Archrock, Inc. (NYSE: AROC) (“Archrock”) today reported results for
the first quarter of 2023.
First Quarter 2023 and Recent
Highlights
- Revenue for the first quarter of
2023 was $229.8 million compared to $197.2 million in the first
quarter of 2022.
- Net income for the first quarter of
2023 was $16.5 million compared to $1.7 million in the
first quarter of 2022.
- Adjusted EBITDA (a non-GAAP measure
defined below) for the first quarter of 2023 was $97.2 million
compared to $81.4 million in the first quarter of 2022.
- Declared a quarterly dividend of
$0.15 per common share for the first quarter of 2023, resulting in
dividend coverage of 2.0x, and announced a $50 million share
repurchase authorization.
- Achieved record period-end utilization of 94% for the first
quarter of 2023 compared to 84% in the first quarter of 2022.
- Trending toward the high-end of 2023 Adjusted EBITDA guidance
range of $400 million to $430 million.
Management Commentary and Outlook
“It’s an exciting time for the compression industry, and with
the strategic actions we’ve taken to transform and differentiate
our franchise, we believe Archrock has never been in a better
position than it is today,” said Brad Childers, Archrock’s
President and Chief Executive Officer. “Strong customer demand
drove utilization at the end of the first quarter to another
all-time high of 94%. This translated into meaningful growth in
quarterly revenue, gross margin and Adjusted EBITDA, putting us
well on our way to delivering our previously announced financial
guidance for 2023. In addition, we believe this significant
inflection in Archrock’s 2023 performance is created by market
supply and demand fundamentals that also support a robust
multi-year outlook for natural gas, compression and Archrock.
“As we navigate the tightest compression market we have seen in
decades, we are focused on demonstrating our improving earnings
power through excellent operating execution, continuing to deliver
a first-rate customer experience, harnessing the benefits of our
upgraded technology platform and high-graded asset base and
prioritizing opportunities to help our customers with emissions
management. We also remain committed to creating value for our
shareholders through disciplined capital allocation. We expect to
reduce our leverage ratio to below 4.0 times this year, creating a
visible path to consistent and meaningful increases in cash returns
to shareholders over time,” concluded Childers.
First Quarter 2023 Financial
Results
Archrock’s first quarter 2023 net income of
$16.5 million included a non-cash long-lived and other asset
impairment of $2.6 million and restructuring charges of $1.0
million. Archrock’s first quarter 2022 net income of $1.7 million
included a non-cash long-lived and other asset impairment of $7.4
million.
Adjusted EBITDA for the first quarter of 2023
and 2022 included $3.6 million and $2.1 million, respectively, in
net gains related to the sale of compression and other assets.
Contract Operations
For the first quarter of 2023, contract
operations segment revenue totaled $187.7 million, an increase of
15% compared to $163.7 million in the first quarter of 2022. Gross
margin (a non-GAAP measure defined below) was $108.3 million, up 9%
from $99.2 million in the first quarter of 2022 and includes $2.0
million in sales tax expense related to the usage of compression
equipment that was previously captured in selling, general and
administrative expense. Gross margin percentage of 58% for the
first quarter of 2023, compared to 61% in the first quarter of
2022. Total operating horsepower at the end of the first quarter of
2023 was 3.5 million compared with 3.3 million at the end of the
first quarter of 2022. Utilization at the end of the first quarter
of 2023 was 94%, compared to 84% at the end of the first quarter of
2022.
Aftermarket Services
For the first quarter of 2023, aftermarket
services segment revenue totaled $42.1 million, an increase of 25%
compared to $33.5 million in the first quarter of 2022, driven by
higher parts sales and service activity. Gross margin of $8.2
million increased 67% compared to $4.9 million in the first quarter
of 2022. Gross margin percentage was 19%, up from 15% in the prior
year quarter.
Balance Sheet
Long-term debt was $1.5 billion at March 31,
2023 and our available liquidity totaled $495.9 million. Our
leverage ratio was 4.1x, compared to 4.5x as of March 31, 2022.
