AROC

It has been about a month since the last earnings report for Archrock Inc. (AROC). Shares have lost about 4.8% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Archrock Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Archrock Misses Q2 Earnings & Revenue Estimates on AMS Weakness Archrock reported second-quarter 2026 adjusted earnings of 38 cents per share, down 2.6% from 39 cents per share a year earlier. The bottom line missed the Zacks Consensus Estimate of 46 cents by 17.4%. Revenues of $371.2 million declined 3.1% from $383.2 million a year ago. The top line missed the consensus mark of $390.4 million by 4.9%. The weak quarterly results were primarily due to softness in aftermarket services (AMS), which offset solid contract operations performance. Period-end horsepower utilization remained high at 94.4%, while contract operations adjusted gross margin percentage improved from the year-ago period. AROC's Contract Operations Remain Resilient Contract operations revenues rose 3.4% to $329.3 million from $318.3 million. The increase reflected higher rates, an additional month of contribution from the NGCS acquisition and revenues from horsepower additions, partly offset by active horsepower sales used to high-grade the fleet. Contract operations adjusted gross margin increased 5.6% to $234.6 million, while the adjusted gross margin percentage rose to 71% from 70%. Total operating horsepower ended the quarter at 4.5 million compared with 4.7 million a year earlier, with the decline largely driven by the sale of approximately 165,000 non-strategic operating horsepower. Archrock's Aftermarket Services Lose Momentum Aftermarket services revenues fell 35.2% to $42 million from $64.8 million in the second quarter of 2025. The decline was due to lower parts sales, the absence of non-recurring overhauled-engine sales that benefited the prior-year quarter and reduced demand for major maintenance activity. The adjusted gross margin for the segment declined 33.6% to $9.9 million from $14.9 million. However, the adjusted gross margin percentage improved to 24% from 23%, reflecting disciplined execution and a focus on higher-quality, higher-margin work. AROC's Margin Gains Offset Some Cost Pressure Total adjusted gross margin increased to $244.5 million from $237.1 million a year ago. The adjusted gross margin percentage expanded to 66% from 62%, helped by the stronger profitability of contract operations and the improved margin rate in aftermarket services. Selling, general and administrative expenses rose 9.4% to $39.6 million from $36.2 million. Higher long-term incentive compensation, primarily driven by the stock price increase, was a key factor. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) remained flat at $212.6 million compared with $212.7 million in the prior-year quarter. Archrock Generates Solid Cash Flow Net cash provided by operating activities was $160.8 million in the quarter. The adjusted free cash flow totaled $67 million, while adjusted free cash flow after dividends was $28.4 million. The total capital expenditure was $98 million. AROC Raises Dividend The board raised the quarterly dividend by around 10% to 23 cents per share from 21 cents a year earlier. Dividend coverage was 3.1X, supporting the company's continued emphasis on shareholder returns alongside growth investment. Archrock Maintains Balance Sheet Flexibility As of June 30, 2026, AROC’s long-term debt was $2.35 billion, while the leverage ratio improved to 2.6X from 3.3X a year ago. Available liquidity totaled $631 million at the quarter-end. During the quarter, Archrock redeemed $800 million of 6.25% senior notes due 2028 using borrowings under its revolving credit facility. The company ended June with $113.2 million in remaining share repurchase authorization and did not repurchase shares during the quarter. AROC Tightens 2026 EBITDA Guidance Archrock tightened its 2026 adjusted EBITDA guidance to $865-$885 million from $865-$915 million. The revision reflects higher contract compression make-ready costs, anticipated second-half lube oil cost pressure, softer aftermarket services demand and higher selling, general and administrative costs tied to long-term incentive compensation. The company maintained 2026 growth capital spending guidance of $250-$275 million and expects the total capital expenditure to be between $400 million and $445 million. Archrock introduced cumulative growth capital guidance of $1.4 to $1.6 billion for 2027 to 2030, aimed at adding 1 million horsepower to meet expected demand. The company signed an eight-year agreement with a strategic customer covering approximately 665,000 horsepower, with a two-year extension option. Since the earnings release, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -9.93% due to these changes. At this time, Archrock Inc. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for value investors. Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Archrock Inc. has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months. Archrock Inc. is part of the Zacks Oil and Gas - Field Services industry. Over the past month, FMC Technologies (FTI), a stock from the same industry, has gained 15%. The company reported its results for the quarter ended June 2026 more than a month ago. FMC Technologies reported revenues of $2.76 billion in the last reported quarter, representing a year-over-year change of +9%. EPS of $0.91 for the same period compares with $0.68 a year ago. For the current quarter, FMC Technologies is expected to post earnings of $0.89 per share, indicating a change of +18.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.3% over the last 30 days. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for FMC Technologies. Also, the stock has a VGM Score of A. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Archrock, Inc. (AROC) : Free Stock Analysis Report TechnipFMC plc (FTI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Wednesday, Aug. 12, 2026 at 8:30 a.m. ET President and Chief Executive Officer - Brad Childers Senior Vice President and Chief Financial Officer - Mohit Singh Vice President of Investor Relations - Megan Repine Operator: Good morning. Welcome to the Archrock Second Quarter 2026 Conference Call. Your host for today's call is Megan Repine, Vice President of Investor Relations at Archrock. I will now turn the call over to Ms. Repine. You may begin. Megan Repine: Thank you, Erica. Hello, everyone, and appreciate you joining us on today's call. With me today are Brad Childers, President and Chief Executive Officer of Archrock; and Mohit Singh, Chief Financial Officer of Archrock. Yesterday, we released our financial and operating results for the second quarter of 2026. If you have not received a copy, you can find the information on the company's website at www.archrock.com. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 based on our current beliefs and expectations as well as assumptions made by and information currently available to Archrock's management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Please refer to our latest filings with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. In addition, our discussion today will reference certain non-GAAP financial measures, including adjusted EBITDA, adjusted EPS, adjusted net income, adjusted free cash flow and adjusted free cash flow after dividends. For reconciliations of these non-GAAP financial measures to our GAAP financial results, please see yesterday's press release and our Form 8-K furnished to the SEC. I'll now turn the call over to Brad to discuss Archrock's second quarter results and provide an update on our business. D. Childers: Thank you, Megan, and good morning, everyone. Before we get into the quarter and our performance, I want to welcome Mohit Singh to Archrock as our Senior Vice President and Chief Financial Officer. Mohit joined our team in July and brings more than 25 years of experience across the energy value chain. Mohit's public company experience, deep understanding of natural gas fundamentals and strategic perspective will be valuable as we position Archrock for its next phase of growth. Mohit, we're excited to have you on board. Now let me turn to our second quarter results. Against a constructive market backdrop, the quarter was outstanding and showcased the quality of our platform with excellent contract operations profitability, high utilization, significant free cash flow, low leverage and continued dividend growth. These results demonstrate the resilience of our business model and the flexibility we have to balance high-return growth while returning capital to shareholders. Let me share a few highlights from the quarter. We delivered EPS of $0.38 and adjusted EBITDA of $213 million in the second quarter, supported by solid contract operations fundamentals and disciplined execution across the business. Customer demand remains healthy as evidenced by our continued high utilization, strong bookings for new starts, low unit stop activity and a long-term agreement we signed with an existing strategic customer covering approximately 665,000 horsepower for midstream applications. We again delivered outstanding operating performance and profitability in contract operations, including utilization of 94.4% and our seventh consecutive quarter of adjusted gross margin above 70% with adjusted gross margin at 71% in the quarter. We translated this performance into adjusted free cash flow of $67 million in the quarter, of which we returned $39 million to shareholders through dividends. Our Board recently approved our fifth dividend increase in 2 years, underscoring the earnings and cash flow strength of our business. We ended the quarter with leverage of 2.6x and dividend coverage of 3.1x, both underscoring our continued financial strength and ability to balance investing in growth while returning capital to shareholders. Overall, we're very pleased with our second quarter performance and remain confident in the strength of our core business and long-term outlook. Last night with our earnings release, we tightened our full year 2026 adjusted EBITDA guidance range to reflect changes in assumptions for several largely external or timing-related factors, including near-term lube oil and make-ready cost pressures, AMS customer deferrals and higher long-term incentive compensation driven by our increasing stock price. This does not reflect the change in demand fundamentals. As a result of these factors, our updated full year 2026 adjusted EBITDA guidance range is $865 million to $885 million compared to our prior guidance range of $865 million to $915 million. Stepping back, our long-term confidence is supported by 3 key advantages: the right market, the right platform and the right balance sheet. First, we're in the right market. Natural gas remains essential to powering economic growth, supporting energy security and meeting rising demand from LNG exports, industrial activity and power generation. These growth drivers for natural gas correlate directly with strong demand for compression over the long term. Second, we have the right platform. Archrock has the scale, fleet quality, operating discipline and customer relationships that we have built over time to capture that opportunity profitably. Our track record of reliable execution and strong customer service positions us to grow alongside our customers. Third, we have the right balance sheet with low leverage, significant liquidity and strong free cash flow generation. Taken together, these advantages reinforce our confidence in our ability to compound earnings and free cash flow, and deliver sustainable, superior returns on capital. Looking ahead, favorable long-term fundamentals support robust growth in natural gas and compression demands. In the Permian, associated gas volumes continue to outpace oil growth as gas-to-oil ratios are expected to increase approximately 21% by 2030. This trend is increasing compression intensity across the basin and should continue to support demand for our services. Infrastructure additions provide further support with approximately 4.6 Bcf a day of Permian takeaway capacity expected to come online in the second half of '26 and another 6.7 Bcf a day anticipated between 2027 and the end of the decade. These projects should improve basin economics and facilitate continued natural gas production growth. Longer term, LNG remains one of the most visible drivers of demand growth. Industry forecasts point to LNG-related natural gas demand reaching approximately 35 Bcf a day by 2030 and 40 Bcf a day by 2035, up from approximately 20 Bcf a day in 2026. At the same time, data center and AI-related power demand represent an additional source of upside with natural gas-fired generation expected to play an