS acquisition, achieving **368,000 operating horsepower growth**, and maintaining a record **96% utilization rate**[3](index=3&type=chunk) - Despite commodity price volatility, customer demand remains robust, with strong contract compression backlog extending into **2026**, primarily driven by the Permian region[4](index=4&type=chunk) - The company raised its **2025 Adjusted EBITDA guidance**, increased the quarterly cash dividend, and repurchased approximately **$29 million** in stock to return value to shareholders and maintain a healthy balance sheet[5](index=5&type=chunk) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Archrock achieved significant financial growth in Q2 2025, with substantial increases in revenue, net income, and Adjusted EBITDA, alongside the NGCS acquisition and enhanced shareholder returns Q2 2025 Key Financial Metrics Comparison (YoY) | Metric | Q2 2025 | Q2 2024 | Change | | :----------------------- | :--------------- | :--------------- | :--- | | Revenue | $383.2 million | $270.5 million | +41.7% | | Net Income | $63.4 million | $34.4 million | +84.3% | | EPS | $0.36 | $0.22 | +63.6% | | Adjusted Net Income | $68.4 million | $35.8 million | +91.1% | | Adjusted EPS | $0.39 | $0.23 | +69.6% | | Adjusted EBITDA | $212.7 million | $129.7 million | +64.0% | - The company completed the acquisition of Natural Gas Compression Systems, Inc. (NGCS) on May 1, 2025[8](index=8&type=chunk) - A quarterly dividend of **$0.21 per share** was declared, representing approximately **27% growth** from Q2 2024, with a **3.4x dividend coverage ratio**[8](index=8&type=chunk) - Shareholder returns through dividends and share repurchases totaled **$96.9 million** in H1 2025, compared to **$53.0 million** in H1 2024[8](index=8&type=chunk) - Full-year 2025 Adjusted EBITDA guidance was raised to a range of **$810 million to $850 million**[8](index=8&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) [Contract Operations](index=2&type=section&id=Contract%20Operations) Contract Operations showed robust Q2 2025 performance with significant revenue and Adjusted Gross Margin growth, increased operating horsepower, high utilization, and a strategic asset divestiture Contract Operations Key Metrics Comparison (YoY) | Metric | Q2 2025 | Q2 2024 | Change | | :----------------------- | :--------------- | :--------------- | :--- | | Revenue | $318.3 million | $225.5 million | +41% | | Adjusted Gross Margin | $222.2 million | $146.2 million | +52% | | Adjusted Gross Margin % | 70% | 65% | +5% | | Total Operating Horsepower (End of Period) | 4.7 million | 3.6 million | +30.6% | | Utilization Rate (End of Period) | 96% | 95% | +1% | - The company completed the sale of 155 compression units (approximately **47,000 horsepower**) and other related assets on August 1, 2025, generating **$71.0 million** in cash proceeds[10](index=10&type=chunk) - A **$10.8 million** impairment of long-lived and other assets was recognized in Q2 2025 due to assets classified as held for sale, with **$8.7 million** impacting Adjusted Net Income, a **$6.9 million** after-tax impact, and approximately **$0.04 per share**[6](index=6&type=chunk)[11](index=11&type=chunk) [Aftermarket Services](index=2&type=section&id=Aftermarket%20Services) Aftermarket Services experienced notable revenue and Adjusted Gross Margin growth in Q2 2025, accompanied by a slight improvement in gross margin percentage Aftermarket Services Key Metrics Comparison (YoY) | Metric | Q2 2025 | Q2 2024 | Change | | :----------------------- | :--------------- | :--------------- | :--- | | Revenue | $64.8 million | $45.1 million | +43.7% | | Adjusted Gross Margin | $14.9 million | $9.9 million | +50.5% | | Adjusted Gross Margin % | 23% | 22% | +1% | [Financial Position & Shareholder Returns](index=2&type=section&id=Financial%20Position%20%26%20Shareholder%20Returns) [Balance Sheet](index=2&type=section&id=Balance%20Sheet) As of June 30, 2025, Archrock reported $2.6 