Archrock, Inc. — Call Transcript 2026

Good morning, Welcome to the Archrock first quarter 2026 conference call. Your host for today's call is Megan Repine, Vice President of Investor Relations at Archrock. I would now like to turn the call over to Ms. Repine. You may begin. Thank you, Carrie. Hello, everyone, and thanks for joining us on today's call. With me today are Brad Childers, President and Chief Executive Officer of Archrock, and Doug Aron, Chief Financial Officer of Archrock. Yesterday, Archrock released its financial and operating results for the first quarter of 2026. If you have not received a copy, you can find the information on the company's website at www.archrock.com. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 based on current beliefs and expectations, as well as assumptions made by and information currently available to Archrock's management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that expectations will prove to be correct. Please refer to our latest SEC filings with the securities with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. In addition, our discussion today will reference certain non-GAAP financial measures, including adjusted EBITDA, adjusted EPS, adjusted net income, cash available for dividends, adjusted free cash flow, and adjusted free cash flow after dividends. For reconciliations of these non-GAAP financial measures to our GAAP financial results, please see yesterday's press release and our Form 8-K furnished to the SEC. I'll now turn the call over to Brad to discuss Archrock's first quarter results and provide an update on our business. Thank you, Megan, and good morning, everyone. Archrock is off to a strong start in 2026, driven by disciplined execution and continued progress on our strategy with a clear focus on delivering returns to our investors. At the same time, customer demand remains strong and our order book continues to build, supporting a constructive outlook for compression and Archrock over the long term. Let me share a few highlights from the quarter that underscore the momentum in our performance and the durability of our business model. We delivered adjusted EPS of $0.42 during the first quarter of 2026 and adjusted EBITDA of $221 million. Compared to the first quarter of 2025, we increased our adjusted EBITDA by 12%. Our fleet remained fully utilized, extending our multi-year track record of full utilization. At the same time, we continue to high-grade our fleets with a sell of non-strategic compression units totaling approximately 40,000 horsepower, strengthening our portfolio and supporting disciplined capital allocation with year-to-date asset sell proceeds of $21 million helping to fund our new build program. We again delivered outstanding performance and profitability in both our contract compression and aftermarket services business segments. We translated this performance into adjusted free cash flow of $92 million in the quarter, of which we returned $44 million to shareholders through dividends and share repurchases, which is up 29% year-over-year. Overall, we're encouraged by the strong start to 2026, which keeps us on pace to achieve our full year 2026 adjusted EBITDA guidance range of between $865 million and $950 million, which we expect will translate into meaningful free cash flow generation for the year. As we look ahead, we believe our strategy is supported by three key drivers: the right market, the right platform, and the right balance sheet. Let me briefly walk through each one. First, the right market. The importance of natural gas is clear today, and it has been underscored again by recent conflict in the Middle East. Natural gas remains essential to powering economic growth, delivering affordable, reliable energy, and enabling energy security, driving sustained demand for the infrastructure needed to move more gas to market. Second, the right platform. We have the people, assets, and technologies in place to help customers move more gas to market more efficiently and safely, and to do so profitably. Customer service is a top priority for our organization, and we're continually deploying technology and data-driven tools for the benefit of our customers, our employees, and our shareholders. Our scale, operating discipline, and focus on reliability position us to execute consistently. Third, the right balance sheet. Our leverage profile reflects the strength and durability of our cash flows, and it provides the flexibility to invest in the organic and inorganic opportunities the current market is offering while continuing to return capital to shareholders. Taken together, these three drivers give us confidence in our ability to continue compounding earnings and free cash flow. As we execute by moving more gas to market safely and efficiently, investing in the highest return segments of the growing compression industry, and maintaining balance sheet strength, we believe Archrock is well-positioned to deliver sustainable and superior returns on capital. Natural gas production continues to climb, and we expect U.S. volumes to reach record levels for the sixth consecutive year in 2026. For Archrock, our footprint is concentrated in the faster-growing basins, especially the Permian, where associated gas volumes are expected to grow at mid-single-digit rates. Rising gas-to-oil ratios are making the basin more compression-intensive and about 4.6 Bcf a day of new takeaway capacity expected later this year should further support expanding levels of activity. We're also seeing early but encouraging signs of improving compression demand beyond the Permian across other basins. On demand, LNG remains a key driver. Roughly 2 Bcf a day of additional FID export capacity is expected to come online in 2026, and projects already sanctioned represent about 14 Bcf a day of incremental capacity through 2030. At the same time, the build-out of AI data centers is accelerating power demand, reinforcing natural gas-fired generation as a practical, scalable source of incremental electricity. Bottom line, we continue to see a constructive setup for natural gas and for compression across the market. Near term, the U.S. is on track for another record year in 2026. In the Permian, we expect mid-single-digit gas growth supported by rising gas-to-oil ratios and new takeaway later this year. Geopolitical risk in the Middle East, including Iran-related volatility, reinforces the strategic value of U.S. supply and supports tighter global LNG fundamentals. Longer term, the outlook is improving. The EIA's Annual Energy Outlook 2026 raised its view of U.S. gas production and demand versus last year, driven in part by LNG growth and AI data center power needs, with production projected to rise from 107 Bcf a day in 2025 to approximately 133 Bcf to 151 Bcf a day by 2050. That would represent an increase in natural gas production of between 24% and 41%, reinforcing our view of a longer-term growth trajectory for both natural gas production and for compression. Moving to our segments, contract operations delivered outstanding performance, supported by excellent execution and continued high demand for our compression fleet, particularly our large horsepower and electric motor drive units, extending our track record of strong results. Our fleet remained highly utilized during the quarter, exiting at 95% utilization, reflecting continued high demand and the high quality of our fleet and sustaining strong utilization in our contract operations business over a multi-year period. That durability is also evident in the time on location, with the blended fleet averaging approximately six years and units of 1,500 horsepower or greater averaging approximately eight years in largely midstream applications. At quarter end, we had 4.5 million operating horsepower. Operating horsepower declined by approximately 43,000 as new-build deliveries during the quarter were more than offset by the sale of approximately 40,000 non-strategic horsepower, including 21,000 active horsepower. As a reminder, we also sold approximately 123,000 horsepower, including 84,000 active horsepower at the end of 2025. Taken together, these sales reduced first quarter adjusted EBITDA by approximately $3 million on a sequential basis. Monthly revenue per horsepower moves higher on a sequential and year-over-year basis. In 2026, we continue to expect monthly revenue per horsepower to benefit from the full year carryover of the rate increases implemented in 2025 and increases in 2026. We achieved a quarterly adjusted gross margin percentage of 72%. Consistent profitability above 70% continues to be driven by strong pricing, disciplined execution, and a continued focus on per horsepower cost management. Over the last several years, we've executed well on the cost inputs into our operations, offsetting some of the cost increases we experienced during the recent higher inflationary environment, including higher costs for labor and parts. We remain focused on continuing this level of execution through technology deployment and ongoing cost management. Moving to our aftermarket services segment, performance was solid in the first quarter. As expected, Q1 is seasonally slower. Even so, we continue to deliver strong profitability levels in the business, reflecting disciplined execution and an ongoing focus on higher quality, higher margin work. Turning to capital allocation, we remain disciplined and returns-focused, prioritizing growth investment and shareholder returns supported by a strong balance sheet. We reaffirmed our 2026 growth capital plan of $250 million-$275 million for fleet investment, reflecting strong demand and our desire to continue growing our profitable platform through high-return new build investments. We expect substantial free cash flow to support increasing shareholder returns. We declared a quarterly dividend of $0.22 per share, up approximately 16% year-over-year while maintaining robust coverage. We also have flexibility for additional shareholder returns, including $113 million of remaining authorization under our share repurchase program as of quarter end, which we view as a tool within our returns-based framework and may use more actively during periods of market dislocation. We exited the quarter below our long-term leverage target of between 3x to 3.5x and expect to operate below 3x in the near term, preserving flexibility for both organic and inorganic growth as well as continued shareholder returns. In summary, Archrock is delivering consistent, strong results underpinned by a culture of disciplined execution and continuous improvement. Looking ahead, we see a meaningful runway for profitable growth with earnings supported by our returns-based capital allocation and durable tailwinds for natural gas infrastructure, including compression. Before I hand it over, I want to recognize Doug Aron. As we previously announced, Doug plans to retire by the end of the year. On behalf of Archrock, thank you, Doug, for more than seven years of outstanding service and leadership during an exciting and transformative period for the company. Doug has been a key leader and a trusted advisor to me, the rest of the executive leadership team, and our board. To be clear, he's not going anywhere just yet. Doug will stay in his role until a successor is named to ensure a smooth transition. With that, I'll turn the call over to Doug to walk through our first quarter and 2026 outlook. Thank you, Brad. Certainly appreciate the kind words. Good morning, everyone. Thanks for joining us. Let's review our first quarter results and then cover our current financial outlook for 2026. Net income for the first quarter of 2026 was $73.8 million. Excluding transaction-related and restructuring costs and adjusting for the associated tax impact, we delivered adjusted net income of $74.4 million or $0.42 per share. We reported adjusted EBITDA of $221 million for the first quarter of 2026. Underlying business performance exceeded our basis for guidance and results also benefited from a $10 million net gain from the sale of non-strategic compression and other assets. Strength in segment fundamentals was somewhat offset by higher selling, general, and administrative expense in the quarter. That performance translated into adjusted free cash flow of $92 million and adjusted free cash flow after dividends of $52 million in the quarter, driven by durable operating cash flow and further supported by proceeds from the non-strategic asset sales, supporting our ongoing commitment to return capital to shareholders. SG&A expenses were $45 million in the first quarter of 2026 compared to $37 million in the first quarter of 2025, with the increase primarily driven by higher long-term incentive compensation for two reasons. First, a little more than half of this increase was the result of the sharply higher stock price in the quarter. Second, the balance of the increase was the result of a GAAP accounting acceleration of expense recognition for long-term incentive compensation under an executive retention agreement, which we do not expect will recur in the remaining periods of this year. Turning to our business segments, Contract Operations revenue came in at $331 million in the first quarter, up 10% compared to the first quarter of 2025, driven by growth in horsepower and higher pricing. Operating horsepower of 4.53 million at the end of the quarter was up approximately 250,000 year-over-year from 4.28 million in the first quarter of 2025. Our Adjusted Gross Margin percentage of 72% in the first quarter of 2026 reflects consistent profitability. Reported Adjusted Gross Margin percentage was down from 78% last quarter, the figure increased slightly on a sequential basis after excluding the impact of out-of-period cash, tax settlements and credits we benefited from during the fourth quarter of 2025 that were more one-time in nature. In our aftermarket services segment, we reported first quarter 2026 revenue of $43 million, reflecting lower service activity and a seasonal slowdown. Even with the expected seasonal softness, AMS delivered a great level of profitability. First quarter 2026 adjusted gross margin percentage was 23%, consistent with the high end of our guidance range for the year. We ended the quarter with total debt of $2.4 billion. In January, we issued $800 million of senior notes to fund the April 1st repurchase of 100% of our senior notes due 2028 at par, which moves our nearest bond maturity to 2032. Pro forma for this activity, available liquidity was approximately $600 million. Our leverage ratio at quarter end was 2.6x compared to 2.7 in the fourth quarter of 2025 as we continue to operate comfortably below our stated target of 3x in the near term. We recently declared a first quarter dividend of $0.22 per share, or $0.88 on an annualized basis. This is consistent with the fourth quarter 2025 dividend level and up approximately 16% year over year. Cash available for dividend for the first quarter of 2026 totaled $134 million, leading to robust quarterly dividend coverage of 3.5x. During the quarter, we repurchased approximately 171,000 shares for approximately $4.4 million and an average price of $25.87 per share. This leaves approximately $113 million in remaining capacity for additional share repurchases. Given our solid first quarter performance, we are reaffirmed our full year 2026 guidance with yesterday's earnings release. We remain on track to deliver our 2026 adjusted EBITDA guidance of $865 million-$915 million. Segment performance in the first quarter was consistent with the basis of that guidance, with strength in the underlying business partially offset by higher SG&A. We do not expect the $3.7 million of long-term compensation expense acceleration to recur in future periods for the remainder of 2026. In contract operations, our outlook reflects year-over-year growth in horsepower, revenue, and profitability. In AMS, we expect revenue and profitability to remain strong. Turning to capital on a full year basis, we continue to expect total 2026 capital expenditures to be approximately $400 million-$445 million. Within that total, we reiterate growth CapEx of $250 million-$275 million to support investment in new build horsepower and repackage CapEx to meet continued customer demand. Growth is expected to be funded by operations with additional support from non-strategic asset sale proceeds as we continue to high grade our fleet, including year-to-date proceeds totaling approximately $21 million. Maintenance CapEx is forecasted to be approximately $125 million-$135 million, up versus 2025 due to increased planned overall activity. We also anticipate approximately $25 million-$35 million in other CapEx, primarily for new vehicles. In summary, we remain confident in the strength of our platform and in the long-term opportunity in front of us. The combination of a fully utilized fleet and the continued build-out of U.S. midstream infrastructure to support both expected growth in LNG exports and rising power demand reinforces our view that the need for reliable compression remains strong. Against that backdrop, we are focused on excellent execution, delivering for our customers, advancing the technologies we've put in place, and adhering to a disciplined, returns-based approach to capital allocation to grow the business and create long-term value for our shareholders. With that, Carrie, I believe we are ready to open the line for questions. Thank you. At this time, if you would like to ask a question, please press star then the number one on your telephone keypad. As a courtesy to all participants, we ask that you limit yourself to one question and one follow-up. We'll pause for just a moment to pull out the Q&A roster. Your first question will come from Michael Blum with Wells Fargo. Thanks. Good morning, everyone. Wanted to start on the guidance, you know, you made the comment that your first quarter underlying business performance is exceeding the basis for guidance, but you didn't raise guidance here. Is that just a function of the higher SG&A in Q1, or conservatism, or is there something