Archrock, Inc. (NYSE: AROC) (“Archrock”) today reported results for
the third quarter of 2020.
Third Quarter 2020 Financial
Results
- Revenue for the third quarter of 2020 was $205.6 million
compared to $244.9 million in the third quarter of 2019.
- Net income for the third quarter of 2020 was $18.3 million
compared to net income of $20.4 million in the third quarter
of 2019.
- Adjusted EBITDA (a non-GAAP measure defined below) for the
third quarter of 2020 was $112.6 million compared to $112.1 million
in the third quarter of 2019.
- Previously declared quarterly dividend of $0.145 per common
share for the third quarter of 2020 was unchanged compared to the
third quarter of 2019. Dividend coverage was 3.5x for the third
quarter of 2020.
- Archrock’s leverage ratio was 4.0x compared to 4.3x as of
September 30, 2019.
- Tightened range of 2020 Adjusted EBITDA guidance to $405
million to $420 million, reflecting a $12.5 million increase at the
midpoint.
Archrock’s third quarter 2020 net income of
$18.3 million included a non-cash long-lived asset impairment of
$10.7 million and restructuring costs related to severance benefits
and property disposals totaling $2.9 million. In addition, Archrock
recorded a net benefit from tax audit settlements of $10.9 million
during the third quarter of 2020.
Adjusted EBITDA for the third quarter of 2020 of
$112.6 million included $9.1 million in net gains primarily related
to the sale of the turbocharger business included within our
aftermarket services segment.
Management Commentary and
Outlook
“I am proud of Archrock’s third quarter
performance and the way our employees continue to respond to the
significant demand headwinds brought on by COVID-19,”
said Brad Childers, Archrock’s President and Chief Executive
Officer. “As our results show, we’ve taken significant action to
aggressively manage costs and improve our balance sheet. During the
third quarter, we protected our strong contract operations gross
margin, reduced SG&A and lowered our capital expenditures. In
addition, we continued to high-grade our business and accelerate
EBITDA through non-core asset sales totaling close to $50 million
so far this year. Combined, these efforts have enabled us to
deliver robust free cash flow, both before and after dividends. As
promised, we’ve redeployed this excess cash to debt repayment,
reducing our debt by over $100 million so far in 2020 and lowering
our leverage ratio to 4.0x as of the end of the third quarter.
“As the third quarter progressed, improved
market stability contributed to reduced compression equipment stop
activity and the continued restart of equipment that was
temporarily on standby status. Looking ahead, U.S. natural
gas production is expected to decline modestly in 2021, at least in
the first half of the year. Against this backdrop, we are planning
for softness in compression demand to persist into 2021, with the
possibility for improved conditions later next year. We remain
confident in the positive long-term fundamentals for the critical
infrastructure we provide to our customers, particularly as natural
gas provides an affordable, reliable, and cleaner-burning solution
to meeting growing energy needs worldwide.
“While it is premature to provide financial
guidance for 2021, we expect significantly lower new equipment
capital expenditures given muted customer booking activity and our
ability to satisfy customer horsepower needs with idle compressor
units. We are focused on preserving our operational momentum and
again delivering significant free cash flow. Reducing debt
and paying a meaningful dividend are key value drivers for our
shareholders and we remain confident in our ability to do both in
the current environment,” concluded Childers.
Contract
Operations
For the third quarter of 2020, contract
operations segment revenue totaled $175.2 million compared to
$198.3 million in the third quarter of 2019. Gross margin was
$114.8 million, down $7.6 million or 6% from the third quarter of
2019, reflecting a gross margin percentage of 66% compared to 62%
in the prior year quarter. Gross margin included a net benefit from
tax audit settlements of $4.2 million. Total operating horsepower
at the end of the third quarter of 2020 was 3.5 million compared to
3.9 million at the end of the prior year quarter. Utilization at
the end of the third quarter of 2020 was 83% compared to 88% at the
end of the third quarter of 2019.
Aftermarket
Services
For the third quarter of 2020, aftermarket
services segment revenue totaled $30.4 million compared to $46.6
million in the third quarter of 2019 due to a decrease in service
activities and parts sales as customers continued the deferral of
maintenance activities as well as the July 2020 disposition of our
turbocharger business. Gross margin of $4.7 million was down from
$9.0 million in the third quarter of 2019. Gross margin percentage
of 15% compared to 19% in the prior year quarter.