Quarterly Dividend
Our Board of Directors recently declared a
quarterly dividend of $0.15 per share of common stock, or $0.60 per
share on an annualized basis. Dividend coverage in the first
quarter of 2023 was 2.0x. The first quarter 2023 dividend will be
paid on May 16, 2023 to stockholders of record at the close of
business on May 9, 2023.
Summary Metrics(in thousands,
except percentages, per share amounts and ratios)
|
|
Three Months Ended |
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
|
2023 |
|
2022 |
|
2022 |
|
Net income |
|
$ |
16,485 |
|
$ |
10,458 |
|
$ |
1,721 |
|
Adjusted EBITDA |
|
$ |
97,199 |
|
$ |
89,040 |
|
$ |
81,432 |
|
|
|
|
|
|
|
|
|
|
|
Contract operations
revenue |
|
$ |
187,745 |
|
$ |
177,350 |
|
$ |
163,656 |
|
Contract operations gross
margin |
|
$ |
108,263 |
|
$ |
103,002 |
|
$ |
99,155 |
|
Contract operations gross
margin percentage |
|
|
58 |
% |
|
58 |
% |
|
61 |
% |
|
|
|
|
|
|
|
|
|
|
Aftermarket services
revenue |
|
$ |
42,089 |
|
$ |
41,521 |
|
$ |
33,545 |
|
Aftermarket services gross
margin |
|
$ |
8,181 |
|
$ |
7,116 |
|
$ |
4,907 |
|
Aftermarket services gross
margin percentage |
|
|
19 |
% |
|
17 |
% |
|
15 |
% |
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative |
|
$ |
26,425 |
|
$ |
31,220 |
|
$ |
27,773 |
|
|
|
|
|
|
|
|
|
|
|
Cash available for
dividend |
|
$ |
46,247 |
|
$ |
34,898 |
|
$ |
41,147 |
|
Cash available for dividend
coverage |
|
|
2.0 |
x |
|
1.5 |
x |
|
1.8 |
x |
|
|
|
|
|
|
|
|
|
|
Free cash flow |
|
$ |
30,190 |
|
$ |
(27,252 |
) |
$ |
39,914 |
|
Free cash flow after
dividend |
|
$ |
6,338 |
|
$ |
(49,841 |
) |
$ |
17,241 |
|
|
|
|
|
|
|
|
|
|
|
Total available horsepower (at
period end) |
|
|
3,729 |
|
|
3,726 |
|
|
3,881 |
|
Total operating horsepower (at
period end) |
|
|
3,504 |
|
|
3,448 |
|
|
3,275 |
|
Horsepower utilization spot
(at period end) |
|
|
94 |
% |
|
93 |
% |
|
84 |
% |
Conference Call Details
Archrock will host a conference call on
Wednesday, May 3, 2023, to discuss first quarter 2023 financial
results. 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, unrealized
change in fair value of investment in unconsolidated affiliate,
restructuring charges, non-cash stock-based compensation expense,
amortization of capitalized implementation costs and other items. A
reconciliation of Adjusted EBITDA to net income, the most directly
comparable GAAP measure, and a reconciliation of our full year 2023
Adjusted EBITDA guidance to net income 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, 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, unrealized change in fair value of investment in
unconsolidated affiliate, restructuring charges, non-cash
stock-based compensation expense, amortization of capitalized
implementation costs 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 and net cash provided by operating activities, the most
directly comparable GAAP measures, and a reconciliation of our
updated full year 2023 cash available for dividend guidance to net
income 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 primary
focus on midstream natural gas compression and a commitment to
helping its customers produce, compress and transport natural
gas in a safe and environmentally responsible way. Headquartered
in Houston, Texas, Archrock is the leading provider of
natural gas compression services to customers in the energy
industry throughout the U.S. and a leading supplier of
aftermarket services to customers that own compression equipment.
