Archrock 2025 Q1 Earnings Stellar Results as Net Income Jumps 75%

Archrock(AROC) reported its fiscal 2025 Q1 earnings on May 06th, 2025. Archrock's financial results surpassed expectations with significant revenue growth and record net income. The company raised its full-year 2025 guidance, projecting adjusted EBITDA between $790 million and $830 million, indicating confidence in sustaining strong operational performance. Archrock's strategic acquisition of Natural Gas Compression Systems underscores its commitment to expanding its capabilities in natural gas compression services. The company declared a quarterly dividend of $0.19 per share, reflecting a 15% increase from the previous year, supported by robust dividend coverage. Despite macroeconomic uncertainties, Archrock's operational excellence and industry consolidation strategy position it favorably for continued growth.

Revenue

Archrock's total revenue for 2025 Q1 reached $347.16 million, marking a 29.3% increase compared to the previous year. In the contract operations segment, Archrock achieved $300.40 million in revenue, reflecting the strength of its core business. Meanwhile, the aftermarket services segment generated $46.77 million. Overall, these results demonstrate the company's successful execution across its segments.

Earnings/Net Income

Archrock's earnings per share (EPS) climbed to $0.40 in 2025 Q1 from $0.26 in 2024 Q1, showcasing a 53.8% increase. The company's net income soared by 74.8%, totaling $70.85 million compared to $40.53 million in the same period last year. This robust EPS growth highlights Archrock's strength in increasing profitability.

Price Action

The stock price of Archrock has edged up 1.14% during the latest trading day, has edged down 1.44% during the most recent full trading week, and has edged down 2.01% month-to-date.

Post-Earnings Price Action Review

Archrock's strategy of purchasing shares following revenue increases quarter-over-quarter and holding them for 30 days has delivered a 36.09% return over the past five years. However, this performance trails the benchmark return of 83.12%, reflecting an excess return of -47.04%. The strategy's compound annual growth rate stood at 6.43%, with a maximum drawdown of -19.04%. The Sharpe ratio of 0.40 suggests moderate returns and risk, indicating that while the approach yielded positive returns, it fell short compared to broader market performance. This underscores the importance of evaluating investment strategies in light of market benchmarks, risk tolerance, and long-term financial goals.

CEO Commentary

"Our outstanding first quarter results were driven by solid execution and our operational transformation from prior and ongoing investments in our high-quality asset base and innovative processes and technology," said Brad Childers, Archrock’s President and Chief Executive Officer. "We maintained record equipment utilization and, excluding asset sales, grew our operating fleet by over 70,000 horsepower. Our excellent underlying business performance and financial strength have positioned us to participate in value-creating industry consolidation. We believe our production-oriented business, high-graded operation, and outstanding financial position provide us with differentiated cash flow stability, giving us good visibility into our outlook this coming year, even in the face of macroeconomic uncertainty."

Guidance

Archrock provided updated guidance for full-year 2025, projecting net income between $245 million and $285 million. The company expects adjusted EBITDA in the range of $790 million to $830 million and anticipates cash available for dividends between $480 million and $495 million. For segment revenue, Archrock forecasts contract operations revenue between $1.26 billion and $1.29 billion, with an adjusted gross margin percentage of 69% to 71%.

Additional News

In recent developments, Archrock completed the acquisition of Natural Gas Compression Systems (NGCS) on May 1, 2025, further enhancing its asset base and capabilities in the natural gas compression sector. The acquisition aligns with Archrock's strategic growth initiatives and strengthens its position as a leading provider of compression services. Additionally, Archrock declared a quarterly dividend of $0.19 per share, marking a 15% increase from Q1 2024, supported by a robust dividend coverage ratio of 3.9x. The company's capital allocation strategy also includes a share repurchase program, with the Board approving an additional $50 million for buybacks through April 2026, reflecting Archrock's commitment to returning value to shareholders.