Archrock (AROC) Q4 2023 earnings summary

Executive summary

• FY2023 revenue rose to $990.3M from $845.6M; net income increased to $105.0M from $44.3M and Adjusted EBITDA to $450.4M from $363.3M.

• Period-end utilization reached a record 96%, while leverage improved to 3.5x from 4.4x YoY.

Financial highlights

• Q4 revenue was $259.6M vs. $218.9M YoY; net income was $33.0M vs. $10.5M and Adjusted EBITDA was $120.3M vs. $89.0M.

• FY2023 basic and diluted EPS was $0.67 vs. $0.28 in 2022; Q4 EPS was $0.21 vs. $0.07.

• FY2023 cash available for dividend was $233.0M, with 2.4x coverage; free cash flow was $77.7M and free cash flow after dividends was $(18.1)M.

Outlook and guidance

• FY2024 Adjusted EBITDA guidance is $500M-$530M, with midpoint growth of 14% vs. FY2023; net income guidance is $134M-$164M.

• FY2024 cash available for dividend is guided to $289M-$309M; dividend coverage is expected to remain well above 2.0x.

• FY2024 total capex is expected at $275M-$290M, including $175M-$180M growth capex; operations are expected to fully fund capital expenditures.

• Guidance includes contract operations revenue of $890M-$915M at 64%-65.5% gross margin and aftermarket revenue of $170M-$185M at 19%-20.5% gross margin.

• Expected leverage ratio is 3.0x-3.5x; earnings growth and free cash flow are expected from operating execution, pricing and strategic fleet investment.