billion in long-term debt and $675 million in available liquidity, with leverage slightly increasing due to the NGCS acquisition Balance Sheet Key Metrics | Metric | June 30, 2025 | June 30, 2024 | Change | | :----------------------- | :--------------- | :--------------- | :--- | | Long-Term Debt | $2.6 billion | $1.6 billion | +62.5% | | Available Liquidity | $675 million | N/A | N/A | | Leverage Ratio | 3.3x | 3.2x | +0.1x | - The increase in leverage was primarily driven by the NGCS acquisition[13](index=13&type=chunk) [Shareholder Returns](index=2&type=section&id=Shareholder%20Returns) Archrock consistently returns value to shareholders through increased quarterly dividends and an active share repurchase program, demonstrating healthy dividend coverage and ample repurchase capacity [Quarterly Dividend](index=2&type=section&id=Quarterly%20Dividend) The Board declared a Q2 2025 quarterly dividend of $0.21 per share, annualized to $0.84 per share, with a 3.4x dividend coverage ratio Quarterly Dividend Information | Metric | Amount | | :----------------------- | :--------------- | | Q2 2025 Dividend/Share | $0.21 | | Annualized Dividend/Share | $0.84 | | Q2 2025 Dividend Coverage | 3.4x | [Share Repurchase Program](index=2&type=section&id=Share%20Repurchase%20Program) In Q2 2025, Archrock repurchased 1,226,954 common shares for approximately $28.8 million, with $58.9 million remaining under the program as of June 30, 2025 Share Repurchase Activity | Metric | Q2 2025 | April 2023 to Date | | :----------------------- | :--------------- | :--------------- | | Shares Repurchased | 1,226,954 shares | 2,719,315 shares | | Average Repurchase Price | $23.49/share | $18.84/share | | Total Repurchase Amount | $28.8 million | $51.2 million | | Available Authorization as of June 30, 2025 | $58.9 million | N/A | [Updated 2025 Annual Guidance](index=3&type=section&id=Updated%202025%20Annual%20Guidance) Archrock updated its 2025 full-year guidance, incorporating the NGCS acquisition and a compression asset divestiture, projecting strong net income and Adjusted EBITDA, stable gross margins, and significant capital expenditures 2025 Full-Year Guidance | Metric | Low (USD Thousands) | High (USD Thousands) | | :----------------------------------- | :-------------- | :-------------- | | Net Income | 249,600 | 289,600 | | Adjusted EBITDA | 810,000 | 850,000 | | Cash Available for Dividend | 502,000 | 527,000 | | Contract Operations Revenue | 1,260,000 | 1,280,000 | | Contract Operations Adjusted Gross Margin % | 69% | 71% | | Aftermarket Services Revenue | 205,000 | 215,000 | | Aftermarket Services Adjusted Gross Margin % | 23% | 24% | | Selling, General & Administrative Expenses | 151,000 | 147,000 | | Growth Capital Expenditures | 340,000 | 360,000 | | Maintenance Capital Expenditures | 110,000 | 120,000 | | Other Capital Expenditures | 35,000 | 40,000 | - The full-year 2025 guidance incorporates the NGCS acquisition (8 months of financial impact) and the divestiture of certain compression assets to Flowco Holdings Inc. (August to December impact)[16](index=16&type=chunk) [Summary Metrics](index=4&type=section&id=Summary%20Metrics) This section provides detailed financial and operational metrics for Q2 2025, Q1 2025, and Q2 2024, including net income, Adjusted EBITDA, segment revenues, gross margins, cash flow, and operating horsepower utilization, illustrating quarterly performance and efficiency changes Key Financial Metrics Summary (USD Thousands, Percentages, Per Share Amounts, and Ratios) | Metric | June 30, 2025 (Q2) | March 31, 2025 (Q1) | June 30, 2024 (Q2) | | :----------------------------------- | :------------------- | :------------------- | :------------------- | | Net Income | $63,420 | $70,850 | $34,425 | | Adjusted Net Income | $68,374 | $74,484 | $35,793 | | Adjusted EBITDA | $212,678 | $197,845 | $129,712 | | Contract Operations Revenue | $318,327 | $300,397 | $225,468 | | Contract Operations Adjusted Gross