important role in meeting growing electricity needs. Simply put, we believe the combination of growing natural gas production, expanding takeaway infrastructure, increasing LNG exports and rising power demand create a favorable backdrop for compression demand. We stand ready to support our customers in meeting this demand, growth and creating value for our shareholders. Moving to our segments. Contract operations delivered a strong performance, supported by excellent execution and high utilization. Customer demand remains robust across our fleet, particularly for large horsepower, and demand remains broad-based and geographically diverse across multiple operating areas. During the quarter, we signed a long-term contract with an existing strategic customer covering approximately 665,000 horsepower for midstream applications. This agreement includes an 8-year base term and a 2-year extension option, underscoring the value of our fleet, the strength of customer demand and the importance of partnering with strategic customers over multiyear development cycles. The market remains tight with Cat engine lead times still extended at just under 200 weeks. This reflects the strength of natural gas demand, the production growth outlook and the compression equipment required to support that growth. It also underscores the importance of securing equipment and remaining well positioned to grow with customers, supported by our financial strength and market position. In this environment, excellent execution by Archrock and the compression industry continue to support attractive returns, constructive commercial arrangements and disciplined capital deployment. We exited the quarter at 94.4% utilization, reflecting continued high demand and the quality of our fleet. We're also seeing recent wins that are putting idle equipment back to work in the second half of the year. At quarter end, operating horsepower was 4.5 million compared to 4.7 million at the end of the second quarter of 2025, with the largest driver of that change being the sale of approximately 165,000 nonstrategic operating horsepower year-over-year. On a sequential basis, net operating horsepower was relatively flat, down approximately 7,500 horsepower, excluding active asset sales. Revenue per horsepower per month was higher sequentially and year-over-year, supported by solid utilization. Contract operation's adjusted gross margin remained excellent at over 71%. As we look back to the back half of the year -- as we look to the back half of the year, we expect to manage near-term cost pressures. First, we're seeing higher make-ready costs as we put idle units back to work to meet customer demand. And second, we anticipate lube oil cost pressure related to the Iran conflict that has driven oil prices higher. Even with these pressures, margins should remain around 70% in the second half of the year, reflecting the strong profitability of our business. Moving to our aftermarket services segment. Activity has been softer than expected as some customers defer major maintenance to keep equipment operating in the current high crude price environment. While AMS can be lumpy and is a smaller part of our overall business, adjusted gross margin percentage has significantly improved, reflecting disciplined execution and our focus on higher quality, higher-margin work. And AMS remains an attractive contributor to returns because it is less capital intensive and enhances the ROIC profile of the company. Turning to capital allocation. We remain disciplined and returns focused with a framework designed to balance high-return growth investment, durable shareholder returns and continued balance sheet strength. For 2026, we're reaffirming growth capital expenditures of $250 million to $275 million, reflecting continued investment in growth horsepower to meet customer demand and extend the growth of our profitable platform. Looking beyond 2026, we're introducing a long-term capital allocation framework supported by the strong market backdrop for natural gas and compression demand. This framework reflects an all-of-the-above approach to capital allocation with 3 components. First, we expect to prioritize high-return organic growth investments that add the new build horsepower needed to meet customer demand. Based on forecasted natural gas demand growth, we estimate that we will require new horsepower additions totaling approximately 1 million horsepower from 2027 through 2030. To meet that demand, we expect to invest $1.4 billion to $1.6 billion of growth capital cumulatively over that 4-year time frame in high-return organic growth opportunities, predominantly in large horsepower and electric motor drive new compression. Second, we expect substantial free cash flow to support increasing shareholder returns. We plan to return 25% to 35% of operating cash flow to shareholders through continued dividend growth and opportunistic share repurchases. Our Board recently increased our quarterly dividend to $0.23 per share, up from $0.22 per share and up approximately 10% year-over-year, marking our fifth dividend increase in 2 years and all while maintaining robust dividend coverage. We have flexibility for additional shareholder returns, including $113 million of remaining authorization under our share repurchase program as of quarter end, which we use a tool within our returns-based framework and may opportunistically use more actively during periods of market dislocation. Third, even after these robust investment levels and with meaningful capital returns to shareholders, we expect to continue generating significant free cash flow. We exited the quarter with a leverage ratio of 2.6x, comfortably below our long-term leverage target range of 3 to 3.5x. This financial position, free cash flow and low leverage preserve flexibility to also pursue inorganic growth opportunities in the future. Simply put, our strong balance sheet and cash flow generation give us flexibility to fund robust organic growth, increase shareholder returns and pursue additional strategic options. In summary, Archrock delivered strong second quarter results and remains well positioned, and the underlying demand fundamentals for long-term growth remain robust. We are confident in our ability to grow profitably, invest in attractive opportunities and increase shareholder returns and create sustainable long-term value. With that, I'll turn the call over to Mohit to walk through our second quarter and 2026 outlook. Mohit Singh: Good morning, everyone. I would like to start by thanking Brad for the warm welcome. Archrock is exceptionally well positioned with an industry-leading operating platform, a healthy order book, a highly motivated team and a peer-leading balance sheet. I have really enjoyed meeting our impressive finance team as we continue to execute on our priorities. With that, let's review our second quarter results and then cover our current financial outlook for 2026. Second quarter net income and adjusted net income were both $67 million and adjusted EPS was $0.38. We delivered strong adjusted EBITDA of $213 million for the second quarter of 2026, essentially flat year-over-year. Higher adjusted gross margin dollars in contract compression operations were offset by lower AMS gross margin dollars and higher SG&A expense. In the second quarter, total CapEx was $98 million, including $51 million of growth CapEx, $39 million of maintenance CapEx and $8 million of other CapEx. That performance translated into adjusted free cash flow of $67 million and adjusted free cash flow after dividends of $28 million in the quarter, driven by durable operating cash flow and supporting our ongoing commitment to return capital to shareholders. Turning to our business segments. Contract operations revenue came in at $329 million for the second quarter, up 3% compared to the second quarter of 2025. The year-over-year increase reflected higher rates, an additional month of contribution from the NGCS acquisition and revenue from horsepower additions. Those benefits were partially offset by active horsepower sales to high-grade our fleet. Contract operations adjusted gross margin was 71% in the second quarter, up from 70% in the year ago quarter, reflecting continued pricing strength and disciplined cost management. In our aftermarket services segment, second quarter 2026 revenue was $42 million compared to $65 million in the year ago quarter. The decline was driven primarily by lower part sales and reduced customer demand for major maintenance activity as some customers deferred work to keep equipment operating in the current high crude oil price environment. The year-over-year comparison was also affected by an unusually strong second quarter of 2025, which included higher parts sales and nonrecurring sales of overhauled engines. Adjusted gross margin was 24% in the quarter, up from 23% in the year ago period, reflecting disciplined execution and our continued focus on higher quality, higher-margin work. Turning to the balance sheet. We ended the quarter in a strong financial position with long-term debt of $2.3 billion at June 30. Our leverage ratio was 2.6x at quarter end, down meaningfully from 3.3x a year ago. That improvement reflects the strength of our earnings growth and cash flow profile, and it keeps us comfortably below our long-term target range. Consistent with that progress, both Moody's and S&P recently reaffirmed our credit ratings and revised their outlooks to positive. We now have positive outlooks from all 3 rating agencies, reflecting our consistent cash generation, financial strength and strong business outlook. During the quarter, we also completed the repurchase of our $800 million 6.25% senior notes due April 2028. We redeemed those notes at par plus accrued interest using borrowings under our revolving credit facility. The transaction was straightforward from a balance sheet perspective and resulted in a modest debt extinguishment gain in the quarter. This has cleared the runway for us with the first debt maturity out in 2032. After that activity, we ended June with $631 million of available liquidity, preserving flexibility to invest in the business, pursue high-return growth opportunities and return capital to shareholders. Turning to shareholder returns. Our Board recently declared a quarterly dividend of $0.23 per share, up from the prior quarterly dividend of $0.22 per share or $0.92 per share annualized. This is up approximately 10% from the second quarter of last year and represents our fifth dividend increase in 2 years, reflecting our continued confidence in the strength and durability of our cash flow. Dividend coverage remained strong at 3.1x in the second quarter, underscoring the sustainability of our return of capital framework. The second quarter dividend is payable August 11 to shareholders of record at the close of business on August 4. On repurchases, we ended June with $113.2 million of remaining capacity under our authorization. That gives us meaningful flexibility to be disciplined and opportunistic using buybacks alongside the dividend and growth investments to enhance long-term shareholder returns when market conditions are attractive. Since the inception of the share repurchase program in April 2023, we have repurchased approximately 4.6 million shares at an average price of $20.91 per share for a total of $96.9 million. Turning to capital guidance. On a full year basis, our 2026 total CapEx remains unchanged at approximately $400 million to $445 million. Within that total, we continue to expect growth CapEx of $250 million to $275 million to support investment in new build horsepower and repackage CapEx to meet continued customer demands. Growth is expected to be funded by operations with additional support from nonstrategic asset sale proceeds as we continue to high-grade our fleet, including year-to-date proceeds totaling approximately $21 million. Maintenance CapEx is still expected to be approximately $125 million to $135 million, up versus 2025 due to increased planned overhaul activity. Other CapEx remains in the range of approximately $25 million to $35 million, primarily for new vehicles. In summary, our business remains well positioned, and we remain focused on disciplined execution, our capital plan and long-term value creation. With that, Erica, we are ready to open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Jim Rollyson with Raymond James. James Rollyson: Putting your money where your mouth is with regards to your long-term bullish gas view and the new kind of multiyear CapEx plan, I guess my question is, like, I'm not surprised given the market outlook and our views and all that, which coincide, but I'm a little surprised to see you actually announce that today. So I'd love to just hear the