Archrock (AROC) Q1 2026 earnings summary

Executive summary

• Revenue increased to $373.8 million for Q1 2026, up 8% year-over-year, driven by contract operations growth, full fleet utilization, and the NGCS Acquisition.

• Net income rose to $73.8 million, with EPS at $0.41, reflecting higher adjusted gross margin and gains on asset sales, partially offset by increased SG&A and depreciation.

• Adjusted EBITDA reached $221 million, up 12% year-over-year, and adjusted EPS was $0.42.

• Returned $44 million to shareholders through dividends and share repurchases, a 29% increase year-over-year.

• Major transactions included the redemption of $800 million in 2028 Notes and issuance of $800 million in 2034 Notes, with proceeds used to repay credit facility borrowings.

Financial highlights

• Adjusted gross margin improved to $247.4 million (66% margin), up from $222.1 million (64%) in Q1 2025, with contract operations margin at 72%.

• Contract operations revenue increased 10% to $330.9 million, while aftermarket services revenue declined 8% to $42.9 million.

• Net cash from operating activities was $185.9 million, with adjusted free cash flow at $91.9 million.

• SG&A expenses rose to $45 million, mainly due to higher incentive compensation and a one-time executive retention expense.

• Quarterly dividend declared at $0.22 per share, up 16% year-over-year, with dividend coverage at 3.5x.

Outlook and guidance

• Management reaffirmed full-year 2026 adjusted EBITDA guidance of $865–$915 million.

• Projected 2026 capital expenditures are $400–$445 million, with $250–$275 million for growth and $125–$135 million for maintenance.

• Free cash flow generation expected to remain strong, supporting continued shareholder returns.

• Expect continued strong demand for compression, with U.S. natural gas production projected to reach record levels.

• Management expects operating cash flows and credit facility access to be sufficient for liquidity needs over the next twelve months and beyond.