For more information on how Archrock embodies its purpose, WE POWER
A CLEANER AMERICA, 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: 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, geopolitical 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 ability to develop and deploy new
technologies and services, including ECOTEC’s products and
services, 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; 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, 2022, Archrock’s Quarterly
Report on Form 10-Q for the quarter ended March 31, 2023 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 |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
Contract operations |
|
$ |
187,745 |
|
|
$ |
177,350 |
|
|
$ |
163,656 |
|
Aftermarket services |
|
|
42,089 |
|
|
|
41,521 |
|
|
|
33,545 |
|
Total revenue |
|
|
229,834 |
|
|
|
218,871 |
|
|
|
197,201 |
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (excluding
depreciation and amortization): |
|
|
|
|
|
|
|
|
|
Contract operations |
|
|
79,482 |
|
|
|
74,348 |
|
|
|
64,501 |
|
Aftermarket services |
|
|
33,908 |
|
|
|
34,405 |
|
|
|
28,638 |
|
Total cost of sales (excluding depreciation and amortization) |
|
|
113,390 |
|
|
|
108,753 |
|
|
|
93,139 |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
|
26,425 |
|
|
|
31,220 |
|
|
|
27,773 |
|
Depreciation and
amortization |
|
|
40,181 |
|
|
|
39,911 |
|
|
|
43,039 |
|
Long-lived and other asset
impairment |
|
|
2,569 |
|
|
|
5,225 |
|
|
|
7,416 |
|
Restructuring charges |
|
|
1,047 |
|
|
|
— |
|
|
|
— |
|
Interest expense |
|
|
26,581 |
|
|
|
26,380 |
|
|
|
25,246 |
|
Gain on sale of assets,
net |
|
|
(3,605 |
) |
|
|
(6,739 |
) |
|
|
(2,112 |
) |
Other (income) expense,
net |
|
|
603 |
|
|
|
1,897 |
|
|
|
36 |
|
Income before income
taxes |
|
|
22,643 |
|
|
|
12,224 |
|
|
|
2,664 |
|
Provision for income
taxes |
|
|
6,158 |
|
|
|
1,766 |
|
|
|
943 |
|
Net income |
|
$ |
16,485 |
|
|
$ |
10,458 |
|
|
$ |
1,721 |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income
per common share(1) |
|
$ |
0.10 |
|
|
$ |
0.07 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
|
154,116 |
|
|
|
153,615 |
|
|
|
152,690 |
|
Diluted |
|
|
154,281 |
|
|
|
153,744 |
|
|
|
152,810 |
|
(1) Basic and diluted net income 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 |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
Contract operations |
|
$ |
187,745 |
|
|
$ |
177,350 |
|
|
$ |
163,656 |
|
Aftermarket services |
|
|
42,089 |
|
|
|
41,521 |
|
|
|
33,545 |
|
Total revenue |
|
$ |
229,834 |
|
|
$ |
218,871 |
|
|
$ |
197,201 |
|
|
|
|
|
|
|
|
|
|
|
Gross margin(1): |
|
|
|
|
|
|
|
|
|
Contract operations |
|
$ |
108,263 |
|
|
$ |
103,002 |
|
|
$ |
99,155 |
|
Aftermarket services |
|
|
8,181 |
|
|
|
7,116 |
|
|
|
4,907 |
|
Total gross margin |
|
$ |
116,444 |
|
|
$ |
110,118 |
|
|
$ |
104,062 |
