Executive Summary

Archrock delivered a strong Q1 2025 with revenue of $347.2M, GAAP EPS of $0.40 and adjusted EPS of $0.42; results beat S&P Global consensus on both EPS (+$0.05) and revenue (+$4.7M), driven by record contract operations margins, higher revenue per horsepower, and non-core asset sale gains . Consensus: EPS $0.37*, Revenue $342.5M*.
Management raised FY2025 Adjusted EBITDA guidance to $790–$830M (from $750–$790M), increased cash available for dividend guidance, and lifted segment revenue/margin targets, reflecting Q1 outperformance and eight months of NGCS contribution; net income guidance was trimmed to include deal-related costs .
Fleet utilization remained at 96% with operating horsepower up ~70k sequentially (ex-asset sales); monthly revenue per horsepower reached a company record of $23.54, underscoring constructive pricing and mix .
Strategic progress: closed the NGCS acquisition (immediately accretive; ~2.25M shares issued; $299M cash funded via ABL), lifted buyback authorization by $50M to $65.2M capacity, and declared a $0.19 dividend (15% YoY increase) with 3.9x coverage .

What Went Well and What Went Wrong

What Went Well
- Record profitability: Contract operations adjusted gross margin held at 70% for the second consecutive quarter; adjusted EBITDA rose to $197.8M (57% of revenue) .
- Strong pricing and utilization: 96% utilization, >70k sequential operating horsepower growth (ex-asset sales), and monthly revenue per horsepower reached $23.54—a company record .
- Accretive consolidation and capital returns: Closed NGCS (immediately accretive to EPS and cash available for dividend), raised 2025 EBITDA guidance, maintained leverage at 3.2x, increased buyback authorization and declared a $0.19 dividend with 3.9x coverage .
- Management quote: “Our outstanding first quarter results were driven by solid execution and our operational transformation… We maintained record equipment utilization… and delivered outstanding profitability in both business segments” .
What Went Wrong
- GAAP net income guidance trimmed: FY2025 net income range lowered ($245–$285M vs $253–$293M prior) to reflect deal-related costs and assumptions, even as EBITDA guidance rose .
- Maintenance CapEx outlook increased: FY2025 maintenance CapEx raised to $110–$120M (from $105–$115M) to reflect planned overhaul activity for the newly acquired fleet .
- Macro uncertainty watch items: Management cited OPEC actions and tariff headlines as sources of short-term volatility; however, customers have not signaled changes to 2025 development plans to date .

Financial Results

Revenue, EPS, margins vs prior periods and estimates

Metric	Q1 2024	Q3 2024	Q4 2024	Q1 2025
Revenue ($M)	$268.5	$292.2	$326.4	$347.2
Net Income ($M)	$40.5	$37.5	$59.8	$70.9
GAAP Diluted EPS ($)	$0.26	$0.22	$0.34	$0.40
Adjusted Net Income ($M)	$40.5	$47.3	$61.5	$74.5
Adjusted EPS ($)	$0.26	$0.28	$0.35	$0.42
Adjusted EBITDA ($M)	$131.0	$150.9	$183.8	$197.8
Adjusted EBITDA Margin (%)	49%	52%	56%	57%

Consensus vs. Actual (Q1 2025)

Metric	Consensus	Actual	Delta
Revenue ($M)	$342.5*	$347.2	+$4.7
Primary EPS ($)	$0.37*	$0.42	+$0.05

Values retrieved from S&P Global.*

Segment breakdown

Segment	Q1 2024	Q4 2024	Q1 2025
Contract Operations Revenue ($M)	$223.1	$286.5	$300.4
Contract Ops Adj. Gross Margin ($M)	$145.3	$200.2	$210.6
Contract Ops Adj. Gross Margin (%)	65%	70%	70%
Aftermarket Services Revenue ($M)	$45.4	$40.0	$46.8
AMS Adj. Gross Margin ($M)	$10.4	$9.1	$11.5
AMS Adj. Gross Margin (%)	23%	23%	25%

KPIs

KPI	Q1 2024	Q4 2024	Q1 2025
Total Available HP (MM)	3.780	4.401	4.461
Total Operating HP (MM)	3.593	4.227	4.283
Utilization (Spot, %)	95%	96%	96%
Cash Available for Dividend ($M)	$82.0	$118.1	$132.2
Dividend Coverage (x)	3.2x	3.5x	3.9x
Dividend Per Share ($)	$0.165	$0.190	$0.190
Leverage Ratio (x)	3.2x (Mar-24)	3.3x (Dec-24)	3.2x (Mar-25)

Notes on non-GAAP: Q1 2025 GAAP net income included $3.9M transaction costs, $1.0M non-cash impairment, $0.7M restructuring; adjusted EBITDA included $7.3M net gains on asset sales; these adjustments supported adjusted EPS of $0.42 vs GAAP EPS of $0.40 .