Margin | $222,175 | $210,598 | $146,190 | | Contract Operations Adjusted Gross Margin % | 70% | 70% | 65% | | Aftermarket Services Revenue | $64,825 | $46,766 | $45,058 | | Aftermarket Services Adjusted Gross Margin | $14,939 | $11,509 | $9,900 | | Aftermarket Services Adjusted Gross Margin % | 23% | 25% | 22% | | Selling, General & Administrative Expenses | $36,244 | $37,207 | $31,163 | | Net Cash Provided by Operating Activities | $127,471 | $115,628 | $70,651 | | Cash Available for Dividend | $125,055 | $132,247 | $71,593 | | Cash Available for Dividend Coverage | 3.4x | 3.9x | 2.6x | | Adjusted Free Cash Flow | $(250,195) | $(48,403) | $(16,914) | | Adjusted Free Cash Flow After Dividends | $(283,815) | $(82,588) | $(42,733) | | Total Available Horsepower (End of Period) | 4,843 | 4,461 | 3,806 | | Total Operating Horsepower (End of Period) | 4,651 | 4,283 | 3,601 | | Horsepower Utilization (End of Period) | 96% | 96% | 95% | | Average Operating Horsepower | 4,467 | 4,254 | 3,605 | | Horsepower Utilization (Average) | 96% | 96% | 95% | | Dividend Declared Per Share for Period | $0.210 | $0.190 | $0.165 | | Total Dividend Declared for Period | $37,155 | $33,758 | $27,977 | [Non-GAAP Financial Measures Definitions](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20Definitions) This section defines Archrock's non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, Adjusted Gross Margin, Cash Available for Dividend, Adjusted Free Cash Flow, and Adjusted Free Cash Flow After Dividends, explaining their relationship to GAAP metrics and management's rationale for their use - Adjusted Net Income is defined as net income (loss) excluding restructuring charges and transaction-related costs, adjusted for income taxes[27](index=27&type=chunk) - Adjusted EBITDA is defined as net income (loss) excluding interest expense, income taxes, depreciation and amortization, impairment of long-lived and other assets, unrealized changes in fair value of investments in unconsolidated affiliates, restructuring charges, transaction-related costs, non-cash equity-based compensation expense, amortization of capitalized implementation costs, and other items[28](index=28&type=chunk) - Adjusted Gross Margin is defined as total revenue less cost of sales, excluding depreciation and amortization; Adjusted Gross Margin Percentage is defined as Adjusted Gross Margin divided by revenue[29](index=29&type=chunk) - Cash Available for Dividend is defined as Adjusted EBITDA less maintenance capital expenditures, other capital expenditures, cash taxes, and cash interest expense[30](index=30&type=chunk) - Adjusted Free Cash Flow is defined as net cash provided by operating activities plus net cash provided by (used in) investing activities[31](index=31&type=chunk) - Adjusted Free Cash Flow After Dividends is defined as net cash provided by operating activities plus net cash provided by (used in) investing activities less dividends paid to shareholders[32](index=32&type=chunk) [Company Information](index=5&type=section&id=Company%20Information) [About Archrock](index=5&type=section&id=About%20Archrock) Archrock is an energy infrastructure company focused on midstream natural gas compression, providing safe and environmentally responsible services for natural gas production, compression, and transportation, and is a leading provider of compression equipment aftermarket services in the U.S - Archrock is an energy infrastructure company focused on midstream natural gas compression[33](index=33&type=chunk) - The company is committed to helping customers produce, compress, and transport natural gas in a safe and environmentally responsible manner[33](index=33&type=chunk) - Archrock is a leading provider of natural gas compression services and aftermarket services in the U.S. energy industry[33](index=33&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) All non-historical statements in this report are forward-looking, based on assumptions