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Mar 31, 2020
Archrock Q1 2020 Earnings Report
Archrock's financial results were impacted by a goodwill impairment charge offset by revenue growth and cost-saving initiatives.
Key Takeaways
Archrock reported a revenue increase of 5.7% year-over-year, driven by contract operations, but experienced a net loss due to a goodwill impairment charge related to the Elite Compression acquisition. The company is implementing cost reduction measures in response to the COVID-19 pandemic and economic slowdown.
Revenue increased to $249.7 million compared to $236.2 million in Q1 2019.
Net loss was $61.2 million, a significant change from the $19.5 million net income in Q1 2019, impacted by a $99.8 million goodwill impairment.
Adjusted EBITDA increased by 24% to $112.9 million compared to $91.2 million in Q1 2019.
The company is reducing capital expenditures and operating expenses to generate $75 to $85 million in annualized cash savings.
Archrock
Archrock
Archrock Revenue by Segment
Revenue by Segment
Contract Operations Revenue
CapyFin.comAftermarket Services Revenue
CapyFin.com Forward Guidance
Archrock provided its 2020 full year guidance, anticipating net loss between $(32) million and $8 million, and adjusted EBITDA between $380 million and $420 million.
Positive Outlook
- Contract operations revenue is expected to be between $750 million and $785 million.
- Contract operations gross margin percentage is projected to be between 61.5% and 63.0%.
- Aftermarket services revenue is forecasted to be between $145 million and $180 million.
- Aftermarket services gross margin percentage is expected to range from 15.5% to 17.0%.
- Cash available for dividend is projected between $209 million and $239 million.
Challenges Ahead
- Net income (loss) is expected to be between $(32) million and $8 million.
- Selling, general, and administrative expenses are expected to be between $113 million and $118 million.
- Growth capital expenditures are projected to be between $70 million and $90 million.
- Maintenance capital expenditures are expected to be between $47 million and $53 million.
- Other capital expenditures are projected to be between $23 million and $27 million.