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage: |
|
|
|
|
|
|
|
|
|
Contract operations |
|
|
58 |
% |
|
|
58 |
% |
|
|
61 |
% |
Aftermarket services |
|
|
19 |
% |
|
|
17 |
% |
|
|
15 |
% |
Total gross margin percentage |
|
|
51 |
% |
|
|
50 |
% |
|
|
53 |
% |
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
|
$ |
26,425 |
|
|
$ |
31,220 |
|
|
$ |
27,773 |
|
% of revenue |
|
|
11 |
% |
|
|
14 |
% |
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1) |
|
$ |
97,199 |
|
|
$ |
89,040 |
|
|
$ |
81,432 |
|
% of revenue |
|
|
42 |
% |
|
|
41 |
% |
|
|
41 |
% |
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
84,392 |
|
|
$ |
68,835 |
|
|
$ |
44,858 |
|
Proceeds from sale of
property, plant and equipment and other assets |
|
|
(28,726 |
) |
|
|
(7,132 |
) |
|
|
(5,437 |
) |
Net capital expenditures |
|
$ |
55,666 |
|
|
$ |
61,703 |
|
|
$ |
39,421 |
|
|
|
|
|
|
|
|
|
|
|
Total available horsepower (at
period end)(2) |
|
|
3,729 |
|
|
|
3,726 |
|
|
|
3,881 |
|
Total operating horsepower (at
period end)(3) |
|
|
3,504 |
|
|
|
3,448 |
|
|
|
3,275 |
|
Average operating
horsepower |
|
|
3,475 |
|
|
|
3,394 |
|
|
|
3,257 |
|
Horsepower utilization: |
|
|
|
|
|
|
|
|
|
Spot (at period end) |
|
|
94 |
% |
|
|
93 |
% |
|
|
84 |
% |
Average |
|
|
93 |
% |
|
|
91 |
% |
|
|
84 |
% |
|
|
|
|
|
|
|
|
|
|
Dividend declared for the
period per share |
|
$ |
0.150 |
|
|
$ |
0.150 |
|
|
$ |
0.145 |
|
Dividend declared for the
period to all shareholders |
|
$ |
23,504 |
|
|
$ |
23,614 |
|
|
$ |
22,584 |
|
Cash available for dividend
coverage(4) |
|
|
2.0 |
x |
|
|
1.5 |
x |
|
|
1.8 |
x |
|
|
|
|
|
|
|
|
|
|
Free cash flow(1) |
|
$ |
30,190 |
|
|
$ |
(27,252 |
) |
|
$ |
39,914 |
|
Free cash flow after
dividend(1) |
|
$ |
6,338 |
|
|
$ |
(49,841 |
) |
|
$ |
17,241 |
|
(1) Management believes gross margin, Adjusted EBITDA, 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 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.
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2023 |
|
2022 |
|
2022 |
Balance
Sheet |
|
|
|
|
|
|
|
|
|
Long-term debt(1) |
|
$ |
1,547,274 |
|
$ |
1,548,334 |
|
$ |
1,517,015 |
Total equity |
|
|
853,050 |
|
|
860,693 |
|
|
872,323 |
(1) Carrying values are shown net of
unamortized premium and deferred financing costs.
Archrock, Inc.Unaudited
Supplemental InformationReconciliation of Net
Income to Adjusted EBITDA and Gross Margin(in
thousands)
|
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Net income |
|
$ |
16,485 |
|
|
$ |
10,458 |
|
|
$ |
1,721 |
|
Depreciation and
amortization |
|
|
40,181 |
|
|
|
39,911 |
|
|
|
43,039 |
|
Long-lived and other asset
impairment |
|
|
2,569 |
|
|
|
5,225 |
|
|
|
7,416 |
|
Unrealized change in fair
value of investment in unconsolidated affiliate |
|
|
254 |
|
|
|
1,864 |
|
|
|
— |
|
Restructuring charges |
|
|
1,047 |
|
|
|
— |
|
