Archrock(US:AROC)2025-10-29 18:39Financial Performance - Revenue for the three months ended September 30, 2025, was $382.4 million, a 31% increase from $292.2 million in the same period of 2024[169] - Net income for the three months ended September 30, 2025, was $71.2 million, up 90% from $37.5 million in the same period of 2024[171] - Adjusted gross margin for the three months ended September 30, 2025, was $252.6 million, representing a 42% increase from $178.0 million in the same period of 2024[168] - Revenue in contract operations increased by 36% to $944.993 million for the nine months ended September 30, 2025, compared to $693.939 million in the same period of 2024[190] - Adjusted gross margin for contract operations rose by 47% to $672.332 million, with an adjusted gross margin percentage of 71%, up from 66%[190] Operational Metrics - Total available horsepower at the end of September 30, 2025, was 4,845 thousand, an increase from 4,418 thousand at the end of September 30, 2024[161] - Average operating horsepower for the three months ended September 30, 2025, was 4,647 thousand, compared to 3,757 thousand in the same period of 2024, reflecting a 24% increase[161] - Revenue from contract operations increased by approximately $80.8 million due to acquisitions and higher rates[174] - Aftermarket services revenue increased by 20% to $56.2 million for the three months ended September 30, 2025, compared to $46.7 million in 2024[177] Expenses and Impairments - Selling, general and administrative expenses rose to $37.7 million for the three months ended September 30, 2025, from $34.1 million in 2024[180] - Interest expense increased to $43.7 million for the three months ended September 30, 2025, compared to $30.2 million in 2024, primarily due to higher long-term debt[184] - The company recorded a long-lived asset impairment of $4.7 million for the three months ended September 30, 2025, compared to $2.5 million in 2024[182] Capital Expenditures - Growth capital expenditures were $299.0 million for the nine months ended September 30, 2025, compared to $181.6 million in 2024, reflecting increased investment in new compressors[211] - Maintenance capital expenditures increased to $84.8 million for the nine months ended September 30, 2025, from $66.1 million in 2024, driven by higher maintenance activities[212] Taxation - The provision for income taxes increased by 66% to $68.994 million for the nine months ended September 30, 2025, compared to $41.545 million in 2024[205] - The effective tax rate increased to 27% for the nine months ended September 30, 2025, compared to 25% in the same period of 2024[205] Dividends and Shareholder Returns - The company declared a quarterly dividend of $0.21 per share, payable on November 13, 2025, to stockholders of record on November 4, 2025[216] Debt and Financing - The Credit Facility was amended to increase borrowing capacity from $1.1 billion to $1.5 billion, with potential increases up to $2.3 billion[218] - The average debt balance under the Credit Facility was $653.6 million for the nine months ended September 30, 2025, compared to $268.7 million for the same period in 2024, with a weighted-average interest rate of 6.6%[219] - As of September 30, 2025, the company had $768.7 million of variable interest rate debt outstanding at a weighted average interest rate of 6.6%[227] - A 1% change in the effective interest rate on the Credit Facility's outstanding balance would result in an annual interest expense change of $7.7 million[228] - The company was in compliance with all covenants under its Credit Facility as of September 30, 2025, with all undrawn capacity available for borrowings[220] Cash Flow - Net cash provided by operating activities increased to $407.6 million for the nine months ended September 30, 2025, up from $305.3 million in 2024[223] - Net cash provided by financing activities decreased by $617.4 million, primarily due to a reduction in long-term debt borrowings and common stock issuance[226] - The company recorded a net decrease in cash and cash equivalents of $337,000 for the nine months ended September 30, 2025, compared to an increase of $2.4 million in 2024[223] Acquisitions - Transaction-related costs for the NGCS Acquisition totaled $8.7 million for the nine months ended September 30, 2025, while costs related to the TOPS Acquisition were $3.1 million[201] - The company spent $868.7 million on the TOPS acquisition, compared to $296.5 million for the NGCS Acquisition, reflecting a significant investment in growth[225] Asset Sales - The gain on sale of assets increased to $13.8 million for the nine months ended September 30, 2025, compared to $5.1 million in 2024[202] Debt Repurchase - The company initiated the repurchase of its 2027 Notes, expected to be redeemed on November 17, 2025, at 100% of their $300 million principal amount plus approximately $2.6 million in accrued interest[217]