Archrock, Inc. (NYSE:AROC) today reported a net
income of $49.1 million in the fourth quarter of 2017,
compared to a net loss of $12.7 million in the third
quarter of 2017 and a net loss of $46.1 million in the
fourth quarter of 2016. Net income was $18.4 million for 2017,
compared to net loss of $65.2 million for 2016. Both the fourth
quarter of 2017 and full year 2017 results include an income tax
benefit of $53.4 million from the Tax Cuts and Jobs Act.
EBITDA, as adjusted (as defined below), was $71.9 million for
the fourth quarter 2017, compared to $62.4 million for the third
quarter of 2017 and $75.2 million for the fourth quarter of 2016.
EBITDA, as adjusted, was $271.9 million for 2017, compared to
$318.8 million for 2016.
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(in thousands, except
percentages and ratios) |
|
Three Months Ended |
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Year Ended |
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December 31, |
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September 30, |
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December 31, |
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December 31, |
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December 31, |
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2017 |
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2017 |
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2016 |
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2017 |
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|
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2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
49,142 |
|
|
$ |
(12,683 |
) |
|
$ |
(46,079 |
) |
|
$ |
18,410 |
|
|
$ |
(65,243 |
) |
Net income (loss)
attributable to Archrock stockholders |
|
$ |
47,560 |
|
|
$ |
(10,235 |
) |
|
$ |
(38,611 |
) |
|
$ |
18,953 |
|
|
$ |
(54,555 |
) |
EBITDA, as
adjusted |
|
$ |
71,934 |
|
|
$ |
62,365 |
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|
$ |
75,171 |
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|
$ |
271,916 |
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|
$ |
318,849 |
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|
|
|
|
|
|
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|
Contract operations
revenue |
|
$ |
156,299 |
|
|
$ |
153,524 |
|
|
$ |
152,017 |
|
|
$ |
610,921 |
|
|
$ |
647,828 |
|
Contract operations
gross margin percentage |
|
|
59 |
% |
|
|
53 |
% |
|
|
60 |
% |
|
|
57 |
% |
|
|
62 |
% |
Contract operations
gross margin |
|
$ |
91,585 |
|
|
$ |
81,573 |
|
|
$ |
91,798 |
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|
$ |
347,916 |
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$ |
400,788 |
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Aftermarket services
revenue |
|
$ |
52,636 |
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$ |
44,329 |
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|
$ |
41,763 |
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|
$ |
183,734 |
|
|
$ |
159,241 |
|
Aftermarket services
gross margin percentage |
|
|
16 |
% |
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|
13 |
% |
|
|
15 |
% |
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|
15 |
% |
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|
17 |
% |
Aftermarket services
gross margin |
|
$ |
8,546 |
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$ |
5,843 |
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$ |
6,349 |
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$ |
27,817 |
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$ |
26,362 |
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Selling, general, and
administrative |
|
$ |
29,660 |
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$ |
29,108 |
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$ |
26,725 |
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$ |
111,483 |
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$ |
114,470 |
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Cash available for
dividend |
|
$ |
11,575 |
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|
$ |
7,544 |
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$ |
11,541 |
|
|
$ |
39,025 |
|
|
$ |
59,542 |
|
Cash available for
dividend coverage |
|
|
1.36x |
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|
|
0.88x |
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|
|
1.36x |
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|
|
1.14x |
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|
|
1.96x |
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December 31, |
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September 30, |
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December 31, |
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2017 |
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2017 |
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2016 |
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|
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Total available
horsepower (at period end) |
|
|
3,847 |
|
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|
3,866 |
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|
|
3,819 |
|
|
|
|
|
Total operating
horsepower (at period end) |
|
|
3,253 |
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|
3,204 |
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|
3,115 |
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Horsepower utilization
spot (at period end) |
|
|
85 |
% |
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|
83 |
% |
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|
82 |
% |
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“Archrock posted solid operating performance in the fourth
quarter,” said Brad Childers, Archrock’s President and Chief
Executive Officer. “During the quarter, we grew operating
horsepower by 49,000 horsepower while efficiently managing start-up
and make-ready expenses. Our outstanding execution drove a
substantial increase in profitability from the third quarter. For
full year 2017, we grew operating horsepower by 138,000 horsepower
and drove new orders at elevated levels throughout the year.”
“We are entering 2018 with a record backlog of new starts. Our
focus in the coming year will be on the profitable execution of our
growth plans, as well as closing the merger of Archrock and
Archrock Partners to further strengthen our platform,” continued
Childers. “In the first quarter of 2018, we implemented a price
increase on the eligible portion of our installed base of
horsepower and we have seen a substantial recovery in spot pricing,
especially on large horsepower applications. During 2018, Archrock
and Archrock Partners together expect to invest $200 to $220
million of growth capital into high demand large horsepower units
to meet our customers’ needs. We expect that the efficient
execution of our operations, recovering prices, and meaningful
investment into our fleet will translate into improved earnings in
2018.”
“In addition, the Energy Information Administration has
forecasted that 2018 will have the largest increase in
year-over-year growth of U.S. natural gas production on record,
with additional growth into the next decade. Based on this forecast
and initial production estimates for 2017, it appears that the
leading edge of a substantial growth period for U.S. natural
production has arrived. We believe U.S. natural gas production
growth will drive demand for our services, and we intend to
profitably capture this opportunity,” concluded Childers.