genesis of kind of why you decided to announce that and maybe a little color around what my math is that kind of implies about a 40% to 45% hike in average annual spend over what you're spending this year. So maybe a little color around the drivers behind the CapEx release. D. Childers: Sure. So a couple of thoughts. Number one, you may remember this quarter last year, we announced preliminary CapEx for 2026 also. So this is the time when as we see the CapEx demand for the prior year solidify, we shared that with our investors. This year, with the amazing lead times that we're seeing for compression equipment, for power equipment as well, it's the case that we are definitely booking ahead. And since we see that tight -- super tight market, long lead times and our expectations for what's required going forward, that drove the timing really of sharing that information with our investors. But stepping back and thinking about the market overall, 2026, it felt a bit like the calm before the storm, even with tight industry conditions, the high utilization we're experiencing, strong revenue per horsepower pricing, clearly long lead times and backlogs. The amount of demand for nat gas and for compression that we see for '27 through '30 and beyond is about to incline sharply higher, as we see a significant amount of LNG come online, as I shared in my prepared remarks, as well as expanded pipeline capacity out of the Permian, all of this being fueled by LNG and by data center power demand. So, we can see that the industry is really preparing for this onslaught of growth that we're going to experience. And we see it pretty clearly. I think most forecasts are in alignment on what this is going to look like. And so what we're pointing out is just like the amount of pipeline capacity expansion that you're seeing, the amount of compression required by the market to meet this demand is going to be robust, and we expect to be there for our customers with the equipment to provide that growth. So that was the market reason for sharing it. James Rollyson: Appreciate that. It's certainly a pretty bullish outlook for sure. Maybe switching gears just to AMS. You mentioned, kind of, the softer-than-expected ramp was deferral of major maintenance given where oil prices are. I imagine that can only persist for so long. So as you think about this over time going into next year and beyond, I presume this eventually comes back around and maybe sets up a better '27 outlook as those guys actually have to hit the maintenance. D. Childers: Yes. I mean, we've said this in the past, AMS is notoriously difficult to forecast. And this unexpectedly high oil price in the current quarter, in 2026, primarily driven by the Iran conflict, we believe is driving significant deferrals by our customer base. But we said in the past, too, that this is a business it's pay us now or pay us later. The equipment is going to require the maintenance. It's going to require the parts. The market is just not taking that right now. It's a not-yet scenario, but we believe we will see this work come back. We absolutely will see the work come back. And I'll also point out that profitability remains solid in that segment. So it's a signal that the high-quality work is there, just a bunch of it is being deferred. Operator: The next question comes from the line of Nate Pendleton with Texas Capital. Nathaniel Pendleton: Perhaps starting with Mohit. Now that you're getting settled in the CFO role, can you talk through your key strategic priorities? And maybe if there are any areas that you're looking to address really in the near term? Mohit Singh: Thanks, Nate. Thanks for the warm welcome. As Brad was alluding to, one of the big reasons why I joined the company is it's a very, very unique opportunity where, when I look at the macro setup, there's a huge amount of demand pull that's coming from LNG and from the AI data center-driven power demand and understanding the natural gas macro dynamics and trying to couple it with the fleet strategy, which Archrock has been very, very phenomenal historically in terms of high-grading and standardizing the fleet itself, and translating that into great financial outcomes is at a very high level, how I would describe what the priorities are. And stating that very, very simply, it's more about my focus has been coming in and trying to make the transition be as seamless as possible because the team has done a phenomenal job. I alluded to earlier, the finance leadership team and the overall finance team is very, very capable and performing at a very, very high level. So my intention is to continue to deliver on the priorities that the Board and Brad have set together for the company. And it's essentially figuring out what role do we play within this setup as we look out into the end of the decade. The demand is coming. The natural gas is a must-run service. We need to be there to support our customers. We have very deep, long relationships with strategic customers, which, again, as we announced that 665,000 horsepower contract, I mean, it's a testament to that deep relationships that we have. And then we have long-standing partnerships. So it's more about execution, Nate, is what we are focused on. And I'm very encouraged and excited about the overall setup over the next coming years. Nathaniel Pendleton: That's great. Really appreciate all that detail. And then I wanted to touch on the updated guidance for a moment. Looking at the updated guidance in the second half of 2026, it would imply an average quarterly EBITDA above what you just announced this past quarter despite the lube oil and make-ready cost headwinds that you talked about. Maybe can you talk about some of the sequential improvements that you expect to see versus that 2Q run rate that more than offset those costs? D. Childers: Yes. We do see the opportunity for horsepower growth in the back half of the year because we're taking delivery of more horsepower in the second half of 2026 than we took in the first half. We also see some pricing opportunities that are going to come in later in the year that are going to impact overall margins or overall gross margin dollars in contract operations. And then I'll point out that the amount of recovery in AMS, it remains an opportunity that we're working for. And finally, because we hit these headwinds with lube oil pricing and AMS, you can be assured that the team is working really hard to mitigate with other cost initiatives that will take that impact in the back half of the year as well. So when we hit this lube oil pricing and AMS headwind, it wasn't without a response internally, and that's going to impact our performance in the back half of the year as well. Operator: Your next question comes from the line of Elvira Scotto with RBC Capital Markets. Elvira Scotto: Welcome, Mohit. The new 665,000 horsepower 8-year contract with the existing strategic customer is significant. Can you provide any details around the genesis of that deal? And also, are you looking for other contracts of this tenor? Or are customers asking to increase the tenor of their contracts? D. Childers: Thanks, Elvira. Well, look, we're not going to go into the details of the contract, as you can imagine, just for commercial reasons. But what this does signify is that with this customer -- and we have other customers with longer-term contracts as well -- it does signify a long-standing, highly valued partnership that we have with this customer. We really like the recognition that it provides of an integral and integrated operating partnership that we have with our customer base. And I think these longer term tenors may be more in the future as we've expressed and shared that our units are simply staying on location longer. Large horsepower stay on location on average of 8 years and all horsepower with an average of 6 years. And I think our customer base wants to ensure that they can both obtain and retain the horsepower that we bring to help grow with our operations. So we really like the signal that this has and really very proud of the organization of our team for the recognition to suggest as to the strength of our operations and our customers' willingness to partner with us so closely. Elvira Scotto: And then just my next question, are you seeing any demand shifts across basins, especially as we start to see more LNG export capacity come online, there may be a greater call on the Haynesville. And then also, have you seen an uptick in the Permian as the new gas takeaway capacity has come online? D. Childers: We're starting to see an uptick in activity in the Permian compared to the prior quarters. That's for sure. And a lot of it does have to do with the fact that export capacity is starting to come online and some of the negative economics that have been predominant or in the Permian should be alleviated with this pipeline capacity expansion. And we are seeing some nice growth opportunities in other basins right now as well. So when we look at the diversified footprint that Archrock has, less than half of our recent bookings have come from the Permian and about half of our bookings are in other places. And we like that a lot because it's nice to see that diversified portfolio pay off in growth opportunities in other basins. Operator: Your next question comes from the line of Doug Irwin with Citi. [Operator Instructions] Our next question comes from the line of Elias Jossen with JPMorgan. Elias Jossen: So if we think about the CapEx guidance through 2030, I just wanted to understand the sort of role of higher input costs versus sort of more fleet additions than we would have previously anticipated. How much are higher overall costs factoring into that equation versus the historical precedent we've seen for horsepower? D. Childers: Thanks, Eli. We've included in our forecast the impact of an inflation for new unit acquisitions. But we've included it at the rate that we've been experiencing, which is a very normalized level of inflation. We have not seen sharp price increases overall from our -- from the OEMs or from the packagers. And so it's included at a more normalized rate of inflationary increase. Elias Jossen: Got it. So if we think about more broadly across the industry, we're seeing structurally longer contracts in what appears to be a really tight supply-demand backdrop. If the contemplated CapEx guide is just passing through kind of historical inflation trends, how should we also think about the kind of pricing going forward? It would seem that this is a pretty favorable environment for pricing, but we also understand the kind of fairness with which you approach your customer contracts. D. Childers: It's a very supportive environment for pricing and profitability in contract operations in our business. And you're seeing that come through with the 71% gross margin we delivered in the quarter and our forecast that even with the headwinds we articulated, we're going to be at 70% in this current environment. As we see this growth ramp, we expect to continue to generate great profitability on a margin basis and robust returns for investors. So we think that this environment is going to be very constructive and very supportive for price increases in the future. I will point out, it's a competitive market, however, including with our customers. And so we do approach this incredible business to generate great returns for our investors, but we are responsible in how we have those negotiations with our -- and drive that pricing with our customers. Operator: Your next question comes from the line of Nick Amicucci with Evercore ISI. Nicholas Amicucci: Just a quick one for me. Just as we, kind of, think about the bifurcation or, I guess, just the bookings and the current order book, just if you could, kind of, break out LNG exports and so kind of like the LNG feed gas versus gas on just the behind-the-meter side? D. Childers: Nick, thanks for the question. I really wish I had a great answer for you that could quantify the spread and the difference between what gas that we're compressing is going to which end market. But that's really not data that's available to us. So I would just pause and point out that regardless of where the gas is going to go, the robust demand that we expect ahead is going to be really solid for the industry, candidly, and for our business overall. Nicholas Amicucci: Got it. That makes sense. And then I'm sorry if I missed this in the prepared remarks, but how should we think about just kind of the free cash flow with the growth CapEx kind of scaling up in '27 through 2030, just as we think about kind of the free cash flow and obviously, it seems like you're able to underwrite it with, kind of, these longer term contracts or at least one longer term contract? But just if we