Archrock, Inc.

How Archrock makes money

Archrock provides natural gas compression equipment and services to energy companies in the United States. Contract operations supply most revenue; aftermarket services maintain equipment owned by customers.

Latest quarterly results

Adjusted EBITDA excludes interest, taxes, depreciation, amortization, impairments, stock compensation and selected other items. Quarterly capital spending was $117.9 million. Archrock reaffirmed full-year 2026 adjusted EBITDA guidance of $865 million to $885 million in its November 2 results.

Contract compression revenue rose 1.5%, while maintenance deferrals and lower parts sales reduced aftermarket revenue. Fleet utilization was 94.3% at September 30.

Cash and debt before the proposed acquisition

At September 30, cash was $4.1 million and the carrying value of debt was $2.343 billion. The $1.5 billion revolver had $860.3 million outstanding and $3.2 million of letters of credit, leaving $636.5 million unused.

The reported leverage ratio, a measure of debt relative to earnings, was 2.5 times, down from 3.1 times a year earlier. The quarterly dividend was $0.23 per share. Archrock made no share repurchases during the quarter.

Proposed HiVolt acquisition

On November 10, Archrock agreed to acquire HiVolt for a base cash price of $415 million, subject to purchase-price adjustments. The deal remains pending, with closing expected in Q1 2027 subject to regulatory approval and other conditions. HiVolt would operate as a separate segment.

A separate employee incentive plan provides up to $35 million linked to performance in 2027 through 2029 and continued employment, with specified exceptions. Payments are scheduled for 2028 through 2030 and are expected to be treated as compensation expense.

The financing plan calls for a $425 million revolving-credit draw, including $10 million of transaction fees and expenses. Archrock forecasts post-deal leverage within 3.0 to 3.5 times and about 3.0 times at year-end 2027.

HiVolt has more than 80 megawatts of contracted capacity and initial power contracts of five to eight years. Its forecast 2028 adjusted EBITDA is $70 million to $75 million. About 70% is supported by operating, contracted and awarded opportunities; awarded projects include verbal awards.

Access to more than 500 megawatts of equipment supports planned expansion but is not current operating capacity. More than 95% of forecast 2028 adjusted EBITDA is expected from upstream and midstream customers.

Our analysis of the HiVolt price and project pipeline examines what is secured today and what the earnings forecast still depends on.