Archrock, Inc. 2026 Q2 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Archrock, Inc. is a premier provider of natural gas compression services and aftermarket services in the U.S. The company operates two primary segments: Contract Operations (owning and operating compression equipment) and Aftermarket Services (maintenance, parts, and overhaul services for customer-owned equipment).
Key Financial Metrics (Six Months Ended June 30, 2026)
| Metric | Value (in millions) |
|---|---|
| Total Revenue | $745.0 |
| Net Income | $140.5 |
| Earnings Per Share (Diluted) | $0.79 |
| Adjusted Gross Margin | $491.9 |
| Operating Cash Flow | $346.6 |
| Capital Expenditures | ($211.4) |
| Long-Term Debt | $2,347.8 |
| Cash and Cash Equivalents | $2.0 |
Material Changes vs. Prior Period
- Revenue: Increased 2% year-over-year (YoY) to $745.0 million for the six months ended June 30, 2026, driven by a 7% increase in Contract Operations revenue ($660.1M), partially offset by a 24% decline in Aftermarket Services revenue ($84.9M) due to lower parts sales and reduced maintenance demand.
- Profitability: Net income rose 5% YoY to $140.5 million. Adjusted gross margin increased 7% to $491.9 million, primarily due to higher rates and additional revenue from the NGCS Acquisition.
- Costs: SG&A expenses increased 16% YoY ($84.9M vs $73.5M), largely due to higher long-term incentive compensation and IT expenses. Interest expense decreased 4% YoY ($76.5M vs $79.5M) due to a lower weighted-average effective interest rate.
- Impairments: Long-lived asset impairment decreased to $10.1 million from $11.8 million, excluding a one-time $8.7 million write-down of assets held for sale in the prior year.
Guidance, Outlook, and Management Commentary
- Capital Expenditures: Management projects 2026 capital expenditures between $400 million and $445 million, split between growth ($250M–$275M) and maintenance ($125M–$135M).
- Debt Management: In April 2026, the company redeemed $800 million of 2028 Notes. In January 2026, it issued $800 million of 6.0% senior notes due 2034. The company maintains a $1.5 billion Credit Facility with significant undrawn capacity.
- Shareholder Returns: The Board declared a quarterly dividend of $0.23 per share (up from $0.22 in Q1 2026). The Share Repurchase Program has $113.2 million in remaining capacity through December 31, 2026.
- Outlook: Management anticipates lube oil cost pressure in the second half of 2026. The company expects operating cash flows and credit facility availability to be sufficient to meet liquidity needs.
Investor Verification Checklist
- Debt Structure: Verify the impact of the new 2034 Notes issuance and the redemption of 2028 Notes on future interest expense and covenant compliance.
- Aftermarket Volatility: Assess the sustainability of the 24% decline in Aftermarket Services revenue and its impact on overall margin mix.
- Capital Commitments: Review the $868.9 million in contractual obligations for fleet assets through 2029, with $258.8 million due within 12 months.
- Asset Impairment: Monitor the $10.1 million impairment charge related to idle compressors and the criteria for future fleet retirements.
- Compensation Costs: Evaluate the impact of rising stock-based compensation and cash-settled incentives on SG&A expenses.