could kind of level set on that. D. Childers: Even after our capital allocation framework, which is sharing and returning capital to shareholders in the -- at the level of 25% to 35% of our operating cash flow after investing in the level of growth that we articulated, we still expect to have net free cash flow after those after that return of capital and those investments. And we believe that with our strong balance sheet positions us exceptionally well to pursue other strategic and growth opportunities in the market. Operator: Our next question comes from the line of Gabe Moreen with Mizuho. [Operator Instructions]. Your next question comes from the line of Josh Jayne with Daniel Energy Partners. Joshua Jayne: I just wanted to follow up on the lead time question for Caterpillar and where they stand. I believe you said less than 200 weeks. Actually, it sounds like some slight level of release. Maybe you could just offer your thoughts on if you think that they've peaked and just your discussions with them into line of sight and how you see that going longer term if we've seen sort of the peak of lead times. D. Childers: Thank you, Josh. We say often, we don't speak for Caterpillar. I still don't speak for Caterpillar. And I cannot predict what's going to happen with their lead times. But for the equipment we require, their lead times are now out where we're ordering for 2029. So it's right at 195 weeks, which I think is the most recent announcement or the quotes that we're getting back for equipment. We do not see these long lead times abating or improving. We see no indication that there's a reason for them to improve. The market remains poised for growth. And I think that Caterpillar being one of the key suppliers to the power market as well as well as for oil and gas and the compression market as they had their call yesterday. They see a robust backlog going into the future. So we expect the market to remain very tight. On the good news front, it portends that those of us that are in a position to deploy capital and have the equipment for our customers are going to be able to drive and participate in that growth that we see ahead. And our investments are intended for us to do exactly that to support the growth of our customer base. Joshua Jayne: And then as a follow-up, just another piece of the puzzle is just space and availability at equipment packagers. Could you just talk about that a bit today? Are you having any issues there? Or is there adequate space to sort of piece all of this together? And is that one of the reasons that you were also sort of out in front of going ahead and ordering or committing to this level of CapEx? Maybe just some details around what you're seeing there would be helpful. And then I'll turn it back. D. Childers: Floor space to the packagers definitely has tightened up over the -- over the last year, 1.5 years. We have not, however, had a challenge in getting the equipment that we require through the shops. We don't expect to have it. But it is absolutely, along with the Caterpillar lead times, one of the drivers for our overall CapEx approach and what we see in the market today and our willingness to share that outlook and forecast with the market. So it's robust. It's a tight time. We expect we will have the equipment that we require to meet need. And there is, however, incrementally some available space with the packagers, but it's definitely tight. Operator: Your next question comes from the line of Steve Ferazani with Sidoti. Steve Ferazani: Welcome, Mohit. Brad, you did raise the dividend again a couple of weeks ago, showing your confidence in market demand. It's been multiple raises over 3 years. Over this run-up, you've added -- you've had fleet expansion, you've lowered leverage and you've raised the dividend. You sort of provided for everyone here. Given that massive growth CapEx you're outlaying for the next 4 years, does that have to shift your capital allocation plans? D. Childers: Steve, thanks for the question. We don't believe so. As I put in my prepared remarks, we think that this is an all-of-the-above approach. We expect to continue returning capital to investors. We expect to make this investment through this cycle. We expect to grow the business, and we expect to be in a position to generate free cash flow after all of that as well. So we think that the market is just positioned and poised. I shared a minute ago in one of my comments that 2026 has felt a little bit like a pause before the storm. What we've seen, especially in the Permian is, I think a lot of companies ended last year, into the beginning of this year were ambivalent with a lower oil price environment. Clearly, the war has changed that. But the longer term outlook for that oil price is something that keeps the market just a bit ambivalent. We're seeing an increase -- a steady increase in activity, which we think is promising. We're seeing a nice increase in the gas-to-oil ratio, which we think is very promising. And we expect that the market, the LNG demand and the power demand is going to require all of this equipment to go to work very profitably for very attractive returns to support the growth that we see in the market going ahead. But overall, we're still going to be generating free cash flow. It puts us in a great position to consider other strategic options. Mohit Singh: You covered it well. One thing I would add, I mean, when we debated internally whether to go out with the long-term capital guide, we don't take a decision like that lightly. And the fact that we are giving the long-term outlook should underpin or should signal our confidence in the outlook. And for all the reasons that Brad mentioned, we feel very good about the trajectory and the direction of travel here in terms of utilizations, in terms of profitability and margins, in terms of free cash flow generation. So from our perspective, we are trying to balance shareholder returns, which is a core tenet, but at the same time, reinvesting it back into the business because those investments at these margins are most value accretive for the investors. Steve Ferazani: Very helpful. My follow-up, just in terms of -- I know the high grading of the fleet is an ongoing process. We can see you've gotten rid of a significant portion of the lower horsepower. We can see how it's contributing to margins even beyond just the market demand. How are you approaching high grading as we enter an even faster growth period? Is it less important given that demand is so overwhelming? D. Childers: Interesting question. The truth is it's both less important, but more importantly, maybe it's less available. We've made such strides in high-grading the fleet that we have a fleet that is very competitive, meeting our customers' needs and the amount of available nonstrategic horsepower that could be a part of that has reduced over time. So while we'll always have disciplined asset management practices that will take into account the standardization of the fleet -- the continuing to improve the standardization of the fleet, it's less available to us in the future than it was in the past. Operator: We have reached the end of the Q&A session. Now I would like to turn the call over to Mr. Childers for final remarks. D. Childers: Thank you, Erica, and thank you, everyone, for joining us today. We're pleased with our second quarter performance and remain confident in the strength of our business, healthy customer demand and the long-term opportunity ahead. We appreciate your continued interest in Archrock and look forward to updating you next quarter. Thank you, everyone. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Archrock, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Archrock wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Archrock (AROC) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Archrock, Inc. AROC reported second-quarter 2026 adjusted earnings of 38 cents per share, down 2.6% from 39 cents per share a year earlier. The bottom line missed the Zacks Consensus Estimate of 46 cents by 17.4%. Revenues of $371.2 million declined 3.1% from $383.2 million a year ago. The top line missed the consensus mark of $390.4 million by 4.9%. The weak quarterly results were primarily due to softness in aftermarket services (AMS), which offset solid contract operations performance. Period-end horsepower utilization remained high at 94.4%, while contract operations adjusted gross margin percentage improved from the year-ago period. Archrock, Inc. price-consensus-eps-surprise-chart | Archrock, Inc. Quote Contract operations revenues rose 3.4% to $329.3 million from $318.3 million. The increase reflected higher rates, an additional month of contribution from the NGCS acquisition and revenues from horsepower additions, partly offset by active horsepower sales used to high-grade the fleet. Contract operations adjusted gross margin increased 5.6% to $234.6 million, while the adjusted gross margin percentage rose to 71% from 70%. Total operating horsepower ended the quarter at 4.5 million compared with 4.7 million a year earlier, with the decline largely driven by the sale of approximately 165,000 non-strategic operating horsepower. Aftermarket services revenues fell 35.2% to $42 million from $64.8 million in the second quarter of 2025. The decline was due to lower parts sales, the absence of non-recurring overhauled-engine sales that benefited the prior-year quarter and reduced demand for major maintenance activity. The adjusted gross margin for the segment declined 33.6% to $9.9 million from $14.9 million. However, the adjusted gross margin percentage improved to 24% from 23%, reflecting disciplined execution and a focus on higher-quality, higher-margin work. Total adjusted gross margin increased to $244.5 million from $237.1 million a year ago. The adjusted gross margin percentage expanded to 66% from 62%, helped by the stronger profitability of contract operations and the improved margin rate in aftermarket services. Selling, general and administrative expenses rose 9.4% to $39.6 million from $36.2 million. Higher long-term incentive compensation, primarily driven by the stock price increase, was a key factor. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) remained flat at $212.6 million compared with $212.7 million in the prior-year quarter. Net cash provided by operating activities was $160.8 million in the quarter. The adjusted free cash flow totaled $67 million, while adjusted free cash flow after dividends was $28.4 million. The total capital expenditure was$98.0 million. The board raised the quarterly dividend around 10% to 23 cents per share from 21 cents a year earlier. Dividend coverage was 3.1X, supporting the company's continued emphasis on shareholder returns alongside growth investment. As of June 30, 2026, AROC’s long-term debt was $2.35 billion, while the leverage ratio improved to 2.6X from 3.3X a year ago. Available liquidity totaled $631 million at the quarter-end. During the quarter, Archrock redeemed $800 million of 6.25% senior notes due 2028 using borrowings under its revolving credit facility. The company ended June with $113.2 million in remaining share repurchase authorization and did not repurchase shares during the quarter. Archrock tightened its 2026 adjusted EBITDA guidance to $865-$885 million from $865-$915 million. The revision reflects higher contract compression make-ready costs, anticipated second-half lube oil cost pressure, softer aftermarket services demand and higher selling, general and administrative costs tied to long-term incentive compensation. The company maintained 2026 growth capital spending guidance of $250-$275 million and expects the total capital expenditure between $400 million and $445 million. Archrock introduced cumulative growth capital guidance of $1.4-$1.6 billion for 2027-2030, aimed at adding 1 million horsepower to meet expected demand. The company signed an eight-year agreement with a strategic customer covering approximately 665,000 horsepower, with a two-year extension option. Archrock currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks from the energy sector are PBF Energy Inc. PBF, Valero Energy Corporation VLO and Cactus, Inc. WHD. PBF sports a Zacks Rank #1 (Strong Buy), and VLO and WHD carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks Rank #1 stocks here. PBF reported second-quarter 2026 adjusted earnings of $6.22 per share, surpassing the Zacks Consensus Estimate of $4.05. As of June 30, 2026, PBF had total debt of $1.75 billion, and cash and cash equivalents of $894.1 million. Valero reported second-quarter 2026 adjusted earnings of $12.54 per share, which beat the Zacks Consensus Estimate of $9.87. As of June 30, 2026, VLO had total debt of $9.10 billion, and cash and cash equivalents of $7.87 billion. Cactus reported second-quarter 2026 adjusted earnings of 93 cents per share, surpassing the Zacks Consensus Estimate of 71 cents. As of June 30, 2026, WHD had cash and cash equivalents of $365 million. