Archrock, Inc. (NYSE: AROC) (“Archrock”) today reported results for
the fourth quarter and full year 2021 and provided 2022 financial
guidance.
Fourth Quarter and Full Year 2021
Highlights
- Revenue for the fourth quarter of
2021 was $195.2 million compared to $199.3 million in the fourth
quarter of 2020. Revenue for 2021 was $781.5 million compared to
$875.0 million in 2020.
- Net income for the fourth quarter
of 2021 was $6.0 million compared to $4.8 million in the
fourth quarter of 2020. Net income for 2021 was $28.2 million
compared to a net loss of $68.4 million in 2020.
- Adjusted EBITDA (a non-GAAP measure
defined below) for the fourth quarter of 2021 was $83.5 million
compared to $88.7 million in the fourth quarter of 2020. Adjusted
EBITDA for 2021 was $360.8 million compared to $414.8 million in
2020.
- Previously-declared quarterly
dividend of $0.145 per common share for the fourth quarter of 2021
resulted in dividend coverage of 2.0x. Dividend coverage for 2021
was 2.2x compared to 2.9x in 2020.
- Leverage ratio was 4.3x at year end
2021 compared to 4.2x as of December 31, 2020.
- Net cash provided by operating
activities and free cash flow after dividend for 2021 were $237.4
million and $164.2 million, respectively.
Management Commentary and
Outlook
“As the market continues to strengthen and
execution by team Archrock remains excellent, we delivered a
sequential increase in our contract operations revenue as well as
our highest quarterly levels of operating horsepower growth and
bookings for the year during the fourth quarter. We closed out 2021
generating positive net income and record annual free cash flow at
the bottom of the cycle,” said Brad Childers, Archrock’s President
and Chief Executive Officer. “More broadly, throughout this
downturn, we’ve demonstrated the stability and cash generating
power of our business, repaying $314 million in debt and returning
$178 million to shareholders since the end of 2019.
“We also achieved several important technology
milestones in 2021, completing the installation of expanded
telematics across our fleet, launching a suite of leading-edge
mobile tools for our field service technicians and migrating key
support functions to our new cloud-based ERP system. These
milestones reflect years of effort to radically transform our
business to ensure our franchise is prepared for energy transition.
With our optimized, standardized and digitized business, we are at
an exciting inflection point. And, as we enter the multi-year
upcycle in natural gas that we see ahead, we are invested in
leveraging the strong foundation of our core compression business
and evaluating complementary opportunities to help our customers
decarbonize.
“Looking at 2022 capital allocation, having
completed nearly $250 million in strategic divestments over the
last three years, together with the opportunity to invest in
high-profit, large midstream compressors, our ability to drive
higher-quality EBITDA growth is accelerating. Our commitment to
strong returns and reducing our emissions footprint are driving our
investment strategy as we grow prudently with our customers. As
such, we expect approximately 25% of our growth capex budget to
fund expansion of our electric motor-drive horsepower. Finally, we
are confident that the strength of our cash flows will continue to
fund our well-covered and competitive dividend and allow us to
maintain a healthy balance sheet,” concluded Childers.
Fourth Quarter and Full Year 2021
Financial Results
Archrock’s fourth quarter 2021 net income of
$6.0 million included a pre-tax non-cash long-lived and other asset
impairment of $6.2 million, a pre-tax insurance settlement related
to damages to facilities and compressors caused by Hurricane Ida of
$2.8 million and pre-tax restructuring costs of $950,000.
Archrock’s fourth quarter 2020 net income of $4.8 million included
a pre-tax non-cash long-lived and other asset impairment of $7.4
million and pre-tax restructuring costs totaling $1.4 million.
Adjusted EBITDA for the fourth quarter of 2021
of $83.5 million included $0.7 million in net gains related to the
sale of compression and other assets. Adjusted EBITDA for the
fourth quarter of 2020 of $88.7 million included $430,000 in net
losses related to the sale of compression and other assets.