Net income attributable to Archrock stockholders for the fourth
quarter of 2017 was $47.6 million, or $0.67 per diluted common
share. Net loss from continuing operations attributable to Archrock
stockholders, excluding the items listed in the following sentence,
for the fourth quarter of 2017 was $0.1 million, or $0.00
per diluted common share. Excluded items consisted of a non-cash
tax reform benefit of $53.4 million, non-cash long-lived asset
impairment charge of $8.3 million, restatement and other
charges of $1.1 million, expensed acquisition and merger related
costs of $0.3 million, restructuring and other charges of $0.1
million, non-controlling interest in the listed items of $2.6
million, and a tax benefit on the listed items of $1.5 million.
Net loss attributable to Archrock stockholders for the third
quarter of 2017 was $10.2 million, or $0.15 per diluted common
share. Net loss from continuing operations attributable to Archrock
stockholders, excluding the items listed in the following sentence,
for the third quarter of 2017 was $6.1 million, or $0.09
per diluted common share. Excluded items consisted of a loss from
discontinued operations of $0.1 million, a non-cash long-lived
asset impairment of $7.1 million, corporate office relocation
costs of $1.3 million, restatement and other charges of $0.6
million, restructuring and other charges of $0.4 million,
non-controlling interest in the listed items of $3.0 million, and a
tax benefit on the listed items of $2.4 million.
Net loss attributable to Archrock stockholders for the fourth
quarter of 2016 was $38.6 million, or $0.56 per diluted common
share. Net loss from continuing operations attributable to Archrock
stockholders, excluding the items listed in the following sentence,
for the fourth quarter 2016 was $4.1 million, or
$0.06 per diluted common share. Excluded items consisted of
income from discontinued operations net of tax of $0.4 million, a
non-cash long-lived asset impairment charge of $47.1 million,
restatement and other charges of $12.6 million, net indemnification
income of $0.2 million, restructuring and other charges of $1.1
million, non-controlling interest in the listed items of $13.6
million, and a tax benefit on the listed items of $12.9
million.
Net income attributable to Archrock stockholders for 2017 was
$19.0 million, or $0.26 per diluted common share. Net loss from
continuing operations attributable to Archrock stockholders,
excluding the items listed in the following sentence, for 2017
was $13.5 million, or $0.20 per diluted common share.
Excluded items consisted of a loss from discontinued operations of
$0.1 million, a non-cash tax reform benefit of $53.4 million,
non-cash long-lived asset impairment charges of $29.1 million,
restatement and other charges of $4.4 million, net indemnification
expense of $0.4 million, debt extinguishment costs of $0.3 million,
corporate office relocation costs of $1.3 million, expensed
acquisition and merger related costs of $0.3 million, and
restructuring and other charges of $1.4 million,
non-controlling interest in the listed items of $10.8 million, and
a tax benefit on the listed items of $5.5 million.
Net loss attributable to Archrock stockholders for 2016 was
$54.6 million, or $0.80 per diluted common share. Net income from
continuing operations attributable to Archrock stockholders,
excluding the items listed in the following sentence, for 2016
was $2.2 million, or $0.02 per diluted common share.
Excluded items consisted of a loss from discontinued operations of
$0.4 million, non-cash long-lived asset impairment charges
of $87.4 million, restatement and other charges of $13.5
million, net indemnification income of $2.6 million, expensed
acquisition and merger related costs of $0.2 million, restructuring
and other charges of $16.9 million, non-controlling interest
in the listed items of $31.6 million, and a tax benefit on the
listed items of $27.4 million.
Conference Call Details
Archrock, Inc. and Archrock Partners, L.P. will host a joint
conference call on Thursday, Feb. 22, 2018, to discuss their fourth
quarter 2017 financial results. The call will begin at 11:00 a.m.
Eastern Time.
To listen to the call via a live webcast, please visit
Archrock’s website at www.archrock.com. The call will also be
available by dialing 1-888-771-4371 in the United States and Canada
or +1-847-585-4405 for international calls. Please call
approximately 15 minutes prior to the scheduled start time and
reference Archrock conference call number 4635 4672.
A replay of the conference call will be available on Archrock’s
website for approximately seven days. Also, a replay may be
accessed by dialing 1-888-843-7419 in the United States and Canada,
or +1-630-652-3042 for international calls. The access code is 4635
4672#.
EBITDA, as adjusted, a non-GAAP measure, is defined as net
income (loss) excluding income (loss) from discontinued operations
(net of tax), income taxes, interest expense, depreciation and
amortization, long-lived asset impairment, restructuring and other
charges, corporate office relocation costs, expensed acquisition
and merger related costs, indemnification (income) expense, net,
restatement and other charges, debt extinguishment costs, and other
items. A reconciliation of EBITDA, as adjusted, to net income
(loss), the most directly comparable GAAP measure, appears
below.
Gross Margin, a non-GAAP measure, is defined as total revenue
less cost of sales (excluding depreciation and amortization). Gross
margin percentage is defined as gross margin divided by revenue. A
reconciliation of gross margin to net income (loss), the most
directly comparable GAAP measure, appears below.
Cash available for dividend, a non-GAAP measure, is defined as
distributions received by us from Archrock Partners, L.P., plus our
deconsolidated gross margin, less the following deconsolidated
items: maintenance and other capital expenditures, cash SG&A
expense excluding corporate office relocation costs, cash interest
expense associated with our debt, cash tax, (gain) loss on sale of
property, plant and equipment, and expensed acquisition and merger
related costs. Cash available for dividend coverage is defined as
cash available for dividend divided by total dividends. A
reconciliation of cash available for dividend to net income (loss),
the most directly comparable GAAP measure, appears below.
Net income (loss) from continuing operations attributable to
Archrock stockholders, excluding items, is defined as net income
(loss) attributable to Archrock stockholders excluding loss from
discontinued operations, net of tax, long-lived asset impairment,
restatement and other charges, restructuring and other charges,
corporate office relocation costs, net indemnification (income)
expense, debt extinguishment costs, expensed acquisition and merger
related costs and the associated non-controlling interest and
tax effect of the items listed above. A reconciliation of net
income (loss) from continuing operations attributable to Archrock
stockholders, excluding items, to net income (loss) attributable to
Archrock stockholders, the most directly comparable GAAP measure,
appears below.