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Archrock, Inc. (AROC) : Free Stock Analysis Report Valero Energy Corporation (VLO) : Free Stock Analysis Report PBF Energy Inc. (PBF) : Free Stock Analysis Report Cactus, Inc. (WHD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Archrock, Inc.? Here are five stocks we like better. Strong core performance: Archrock reported $67 million in net income, $213 million in adjusted EBITDA and $0.38 in adjusted EPS. Contract Operations revenue rose 3% year over year, with 94.4% utilization and a 71% adjusted gross margin. Guidance narrowed: The company reduced its 2026 adjusted EBITDA outlook to $865 million–$885 million from $865 million–$915 million, citing higher near-term costs, customer maintenance deferrals and increased compensation expense. Management said demand fundamentals remain healthy and expects deferred maintenance activity to return. Growth and shareholder returns remain priorities: Archrock plans $1.4 billion–$1.6 billion of growth capital spending from 2027 through 2030 to add about 1 million horsepower, while targeting dividend growth and share repurchases. It raised its quarterly dividend to $0.23 per share and reduced leverage to 2.6 times. Oil’s Outlook Looks Ugly—That’s Why These 3 Energy Plays Matter Archrock (NYSE:AROC) reported second-quarter 2026 results marked by high contract-operations utilization, strong margins and continued free-cash-flow generation, while narrowing its full-year adjusted EBITDA outlook to account for near-term cost pressures and customer maintenance deferrals. The company posted net income and adjusted net income of $67 million for the quarter, with adjusted earnings per share of $0.38. Adjusted EBITDA was $213 million, essentially flat from a year earlier, Chief Financial Officer Mohit Singh said. Higher adjusted gross-margin dollars in contract operations were offset by lower Aftermarket Services gross-margin dollars and higher selling, general and administrative expense. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control 3 Oil & Gas Gear Makers With Triple-Digit EPS Growth Forecasts President and CEO Brad Childers described the quarter as “outstanding,” citing healthy customer demand, high utilization, low unit-stop activity and a recently signed long-term agreement with an existing strategic customer covering approximately 665,000 horsepower for midstream applications. Contract Operations revenue rose 3% year over year to $329 million. Singh said higher rates, an additional month of contribution from the NGCS acquisition and revenue from added horsepower supported the increase. Those factors were partly offset by sales of active horsepower as Archrock continued to high-grade its fleet. → 3 Drone Stocks That Should Soar After the Summer Slump Contract Operations adjusted gross margin reached 71%, compared with 70% in the prior-year quarter. Fleet utilization stood at 94.4%, marking the company’s seventh consecutive quarter with adjusted gross margin above 70%. Archrock ended the quarter with 4.5 million operating horsepower, compared with 4.7 million a year earlier. Childers said the primary reason for the year-over-year decline was the sale of about 165,000 non-strategic operating horsepower. Excluding active asset sales, operating horsepower was down roughly 7,500 sequentially. → The Bitcoin Comeback May Already Be Underway—2 ETFs for Exposure The 665,000-horsepower customer agreement includes an eight-year base term and a two-year extension option. Childers said longer contract terms could become more common as large-horsepower units remain at customer locations for longer periods. He said large horsepower has an average duration on location of about eight years, while all horsepower averages about six years. Archrock said Caterpillar engine lead times remain extended at just under 200 weeks, with Childers putting current equipment lead times at about 195 weeks. He said the company sees no indication that the lengthy lead times will ease, adding that packager floor space has also tightened, although Archrock has not faced challenges getting required equipment through shops. Aftermarket Services revenue fell to $42 million from $65 million in the second quarter of 2025. The decline reflected lower parts sales and reduced demand for major maintenance work, as some customers deferred maintenance to keep equipment running amid higher crude oil prices, Singh said. The prior-year comparison also included elevated parts sales and non-recurring sales of overhauled engines. Despite lower revenue, Aftermarket Services adjusted gross margin improved to 24% from 23% a year earlier, which management attributed to disciplined execution and a focus on higher-quality, higher-margin work. Childers said maintenance demand has been deferred rather than eliminated. “The equipment is going to require the maintenance,” he said during the question-and-answer session, adding that Archrock expects the work to return, though the segment remains difficult to forecast. Archrock narrowed its 2026 adjusted EBITDA guidance range to $865 million to $885 million, from its previous outlook of $865 million to $915 million. The revised outlook reflects near-term lube-oil and make-ready cost pressure, customer maintenance deferrals in Aftermarket Services, and higher long-term incentive compensation associated with the company’s rising stock price. Childers said the adjustment does not reflect a change in demand fundamentals. For the second half, Archrock expects additional horsepower deliveries, pricing opportunities, potential Aftermarket Services recovery and internal cost-mitigation initiatives to support results. Contract Operations margins are expected to remain around 70% in the back half of the year despite anticipated lube-oil and make-ready costs. Management also said it is seeing increased activity in the Permian Basin as additional export capacity begins to come online. However, Childers noted that Archrock’s recent bookings remain diversified, with less than half coming from the Permian and about half from other producing regions. Archrock reaffirmed 2026 total capital expenditures of approximately $400 million to $445 million, including $250 million to $275 million of growth capital, $125 million to $135 million of maintenance capital, and $25 million to $35 million of other capital expenditures. Second-quarter capital expenditures totaled $98 million, including $51 million of growth capital and $39 million of maintenance capital. The company introduced a longer-term framework calling for approximately $1.4 billion to $1.6 billion of cumulative growth capital spending from 2027 through 2030. Archrock expects to add about 1 million horsepower over that period, with investment focused predominantly on large-horsepower and electric-motor-drive compression equipment. Childers said the forecast incorporates normalized inflation for new equipment but does not assume sharp price increases from original equipment manufacturers or packagers. The company expects to prioritize organic growth investments while returning 25% to 35% of operating cash flow to shareholders through dividend growth and opportunistic share repurchases. Archrock generated $67 million of adjusted free cash flow during the quarter and $28 million of adjusted free cash flow after dividends. The board increased the quarterly dividend to $0.23 per share from $0.22 per share, representing the company’s fifth dividend increase in two years. Dividend coverage was 3.1 times in the quarter. Long-term debt totaled $2.3 billion at June 30, while leverage stood at 2.6 times, down from 3.3 times a year earlier. The company said it had $631 million of available liquidity after redeeming $800 million of 6.25% senior notes due in 2028 using its revolving credit facility. Archrock said its first debt maturity is now in 2032. As of quarter-end, the company had $113.2 million remaining under its share-repurchase authorization. Since the program began in April 2023, Archrock has repurchased about 4.6 million shares at an average price of $20.91 per share, totaling $96.9 million. Archrock, Inc is a Houston‐based provider of natural gas compression services and equipment to the oil and gas industry in North America. Founded in 2004, the company supplies both short‐term rentals and long‐term contracts for compression solutions, serving upstream and midstream producers. Archrock's offerings include engineered compression systems, aftermarket parts, maintenance and field services designed to optimize wellhead and pipeline operations. The company's core business activities focus on the design, manufacture, rental and sale of gas compression equipment. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Archrock Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management characterized the current market as the 'calm before the storm,' anticipating a sharp incline in natural gas and compression demand through 2030. Performance was driven by high utilization of 94.4% and a seventh consecutive quarter of gross margins exceeding 70%, reflecting strong contract operations fundamentals. The company secured a significant 665,000 horsepower long-term agreement with a strategic customer, featuring an 8-year base term that underscores the value of fleet scale in multi-year development cycles. Market tightness is exacerbated by extended Caterpillar engine lead times of nearly 200 weeks, reinforcing the competitive advantage of Archrock's existing fleet and financial capacity to order equipment years in advance. The Permian Basin remains a primary growth driver as gas-to-oil ratios are expected to increase 21% by 2030, necessitating higher compression intensity per barrel of oil produced. Management attributed the tightening of 2026 EBITDA guidance to several factors, including lube oil price spikes from the Iran conflict, higher make-ready costs, timing-related customer deferrals in the Aftermarket Services (AMS) segment, and higher long-term incentive compensation. Introduced a 2027-2030 capital framework projecting $1.4 billion to $1.6 billion in cumulative growth investment to add approximately 1 million horsepower of new capacity. The investment strategy prioritizes large horsepower and electric motor drive compression to meet rising demand from LNG exports and AI-related power generation. Management committed to returning 25% to 35% of operating cash flow to shareholders through a combination of dividend growth and opportunistic share repurchases. Guidance assumes that while near-term costs like lube oil and make-ready expenses will persist, margins will remain around 70% due to pricing power and internal cost mitigation initiatives. The company expects to maintain a leverage ratio below its 3.0x to 3.5x target range, preserving flexibility for potential inorganic growth opportunities. Aftermarket Services (AMS) experienced softer demand as customers deferred maintenance to keep equipment running during high crude price environments, though management views this as a 'pay us later' scenario. Lube oil cost pressures are explicitly linked to the Iran conflict, representing a specific geopolitical headwind to operating margins in the second half of 2026. The company successfully repurchased $800 million of 6.25% senior notes due 2028, clearing the debt maturity runway until 2032. Asset high-grading continues with $21 million in year-to-date proceeds from non-strategic sales, though management noted the pool of non-strategic assets is shrinking as the fleet becomes more standardized. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management cited unprecedented lead times for equipment, with orders now being placed for 2029, requiring early visibility for investors. The move signals confidence in a massive 'onslaught of growth' expected from LNG and data center power demand. Management expects pricing opportunities and new horsepower deliveries in the second half of the year to offset lube oil and make-ready cost headwinds. Internal cost mitigation initiatives have been launched specifically to counter the recent inflationary pressures in the supply chain. The forecast includes normalized inflationary increases for new unit acquisitions based on current OEM trends. Management noted they have not yet seen 'sharp' price increases from packagers, keeping the long-term budget realistic. Activity in the Permian is ticking up as new takeaway capacity alleviates negative basin economics. Archrock's bookings remain diversified, with approximately half of recent wins coming from basins outside the Permian.

