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Jun 30, 2020
Archrock Q2 2020 Earnings Report
Reported a net loss due to non-cash long-lived asset impairment, debt extinguishment loss and restructuring costs, but improved contract operations gross margin percentage through cost management.
Key Takeaways
Archrock reported a revenue of $220.3 million and a net loss of $30.4 million for Q2 2020. Despite market challenges, the company improved its contract operations gross margin percentage through aggressive cost management. They also saw signs of market stabilization entering the third quarter.
Revenue for the second quarter of 2020 was $220.3 million compared to $238.4 million in the second quarter of 2019.
Net loss for the second quarter of 2020 was $30.4 million compared to net income of $11.4 million in the second quarter of 2019.
Adjusted EBITDA for the second quarter of 2020 was $100.5 million compared to $100.7 million in the second quarter of 2019.
Archrock’s leverage ratio was 4.1x compared to 4.4x as of June 30, 2019.
Archrock
Archrock
Archrock Revenue by Segment
Revenue by Segment
Contract Operations Revenue
CapyFin.comAftermarket Services Revenue
CapyFin.com Forward Guidance
Archrock is providing updated 2020 annual guidance. The guidance includes estimated net loss between $(77,000) and $(37,000), adjusted EBITDA between 380,000 and 420,000, contract operations revenue between $735,000 and $745,000, and aftermarket services revenue between $135,000 and $145,000.
Positive Outlook
- Expect to continue to generate free cash flow as largely funded 2020 capital needs.
- Not planning large new equipment capital expenditures in 2021
- Expanding free cash flow generation will facilitate further debt reduction
- Continuing return of cash to shareholders
- Substantial available liquidity and no near-term debt maturities
Challenges Ahead
- Net loss annual guidance includes $99.8 million of goodwill impairment
- Net loss annual guidance includes $61.4 million of long-lived asset impairments
- Net loss annual guidance includes $4.1 million of restructuring charges
- Net loss annual guidance includes $4.0 million of debt extinguishment loss as of June 30, 2020
- Does not include the impact of any such future costs, because due to their nature, they cannot be accurately forecasted.
Revenue & Expenses
Visualization of income flow from segment revenue to net income