Archrock (AROC) Q2 2024 earnings summary

Executive summary

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

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

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

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

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

Financial highlights

• Adjusted EBITDA of $130 million for Q2 2024, up 15% from the prior year period.

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

• Net income of $34.4 million included a $4.4 million non-cash impairment and $1.8 million in transaction expenses.

• Cash available for dividend in Q2 totaled $72 million.

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

Outlook and guidance

• 2024 Adjusted EBITDA (excluding TOPS) expected between $510 million and $540 million, up 17% from 2023.

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

• Growth CapEx for 2024 forecasted at $190 million, maintenance CapEx at $80–$85 million, and total CapEx at $290–$300 million.

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

• The TOPS acquisition is expected to close by year-end 2024, subject to customary conditions.