about future events, and subject to uncertainties and factors that could cause actual results to differ materially, including integration challenges, macroeconomic conditions, competition, debt risks, and regulatory changes - Forward-looking statements rely on assumptions about future events and are subject to various uncertainties and factors that could cause actual results to differ materially from those stated[34](index=34&type=chunk) - Risk factors include difficulties in integrating the NGCS acquisition, macroeconomic conditions (inflation, trade tensions), pandemics, international conflicts, operational risks, competitive pressures, debt and debt agreement risks, access to capital markets, deterioration of customer financial conditions, loss of key customers, information technology and cybersecurity risks, and legal and regulatory risks (including climate-related and ESG risks)[35](index=35&type=chunk) [Conference Call Details](index=5&type=section&id=Conference%20Call%20Details) Archrock will host a conference call on August 5, 2025, at 11:30 AM ET to discuss Q2 2025 financial results, accessible via webcast or phone, with a 90-day replay available online - The conference call will be held on **August 5, 2025, at 11:30 AM ET**[25](index=25&type=chunk) - It can be accessed via webcast on Archrock's website (www.archrock.com) or by dialing a specified phone number[25](index=25&type=chunk) - A webcast replay will be available on the company's website for **90 days**[26](index=26&type=chunk) [Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Statements of Operations](index=7&type=section&id=Statements%20of%20Operations) This section presents Archrock's unaudited condensed consolidated statements of operations, detailing key financial data including revenue, costs, expenses, net income, and earnings per share for Q2 2025, Q1 2025, and Q2 2024 Unaudited Condensed Consolidated Statements of Operations (USD Thousands, Per Share Amounts) | Metric | June 30, 2025 (Q2) | March 31, 2025 (Q1) | June 30, 2024 (Q2) | | :----------------------------------- | :------------------- | :------------------- | :------------------- | | **Revenue:** | | | | | Contract Operations | $318,327 | $300,397 | $225,468 | | Aftermarket Services | $64,825 | $46,766 | $45,058 | | **Total Revenue** | **$383,152** | **$347,163** | **$270,526** | | **Cost of Sales (Excluding D&A):** | | | | | Contract Operations | $96,152 | $89,799 | $79,278 | | Aftermarket Services | $49,886 | $35,257 | $35,158 | | **Total Cost of Sales (Excluding D&A)** | **$146,038** | **$125,056** | **$114,436** | | Selling, General & Administrative Expenses | $36,244 | $37,207 | $31,163 | | Depreciation and Amortization | $63,139 | $57,620 | $43,853 | | Impairment of Long-Lived and Other Assets | $10,847 | $972 | $4,401 | | Restructuring Charges | $144 | $665 | — | | Interest Expense | $41,711 | $37,741 | $27,859 | | Transaction-Related Costs | $6,127 | $3,935 | $1,782 | | Net Gain on Sale of Assets | $(4,297) | $(7,335) | $(576) | | Other (Income) Expense, Net | $(2,841) | $(684) | $128 | | Income Before Income Taxes | $86,040 | $91,986 | $47,480 | | Income Tax Expense | $22,433 | $21,136 | $13,055 | | Income Before Equity in Net Loss of Unconsolidated Affiliates | $63,607 | $70,850 | $34,425 | | Equity in Net Loss of Unconsolidated Affiliates (After Tax) | $187 | — | — | | **Net Income** | **$63,420** | **$70,850** | **$34,425** | | Net Income Per Share - Basic and Diluted | $0.36 | $0.40 | $0.22 | | Weighted Average Common Shares Outstanding - Basic | 175,007 | 174,014 | 154,496 | | Weighted Average Common Shares Outstanding - Diluted | 175,264 | 174,371 | 154,785 | [Supplemental Information (General)](index=8&type=section&id=Supplemental%20Information%20(General)) This section provides additional supplemental financial and operational data, including segment Adjusted Gross Margins, capital expenditures, total available and operating horsepower, utilization