Archrock Inc (AROC) Reports a 101% Increase in Net Income for Q3 2023
Archrock Inc (NYSE:AROC) reported a net income of $30.9 million for Q3 2023, a 101% increase from Q3 2022's $15.4 million.
Contract operations segment revenue increased by 22% to $207.6 million compared to Q3 2022.
Aftermarket services segment revenue rose to $45.8 million, a 6% increase from Q3 2022.
The company repurchased 354,012 common shares at an average price of $12.49 per share, totaling approximately $4.4 million.
Archrock Inc (NYSE:AROC) released its Q3 2023 earnings report on November 2, 2023, revealing a significant increase in net income and strong operational performance. The company's net income for the quarter was $30.9 million, a 101% increase from the $15.4 million reported in Q3 2022. This increase was driven by a robust operational and financial performance, setting new records for utilization, monthly revenue per horsepower, and quarterly Adjusted EBITDA.
Financial Performance
Archrock's contract operations segment revenue for Q3 2023 totaled $207.6 million, marking a 22% increase compared to $170.5 million in Q3 2022. The aftermarket services segment revenue also saw an increase, totaling $45.8 million compared to $43.2 million in Q3 2022. The gross margin for contract operations was 64%, up from 58% in Q3 2022, while the aftermarket services gross margin was 20%, up from 17% in Q3 2022.
Shareholder Returns
The company's board of directors declared a quarterly dividend of $0.155 per share of common stock, or $0.62 per share on an annualized basis. The dividend coverage in Q3 2023 was 2.6x. During the quarter, Archrock repurchased 354,012 common shares at an average price of $12.49 per share, for an aggregate of approximately $4.4 million.
Management Commentary
Brad Childers, Archrocks President and Chief Executive Officer, commented on the company's performance, stating,
During the third quarter, we delivered excellent operational and financial performance and set new records for utilization, monthly revenue per horsepower and quarterly Adjusted EBITDA. We also achieved a milestone leverage ratio of 3.8x times and increased returns to our shareholders through both a dividend raise and share buybacks."
Outlook
Looking ahead, Archrock expects to see continued growth and strong demand for compression, combined with tight equipment supply and continued capital discipline across the value chain. The company remains committed to its differentiated capital allocation framework, which includes increasing shareholder returns through annual dividend growth of 5%, reducing its leverage ratio further to a range of 3.0 to 3.5 times, and preserving the option to buy back additional shares.
Explore the complete 8-K earnings release (here) from Archrock Inc for further details.
This article first appeared on GuruFocus.
