Archrock Reports Substantial Increase in Net Income, Reaching $34 Million

Archrock Inc. Reports Strong Q2 2024 Results and Strategic Acquisition

Archrock Inc., a prominent provider of contract compression services, has announced significant financial growth for the second quarter of 2024, with net income rising to $34 million, up from $25 million during the same period last year. The company’s adjusted EBITDA also saw an impressive 15% increase, reaching $130 million. In a strategic development, Archrock revealed its plan to acquire TOPS, a rival contract compression firm, for approximately $983 million, with the deal expected to finalize by year-end.

This acquisition is poised to strengthen Archrock’s market position and enhance both earnings and shareholder dividends. Although there has been a slight slowdown in dry gas operations, Archrock’s predominant presence in liquid-rich regions, notably the Permian Basin, combined with its pricing strength, should continue to foster positive operational performance.

Key Highlights

• Archrock’s net income for Q2 2024 stands at $34 million, marking a 36% year-over-year increase.
• Adjusted EBITDA increased by 15%, amounting to $130 million.
• The acquisition of TOPS for $983 million aims to strengthen market position and boost shareholder returns.
• Archrock reported a leverage ratio of 3.2x, indicating a solid financial footing.
• Earnings forecast remains stable at $20-25 million.
• The company plans to implement price increases across a significant portion of its fleet in the next 18 months.

Company Outlook

• Archrock anticipates maintaining a robust financial position with steady earnings and high fleet utilization rates.
• The acquisition of TOPS is expected to further enhance market presence and earnings potential.
• Continued focus on high-return opportunities and increasing shareholder returns remain priorities for the company.

Market Overview

• A slight cooling in dry gas operations has been observed, though Archrock continues to thrive in liquid-rich areas.
• The aftermarket service business is flourishing, demonstrating high utilization and a customer-centric approach.
• The company is expected to leverage pricing power and plans to raise prices on most of its fleet.

Earnings Call Summary

During the Q2 earnings call, Archrock executives emphasized the strong performance driven by efficient operations and customer service. The company estimated that about 80-90% of its fleet is eligible for repricing in the coming 18 months, indicating a proactive approach towards enhancing revenue potential.

The Q&A segment highlighted the company’s strategic focus on redeploying assets from dry gas to liquid plays, reinforcing positive expectations for future performance.

In conclusion, Archrock’s second quarter of 2024 showcased robust financial results alongside strategic growth initiatives. With a solid leverage ratio and unchanged earnings forecast, combined with a strong positioning in liquid-rich markets and effective pricing strategies, Archrock appears well-positioned for sustained growth and value creation for its shareholders.