rates, dividend information, and key balance sheet metrics like long-term debt and total equity Unaudited Supplemental Information (USD Thousands, Percentages, Per Share Amounts, and Ratios) | Metric | June 30, 2025 (Q2) | March 31, 2025 (Q1) | June 30, 2024 (Q2) | | :----------------------------------- | :------------------- | :------------------- | :------------------- | | **Revenue:** | | | | | Contract Operations | $318,327 | $300,397 | $225,468 | | Aftermarket Services | $64,825 | $46,766 | $45,058 | | **Total Revenue** | **$383,152** | **$347,163** | **$270,526** | | **Adjusted Gross Margin:** | | | | | Contract Operations | $222,175 | $210,598 | $146,190 | | Aftermarket Services | $14,939 | $11,509 | $9,900 | | **Total Adjusted Gross Margin** | **$237,114** | **$222,107** | **$156,090** | | **Adjusted Gross Margin %:** | | | | | Contract Operations | 70% | 70% | 65% | | Aftermarket Services | 23% | 25% | 22% | | **Total Adjusted Gross Margin %** | **62%** | **64%** | **58%** | | Selling, General & Administrative Expenses | $36,244 | $37,207 | $31,163 | | % of Revenue | 9% | 11% | 12% | | Adjusted EBITDA | $212,678 | $197,845 | $129,712 | | % of Revenue | 56% | 57% | 48% | | Capital Expenditures | $111,462 | $168,140 | $91,271 | | Proceeds from Sale of Property, Plant & Equipment and Other Assets | $(28,589) | $(2,904) | $(3,706) | | Net Capital Expenditures | $82,873 | $165,236 | $87,565 | | Total Available Horsepower (End of Period) | 4,843 | 4,461 | 3,806 | | Total Operating Horsepower (End of Period) | 4,651 | 4,283 | 3,601 | | Average Operating Horsepower | 4,467 | 4,254 | 3,605 | | Horsepower Utilization (End of Period) | 96% | 96% | 95% | | Horsepower Utilization (Average) | 96% | 96% | 95% | | Dividend Declared Per Share for Period | $0.210 | $0.190 | $0.165 | | Total Dividend Declared for Period | $37,155 | $33,758 | $27,977 | | Cash Available for Dividend Coverage | 3.4x | 3.9x | 2.6x | | Adjusted Free Cash Flow | $(250,195) | $(48,403) | $(16,914) | | Adjusted Free Cash Flow After Dividends | $(283,815) | $(82,588) | $(42,733) | Balance Sheet Key Metrics (USD Thousands) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :----------------------- | :--------------- | :--------------- | :--------------- | | Long-Term Debt | $2,613,082 | $2,297,767 | $1,608,956 | | Total Equity | $1,408,440 | $1,349,983 | $894,496 | [Reconciliation of Net Income to Adjusted Net Income and Earnings Per Share to Adjusted Earnings Per Share](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income%20and%20Earnings%20Per%20Share%20to%20Adjusted%20Earnings%20Per%20Share) This section presents the reconciliation of net income to Adjusted Net Income and earnings per share to Adjusted Earnings Per Share, detailing restructuring and transaction-related costs and their tax impacts to illustrate non-GAAP metric calculations Reconciliation of Net Income to Adjusted Net Income and EPS to Adjusted EPS (USD Thousands, Per Share Amounts) | Metric | June 30, 2025 (Q2) | March 31, 2025 (Q1) | June 30, 2024 (Q2) | | :----------------------------------- | :------------------- | :------------------- | :------------------- | | Net Income | $63,420 | $70,850 | $34,425 | | Restructuring Charges | $144 | $665 | — | | Transaction-Related Costs | $6,127 | $3,935 | $1,732 | | Adjusted Tax Impact | $(1,317) | $(966) | $(364) | | **Adjusted Net Income** | **$68,374** | **$74,484** | **$35,793** | | Weighted Average Common Shares Outstanding - Basic | 175,007 | 174,014 | 154,496 | | Weighted Average Common Shares Outstanding - Diluted | 175,264 | 174,371 | 154,785 | | Net Income Per Share - Basic and Diluted | $0.36 | $0.40 | $0.22 | | Restructuring Charges Per Share | $0.00 | $0.00 | — | | Transaction-Related Costs Per Share | $0.04 | $0.03 | $0.01 | | Adjusted Tax Impact Per Share | $(0.01) | $(0.01) | — | | **Adjusted Basic and Diluted EPS** | **$0.39** | **$0.42** | **$0.23** | [Reconciliation of Net Income to Adjusted