Balance
Sheet
Long-term debt was $1.7 billion at September 30,
2020, reflecting net debt repayment of $77 million during the third
quarter of 2020. Our leverage ratio was 4.0x, down from 4.1x at the
end of the second quarter of 2020 and 4.3x at the end of the third
quarter of 2019. Our available liquidity totaled $491.6 million as
of September 30, 2020.
Quarterly
Dividend
Our Board of Directors recently declared a
quarterly dividend of $0.145 per share of common stock, or $0.58
per share on an annualized basis, unchanged on a sequential and
annual basis. Dividend coverage in the third quarter of 2020 was
3.5x. The dividend will be paid on November 18, 2020 to
stockholders of record at the close of business on November 12,
2020.
2020 Annual Guidance
Archrock is providing updated 2020 annual guidance as listed
below. All figures are in thousands, except percentages and
ratios:
|
|
|
|
|
|
|
Full Year 2020 Guidance |
|
|
Low |
|
|
High |
|
|
|
|
|
|
Net loss (1) |
$ |
(69,000 |
) |
|
$ |
(54,000 |
) |
Adjusted EBITDA (2) |
|
405,000 |
|
|
|
420,000 |
|
Cash available for
dividend (3) (4) |
|
255,000 |
|
|
|
263,000 |
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
Contract operations
revenue |
$ |
735,000 |
|
|
$ |
745,000 |
|
Contract operations gross
margin percentage |
|
63.0 |
% |
|
|
65.0 |
% |
Aftermarket services
revenue |
$ |
130,000 |
|
|
$ |
135,000 |
|
Aftermarket services gross
margin percentage |
|
14.0 |
% |
|
|
16.0 |
% |
|
|
|
|
|
|
Selling, general and
administrative |
$ |
105,000 |
|
|
$ |
108,000 |
|
|
|
|
|
|
|
Capital
expenditures |
|
|
|
|
|
Growth capital
expenditures |
$ |
75,000 |
|
|
$ |
80,000 |
|
Maintenance capital
expenditures |
|
30,000 |
|
|
|
33,000 |
|
Other capital
expenditures |
|
23,000 |
|
|
|
27,000 |
|
(1) |
|
2020 annual guidance for net loss includes $99.8 million of
goodwill impairment, $72.1 million of long-lived asset impairments,
$7.0 million of restructuring charges and $4.0 million of debt
extinguishment loss as of September 30, 2020, but does not include
the impact of any such future costs, because due to their nature,
they cannot be accurately forecasted. Such costs do not impact
Adjusted EBITDA or cash available for dividend, however they are
reconciling items between these measures and net loss. |
(2) |
|
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. |
(3) |
|
Management uses cash available for dividend as a supplemental
performance measure to compute the coverage ratio of estimated cash
flows to planned dividends. |
(4) |
|
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 $10.4 million and $(13.2) million for the years
ended 2019 and 2018, respectively. |
Summary
Metrics
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
September 30, |
|
|
June 30, |
|
September 30, |
|
(in thousands,
except percentages, per share amounts and
ratios) |
2020 |
|
|
2020 |
|
2019 |
|
Net income (loss) |
$ |
18,332 |
|
|
$ |
(30,381 |
) |
|
$ |
20,407 |
|
Adjusted EBITDA |
$ |
112,634 |
|
|
$ |
100,509 |
|
|
$ |
112,133 |
|
|
|
|
|
|
|
|
|
|
|
|
Contract operations
revenue |
$ |
175,223 |
|
|
$ |
187,949 |
|
|
$ |
198,337 |
|
Contract operations gross
margin |
$ |
114,779 |
|
|
$ |
124,559 |
|
|
$ |
122,396 |
|
Contract operations gross
margin percentage |
|
66 |
% |
|
|
66 |
% |
|
|
62 |
% |
|
|
|
|
|
|
|
|
|
|
|
Aftermarket services
revenue |
$ |
30,408 |
|
|
$ |
32,367 |
|
|
$ |
46,612 |
|
Aftermarket services gross
margin |
$ |
4,699 |
|
|
$ |
3,681 |
|
|
$ |
8,987 |
|
Aftermarket services gross
margin percentage |
|
15 |
% |
|
|
11 |
% |
|
|
19 |
% |
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative |
$ |
18,681 |
|
|
$ |
28,745 |
|
|
$ |
29,526 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash available for
dividend |
$ |
77,246 |
|
|
$ |
58,036 |
|
|
$ |
68,306 |
|
Cash available for dividend
coverage |
|
3.5 |
x |
|
|
2.6 |
x |
|
|
3.1 |
x |
|
|
|
|
|
|
|
|
|
|
|
Total available horsepower (at
period end) |
|
4,153 |
|
|
|
4,203 |
|
|
|
4,441 |
|
Total operating horsepower (at
period end) |
|
3,465 |
|
|
|
3,613 |
|
|
|
3,916 |
|
Horsepower utilization spot
(at period end) |
|
83 |
% |
|
|
86 |
% |
|
|
88 |
% |
Conference Call
Details
Archrock will host a conference call on Tuesday,
November 3, 2020, to discuss third quarter 2020 financial results.