else? Yeah, look, I would say, I can't remember exactly what we did last year, ‘cause I know we had an acquisition middle of the year. It, it is, you know, for us historically to not do anything with guidance after only a quarter is not something that is unusual. I think that, it just feels early in the year. We've given a guidance range that we feel comfortable with and we'll continue to look at that as we move through the year. Okay. Fair enough. Appreciate that. Wondering if you can just give us your latest view on Cat equipment lead time and how the order book is shaping up for 2027. Thanks. Caterpillar lead times continue to extend out as we're seeing an extreme tightness in the supply chain. I think at now we're out to close to 160 weeks, so it's meaningfully out there. The interpretation I'd offer that is interesting, though. This tightness in the market just reflects a market that I believe is coiled for growth. We see this in the overall burgeoning demand for natural gas. We see this in the amount of pipeline capacity expected to come online in 2026, the amount of LNG incrementally that's going to come online in 2026. We see it in the tightness in the supply chain, and candidly, we're seeing it in our bookings. This is a market that's just posed right now for that accelerated growth for the future and candidly for years. As far as 2027, we are definitely going to be placing orders and have placed orders to ensure we're positioned well to meet customer demand, but we're not yet giving guidance on CapEx for 2027. Thank you. Your next question will come from Eli Jossen with JPMorgan. Hey, good morning, everyone. Congrats to Doug in your retirement and next steps ahead. Maybe to take that last point a step further, I know some of your peers have signaled reserving slots even past 2027 and 2028 and 2029, just given the aforementioned tightness. Can you give any color just in terms of how you're thinking, you know, even multiple years ahead and what kind of, you know, discussions you're having with your customers so that they can ensure they're getting the equipment they need? Thanks. Yeah. Thanks for the question. For the customers, we are working closely with our customers to advise as to where lead times are and to help them ensure that they're not caught short and without equipment to produce and compress the gas that they're going to have in the coming years. When we think about our outlook for the business, we are seriously optimistic about the growth ahead. That does mean we are absolutely going to use our incredibly strong balance sheet that positions us well to capture market going forward, to place orders and ensure that we're not caught without equipment to support our customers' needs. Thinking about years beyond 2026, we assess the market overall based on and we're willing to place orders based on a contract in hand, based upon a good lead and intel with our customers, as well as strong market signals. We are going to be in the position to show up and have equipment for our customers and to capture market share in the future based upon the extreme tightness we see. Got it. Maybe just thinking about some of the strong performance we saw this quarter. Looked like pricing jumped up a bit and just wanna get a sense. I know that you need to balance kind of those price increases with your customers' needs, but can you just give us a signal to how you see price trending throughout the year and maybe also confirm the cadence for deployment of horsepower this year as well, how much we're expecting and then when it should come on? Thanks. On the second part of the question first, the deployment of horsepower, it is the case that in Q1 that was the lowest quarter for us of deliveries of new-build horsepower, and we expect future deliveries or deliveries in future quarters of 2026 to continue to grow, and it's more back half-weighted. You'll see that shape in the curve for new equipment deliveries. We expect that to translate to start activity for the same reason. As far as pricing goes, we are very happy to see the growth in revenue per horsepower that we delivered, year-over-year on a sequential basis. It shows the strength in our business. I'm going to point out that at profitability above 70% now for a sustained period of time, we are very happy with the overall pricing in the market, the returns we're achieving, and expect to grow our business to achieve growing returns to our investors going forward. As far as particular pricing commentary right now, and other points of strategy for the company, let's just say that we're very invested in growing this profitable business for the benefit of our investors. Understood. Thanks. Your next question will come from Jim Rollyson with Raymond James. Hey, good morning, Doug, Brad, and Megan. Congrats, Doug, on your pending retirement, and we'll send you off properly in Aspen this summer, I think. Thanks, Jim. Brad, on the oil price side, obviously you guys have been in this kind of perfect environment until recently where gas outlook has been fantastic and you've been growing at a pretty rapid clip and you've had, you know, somewhat muted oil prices that have kind of helped on the lube oil and fuel cost side of the equation, and that's obviously changed. I'm kinda curious what you all are seeing there and, you know, how quickly can you pass those through so you can sustain these, you know, low 70% margins in that business? We do expect to have some oil price headwinds primarily in the back half of the year, as lube oil pricing for us adjusts quarterly. There's definitely a lag time between when we experience an increase in our costs and when we can pass them on to customers. I am not gonna use the word transitory. However, what we see in the market today is that we are not willing to know or to guess where oil will ultimately resolve, and therefore, where base oil and lube oil pricing will ultimately resolve. But what we see for this higher stock price, higher oil price environment today is it appears to be mostly driven by external events, notably hostility in the Middle East. We need to see where that resolves longer term. In the meantime, we did not change our guidance notwithstanding what we see for risk on lube oil pricing for the back half of the year. We intend to mitigate that through the best cost management we can offer in the market to continue to deliver this high level of profitability and returns to our investors. Got it. Appreciate that. Then just on the asset sales side, you know, you guys have been basically great portfolio managers for a while now, where you keep migrating assets and redeploying the capital. Just curious, if you have any color or view, and maybe you don't yet. How we should think about incremental, you know, kind of older asset sales that you're looking to monetize just as we, you know, think about how that impacts the numbers and there's obviously a lag between getting the capital and redeploying it. Just wondering how do you think about that going forward? The fleet repositioning we've been engaged in for the last number of years now has been remarkably consistent. Just when I think that we actually have de-aged the fleet and we no longer have a lot of assets in that category for disposal, yet the calendar turns, another year passes, and we find that there's still an opportunity for some assets that we believe will not be as competitive for the future. This program on our asset management that we've implemented has some real benefits, and it's really important. First and foremost, in keeping our fleet as competitive as we can keep it and in providing the best service to our customers that we can deliver. You know, second, when we look at the total ownership of the life of a unit, it allows us to really think about how to optimize the total cash flow coming out of a unit for its life. To sell units while they still have meaningful market value, which is why we've been able to generate nice gain on sell on a fairly consistent basis through our asset management program over that period of time. We take those proceeds and redeploy it into our new build program, which is a very efficient, you know, overall capital management program. The third benefit is that even though I know this is a gain on sell income, in some ways it accelerates some of that EBITDA into the period. It's a really effective program when you think about those three primary benefits. We're going to continue to engage in a very disciplined asset management approach. I do think that looking to our past levels is fairly indicative of what could happen in the future. It's very difficult to forecast this, but we're gonna continue. That said, it's gonna be consistent with past levels, but I do think it's going to ramp down a bit, potentially lower going forward only because of the amazing growth environment that we find ourselves in as an industry, in compression and for natural gas production, and because of the high quality and the repositioning we've already accomplished on the fleet. Appreciate the color, and thank you guys. Your next question will come from Nate Pendleton with Texas Capital. Good morning, Brad and Doug. Brad, in your prepared remarks, you called out improving compression demand outside of the Permian. Can you talk about where you see those opportunities geographically and maybe if there's any difference in the unit sizes needed for those opportunities? Yes. Great question. What we saw in the quarter was that, and really beneficially, only about 35% of our bookings were in the Permian in the quarter. More were outside. They're spread, you know, fairly evenly between the Northeast, the Mid-Continent, the South, and that would be in East Texas, Haynesville, and the Rockies. It's been a nice spread, but it's also been good to see units moving into other markets and other basins accomplishing some growth, especially on natural gas. The unit sizes are more diverse in the plays outside the Permian, especially in the electric motor drives that we're deploying, where we see a spread of horsepower more, you know, all the way from 400, 800, and potentially moving up to 1,500. We do see more diversity, but it's primarily within the electric motor drives that we're seeing the smaller horsepower go out into the marketplace. Got it. I appreciate that. Then as my follow-up, with the longer timelines for large horsepower units that's been very topical so far, can you talk about if that delay changes your procurement strategy with packagers? Do you have to put down a deposit for the full unit so far in advance? Maybe can you help us understand the cash flow implications of such a long lead time for just the engines? Well, without going into too much on our procurement strategy and the work we do with our packagers, I will say we're very aligned with our packagers in fulfillment and in making sure we can manage the need. It does not require a change in the overall kind of structure of the cash flows, where we still expect to have very effective deployment of capital so that the unit revenue is recognized, you know, within two-three months max of when the bulk of the capital goes out the door for a unit. Got it. Thanks. Those are my questions. Thank you. Your next question will come from Doug Irwin with Citi. Hey, team. Thanks for the question. Brad, you made a comment in your prepared remarks about maintaining flexibility for both organic and inorganic growth. Just curious if inorganic growth becomes even more attractive here, just given where lead times are, as well as the fact that you have a much stronger equity currency compared to the last few acquisitions you did. We are, you know, extremely well-positioned, both from a balance sheet perspective, given our low leverage ratio now, and our equity position with our stock price. We're definitely, really well-positioned to finance any growth going forward, including inorganic growth. I would say that it doesn't make the targets look more attractive, and we're still gonna be very disciplined in how we evaluate the opportunity set going forward. We wanna make sure that if we, if we see an opportunity, that we know why we can use why we can add value to that opportunity or why that opportunity adds value to us. The discipline's gonna remain in outstanding the really strong financial position we're in. We do see that there are a number of opportunities in the marketplace that could develop over the coming years, and we're optimistic that just like our track record of having grown through acquisition with TOPS, with NGCSi, that there will be opportunities for us to deploy capital into the market through both means. Got it. Thanks for that. Maybe just a higher level one as a follow-up here. Sounds like you're working pretty closely with your own customers to make sure they have enough supply over the next year or so, but it's obviously a pretty dynamic market, so just curious to get your view on the balance of the broader market here going forward. I guess, is there a potential scenario where we could see compression become kind of a real near-term bottleneck if we see producers look to start accelerating activity into the back half of the year? Just curious kind of how much slack you see there being in broader compression market here? I don't know that I have enough visibility into the market to be able to answer the question accurately, but I would step back and pose the following, that for the United States to deliver all of the LNG we're targeting to export and all the power we expect to fuel through natural gas. I'm gonna stick to that. It's, it's in our lane. We have a lot of power capacity, power plants, power generation to build. We have a lot of lines to lay. We have a lot of pipelines to lay. We have a lot of gas plants to go in, and we have a lot of compression to go into the market. It is not all going to happen without some bottlenecks and delays along that entire supply chain. At Archrock, we're very invested to not being one of them. Yeah. Look, I think I'd just add, like with, you know, our utilization as high as it is, the industry at tight utilization. Brad pointed out, you know, there are a lot of macro factors. You know, we saw large E&P make a pretty aggressive announcement earlier in the week about their ability to grow even this year. I think we're gonna do everything we can to continue to make sure we have equipment for our customers and support this growth for compression. Understood. Thanks for your time. Your final question will come from Steve Ferazani with Sidoti. Morning, everyone. Thanks for taking my questions. Brad and Doug, when I think about your fleet, which you've obviously spent several years high grading, its larger horsepower units, it's a younger fleet. How do you think about changes in annual maintenance and other CapEx, particularly in a quarter where it looks like a lot of your guidance for the full year, other CapEx was taken in Q1? A few things you're seeing in our CapEx. Number one, our CapEx is typically dictated by what the units tell us they need from a time on location, time in operation, and hours perspective. We are seeing an incremental uptick in our maintenance CapEx right now because of the time at which we added the horsepower in prior years. We just have more large horsepower due for major maintenance this year than we have in the most recent couple of years. What you're going to see in major maintenance in particular is just going to be exactly that, the timing required for the units based upon, you know, hours of operation in the field, and that's what we're experiencing. Even though we've de-aged the fleet nicely, we've standardized the mix of fleet really well, and we've increased the average size of horsepower and added in electric motor drives. The other aspect that you're seeing is that we grew through acquisition, some of what we're seeing for the year includes the NGCSi units coming into our fleet. Finally, we did go through a period of inflation that was pretty steep. Just the maintenance investment required for the same work has increased over time. That's what you're seeing in our maintenance activity overall. That said, we're very dedicated to ensuring we spend the maintenance capital required by the units to deliver superior customer service over time. When we think about your other CapEx guidance for the year, it looks like you spent about half of it in Q1. Was there anything particular, any reason to think that number could end up higher? Likely just timing. The other CapEx is primarily trucks and computers. Yeah. That would just mostly be the timing of delivery of our truck fleet to support the growth that we're seeing in the marketplace and making sure we have the right transportation for our mechanics. Got it. That's helpful. I mean, you almost doubled your available liquidity sequentially with the, with the asset sales. When you think about returning capital to shareholders, does that mean you can get more aggressive, or do you have to carefully think about the multi-year likely expansion of your fleet given the expected demand growth? Fortunately, we're in the position to be able to pay attention to both these key drivers for value creation for our investors. First and foremost, given the market we're in, as you just highlighted, growth. Poised for growth in maintaining some dry powder for growth is absolutely strategically something we wanna make sure we have done, but we do expect to continue to grow our cash returns to our investors over time as we grow our business. We certainly have the financial strength to do that comfortably. Great. Thanks, everyone. There are no more questions. Now, I'd like to turn the call back over to you, Mr. Childers, for final remarks. Thank you for joining us today. We're pleased with our strong start to 2026 and remain focused on execution, profitable growth, and returning capital to shareholders. We appreciate your support and look forward to updating you on our progress next quarter. Thank you. Thank you for your participation. This does conclude today's conference. You may now disconnect.