Archrock’s full year 2021 net income of $28.2
million included the following pre-tax items: non-cash long-lived
and other asset impairment of $21.4 million, restructuring costs
related to severance and property exit and disposals totaling $2.9
million, a non-cash write-off of unamortized deferred financing
costs of $4.9 million, non-cash depreciation expense from the
write-off of assets damaged in Hurricane Ida of $2.0 million and a
non-income-based tax benefit of $2.5 million. Archrock’s full year
2020 net loss of $68.4 million included the following pre-tax
items: non-cash impairment of the remaining $99.8 million of
goodwill associated with the 2019 Elite Compression acquisition,
non-cash long-lived and other asset impairments of $79.6 million,
restructuring costs related to severance and property disposals
totaling $8.5 million and a net benefit from tax audit settlements
of $10.9 million.
Adjusted EBITDA for the full year 2021 and 2020
included $30.3 million and $10.6 million, respectively, in net
gains related to the sale of compression and other assets.
Contract Operations
For the fourth quarter of 2021, contract
operations segment revenue totaled $159.5 million compared to
$158.9 million in the third quarter of 2021 and $168.8 million in
the fourth quarter of 2020. Gross margin was $99.0 million,
compared to $97.6 million in the third quarter of 2021 and $110.2
million in the fourth quarter of 2020. This reflected a gross
margin percentage of 62%, compared to 61% in the third quarter of
2021 and 65% in the prior year quarter. Total operating horsepower
at the end of the fourth quarter of 2021 was 3.2 million, up 51,000
horsepower from the end of the third quarter of 2021 and compared
to 3.4 million at the end of the prior year quarter. The annual
decline reflected the sale of 147,000 active horsepower as part of
our ongoing fleet high-grading initiative. Utilization at the end
of the fourth quarter of 2021 was 84%, compared to 82% at both the
end of the third quarter of 2021 and the end of the fourth quarter
of 2020.
Aftermarket Services
For the fourth quarter of 2021, aftermarket
services segment revenue totaled $35.7 million, compared to $36.3
million in the third quarter of 2021 due to a seasonal slowdown.
Fourth quarter 2021 aftermarket services revenue was up from $30.6
million in the fourth quarter of 2020, driven by higher parts sales
and service activity. Gross margin of $5.2 million compared to $5.6
million in the third quarter of 2021 and was up from $3.8 million
in the fourth quarter of 2020. Gross margin percentage was 15%,
flat compared to the third quarter of 2021 and up from 13% in the
prior year quarter.
Balance Sheet
Long-term debt was $1.5 billion at December 31,
2021, reflecting net debt repayment of $158.5 million for the full
year 2021. Our leverage ratio was 4.3x, compared to 4.2x as of
December 31, 2020. Our available liquidity totaled $502.5 million
as of December 31, 2021.
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, resulting in dividend coverage in
the fourth quarter of 2021 of 2.0x. The dividend was paid on
February 15, 2022 to stockholders of record at the close of
business on February 8, 2022.
2022 Annual Guidance
Archrock is providing annual guidance as listed
below. All figures are in thousands, except percentages and
ratios:
|
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|
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|
Full Year 2022 Guidance |
|
|
|
|
Low |
|
|
High |
|
Net income (1) |
|
$ |
15,000 |
|
$ |
55,000 |
|
Adjusted EBITDA (2) |
|
|
320,000 |
|
|
360,000 |
|
Cash available for
dividend (3)(4) |
|
|
163,000 |
|
|
181,000 |
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
|
|
Contract operations
revenue |
|
$ |
660,000 |
|
$ |
690,000 |
|
Contract operations gross
margin percentage |
|
|
60 |
% |
|
62 |
% |
Aftermarket services
revenue |
|
$ |
140,000 |
|
$ |
155,000 |
|
Aftermarket services gross
margin percentage |
|
|
16 |
% |
|
18 |
% |
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
$ |
113,000 |
|
$ |
115,000 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
|
|
|
|
|
|
|
Growth capital
expenditures |
|
$ |
150,000 |
|
$ |
150,000 |
|
Maintenance capital
expenditures |
|
|
55,000 |
|
|
75,000 |
|
Other capital
expenditures |
|
|
8,000 |
|
|
10,000 |
|
(1) 2022 annual guidance for net income
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 2021 and 2020 was $21.4
million and $79.6 million, respectively.(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 $(9.5) million and $19.1 million for the years
2021 and 2020, respectively.