The call will begin at 12:00 p.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 1-877-407-0784 in the United States and Canada
or 1-201-689-8560 for international calls. Please call
approximately 15 minutes prior to the scheduled start time and
reference Archrock.
A replay of the conference call will be
available on Archrock’s website for approximately seven days. Also,
a replay may be accessed by dialing 1-844-512-2921 in the United
States and Canada, or 1-412-317-6671 for international calls. The
access code is 13711248.
*****
Adjusted EBITDA, a non-GAAP measure, is defined
as net income (loss) excluding interest expense, income taxes,
depreciation and amortization, long-lived asset impairment,
restructuring charges, debt extinguishment loss,
transaction-related costs, non-cash stock-based compensation
expense, indemnification income (expense), net and other items. A
reconciliation of Adjusted EBITDA to net income (loss), the most
directly comparable GAAP measure, and a reconciliation of our
updated full year 2020 Adjusted EBITDA guidance to net income
(loss) appear below.
Gross margin, a non-GAAP measure, is defined as
revenue less cost of sales (excluding depreciation and
amortization). Gross margin percentage is defined as gross margin
divided by revenue. A reconciliation of gross margin to net income
(loss), the most directly comparable GAAP measure, appears
below.
Cash available for dividend, a non-GAAP measure,
is defined as net income (loss) excluding interest expense,
income taxes, depreciation and amortization, long-lived asset
impairment, restructuring charges, debt extinguishment loss,
transaction-related costs, non-cash stock-based compensation
expense and indemnification income (expense), net and other items,
less maintenance capital expenditures, other capital expenditures,
cash taxes and cash interest expense. Reconciliations of cash
available for dividend to net income (loss) and cash flows from
operating activities, the most directly comparable GAAP measures,
appear below.
About Archrock
Archrock is an energy infrastructure company
with a pure-play focus on midstream natural gas compression.
Archrock is the leading provider of natural gas compression
services to customers in the oil and natural gas industry
throughout the U.S. and a leading supplier of aftermarket services
to customers that own compression equipment in the U.S. Archrock is
headquartered in Houston, Texas. For more information, please 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, Inc. Forward-looking information includes, but
is not limited to statements regarding: the effects of the COVID-19
pandemic on our business, operations, customers and financial
conditions; 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 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; and 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: changes in customer, employee or supplier
relationships; local, regional and national economic and financial
market conditions and the impact they may have on Archrock and its
customers; changes in tax laws; conditions in the oil and gas
industry, including a sustained decrease in the level of supply or
demand for oil or natural gas or a sustained decrease in the price
of oil or natural gas; changes in economic conditions in key
operating markets; impacts of world events, including the COVID-19
pandemic; the financial condition of Archrock’s customers; the
failure of any customer to perform its contractual obligations;
changes in safety, health, environmental and other regulations; and
the effectiveness of Archrock’s control environment, including the
identification of control deficiencies.