About Archrock
Archrock, Inc. (NYSE:AROC) is a pure-play U.S. natural gas
contract compression services business and a leading supplier of
aftermarket services to customers that own compression equipment in
the United States. Archrock, Inc. holds interests in Archrock
Partners, L.P. (NASDAQ:APLP), a master limited partnership and the
leading provider of natural gas compression services to customers
in the oil and natural gas industry throughout the United States.
Archrock is headquartered in Houston, Texas, operating in the major
oil and gas producing regions in the United States, with
approximately 1,700 employees. For more information, visit
www.archrock.com.
Forward-Looking Statements
All statements in this release (and oral statements made
regarding the subjects of this release) other than historical facts
are forward-looking statements within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended. These
forward-looking statements rely on a number of assumptions
concerning future events and are subject to a number of
uncertainties and factors, many of which are outside the control of
Archrock and Archrock Partners, which could cause actual results to
differ materially from such statements. Forward-looking information
includes, but is not limited to: about the anticipated completion
of the proposed merger and the timing thereof; Archrock’s
dividends; Archrock’s financial and operational strategies and
ability to successfully effect those strategies; Archrock’s
expectations regarding future commodity prices, demand for natural
gas and economic and market conditions; demand for Archrock’s
services; and Archrock’s financial and operational outlook and
ability to fulfill that outlook, including as related to increasing
operating horsepower and gross margin percentage.
While Archrock and Archrock Partners believe that the
assumptions concerning future events are reasonable, they caution
that there are inherent difficulties in predicting certain
important factors that could impact the future performance or
results of their businesses. Among the factors that could cause
results to differ materially from those indicated by such
forward-looking statements are: the failure to realize the
anticipated costs savings, synergies and other benefits of the
transaction; the possible diversion of management time on
transaction-related issues; the risk that the requisite approvals
to complete the transaction are not obtained; local, regional and
national economic conditions and the impact they may have on
Archrock, Archrock Partners and their customers; changes in tax
laws that impact master limited partnerships; conditions in the oil
and gas industry, including a sustained decrease in the level of
supply or demand for oil or natural gas or a sustained decrease in
the price of oil or natural gas; the financial condition of
Archrock’s or Archrock Partners’ customers; any non-performance by
customers of their contractual obligations; changes in customer,
employee or supplier relationships resulting from the transaction;
changes in safety, health, environmental and other regulations; the
results of any reviews, investigations or other proceedings by
government authorities; the results of any shareholder actions that
may be filed relating to the restatement of Archrock’s financial
statements; the potential additional costs relating to Archrock’s
restatement, cost-sharing with Exterran Corporation and to
addressing any reviews, investigations or other proceedings by
government authorities or shareholder actions; and the performance
of Archrock Partners.
These forward-looking statements are also affected by the risk
factors, forward-looking statements and challenges and
uncertainties described in each of Archrock’s and Archrock
Partners’ Annual Reports on Form 10-K for the year ended December
31, 2016, and those set forth from time to time in each party’s
filings with the Securities and Exchange Commission (the “SEC”),
which are available at www.archrock.com. Except as required by law,
Archrock and Archrock Partners expressly disclaim any intention or
obligation to revise or update any forward-looking statements
whether as a result of new information, future events or
otherwise.
No Offer or Solicitation
This release is for informational purposes only and shall not
constitute an offer to sell or the solicitation of an offer to buy
any securities pursuant to the transaction or otherwise, nor shall
there be any sale of securities in any jurisdiction in which the
offer, solicitation or sale would be unlawful prior to the
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Important Additional Information Regarding the
Transaction Will Be Filed With the SEC In connection with
the proposed transaction, on February 5, 2018, Archrock filed with
the SEC a registration statement on Form S-4, including a joint
proxy statement/prospectus of Archrock and Archrock Partners.
INVESTORS AND SECURITY HOLDERS OF ARCHROCK AND ARCHROCK PARTNERS
ARE ADVISED TO CAREFULLY READ THE REGISTRATION STATEMENT AND JOINT
PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND
SUPPLEMENTS THERETO) BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT THE TRANSACTION, THE PARTIES TO THE TRANSACTION AND THE RISKS
ASSOCIATED WITH THE TRANSACTION. A definitive joint proxy
statement/prospectus will be sent to security holders of Archrock
and Archrock Partners in connection with the Archrock shareholder
meeting and the Archrock Partners unitholder meeting.
Investors and security holders may obtain a free copy of the joint
proxy statement/prospectus (when available) and other relevant
documents filed by Archrock and Archrock Partners with the SEC from
the SEC’s website at www.sec.gov. Security holders and other
interested parties will also be able to obtain, without charge, a
copy of the joint proxy statement/prospectus and other relevant
documents (when available) from www.archrock.com under the tab
“Investors” and then under the heading “SEC Filings.” Security
holders may also read and copy any reports, statements and other
information filed with the SEC at the SEC public reference room at
100 F Street N.E., Room 1580, Washington D.C. 20549. Please call
the SEC at (800) 732-0330 or visit the SEC’s website for further
information on its public reference room.
Participants in the Solicitation Archrock,
Archrock Partners and their respective directors, executive
officers and certain other members of management may be deemed to
be participants in the solicitation of proxies from their
respective security holders with respect to the transaction.