Summary Metrics(in thousands,
except percentages, per share amounts and ratios)
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|
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|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
December 31, |
|
September 30, |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
2021 |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
Net income (loss) |
|
$ |
5,992 |
|
|
$ |
9,304 |
|
|
$ |
4,791 |
|
|
$ |
28,217 |
|
|
$ |
(68,445 |
) |
Adjusted EBITDA |
|
$ |
83,499 |
|
|
$ |
92,351 |
|
|
$ |
88,712 |
|
|
$ |
360,809 |
|
|
$ |
414,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract operations
revenue |
|
$ |
159,501 |
|
|
$ |
158,911 |
|
|
$ |
168,772 |
|
|
$ |
648,311 |
|
|
$ |
738,918 |
|
Contract operations gross
margin |
|
$ |
99,047 |
|
|
$ |
97,631 |
|
|
$ |
110,170 |
|
|
$ |
403,825 |
|
|
$ |
477,831 |
|
Contract operations gross
margin percentage |
|
|
62 |
% |
|
|
61 |
% |
|
|
65 |
% |
|
|
62 |
% |
|
|
65 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aftermarket services
revenue |
|
$ |
35,748 |
|
|
$ |
36,255 |
|
|
$ |
30,554 |
|
|
$ |
133,150 |
|
|
$ |
136,052 |
|
Aftermarket services gross
margin |
|
$ |
5,242 |
|
|
$ |
5,603 |
|
|
$ |
3,834 |
|
|
$ |
18,719 |
|
|
$ |
19,946 |
|
Aftermarket services gross
margin percentage |
|
|
15 |
% |
|
|
15 |
% |
|
|
13 |
% |
|
|
14 |
% |
|
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative |
|
$ |
27,167 |
|
|
$ |
28,839 |
|
|
$ |
27,048 |
|
|
$ |
107,167 |
|
|
$ |
105,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash available for
dividend |
|
$ |
45,545 |
|
|
$ |
50,128 |
|
|
$ |
56,311 |
|
|
$ |
199,838 |
|
|
$ |
253,707 |
|
Cash available for dividend
coverage |
|
|
2.0 |
x |
|
|
2.2 |
x |
|
|
2.5 |
x |
|
|
2.2 |
x |
|
|
2.9 |
x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
6,928 |
|
|
$ |
120,828 |
|
|
$ |
65,408 |
|
|
|
253,507 |
|
|
|
250,247 |
|
Free cash flow after
dividend |
|
$ |
(15,423 |
) |
|
$ |
98,322 |
|
|
$ |
43,231 |
|
|
|
164,164 |
|
|
|
161,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available horsepower (at
period end) |
|
|
3,878 |
|
|
|
3,913 |
|
|
|
4,120 |
|
|
|
|
|
|
|
|
Total operating horsepower (at
period end) |
|
|
3,247 |
|
|
|
3,196 |
|
|
|
3,388 |
|
|
|
|
|
|
|
|
Horsepower utilization spot
(at period end) |
|
|
84 |
% |
|
|
82 |
% |
|
|
82 |
% |
|
|
|
|
|
|
|
Conference Call Details
Archrock will host a conference call on
Wednesday, February 23, 2022, to discuss fourth quarter and full
year 2021 financial results and 2022 guidance. The call will begin
at 10:00 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 1-888-440-5667 in the United States and Canada
or 1-646-960-0476 for international calls. The access code is
4749623.
A replay of the webcast will be available on Archrock’s website
for 90 days following the event.
Adjusted EBITDA, a non-GAAP measure, is defined
as net income (loss) excluding interest expense, income taxes,
depreciation and amortization, long-lived and other asset
impairment, goodwill impairment, restructuring charges, debt
extinguishment loss, 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 full
year 2022 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 and other
asset impairment, goodwill impairment, restructuring charges, debt
extinguishment loss, non-cash stock-based compensation expense,
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 net cash provided by
operating activities, the most directly comparable GAAP measures,
appear below.
Free cash flow, a non-GAAP measure, is defined
as net cash provided by operating activities plus net cash provided
by (used in) investing activities. A reconciliation of free cash
flow to net cash provided by operating activities, the most
directly comparable GAAP measure, appears below.
