Archrock (AROC) Q4 2025 Earnings Call Transcript

Motley Fool Transcribing, The Motley Fool

Wed, February 25, 2026 astatine 11:21 AM CST 45 min read

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Wednesday, Feb. 25, 2026 astatine 8:30 a.m. ET

• President & Chief Executive Officer — D. Childers

• Chief Financial Officer — Douglas Aron

D. Childers: Thank you, Megan, and bully morning, everyone. 2025 was an unthinkable twelvemonth for Archrock, 1 that leveraged a multiyear translation of the concern and demonstrated the strength, durability and scalability of our strategy against what continues to beryllium a robust outlook for our business. Before I reappraisal our 4th fourth and 2025 performance, I privation to convey our employees crossed the enactment for their tireless absorption connected safety, lawsuit work and execution. This was different highly engaged year, and our squad delivered. The results we're reporting contiguous simply bash not hap without the committedness and excellence of Archrock's astonishing team. We achieved overmuch crossed the concern successful 2025.

Compared to 2024, we accrued adjusted EPS by 68% and adjusted EBITDA by 51%. Importantly, with beardown Q4 results, we delivered adjusted EBITDA supra the midpoint of guidance aft raising our outlook doubly during the year. Building connected the advancement we've made successful pricing, ratio and outgo discipline, our declaration operations and aftermarket Services segments delivered outstanding adjusted gross margins. Contract operations achieved 70% positive adjusted gross margins for the 5th consecutive quarter, underscoring fantabulous execution successful a choky market. We proceed to heighten and standardize our fleet done disciplined portfolio actions, completing our 2nd accretive acquisition successful 18 months portion executing plus income of 325,000 horsepower for $192 million, which we redeployed into high-return caller physique investments.

Taken together, these actions drove 8% operating horsepower maturation compared to 2024. Our high-quality fleet has maintained afloat utilization of 95% oregon higher for the past 11 quarters, underscoring the spot of request for our equipment, our services and the reliability of our operations. We translated this show into meaningful worth for shareholders, returning $212 cardinal done dividends and stock repurchases during 2025, up implicit 70% year-over-year. We besides concurrently drove our year-end leverage ratio to 2.7x, demonstrating our cash-generating capacity. Overall, 2025 was a twelvemonth of exceptional net growth, equilibrium expanse strengthening and superior returns, providing a beardown instauration arsenic we participate 2026.

As we look up to 2026, our strategy is grounded successful the relation earthy state continues to play arsenic a captious constituent of the planetary vigor mix. Our strategical absorption for 2026 centers connected 3 priorities. First, capturing opportunities to put successful our earthy state levered transformed vigor infrastructure and compression level by helping our customers determination much state to marketplace much efficiently, safely and with little biology impact. We proceed to allocate superior toward ample horsepower and electrical centrifugal thrust compression, wherever we spot durable demand, beardown returns and wide benefits for some our customers and our shareholders. Second, maximizing the reliability of our work for our customers. Reliability remains our cardinal worth proposition.