Archrock, Inc. Files Q2 2024 10-Q

TL;DR

Archrock's Q2 10-Q is out - check financials and asset impairment details.

AI Summary

Archrock, Inc. filed its 10-Q for the period ending June 30, 2024. The filing details financial performance and operational updates for the company, which is involved in natural gas transmission. Key financial figures and business segments are presented, along with disclosures on asset impairments and share repurchase programs.

Why It Matters

This filing provides investors with a detailed look at Archrock's financial health and operational status for the second quarter of 2024, influencing investment decisions.

Risk Assessment

Risk Level: medium — The filing includes disclosures on asset impairments, which can indicate potential future financial challenges or write-downs.

Key Numbers

• 20240630 — Period End Date (The filing covers financial performance up to this date.)
• 20240731 — Filing Date (The date the 10-Q was officially submitted to the SEC.)

Key Players & Entities

• Archrock, Inc. (company) — Filer of the 10-Q
• 0001389050-24-000035 (other) — Accession Number for the filing
• 20240630 (date) — Conformed period of report
• NATURAL GAS TRANSMISSION [4922] (industry) — Standard Industrial Classification
• EXTERRAN HOLDINGS INC. (company) — Former company name
• Iliad Holdings, INC (company) — Former company name
• aroc:ShareRepurchaseProgram2023Member (program) — Share repurchase program
• aroc:StockIncentivePlans2013And2020Member (plan) — Stock incentive plans

FAQ

Key Financial Figures

• $0.01 — nge on which registered Common stock, $0.01 par value per share AROC New York S
• $500.0 million — ar ended December 31, 2023 2027 Notes $500.0 million of 6.875% senior notes due April 2027,
• $800.0 million — 2027, issued in March 2019 2028 Notes $800.0 million of 6.25% senior notes due April 2028, $
• $300.0 million — n of which was issued in December 2019, $300.0 million of which was issued in December 2020 A
• $750.0 million — ting Standards Update Credit Facility $750.0 million asset-based revolving credit facility d
• $50.0 million — 023 that allowed us to repurchase up to $50.0 million of outstanding common stock for a perio

Filing Documents

• aroc-20240630x10q.htm (10-Q) — 1991KB
• aroc-20240630xex31d1.htm (EX-31.1) — 18KB
• aroc-20240630xex31d2.htm (EX-31.2) — 16KB
• aroc-20240630xex32d1.htm (EX-32.1) — 8KB
• aroc-20240630xex32d2.htm (EX-32.2) — 7KB
• 0001389050-24-000035.txt ( ) — 8320KB
• aroc-20240630.xsd (EX-101.SCH) — 51KB
• aroc-20240630_cal.xml (EX-101.CAL) — 59KB
• aroc-20240630_def.xml (EX-101.DEF) — 227KB
• aroc-20240630_lab.xml (EX-101.LAB) — 457KB
• aroc-20240630_pre.xml (EX-101.PRE) — 346KB
• aroc-20240630x10q_htm.xml (XML) — 1623KB

Forward-Looking Statements

Forward-Looking Statements 4

Financial Information

Part I. Financial Information

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) 5 Condensed Consolidated Balance Sheets 5 Condensed Consolidated Statements of Operations 6 Condensed Consolidated Statements of Equity 7 Condensed Consolidated Statements of Cash Flows 9 Notes to Unaudited Condensed Consolidated Financial Statements 10

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 25

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 33

Controls and Procedures

Item 4. Controls and Procedures 33

Other Information

Part II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 35

Risk Factors

Item 1A. Risk Factors 35

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 37

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 37

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 37

Other Information

Item 5. Other Information 37

Exhibits

Item 6. Exhibits 38

Signatures

Signatures 39 2 Table of Contents GLOSSARY The following terms and abbreviations appearing in the text of this report have the meanings indicated below. 2013 Plan 2013 Stock Incentive Plan 2020 Plan 2020 Stock Incentive Plan 2023 Form 10-K Annual Report on Form 10-K for the year ended December 31, 2023 2027 Notes $500.0 million of 6.875% senior notes due April 2027, issued in March 2019 2028 Notes $800.0 million of 6.25% senior notes due April 2028, $500.0 million of which was issued in December 2019, $300.0 million of which was issued in December 2020 Amended and Restated Credit Agreement Amended and Restated Credit Agreement, dated May 16, 2023, which amended and restated that Credit Agreement, dated as of March 30, 2017, which governs the Credit Facility Archrock, our, we, us Archrock, Inc., individually and together with its wholly-owned subsidiaries Archrock ELT Archrock ELT LLC, an indirect, wholly owned subsidiary of Archrock ASU Accounting Standards Update Credit Facility $750.0 million asset-based revolving credit facility due May 2028, as governed by the Amended and Restated Credit Agreement, dated May 16, 2023, which amended and restated that Credit Agreement, dated as of March 30, 2017 ECOTEC Ecotec International Holdings, LLC ESPP Employee Stock Purchase Plan Exchange Act Securities Exchange Act of 1934, as amended FASB Financial Accounting Standards Board