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, 2019, Archrock’s
Quarterly Reports on Form 10-Q for the quarters ended March 31,
2020, June 30, 2020 and September 30, 2020, and those set forth
from time to time in Archrock’s filings with the Securities and
Exchange Commission, which are available at 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
Relations281-836-8360investor.relations@archrock.com
ARCHROCK,
INC.UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
2020 |
|
2020 |
|
2019 |
Revenue: |
|
|
|
|
|
|
|
|
Contract operations |
$ |
175,223 |
|
|
$ |
187,949 |
|
|
$ |
198,337 |
|
Aftermarket services |
|
30,408 |
|
|
|
32,367 |
|
|
|
46,612 |
|
Total revenue |
|
205,631 |
|
|
|
220,316 |
|
|
|
244,949 |
|
Cost of sales (excluding
depreciation and amortization): |
|
|
|
|
|
|
|
|
Contract operations |
|
60,444 |
|
|
|
63,390 |
|
|
|
75,941 |
|
Aftermarket services |
|
25,709 |
|
|
|
28,686 |
|
|
|
37,625 |
|
Total cost of sales (excluding depreciation and amortization) |
|
86,153 |
|
|
|
92,076 |
|
|
|
113,566 |
|
Selling, general and
administrative |
|
18,681 |
|
|
|
28,745 |
|
|
|
29,526 |
|
Depreciation and
amortization |
|
47,279 |
|
|
|
48,849 |
|
|
|
48,409 |
|
Long-lived and other asset
impairment |
|
10,727 |
|
|
|
55,210 |
|
|
|
7,097 |
|
Restructuring charges |
|
2,900 |
|
|
|
2,408 |
|
|
|
— |
|
Interest expense |
|
25,221 |
|
|
|
25,778 |
|
|
|
27,401 |
|
Debt extinguishment loss |
|
— |
|
|
|
3,971 |
|
|
|
— |
|
Transaction-related costs |
|
— |
|
|
|
— |
|
|
|
4,905 |
|
(Gain) loss on sale of assets,
net |
|
(9,146 |
) |
|
|
2,189 |
|
|
|
(7,859 |
) |
Other (income) loss, net |
|
(324 |
) |
|
|
(438 |
) |
|
|
49 |
|
Income (loss) before income
taxes |
|
24,140 |
|
|
|
(38,472 |
) |
|
|
21,855 |
|
Provision for (benefit from)
income taxes |
|
5,808 |
|
|
|
(8,091 |
) |
|
|
1,448 |
|
Net income (loss) |
$ |
18,332 |
|
|
$ |
(30,381 |
) |
|
$ |
20,407 |
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income
(loss) per common share (1) |
$ |
0.12 |
|
|
$ |
(0.20 |
) |
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
150,974 |
|
|
|
150,743 |
|
|
|
142,931 |
|
Diluted |
|
151,038 |
|
|
|
150,743 |
|
|
|
142,965 |
|
(1) |
|
Basic and diluted net income (loss) per common share is computed
using the two-class method to determine the net income (loss) 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 net income (loss) per common
share. |
ARCHROCK,
INC.UNAUDITED SUPPLEMENTAL
INFORMATION(in thousands, except
percentages, per share amounts and ratios)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
2020 |
|
2020 |
|
2019 |
Revenue: |
|
|
|
|
|
|
|
|
Contract operations |
$ |
175,223 |
|
|
$ |
187,949 |
|
|
$ |