This article first appeared on GuruFocus. Adjusted EPS: $0.38 for the second quarter of 2026. Adjusted EBITDA: $213 million in the second quarter, essentially flat year over year. Net Income: $67 million for the second quarter. Contract Operations Revenue: $329 million, up 3% year over year. Aftermarket Services Revenue: $42 million, down from $65 million in the year-ago quarter. Contract Operations Adjusted Gross Margin: 71%, up from 70% in the year-ago quarter. Aftermarket Services Adjusted Gross Margin: 24%, up from 23% in the year-ago period. Utilization: 94.4% at quarter end. Operating Horsepower: 4.5 million at quarter end, compared to 4.7 million at the end of the second quarter of 2025. Adjusted Free Cash Flow: $67 million in the quarter. Dividend: Quarterly dividend increased to $0.23 per share, up from $0.22 per share. Dividend Coverage: 3.1 times in the second quarter. Leverage Ratio: 2.6 times at quarter end, down from 3.3 times a year ago. Total CapEx: $98 million in the second quarter, including $51 million of Growth CapEx, $39 million of Maintenance CapEx, and $8 million of other CapEx. 2026 Adjusted EBITDA Guidance: Tightened to $865 million to $885 million. 2026 Growth CapEx Guidance: Reaffirmed at $250 million to $275 million. Warning! GuruFocus has detected 4 Warning Signs with AROC. Is AROC fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Archrock Inc (NYSE:AROC) delivered strong second quarter results with EPS of $0.38 and adjusted EBITDA of $213 million, showcasing excellent contract operations profitability. Contract operations utilization remained high at 94.4%, with adjusted gross margin at 71%, marking the seventh consecutive quarter above 70%. The company signed a significant long-term contract with an existing strategic customer covering approximately 665,000 horsepower for midstream applications, underscoring strong customer demand. Archrock Inc (NYSE:AROC) ended the quarter with a low leverage ratio of 2.6 times and strong dividend coverage of 3.1 times, reflecting financial strength and flexibility. The Board approved the fifth dividend increase in two years, raising the quarterly dividend to $0.23 per share, demonstrating confidence in cash flow durability. Archrock Inc (NYSE:AROC) introduced a long-term capital allocation framework, planning to invest $1.4 billion to $1.6 billion in high-return organic growth from 2027 through 2030 to meet robust natural gas demand. The company received positive outlook revisions from all three rating agencies, reflecting consistent cash generation and a strong business outlook. Archrock Inc (NYSE:AROC) tightened its full year 2026 adjusted EBITDA guidance range to $865 million to $885 million, down from the prior upper end of $915 million, due to external and timing-related factors. The company is experiencing higher make-ready costs as it puts idle units back to work to meet customer demand, which could pressure margins. Near-term lube oil cost pressures, driven by the Iran conflict and higher oil prices, are expected to impact profitability in the second half of 2026. Aftermarket Services (AMS) activity has been softer than expected as customers defer major maintenance to keep equipment operating in the high crude price environment, leading to lower revenue. AMS revenue declined significantly year-over-year to $42 million from $65 million, impacted by lower part sales and reduced demand for major maintenance activity. The company faces extended Cat engine lead times of just under 200 weeks, which could constrain the ability to quickly add new horsepower to meet demand. Higher long-term incentive compensation, driven by the increasing stock price, is contributing to higher SG&A expenses and impacting adjusted EBITDA. Q: Can you provide details on the genesis of the new 665,000 horsepower, eight-year contract with an existing strategic customer, and are you seeing a trend toward longer contract tenors? A: Brad Childers (CEO) stated that while commercial details are confidential, the agreement signifies a longstanding, highly valued partnership and an integrated operating relationship. He noted that longer tenors may become more common as large horsepower units now stay on location for an average of eight years, and customers want to secure both the equipment and the partnership to support their growth. Q: What drove the decision to announce a long-term capital allocation framework and a significant increase in growth CapEx for 2027 through 2030? A: Brad Childers (CEO) explained that the timing was driven by the extremely tight market, with Cat engine lead times at just under 200 weeks, forcing the company to book equipment for 2029. He described 2026 as "the calm before the storm," with LNG, pipeline capacity, and data center power demand set to drive a sharp incline in compression demand. The company is proactively sharing its outlook to signal its confidence and readiness to meet customer needs. Q: How should we think about the sequential improvements in the second half of 2026 that will offset the lube oil and make-ready cost headwinds, given the updated guidance implies higher average quarterly EBITDA? A: Brad Childers (CEO) cited three key drivers: higher horsepower deliveries in the back half of the year, pricing opportunities that will impact gross margin dollars, and internal cost mitigation initiatives launched in response to the headwinds. He also noted that a recovery in the Aftermarket Services (AMS) segment remains an opportunity. Q: How much of the $1.4 billion to $1.6 billion growth CapEx plan for 2027-2030 is driven by higher input costs versus more fleet additions? A: Brad Childers (CEO) clarified that the forecast includes only a normalized rate of inflation for new unit acquisitions, not sharp price increases from OEMs or packagers. The plan is primarily driven by the need to add approximately one million horsepower to meet forecasted natural gas demand growth, with a focus on large horsepower and electric motor drive compression. Q: Can you provide an update on Caterpillar lead times and whether they have peaked, and also discuss packager floor space availability? A: Brad Childers (CEO) stated that lead times are now at approximately 195 weeks, with orders being placed for 2029, and he sees no indication of improvement given the robust backlog across power and oil and gas markets. He added that packager floor space has tightened significantly over the past year and a half, which, along with engine lead times, was a key driver for the company's proactive capital allocation announcement. Q: Given the massive growth CapEx plan, does this shift your capital allocation priorities away from shareholder returns? A: Brad Childers (CEO) and Mohit Singh (CFO) both affirmed that the plan is an "all of the above" approach. They expect to continue returning 25% to 35% of operating cash flow to shareholders while funding growth, and still generate free cash flow after both. Mohit Singh added that the decision to issue long-term guidance signals confidence in the trajectory of utilizations, margins, and free cash flow, and that reinvesting at these margins is the most value-accretive option for investors. Q: Are you seeing any demand shifts across basins, particularly with new LNG export capacity and Permian takeaway coming online? A: Brad Childers (CEO) confirmed an uptick in Permian activity as export capacity comes online and negative basin economics are alleviated. He highlighted that less than half of recent bookings are from the Permian, with the remainder coming from other plays, which validates the company's diversified footprint and provides growth opportunities across multiple basins. Q: Can you discuss the softer-than-expected AMS performance and the outlook for a recovery? A: Brad Childers (CEO) attributed the softness to customers deferring major maintenance to keep equipment running in the high crude price environment driven by the Iran conflict. He described it as a "pay us now or pay us later" scenario, stating that the work will absolutely come back. He noted that profitability in the segment remains solid, indicating the high-quality work is still there, just deferred. Q: As the new CFO, what are your key strategic priorities for Archrock? A: Mohit Singh (CFO) emphasized the unique macro setup with demand pull from LNG and AI-driven power demand. His priorities are to ensure a seamless transition, continue executing on the board's and CEO's strategic plan, and leverage the company's deep customer relationships and high-graded fleet to support customers through the end of the decade. He stressed that execution is the primary focus. Q: How are you approaching fleet high-grading as you enter a faster growth period? A: Brad Childers (CEO) noted that while high-grading remains a disciplined practice, it is both less important and less available now. The fleet is already highly competitive and standardized, and the pool of non-strategic horsepower available for sale has diminished. The focus is shifting toward deploying new, large-horsepower equipment to meet growing demand. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Tetra Technologies (TTI) came out with quarterly earnings of $0.08 per share, in line with the Zacks Consensus Estimate . This compares to earnings of $0.09 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this oil and gas services company would post earnings of $0.03 per share when it actually produced earnings of $0.06, delivering a surprise of +100%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. Tetra Technologies, which belongs to the Zacks Oil and Gas - Field Services industry, posted revenues of $185.66 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.89%. This compares to year-ago revenues of $173.87 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Tetra Technologies shares have lost about 17.8% since the beginning of the year versus the S&P 500's gain of 9.4%. While Tetra Technologies has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Tetra Technologies was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.07 on $164.87 million in revenues for the coming quarter and $0.27 on $662.37 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Oil and Gas - Field Services is currently in the bottom 22% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Archrock Inc. (AROC), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 4. This natural gas compression services business is expected to post quarterly earnings of $0.46 per share in its upcoming report, which represents a year-over-year change of +18%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Archrock Inc.'s revenues are expected to be $390.4 million, up 1.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tetra Technologies, Inc. (TTI) : Free Stock Analysis Report Archrock, Inc. (AROC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Archrock Inc. (AROC) came out with quarterly earnings of $0.38 per share, missing the Zacks Consensus Estimate of $0.46 per share. This compares to earnings of $0.39 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -17.39%. A quarter ago, it was expected that this natural gas compression services business would post earnings of $0.47 per share when it actually produced earnings of $0.42, delivering a surprise of -10.64%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Archrock Inc., which belongs to the Zacks Oil and Gas - Field Services industry, posted revenues of $371.24 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 4.91%. This compares to year-ago revenues of $383.15 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Archrock Inc. shares have added about 35% since the beginning of the year versus the S&P 500's gain of 11%. While Archrock Inc. has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Archrock Inc. was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.50 on $396.8 million in revenues for the coming quarter and $1.90 on $1.55 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Oil and Gas - Field Services is currently in the bottom 24% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. KLX Energy Services (KLXE), another stock in the same industry, has yet to report results for the quarter ended June 2026. This service provider to oil and natural gas producers is expected to post quarterly loss of $0.82 per share in its upcoming report, which represents a year-over-year change of +6.8%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. KLX Energy Services' revenues are expected to be $167.5 million, up 5.4% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Archrock, Inc. (AROC) : Free Stock Analysis Report KLX Energy Services Holdings, Inc. (KLXE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