EBITDA and Adjusted Gross Margin](index=10&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA%20and%20Adjusted%20Gross%20Margin) This section provides the reconciliation of net income to Adjusted EBITDA and Adjusted Gross Margin, detailing adjustments such as depreciation, amortization, interest, taxes, and equity-based compensation to show non-GAAP metric calculations Reconciliation of Net Income to Adjusted EBITDA and Adjusted Gross Margin (USD Thousands) | Metric | June 30, 2025 (Q2) | March 31, 2025 (Q1) | June 30, 2024 (Q2) | | :----------------------------------- | :------------------- | :------------------- | :------------------- | | Net Income | $63,420 | $70,850 | $34,425 | | Depreciation and Amortization | $63,139 | $57,620 | $43,853 | | Impairment of Long-Lived and Other Assets | $10,847 | $972 | $4,401 | | Restructuring Charges | $144 | $665 | — | | Interest Expense | $41,711 | $37,741 | $27,859 | | Transaction-Related Costs | $6,127 | $3,935 | $1,782 | | Equity-Based Compensation Expense | $4,085 | $4,027 | $3,513 | | Amortization of Capitalized Implementation Costs | $818 | $762 | $824 | | Indemnification (Income) Expense, Net | $(233) | $137 | — | | Income Tax Expense | $22,433 | $21,136 | $13,055 | | Equity in Net Loss of Unconsolidated Affiliates (After Tax) | $187 | — | — | | **Adjusted EBITDA** | **$212,678** | **$197,845** | **$129,712** | | Less: Selling, General & Administrative Expenses | $36,244 | $37,207 | $31,163 | | Add: Equity-Based Compensation Expense | $(4,085) | $(4,027) | $(3,513) | | Add: Amortization of Capitalized Implementation Costs | $(818) | $(762) | $(824) | | Less: Net Gain on Sale of Assets | $(4,297) | $(7,335) | $(576) | | Less: Other (Income) Expense, Net | $(2,841) | $(684) | $128 | | **Adjusted Gross Margin** | **$237,114** | **$222,107** | **$156,090** | [Reconciliation of Gross Margin to Adjusted Gross Margin and Adjusted Gross Margin Percentage](index=11&type=section&id=Reconciliation%20of%20Gross%20Margin%20to%20Adjusted%20Gross%20Margin%20and%20Adjusted%20Gross%20Margin%20Percentage) This section presents the reconciliation of gross margin to Adjusted Gross Margin and Adjusted Gross Margin Percentage, illustrating the calculation of Adjusted Gross Margin by adding back depreciation and amortization Reconciliation of Gross Margin to Adjusted Gross Margin and Adjusted Gross Margin Percentage (USD Thousands) | Metric | June 30, 2025 (Q2) | March 31, 2025 (Q1) | June 30, 2024 (Q2) | | :----------------------------------- | :------------------- | :------------------- | :------------------- | | Total Revenue | $383,152 | $347,163 | $270,526 | | Cost of Sales (Excluding D&A) | $(146,038) | $(125,056) | $(114,436) | | Depreciation and Amortization | $(63,139) | $(57,620) | $(43,853) | | **Gross Margin** | **$173,975** | **$164,487** | **$112,237** | | **Gross Margin %** | **45%** | **47%** | **41%** | | Add: Depreciation and Amortization | $63,139 | $57,620 | $43,853 | | **Adjusted Gross Margin** | **$237,114** | **$222,107** | **$156,090** | | **Adjusted Gross Margin %** | **62%** | **64%** | **58%** | [Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Dividend](index=12&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA%20and%20Cash%20Available%20for%20Dividend) This section provides the reconciliation of net income to Adjusted EBITDA and Cash Available for Dividend, detailing adjustments from net income to Adjusted EBITDA, and further deducting maintenance and other capital expenditures, cash taxes, and cash interest to derive Cash Available for Dividend Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Dividend (USD Thousands) | Metric | June 30, 2025 (Q2) | March 31, 2025 (Q1) | June 30, 2024 (Q2) | | :----------------------------------- | :------------------- | :------------------- | :------------------- | | Net Income | $63,420 | $70,850 | $34,425 | | Depreciation and Amortization | $63,139 | $57,620 | $43,853 | | Impairment of Long-Lived