Information about these persons is set forth in Archrock’s proxy
statement relating to its 2017 Annual Meeting of Stockholders,
which was filed with the SEC on March 14, 2017, and Archrock
Partners’ Annual Report on Form 10-K for the year ended December
31, 2016, which was filed with the SEC on February 23, 2017, and
subsequent statements of changes in beneficial ownership on file
with the SEC. Security holders and investors may obtain
additional information regarding the interests of such persons,
which may be different than those of the respective companies’
security holders generally, by reading the joint proxy
statement/prospectus and other relevant documents regarding the
transaction, which will be filed with the SEC.
SOURCE: Archrock, Inc.
ARCHROCK, INC.UNAUDITED
SUPPLEMENTAL INFORMATION(In thousands, except per
share amounts) |
|
|
Three Months Ended |
|
Years Ended |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenue: |
|
|
|
|
|
|
|
|
|
Contract
operations |
$ |
156,299 |
|
|
$ |
153,524 |
|
|
$ |
152,017 |
|
|
$ |
610,921 |
|
|
$ |
647,828 |
|
Aftermarket services |
52,636 |
|
|
44,329 |
|
|
41,763 |
|
|
183,734 |
|
|
159,241 |
|
Total
revenue |
208,935 |
|
|
197,853 |
|
|
193,780 |
|
|
794,655 |
|
|
807,069 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
Cost of
sales (excluding depreciation and amortization): |
|
|
|
|
|
|
|
|
|
Contract
operations |
64,714 |
|
|
71,951 |
|
|
60,219 |
|
|
263,005 |
|
|
247,040 |
|
Aftermarket services |
44,090 |
|
|
38,486 |
|
|
35,414 |
|
|
155,917 |
|
|
132,879 |
|
Selling,
general and administrative |
29,660 |
|
|
29,108 |
|
|
26,725 |
|
|
111,483 |
|
|
114,470 |
|
Depreciation and amortization |
46,080 |
|
|
47,463 |
|
|
51,095 |
|
|
188,563 |
|
|
208,986 |
|
Long-lived asset impairment |
8,284 |
|
|
7,105 |
|
|
47,054 |
|
|
29,142 |
|
|
87,435 |
|
Restatement and other charges |
1,083 |
|
|
566 |
|
|
12,610 |
|
|
4,370 |
|
|
13,470 |
|
Restructuring and other charges |
141 |
|
|
422 |
|
|
1,143 |
|
|
1,386 |
|
|
16,901 |
|
Interest
expense |
21,943 |
|
|
22,892 |
|
|
21,057 |
|
|
88,760 |
|
|
83,899 |
|
Debt
extinguishment costs |
— |
|
|
— |
|
|
— |
|
|
291 |
|
|
— |
|
Other
income, net |
(1,171 |
) |
|
(2,716 |
) |
|
(3,950 |
) |
|
(5,643 |
) |
|
(8,590 |
) |
Total
costs and expenses |
214,824 |
|
|
215,277 |
|
|
251,367 |
|
|
837,274 |
|
|
896,490 |
|
Loss before income
taxes |
(5,889 |
) |
|
(17,424 |
) |
|
(57,587 |
) |
|
(42,619 |
) |
|
(89,421 |
) |
Benefit from income
taxes |
(55,031 |
) |
|
(4,795 |
) |
|
(11,892 |
) |
|
(61,083 |
) |
|
(24,604 |
) |
Income (loss) from
continuing operations |
49,142 |
|
|
(12,629 |
) |
|
(45,695 |
) |
|
18,464 |
|
|
(64,817 |
) |
Loss from discontinued
operations, net of tax |
— |
|
|
(54 |
) |
|
(384 |
) |
|
(54 |
) |
|
(426 |
) |
Net income (loss) |
49,142 |
|
|
(12,683 |
) |
|
(46,079 |
) |
|
18,410 |
|
|
(65,243 |
) |
Less: Net
(income) loss attributable to the noncontrolling interest |
(1,582 |
) |
|
2,448 |
|
|
7,468 |
|
|
543 |
|
|
10,688 |
|
Net income (loss)
attributable to Archrock stockholders |
$ |
47,560 |
|
|
$ |
(10,235 |
) |
|
$ |
(38,611 |
) |
|
$ |
18,953 |
|
|
$ |
(54,555 |
) |
|
|
|
|
|
|
|
|
|
|
Basic and diluted
income (loss) per common share (1): |
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations attributable to Archrock common
stockholders |
$ |
0.67 |
|
|
$ |
(0.15 |
) |
|
$ |
(0.56 |
) |
|
$ |
0.26 |
|
|
$ |
(0.79 |
) |
Loss from
discontinued operations attributable to Archrock common
stockholders |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.01 |
) |
Net
income (loss) attributable to Archrock common stockholders |
$ |
0.67 |
|
|
$ |
(0.15 |
) |
|
$ |
(0.56 |
) |
|
$ |
0.26 |
|
|
$ |
(0.80 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding used in income (loss) per common share: |
|
|
|
|
|
|
|
|
|
Basic |
69,709 |
|
|
69,644 |
|
|
69,142 |
|
|
69,552 |
|
|
68,993 |
|
Diluted |
69,809 |
|
|
69,644 |
|
|
69,142 |
|
|
69,664 |
|
|
68,993 |
|
|
|
|
|
|
|
|
|
|
|
Dividends declared and
paid per common share |
$ |
0.1200 |
|
|
$ |
0.1200 |
|
|
$ |
0.1200 |
|
|
$ |
0.4800 |
|
|
$ |
0.4975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Basic and
diluted net income (loss) attributable to Archrock common
stockholders per common share was computed using the two-class
method to determine the net income (loss) per share for each class
of common stock and participating security (restricted stock and