Financial Statements

Financial Statements Condensed consolidated financial statements included in Part I Item 1 of this Quarterly Report on Form 10-Q GAAP U.S. generally accepted accounting principles GHG Greenhouse gases (carbon dioxide, methane and water vapor for example) Hilcorp Hilcorp Energy Company Ionada Ionada PLC LIBOR London Interbank Offered Rate OTC Over-the-counter, as related to aftermarket services parts and components SEC U.S. Securities and Exchange Commission SG&A Selling, general and administrative Share Repurchase Program Share repurchase program approved by our Board of Directors on April 27, 2023 that allowed us to repurchase up to $50.0 million of outstanding common stock for a period of twelve months, which prior to its expiration was extended on April 25, 2024 for an additional 24-month period and a replenishment of the authorized share repurchase amount to $50.0 million TOPS Total Operations and Production Services, LLC, a portfolio company managed by certain affiliates of Apollo Global Management, Inc. TOPS Acquisition Transaction announced on July 22, 2024 pursuant to the asset purchase agreement entered into on July 22, 2024 whereby Archrock will acquire all of the issued and outstanding equity interests in TOPS SOFR Secured Overnight Financing Rate U.S. United States of America WACC Weighted average cost of capital 3 Table of Contents

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q (this "Form 10-Q") contains "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this Form 10-Q are forward-looking statements within the meaning of the Exchange Act, including, without limitation, our business growth strategy and projected costs; future financial position; the sufficiency of available cash flows to fund continuing operations and pay dividends; the expected amount of our capital expenditures; anticipated cost savings; future revenue, adjusted gross margin and other financial or operational measures related to our business; the future value of our equipment; and plans and objectives of our management for our future operations. You can identify many of these statements by words such as "believe," "expect," "intend," "project," "anticipate," "estimate," "will continue" or similar words or the negative thereof. Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this Form 10-Q. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, no assurance can be given that these expectations will prove to be correct. Known material factors that could cause our actual results to differ materially from the expectations reflected in these forward-looking statements include the risk factors described in our 2023 Form 10-K and those set forth from time to time in our filings with the SEC, which are available through our website at www.archrock.com and through the SEC's website at www.sec.gov . These risk factors include, but are not limited to, inability to consummate the TOPS Acquisition; inability to achieve the expected benefits of the TOPS Acquisit

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Archrock, Inc. Condensed Consolidated Balance Sheets (in thousands, except par value and share amounts) (unaudited) June 30, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 919 $ 1,338 Accounts receivable, net of allowance of $ 556 and $ 587 , respectively 115,351 124,069 Inventory 79,233 81,761 Other current assets 8,671 5,989 Total current assets 204,174 213,157 Property, plant and equipment, net 2,372,069 2,301,982 Operating lease right-of-use assets 14,481 14,097 Intangible assets, net 27,293 30,182 Contract costs, net 35,674 37,739 Deferred tax assets 2,445 3,192 Other assets 46,643 47,733 Non-current assets of discontinued operations 7,868 7,868 Total assets $ 2,710,647 $ 2,655,950 Liabilities and Stockholders' Equity Current liabilities: Accounts payable, trade $ 43,976 $ 61,026 Accrued liabilities 83,555 85,381 Deferred revenue 5,661 5,736 Total current liabilities 133,192 152,143 Long-term debt 1,608,956 1,584,869 Operating lease liabilities 12,391 12,271 Deferred tax liabilities 27,310 4,921 Other liabilities 26,434 22,857 Non-current liabilities of discontinued operations 7,868 7,868 Total liabilities 1,816,151 1,784,929 Commitments and contingencies (Note 7) Equity: Preferred stock: $ 0.01 par value per share, 50,000,000 shares authorized, zero issued — — Common stock: $ 0.01 par value per share, 250,000,000 shares authorized, 165,793,798 and 164,984,401 shares issued, respectively 1,658 1,650 Additional paid-in capital 3,478,597 3,470,576 Accumulated deficit ( 2,476,793 ) ( 2,499,931 ) Treasury stock: 9,493,262 and 9,020,454 common shares, at cost, respectively ( 108,966 ) ( 101,274 ) Total equity 894,496 871,021 Total liabilities and equity $ 2,710,647 $ 2,655,950 The accompanying notes are an integral part of these unaudited

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View this 10-Q filing on SEC EDGAR