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Archrock Miss Q2 Earnings & Revenues Estimates on AMS Weakness
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Key Takeaways
Archrock's Q2 2026 revenues declined 3.1% as weaker aftermarket services offset growth in contract operations.
Archrock's contract operations revenues rose 3.4%, while the adjusted gross margin increased 5.6%.
Archrock tightened its 2026 EBITDA guidance as softer services demand and higher costs weigh on the outlook.
Archrock, Inc. (AROC - Free Report) reported second-quarter 2026 adjusted earnings of 38 cents per share, down 2.6% from 39 cents per share a year earlier. The bottom line missed the Zacks Consensus Estimate of 46 cents by 17.4%.
Revenues of $371.2 million declined 3.1% from $383.2 million a year ago. The top line missed the consensus mark of $390.4 million by 4.9%.
The weak quarterly results were primarily due to softness in aftermarket services (AMS), which offset solid contract operations performance.
Period-end horsepower utilization remained high at 94.4%, while contract operations adjusted gross margin percentage improved from the year-ago period.
Contract operations revenues rose 3.4% to $329.3 million from $318.3 million. The increase reflected higher rates, an additional month of contribution from the NGCS acquisition and revenues from horsepower additions, partly offset by active horsepower sales used to high-grade the fleet.
Contract operations adjusted gross margin increased 5.6% to $234.6 million, while the adjusted gross margin percentage rose to 71% from 70%. Total operating horsepower ended the quarter at 4.5 million compared with 4.7 million a year earlier, with the decline largely driven by the sale of approximately 165,000 non-strategic operating horsepower.
Archrock's Aftermarket Services Lose Momentum
Aftermarket services revenues fell 35.2% to $42 million from $64.8 million in the second quarter of 2025. The decline was due to lower parts sales, the absence of non-recurring overhauled-engine sales that benefited the prior-year quarter and reduced demand for major maintenance activity.
The adjusted gross margin for the segment declined 33.6% to $9.9 million from $14.9 million. However, the adjusted gross margin percentage improved to 24% from 23%, reflecting disciplined execution and a focus on higher-quality, higher-margin work.
AROC's Margin Gains Offset Some Cost Pressure
Total adjusted gross margin increased to $244.5 million from $237.1 million a year ago. The adjusted gross margin percentage expanded to 66% from 62%, helped by the stronger profitability of contract operations and the improved margin rate in aftermarket services.
Selling, general and administrative expenses rose 9.4% to $39.6 million from $36.2 million. Higher long-term incentive compensation, primarily driven by the stock price increase, was a key factor. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) remained flat at $212.6 million compared with $212.7 million in the prior-year quarter.
Archrock Generates Solid Cash Flow
Net cash provided by operating activities was $160.8 million in the quarter. The adjusted free cash flow totaled $67 million, while adjusted free cash flow after dividends was $28.4 million. The total capital expenditure was$98.0 million.
AROC Raises Dividend
The board raised the quarterly dividend around 10% to 23 cents per share from 21 cents a year earlier. Dividend coverage was 3.1X, supporting the company's continued emphasis on shareholder returns alongside growth investment.
Archrock Maintains Balance Sheet Flexibility
As of June 30, 2026, AROC’s long-term debt was $2.35 billion, while the leverage ratio improved to 2.6X from 3.3X a year ago. Available liquidity totaled $631 million at the quarter-end.
During the quarter, Archrock redeemed $800 million of 6.25% senior notes due 2028 using borrowings under its revolving credit facility. The company ended June with $113.2 million in remaining share repurchase authorization and did not repurchase shares during the quarter.
AROC Tightens 2026 EBITDA Guidance
Archrock tightened its 2026 adjusted EBITDA guidance to $865-$885 million from $865-$915 million. The revision reflects higher contract compression make-ready costs, anticipated second-half lube oil cost pressure, softer aftermarket services demand and higher selling, general and administrative costs tied to long-term incentive compensation.
The company maintained 2026 growth capital spending guidance of $250-$275 million and expects the total capital expenditure between $400 million and $445 million. Archrock introduced cumulative growth capital guidance of $1.4-$1.6 billion for 2027-2030, aimed at adding 1 million horsepower to meet expected demand. The company signed an eight-year agreement with a strategic customer covering approximately 665,000 horsepower, with a two-year extension option.
AROC’s Zacks Rank & Stocks to Consider
Archrock currently carries a Zacks Rank #4 (Sell).
View the Zacks #1 Rank List
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Archrock Miss Q2 Earnings & Revenues Estimates on AMS Weakness
Key Takeaways
Archrock, Inc. (AROC - Free Report) reported second-quarter 2026 adjusted earnings of 38 cents per share, down 2.6% from 39 cents per share a year earlier. The bottom line missed the Zacks Consensus Estimate of 46 cents by 17.4%.