certain of our stock settled restricted stock units) according to
dividends declared and participation rights in undistributed
earnings. Accordingly, we have excluded net income attributable to
participating securities from our calculation of basic and diluted
net income (loss) attributable to Archrock common stockholders per
common share. |
|
|
|
ARCHROCK, INC.UNAUDITED
SUPPLEMENTAL INFORMATION(In thousands, except
percentages) |
|
|
Three Months Ended |
|
Years Ended |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
|
|
Contract
operations |
$ |
156,299 |
|
|
$ |
153,524 |
|
|
$ |
152,017 |
|
|
$ |
610,921 |
|
|
$ |
647,828 |
|
Aftermarket services |
52,636 |
|
|
44,329 |
|
|
41,763 |
|
|
183,734 |
|
|
159,241 |
|
|
$ |
208,935 |
|
|
$ |
197,853 |
|
|
$ |
193,780 |
|
|
$ |
794,655 |
|
|
$ |
807,069 |
|
|
|
|
|
|
|
|
|
|
|
Gross Margin (1): |
|
|
|
|
|
|
|
|
|
Contract
operations |
$ |
91,585 |
|
|
$ |
81,573 |
|
|
$ |
91,798 |
|
|
$ |
347,916 |
|
|
$ |
400,788 |
|
Aftermarket services |
8,546 |
|
|
5,843 |
|
|
6,349 |
|
|
27,817 |
|
|
26,362 |
|
Total |
$ |
100,131 |
|
|
$ |
87,416 |
|
|
$ |
98,147 |
|
|
$ |
375,733 |
|
|
$ |
427,150 |
|
|
|
|
|
|
|
|
|
|
|
Selling, General and
Administrative |
$ |
29,660 |
|
|
$ |
29,108 |
|
|
$ |
26,725 |
|
|
$ |
111,483 |
|
|
$ |
114,470 |
|
% of
revenue |
14 |
% |
|
15 |
% |
|
14 |
% |
|
14 |
% |
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
EBITDA, as adjusted
(1) |
$ |
71,934 |
|
|
$ |
62,365 |
|
|
$ |
75,171 |
|
|
$ |
271,916 |
|
|
$ |
318,849 |
|
% of
revenue |
34 |
% |
|
32 |
% |
|
39 |
% |
|
34 |
% |
|
40 |
% |
|
|
|
|
|
|
|
|
|
|
Gross Margin
Percentage: |
|
|
|
|
|
|
|
|
|
Contract
operations |
59 |
% |
|
53 |
% |
|
60 |
% |
|
57 |
% |
|
62 |
% |
Aftermarket services |
16 |
% |
|
13 |
% |
|
15 |
% |
|
15 |
% |
|
17 |
% |
Total |
48 |
% |
|
44 |
% |
|
51 |
% |
|
47 |
% |
|
53 |
% |
|
|
|
|
|
|
|
|
|
|
Capital
expenditures |
$ |
69,445 |
|
|
$ |
52,839 |
|
|
$ |
20,563 |
|
|
$ |
221,693 |
|
|
$ |
117,572 |
|
Less: Proceeds from
sale of property, plant and equipment |
(24,273 |
) |
|
(13,792 |
) |
|
(14,828 |
) |
|
(46,954 |
) |
|
(41,892 |
) |
Net capital
expenditures |
$ |
45,172 |
|
|
$ |
39,047 |
|
|
$ |
5,735 |
|
|
$ |
174,739 |
|
|
$ |
75,680 |
|
|
|
|
|
|
|
|
|
|
|
Total Available
Horsepower (at period end) (2) |
3,847 |
|
|
3,866 |
|
|
3,819 |
|
|
3,847 |
|
|
3,819 |
|
Total Operating
Horsepower (at period end) (3) |
3,253 |
|
|
3,204 |
|
|
3,115 |
|
|
3,253 |
|
|
3,115 |
|
Average Operating
Horsepower |
3,234 |
|
|
3,166 |
|
|
3,138 |
|
|
3,152 |
|
|
3,234 |
|
Horsepower
Utilization: |
|
|
|
|
|
|
|
|
|
Spot (at
period end) |
85 |
% |
|
83 |
% |
|
82 |
% |
|
85 |
% |
|
82 |
% |
Average |
84 |
% |
|
82 |
% |
|
79 |
% |
|
82 |
% |
|
81 |
% |
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
|
|
|
2017 |
|
2017 |
|
2016 |
|
|
|
|
Balance Sheet: |
|
|
|
|
|
|
|
|
|
Debt -
Parent level |
$ |
56,000 |
|
|
$ |
75,500 |
|
|
$ |
99,000 |
|
|
|
|
|
Debt -
Archrock Partners, L.P. |
1,361,053 |
|
|
1,317,447 |
|
|
1,342,724 |
|
|
|
|
|
Total
consolidated debt, net (4) |
$ |
1,417,053 |
|
|
$ |
1,392,947 |
|
|
$ |
1,441,724 |
|
|
|
|
|
Archrock stockholders'
equity |
$ |
777,049 |
|
|
$ |
735,329 |
|
|
$ |
718,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Management
believes gross margin and EBITDA, as adjusted, provide useful
information to investors because these non-GAAP measures, when
viewed with our GAAP results and accompanying reconciliations,
provide a more complete understanding of our performance than GAAP
results alone. Management uses these non-GAAP measures as
supplemental measures to review current period operating
performance, comparability measures and performance measures for
period to period comparisons. |
(2) |
|
Defined as
idle and operating horsepower. New units completed by a third party
manufacturer that have been delivered to us are included in the
fleet. |
(3) |
|
Defined as
horsepower that is operating under contract and horsepower that is
idle but under contract and generating revenue such as standby
revenue. |
(4) |
|
Carrying
values are shown net of unamortized debt discounts and unamortized
deferred financing costs. |
|
|
|
ARCHROCK, INC.UNAUDITED
SUPPLEMENTAL INFORMATION(In thousands, except per
share amounts) |
|
|
Three Months Ended |
|
Years Ended |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation of GAAP
to Non-GAAP Financial Information: |
|
|
|
|
|
|
|
|
|
Net
income (loss) |
$ |
49,142 |
|
|
$ |