Free cash flow after dividend, a non-GAAP
measure, is defined as net cash provided by operating activities
plus net cash provided by (used in) investing activities less
dividends paid to stockholders. A reconciliation of free cash flow
after dividend to net cash provided by operating activities, the
most directly comparable GAAP measure, appears 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, 2020, Archrock’s
Quarterly Reports on Form 10-Q for the quarters ended March 31,
2021, June 30, 2021 and September 30, 2021, 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)
|
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|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract operations |
|
$ |
159,501 |
|
|
$ |
158,911 |
|
|
$ |
168,772 |
|
|
$ |
648,311 |
|
|
$ |
738,918 |
|
Aftermarket services |
|
|
35,748 |
|
|
|
36,255 |
|
|
|
30,554 |
|
|
|
133,150 |
|
|
|
136,052 |
|
Total revenue |
|
|
195,249 |
|
|
|
195,166 |
|
|
|
199,326 |
|
|
|
781,461 |
|
|
|
874,970 |
|
Cost of sales (excluding
depreciation and amortization): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract operations |
|
|
60,454 |
|
|
|
61,280 |
|
|
|
58,602 |
|
|
|
244,486 |
|
|
|
261,087 |
|
Aftermarket services |
|
|
30,506 |
|
|
|
30,652 |
|
|
|
26,720 |
|
|
|
114,431 |
|
|
|
116,106 |
|
Total cost of sales (excluding depreciation and amortization) |
|
|
90,960 |
|
|
|
91,932 |
|
|
|
85,322 |
|
|
|
358,917 |
|
|
|
377,193 |
|
Selling, general and
administrative |
|
|
27,167 |
|
|
|
28,839 |
|
|
|
27,048 |
|
|
|
107,167 |
|
|
|
105,100 |
|
Depreciation and
amortization |
|
|
43,761 |
|
|
|
45,280 |
|
|
|
47,188 |
|
|
|
178,946 |
|
|
|
193,138 |
|
Long-lived and other asset
impairment |
|
|
6,243 |
|
|
|
5,121 |
|
|
|
7,424 |
|
|
|
21,397 |
|
|
|
79,556 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
99,830 |
|
Restructuring charges |
|
|
950 |
|
|
|
313 |
|
|
|
1,414 |
|
|
|
2,903 |
|
|
|
8,450 |
|
Interest expense |
|
|
25,424 |
|
|
|
25,508 |
|
|
|
25,052 |
|
|
|
108,135 |
|
|
|
105,716 |
|
Debt extinguishment loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,971 |
|
(Gain) loss on sale of assets,
net |
|
|
(709 |
) |
|
|
(15,393 |
) |
|
|
430 |
|
|
|
(30,258 |
) |
|
|
(10,643 |
) |
Other (income) expense,
net |
|
|
(3,073 |
) |
|
|
337 |
|
|
|
(42 |
) |
|
|
(4,707 |
) |
|
|
(1,359 |
) |
Income (loss) before income
taxes |
|
|
4,526 |
|
|
|
13,229 |
|
|
|
5,490 |
|
|
|
38,961 |
|
|
|
(85,982 |
) |
Provision for (benefit from)
income taxes |
|
|
(1,466 |
) |
|
|
3,925 |
|
|
|
699 |
|
|
|
10,744 |
|
|
|
(17,537 |
) |
Net income (loss) |
|
$ |
5,992 |
|
|
$ |
9,304 |
|
|
$ |
4,791 |
|
|
$ |
28,217 |
|
|
$ |
(68,445 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income
(loss) per common share (1) |
|
$ |
0.04 |
|
|
$ |
0.06 |
|
|
$ |
0.03 |
|
|
$ |
0.18 |
|
|
$ |
(0.46 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
152,320 |
|
|
|
152,158 |
|
|
|
151,161 |
|
|
|
151,684 |
|
|
|
150,828 |
|
Diluted |
|
|
152,442 |
|
|
|
152,297 |
|
|
|
151,215 |
|
|
|
151,830 |
|
|
|
150,828 |
|
(1) Basic and diluted net income (loss) 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 net income per common
share.