Revenues of $371.2 million declined 3.1% from $383.2 million a year ago. The top line missed the consensus mark of $390.4 million by 4.9%.
The weak quarterly results were primarily due to softness in aftermarket services (AMS), which offset solid contract operations performance.
Period-end horsepower utilization remained high at 94.4%, while contract operations adjusted gross margin percentage improved from the year-ago period.
Archrock, Inc. Price, Consensus and EPS Surprise
Archrock, Inc. price-consensus-eps-surprise-chart | Archrock, Inc. Quote
AROC's Contract Operations Remain Resilient
Contract operations revenues rose 3.4% to $329.3 million from $318.3 million. The increase reflected higher rates, an additional month of contribution from the NGCS acquisition and revenues from horsepower additions, partly offset by active horsepower sales used to high-grade the fleet.
Contract operations adjusted gross margin increased 5.6% to $234.6 million, while the adjusted gross margin percentage rose to 71% from 70%. Total operating horsepower ended the quarter at 4.5 million compared with 4.7 million a year earlier, with the decline largely driven by the sale of approximately 165,000 non-strategic operating horsepower.
Archrock's Aftermarket Services Lose Momentum
Aftermarket services revenues fell 35.2% to $42 million from $64.8 million in the second quarter of 2025. The decline was due to lower parts sales, the absence of non-recurring overhauled-engine sales that benefited the prior-year quarter and reduced demand for major maintenance activity.
The adjusted gross margin for the segment declined 33.6% to $9.9 million from $14.9 million. However, the adjusted gross margin percentage improved to 24% from 23%, reflecting disciplined execution and a focus on higher-quality, higher-margin work.
AROC's Margin Gains Offset Some Cost Pressure
Total adjusted gross margin increased to $244.5 million from $237.1 million a year ago. The adjusted gross margin percentage expanded to 66% from 62%, helped by the stronger profitability of contract operations and the improved margin rate in aftermarket services.
Selling, general and administrative expenses rose 9.4% to $39.6 million from $36.2 million. Higher long-term incentive compensation, primarily driven by the stock price increase, was a key factor. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) remained flat at $212.6 million compared with $212.7 million in the prior-year quarter.
Archrock Generates Solid Cash Flow
Net cash provided by operating activities was $160.8 million in the quarter. The adjusted free cash flow totaled $67 million, while adjusted free cash flow after dividends was $28.4 million. The total capital expenditure was$98.0 million.
AROC Raises Dividend
The board raised the quarterly dividend around 10% to 23 cents per share from 21 cents a year earlier. Dividend coverage was 3.1X, supporting the company's continued emphasis on shareholder returns alongside growth investment.
Archrock Maintains Balance Sheet Flexibility
As of June 30, 2026, AROC’s long-term debt was $2.35 billion, while the leverage ratio improved to 2.6X from 3.3X a year ago. Available liquidity totaled $631 million at the quarter-end.
During the quarter, Archrock redeemed $800 million of 6.25% senior notes due 2028 using borrowings under its revolving credit facility. The company ended June with $113.2 million in remaining share repurchase authorization and did not repurchase shares during the quarter.
AROC Tightens 2026 EBITDA Guidance
Archrock tightened its 2026 adjusted EBITDA guidance to $865-$885 million from $865-$915 million. The revision reflects higher contract compression make-ready costs, anticipated second-half lube oil cost pressure, softer aftermarket services demand and higher selling, general and administrative costs tied to long-term incentive compensation.
The company maintained 2026 growth capital spending guidance of $250-$275 million and expects the total capital expenditure between $400 million and $445 million. Archrock introduced cumulative growth capital guidance of $1.4-$1.6 billion for 2027-2030, aimed at adding 1 million horsepower to meet expected demand. The company signed an eight-year agreement with a strategic customer covering approximately 665,000 horsepower, with a two-year extension option.
AROC’s Zacks Rank & Stocks to Consider
Archrock currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the energy sector are PBF Energy Inc. (PBF - Free Report) , Valero Energy Corporation (VLO - Free Report) and Cactus, Inc. (WHD - Free Report) . PBF sports a Zacks Rank #1 (Strong Buy), and VLO and WHD carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks Rank #1 stocks here.
PBF reported second-quarter 2026 adjusted earnings of $6.22 per share, surpassing the Zacks Consensus Estimate of $4.05.
As of June 30, 2026, PBF had total debt of $1.75 billion, and cash and cash equivalents of $894.1 million.
Valero reported second-quarter 2026 adjusted earnings of $12.54 per share, which beat the Zacks Consensus Estimate of $9.87.
As of June 30, 2026, VLO had total debt of $9.10 billion, and cash and cash equivalents of $7.87 billion.
Cactus reported second-quarter 2026 adjusted earnings of 93 cents per share, surpassing the Zacks Consensus Estimate of 71 cents.
As of June 30, 2026, WHD had cash and cash equivalents of $365 million.