Core Insights - Zacks Premium provides various tools to enhance investor confidence and market engagement, including daily updates, research reports, and stock screens [1][2] Zacks Style Scores - Zacks Style Scores rate stocks based on value, growth, and momentum, serving as complementary indicators to the Zacks Rank, helping investors identify securities likely to outperform the market in the short term [3][4] - Each stock receives an alphabetic rating from A to F, with A indicating the highest potential for outperformance [4] Value Score - The Value Style Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales, aiming to find attractive investment opportunities [4] Growth Score - The Growth Style Score evaluates stocks based on projected and historical earnings, sales, and cash flow, targeting companies with sustainable growth potential [5] Momentum Score - The Momentum Style Score assesses stocks based on price trends and earnings estimate changes, helping investors capitalize on upward or downward price movements [6] VGM Score - The VGM Score combines the three Style Scores, providing a comprehensive indicator for investors who utilize multiple investing strategies [7] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks achieving an average annual return of +23.75% since 1988, significantly outperforming the S&P 500 [8][9] - Investors can choose from over 800 top-rated stocks, making it essential to select those with favorable Style Scores alongside the Zacks Rank [9][10] Stock Highlight: Archrock Inc. (AROC) - Archrock has transitioned to a leading pure-play compression services company, focusing on natural gas production and transportation, with a commitment to operational excellence and environmental responsibility [12] - AROC holds a 2 (Buy) rating on the Zacks Rank and a VGM Score of B, indicating strong growth potential, with a projected year-over-year earnings growth of 49.5% for the current fiscal year [13] - Recent upward revisions in earnings estimates and a consistent earnings surprise of +6.5% further enhance AROC's attractiveness for growth investors [13][14]

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong growth stocks can be challenging due to associated risks and volatility [1] Group 1: Company Overview - Archrock Inc. (AROC) is identified as a promising growth stock with a favorable Growth Score and a top Zacks Rank [2][10] Group 2: Earnings Growth - Archrock Inc. has a historical EPS growth rate of 32.4%, with projected EPS growth of 49% this year, significantly outperforming the industry average of 0% [5][4] Group 3: Cash Flow Growth - The year-over-year cash flow growth for Archrock Inc. is 34.8%, well above the industry average of 5.5%, indicating strong cash accumulation capabilities [6][10] - The company's annualized cash flow growth rate over the past 3-5 years is 5.9%, slightly above the industry average of 5.8% [7] Group 4: Earnings Estimate Revisions - Current-year earnings estimates for Archrock Inc. have been revised upward, with the Zacks Consensus Estimate increasing by 4.5% over the past month, suggesting positive momentum [8][10] Group 5: Investment Potential - Archrock Inc. holds a Growth Score of B and a Zacks Rank 2, indicating it is a solid choice for growth investors and a potential outperformer in the market [10]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Archrock Inc. (AROC), and highlights the potential misalignment of interests between brokerage analysts and retail investors [1][10]. Brokerage Recommendations - Archrock Inc. has an average brokerage recommendation (ABR) of 1.67, indicating a consensus between Strong Buy and Buy, with five Strong Buy and two Buy recommendations from nine brokerage firms [2][5]. - The distribution of recommendations shows that Strong Buy and Buy account for 55.6% and 22.2% of all recommendations, respectively [2]. Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations have limited success in guiding investors towards stocks with the best price increase potential [5]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, often issuing five "Strong Buy" recommendations for every "Strong Sell" [6][10]. Zacks Rank as an Alternative - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Zacks Rank 1 (Strong Buy) to Zacks Rank 5 (Strong Sell) and is based on earnings estimate revisions, which correlate strongly with near-term stock price movements [8][11]. - The Zacks Rank is updated more frequently than the ABR, making it a more timely indicator for predicting future stock prices [12]. Earnings Estimates for Archrock Inc. - The Zacks Consensus Estimate for Archrock Inc. has increased by 4.5% over the past month to $1.57, reflecting analysts' growing optimism about the company's earnings prospects [13]. - This increase in consensus estimates has contributed to a Zacks Rank 2 (Buy) for Archrock Inc., suggesting a favorable outlook for the stock [14].

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]