Archrock, Inc.Unaudited
Supplemental Information(in thousands, except percentages,
per share amounts and ratios)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract operations |
|
$ |
159,501 |
|
|
$ |
158,911 |
|
|
$ |
168,772 |
|
|
$ |
648,311 |
|
|
$ |
738,918 |
|
Aftermarket services |
|
|
35,748 |
|
|
|
36,255 |
|
|
|
30,554 |
|
|
|
133,150 |
|
|
|
136,052 |
|
Total revenue |
|
$ |
195,249 |
|
|
$ |
195,166 |
|
|
$ |
199,326 |
|
|
$ |
781,461 |
|
|
$ |
874,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract operations |
|
$ |
99,047 |
|
|
$ |
97,631 |
|
|
$ |
110,170 |
|
|
$ |
403,825 |
|
|
$ |
477,831 |
|
Aftermarket services |
|
|
5,242 |
|
|
|
5,603 |
|
|
|
3,834 |
|
|
|
18,719 |
|
|
|
19,946 |
|
Total gross margin |
|
$ |
104,289 |
|
|
$ |
103,234 |
|
|
$ |
114,004 |
|
|
$ |
422,544 |
|
|
$ |
497,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract operations |
|
|
62 |
% |
|
|
61 |
% |
|
|
65 |
% |
|
|
62 |
% |
|
|
65 |
% |
Aftermarket services |
|
|
15 |
% |
|
|
15 |
% |
|
|
13 |
% |
|
|
14 |
% |
|
|
15 |
% |
Total gross margin percentage |
|
|
53 |
% |
|
|
53 |
% |
|
|
57 |
% |
|
|
54 |
% |
|
|
57 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
$ |
27,167 |
|
|
$ |
28,839 |
|
|
$ |
27,048 |
|
|
$ |
107,167 |
|
|
$ |
105,100 |
|
% of revenue |
|
|
14 |
% |
|
|
15 |
% |
|
|
14 |
% |
|
|
14 |
% |
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (1) |
|
$ |
83,499 |
|
|
$ |
92,351 |
|
|
$ |
88,712 |
|
|
$ |
360,809 |
|
|
$ |
414,770 |
|
% of revenue |
|
|
43 |
% |
|
|
47 |
% |
|
|
45 |
% |
|
|
46 |
% |
|
|
47 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
27,004 |
|
|
$ |
32,132 |
|
|
$ |
9,959 |
|
|
$ |
97,885 |
|
|
$ |
140,302 |
|
Proceeds from sale of
property, plant and equipment and other assets |
|
|
(5,149 |
) |
|
|
(70,785 |
) |
|
|
(5,605 |
) |
|
|
(112,907 |
) |
|
|
(52,562 |
) |
Net capital expenditures |
|
$ |
21,855 |
|
|
$ |
(38,653 |
) |
|
$ |
4,354 |
|
|
$ |
(15,022 |
) |
|
$ |
87,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available horsepower (at
period end) (2) |
|
|
3,878 |
|
|
|
3,913 |
|
|
|
4,120 |
|
|
|
3,878 |
|
|
|
4,120 |
|
Total operating horsepower (at
period end) (3) |
|
|
3,247 |
|
|
|
3,196 |
|
|
|
3,388 |
|
|
|
3,247 |
|
|
|
3,388 |
|
Average operating
horsepower |
|
|
3,220 |
|
|
|
3,225 |
|
|
|
3,423 |
|
|
|
3,282 |
|
|
|
3,657 |
|
Horsepower utilization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spot (at period end) |
|
|
84 |
% |
|
|
82 |
% |
|
|
82 |
% |
|
|
84 |
% |
|
|
82 |
% |
Average |
|
|
83 |
% |
|
|
82 |
% |
|
|
83 |
% |
|
|
82 |
% |
|
|
86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend declared for the
period per share |
|
$ |
0.145 |
|
|
$ |
0.145 |
|
|
$ |
0.145 |
|
|
$ |
0.580 |
|
|
$ |
0.580 |
|
Dividend declared for the
period to all shareholders |
|
$ |
22,598 |
|
|
$ |
22,393 |
|
|
$ |
22,192 |
|
|
$ |
89,590 |
|
|
$ |
88,853 |
|
Cash available for dividend
coverage (4) |
|
|
2.0 |
x |
|
|
2.2 |
x |
|
|
2.5 |
x |
|
|
2.2 |
x |
|
|
2.9 |
x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow (5) |
|
$ |
6,928 |
|
|
$ |
120,828 |
|
|
$ |
65,408 |
|
|
$ |
253,507 |
|
|
$ |
250,247 |
|
Free cash flow after dividend
(5) |
|
$ |
(15,423 |
) |
|
$ |
98,322 |
|
|
$ |
43,231 |
|
|
$ |
164,164 |
|
|
$ |
161,415 |
|
(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, 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 cash available
for dividend divided by dividends declared for the
period.(5) Management believes free cash flow and 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 and the amount of cash that is available for
dividends, debt repayment and other general corporate purposes.