Speaker 9: Good morning, Welcome to the Archrock first quarter 2026 conference call. Your host for today's call is Megan Repine, Vice President of Investor Relations at Archrock. I would now like to turn the call over to Ms. Repine. You may begin. Good morning, Welcome to the Archrock first quarter 2026 conference call. good morning welcome to the archrock first quarter 2026 conference call Your host for today's call is Megan Repine, Vice President of Investor Relations at Archrock. your host for today's call is megan repine vice president of investor relations at archrock I would now like to turn the call over to Ms. Repine. i would now like to turn the call over to ms repine You may begin. you may begin

Speaker 6: Thank you, Carrie. Hello, everyone, and thanks for joining us on today's call. With me today are Brad Childers, President and Chief Executive Officer of Archrock, and Doug Aron, Chief Financial Officer of Archrock. Yesterday, Archrock released its financial and operating results for the first quarter of 2026. If you have not received a copy, you can find the information on the company's website at www.archrock.com. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 based on current beliefs and expectations, as well as assumptions made by and information currently available to Archrock's management team. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that expectations will prove to be correct. Thank you, Carrie. thank you carrie Hello, everyone, and thanks for joining us on today's call. hello everyone and thanks for joining us on today's call With me today are Brad Childers, President and Chief Executive Officer of Archrock, and Doug Aron, Chief Financial Officer of Archrock. with me today are brad childers president and chief executive officer of archrock and doug aron chief financial officer of archrock Yesterday, Archrock released its financial and operating results for the first quarter of 2026. yesterday archrock released its financial and operating results for the first quarter of 2026 If you have not received a copy, you can find the information on the company's website at www.archrock.com. if you have not received a copy you can find the information on the company's website at www.archrock.com During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 based on current beliefs and expectations, as well as assumptions made by and information currently available to Archrock's management team. during this call we will make forward-looking statements within the meaning of section 21e of the securities exchange act of 1934 based on current beliefs and expectations as well as assumptions made by and information currently available to archrock's management team Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that expectations will prove to be correct. although management believes that the expectations reflected in such forward-looking statements are reasonable it can give no assurance that expectations will prove to be correct Please refer to our latest SEC filings with the securities with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. In addition, our discussion today will reference certain non-GAAP financial measures, including adjusted EBITDA, adjusted EPS, adjusted net income, cash available for dividends, adjusted free cash flow, and adjusted free cash flow after dividends. For reconciliations of these non-GAAP financial measures to our GAAP financial results, please see yesterday's press release and our Form 8-K furnished to the SEC. I'll now turn the call over to Brad to discuss Archrock's first quarter results and provide an update on our business. Please refer to our latest SEC filings with the securities with the SEC for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. please refer to our latest sec filings with the securities with the sec for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call In addition, our discussion today will reference certain non-GAAP financial measures, including adjusted EBITDA, adjusted EPS, adjusted net income, cash available for dividends, adjusted free cash flow, and adjusted free cash flow after dividends. in addition our discussion today will reference certain non-gaap financial measures including adjusted ebitda adjusted eps adjusted net income cash available for dividends adjusted free cash flow and adjusted free cash flow after dividends For reconciliations of these non-GAAP financial measures to our GAAP financial results, please see yesterday's press release and our Form 8-K furnished to the SEC. for reconciliations of these non-gaap financial measures to our gaap financial results please see yesterday's press release and our form 8-k furnished to the sec I'll now turn the call over to Brad to discuss Archrock's first quarter results and provide an update on our business. i'll now turn the call over to brad to discuss archrock's first quarter results and provide an update on our business

