Archrock (AROC) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue rose to $270.5 million, up 9% year-over-year, driven by higher contract operations rates and increased average operating horsepower.

• Net income for Q2 2024 was $34.4 million, a 39% increase from Q2 2023, reflecting strong operational execution and higher adjusted gross margin.

• Adjusted EBITDA reached $130 million, a 15% increase year-over-year, driven by higher pricing and cost management.

• Announced acquisition of TOPS for $820–$983 million, to be funded with cash, 6.87 million shares, and up to $6 million in deferred payments, expected to close by year-end 2024.

• Declared a quarterly dividend of $0.165 per share, 6% higher year-over-year, with a 2.6x coverage ratio.

Financial highlights

• Six-month 2024 revenue was $539.0 million, up 13% year-over-year; net income was $75.0 million, up 82%.

• Adjusted gross margin for Q2 2024 was $156.1 million (58% of revenue), up from $136.2 million in Q2 2023.

• Growth CapEx for Q2 was $62 million, with year-to-date growth CapEx at $140 million; full-year growth CapEx expected at $190 million.

• Maintenance and other CapEx for Q2 was $29 million, totaling $51 million for the first half of 2024; full-year maintenance CapEx guidance is $80–$85 million.

• Long-term debt at quarter-end was $1.6–$1.61 billion, with a leverage ratio of 3.2x.

Outlook and guidance

• 2024 Adjusted EBITDA (excluding TOPS) is expected to be $510–$540 million, up 17% from 2023.

• 2024 net income guidance is $139–$167 million, including $1.8–$4 million in transaction-related expenses.

• Capital expenditures for 2024 expected at $290–$300 million, with $190 million for growth and $80–$85 million for maintenance.

• Guidance excludes the pending TOPS acquisition; combined company outlook to be provided post-close.