Archrock touts strong Q2 as compression demand fuels guidance boost

Houston-based Archrock Inc. reported strong second-quarter 2025 results, underpinned by high fleet utilization, robust contract compression demand, and early contributions from its recent acquisition of Natural Gas Compression Systems, Inc. (NGCS). The company also raised its full-year adjusted EBITDA guidance, reflecting continued optimism in U.S. natural gas markets and related infrastructure.

Archrock touts strong Q2 as compression demand fuels guidance boost. (Image: Archrock)

Archrock posted $383.2 million in revenue for the quarter, up 42% from $270.5 million in the same period last year. Net income rose to $63.4 million, compared to $34.4 million in Q2 2024. Adjusted EBITDA jumped 64% year-over-year to $212.7 million, and adjusted EPS rose to $0.39 from $0.23.

“We delivered 368,000 horsepower of sequential growth and achieved a record 96% utilization across our fleet,” said Brad Childers, Archrock’s president and CEO. “Demand for our compression equipment remains high despite commodity price fluctuations, with the Permian Basin leading the charge.”

The company completed its acquisition of NGCS and its affiliate NGCSE on May 1, expanding its scale and customer base. NGCS adds meaningful horsepower and aftermarket service capabilities across Archrock’s geographic footprint. Eight months of the NGCS contribution are reflected in the updated full-year guidance.

Segment growth and fleet performance

Archrock’s contract operations segment—which provides compression services under long-term contracts—generated $318.3 million in revenue, up 41% year-over-year. Adjusted gross margin for the segment rose to $222.2 million, or 70% of revenue, up from 65% in the prior-year period. The company ended the quarter with 4.7 million horsepower in operation, a 1.1 million horsepower increase from Q2 2024.

Aftermarket services revenue also grew, reaching $64.8 million compared to $45.1 million a year earlier. Adjusted gross margin for the segment improved modestly to 23%.

On August 1, just after the end of the quarter, Archrock closed the sale of 155 compressors—representing about 47,000 horsepower primarily used in high-pressure gas lift and vapor recovery applications—to Flowco for $71 million. Those assets had been classified as held-for-sale during Q2, contributing to a $10.8 million non-cash impairment charge.

Rising shareholder returns, active capital management

Archrock continues to balance growth with returns to shareholders. The company declared a $0.21 per share dividend for the second quarter, a 27% increase from the year-earlier level, and repurchased 1.2 million shares for approximately $29 million. Dividend coverage stood at 3.4x, underscoring robust cash generation.

For the first half of 2025, Archrock returned $96.9 million to shareholders, up from $53 million during the same period in 2024. Available liquidity at midyear stood at $675 million.

Updated guidance reflects confidence

The company raised its full-year 2025 adjusted EBITDA guidance to a range of $810 million to $850 million, up from prior projections. It now expects annual contract operations revenue between $1.26 billion and $1.28 billion, with a gross margin percentage between 69% and 71%. Aftermarket services revenue is projected to reach $205–215 million.

Maintenance capital expenditures are expected to total $110–120 million, with another $340–360 million allocated for growth projects.

“We continue to execute with discipline and efficiency,” Childers said. “Our strong backlog, customer demand visibility, and the enduring strength of U.S. natural gas fundamentals give us confidence to invest in growth while returning capital to shareholders.”

Positioned for LNG and power-driven demand pull

Looking ahead, Archrock expects rising U.S. LNG exports and domestic power generation needs to drive sustained compression demand across major basins. The company’s high utilization and broad geographic presence leave it well positioned to meet this next wave of gas infrastructure buildout.

“Our strategy is centered on high-quality growth, operational leverage, and strong shareholder returns,” Childers added. “With the NGCS acquisition in place, we’re operating at greater scale and efficiency than ever before.”