Speaker 1: Thank you, Megan, and good morning, everyone. Archrock is off to a strong start in 2026, driven by disciplined execution and continued progress on our strategy with a clear focus on delivering returns to our investors. At the same time, customer demand remains strong and our order book continues to build, supporting a constructive outlook for compression and Archrock over the long term. Let me share a few highlights from the quarter that underscore the momentum in our performance and the durability of our business model. We delivered adjusted EPS of $0.42 during the first quarter of 2026 and adjusted EBITDA of $221 million. Compared to the first quarter of 2025, we increased our adjusted EBITDA by 12%. Our fleet remained fully utilized, extending our multi-year track record of full utilization. Thank you, Megan, and good morning, everyone. thank you megan and good morning everyone Archrock is off to a strong start in 2026, driven by disciplined execution and continued progress on our strategy with a clear focus on delivering returns to our investors. archrock is off to a strong start in 2026 driven by disciplined execution and continued progress on our strategy with a clear focus on delivering returns to our investors At the same time, customer demand remains strong and our order book continues to build, supporting a constructive outlook for compression and Archrock over the long term. at the same time customer demand remains strong and our order book continues to build supporting a constructive outlook for compression and archrock over the long term Let me share a few highlights from the quarter that underscore the momentum in our performance and the durability of our business model. let me share a few highlights from the quarter that underscore the momentum in our performance and the durability of our business model We delivered adjusted EPS of $0.42 during the first quarter of 2026 and adjusted EBITDA of $221 million. we delivered adjusted eps of $0.42 during the first quarter of 2026 and adjusted ebitda of $221 million Compared to the first quarter of 2025, we increased our adjusted EBITDA by 12%. compared to the first quarter of 2025 we increased our adjusted ebitda by 12% Our fleet remained fully utilized, extending our multi-year track record of full utilization. our fleet remained fully utilized extending our multi-year track record of full utilization At the same time, we continue to high-grade our fleets with a sell of non-strategic compression units totaling approximately 40,000 horsepower, strengthening our portfolio and supporting disciplined capital allocation with year-to-date asset sell proceeds of $21 million helping to fund our new build program. We again delivered outstanding performance and profitability in both our contract compression and aftermarket services business segments. We translated this performance into adjusted free cash flow of $92 million in the quarter, of which we returned $44 million to shareholders through dividends and share repurchases, which is up 29% year-over-year. At the same time, we continue to high-grade our fleets with a sell of non-strategic compression units totaling approximately 40,000 horsepower, strengthening our portfolio and supporting disciplined capital allocation with year-to-date asset sell proceeds of $21 million helping to fund our new build program. at the same time we continue to high-grade our fleets with a sell of non-strategic compression units totaling approximately 40,000 horsepower strengthening our portfolio and supporting disciplined capital allocation with year-to-date asset sell proceeds of $21 million helping to fund our new build program We again delivered outstanding performance and profitability in both our contract compression and aftermarket services business segments. we again delivered outstanding performance and profitability in both our contract compression and aftermarket services business segments We translated this performance into adjusted free cash flow of $92 million in the quarter, of which we returned $44 million to shareholders through dividends and share repurchases, which is up 29% year-over-year. we translated this performance into adjusted free cash flow of $92 million in the quarter of which we returned $44 million to shareholders through dividends and share repurchases which is up 29% year-over-year Overall, we're encouraged by the strong start to 2026, which keeps us on pace to achieve our full year 2026 adjusted EBITDA guidance range of between $865 million and $950 million, which we expect will translate into meaningful free cash flow generation for the year. As we look ahead, we believe our strategy is supported by three key drivers: the right market, the right platform, and the right balance sheet. Let me briefly walk through each one. First, the right market. The importance of natural gas is clear today, and it has been underscored again by recent conflict in the Middle East. Natural gas remains essential to powering economic growth, delivering affordable, reliable energy, and enabling energy security, driving sustained demand for the infrastructure needed to move more gas to market. Second, the right platform. Overall, we're encouraged by the strong start to 2026, which keeps us on pace to achieve our full year 2026 adjusted EBITDA guidance range of between $865 million and $950 million, which we expect will translate into meaningful free cash flow generation for the year. overall we're encouraged by the strong start to 2026 which keeps us on pace to achieve our full year 2026 adjusted ebitda guidance range of between $865 million and $950 million which we expect will translate into meaningful free cash flow generation for the year As we look ahead, we believe our strategy is supported by three key drivers: the right market, the right platform, and the right balance sheet. as we look ahead we believe our strategy is supported by three key drivers the right market the right platform and the right balance sheet Let me briefly walk through each one. let me briefly walk through each one First, the right market. first the right market The importance of natural gas is clear today, and it has been underscored again by recent conflict in the Middle East. the importance of natural gas is clear today and it has been underscored again by recent conflict in the middle east Natural gas remains essential to powering economic growth, delivering affordable, reliable energy, and enabling energy security, driving sustained demand for the infrastructure needed to move more gas to market. natural gas remains essential to powering economic growth delivering affordable reliable energy and enabling energy security driving sustained demand for the infrastructure needed to move more gas to market Second, the right platform. second the right platform We have the people, assets, and technologies in place to help customers move more gas to market more efficiently and safely, and to do so profitably. Customer service is a top priority for our organization, and we're continually deploying technology and data-driven tools for the benefit of our customers, our employees, and our shareholders. Our scale, operating discipline, and focus on reliability position us to execute consistently. Third, the right balance sheet. Our leverage profile reflects the strength and durability of our cash flows, and it provides the flexibility to invest in the organic and inorganic opportunities the current market is offering while continuing to return capital to shareholders. Taken together, these three drivers give us confidence in our ability to continue compounding earnings and free cash flow. We have the people, assets, and technologies in place to help customers move more gas to market more efficiently and safely, and to do so profitably. we have the people assets and technologies in place to help customers move more gas to market more efficiently and safely and to do so profitably Customer service is a top priority for our organization, and we're continually deploying technology and data-driven tools for the benefit of our customers, our employees, and our shareholders. customer service is a top priority for our organization and we're continually deploying technology and data-driven tools for the benefit of our customers our employees and our shareholders Our scale, operating discipline, and focus on reliability position us to execute consistently. our scale operating discipline and focus on reliability position us to execute consistently Third, the right balance sheet. third the right balance sheet Our leverage profile reflects the strength and durability of our cash flows, and it provides the flexibility to invest in the organic and inorganic opportunities the current market is offering while continuing to return capital to shareholders. our leverage profile reflects the strength and durability of our cash flows and it provides the flexibility to invest in the organic and inorganic opportunities the current market is offering while continuing to return capital to shareholders Taken together, these three drivers give us confidence in our ability to continue compounding earnings and free cash flow. taken together these three drivers give us confidence in our ability to continue compounding earnings and free cash flow As we execute by moving more gas to market safely and efficiently, investing in the highest return segments of the growing compression industry, and maintaining balance sheet strength, we believe Archrock is well-positioned to deliver sustainable and superior returns on capital. Natural gas production continues to climb, and we expect U.S. volumes to reach record levels for the sixth consecutive year in 2026. For Archrock, our footprint is concentrated in the faster-growing basins, especially the Permian, where associated gas volumes are expected to grow at mid-single-digit rates. Rising gas-to-oil ratios are making the basin more compression-intensive and about 4.6 Bcf a day of new takeaway capacity expected later this year should further support expanding levels of activity. We're also seeing early but encouraging signs of improving compression demand beyond the Permian across other basins. On demand, LNG remains a key driver. As we execute by moving more gas to market safely and efficiently, investing in the highest return segments of the growing compression industry, and maintaining balance sheet strength, we believe Archrock is well-positioned to deliver sustainable and superior returns on capital. as we execute by moving more gas to market safely and efficiently investing in the highest return segments of the growing compression industry and maintaining balance sheet strength we believe archrock is well-positioned to deliver sustainable and superior returns on capital Natural gas production continues to climb, and we expect U.S. volumes to reach record levels for the sixth consecutive year in 2026. natural gas production continues to climb and we expect u.s volumes to reach record levels for the sixth consecutive year in 2026 For Archrock, our footprint is concentrated in the faster-growing basins, especially the Permian, where associated gas volumes are expected to grow at mid-single-digit rates. for archrock our footprint is concentrated in the faster-growing basins especially the permian where associated gas volumes are expected to grow at mid-single-digit rates Rising gas-to-oil ratios are making the basin more compression-intensive and about 4.6 Bcf a day of new takeaway capacity expected later this year should further support expanding levels of activity. rising gas-to-oil ratios are making the basin more compression-intensive and about 4.6 bcf a day of new takeaway capacity expected later this year should further support expanding levels of activity We're also seeing early but encouraging signs of improving compression demand beyond the Permian across other basins. we're also seeing early but encouraging signs of improving compression demand beyond the permian across other basins On demand, LNG remains a key driver. on demand lng remains a key driver Roughly 2 Bcf a day of additional FID export capacity is expected to come online in 2026, and projects already sanctioned represent about 14 Bcf a day of incremental capacity through 2030. At the same time, the build-out of AI data centers is accelerating power demand, reinforcing natural gas-fired generation as a practical, scalable source of incremental electricity. Bottom line, we continue to see a constructive setup for natural gas and for compression across the market. Near term, the U.S. is on track for another record year in 2026. In the Permian, we expect mid-single-digit gas growth supported by rising gas-to-oil ratios and new takeaway later this year. Geopolitical risk in the Middle East, including Iran-related volatility, reinforces the strategic value of U.S. supply and supports tighter global LNG fundamentals. Longer term, the outlook is improving. Roughly 2 Bcf a day of additional FID export capacity is expected to come online in 2026, and projects already sanctioned represent about 14 Bcf a day of incremental capacity through 2030. roughly 2 bcf a day of additional fid export capacity is expected to come online in 2026 and projects already sanctioned represent about 14 bcf a day of incremental capacity through 2030 At the same time, the build-out of AI data centers is accelerating power demand, reinforcing natural gas-fired generation as a practical, scalable source of incremental electricity. at the same time the build-out of ai data centers is accelerating power demand reinforcing natural gas-fired generation as a practical scalable source of incremental electricity Bottom line, we continue to see a constructive setup for natural gas and for compression across the market. bottom line we continue to see a constructive setup for natural gas and for compression across the market Near term, the U.S. is on track for another record year in 2026. near term the u.s is on track for another record year in 2026 In the Permian, we expect mid-single-digit gas growth supported by rising gas-to-oil ratios and new takeaway later this year. in the permian we expect mid-single-digit gas growth supported by rising gas-to-oil ratios and new takeaway later this year Geopolitical risk in the Middle East, including Iran-related volatility, reinforces the strategic value of U.S. supply and supports tighter global LNG fundamentals. geopolitical risk in the middle east including iran-related volatility reinforces the strategic value of u.s supply and supports tighter global lng fundamentals Longer term, the outlook is improving. longer term the