Archrock: 2015 Results – Strong Operating Margins, EBITDA Up

Archrock, Inc. today reported EBITDA, as adjusted (as defined below), of $86.0 million for the fourth quarter 2015, as compared to $90.7 million for the third quarter 2015 and $92.4 million for the fourth quarter 2014.

• Full-year 2015 EBITDA, as adjusted, of $373.2 million, up from $330.1 million in 2014
• Gross margin for contract operations remained steady at 59 percent for the fourth quarter and full year 2015

Revenue was $241.3 million in the fourth quarter 2015, compared to $248.9 million in the third quarter 2015 and $262.8 million in the fourth quarter 2014.

EBITDA, as adjusted, was $373.2 million for 2015, compared to $330.1 million for 2014. Revenue was $998.1 million for 2015, compared to $959.2 million for 2014.

Archrock, Inc. declared a dividend of $0.1875 per share of common stock for the fourth quarter 2015, a rate of $0.75 per share on an annualized basis. The dividend was paid onFebruary 16, 2016, to stockholders of record at the close of business on February 9, 2016.

“Archrock’s fourth-quarter and full-year 2015 operating performance was strong with solid operating gross margins throughout the year, despite the headwinds in the market and a decline of 87,000 net operating horsepower in the fourth quarter,” said Brad Childers, Archrock’s President and Chief Executive Officer. “With continued challenges in the market, we are taking aggressive action now to reduce costs to maximize our cash flow and take full advantage of the opportunity our new structure provides for us to continue to simplify and streamline our company.

“In the fourth quarter, Archrock incurred a non-cash, long-lived asset impairment charge of $87.4 million as we elected to write off certain compression units in our idle fleet that did not warrant reinvestment. Removing these compression units furthers our progress in standardizing our fleet, which is the largest in the industry.”

Net income from continuing operations attributable to Archrock stockholders, excluding certain items, for the fourth quarter 2015 was $7.8 million, or $0.08 per diluted common share. Excluded items include a non-cash valuation allowance for foreign tax credits of $86.0 million and pretax items totaling $103.6, comprised of a non-cash long-lived asset impairment charge of $87.4 million, a goodwill impairment of $3.7 million, restructuring charges of $3.3 million and debt extinguishment costs of $9.2 million related to our recently completed spin-off transaction. Net loss from continuing operations attributable to Archrock stockholders, excluding certain items, was $9.9 million, or a loss of $0.15 per diluted common share, for the third quarter 2015. Net loss from continuing operations attributable to Archrock stockholders, excluding certain items, for the fourth quarter 2014 was $9.4 million, or a loss of $0.13 per diluted common share.

Net income from continuing operations attributable to Archrock stockholders, excluding certain items, for 2015 was $0.08 million, or a loss of $0.01 per diluted common share. Excluded items include $86.0 million of income tax expense related to a foreign tax credit valuation allowance and pretax items totaling $142.9 million, comprised of non-cash long-lived asset impairment charges of $125.0 million, goodwill impairment of $3.7 million, debt extinguishment charges of $9.2 million, restructuring charges of $4.7 million, and expensed acquisition costs of $0.3 million. Net loss from continuing operations attributable to Archrock stockholders, excluding items, for 2014 was $12 million, or $0.19 per diluted common share. Net loss attributable to Archrock stockholders was $105.8 million, or $1.55 per diluted common share, for 2015, compared to net income of $98.2 million, or $1.47 per diluted common share, for 2014.

The cash distribution received by Archrock based on its limited partner and general partner interests in Archrock Partners, L.P. was $18.9 million for the fourth quarter 2015, compared to $18.9 million for the third quarter 2015 and $15.2 million for the fourth quarter 2014. The cash distribution received by Archrock for 2015 based on its limited partner and general partner interests in Archrock Partners, L.P. was $68.2 million, compared to $55.5 million for 2014.