and Other Assets | $10,847 | $972 | $4,401 | | Restructuring Charges | $144 | $665 | — | | Interest Expense | $41,711 | $37,741 | $27,859 | | Transaction-Related Costs | $6,127 | $3,935 | $1,782 | | Equity-Based Compensation Expense | $4,085 | $4,027 | $3,513 | | Amortization of Capitalized Implementation Costs | $818 | $762 | $824 | | Indemnification (Income) Expense, Net | $(233) | $137 | — | | Income Tax Expense | $22,433 | $21,136 | $13,055 | | Equity in Net Loss of Unconsolidated Affiliates (After Tax) | $187 | — | — | | **Adjusted EBITDA** | **$212,678** | **$197,845** | **$129,712** | | Less: Maintenance Capital Expenditures | $(32,413) | $(22,753) | $(25,415) | | Less: Other Capital Expenditures | $(11,707) | $(6,019) | $(3,445) | | Less: Cash Taxes Paid | $(2,853) | $(92) | $(2,028) | | Less: Cash Interest Expense | $(40,650) | $(36,734) | $(27,231) | | **Cash Available for Dividend** | **$125,055** | **$132,247** | **$71,593** | [Reconciliation of Net Cash Provided by Operating Activities to Cash Available for Dividend](index=13&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Cash%20Available%20for%20Dividend) This section reconciles net cash provided by operating activities to Cash Available for Dividend, detailing adjustments for inventory impairment, credit loss provisions, asset sale gains, taxes, amortization, deferred revenue, cash restructuring, cash transaction costs, and balance sheet changes Reconciliation of Net Cash Provided by Operating Activities to Cash Available for Dividend (USD Thousands) | Metric | June 30, 2025 (Q2) | March 31, 2025 (Q1) | June 30, 2024 (Q2) | | :----------------------------------- | :------------------- | :------------------- | :------------------- | | Net Cash Provided by Operating Activities | $127,471 | $115,628 | $70,651 | | Inventory Impairment | $(280) | $(188) | $(318) | | Provision for Credit Losses | $(71) | $(156) | $(80) | | Net Gain on Sale of Assets | $4,297 | $7,335 | $576 | | Current Income Tax Expense | $2,155 | $1,182 | $615 | | Cash Taxes Paid | $(2,853) | $(92) | $(2,028) | | Amortization of Operating Lease Right-of-Use Assets | $(1,080) | $(1,204) | $(880) | | Amortization of Contract Costs | $(5,615) | $(5,889) | $(5,957) | | Recognition of Deferred Revenue | $4,039 | $3,746 | $2,747 | | Indemnification (Income) Expense, Net | $(233) | $137 | — | | Cash Restructuring Charges | $144 | $665 | — | | Cash Transaction-Related Costs | $6,127 | $3,935 | $1,782 | | Equity Settlement of Time-Vested Cash or Equity-Settled Units | — | $(1,756) | — | | Changes in Assets and Liabilities | $35,074 | $37,676 | $33,345 | | Maintenance Capital Expenditures | $(32,413) | $(22,753) | $(25,415) | | Other Capital Expenditures | $(11,707) | $(6,019) | $(3,445) | | **Cash Available for Dividend** | **$125,055** | **$132,247** | **$71,593** | [Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow and Adjusted Free Cash Flow After Dividends](index=14&type=section&id=Reconciliation%20of%20Net%20Cash%20Provided%20by%20Operating%20Activities%20to%20Adjusted%20Free%20Cash%20Flow%20and%20Adjusted%20Free%20Cash%20Flow%20After%20Dividends) This section reconciles net cash provided by operating activities to Adjusted Free Cash Flow and Adjusted Free Cash Flow After Dividends, by adding back net cash used in investing activities and deducting dividends paid to shareholders, illustrating the calculation of these non-GAAP cash flow metrics Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow and Adjusted Free Cash Flow After Dividends (USD Thousands) | Metric | June 30, 2025 (Q2) | March 31, 2025 (Q1) | June 30, 2024 (Q2) | | :----------------------------------- | :------------------- | :------------------- | :------------------- | | Net Cash Provided by Operating Activities | $127,471 | $115,628 | $70,651 | | Net Cash Used in Investing Activities | $(377,666) | $(164,031) | $(87,565) | | **Adjusted Free Cash Flow** | **$(250,195)** | **$(48,403)** | **$(16,914)** | | Dividends