198,337 |
|
Aftermarket services |
|
30,408 |
|
|
|
32,367 |
|
|
|
46,612 |
|
Total revenue |
$ |
205,631 |
|
|
$ |
220,316 |
|
|
$ |
244,949 |
|
|
|
|
|
|
|
|
|
|
Gross margin (1): |
|
|
|
|
|
|
|
|
Contract operations |
$ |
114,779 |
|
|
$ |
124,559 |
|
|
$ |
122,396 |
|
Aftermarket services |
|
4,699 |
|
|
|
3,681 |
|
|
|
8,987 |
|
Total gross margin |
$ |
119,478 |
|
|
$ |
128,240 |
|
|
$ |
131,383 |
|
|
|
|
|
|
|
|
|
|
Gross margin percentage: |
|
|
|
|
|
|
|
|
Contract operations |
|
66 |
% |
|
|
66 |
% |
|
|
62 |
% |
Aftermarket services |
|
15 |
% |
|
|
11 |
% |
|
|
19 |
% |
Total gross margin percentage |
|
58 |
% |
|
|
58 |
% |
|
|
54 |
% |
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
$ |
18,681 |
|
|
$ |
28,745 |
|
|
$ |
29,526 |
|
% of revenue |
|
9 |
% |
|
|
13 |
% |
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (1) |
$ |
112,634 |
|
|
$ |
100,509 |
|
|
$ |
112,133 |
|
% of revenue |
|
55 |
% |
|
|
46 |
% |
|
|
46 |
% |
|
|
|
|
|
|
|
|
|
Capital expenditures |
$ |
17,054 |
|
|
$ |
41,343 |
|
|
$ |
68,495 |
|
Less: Proceeds from sale of
property, plant and equipment and other assets |
|
(17,707 |
) |
|
|
(2,528 |
) |
|
|
(33,720 |
) |
Net capital expenditures |
$ |
(653 |
) |
|
$ |
38,815 |
|
|
$ |
34,775 |
|
|
|
|
|
|
|
|
|
|
Total available horsepower (at
period end) (2) |
|
4,153 |
|
|
|
4,203 |
|
|
|
4,441 |
|
Total operating horsepower (at
period end) (3) |
|
3,465 |
|
|
|
3,613 |
|
|
|
3,916 |
|
Average operating
horsepower |
|
3,536 |
|
|
|
3,752 |
|
|
|
3,770 |
|
Horsepower utilization: |
|
|
|
|
|
|
|
|
Spot (at period end) |
|
83 |
% |
|
|
86 |
% |
|
|
88 |
% |
Average |
|
85 |
% |
|
|
86 |
% |
|
|
88 |
% |
|
|
|
|
|
|
|
|
|
Dividend declared for the
period per share |
$ |
0.145 |
|
|
$ |
0.145 |
|
|
$ |
0.145 |
|
Dividend declared for the
period to all shareholders |
$ |
22,216 |
|
|
$ |
22,229 |
|
|
$ |
22,051 |
|
Cash available for dividend
coverage (4) |
|
3.5 |
|
x |
|
2.6 |
x |
|
|
3.1 |
x |
(1) |
|
Management believes gross margin
and Adjusted EBITDA 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. New compressor units completed by a third party
manufacturer that have been delivered to us are included in the
fleet. |
(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 cash available for
dividend divided by dividends declared for the period. |
|
|
|
|
|
|
|
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
2020 |
|
2020 |
|
2019 |
Balance
Sheet |
|
|
|
|
|
|
|
|
Long-term debt (1) |
$ |
1,731,459 |
|
$ |
1,807,937 |
|
$ |
1,825,475 |
Total equity |
|
949,685 |
|
|
950,873 |
|
|
1,057,018 |
(1) Carrying values are shown net of unamortized debt
discounts and unamortized deferred financing costs.