(12,683 |
) |
|
$ |
(46,079 |
) |
|
$ |
18,410 |
|
|
$ |
(65,243 |
) |
Less:
Loss from discontinued operations, net of tax |
— |
|
|
(54 |
) |
|
(384 |
) |
|
(54 |
) |
|
(426 |
) |
Income
(loss) from continuing operations |
49,142 |
|
|
(12,629 |
) |
|
(45,695 |
) |
|
18,464 |
|
|
(64,817 |
) |
Depreciation and amortization |
46,080 |
|
|
47,463 |
|
|
51,095 |
|
|
188,563 |
|
|
208,986 |
|
Long-lived asset impairment |
8,284 |
|
|
7,105 |
|
|
47,054 |
|
|
29,142 |
|
|
87,435 |
|
Restatement and other charges |
1,083 |
|
|
566 |
|
|
12,610 |
|
|
4,370 |
|
|
13,470 |
|
Restructuring and other charges |
141 |
|
|
422 |
|
|
1,143 |
|
|
1,386 |
|
|
16,901 |
|
Corporate
office relocation costs(1) |
— |
|
|
1,318 |
|
|
— |
|
|
1,318 |
|
|
— |
|
Interest
expense |
21,943 |
|
|
22,892 |
|
|
21,057 |
|
|
88,760 |
|
|
83,899 |
|
Indemnification (income) expense, net |
17 |
|
|
23 |
|
|
(201 |
) |
|
430 |
|
|
(2,593 |
) |
Debt
extinguishment costs |
— |
|
|
— |
|
|
— |
|
|
291 |
|
|
— |
|
Expensed
acquisition and merger related costs |
275 |
|
|
— |
|
|
— |
|
|
275 |
|
|
172 |
|
Benefit
from income taxes |
(55,031 |
) |
|
(4,795 |
) |
|
(11,892 |
) |
|
(61,083 |
) |
|
(24,604 |
) |
EBITDA,
as adjusted (2) |
71,934 |
|
|
62,365 |
|
|
75,171 |
|
|
271,916 |
|
|
318,849 |
|
Selling,
general and administrative |
29,660 |
|
|
29,108 |
|
|
26,725 |
|
|
111,483 |
|
|
114,470 |
|
Corporate
office relocation costs |
— |
|
|
(1,318 |
) |
|
— |
|
|
(1,318 |
) |
|
— |
|
Indemnification income (expense), net |
(17 |
) |
|
(23 |
) |
|
201 |
|
|
(430 |
) |
|
2,593 |
|
Expensed
acquisition and merger related costs |
(275 |
) |
|
— |
|
|
— |
|
|
(275 |
) |
|
(172 |
) |
Other
income, net |
(1,171 |
) |
|
(2,716 |
) |
|
(3,950 |
) |
|
(5,643 |
) |
|
(8,590 |
) |
Gross
Margin (2) |
$ |
100,131 |
|
|
$ |
87,416 |
|
|
$ |
98,147 |
|
|
$ |
375,733 |
|
|
$ |
427,150 |
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss) attributable to Archrock stockholders |
$ |
47,560 |
|
|
$ |
(10,235 |
) |
|
$ |
(38,611 |
) |
|
$ |
18,953 |
|
|
$ |
(54,555 |
) |
Loss from
discontinued operations, net of tax |
— |
|
|
54 |
|
|
384 |
|
|
54 |
|
|
426 |
|
Items: |
|
|
|
|
|
|
|
|
|
Long-lived asset impairment |
8,284 |
|
|
7,105 |
|
|
47,054 |
|
|
29,142 |
|
|
87,435 |
|
Restatement and other charges |
1,083 |
|
|
566 |
|
|
12,610 |
|
|
4,370 |
|
|
13,470 |
|
Restructuring and other charges |
141 |
|
|
422 |
|
|
1,143 |
|
|
1,386 |
|
|
16,901 |
|
Indemnification (income) expense, net |
17 |
|
|
23 |
|
|
(201 |
) |
|
430 |
|
|
(2,593 |
) |
Debt
extinguishment costs |
— |
|
|
— |
|
|
— |
|
|
291 |
|
|
— |
|
Corporate
office relocation costs |
— |
|
|
1,318 |
|
|
— |
|
|
1,318 |
|
|
— |
|
Expensed
acquisition and merger related costs |
275 |
|
|
— |
|
|
— |
|
|
275 |
|
|
172 |
|
Noncontrolling interest in items |
(2,554 |
) |
|
(3,022 |
) |
|
(13,566 |
) |
|
(10,812 |
) |
|
(31,625 |
) |
Tax
Reform (3) |
(53,442 |
) |
|
— |
|
|
— |
|
|
(53,442 |
) |
|
— |
|
Tax
effect on items (4) |
(1,510 |
) |
|
(2,362 |
) |
|
(12,928 |
) |
|
(5,479 |
) |
|
(27,400 |
) |
Net
income (loss) from continuing operations attributable to Archrock
stockholders, excluding items |
$ |
(146 |
) |
|
$ |
(6,131 |
) |
|
$ |
(4,115 |
) |
|
$ |
(13,514 |
) |
|
$ |
2,231 |
|
|
|
|
|
|
|
|
|
|
|
Diluted
net income (loss) attributable to Archrock common stockholders |
$ |
0.67 |
|
|
$ |
(0.15 |
) |
|
$ |
(0.56 |
) |
|
$ |
0.26 |
|
|
$ |
(0.80 |
) |
Adjustment for items, after-tax, per common share (5) |
(0.67 |
) |
|
0.06 |
|
|
0.50 |
|
|
(0.46 |
) |
|
0.82 |
|
Diluted
net income (loss) from continuing operations attributable to
Archrock common stockholders per common share, excluding items
(2)(4) |
$ |
— |
|
|
$ |
(0.09 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.20 |
) |
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes
charges associated with the relocation of our corporate
headquarters in the third quarter of 2017, which are included in
Selling, general and administrative in our condensed consolidated
statement of operations. |
(2) |
|
Management
believes EBITDA, as adjusted, gross margin and diluted net income
(loss) from continuing operations attributable to Archrock common
stockholders per common share, excluding items, provides useful
information to investors because these non-GAAP measures, when
viewed with our GAAP results and accompanying reconciliations,
provides a more complete understanding of our performance than GAAP
