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Archrock reported Q1 adjusted EPS of $0.42 and adjusted EBITDA of $221 million (up 12% YoY), generated $92 million of adjusted free cash flow, and returned $44 million to shareholders via dividends and buybacks.
The fleet stayed effectively fully utilized (95% utilization) with operating horsepower at 4.53 million, supporting a strong adjusted gross margin of 72% as pricing and rate increases lift per-horsepower revenue.
Management reaffirmed 2026 adjusted EBITDA guidance of $865 million to $915 million, plans roughly $400–$445 million in total CapEx including $250–$275 million of growth spend, ended the quarter with $2.4 billion of debt and ~2.6x leverage and noted extreme equipment lead times (~160 weeks).
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Archrock (NYSE:AROC) executives told investors the company started 2026 with what they described as strong operational execution, a fully utilized fleet, and continued customer demand for compression services, while maintaining full-year guidance and expanding shareholder returns.
President and CEO Brad Childers said the company delivered adjusted earnings per share of $0.42 in the first quarter of 2026 and adjusted EBITDA of $221 million, representing a 12% increase in adjusted EBITDA compared with the first quarter of 2025. Childers said Archrock’s fleet “remained fully utilized,” extending what he called a multi-year track record of full utilization.
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Chief Financial Officer Doug Aron reported net income of $73.8 million for the quarter. Excluding transaction-related and restructuring costs and associated tax impacts, Aron said adjusted net income was $74.4 million, or $0.42 per share. He said results “also benefited from a $10 million net gain from the sale of non-strategic compression and other assets,” while strength in fundamentals was “somewhat offset by higher” selling, general and administrative expense.
Management highlighted free cash flow generation and capital returns. Childers said Archrock produced adjusted free cash flow of $92 million during the quarter and returned $44 million to shareholders through dividends and share repurchases, which he said was up 29% year-over-year. Aron added that adjusted free cash flow after dividends was $52 million in the quarter.
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In the contract operations segment, Aron said first-quarter revenue was $331 million, up 10% year-over-year, driven by “growth in horsepower and higher pricing.” Operating horsepower ended the quarter at 4.53 million, up about 250,000 from 4.28 million in the first quarter of 2025.
Childers said the fleet exited the quarter at 95% utilization and pointed to long time-on-location trends, with the blended fleet averaging about six years on location and units of 1,500 horsepower or greater averaging about eight years, “in largely midstream applications.” He also said monthly revenue per horsepower increased sequentially and year-over-year and is expected to benefit in 2026 from rate increases implemented in 2025 and additional increases in 2026.
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Childers said Archrock continued high-grading its fleet through asset sales, including the sale of about 40,000 horsepower of non-strategic compression units, which helped generate year-to-date proceeds of $21 million to support the company’s new-build program. He said operating horsepower declined by about 43,000 during the quarter as new-build deliveries were more than offset by the asset sale, which included 21,000 active horsepower. Childers said the company also sold about 123,000 horsepower at the end of 2025, including 84,000 active horsepower, and that the combined sales reduced first-quarter adjusted EBITDA by about $3 million on a sequential basis.
On margins, Childers said Archrock achieved an adjusted gross margin of 72% and attributed sustained profitability above 70% to “strong pricing, disciplined execution, and a continued focus on per horsepower cost management.”
Aftermarket services (AMS) results reflected typical seasonality, executives said. Childers noted first-quarter activity is “seasonally slower,” while Aron reported AMS revenue of $43 million due to lower service activity. Aron said AMS adjusted gross margin was 23%, which he described as consistent with the high end of the company’s guidance range for the year.
Aron also detailed an increase in SG&A expense. He said SG&A was $45 million in the first quarter of 2026 compared with $37 million in the first quarter of 2025, primarily due to higher long-term incentive compensation. Aron cited two drivers: more than half tied to the company’s “sharply higher stock price” during the quarter, and the remainder tied to “a GAAP accounting acceleration of expense recognition” under an executive retention agreement, which he said is not expected to recur during the rest of 2026. He later quantified the non-recurring portion as $3.7 million.
Despite management saying underlying performance exceeded internal expectations used to set the outlook, Archrock did not raise its full-year guidance. Asked why, Aron said it is “not unusual” historically for Archrock to leave guidance unchanged after only one quarter, adding, “it just feels early in the year.”
Childers said the strong start keeps the company on pace for its full-year adjusted EBITDA guidance, which he cited as $865 million to $950 million in prepared remarks. Aron, however, referenced a reaffirmed 2026 adjusted EBITDA guidance range of $865 million to $915 million and said the company remains on track to deliver within that range, with first-quarter segment performance consistent with the basis for guidance.
On capital spending, Childers reaffirmed a 2026 growth capital plan of $250 million to $275 million for fleet investment. Aron said total 2026 capital expenditures are expected to be about $400 million to $445 million, including:
Growth CapEx: $250 million to $275 million for new-build horsepower and repackaging to meet demand
Maintenance CapEx: $125 million to $135 million, up from 2025 due to increased planned overall activity
Other CapEx: $25 million to $35 million, primarily vehicles
In response to an analyst question about “other CapEx” trending, management said the spending was largely timing-related and primarily associated with “trucks and computers,” including vehicle deliveries to support mechanics as the business grows.
Archrock ended the quarter with $2.4 billion of total debt. Aron said the company issued $800 million of senior notes in January to fund the April 1 repurchase of 100% of its senior notes due 2028 at par, pushing the nearest bond maturity to 2032. He said pro forma available liquidity was about $600 million, and the leverage ratio was 2.6x at quarter end, down from 2.7x in the fourth quarter of 2025.
Childers framed the broader demand environment around natural gas growth, LNG exports, and rising power needs. He said U.S. natural gas volumes are expected to reach record levels for the sixth consecutive year in 2026 and highlighted the Permian Basin as a key growth area for the company. Childers said associated gas volumes in the Permian are expected to grow at mid-single-digit rates, with rising gas-to-oil ratios making the basin more compression-intensive. He also pointed to about 4.6 Bcf per day of new takeaway capacity expected later in the year.
Outside the Permian, Childers said Archrock is seeing “early but encouraging signs” of improving demand. He told analysts that only about 35% of bookings in the quarter were in the Permian, with the remainder spread across the Northeast, Mid-Continent, the South (including East Texas and Haynesville), and the Rockies. He said unit size needs are “more diverse” outside the Permian, especially for electric motor drives, citing deployments “from 400, 800, and potentially moving up to 1,500” horsepower.
Management also addressed equipment supply chain constraints. In response to a question about Caterpillar lead times, the company said lead times “continue to extend out” and are now “close to 160 weeks,” describing “extreme tightness in the supply chain.” Executives said Archrock is placing orders to ensure it can meet customer demand, but said it is not yet providing 2027 CapEx guidance.
Childers added that first-quarter new-build deliveries were the lowest quarter of the year, and that deliveries are expected to increase in subsequent quarters and be “more back half-weighted.” He said this is expected to influence the cadence of start activity as well.
Separately, Childers noted Aron plans to retire by year-end, and said the CFO will remain in the role until a successor is named to support a smooth transition.
Archrock, Inc is a Houston‐based provider of natural gas compression services and equipment to the oil and gas industry in North America. Founded in 2004, the company supplies both short‐term rentals and long‐term contracts for compression solutions, serving upstream and midstream producers. Archrock's offerings include engineered compression systems, aftermarket parts, maintenance and field services designed to optimize wellhead and pipeline operations.
The company's core business activities focus on the design, manufacture, rental and sale of gas compression equipment.
The article "Archrock Q1 Earnings Call Highlights" was originally published by MarketBeat.