Archrock, Inc. Q4 FY2025 earnings call

Brad thanked employees for their work. 2025 saw adjusted EPS increase 68% and adjusted EBITDA 51%. 2026 strategy focuses on investing in natural gas levered transformed energy infrastructure, maximizing service reliability through technology deployment, and disciplined capital allocation. Continued to enhance fleet through acquisitions and asset sales, driving operating horsepower growth. Returned $212 million to shareholders in 2025. Doug discussed financial results, including net income and adjusted EBITDA for 2025, and 2026 guidance on adjusted EBITDA, capital expenditures, etc.

Contract operations delivered outstanding performance, supported by excellent execution and continued high demand for our compression fleet. Our fleet remained fully utilized during the quarter, exiting at 95.5%. Contract operations achieved 70% plus adjusted gross margins for the fifth consecutive quarter. Aftermarket Services segment performance remained solid despite seasonal slowdown, with adjusted gross margin percentage remaining firmly above 20%

2026 adjusted EBITDA guidance is $865 million to $915 million, midpoint $890 million. Total 2026 capital expenditures expected to be approximately $400 million to $445 million, with growth CapEx between $250 million and $275 million

Supply chain lead times have extended, which could impact equipment delivery. Also, competition and market dynamics could affect performance

Q: Doug Irwin on growth CapEx and organic horsepower.

A: Brad Childers said CapEx should translate to about 170,000 horsepower in 2026, with 60% starting in first half.

Q: Jim Rollyson on lead times and pricing.

A: Brad said lead times for gas drive equipment are out to 110 - 120 weeks, but 2026 bookings are 85% committed, and pricing expected to have modest increases.

Q: Nate Pendleton on units sold and noncore assets.

A: Brad discussed disciplined asset management, including sales of nonstrategic assets.

Q: Eli Jossen on growth CapEx upside and basin focus.

A: Brad said upside possible but shop space full, and focus on Permian Basin with diversified footprint.

Q: Selman Akyol on utilization extension and consolidation.

A: Brad said utilization likely to extend due to durable gas demand, and past success in acquiring asset packages.

Q: Steve Ferazani on SG&A and aftermarket.

A: Brad discussed SG&A scaling and prudent growth in aftermarket.

Q: Elvira Scotto on technology and customer outsourcing.

A: Brad talked about technology investments for uptime and profitability, and no shift in customer in-sourcing/out-sourcing dynamic.

Q: Nicholas Amicucci on AI demand and aftermarket.

A: Brad said AI driving improvements and aftermarket has prudent growth approach