outlook is improving The EIA's Annual Energy Outlook 2026 raised its view of U.S. gas production and demand versus last year, driven in part by LNG growth and AI data center power needs, with production projected to rise from 107 Bcf a day in 2025 to approximately 133 Bcf to 151 Bcf a day by 2050. That would represent an increase in natural gas production of between 24% and 41%, reinforcing our view of a longer-term growth trajectory for both natural gas production and for compression. Moving to our segments, contract operations delivered outstanding performance, supported by excellent execution and continued high demand for our compression fleet, particularly our large horsepower and electric motor drive units, extending our track record of strong results. The EIA's Annual Energy Outlook 2026 raised its view of U.S. gas production and demand versus last year, driven in part by LNG growth and AI data center power needs, with production projected to rise from 107 Bcf a day in 2025 to approximately 133 Bcf to 151 Bcf a day by 2050. the eia's annual energy outlook 2026 raised its view of u.s gas production and demand versus last year driven in part by lng growth and ai data center power needs with production projected to rise from 107 bcf a day in 2025 to approximately 133 bcf to 151 bcf a day by 2050 That would represent an increase in natural gas production of between 24% and 41%, reinforcing our view of a longer-term growth trajectory for both natural gas production and for compression. that would represent an increase in natural gas production of between 24% and 41% reinforcing our view of a longer-term growth trajectory for both natural gas production and for compression Moving to our segments, contract operations delivered outstanding performance, supported by excellent execution and continued high demand for our compression fleet, particularly our large horsepower and electric motor drive units, extending our track record of strong results. moving to our segments contract operations delivered outstanding performance supported by excellent execution and continued high demand for our compression fleet particularly our large horsepower and electric motor drive units extending our track record of strong results Our fleet remained highly utilized during the quarter, exiting at 95% utilization, reflecting continued high demand and the high quality of our fleet and sustaining strong utilization in our contract operations business over a multi-year period. That durability is also evident in the time on location, with the blended fleet averaging approximately six years and units of 1,500 horsepower or greater averaging approximately eight years in largely midstream applications. At quarter end, we had 4.5 million operating horsepower. Operating horsepower declined by approximately 43,000 as new-build deliveries during the quarter were more than offset by the sale of approximately 40,000 non-strategic horsepower, including 21,000 active horsepower. As a reminder, we also sold approximately 123,000 horsepower, including 84,000 active horsepower at the end of 2025. Our fleet remained highly utilized during the quarter, exiting at 95% utilization, reflecting continued high demand and the high quality of our fleet and sustaining strong utilization in our contract operations business over a multi-year period. our fleet remained highly utilized during the quarter exiting at 95% utilization reflecting continued high demand and the high quality of our fleet and sustaining strong utilization in our contract operations business over a multi-year period That durability is also evident in the time on location, with the blended fleet averaging approximately six years and units of 1,500 horsepower or greater averaging approximately eight years in largely midstream applications. that durability is also evident in the time on location with the blended fleet averaging approximately six years and units of 1,500 horsepower or greater averaging approximately eight years in largely midstream applications At quarter end, we had 4.5 million operating horsepower. at quarter end we had 4.5 million operating horsepower Operating horsepower declined by approximately 43,000 as new-build deliveries during the quarter were more than offset by the sale of approximately 40,000 non-strategic horsepower, including 21,000 active horsepower. operating horsepower declined by approximately 43,000 as new-build deliveries during the quarter were more than offset by the sale of approximately 40,000 non-strategic horsepower including 21,000 active horsepower As a reminder, we also sold approximately 123,000 horsepower, including 84,000 active horsepower at the end of 2025. as a reminder we also sold approximately 123,000 horsepower including 84,000 active horsepower at the end of 2025 Taken together, these sales reduced first quarter adjusted EBITDA by approximately $3 million on a sequential basis. Monthly revenue per horsepower moves higher on a sequential and year-over-year basis. In 2026, we continue to expect monthly revenue per horsepower to benefit from the full year carryover of the rate increases implemented in 2025 and increases in 2026. We achieved a quarterly adjusted gross margin percentage of 72%. Consistent profitability above 70% continues to be driven by strong pricing, disciplined execution, and a continued focus on per horsepower cost management. Over the last several years, we've executed well on the cost inputs into our operations, offsetting some of the cost increases we experienced during the recent higher inflationary environment, including higher costs for labor and parts. We remain focused on continuing this level of execution through technology deployment and ongoing cost management. Taken together, these sales reduced first quarter adjusted EBITDA by approximately $3 million on a sequential basis. taken together these sales reduced first quarter adjusted ebitda by approximately $3 million on a sequential basis Monthly revenue per horsepower moves higher on a sequential and year-over-year basis. monthly revenue per horsepower moves higher on a sequential and year-over-year basis In 2026, we continue to expect monthly revenue per horsepower to benefit from the full year carryover of the rate increases implemented in 2025 and increases in 2026. in 2026 we continue to expect monthly revenue per horsepower to benefit from the full year carryover of the rate increases implemented in 2025 and increases in 2026 We achieved a quarterly adjusted gross margin percentage of 72%. we achieved a quarterly adjusted gross margin percentage of 72% Consistent profitability above 70% continues to be driven by strong pricing, disciplined execution, and a continued focus on per horsepower cost management. consistent profitability above 70% continues to be driven by strong pricing disciplined execution and a continued focus on per horsepower cost management Over the last several years, we've executed well on the cost inputs into our operations, offsetting some of the cost increases we experienced during the recent higher inflationary environment, including higher costs for labor and parts. over the last several years we've executed well on the cost inputs into our operations offsetting some of the cost increases we experienced during the recent higher inflationary environment including higher costs for labor and parts We remain focused on continuing this level of execution through technology deployment and ongoing cost management. we remain focused on continuing this level of execution through technology deployment and ongoing cost management Moving to our aftermarket services segment, performance was solid in the first quarter. As expected, Q1 is seasonally slower. Even so, we continue to deliver strong profitability levels in the business, reflecting disciplined execution and an ongoing focus on higher quality, higher margin work. Turning to capital allocation, we remain disciplined and returns-focused, prioritizing growth investment and shareholder returns supported by a strong balance sheet. We reaffirmed our 2026 growth capital plan of $250 million-$275 million for fleet investment, reflecting strong demand and our desire to continue growing our profitable platform through high-return new build investments. We expect substantial free cash flow to support increasing shareholder returns. We declared a quarterly dividend of $0.22 per share, up approximately 16% year-over-year while maintaining robust coverage. Moving to our aftermarket services segment, performance was solid in the first quarter. moving to our aftermarket services segment performance was solid in the first quarter As expected, Q1 is seasonally slower. as expected q1 is seasonally slower Even so, we continue to deliver strong profitability levels in the business, reflecting disciplined execution and an ongoing focus on higher quality, higher margin work. even so we continue to deliver strong profitability levels in the business reflecting disciplined execution and an ongoing focus on higher quality higher margin work Turning to capital allocation, we remain disciplined and returns-focused, prioritizing growth investment and shareholder returns supported by a strong balance sheet. turning to capital allocation we remain disciplined and returns-focused prioritizing growth investment and shareholder returns supported by a strong balance sheet We reaffirmed our 2026 growth capital plan of $250 million-$275 million for fleet investment, reflecting strong demand and our desire to continue growing our profitable platform through high-return new build investments. we reaffirmed our 2026 growth capital plan of $250 million-$275 million for fleet investment reflecting strong demand and our desire to continue growing our profitable platform through high-return new build investments We expect substantial free cash flow to support increasing shareholder returns. We declared a quarterly dividend of $0.22 per share, up approximately 16% year-over-year while maintaining robust coverage. we expect substantial free cash flow to support increasing shareholder returns. we declared a quarterly dividend of $0.22 per share up approximately 16% year-over-year while maintaining robust coverage We also have flexibility for additional shareholder returns, including $113 million of remaining authorization under our share repurchase program as of quarter end, which we view as a tool within our returns-based framework and may use more actively during periods of market dislocation. We exited the quarter below our long-term leverage target of between 3x to 3.5x and expect to operate below 3x in the near term, preserving flexibility for both organic and inorganic growth as well as continued shareholder returns. In summary, Archrock is delivering consistent, strong results underpinned by a culture of disciplined execution and continuous improvement. Looking ahead, we see a meaningful runway for profitable growth with earnings supported by our returns-based capital allocation and durable tailwinds for natural gas infrastructure, including compression. Before I hand it over, I want to recognize Doug Aron. We also have flexibility for additional shareholder returns, including $113 million of remaining authorization under our share repurchase program as of quarter end, which we view as a tool within our returns-based framework and may use more actively during periods of market dislocation. we also have flexibility for additional shareholder returns including $113 million of remaining authorization under our share repurchase program as of quarter end which we view as a tool within our returns-based framework and may use more actively during periods of market dislocation We exited the quarter below our long-term leverage target of between 3 x to 3.5 x and expect to operate below 3 x in the near term, preserving flexibility for both organic and inorganic growth as well as continued shareholder returns. we exited the quarter below our long-term leverage target of between 3 x to 3.5 x and expect to operate below 3 x in the near term preserving flexibility for both organic and inorganic growth as well as continued shareholder returns In summary, Archrock is delivering consistent, strong results underpinned by a culture of disciplined execution and continuous improvement. in summary archrock is delivering consistent strong results underpinned by a culture of disciplined execution and continuous improvement Looking ahead, we see a meaningful runway for profitable growth with earnings supported by our returns-based capital allocation and durable tailwinds for natural gas infrastructure, including compression. looking ahead we see a meaningful runway for profitable growth with earnings supported by our returns-based capital allocation and durable tailwinds for natural gas infrastructure including compression Before I hand it over, I want to recognize Doug Aron. before i hand it over i want to recognize doug aron As we previously announced, Doug plans to retire by the end of the year. On behalf of Archrock, thank you, Doug, for more than seven years of outstanding service and leadership during an exciting and transformative period for the company. Doug has been a key leader and a trusted advisor to me, the rest of the executive leadership team, and our board. To be clear, he's not going anywhere just yet. Doug will stay in his role until a successor is named to ensure a smooth transition. With that, I'll turn the call over to Doug to walk through our first quarter and 2026 outlook. As we previously announced, Doug plans to retire by the end of the year. as we previously announced doug plans to retire by the end of the year On behalf of Archrock, thank you, Doug, for more than seven years of outstanding service and leadership during an exciting and transformative period for the company. on behalf of archrock thank you doug for more than seven years of outstanding service and leadership during an exciting and transformative period for the company Doug has been a key leader and a trusted advisor to me, the rest of the executive leadership team, and our board. doug has been a key leader and a trusted advisor to me the rest of the executive leadership team and our board To be clear, he's not going anywhere just yet. to be clear he's not going anywhere just yet Doug will stay in his role until a successor is named to ensure a smooth transition. doug will stay in his role until a successor is named to ensure a smooth transition With that, I'll turn the call over to Doug to walk through our first quarter and 2026 outlook. with that i'll turn the call over to doug to walk through our first quarter and 2026 outlook