results alone. Management uses these non-GAAP measures as
supplemental measures to review current period operating
performance, comparability measures and performance measures for
period to period comparisons. |
(3) |
|
During the
year ended December 31, 2017 we recorded a tax benefit due to the
change in corporate tax rate from 35% to 21% enacted under the Tax
Cuts and Jobs Act which reduced our net deferred tax
liability. |
(4) |
|
The tax
effect is computed by applying the appropriate tax rate to each
adjustment and then allocating the tax impact between controlling
and non-controlling interests. |
(5) |
|
Diluted net
income (loss) from continuing operations attributable to Archrock
common stockholders per common share, excluding items, was computed
using the two-class method to determine the net income (loss) per
share for each class of common stock and participating security
(restricted stock and certain of our stock settled restricted stock
units) according to dividends declared and participation rights in
undistributed earnings. Accordingly, we have excluded net income
from continuing operations attributable to participating
securities, excluding items, of $0.2 million for the three months
ended December 31, 2017, September 30, 2017, and December 31, 2016,
and $0.7 million and $0.6 million for the years ended December 31,
2017 and 2016, respectively, from our calculation of diluted net
income (loss) from continuing operations attributable to Archrock
common stockholders per common share, excluding items. |
|
|
|
ARCHROCK, INC.UNAUDITED
SUPPLEMENTAL INFORMATION(In thousands, except per
share amounts and ratios) |
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2017 |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation
of Archrock, Inc. Net Income (Loss) to Cash Available for
Dividend |
|
|
|
|
|
|
|
|
|
Net
income (loss) |
$ |
49,142 |
|
|
$ |
(12,683 |
) |
|
$ |
(46,079 |
) |
|
$ |
18,410 |
|
|
$ |
(65,243 |
) |
Less:
Loss from discontinued operations, net of tax |
— |
|
|
(54 |
) |
|
(384 |
) |
|
(54 |
) |
|
(426 |
) |
Net
income (loss) from continuing operations |
49,142 |
|
|
(12,629 |
) |
|
(45,695 |
) |
|
18,464 |
|
|
(64,817 |
) |
Less:
Archrock Partners net income (loss) |
2,633 |
|
|
(4,013 |
) |
|
(14,021 |
) |
|
(421 |
) |
|
(10,757 |
) |
Deconsolidated net (income) loss from continuing operations |
46,509 |
|
|
(8,616 |
) |
|
(31,674 |
) |
|
18,885 |
|
|
(54,060 |
) |
Declared
LP distributions to Archrock, Inc. |
8,283 |
|
|
8,283 |
|
|
8,283 |
|
|
33,134 |
|
|
28,446 |
|
Declared
GP distributions to Archrock, Inc. |
405 |
|
|
405 |
|
|
378 |
|
|
1,594 |
|
|
1,417 |
|
Deconsolidated items: |
|
|
|
|
|
|
|
|
|
Restatement and other charges |
1,083 |
|
|
566 |
|
|
12,610 |
|
|
4,370 |
|
|
13,470 |
|
Restructuring and other charges |
141 |
|
|
422 |
|
|
1,127 |
|
|
1,386 |
|
|
9,592 |
|
Depreciation and amortization |
11,179 |
|
|
11,676 |
|
|
13,305 |
|
|
44,715 |
|
|
55,245 |
|
Benefit
from income taxes |
(55,443 |
) |
|
(5,503 |
) |
|
(12,835 |
) |
|
(64,465 |
) |
|
(26,016 |
) |
Cash tax
(payment) refund |
(1 |
) |
|
130 |
|
|
115 |
|
|
554 |
|
|
3,920 |
|
Maintenance and other capital expenditures |
(6,102 |
) |
|
(5,151 |
) |
|
(2,716 |
) |
|
(18,971 |
) |
|
(15,026 |
) |
Long-lived asset impairment |
3,837 |
|
|
1,737 |
|
|
23,303 |
|
|
10,036 |
|
|
41,177 |
|
Non-cash
selling, general and administrative expense |
2,035 |
|
|
1,846 |
|
|
1,463 |
|
|
7,399 |
|
|
7,766 |
|
Non-cash
interest expense |
254 |
|
|
258 |
|
|
486 |
|
|
1,467 |
|
|
2,021 |
|
(Gain)
loss on sale of property, plant and equipment |
(479 |
) |
|
96 |
|
|
(968 |
) |
|
(1,413 |
) |
|
(2,414 |
) |
Corporate
office relocation costs(1) |
— |
|
|
1,318 |
|
|
— |
|
|
1,318 |
|
|
— |
|
Expensed
acquisition and merger related costs |
275 |
|
|
— |
|
|
— |
|
|
275 |
|
|
— |
|
Other
(income) loss, net |
(401 |
) |
|
77 |
|
|
(1,336 |
) |
|
(1,259 |
) |
|
(5,996 |
) |
Cash Available for Dividend (2) |
$ |
11,575 |
|
|
$ |
7,544 |
|
|
$ |
11,541 |
|
|
$ |
39,025 |
|
|
$ |
59,542 |
|
|
|
|
|
|
|
|
|
|
|
Dividend
declared for the period per share |
$ |
0.1200 |
|
|
$ |
0.1200 |
|
|
$ |
0.1200 |
|
|
$ |
0.4800 |
|
|
$ |
0.4300 |
|
Dividend
declared for the period to all shareholders |
$ |
8,519 |
|
|
$ |
8,536 |
|
|
$ |
8,495 |
|
|
$ |
34,125 |
|
|
$ |
30,363 |
|
Cash
available for dividend coverage (3) |
|
1.36x |
|
|
|
0.88x |
|
|
|
1.36x |
|
|
|
1.14x |
|
|
|
1.96x |
|
|
|
|
|
|
|
|
|
|
|
Archrock, Inc.
