Archrock — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for Q3 2026 was $370.8 million, a decrease from $382.4 million in Q3 2025.
• Net income for Q3 2026 was $84.5 million ($0.48 EPS), compared to $71.2 million ($0.40 EPS) in Q3 2025.
• Adjusted net income for Q3 2026 was $84.7 million ($0.49 adjusted EPS), compared to $73.2 million ($0.42 adjusted EPS) in Q3 2025.
• Adjusted EBITDA for Q3 2026 was $228.4 million, an increase from $220.9 million in Q3 2025.
• Net cash provided by operating activities for Q3 2026 was $158.8 million, down from $164.5 million in Q3 2025.
• Adjusted free cash flow for Q3 2026 was $49.6 million, compared to $113.8 million in Q3 2025.
• Adjusted free cash flow after dividends for Q3 2026 was $9.0 million, compared to $76.9 million in Q3 2025.
• Long-term debt was $2.3 billion as of September 30, 2026, down from $2.56 billion as of September 30, 2025.
• Leverage ratio was 2.5x as of September 30, 2026, down from 3.1x as of September 30, 2025.
• Available liquidity totaled $637 million as of September 30, 2026.
• Q3 2026 net income included a $3.2 million non-cash long-lived and other asset impairment, compared to $4.7 million in Q3 2025.
• Q3 2025 Adjusted EBITDA included a $9.9 million net benefit from sales and use tax audit settlements.

Guidance and Future Outlook:

• Reaffirmed full-year 2026 Adjusted EBITDA guidance of $865 million to $885 million.
• Management cited strong underlying demand fundamentals supported by rising gas-to-oil ratios and additional takeaway capacity in the Permian Basin.
• Outlook is supported by durable natural gas demand driven by long-term growth in LNG exports and power generation.
• Management expects to generate durable free cash flow and deliver consistent shareholder returns.

Business Segments and Product Lines:

• Contract Operations revenue was $331.2 million in Q3 2026, an increase of 1.5% from $326.3 million in Q3 2025.
• Contract Operations adjusted gross margin was $238.7 million (72% margin) in Q3 2026, compared to $239.6 million (73% margin) in Q3 2025.
• Aftermarket Services revenue was $39.7 million in Q3 2026, a decrease from $56.2 million in Q3 2025, primarily due to reduced customer demand for major maintenance and lower parts sales.
• Aftermarket Services adjusted gross margin was $9.1 million (23% margin) in Q3 2026, compared to $13.0 million (23% margin) in Q3 2025.
• Total operating horsepower at period-end was 4.5 million in Q3 2026, down from 4.7 million in Q3 2025, reflecting the sale of approximately 112,000 non-strategic operating horsepower.
• Period-end fleet utilization was 94.3% in Q3 2026, compared to 96.0% in Q3 2025.
• Achieved strongest bookings quarter since Q2 2023, with strong bookings in the Permian Basin.

Market and Competitive Landscape:

• The compression market is described as structurally tight.
• Rising gas-to-oil ratios and additional takeaway capacity in the Permian Basin are supporting sustained compression requirements.
• Management noted higher lube oil prices created near-term cost pressure, which is being mitigated through cost discipline and operating efficiencies.

Risks and Challenges:

• Customer maintenance deferrals affected aftermarket activity.
• Higher lube oil prices created near-term cost pressure.
• Forward-looking statements note risks including macroeconomic conditions, inflation, trade tensions, pandemics, international conflicts, competitive pressures, and risks related to debt and interest rates.
• Risks include inability to access capital markets on affordable terms, erosion of customer financial condition, loss of significant customers, and uncertainty regarding contract renewals.

Management Commentary and Tone:

• Brad Childers, President and CEO, stated that the business reflects consistent customer demand and a structurally tight compression market.
• Management expressed confidence in the long-term outlook due to strong underlying demand fundamentals.
• The tone emphasized executing a disciplined growth program, deploying horsepower to meet demand, and delivering operational reliability.
• Management highlighted a strong balance sheet and a disciplined, returns-based approach to capital deployment.

Other Key Points:

• Declared a quarterly dividend of $0.23 per common share for Q3 2026, approximately 10% higher than Q3 2025.
• Dividend coverage for Q3 2026 was 3.8x.
• No shares were repurchased during Q3 2026; $113.2 million remained available under the share repurchase program as of September 30, 2026.
• Since the program's inception in April 2023 through September 30, 2026, the company repurchased 4,632,263 shares for an aggregate price of $96.9 million (average price of $20.91 per share).
• Q3 2026 Adjusted EBITDA included $2.1 million in net gains primarily related to the sale of compression and other assets.
• Q3 2025 Adjusted EBITDA included $3.8 million in net gains primarily related to the sale of compression and other assets.