ARCHROCK,
INC.UNAUDITED SUPPLEMENTAL
INFORMATION(in
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
2020 |
|
2020 |
|
2019 |
Reconciliation
of Net Income (Loss) to Adjusted EBITDA and Gross
Margin |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
18,332 |
|
|
$ |
(30,381 |
) |
|
$ |
20,407 |
|
Depreciation and
amortization |
|
47,279 |
|
|
|
48,849 |
|
|
|
48,409 |
|
Long-lived and other asset
impairment |
|
10,727 |
|
|
|
55,210 |
|
|
|
7,097 |
|
Restructuring charges |
|
2,900 |
|
|
|
2,408 |
|
|
|
— |
|
Interest expense |
|
25,221 |
|
|
|
25,778 |
|
|
|
27,401 |
|
Debt extinguishment loss |
|
— |
|
|
|
3,971 |
|
|
|
— |
|
Transaction-related costs |
|
— |
|
|
|
— |
|
|
|
4,905 |
|
Stock-based compensation
expense |
|
2,645 |
|
|
|
2,772 |
|
|
|
2,276 |
|
Indemnification (income)
expense, net (1) |
|
(278 |
) |
|
|
(7 |
) |
|
|
190 |
|
Provision for (benefit from)
income taxes |
|
5,808 |
|
|
|
(8,091 |
) |
|
|
1,448 |
|
Adjusted EBITDA (2) |
|
112,634 |
|
|
|
100,509 |
|
|
|
112,133 |
|
Selling, general and
administrative |
|
18,681 |
|
|
|
28,745 |
|
|
|
29,526 |
|
Stock-based compensation
expense |
|
(2,645 |
) |
|
|
(2,772 |
) |
|
|
(2,276 |
) |
Indemnification income
(expense), net (1) |
|
278 |
|
|
|
7 |
|
|
|
(190 |
) |
(Gain) loss on sale of assets,
net |
|
(9,146 |
) |
|
|
2,189 |
|
|
|
(7,859 |
) |
Other (income) loss, net |
|
(324 |
) |
|
|
(438 |
) |
|
|
49 |
|
Gross margin (2) |
$ |
119,478 |
|
|
$ |
128,240 |
|
|
$ |
131,383 |
|
(1) |
|
Represents the net income earned or net expense incurred pursuant
to indemnification provisions of our separation and distribution
and tax matters agreements with Exterran Corporation. |
(2) |
|
Management believes Adjusted EBITDA and 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. |
ARCHROCK,
INC.UNAUDITED SUPPLEMENTAL
INFORMATION(in
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
2020 |
|
2020 |
|
2019 |
Reconciliation
of Net Income (Loss) to Adjusted EBITDA and Cash Available for
Dividend |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
18,332 |
|
|
$ |
(30,381 |
) |
|
$ |
20,407 |
|
Depreciation and
amortization |
|
47,279 |
|
|
|
48,849 |
|
|
|
48,409 |
|
Long-lived and other asset
impairment |
|
10,727 |
|
|
|
55,210 |
|
|
|
7,097 |
|
Restructuring charges |
|
2,900 |
|
|
|
2,408 |
|
|
|
— |
|
Interest expense |
|
25,221 |
|
|
|
25,778 |
|
|
|
27,401 |
|
Debt extinguishment loss |
|
— |
|
|
|
3,971 |
|
|
|
— |
|
Transaction-related costs |
|
— |
|
|
|
— |
|
|
|
4,905 |
|
Stock-based compensation
expense |
|
2,645 |
|
|
|
2,772 |
|
|
|
2,276 |
|
Indemnification (income)
expense, net |
|
(278 |
) |
|
|
(7 |
) |
|
|
190 |
|
Provision for (benefit from)
income taxes |
|
5,808 |
|
|
|
(8,091 |
) |
|
|
1,448 |
|
Adjusted EBITDA (1) |
|
112,634 |
|
|
|
100,509 |
|
|
|
112,133 |
|
Less: Maintenance capital
expenditures |
|
(3,817 |
) |
|
|
(8,965 |
) |
|
|
(14,145 |
) |
Less: Other capital
expenditures |
|
(7,363 |
) |
|
|
(9,086 |
) |
|
|
(5,566 |
) |
Less: Cash tax refund
(payment) |
|
(407 |
) |
|
|
— |
|
|
|
1,514 |
|
Less: Cash interest
expense |
|
(23,801 |
) |
|
|
(24,422 |
) |
|
|
(25,630 |
) |
Cash available for dividend
(2) |
$ |
77,246 |
|
|
$ |
58,036 |
|
|
$ |
68,306 |
|
(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. |
ARCHROCK,
INC.UNAUDITED SUPPLEMENTAL
INFORMATION(in
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
2020 |
|
2020 |
|
2019 |
Reconciliation
of Cash Flows From Operating Activities to Cash Available for
Dividend |
|
|
|
|