HOUSTON, Aug. 04, 2026 (GLOBE NEWSWIRE) -- Archrock, Inc. (NYSE: AROC) (“Archrock” or the “Company”) today reported results for the second quarter 2026. Second Quarter 2026 Highlights Revenue for the second quarter of 2026 was $371.2 million compared to $383.2 million in the second quarter of 2025. Net income for the second quarter of 2026 was $66.7 million and EPS was $0.38 compared to $63.4 million and $0.36, respectively, in the second quarter of 2025. Adjusted net income (a non-GAAP measure defined below) for the second quarter of 2026 was $66.5 million and adjusted EPS (a non-GAAP measure defined below) was $0.38, compared to $68.4 million and $0.39, respectively, in the second quarter of 2025. Adjusted EBITDA (a non-GAAP measure defined below) for the second quarter of 2026 was $212.6 million compared to $212.7 million in the second quarter of 2025. Signed a long-term agreement with an existing strategic customer covering approximately 665,000 horsepower, for an eight-year base term with a two-year extension option. Declared a quarterly dividend of $0.23 per common share for the second quarter of 2026, approximately 10% higher compared to the second quarter of 2025, resulting in dividend coverage of 3.1x. Leverage ratio of 2.6x as of June 30, 2026, down from 3.3x as of June 30, 2025. Introduced multi-year growth capital expenditure guidance of $1.4 billion to $1.6 billion cumulatively from 2027 through 2030. Tightening full-year 2026 Adjusted EBITDA guidance to a range of $865 million to $885 million compared to prior guidance of $865 million to $915 million. Management Commentary and Outlook “The compression market outlook remains highly constructive, driven by durable natural gas demand and a structurally tight compression market continuing to support our expectations for robust long-term growth,” said Brad Childers, Archrock’s President and Chief Executive Officer. “Our Contract Compression business continues to perform at a high level, supported by strong utilization, outstanding profitability and a healthy order book. This demand outlook supports reaffirming 2026 growth capital expenditures of $250 million to $275 million and a multi-year growth capital investment opportunity ranging from $1.4 billion to $1.6 billion cumulatively from 2027 through 2030. “We are tightening our full-year adjusted EBITDA guidance to primarily reflect near-term costs, including lube oil and timing impacts. This does not reflect a change in demand fundamentals. We remain confident in the strength of our core business and long-term outlook. “We are focused on maximizing customer service and operational reliability, supporting critical midstream infrastructure tied to long-term growth in LNG exports and power demand, and maintaining a disciplined, returns-based approach to capital allocation. Our continued dividend increases, including five increases over the past two years, reflect our strong confidence in the durability of our long-term cash flow projections. Archrock has sector-leading balance sheet strength and a growing free cash flow profile, which position us well to support our customers’ long-term natural gas infrastructure needs while continuing to create peer-leading and durable shareholder value,” concluded Childers. Second Quarter 2026 Financial Results Archrock’s second quarter 2026 net income of $66.7 million included a non-cash long-lived and other asset impairment of $4.9 million. Archrock’s second quarter 2025 net income of $63.4 million included a non-cash long-lived and other asset impairment of $10.8 million and transaction-related costs totaling $6.1 million. Adjusted EBITDA for the second quarter of 2026 and 2025 included $0.3 million and $4.3 million, respectively, in net gains primarily related to the sale of compression and other assets. Also included in Adjusted EBITDA for the second quarter of 2026 was a debt extinguishment gain of $0.7 million related to the redemption of all outstanding 6.250% senior notes due 2028 on April 1, 2026 (the “2028 Notes”). Contract Operations For the second quarter of 2026, contract operations segment revenue totaled $329.3 million, an increase of 3% compared to $318.3 million in the second quarter of 2025. Total operating horsepower at the end of the second quarter of 2026 was 4.5 million compared to 4.7 million at the end of the second quarter of 2025, reflecting period-end fleet utilization of 94.4% and the sale of approximately 165,000 non-strategic operating horsepower since the prior-year period. Adjusted gross margin for the second quarter of 2026 was $234.6 million, up 6% from $222.2 million in the second quarter of 2025. Adjusted gross margin percentage for the second quarter of 2026 was 71%, compared to 70% in the second quarter of 2025. Aftermarket Services For the second quarter of 2026, aftermarket services segment revenue totaled $42.0 million, compared to $64.8 million in the second quarter of 2025, primarily reflecting lower parts sales due to the absence of non-recurring sales of overhauled engines that benefited the prior-year quarter and reduced customer demand for major maintenance service activity, which did not experience the typical mid-year seasonal uptick. Adjusted gross margin for the second quarter of 2026 was $9.9 million, compared to $14.9 million in the second quarter of 2025. Adjusted gross margin percentage for the second quarter of 2026 was 24%, compared to 23% for the second quarter of 2025. Balance Sheet Long-term debt was $2.3 billion, and our available liquidity totaled $631 million at June 30, 2026. Our leverage ratio was 2.6x as of June 30, 2026, down from 3.3x as of June 30, 2025. On April 1, 2026, we repurchased our 2028 Notes. The 2028 Notes were redeemed at 100% of their $800.0 million aggregate principal amount plus accrued and unpaid interest of approximately $25.0 million with borrowings under our $1.5 billion asset-based revolving credit facility due May 2028. We recorded a debt extinguishment gain of $0.7 million related to unamortized debt premium during the second quarter of 2026, partially offset by unamortized issuance costs. Shareholder Returns Quarterly Dividend Our Board of Directors recently declared a quarterly dividend of $0.23 per share of common stock, or $0.92 per share on an annualized basis, approximately 10% higher compared to the second quarter of 2025. Dividend coverage in the second quarter of 2026 was 3.1x. The second quarter 2026 dividend will be paid on August 11, 2026 to stockholders of record at the close of business on August 4, 2026. Share Repurchase Program We did not repurchase any outstanding shares during the second quarter of 2026. The share repurchase program had an available capacity of $113.2 million as of June 30, 2026. Since the inception of the Share Repurchase Program in April 2023 and through June 30, 2026, we have repurchased 4,632,263 shares of common stock at an average price of $20.91 per share for an aggregate of $96.9 million. 2026 Annual Guidance Archrock is providing updated annual guidance as listed below. The updated 2026 Adjusted EBITDA guidance primarily reflects changes in certain assumptions, including an increase in contract compression make-ready costs to put idle equipment back to work, anticipated second-half lube oil cost pressure, reduced customer demand for aftermarket services, which did not experience the typical mid-year seasonal uptick, and higher SG&A expense due to higher long-term incentive compensation primarily driven by stock price increases. All figures are in thousands, except percentages and ratios: ________________________________(1)   2026 annual guidance for net income includes $10.1 million of long-lived and other asset impairment as of June 30, 2026, but does not include the impact of long-lived and other asset impairment because due to its nature, it cannot be accurately forecasted. Long-lived and other asset impairment does not impact Adjusted EBITDA or cash available for dividend, however it is a reconciling item between these measures and net income. Long-lived and other asset impairment for the years 2025 and 2024 was $18.3 million and $10.7 million, respectively.(2)   Reflects an estimate of expenses incurred related to the acquisitions of Total Operations and Production Services, LLC (“TOPS”) and Natural Gas Compression Systems, Inc. and NGCSE, Inc. (“NGCS”).(3)   Management believes Adjusted EBITDA provides useful information to investors because this non-GAAP measure, when viewed with our GAAP results and accompanying reconciliations, provides a more complete understanding of our performance than GAAP results alone. Management uses this non-GAAP measure as a supplemental measure to review current period operating performance, comparability measure and performance measure for period-to-period comparisons.(4)   Management uses cash available for dividend as a supplemental performance measure to compute the coverage ratio of estimated cash flows to planned dividends.(5)   A forward-looking estimate of cash provided by operating activities is not provided because certain items necessary to estimate cash provided by operating activities, including changes in assets and liabilities, are not estimable at this time. Changes in assets and liabilities were $(58.9) million and $(25.8) million for the years 2025 and 2024, respectively. Summary Metrics(in thousands, except percentages and ratios) ________________________________(1)   Management believes adjusted net income, adjusted EBITDA, cash available for dividend, adjusted free cash flow and adjusted free cash flow after dividend provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons.(2)   Defined as cash available for dividend divided by dividends declared for the period.(3)   Reflects $296.6 million cash paid in the NGCS acquisition, net of cash acquired, during the three months ended June 30, 2025.(4)   Defined as idle and operating horsepower and includes new compressor units completed by a third-party manufacturer that have been delivered to us.(5)   Defined as horsepower that is operating under contract and horsepower that is idle but under contract and generating revenue such as standby revenue.(6)   Defined as total operating horsepower divided by total available horsepower at period end. Conference Call DetailsArchrock will host a conference call on August 5, 2026, to discuss second quarter 2026 financial results. The call will begin at 8:30 a.m. Eastern Time. To listen to the call via a live webcast, please visit Archrock’s website at www.archrock.com. The call will also be available by dialing 1 (833) 461-5787 in the United States or 1 (585) 542-9983 for international calls. The meeting ID is 670342078. A replay of the webcast will be available on Archrock’s website for 90 days following the event. The company may from time to time publish additional materials for investors at the same website address. Adjusted net income, a non-GAAP measure, is defined as net income excluding restructuring charges, transaction-related costs and debt extinguishment gain adjusted for income taxes. A reconciliation of net income, the most directly comparable GAAP measure, to adjusted net income, and a reconciliation of basic and diluted earnings per common share, the most directly comparable GAAP measure, to adjusted basic and diluted earnings per share, appear below. Adjusted EBITDA, a non-GAAP measure, is defined as net income excluding interest expense, provision for income taxes, depreciation and amortization, long-lived and other asset impairment, restructuring charges, debt extinguishment gain, transaction-related costs, non-cash stock-based compensation expense, amortization of capitalized implementation costs and other items. A reconciliation of net income, the most directly comparable GAAP measure, to adjusted EBITDA, and a reconciliation of our full year 2026 net income to adjusted EBITDA guidance, appear below. Adjusted gross margin, a non-GAAP measure, is defined as total revenue less cost of sales, excluding depreciation and amortization. Adjusted gross margin percentage, a non-GAAP measure, is defined as adjusted gross margin divided by revenue. A reconciliation of net income to adjusted gross margin, and a reconciliation of gross margin, the most directly comparable GAAP measure, to adjusted gross margin and adjusted gross margin percentage, appear below. Cash available for dividend, a non-GAAP measure, is defined as net income excluding interest expense, provision for income taxes, depreciation and amortization, long-lived and other asset impairment, restructuring charges, debt extinguishment gain, transaction-related costs, non-cash stock-based compensation expense, amortization of capitalized implementation costs and other items, less maintenance capital expenditures, other capital expenditures, cash taxes and cash interest expense. Reconciliations of net income and net cash provided by operating activities, the most directly comparable GAAP measures, to cash available for dividend, and a reconciliation of our full year 2026 net income to cash available for dividend guidance, appear below. Adjusted free cash flow, a non-GAAP measure, is defined as net cash provided by operating activities plus net cash used in investing activities. A reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to adjusted free cash flow, appears below. Adjusted free cash flow after dividend, a non-GAAP measure, is defined as net cash provided by operating activities plus net cash used in investing activities less dividends paid to stockholders. A reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to adjusted free cash flow after dividend, appears below. About Archrock Archrock is an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping its customers produce, compress and transport natural gas in a safe and environmentally responsible way. Headquartered in Houston, Texas, Archrock is a premier provider of natural gas compression services to customers in the energy industry throughout the U.S. and a leading supplier of aftermarket services to customers that own compression equipment. For more information on how Archrock embodies its purpose, WE POWER A CLEANER AMERICA®, visit www.archrock.com. Forward-Looking Statements All statements in this release (and oral statements made regarding the subjects of this release) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside the control of Archrock. Forward-looking information includes, but is not limited to statements regarding: guidance or estimates related to Archrock’s results of operations or of financial condition; fundamentals of Archrock’s industry, including the attractiveness of returns and valuation, stability of cash flows, demand dynamics and overall outlook, and Archrock’s ability to realize the benefits thereof; Archrock’s expectations regarding future economic, geopolitical and market conditions and trends; Archrock’s operational and financial strategies, including planned growth, coverage and leverage reduction strategies, Archrock’s ability to successfully effect those strategies, and the expected results therefrom; Archrock’s