Guidance Changes

Metric	Period	Previous Guidance (Feb 24, 2025)	Current Guidance (May 5, 2025)	Change
Net Income ($M)	FY 2025	$253–$293	$245–$285	Lowered (deal costs)
Adjusted EBITDA ($M)	FY 2025	$750–$790	$790–$830	Raised
Cash Available for Dividend ($M)	FY 2025	$456–$471	$480–$495	Raised
Contract Ops Revenue ($M)	FY 2025	$1,200–$1,235	$1,260–$1,290	Raised
Contract Ops Adj. GM (%)	FY 2025	68–71%	69–71%	Raised low end
AMS Revenue ($M)	FY 2025	$190–$210	$190–$210	Maintained
AMS Adj. GM (%)	FY 2025	22–24%	22–24%	Maintained
SG&A ($M)	FY 2025	$147–$142	$149–$144 (as printed)	Slightly higher
Growth CapEx ($M)	FY 2025	$330–$370	$330–$370	Maintained
Maintenance CapEx ($M)	FY 2025	$105–$115	$110–$120	Raised
Other CapEx ($M)	FY 2025	$35–$50	$35–$50	Maintained
Dividend	Q1 2025	—	$0.19 declared (payable May 13)	Declared

Management attributed the EBITDA raise to Q1 outperformance and ~~8 months of NGCS contribution (~~$30M uplift at midpoint), while net income guidance embeds transaction-related costs .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q3 2024; Q-1: Q4 2024)	Current Period (Q1 2025)	Trend
AI/data center-driven gas demand	“Expanding opportunity set” incl. power generation for AI/data centers ; EIA 2–3% production growth, AI onshoring noted	Continues as a long-term demand driver; compression infrastructure investment needed	Positive, sustained
Supply chain & tariffs	Lead times normalized (42–44 weeks); tariffs a risk but not material	Tariff impacts estimated low-single-digit; 2025 orders largely price-locked; reflected in plan	Manageable risk
Pricing & utilization	Pricing higher QoQ; margin expansion ambition	15% YoY rev/HP increase; long-term contract opportunities ; Q1 monthly revenue/HP record; pricing increases moderating amid tight market	Still constructive
Electrification (EMD)	EMD mix to 40–50% of newbuild CapEx over time	Leader in EMD; 2025 focus on large midstream & EMD; power availability is gating item	Expanding selectively
M&A integration	TOPS closed; integration on track; accretive	NGCS closed May 1; immediately accretive; modeled ~sub-7x multiple; no synergies modeled yet	Scale-up underway
Macro/regulatory	Strong LNG, midstream buildout thesis	OPEC/tariff headlines monitored; no 2025 customer plan changes	Watchful but steady
Regional trends	Permian-led growth; incremental Haynesville	Permian highest compression intensity; small Haynesville exposure (2–3% of fleet)	Permian-led

Management Commentary

Strategy and quality: “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” — Brad Childers, CEO .
Market and backlog: “We have a substantial contracted backlog for 2025, and we are booking units for 2026… our fleet remains fully utilized at 96%” .
Capital allocation: “We are committed to our prudent and returns-based capital allocation approach… dividend coverage remains over 3.0x… Board… approved an increase in the Company’s share repurchase program by an additional $50 million” .
Profit drivers: “Results further benefited from $7 million in net asset sale gains… and higher total adjusted gross margin dollars for contract operations and aftermarket services on a sequential basis” — Doug Aron, CFO .

Q&A Highlights

Macro sensitivity and actions: Management is monitoring OPEC-driven oil volatility and tariffs but noted no customer changes to 2025 plans; should activity moderate, Archrock can quickly flex OpEx/CapEx to protect cash flow .
Pricing and contracts: Pricing increases have moderated after catching up for inflation, but tight utilization supports returns; opportunity to extend contract terms where appropriate, while meeting customers “where they are” across tenures .
NGCS deal math: Guidance uplift implies ~$30M EBITDA contribution for 8 months; purchase multiple just under 7x with backlog coming online by mid-year; no synergies modeled yet .
Permian vs. dry gas: Permian remains most compression-intensive; Haynesville is 2–3% of fleet and not expected to grow materially for Archrock; bookings remain ~70–80% Permian .
Electrification: ~30% of newbuild CapEx dedicated to electric units; power availability is the gating factor; Archrock is agnostic gas drive vs. electric and can deliver both .

Estimates Context

Q1 2025 beat consensus on both EPS and revenue: EPS $0.42 vs $0.37*, revenue $347.2M vs $342.5M*; four estimates for each metric . Values retrieved from S&P Global.*
Potential estimate revisions: Raised FY2025 Adjusted EBITDA and segment revenue/margin guidance, plus NGCS accretion, likely drive upward revisions to EBITDA/FCF; maintenance CapEx uplift and inclusion of transaction costs may temper net income/EPS revisions .

Key Takeaways for Investors

Core operating momentum intact: High utilization, record revenue/HP, and 70% contract ops margins underpin durable profitability into 2025 .
Guidance reset upward where it counts: EBITDA and cash available for dividend ranges increased; net income range lower largely on deal-cost assumptions .
Visible growth pipeline: Backlog fully supports 2025 plan; 2026 bookings underway with constructive pricing dynamics .
Accretive consolidation: NGCS closed with immediate accretion; leverage remains disciplined at 3.2x; buyback authorization increased .
Watch items: Tariff pass-throughs (low single-digit) and oil macro; maintenance CapEx lifted for acquired fleet overhauls; management prepared to flex OpEx/CapEx if activity slows .
Dividend strength: $0.19/share quarterly dividend with 3.9x coverage in Q1 supports continued return growth as profits expand .
Tactical angle: Post-beat and guidance raise, the narrative is about sustained margin quality and backlog conversion; any datapoints on EMD power availability and large-horsepower starts are incremental catalysts .

Archrock, Inc. (AROC)·Q1 2025 Earnings Summary