Speaker 2: Thank you, Brad. Certainly appreciate the kind words. Good morning, everyone. Thanks for joining us. Let's review our first quarter results and then cover our current financial outlook for 2026. Net income for the first quarter of 2026 was $73.8 million. Excluding transaction-related and restructuring costs and adjusting for the associated tax impact, we delivered adjusted net income of $74.4 million or $0.42 per share. We reported adjusted EBITDA of $221 million for the first quarter of 2026. Underlying business performance exceeded our basis for guidance and results also benefited from a $10 million net gain from the sale of non-strategic compression and other assets. Strength in segment fundamentals was somewhat offset by higher selling, general, and administrative expense in the quarter. Thank you, Brad. thank you brad Certainly appreciate the kind words. certainly appreciate the kind words Good morning, everyone. good morning everyone Thanks for joining us. thanks for joining us Let's review our first quarter results and then cover our current financial outlook for 2026. let's review our first quarter results and then cover our current financial outlook for 2026 Net income for the first quarter of 2026 was $73.8 million. net income for the first quarter of 2026 was $73.8 million Excluding transaction-related and restructuring costs and adjusting for the associated tax impact, we delivered adjusted net income of $74.4 million or $0.42 per share. excluding transaction-related and restructuring costs and adjusting for the associated tax impact we delivered adjusted net income of $74.4 million or $0.42 per share We reported adjusted EBITDA of $221 million for the first quarter of 2026. we reported adjusted ebitda of $221 million for the first quarter of 2026 Underlying business performance exceeded our basis for guidance and results also benefited from a $10 million net gain from the sale of non-strategic compression and other assets. underlying business performance exceeded our basis for guidance and results also benefited from a $10 million net gain from the sale of non-strategic compression and other assets Strength in segment fundamentals was somewhat offset by higher selling, general, and administrative expense in the quarter. strength in segment fundamentals was somewhat offset by higher selling general and administrative expense in the quarter That performance translated into adjusted free cash flow of $92 million and adjusted free cash flow after dividends of $52 million in the quarter, driven by durable operating cash flow and further supported by proceeds from the non-strategic asset sales, supporting our ongoing commitment to return capital to shareholders. SG&A expenses were $45 million in the first quarter of 2026 compared to $37 million in the first quarter of 2025, with the increase primarily driven by higher long-term incentive compensation for two reasons. First, a little more than half of this increase was the result of the sharply higher stock price in the quarter. Second, the balance of the increase was the result of a GAAP accounting acceleration of expense recognition for long-term incentive compensation under an executive retention agreement, which we do not expect will recur in the remaining periods of this year. That performance translated into adjusted free cash flow of $92 million and adjusted free cash flow after dividends of $52 million in the quarter, driven by durable operating cash flow and further supported by proceeds from the non-strategic asset sales, supporting our ongoing commitment to return capital to shareholders. that performance translated into adjusted free cash flow of $92 million and adjusted free cash flow after dividends of $52 million in the quarter driven by durable operating cash flow and further supported by proceeds from the non-strategic asset sales supporting our ongoing commitment to return capital to shareholders SG&A expenses were $45 million in the first quarter of 2026 compared to $37 million in the first quarter of 2025, with the increase primarily driven by higher long-term incentive compensation for two reasons. sg&a expenses were $45 million in the first quarter of 2026 compared to $37 million in the first quarter of 2025 with the increase primarily driven by higher long-term incentive compensation for two reasons First, a little more than half of this increase was the result of the sharply higher stock price in the quarter. first a little more than half of this increase was the result of the sharply higher stock price in the quarter Second, the balance of the increase was the result of a GAAP accounting acceleration of expense recognition for long-term incentive compensation under an executive retention agreement, which we do not expect will recur in the remaining periods of this year. second the balance of the increase was the result of a gaap accounting acceleration of expense recognition for long-term incentive compensation under an executive retention agreement which we do not expect will recur in the remaining periods of this year Turning to our business segments, Contract Operations revenue came in at $331 million in the first quarter, up 10% compared to the first quarter of 2025, driven by growth in horsepower and higher pricing. Operating horsepower of 4.53 million at the end of the quarter was up approximately 250,000 year-over-year from 4.28 million in the first quarter of 2025. Our Adjusted Gross Margin percentage of 72% in the first quarter of 2026 reflects consistent profitability. Reported Adjusted Gross Margin percentage was down from 78% last quarter, the figure increased slightly on a sequential basis after excluding the impact of out-of-period cash, tax settlements and credits we benefited from during the fourth quarter of 2025 that were more one-time in nature. Turning to our business segments, Contract Operations revenue came in at $331 million in the first quarter, up 10% compared to the first quarter of 2025, driven by growth in horsepower and higher pricing. turning to our business segments contract operations revenue came in at $331 million in the first quarter up 10% compared to the first quarter of 2025 driven by growth in horsepower and higher pricing Operating horsepower of 4.53 million at the end of the quarter was up approximately 250,000 year-over-year from 4.28 million in the first quarter of 2025. operating horsepower of 4.53 million at the end of the quarter was up approximately 250,000 year-over-year from 4.28 million in the first quarter of 2025 Our Adjusted Gross Margin percentage of 72% in the first quarter of 2026 reflects consistent profitability. our adjusted gross margin percentage of 72% in the first quarter of 2026 reflects consistent profitability Reported Adjusted Gross Margin percentage was down from 78% last quarter, the figure increased slightly on a sequential basis after excluding the impact of out-of-period cash, tax settlements and credits we benefited from during the fourth quarter of 2025 that were more one-time in nature. reported adjusted gross margin percentage was down from 78% last quarter the figure increased slightly on a sequential basis after excluding the impact of out-of-period cash tax settlements and credits we benefited from during the fourth quarter of 2025 that were more one-time in nature In our aftermarket services segment, we reported first quarter 2026 revenue of $43 million, reflecting lower service activity and a seasonal slowdown. Even with the expected seasonal softness, AMS delivered a great level of profitability. First quarter 2026 adjusted gross margin percentage was 23%, consistent with the high end of our guidance range for the year. We ended the quarter with total debt of $2.4 billion. In January, we issued $800 million of senior notes to fund the April 1st repurchase of 100% of our senior notes due 2028 at par, which moves our nearest bond maturity to 2032. Pro forma for this activity, available liquidity was approximately $600 million. In our aftermarket services segment, we reported first quarter 2026 revenue of $43 million, reflecting lower service activity and a seasonal slowdown. in our aftermarket services segment we reported first quarter 2026 revenue of $43 million reflecting lower service activity and a seasonal slowdown Even with the expected seasonal softness, AMS delivered a great level of profitability. even with the expected seasonal softness ams delivered a great level of profitability First quarter 2026 adjusted gross margin percentage was 23%, consistent with the high end of our guidance range for the year. first quarter 2026 adjusted gross margin percentage was 23% consistent with the high end of our guidance range for the year We ended the quarter with total debt of $2.4 billion. we ended the quarter with total debt of $2.4 billion In January, we issued $800 million of senior notes to fund the April 1st repurchase of 100% of our senior notes due 2028 at par, which moves our nearest bond maturity to 2032. in january we issued $800 million of senior notes to fund the april 1st repurchase of 100% of our senior notes due 2028 at par which moves our nearest bond maturity to 2032 Pro forma for this activity, available liquidity was approximately $600 million. pro forma for this activity available liquidity was approximately $600 million Our leverage ratio at quarter end was 2.6x compared to 2.7 in the fourth quarter of 2025 as we continue to operate comfortably below our stated target of 3x in the near term. We recently declared a first quarter dividend of $0.22 per share, or $0.88 on an annualized basis. This is consistent with the fourth quarter 2025 dividend level and up approximately 16% year over year. Cash available for dividend for the first quarter of 2026 totaled $134 million, leading to robust quarterly dividend coverage of 3.5x. During the quarter, we repurchased approximately 171,000 shares for approximately $4.4 million and an average price of $25.87 per share. Our leverage ratio at quarter end was 2.6 x compared to 2.7 in the fourth quarter of 2025 as we continue to operate comfortably below our stated target of 3 x in the near term. We recently declared a first quarter dividend of $0.22 per share, or $0.88 on an annualized basis. our leverage ratio at quarter end was 2.6 x compared to 2.7 in the fourth quarter of 2025 as we continue to operate comfortably below our stated target of 3 x in the near term. we recently declared a first quarter dividend of $0.22 per share or $0.88 on an annualized basis This is consistent with the fourth quarter 2025 dividend level and up approximately 16% year over year. this is consistent with the fourth quarter 2025 dividend level and up approximately 16% year over year Cash available for dividend for the first quarter of 2026 totaled $134 million, leading to robust quarterly dividend coverage of 3.5x . cash available for dividend for the first quarter of 2026 totaled $134 million leading to robust quarterly dividend coverage of 3.5x During the quarter, we repurchased approximately 171,000 shares for approximately $4.4 million and an average price of $25.87 per share. during the quarter we repurchased approximately 171,000 shares for approximately $4.4 million and an average price of $25.87 per share This leaves approximately $113 million in remaining capacity for additional share repurchases. Given our solid first quarter performance, we are reaffirmed our full year 2026 guidance with yesterday's earnings release. We remain on track to deliver our 2026 adjusted EBITDA guidance of $865 million-$915 million. Segment performance in the first quarter was consistent with the basis of that guidance, with strength in the underlying business partially offset by higher SG&A. We do not expect the $3.7 million of long-term compensation expense acceleration to recur in future periods for the remainder of 2026. In contract operations, our outlook reflects year-over-year growth in horsepower, revenue, and profitability. In AMS, we expect revenue and profitability to remain strong. This leaves approximately $113 million in remaining capacity for additional share repurchases. this leaves approximately $113 million in remaining capacity for additional share repurchases Given our solid first quarter performance, we are reaffirmed our full year 2026 guidance with yesterday's earnings release. given our solid first quarter performance we are reaffirmed our full year 2026 guidance with yesterday's earnings release We remain on track to deliver our 2026 adjusted EBITDA guidance of $865 million-$915 million. we remain on track to deliver our 2026 adjusted ebitda guidance of $865 million-$915 million Segment performance in the first quarter was consistent with the basis of that guidance, with strength in the underlying business partially offset by higher SG&A. segment performance in the first quarter was consistent with the basis of that guidance with strength in the underlying business partially offset by higher sg&a We do not expect the $3.7 million of long-term compensation expense acceleration to recur in future periods for the remainder of 2026. we do not expect the $3.7 million of long-term compensation expense acceleration to recur in future periods for the remainder of 2026 In contract operations, our outlook reflects year-over-year growth in horsepower, revenue, and profitability. in contract operations our outlook reflects year-over-year growth in horsepower revenue and profitability In AMS, we expect revenue and profitability to remain strong. in ams we expect revenue and profitability to remain strong Turning to capital on a full year basis, we continue to expect total 2026 capital expenditures to be approximately $400 million-$445 million. Within that total, we reiterate growth CapEx of $250 million-$275 million to support investment in new build horsepower and repackage CapEx to meet continued customer demand. Growth is expected to be funded by operations with additional support from non-strategic asset sale proceeds as we continue to high grade our fleet, including year-to-date proceeds totaling approximately $21 million. Maintenance CapEx is forecasted to be approximately $125 million-$135 million, up versus 2025 due to increased planned overall activity. We also anticipate approximately $25 million-$35 million in other CapEx, primarily for new vehicles. Turning to capital on a full year basis, we continue to expect total 2026 capital expenditures to be approximately $400 million-$445 million. turning to capital on a full year basis we continue to expect total 2026 capital expenditures to be approximately $400 million-$445 million Within that total, we reiterate growth CapEx of $250 million-$275 million to support investment in new build horsepower and repackage CapEx to meet continued customer demand. within that total we reiterate growth capex of $250 million-$275 million to support investment in new build horsepower and repackage capex to meet continued customer demand Growth is expected to be funded by operations with additional support from non-strategic asset sale proceeds as we continue to high grade our fleet, including year-to-date proceeds totaling approximately $21 million. growth is expected to be funded by operations with additional support from non-strategic asset sale proceeds as we continue to high grade our fleet including year-to-date proceeds totaling approximately $21 million Maintenance CapEx is forecasted to be approximately $125 million-$135 million, up versus 2025 due to increased planned overall activity. maintenance capex is forecasted to be approximately $125 million-$135 million up versus 2025 due to increased planned overall activity We also anticipate approximately $25 million-$35 million in other CapEx, primarily for new vehicles. we also anticipate approximately $25 million-$35 million in other capex primarily for new vehicles In summary, we remain confident in the strength of our platform and in the long-term opportunity in front of us. The combination of a fully utilized fleet and the continued build-out of U.S. midstream infrastructure to support both expected growth in LNG exports and rising power demand reinforces our view that the need for reliable compression remains strong. Against that backdrop, we are focused on excellent execution, delivering for our customers, advancing the technologies we've put in place, and adhering to a disciplined, returns-based approach to capital allocation to grow the business and create long-term value for our shareholders. With that, Carrie, I believe we are ready to open the line for questions. In summary, we remain confident in the strength of our platform and in the long-term opportunity in front of us. in summary we remain confident in the strength of our platform and in the long-term opportunity in front of us The combination of a fully utilized fleet and the continued build-out of U.S. midstream infrastructure to support both expected growth in LNG exports and rising power demand reinforces our view that the need for reliable compression remains strong. the combination of a fully utilized fleet and the continued build-out of u.s midstream infrastructure to support both expected growth in lng exports and rising power demand reinforces our view that the need for reliable compression remains strong Against that backdrop, we are focused on excellent execution, delivering for our customers, advancing the technologies we've put in place, and adhering to a disciplined, returns-based approach to capital allocation to grow the business and create long-term value for our shareholders. against that backdrop we are focused on excellent execution delivering for our customers advancing the technologies we've put in place and adhering to a disciplined returns-based approach to capital allocation to grow the business and create long-term value for our shareholders With that, Carrie, I believe we are ready to open the line for questions. with that carrie i believe we are ready to open the line for questions