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
Balance
Sheet |
|
|
|
|
|
|
|
|
|
Long-term debt (1) |
|
$ |
1,530,825 |
|
$ |
1,516,135 |
|
$ |
1,688,867 |
Total equity |
|
|
891,438 |
|
|
904,047 |
|
|
935,557 |
(1) Carrying
values are shown net of unamortized debt premium and deferred
financing costs.
Archrock, Inc.Unaudited
Supplemental Information(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Reconciliation of Net
Income (Loss) to Adjusted EBITDA and Gross Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
5,992 |
|
|
$ |
9,304 |
|
|
$ |
4,791 |
|
|
$ |
28,217 |
|
|
$ |
(68,445 |
) |
Depreciation and
amortization |
|
|
43,761 |
|
|
|
45,280 |
|
|
|
47,188 |
|
|
|
178,946 |
|
|
|
193,138 |
|
Long-lived and other asset
impairment |
|
|
6,243 |
|
|
|
5,121 |
|
|
|
7,424 |
|
|
|
21,397 |
|
|
|
79,556 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
99,830 |
|
Restructuring charges |
|
|
950 |
|
|
|
313 |
|
|
|
1,414 |
|
|
|
2,903 |
|
|
|
8,450 |
|
Interest expense |
|
|
25,424 |
|
|
|
25,508 |
|
|
|
25,052 |
|
|
|
108,135 |
|
|
|
105,716 |
|
Debt extinguishment loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,971 |
|
Stock-based compensation
expense |
|
|
2,595 |
|
|
|
2,900 |
|
|
|
2,128 |
|
|
|
11,336 |
|
|
|
10,551 |
|
Indemnification (income)
expense, net (1) |
|
|
— |
|
|
|
— |
|
|
|
16 |
|
|
|
(869 |
) |
|
|
(460 |
) |
Provision for (benefit from)
income taxes |
|
|
(1,466 |
) |
|
|
3,925 |
|
|
|
699 |
|
|
|
10,744 |
|
|
|
(17,537 |
) |
Adjusted EBITDA (2) |
|
|
83,499 |
|
|
|
92,351 |
|
|
|
88,712 |
|
|
|
360,809 |
|
|
|
414,770 |
|
Selling, general and
administrative |
|
|
27,167 |
|
|
|
28,839 |
|
|
|
27,048 |
|
|
|
107,167 |
|
|
|
105,100 |
|
Stock-based compensation
expense |
|
|
(2,595 |
) |
|
|
(2,900 |
) |
|
|
(2,128 |
) |
|
|
(11,336 |
) |
|
|
(10,551 |
) |
Indemnification income
(expense), net (1) |
|
|
— |
|
|
|
— |
|
|
|
(16 |
) |
|
|
869 |
|
|
|
460 |
|
(Gain) loss on sale of assets,
net |
|
|
(709 |
) |
|
|
(15,393 |
) |
|
|
430 |
|
|
|
(30,258 |
) |
|
|
(10,643 |
) |
Other (income) expense,
net |
|
|
(3,073 |
) |
|
|
337 |
|
|
|
(42 |
) |
|
|
(4,707 |
) |
|
|
(1,359 |
) |
Gross margin (2) |
|
$ |
104,289 |
|
|
$ |
103,234 |
|
|
$ |
114,004 |
|
|
$ |
422,544 |
|
|
$ |
497,777 |
|
(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 |
|
Year Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Reconciliation of Net
Income (Loss) to Adjusted EBITDA and Cash Available for
Dividend |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
5,992 |
|
|
$ |
9,304 |
|
|
$ |
4,791 |
|
|
$ |
28,217 |
|
|
$ |
(68,445 |
) |
Depreciation and
amortization |
|
|
43,761 |
|
|
|
45,280 |
|
|
|
47,188 |
|
|
|
178,946 |
|
|
|
193,138 |
|
Long-lived and other asset
impairment |
|
|
6,243 |
|
|
|
5,121 |
|
|
|
7,424 |
|
|
|
21,397 |
|
|
|
79,556 |
|