|
|
— |
|
Interest expense |
|
|
26,581 |
|
|
|
26,380 |
|
|
|
25,246 |
|
Stock-based compensation
expense |
|
|
3,327 |
|
|
|
2,893 |
|
|
|
3,067 |
|
Amortization of capitalized
implementation costs(1) |
|
|
597 |
|
|
|
543 |
|
|
|
— |
|
Provision for income
taxes |
|
|
6,158 |
|
|
|
1,766 |
|
|
|
943 |
|
Adjusted EBITDA(2) |
|
|
97,199 |
|
|
|
89,040 |
|
|
|
81,432 |
|
Selling, general and
administrative |
|
|
26,425 |
|
|
|
31,220 |
|
|
|
27,773 |
|
Stock-based compensation
expense |
|
|
(3,327 |
) |
|
|
(2,893 |
) |
|
|
(3,067 |
) |
Amortization of capitalized
implementation costs |
|
|
(597 |
) |
|
|
(543 |
) |
|
|
— |
|
Unrealized change in fair
value of investment in unconsolidated affiliate |
|
|
(254 |
) |
|
|
(1,864 |
) |
|
|
— |
|
Gain on sale of assets,
net |
|
|
(3,605 |
) |
|
|
(6,739 |
) |
|
|
(2,112 |
) |
Other (income) expense,
net |
|
|
603 |
|
|
|
1,897 |
|
|
|
36 |
|
Gross margin(2) |
|
$ |
116,444 |
|
|
$ |
110,118 |
|
|
$ |
104,062 |
|
(1) The amortization of capitalized implementation costs is
a new adjustment beginning in the fourth quarter of 2022; as such,
only the amounts for the fourth quarter of 2022 and first quarter
of 2023 have been included. (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 InformationReconciliation of Net
Income to Adjusted EBITDA and Cash Available for
Dividend(in thousands)
|
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Net income |
|
$ |
16,485 |
|
|
$ |
10,458 |
|
|
$ |
1,721 |
|
Depreciation and
amortization |
|
|
40,181 |
|
|
|
39,911 |
|
|
|
43,039 |
|
Long-lived and other asset
impairment |
|
|
2,569 |
|
|
|
5,225 |
|
|
|
7,416 |
|
Unrealized change in fair
value of investment in unconsolidated affiliate |
|
|
254 |
|
|
|
1,864 |
|
|
|
— |
|
Restructuring charges |
|
|
1,047 |
|
|
|
— |
|
|
|
— |
|
Interest expense |
|
|
26,581 |
|
|
|
26,380 |
|
|
|
25,246 |
|
Stock-based compensation
expense |
|
|
3,327 |
|
|
|
2,893 |
|
|
|
3,067 |
|
Amortization of capitalized
implementation costs(1) |
|
|
597 |
|
|
|
543 |
|
|
|
— |
|
Provision for income
taxes |
|
|
6,158 |
|
|
|
1,766 |
|
|
|
943 |
|
Adjusted EBITDA(2) |
|
|
97,199 |
|
|
|
89,040 |
|
|
|
81,432 |
|
Less: Maintenance capital
expenditures |
|
|
(22,562 |
) |
|
|
(24,695 |
) |
|
|
(13,546 |
) |
Less: Other capital
expenditures |
|
|
(2,578 |
) |
|
|
(3,849 |
) |
|
|
(1,983 |
) |
Less: Cash tax payment |
|
|
(18 |
) |
|
|
(4 |
) |
|
|
(3 |
) |
Less: Cash interest
expense |
|
|
(25,794 |
) |
|
|
(25,594 |
) |
|
|
(24,753 |
) |
Cash available for
dividend(3) |
|
$ |
46,247 |
|
|
$ |
34,898 |
|
|
$ |
41,147 |
|
(1) The amortization of capitalized implementation costs is
a new adjustment beginning in the fourth quarter of 2022; as such,
only the amounts for the fourth quarter of 2022 and first quarter
of 2023 have been included. (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.
