Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2022 was $92 million, reflecting solid underlying business performance and sequential growth in total gross margin dollars [7][27] - Net income for Q3 2022 was $15 million, including a noncash $4 million long-lived asset impairment [27] - Total debt at the end of the quarter was $1.5 billion, with a leverage ratio of 4.3x [30][25] - Cash available for dividend for Q3 2022 totaled $41 million, leading to a dividend coverage of 1.8x [31] Business Line Data and Key Metrics Changes - Contract operations revenue was $170 million in Q3 2022, up $4 million or 3% compared to Q2 2022 [28] - Aftermarket services segment revenue was $43 million, up $7 million or 19% year-over-year [29] - Gross margin percentage for contract operations was 58%, consistent with expectations for a decline in the second half of the year [28] Market Data and Key Metrics Changes - Year-to-date bookings have doubled compared to the same time last year, indicating strong demand [9] - Exit utilization increased by 200 basis points to a record 89%, with 90% utilization as of the end of October [8][16] - Spot pricing for new deployments is up a minimum of 20% year-over-year across major asset classes [16] Company Strategy and Development Direction - The company is focusing on fleet high-grading to improve utilization and profitability through market cycles [10] - Plans to electrify the fleet by converting existing units and building new electric units [11] - The company is committed to developing solutions for emissions management and has introduced a methane capture technology [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for natural gas and the strong market conditions for midstream compression [7] - Supply-demand balances for oil and gas are tight, with elevated commodity prices supporting strong well economics [13] - The company expects prudent investment from upstream and midstream customers, leading to low to mid-single-digit production growth rates [14] Other Important Information - The company has maintained a strong balance sheet and liquidity, with $492 million available as of September 30 [30] - The dividend yield is currently at 8%, with a commitment to return capital to investors [25][31] Q&A Session Summary Question: How should commercialization of methane capture technology be measured? - Management indicated that it will take time to build out the commercial model and engage customers, with expectations for clarity by mid-2023 [35][36] Question: Is pricing power sufficient to increase shareholder returns while investing in CapEx? - Management believes that pricing power is strong enough to potentially increase shareholder returns before achieving a leverage ratio below 4x [38][40] Question: What is the demand and supply chain situation for electric compression? - There is good demand for electric motor drive units, with about 15% of CapEx allocated to this segment [42] Question: Is carbon capture an opportunity for the company? - Management sees multiple opportunities in the carbon capture economy, including providing compression for carbon capture projects [48]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 2022 was $99 million, reflecting solid underlying business performance [5][21] - Net income for Q2 2022 was $17 million, including a noncash $5 million long-lived asset impairment [21] - Total gross margin increased by $2 million compared to the first quarter, with a gross margin percentage of 59% for contract operations [21][22] - Cash available for dividend totaled $52 million, leading to a dividend coverage of 2.3x [24] Business Line Data and Key Metrics Changes - Contract operations revenue was $166 million in Q2 2022, up $3 million or 2% from the first quarter [21][22] - Aftermarket services (AMS) revenue increased to $50 million, up $16 million from the previous quarter and $18 million year-over-year [22] - AMS gross margin was 16%, up 100 basis points from the first quarter and 300 basis points higher year-over-year [22] Market Data and Key Metrics Changes - U.S. oil and gas production is projected to increase by 3% to 4% for natural gas and 6% to 7% for oil in 2022 and 2023 [6] - Year-to-date bookings have doubled compared to the first half of 2021, indicating strong customer demand [6][10] - The company experienced a significant increase in operating horsepower of 100,000 horsepower, with exit utilization rising to 87% [5][10] Company Strategy and Development Direction - The company is focused on converting growing customer demand into high-return bookings while maintaining capital discipline [5] - Strategic divestitures of noncore assets are aimed at improving returns and reducing greenhouse gas emissions [11][16] - The company plans to invest in new, standardized large horsepower equipment to meet customer demand and enhance operational efficiency [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for the business, citing strong demand for natural gas and limited supply of compression equipment [8][19] - The company anticipates a temporary step down in gross margin percentage due to inflationary pressures but expects gross profit to be higher in the second half of the year [25] - Management highlighted the importance of maintaining a strong balance sheet and liquidity to support growth investments [17][24] Other Important Information - The company declared a second quarter dividend of $0.145 per share, representing a yield of 7% [24] - Total capital expenditures for Q2 2022 were $61 million, with growth capital expenditures totaling $38 million [23] Q&A Session Summary Question: On the price increases on the installed base, how quickly can you implement those? - Management indicated that pricing increases have already started and are driven by utilization levels, with expectations to reclaim inflation and cost increases over 12 to 24 months [28] Question: Can you provide more color on the horsepower categories that are in higher demand? - Management noted that the largest horsepower categories are in high demand, with lead times extending to over 52 weeks for new equipment [31] Question: What do you think you can get those margins back to? - Management expressed ambition to improve gross margins over the long term, aiming for levels in the mid-60s, but did not provide specific guidance for 2023 [34][35] Question: What is the sales cycle for ECOTEC technology? - Management stated that the focus for 2022 is on demonstrating the technology to customers, with expectations for broader market introduction in 2023 [39] Question: Have you seen any inquiries regarding carbon capture or hydrogen? - Management confirmed that there are discussions around carbon capture, but noted that substantial demand for compression in these areas is not yet evident [42]

Archrock, Inc. (NYSE:AROC) Q1 2022 Earnings Conference Call May 10, 2022 11:00 AM ET Company Participants Megan Repine - VP, IR Brad Childers - President & CEO Doug Aron - CFO Conference Call Participants Kyle May - Capital One Securities Selman Akyol - Stifel Operator Good morning. Welcome to the Archrock First Quarter 2022 Conference Call. Your host for today's call is Megan Repine, Vice President of Investor Relations for Archrock. I will now turn the call over to Ms. Repine. You may begin. Megan Repine ...

Archrock, Inc. (NYSE:AROC) Q4 2021 Earnings Conference Call February 23, 2022 10:00 AM ET Company Participants Megan Repine - Vice President, Investor Relations Brad Childers - President and Chief Executive Officer Doug Aron - Chief Financial Officer Conference Call Participants TJ Schultz - RBC Daniel Burke - Johnson Rice Kyle May - Capital One Securities Selman Akyol - Stifel Operator Good morning. Welcome to the Archrock’s Fourth Quarter 2021 Conference Call. Your host for today’s call is Megan Repine, V ...