Goodwill impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
99,830 |
|
Restructuring charges |
|
|
950 |
|
|
|
313 |
|
|
|
1,414 |
|
|
|
2,903 |
|
|
|
8,450 |
|
Interest expense |
|
|
25,424 |
|
|
|
25,508 |
|
|
|
25,052 |
|
|
|
108,135 |
|
|
|
105,716 |
|
Debt extinguishment loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,971 |
|
Stock-based compensation
expense |
|
|
2,595 |
|
|
|
2,900 |
|
|
|
2,128 |
|
|
|
11,336 |
|
|
|
10,551 |
|
Indemnification (income)
expense, net |
|
|
— |
|
|
|
— |
|
|
|
16 |
|
|
|
(869 |
) |
|
|
(460 |
) |
Provision for (benefit from)
income taxes |
|
|
(1,466 |
) |
|
|
3,925 |
|
|
|
699 |
|
|
|
10,744 |
|
|
|
(17,537 |
) |
Adjusted EBITDA (1) |
|
|
83,499 |
|
|
|
92,351 |
|
|
|
88,712 |
|
|
|
360,809 |
|
|
|
414,770 |
|
Less: Maintenance capital
expenditures |
|
|
(11,883 |
) |
|
|
(14,086 |
) |
|
|
(4,019 |
) |
|
|
(47,346 |
) |
|
|
(31,958 |
) |
Less: Other capital
expenditures |
|
|
(1,789 |
) |
|
|
(3,430 |
) |
|
|
(4,763 |
) |
|
|
(13,376 |
) |
|
|
(29,214 |
) |
Less: Cash tax refund
(payment) |
|
|
358 |
|
|
|
— |
|
|
|
118 |
|
|
|
(247 |
) |
|
|
(94 |
) |
Less: Cash interest
expense |
|
|
(24,640 |
) |
|
|
(24,707 |
) |
|
|
(23,737 |
) |
|
|
(100,002 |
) |
|
|
(99,797 |
) |
Cash available for dividend
(2) |
|
$ |
45,545 |
|
|
$ |
50,128 |
|
|
$ |
56,311 |
|
|
$ |
199,838 |
|
|
$ |
253,707 |
|
(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 |
|
Year Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Reconciliation of Cash
Flows From Operating Activities to Cash Available for
Dividend |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
28,675 |
|
|
$ |
82,108 |
|
|
$ |
68,444 |
|
|
$ |
237,400 |
|
|
$ |
335,278 |
|
Inventory write-downs |
|
|
(376 |
) |
|
|
(110 |
) |
|
|
(434 |
) |
|
|
(997 |
) |
|
|
(1,349 |
) |
Provision for credit
losses |
|
|
241 |
|
|
|
(366 |
) |
|
|
(1,290 |
) |
|
|
90 |
|
|
|
(3,525 |
) |
Gain (loss) on sale of assets,
net |
|
|
709 |
|
|
|
15,393 |
|
|
|
(430 |
) |
|
|
30,258 |
|
|
|
10,643 |
|
Current income tax provision
(benefit) |
|
|
(67 |
) |
|
|
142 |
|
|
|
175 |
|
|
|
365 |
|
|
|
227 |
|
Cash tax refund (payment) |
|
|
358 |
|
|
|
— |
|
|
|
118 |
|
|
|
(247 |
) |
|
|
(94 |
) |
Amortization of operating
lease ROU assets |
|
|
(958 |
) |
|
|
(1,031 |
) |
|
|
(922 |
) |
|
|
(3,880 |
) |
|
|
(3,477 |
) |
Amortization of contract
costs |
|
|
(4,467 |
) |
|
|
(4,771 |
) |
|
|
(6,343 |
) |
|
|
(19,990 |
) |
|
|
(26,629 |
) |
Deferred revenue recognized in
earnings |
|
|
2,301 |
|
|
|
3,033 |
|
|
|
2,306 |
|
|
|
10,382 |
|
|
|
19,489 |
|
Cash restructuring
charges |
|
|
950 |
|
|
|
313 |
|
|
|
1,414 |
|
|
|
2,903 |
|
|
|
6,790 |
|
Indemnification (income)
expense, net |
|
|
— |
|
|
|
— |
|
|
|
16 |
|
|
|
(869 |
) |
|
|
(460 |
) |
Changes in assets and
liabilities |
|
|
32,958 |
|
|
|
(25,953 |
) |
|
|
3,099 |
|
|
|
9,535 |
|
|
|
(19,098 |
) |