Archrock, Inc.Unaudited
Supplemental InformationReconciliation of Cash
Flows from Operating Activities to Cash Available for
Dividend(in thousands)
|
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Net cash provided by operating activities |
|
$ |
87,856 |
|
|
$ |
37,118 |
|
|
$ |
76,572 |
|
Inventory write-downs |
|
|
(216 |
) |
|
|
(600 |
) |
|
|
(294 |
) |
Provision for (benefit from)
credit losses |
|
|
340 |
|
|
|
(234 |
) |
|
|
(108 |
) |
Gain on sale of assets,
net |
|
|
3,605 |
|
|
|
6,739 |
|
|
|
2,112 |
|
Current income tax provision
(benefit) |
|
|
277 |
|
|
|
161 |
|
|
|
57 |
|
Cash tax payment |
|
|
(18 |
) |
|
|
(4 |
) |
|
|
(3 |
) |
Amortization of operating
lease ROU assets |
|
|
(823 |
) |
|
|
(799 |
) |
|
|
(780 |
) |
Amortization of contract
costs |
|
|
(5,090 |
) |
|
|
(4,951 |
) |
|
|
(4,476 |
) |
Deferred revenue recognized in
earnings |
|
|
4,476 |
|
|
|
5,247 |
|
|
|
3,115 |
|
Cash restructuring
charges |
|
|
120 |
|
|
|
— |
|
|
|
— |
|
Changes in assets and
liabilities |
|
|
(19,140 |
) |
|
|
20,765 |
|
|
|
(18,185 |
) |
Maintenance capital
expenditures |
|
|
(22,562 |
) |
|
|
(24,695 |
) |
|
|
(13,546 |
) |
Other capital
expenditures |
|
|
(2,578 |
) |
|
|
(3,849 |
) |
|
|
(1,983 |
) |
Payments for settlement of
interest rate swaps that include financing elements |
|
|
— |
|
|
|
— |
|
|
|
(1,334 |
) |
Cash available for
dividend(1) |
|
$ |
46,247 |
|
|
$ |
34,898 |
|
|
$ |
41,147 |
|
(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 InformationReconciliation of Cash
Flows From Operating Activities to Free Cash Flow and Free Cash
Flow After Dividend(in thousands)
|
|
Three Months Ended |
|
|
March 31, |
|
December 31, |
|
March 31, |
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Net cash provided by operating activities |
|
$ |
87,856 |
|
|
$ |
37,118 |
|
|
$ |
76,572 |
|
Net cash used in investing
activities |
|
|
(57,666 |
) |
|
|
(64,370 |
) |
|
|
(36,658 |
) |
Free cash flow(1) |
|
|
30,190 |
|
|
|
(27,252 |
) |
|
|
39,914 |
|
Dividends paid to
stockholders |
|
|
(23,852 |
) |
|
|
(22,589 |
) |
|
|
(22,673 |
) |
Free cash flow after
dividend(1) |
|
$ |
6,338 |
|
|
$ |
(49,841 |
) |
|
$ |
17,241 |
|
(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 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 InformationReconciliation of Net
Income to Adjusted EBITDA and Cash Available for
Dividend(in thousands)
|
|
|
|
|
|
|
|
|
Annual Guidance Range |
|
|
2023 |
|
|
|
Low |
|
High |
Net income (1) |
|
$ |
75,000 |
|
|
$ |
105,000 |
|
Interest expense |
|
|
111,000 |
|
|
|
111,000 |
|
Provision for income
taxes |
|
|
33,000 |
|
|
|
33,000 |
|
Depreciation and
amortization |
|
|
167,000 |
|
|
|
167,000 |
|
Stock-based compensation
expense |
|
|
12,000 |
|
|
|
12,000 |
|
Amortization of capitalized
implementation costs |
|
|
2,000 |
|
|
|
2,000 |
|
Adjusted EBITDA (2) |
|
|
400,000 |
|
|
|
430,000 |
|
Less: Maintenance capital
expenditures |
|
|
(75,000 |
) |
|
|
(80,000 |
) |
Less: Other capital
expenditures |
|
|
(15,000 |
) |
|
|
(15,000 |
) |
Less: Cash interest
expense |
|
|
(108,000 |
) |
|
|
(108,000 |
) |
Cash available for dividend
(3)(4) |
|
$ |
202,000 |
|
|
$ |
227,000 |
|
(1) 2023 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 both 2022 and 2021 was $21.4
million.(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 $(24.5) million
and $(9.5) million for 2022 and 2021, respectively.
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