Speaker 9: Thank you. At this time, if you would like to ask a question, please press star then the number one on your telephone keypad. As a courtesy to all participants, we ask that you limit yourself to one question and one follow-up. We'll pause for just a moment to pull out the Q&A roster. Your first question will come from Michael Blum with Wells Fargo. Thank you. thank you At this time, if you would like to ask a question, please press star then the number one on your telephone keypad. at this time if you would like to ask a question please press star then the number one on your telephone keypad As a courtesy to all participants, we ask that you limit yourself to one question and one follow-up. as a courtesy to all participants we ask that you limit yourself to one question and one follow-up We'll pause for just a moment to pull out the Q&A roster. we'll pause for just a moment to pull out the q&a roster Your first question will come from Michael Blum with Wells Fargo. your first question will come from michael blum with wells fargo

Speaker 7: Thanks. Good morning, everyone. Wanted to start on the guidance, you know, you made the comment that your first quarter underlying business performance is exceeding the basis for guidance, but you didn't raise guidance here. Is that just a function of the higher SG&A in Q1, or conservatism, or is there something else? Thanks. thanks Good morning, everyone. good morning everyone Wanted to start on the guidance, you know, you made the comment that your first quarter underlying business performance is exceeding the basis for guidance, but you didn't raise guidance here. wanted to start on the guidance you know you made the comment that your first quarter underlying business performance is exceeding the basis for guidance but you didn't raise guidance here Is that just a function of the higher SG&A in Q1, or conservatism, or is there something else? is that just a function of the higher sg&a in q1 or conservatism or is there something else

Speaker 2: Yeah, look, I would say, I can't remember exactly what we did last year, ‘cause I know we had an acquisition middle of the year. It, it is, you know, for us historically to not do anything with guidance after only a quarter is not something that is unusual. I think that, it just feels early in the year. We've given a guidance range that we feel comfortable with and we'll continue to look at that as we move through the year. Yeah, look, I would say, I can't remember exactly what we did last year, ‘cause I know we had an acquisition middle of the year. yeah look i would say i can't remember exactly what we did last year ‘cause i know we had an acquisition middle of the year It, it is, you know, for us historically to not do anything with guidance after only a quarter is not something that is unusual. it it is you know for us historically to not do anything with guidance after only a quarter is not something that is unusual I think that, it just feels early in the year. i think that it just feels early in the year We've given a guidance range that we feel comfortable with and we'll continue to look at that as we move through the year. we've given a guidance range that we feel comfortable with and we'll continue to look at that as we move through the year

Speaker 7: Okay. Fair enough. Appreciate that. Wondering if you can just give us your latest view on Cat equipment lead time and how the order book is shaping up for 2027. Thanks. Okay. okay Fair enough. fair enough Appreciate that. appreciate that Wondering if you can just give us your latest view on Cat equipment lead time and how the order book is shaping up for 2027. wondering if you can just give us your latest view on cat equipment lead time and how the order book is shaping up for 2027 Thanks. thanks

Speaker 1: Caterpillar lead times continue to extend out as we're seeing an extreme tightness in the supply chain. I think at now we're out to close to 160 weeks, so it's meaningfully out there. The interpretation I'd offer that is interesting, though. This tightness in the market just reflects a market that I believe is coiled for growth. We see this in the overall burgeoning demand for natural gas. We see this in the amount of pipeline capacity expected to come online in 2026, the amount of LNG incrementally that's going to come online in 2026. Caterpillar lead times continue to extend out as we're seeing an extreme tightness in the supply chain. caterpillar lead times continue to extend out as we're seeing an extreme tightness in the supply chain I think at now we're out to close to 160 weeks, so it's meaningfully out there. i think at now we're out to close to 160 weeks so it's meaningfully out there The interpretation I'd offer that is interesting, though. the interpretation i'd offer that is interesting though This tightness in the market just reflects a market that I believe is coiled for growth. this tightness in the market just reflects a market that i believe is coiled for growth We see this in the overall burgeoning demand for natural gas. we see this in the overall burgeoning demand for natural gas We see this in the amount of pipeline capacity expected to come online in 2026, the amount of LNG incrementally that's going to come online in 2026. we see this in the amount of pipeline capacity expected to come online in 2026 the amount of lng incrementally that's going to come online in 2026 We see it in the tightness in the supply chain, and candidly, we're seeing it in our bookings. This is a market that's just posed right now for that accelerated growth for the future and candidly for years. As far as 2027, we are definitely going to be placing orders and have placed orders to ensure we're positioned well to meet customer demand, but we're not yet giving guidance on CapEx for 2027. We see it in the tightness in the supply chain, and candidly, we're seeing it in our bookings. we see it in the tightness in the supply chain and candidly we're seeing it in our bookings This is a market that's just posed right now for that accelerated growth for the future and candidly for years. As far as 2027, we are definitely going to be placing orders and have placed orders to ensure we're positioned well to meet customer demand, but we're not yet giving guidance on CapEx for 2027. this is a market that's just posed right now for that accelerated growth for the future and candidly for years. as far as 2027 we are definitely going to be placing orders and have placed orders to ensure we're positioned well to meet customer demand but we're not yet giving guidance on capex for 2027

Speaker 7: Thank you. Thank you. thank you

Speaker 9: Your next question will come from Eli Jossen with JPMorgan. Your next question will come from Eli Jossen with JP Morgan. your next question will come from eli jossen with jp morgan

Speaker 4: Hey, good morning, everyone. Congrats to Doug in your retirement and next steps ahead. Maybe to take that last point a step further, I know some of your peers have signaled reserving slots even past 2027 and 2028 and 2029, just given the aforementioned tightness. Can you give any color just in terms of how you're thinking, you know, even multiple years ahead and what kind of, you know, discussions you're having with your customers so that they can ensure they're getting the equipment they need? Thanks. Hey, good morning, everyone. hey good morning everyone Congrats to Doug in your retirement and next steps ahead. congrats to doug in your retirement and next steps ahead Maybe to take that last point a step further, I know some of your peers have signaled reserving slots even past 2027 and 2028 and 2029, just given the aforementioned tightness. maybe to take that last point a step further i know some of your peers have signaled reserving slots even past 2027 and 2028 and 2029 just given the aforementioned tightness Can you give any color just in terms of how you're thinking, you know, even multiple years ahead and what kind of, you know, discussions you're having with your customers so that they can ensure they're getting the equipment they need? can you give any color just in terms of how you're thinking you know even multiple years ahead and what kind of you know discussions you're having with your customers so that they can ensure they're getting the equipment they need Thanks. thanks

Speaker 1: Yeah. Thanks for the question. For the customers, we are working closely with our customers to advise as to where lead times are and to help them ensure that they're not caught short and without equipment to produce and compress the gas that they're going to have in the coming years. When we think about our outlook for the business, we are seriously optimistic about the growth ahead. That does mean we are absolutely going to use our incredibly strong balance sheet that positions us well to capture market going forward, to place orders and ensure that we're not caught without equipment to support our customers' needs. Yeah. yeah Thanks for the question. thanks for the question For the customers, we are working closely with our customers to advise as to where lead times are and to help them ensure that they're not caught short and without equipment to produce and compress the gas that they're going to have in the coming years. for the customers we are working closely with our customers to advise as to where lead times are and to help them ensure that they're not caught short and without equipment to produce and compress the gas that they're going to have in the coming years When we think about our outlook for the business, we are seriously optimistic about the growth ahead. when we think about our outlook for the business we are seriously optimistic about the growth ahead That does mean we are absolutely going to use our incredibly strong balance sheet that positions us well to capture market going forward, to place orders and ensure that we're not caught without equipment to support our customers' needs. that does mean we are absolutely going to use our incredibly strong balance sheet that positions us well to capture market going forward to place orders and ensure that we're not caught without equipment to support our customers' needs Thinking about years beyond 2026, we assess the market overall based on and we're willing to place orders based on a contract in hand, based upon a good lead and intel with our customers, as well as strong market signals. We are going to be in the position to show up and have equipment for our customers and to capture market share in the future based upon the extreme tightness we see. Thinking about years beyond 2026, we assess the market overall based on and we're willing to place orders based on a contract in hand, based upon a good lead and intel with our customers, as well as strong market signals. thinking about years beyond 2026 we assess the market overall based on and we're willing to place orders based on a contract in hand based upon a good lead and intel with our customers as well as strong market signals We are going to be in the position to show up and have equipment for our customers and to capture market share in the future based upon the extreme tightness we see. we are going to be in the position to show up and have equipment for our customers and to capture market share in the future based upon the extreme tightness we see

Speaker 4: Got it. Maybe just thinking about some of the strong performance we saw this quarter. Looked like pricing jumped up a bit and just wanna get a sense. I know that you need to balance kind of those price increases with your customers' needs, but can you just give us a signal to how you see price trending throughout the year and maybe also confirm the cadence for deployment of horsepower this year as well, how much we're expecting and then when it should come on? Thanks. Got it. got it Maybe just thinking about some of the strong performance we saw this quarter. maybe just thinking about some of the strong performance we saw this quarter Looked like pricing jumped up a bit and just wanna get a sense. looked like pricing jumped up a bit and just wanna get a sense I know that you need to balance kind of those price increases with your customers' needs, but can you just give us a signal to how you see price trending throughout the year and maybe also confirm the cadence for deployment of horsepower this year as well, how much we're expecting and then when it should come on? i know that you need to balance kind of those price increases with your customers' needs but can you just give us a signal to how you see price trending throughout the year and maybe also confirm the cadence for deployment of horsepower this year as well how much we're expecting and then when it should come on Thanks. thanks

Speaker 1: On the second part of the question first, the deployment of horsepower, it is the case that in Q1 that was the lowest quarter for us of deliveries of new-build horsepower, and we expect future deliveries or deliveries in future quarters of 2026 to continue to grow, and it's more back half-weighted. You'll see that shape in the curve for new equipment deliveries. We expect that to translate to start activity for the same reason. As far as pricing goes, we are very happy to see the growth in revenue per horsepower that we delivered, year-over-year on a sequential basis. On the second part of the question first, the deployment of horsepower, it is the case that in Q1 that was the lowest quarter for us of deliveries of new-build horsepower, and we expect future deliveries or deliveries in future quarters of 2026 to continue to grow, and it's more back half-weighted. on the second part of the question first the deployment of horsepower it is the case that in q1 that was the lowest quarter for us of deliveries of new-build horsepower and we expect future deliveries or deliveries in future quarters of 2026 to continue to grow and it's more back half-weighted You'll see that shape in the curve for new equipment deliveries. you'll see that shape in the curve for new equipment deliveries We expect that to translate to start activity for the same reason. we expect that to translate to start activity for the same reason As far as pricing goes, we are very happy to see the growth in revenue per horsepower that we delivered, year-over-year on a sequential basis. as far as pricing goes we are very happy to see the growth in revenue per horsepower that we delivered year-over-year on a sequential basis It shows the strength in our business. I'm going to point out that at profitability above 70% now for a sustained period of time, we are very happy with the overall pricing in the market, the returns we're achieving, and expect to grow our business to achieve growing returns to our investors going forward. As far as particular pricing commentary right now, and other points of strategy for the company, let's just say that we're very invested in growing this profitable business for the benefit of our investors. It shows the strength in our business. it shows the strength in our business I'm going to point out that at profitability above 70% now for a sustained period of time, we are very happy with the overall pricing in the market, the returns we're achieving, and expect to grow our business to achieve growing returns to our investors going forward. i'm going to point out that at profitability above 70% now for a sustained period of time we are very happy with the overall pricing in the market the returns we're achieving and expect to grow our business to achieve growing returns to our investors going forward As far as particular pricing commentary right now, and other points of strategy for the company, let's just say that we're very invested in growing this profitable business for the benefit of our investors. as far as particular pricing commentary right now and other points of strategy for the company let's just say that we're very invested in growing this profitable business for the benefit of our investors