Maintenance capital
expenditures |
|
|
(11,883 |
) |
|
|
(14,086 |
) |
|
|
(4,019 |
) |
|
|
(47,346 |
) |
|
|
(31,958 |
) |
Other capital
expenditures |
|
|
(1,789 |
) |
|
|
(3,430 |
) |
|
|
(4,763 |
) |
|
|
(13,376 |
) |
|
|
(29,214 |
) |
Payments for settlement of
interest rate swaps that include financing elements |
|
|
(1,107 |
) |
|
|
(1,114 |
) |
|
|
(1,060 |
) |
|
|
(4,390 |
) |
|
|
(2,916 |
) |
Cash available for dividend
(1) |
|
$ |
45,545 |
|
|
$ |
50,128 |
|
|
$ |
56,311 |
|
|
$ |
199,838 |
|
|
$ |
253,707 |
|
(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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
2021 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Reconciliation of Cash
Flows From Operating Activities to Free Cash Flow and Free Cash
Flow After Dividend |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
28,675 |
|
|
$ |
82,108 |
|
|
$ |
68,444 |
|
|
$ |
237,400 |
|
|
$ |
335,278 |
|
Net cash provided by (used in)
investing activities |
|
|
(21,747 |
) |
|
|
38,720 |
|
|
|
(3,036 |
) |
|
|
16,107 |
|
|
|
(85,031 |
) |
Free cash flow (1) |
|
|
6,928 |
|
|
|
120,828 |
|
|
|
65,408 |
|
|
|
253,507 |
|
|
|
250,247 |
|
Dividends paid to
stockholders |
|
|
(22,351 |
) |
|
|
(22,506 |
) |
|
|
(22,177 |
) |
|
|
(89,343 |
) |
|
|
(88,832 |
) |
Free cash flow after dividend
(1) |
|
$ |
(15,423 |
) |
|
$ |
98,322 |
|
|
$ |
43,231 |
|
|
$ |
164,164 |
|
|
$ |
161,415 |
|
(1) Management believes free cash flow and
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 and the amount of cash
that is available for dividends, debt repayment and other general
corporate purposes.
Archrock, Inc.Unaudited
Supplemental Information(in thousands)
|
|
|
|
|
|
|
|
|
Annual Guidance Range |
|
|
2022 |
|
|
Low |
|
High |
Reconciliation of Net
Income to Adjusted EBITDA and Cash Available for
Dividend |
|
|
|
|
|
|
Net income (1) |
|
$ |
15,000 |
|
|
$ |
55,000 |
|
Depreciation and
amortization |
|
|
179,000 |
|
|
|
179,000 |
|
Interest expense |
|
|
98,000 |
|
|
|
98,000 |
|
Stock-based compensation
expense |
|
|
11,000 |
|
|
|
11,000 |
|
Provision for income
taxes |
|
|
17,000 |
|
|
|
17,000 |
|
Adjusted EBITDA (2) |
|
|
320,000 |
|
|
|
360,000 |
|
Less: Maintenance capital
expenditures |
|
|
55,000 |
|
|
|
75,000 |
|
Less: Other capital
expenditures |
|
|
8,000 |
|
|
|
10,000 |
|
Less: Cash tax refund |
|
|
(1,000 |
) |
|
|
(1,000 |
) |
Less: Cash interest
expense |
|
|
95,000 |
|
|
|
95,000 |
|
Cash available for dividend
(3)(4) |
|
$ |
163,000 |
|
|
$ |
181,000 |
|
(1) 2022 annual guidance for net income
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 2021 and 2020 was $21.4
million and $79.6 million, respectively.(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 $(9.5) million
and $19.1 million for the years 2021 and 2020, respectively.
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