Cash Available for Dividend |
|
|
|
|
|
|
|
|
|
Declared
LP distributions to Archrock, Inc. |
$ |
8,283 |
|
|
$ |
8,283 |
|
|
$ |
8,283 |
|
|
$ |
33,134 |
|
|
$ |
28,446 |
|
Declared
GP distributions to Archrock, Inc. |
405 |
|
|
405 |
|
|
378 |
|
|
1,594 |
|
|
1,417 |
|
Total
distributions received |
8,688 |
|
|
8,688 |
|
|
8,661 |
|
|
34,728 |
|
|
29,863 |
|
Deconsolidated items: |
|
|
|
|
|
|
|
|
|
Contract
operations gross margin (4) |
6,322 |
|
|
3,966 |
|
|
7,779 |
|
|
19,768 |
|
|
47,839 |
|
Aftermarket services gross margin (4) |
8,546 |
|
|
5,843 |
|
|
6,349 |
|
|
27,817 |
|
|
26,362 |
|
Selling,
general and administrative |
(6,950 |
) |
|
(8,397 |
) |
|
(8,345 |
) |
|
(29,448 |
) |
|
(34,753 |
) |
Non-cash
selling, general and administrative |
2,035 |
|
|
1,846 |
|
|
1,463 |
|
|
7,399 |
|
|
7,766 |
|
Maintenance and other capital expenditures |
(6,102 |
) |
|
(5,151 |
) |
|
(2,716 |
) |
|
(18,971 |
) |
|
(15,026 |
) |
Cash
interest expense |
(759 |
) |
|
(795 |
) |
|
(797 |
) |
|
(3,002 |
) |
|
(4,015 |
) |
(Gain)
loss on sale of property, plant and equipment |
(479 |
) |
|
96 |
|
|
(968 |
) |
|
(1,413 |
) |
|
(2,414 |
) |
Corporate
office relocation costs(1) |
— |
|
|
1,318 |
|
|
— |
|
|
1,318 |
|
|
— |
|
Expensed
acquisition and merger related costs |
275 |
|
|
— |
|
|
— |
|
|
275 |
|
|
— |
|
Cash tax
(payment) refund |
(1 |
) |
|
130 |
|
|
115 |
|
|
554 |
|
|
3,920 |
|
Cash Available for Dividend (2) |
$ |
11,575 |
|
|
$ |
7,544 |
|
|
$ |
11,541 |
|
|
$ |
39,025 |
|
|
$ |
59,542 |
|
|
|
|
|
|
|
|
|
|
|
Dividend
declared for the period per share |
$ |
0.1200 |
|
|
$ |
0.1200 |
|
|
$ |
0.1200 |
|
|
$ |
0.4800 |
|
|
$ |
0.4300 |
|
Dividend
declared for the period to all shareholders |
$ |
8,519 |
|
|
$ |
8,536 |
|
|
$ |
8,495 |
|
|
$ |
34,125 |
|
|
$ |
30,363 |
|
Cash
available for dividend coverage (3) |
|
1.36x |
|
|
|
0.88x |
|
|
|
1.36x |
|
|
|
1.14x |
|
|
|
1.96x |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes
charges associated with the relocation of our corporate
headquarters in the third quarter of 2017, which are included in
Selling, general and administrative in our condensed consolidated
statement of operations. |
(2) |
|
Cash
available for dividend, a non-GAAP measure, is defined as
distributions received by us from Archrock Partners, L.P., plus our
deconsolidated gross margin, less the following deconsolidated
items: maintenance and other capital expenditures, cash selling,
general and administrative expense excluding corporate office
relocation costs, cash interest expense associated with our debt,
cash tax, (gain) loss on sale of property, plant and equipment and
expensed acquisition and merger related costs. Management uses cash
available for dividend as a supplemental performance measure. Using
this metric, management can quickly compute the coverage ratio of
estimated cash flows to planned dividends. |
(3) |
|
Defined as
cash available for dividend for the period divided by dividend
declared for the period to all shareholders. |
(4) |
|
Management
believes gross margin provides useful information to investors
because this non-GAAP measure, when viewed with our GAAP results
and accompanying reconciliations, provides a more complete
understanding of our performance than GAAP results alone.
Management uses this non-GAAP measure as a supplemental measure to
review current period operating performance, comparability measures
and performance measures for period to period comparisons. |
|
|
|
For information, contact:
David Skipper, 281-836-8155
Archrock Partners, L.P. (NASDAQ:APLP)
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