|
|
|
|
Net cash provided by operating
activities |
$ |
99,760 |
|
|
$ |
67,945 |
|
|
$ |
74,962 |
|
Cash flows used in
discontinued operations |
|
— |
|
|
|
— |
|
|
|
269 |
|
Inventory write-downs |
|
(220 |
) |
|
|
(413 |
) |
|
|
(170 |
) |
(Provision for) benefit from
credit losses |
|
47 |
|
|
|
(1,530 |
) |
|
|
(644 |
) |
Gain (loss) on sale of assets,
net |
|
9,146 |
|
|
|
(2,189 |
) |
|
|
7,859 |
|
Current income tax provision
(benefit) |
|
(21 |
) |
|
|
60 |
|
|
|
(41 |
) |
Cash tax refund (payment) |
|
(407 |
) |
|
|
— |
|
|
|
1,514 |
|
Amortization of operating
lease ROU assets |
|
(928 |
) |
|
|
(846 |
) |
|
|
(726 |
) |
Amortization of contract
costs |
|
(6,630 |
) |
|
|
(6,851 |
) |
|
|
(6,110 |
) |
Deferred revenue recognized in
earnings |
|
4,421 |
|
|
|
5,027 |
|
|
|
8,311 |
|
Cash restructuring
charges |
|
1,402 |
|
|
|
2,307 |
|
|
|
— |
|
Transaction-related costs |
|
— |
|
|
|
— |
|
|
|
4,905 |
|
Indemnification (income)
expense, net |
|
(278 |
) |
|
|
(7 |
) |
|
|
190 |
|
Changes in assets and
liabilities |
|
(16,797 |
) |
|
|
13,283 |
|
|
|
(2,625 |
) |
Maintenance capital
expenditures |
|
(3,817 |
) |
|
|
(8,965 |
) |
|
|
(14,145 |
) |
Other capital
expenditures |
|
(7,363 |
) |
|
|
(9,086 |
) |
|
|
(5,566 |
) |
Proceeds from (payments for)
settlement of interest rate swaps that include financing
elements |
|
(1,069 |
) |
|
|
(699 |
) |
|
|
323 |
|
Cash available for dividend
(1) |
$ |
77,246 |
|
|
$ |
58,036 |
|
|
$ |
68,306 |
|
(1) |
|
Management
uses cash available for dividend as a supplemental performance
measure to compute the coverage ratio of estimated cash flows to
planned dividends. |
ARCHROCK,
INC.UNAUDITED SUPPLEMENTAL
INFORMATION(in
thousands)
|
|
|
|
|
|
|
Annual Guidance Range |
|
2020 |
|
Low |
|
High |
Reconciliation
of Net Loss to Adjusted EBITDA and Cash Available for
Dividend |
|
|
|
|
|
Net loss (1) |
$ |
(69,000 |
) |
|
$ |
(54,000 |
) |
Depreciation and
amortization |
|
192,000 |
|
|
|
192,000 |
|
Interest expense |
|
105,000 |
|
|
|
105,000 |
|
Stock-based compensation
expense |
|
11,000 |
|
|
|
11,000 |
|
Benefit from income taxes |
|
(16,000 |
) |
|
|
(16,000 |
) |
Goodwill impairment and other
expenses |
|
182,000 |
|
|
|
182,000 |
|
Adjusted EBITDA (2) |
|
405,000 |
|
|
|
420,000 |
|
Less: Maintenance capital
expenditures |
|
(30,000 |
) |
|
|
(33,000 |
) |
Less: Other capital
expenditures |
|
(23,000 |
) |
|
|
(27,000 |
) |
Less: Cash interest
expense |
|
(97,000 |
) |
|
|
(97,000 |
) |
Cash available for dividend
(3) (4) |
$ |
255,000 |
|
|
$ |
263,000 |
|
(1) |
|
2020 annual guidance for net loss includes $99.8 million of
goodwill impairment, $72.1 million of long-lived asset impairments,
$7.0 million of restructuring charges and $4.0 million of debt
extinguishment loss as of September 30, 2020, but does not include
the impact of any such future costs, because due to their nature,
they cannot be accurately forecasted. Such costs do not impact
Adjusted EBITDA or cash available for dividend, however they are
reconciling items between these measures and net loss. |
(2) |
|
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. |
(3) |
|
Management uses cash available for dividend as a supplemental
performance measure to compute the coverage ratio of estimated cash
flows to planned dividends. |
(4) |
|
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 $10.4 million and $(13.2) million for the years
ended 2019 and 2018, respectively. |
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