financial and operational outlook; demand and growth opportunities for Archrock’s services; structural and process improvement initiatives, the expected timing thereof, Archrock’s ability to successfully effect those initiatives and the expected results therefrom; the operational and financial synergies provided by Archrock’s size; statements regarding Archrock’s dividend policy. While Archrock believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. The factors that could cause results to differ materially from those indicated by such forward-looking statements include, but are not limited to: risks related to macroeconomic conditions, including an increase in inflation and trade tensions; pandemics and other public health crises; ongoing international conflicts and tensions; risks related to our operations; competitive pressures; risks of acquisitions or mergers to reduce our ability to make distributions to our common stockholders; inability to make acquisitions on economically acceptable terms; inability to achieve the expected benefits of the acquisition of Natural Gas Compression Systems, Inc. and NGCSE, Inc. (collectively, “NGCS”) and difficulties integrating NGCS; risks related to our sustainability initiatives; uncertainty to pay dividends in the future; risks related to a substantial amount of debt and our debt agreements; inability to access the capital and credit markets or borrow on affordable terms to obtain additional capital; inability to fund purchases of additional compression equipment; vulnerability to interest rate increases and fluctuations; erosion of the financial condition of our customers; risks related to the loss of our most significant customers; uncertainty of the renewals for our contract operations service agreements; risks related to losing management or operational personnel; dependence on particular suppliers and vulnerability to product shortages and price increases; information technology and cybersecurity risks; tax-related risks; legal and regulatory risks, including climate-related and environmental, social and governance risks. These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Archrock’s Annual Report on Form 10-K for the year ended December 31, 2025, Archrock’s Quarterly Reports on Form 10-Q and as set forth from time to time in Archrock’s filings with the Securities and Exchange Commission. These filings are available online at www.sec.gov and www.archrock.com. Except as required by law, Archrock expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise. SOURCE: Archrock, Inc. For information, contact: Megan RepineVP of Investor [email protected] ________________________________(1)   Basic and diluted earnings per common share is computed using the two-class method to determine the net income per share for each class of common stock and participating security (restricted stock and stock-settled restricted stock units that have non-forfeitable rights to receive dividends or dividend equivalents) according to dividends declared and participation rights in undistributed earnings. Accordingly, we have excluded net income attributable to participating securities from our calculation of basic and diluted earnings per common share. ________________________________(1)   Management believes adjusted gross margin, adjusted EBITDA, adjusted gross margin percentage, adjusted free cash flow and adjusted free cash flow after dividend provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons.(2)   Defined as idle and operating horsepower and includes new compressor units completed by a third-party manufacturer that have been delivered to us.(3)   Defined as horsepower that is operating under contract and horsepower that is idle but under contract and generating revenue such as standby revenue.(4)   Defined as total operating horsepower divided by total available horsepower at period end (spot) or over time (average).(5)   Defined as cash available for dividend divided by dividends declared for the period.(6)   Reflects $296.6 million cash paid in the NGCS acquisition, net of cash acquired, during the three months ended June 30, 2025. ________________________________(1)   Carrying values are shown net of unamortized premium and deferred financing costs. ________________________________(1)   Represents an estimated tax effect of restructuring charges, transaction-related costs and debt extinguishment gain based on the federal statutory tax rate of 21%.(2)   Management believes adjusted net income and adjusted earnings per share provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review our current period operating performance, comparability measure and performance measure for period-to-period comparisons without burdened earnings and earnings per share for non-recurring transactional costs.(3)   Basic and diluted earnings per common share is computed using the two-class method to determine the net income per share for each class of common stock and participating security (restricted stock and stock-settled restricted stock units that have non-forfeitable rights to receive dividends or dividend equivalents) according to dividends declared and participation rights in undistributed earnings. Accordingly, we have excluded net income attributable to participating securities from our calculation of basic and diluted earnings per common share. ________________________________(1)   Management believes adjusted EBITDA and adjusted gross margin provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons. ________________________________(1)   Management believes adjusted gross margin and adjusted gross margin percentage provide useful information to investors because this non-GAAP measure, when viewed with our GAAP results and accompanying reconciliations, provides a more complete understanding of our performance than GAAP results alone. Management uses this non-GAAP measure as a supplemental measure to review current period operating performance, comparability measures and performance measures for period-to-period comparisons. ________________________________(1)   Management believes adjusted EBITDA provides useful information to investors because this non-GAAP measure, when viewed with our GAAP results and accompanying reconciliations, provides a more complete understanding of our performance than GAAP results alone. Management uses this non-GAAP measure as a supplemental measure to review current period operating performance, comparability measure and performance measure for period-to-period comparisons.(2)   Management uses cash available for dividend as a supplemental performance measure to compute the coverage ratio of estimated cash flows to planned dividends. ________________________________(1)   Management uses cash available for dividend as a supplemental performance measure to compute the coverage ratio of estimated cash flows to planned dividends. ________________________________(1)   Reflects $296.6 million cash paid in the NGCS acquisition, net of cash acquired, during the three months ended June 30, 2025.(2)   Management believes adjusted free cash flow and adjusted free cash flow after dividend provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons. ________________________________(1)   2026 annual guidance for net income includes $10.1 million of long-lived and other asset impairment as of June 30, 2026, but does not include the impact of long-lived and other asset impairment because due to its nature, it cannot be accurately forecasted. Long-lived and other asset impairment does not impact Adjusted EBITDA or cash available for dividend; however, it is a reconciling item between these measures and net income. Long-lived and other asset impairment for the years 2025 and 2024 was $18.3 million and $10.7 million, respectively.(2)   Reflects an estimate of expenses to be incurred related to the TOPS and NGCS acquisitions.(3)   Management believes adjusted EBITDA provides useful information to investors because this non-GAAP measure, when viewed with our GAAP results and accompanying reconciliations, provides a more complete understanding of our performance than GAAP results alone. Management uses this non-GAAP measure as a supplemental measure to review current period operating performance, comparability measure and performance measure for period-to-period comparisons.(4)   Management uses cash available for dividend as a supplemental performance measure to compute the coverage ratio of estimated cash flows to planned dividends.(5)   A forward-looking estimate of cash provided by operating activities is not provided because certain items necessary to estimate cash provided by operating activities, including changes in assets and liabilities, are not estimable at this time. Changes in assets and liabilities were $(58.9) million and $(25.8) million for the years 2025 and 2024, respectively.

In its upcoming report, Archrock Inc. (AROC) is predicted by Wall Street analysts to post quarterly earnings of $0.46 per share, reflecting an increase of 18% compared to the same period last year. Revenues are forecasted to be $390.4 million, representing a year-over-year increase of 1.9%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe. Prior to a company's earnings announcement, it is crucial to consider revisions to earnings estimates. This serves as a significant indicator for predicting potential investor actions regarding the stock. Empirical research has consistently demonstrated a robust correlation between trends in earnings estimate revision and the short-term price performance of a stock. While investors typically use consensus earnings and revenue estimates as a yardstick to evaluate the company's quarterly performance, scrutinizing analysts' projections for some of the company's key metrics can offer a more comprehensive perspective. Bearing this in mind, let's now explore the average estimates of specific Archrock Inc. metrics that are commonly monitored and projected by Wall Street analysts. The consensus estimate for 'Revenue- Aftermarket services' stands at $61.26 million. The estimate suggests a change of -5.5% year over year. The consensus among analysts is that 'Revenue- Contract operations' will reach $335.09 million. The estimate points to a change of +5.3% from the year-ago quarter. The combined assessment of analysts suggests that 'Adjusted gross margin- Aftermarket services' will likely reach $13.98 million. Compared to the present estimate, the company reported $14.94 million in the same quarter last year. Analysts' assessment points toward 'Adjusted gross margin- Contract operations' reaching $240.78 million. Compared to the present estimate, the company reported $222.18 million in the same quarter last year. View all Key Company Metrics for Archrock Inc. here>>> Over the past month, Archrock Inc. shares have recorded returns of -2.8% versus the Zacks S&P 500 composite's +0.2% change. Based on its Zacks Rank #3 (Hold), AROC will likely exhibit a performance that aligns with the overall market in the upcoming period. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> . Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Archrock, Inc. (AROC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

HOUSTON, July 23, 2026 (GLOBE NEWSWIRE) -- Archrock, Inc. (NYSE: AROC) (“Archrock” or the “Company”) today announced that its Board of Directors has declared an increased quarterly dividend of $0.23 per share of common stock, or $0.92 per share on an annualized basis. The second quarter 2026 dividend will be paid on August 11, 2026, to all stockholders of record on August 4, 2026. The second quarter 2026 dividend per share amount represents an increase of approximately 5 percent over the Archrock first quarter 2026 dividend level and an increase of approximately 10 percent over the Archrock second quarter 2025 dividend level. “This dividend increase, our fifth in the last two years, reflects our confidence in the durable demand outlook for natural gas compression and Archrock’s long-term growth. Backed by a strong balance sheet and growing cash flow, we remain focused on investing in profitable growth and returning cash to shareholders,” said Brad Childers, Archrock’s President and Chief Executive Officer. About Archrock Archrock is an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping its customers produce, compress and transport natural gas in a safe and environmentally responsible way. Headquartered in Houston, Texas, Archrock is a premier provider of natural gas compression services to customers in the energy industry throughout the U.S. and a leading supplier of aftermarket services to customers that own compression equipment. For more information on how the Company embodies its purpose, WE POWER A CLEANER AMERICA™, visit www.archrock.com. Forward-Looking Statements This press release contains forward-looking statements, which include statements about Archrock’s future financial performance and dividends. These statements are not guarantees of future performance or actions. Forward-looking statements rely on a number of assumptions concerning future events and are subject to risks and uncertainties. If one or more of these risks or uncertainties materialize, actual results may differ materially from those contemplated by a forward-looking statement. Forward-looking statements speak only as of the date on which they are made. Archrock expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. A further list and description of risks, uncertainties and other matters can be found in Archrock’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, Archrock’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 and as set forth from time to time in Archrock’s filings with the Securities and Exchange Commission. These filings are available online at www.sec.gov and www.archrock.com. For information, contact: Megan RepineVice President, Investor Relations(281) [email protected]