Paid to Shareholders | $(33,620) | $(34,185) | $(25,819) | | **Adjusted Free Cash Flow After Dividends** | **$(283,815)** | **$(82,588)** | **$(42,733)** | - The cash flow metrics reflect **$296.6 million** in cash paid for the NGCS acquisition (net of cash acquired)[57](index=57&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Dividend Guidance](index=15&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA%20and%20Cash%20Available%20for%20Dividend%20Guidance) This section provides the reconciliation of 2025 full-year net income to Adjusted EBITDA and Cash Available for Dividend guidance, detailing all projected adjustments to illustrate the calculation of these non-GAAP guidance metrics Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Dividend Guidance (USD Thousands) | Metric | 2025 Guidance Low | 2025 Guidance High | | :----------------------------------- | :--------------- | :--------------- | | Net Income | $249,600 | $289,600 | | Interest Expense | $164,000 | $164,000 | | Income Tax Expense | $94,000 | $94,000 | | Depreciation and Amortization | $249,000 | $249,000 | | Equity-Based Compensation Expense | $20,000 | $20,000 | | Impairment of Long-Lived and Other Assets | $11,800 | $11,800 | | Amortization of Capitalized Implementation Costs | $3,700 | $3,700 | | Transaction-Related Costs | $17,000 | $17,000 | | Restructuring Charges | $800 | $800 | | Equity in Net Loss of Unconsolidated Affiliates (After Tax) | $200 | $200 | | Net Indemnification Income | $(100) | $(100) | | **Adjusted EBITDA** | **$810,000** | **$850,000** | | Less: Maintenance Capital Expenditures | $(110,000) | $(120,000) | | Less: Other Capital Expenditures | $(35,000) | $(40,000) | | Less: Cash Tax Expense | $(4,000) | $(4,000) | | Less: Cash Interest Expense | $(159,000) | $(159,000) | | **Cash Available for Dividend** | **$502,000** | **$527,000** | - The 2025 annual net income guidance includes **$11.8 million** in impairment of long-lived and other assets as of June 30, 2025, but excludes any potential future costs of this nature[60](index=60&type=chunk) - Transaction-related costs reflect estimated expenses associated with the TOPS and NGCS acquisitions[61](index=61&type=chunk)

Core Insights - Archrock reported outstanding performance in Q2 2025, completing the acquisition of NGCS and achieving a record utilization rate of 96% across its fleet [3][4][5] - The company raised its 2025 adjusted EBITDA guidance and increased its quarterly cash dividend per share, reflecting confidence in future growth [5][16] Financial Performance - Q2 2025 net income was $63.4 million, up from $34.4 million in Q2 2024, with adjusted net income reaching $68.4 million compared to $35.8 million in the prior year [6][8] - Total revenue for Q2 2025 was $383.2 million, a 42% increase from $270.5 million in Q2 2024 [8][39] - Adjusted EBITDA for Q2 2025 was $212.7 million, compared to $129.7 million in Q2 2024, indicating strong operational performance [8][22] Segment Performance - Contract operations segment revenue increased by 41% to $318.3 million in Q2 2025, with an adjusted gross margin percentage of 70% [8][12] - Aftermarket services segment revenue rose to $64.8 million, with an adjusted gross margin percentage of 23% [12][22] Shareholder Returns - The company declared a quarterly dividend of $0.21 per share, approximately 27% higher than the previous year, with a dividend coverage ratio of 3.4x [14][22] - Archrock returned $96.9 million to shareholders through dividends and share repurchases in the first half of 2025, compared to $53.0 million in the same period of 2024 [5][8] Balance Sheet and Guidance - Long-term debt stood at $2.6 billion with available liquidity of $675 million as of June 30, 2025, resulting in a leverage ratio of 3.3x [13][47] - The revised full-year 2025 guidance includes net income between $249.6 million and $289.6 million and adjusted EBITDA between $810 million and $850 million [16][17]