Speaker 4: Understood. Thanks. Understood. understood Thanks. thanks

Speaker 9: Your next question will come from Jim Rollyson with Raymond James. Your next question will come from Jim Rollyson with Raymond James. your next question will come from jim rollyson with raymond james

Speaker 5: Hey, good morning, Doug, Brad, and Megan. Congrats, Doug, on your pending retirement, and we'll send you off properly in Aspen this summer, I think. Hey, good morning, Doug, Brad, and Megan. hey good morning doug brad and megan Congrats, Doug, on your pending retirement, and we'll send you off properly in Aspen this summer, I think. congrats doug on your pending retirement and we'll send you off properly in aspen this summer i think

Speaker 2: Thanks, Jim. Thanks, Jim. thanks jim

Speaker 5: Brad, on the oil price side, obviously you guys have been in this kind of perfect environment until recently where gas outlook has been fantastic and you've been growing at a pretty rapid clip and you've had, you know, somewhat muted oil prices that have kind of helped on the lube oil and fuel cost side of the equation, and that's obviously changed. I'm kinda curious what you all are seeing there and, you know, how quickly can you pass those through so you can sustain these, you know, low 70% margins in that business? Brad, on the oil price side, obviously you guys have been in this kind of perfect environment until recently where gas outlook has been fantastic and you've been growing at a pretty rapid clip and you've had, you know, somewhat muted oil prices that have kind of helped on the lube oil and fuel cost side of the equation, and that's obviously changed. brad on the oil price side obviously you guys have been in this kind of perfect environment until recently where gas outlook has been fantastic and you've been growing at a pretty rapid clip and you've had you know somewhat muted oil prices that have kind of helped on the lube oil and fuel cost side of the equation and that's obviously changed I'm kinda curious what you all are seeing there and, you know, how quickly can you pass those through so you can sustain these, you know, low 70% margins in that business? i'm kinda curious what you all are seeing there and you know how quickly can you pass those through so you can sustain these you know low 70% margins in that business

Speaker 1: We do expect to have some oil price headwinds primarily in the back half of the year, as lube oil pricing for us adjusts quarterly. There's definitely a lag time between when we experience an increase in our costs and when we can pass them on to customers. I am not gonna use the word transitory. However, what we see in the market today is that we are not willing to know or to guess where oil will ultimately resolve, and therefore, where base oil and lube oil pricing will ultimately resolve. But what we see for this higher stock price, higher oil price environment today is it appears to be mostly driven by external events, notably hostility in the Middle East. We need to see where that resolves longer term. We do expect to have some oil price headwinds primarily in the back half of the year, as lube oil pricing for us adjusts quarterly. we do expect to have some oil price headwinds primarily in the back half of the year as lube oil pricing for us adjusts quarterly There's definitely a lag time between when we experience an increase in our costs and when we can pass them on to customers. there's definitely a lag time between when we experience an increase in our costs and when we can pass them on to customers I am not gonna use the word transitory. i am not gonna use the word transitory However, what we see in the market today is that we are not willing to know or to guess where oil will ultimately resolve, and therefore, where base oil and lube oil pricing will ultimately resolve. however what we see in the market today is that we are not willing to know or to guess where oil will ultimately resolve and therefore where base oil and lube oil pricing will ultimately resolve But what we see for this higher stock price, higher oil price environment today is it appears to be mostly driven by external events, notably hostility in the Middle East. but what we see for this higher stock price higher oil price environment today is it appears to be mostly driven by external events notably hostility in the middle east We need to see where that resolves longer term. we need to see where that resolves longer term In the meantime, we did not change our guidance notwithstanding what we see for risk on lube oil pricing for the back half of the year. We intend to mitigate that through the best cost management we can offer in the market to continue to deliver this high level of profitability and returns to our investors. In the meantime, we did not change our guidance notwithstanding what we see for risk on lube oil pricing for the back half of the year. in the meantime we did not change our guidance notwithstanding what we see for risk on lube oil pricing for the back half of the year We intend to mitigate that through the best cost management we can offer in the market to continue to deliver this high level of profitability and returns to our investors. we intend to mitigate that through the best cost management we can offer in the market to continue to deliver this high level of profitability and returns to our investors

Speaker 5: Got it. Appreciate that. Then just on the asset sales side, you know, you guys have been basically great portfolio managers for a while now, where you keep migrating assets and redeploying the capital. Just curious, if you have any color or view, and maybe you don't yet. How we should think about incremental, you know, kind of older asset sales that you're looking to monetize just as we, you know, think about how that impacts the numbers and there's obviously a lag between getting the capital and redeploying it. Just wondering how do you think about that going forward? Got it. got it Appreciate that. appreciate that Then just on the asset sales side, you know, you guys have been basically great portfolio managers for a while now, where you keep migrating assets and redeploying the capital. then just on the asset sales side you know you guys have been basically great portfolio managers for a while now where you keep migrating assets and redeploying the capital Just curious, if you have any color or view, and maybe you don't yet. H ow we should think about incremental, you know, kind of older asset sales that you're looking to monetize just as we, you know, think about how that impacts the numbers and there's obviously a lag between getting the capital and redeploying it. just curious if you have any color or view and maybe you don't yet. h ow we should think about incremental you know kind of older asset sales that you're looking to monetize just as we you know think about how that impacts the numbers and there's obviously a lag between getting the capital and redeploying it Just wondering how do you think about that going forward? just wondering how do you think about that going forward

Speaker 1: The fleet repositioning we've been engaged in for the last number of years now has been remarkably consistent. Just when I think that we actually have de-aged the fleet and we no longer have a lot of assets in that category for disposal, yet the calendar turns, another year passes, and we find that there's still an opportunity for some assets that we believe will not be as competitive for the future. This program on our asset management that we've implemented has some real benefits, and it's really important. First and foremost, in keeping our fleet as competitive as we can keep it and in providing the best service to our customers that we can deliver. The fleet repositioning we've been engaged in for the last number of years now has been remarkably consistent. the fleet repositioning we've been engaged in for the last number of years now has been remarkably consistent Just when I think that we actually have de-aged the fleet and we no longer have a lot of assets in that category for disposal, yet the calendar turns, another year passes, and we find that there's still an opportunity for some assets that we believe will not be as competitive for the future. just when i think that we actually have de-aged the fleet and we no longer have a lot of assets in that category for disposal yet the calendar turns another year passes and we find that there's still an opportunity for some assets that we believe will not be as competitive for the future This program on our asset management that we've implemented has some real benefits, and it's really important. this program on our asset management that we've implemented has some real benefits and it's really important First and foremost, in keeping our fleet as competitive as we can keep it and in providing the best service to our customers that we can deliver. first and foremost in keeping our fleet as competitive as we can keep it and in providing the best service to our customers that we can deliver You know, second, when we look at the total ownership of the life of a unit, it allows us to really think about how to optimize the total cash flow coming out of a unit for its life. To sell units while they still have meaningful market value, which is why we've been able to generate nice gain on sell on a fairly consistent basis through our asset management program over that period of time. We take those proceeds and redeploy it into our new build program, which is a very efficient, you know, overall capital management program. The third benefit is that even though I know this is a gain on sell income, in some ways it accelerates some of that EBITDA into the period. You know, second, when we look at the total ownership of the life of a unit, it allows us to really think about how to optimize the total cash flow coming out of a unit for its life. you know second when we look at the total ownership of the life of a unit it allows us to really think about how to optimize the total cash flow coming out of a unit for its life To sell units while they still have meaningful market value, which is why we've been able to generate nice gain on sell on a fairly consistent basis through our asset management program over that period of time. to sell units while they still have meaningful market value which is why we've been able to generate nice gain on sell on a fairly consistent basis through our asset management program over that period of time We take those proceeds and redeploy it into our new build program, which is a very efficient, you know, overall capital management program. we take those proceeds and redeploy it into our new build program which is a very efficient you know overall capital management program The third benefit is that even though I know this is a gain on sell income, in some ways it accelerates some of that EBITDA into the period. the third benefit is that even though i know this is a gain on sell income in some ways it accelerates some of that ebitda into the period It's a really effective program when you think about those three primary benefits. We're going to continue to engage in a very disciplined asset management approach. I do think that looking to our past levels is fairly indicative of what could happen in the future. It's very difficult to forecast this, but we're gonna continue. That said, it's gonna be consistent with past levels, but I do think it's going to ramp down a bit, potentially lower going forward only because of the amazing growth environment that we find ourselves in as an industry, in compression and for natural gas production, and because of the high quality and the repositioning we've already accomplished on the fleet. It's a really effective program when you think about those three primary benefits. it's a really effective program when you think about those three primary benefits We're going to continue to engage in a very disciplined asset management approach. we're going to continue to engage in a very disciplined asset management approach I do think that looking to our past levels is fairly indicative of what could happen in the future. i do think that looking to our past levels is fairly indicative of what could happen in the future It's very difficult to forecast this, but we're gonna continue. it's very difficult to forecast this but we're gonna continue That said, it's gonna be consistent with past levels, but I do think it's going to ramp down a bit, potentially lower going forward only because of the amazing growth environment that we find ourselves in as an industry, in compression and for natural gas production, and because of the high quality and the repositioning we've already accomplished on the fleet. that said it's gonna be consistent with past levels but i do think it's going to ramp down a bit potentially lower going forward only because of the amazing growth environment that we find ourselves in as an industry in compression and for natural gas production and because of the high quality and the repositioning we've already accomplished on the fleet

Speaker 5: Appreciate the color, and thank you guys. Appreciate the color, and thank you guys. appreciate the color and thank you guys

Speaker 9: Your next question will come from Nate Pendleton with Texas Capital. Your next question will come from Nate Pendleton with Texas Capital. your next question will come from nate pendleton with texas capital

Speaker 8: Good morning, Brad and Doug. Brad, in your prepared remarks, you called out improving compression demand outside of the Permian. Can you talk about where you see those opportunities geographically and maybe if there's any difference in the unit sizes needed for those opportunities? Good morning, Brad and Doug. good morning brad and doug Brad, in your prepared remarks, you called out improving compression demand outside of the Permian. brad in your prepared remarks you called out improving compression demand outside of the permian Can you talk about where you see those opportunities geographically and maybe if there's any difference in the unit sizes needed for those opportunities? can you talk about where you see those opportunities geographically and maybe if there's any difference in the unit sizes needed for those opportunities

Speaker 1: Yes. Great question. What we saw in the quarter was that, and really beneficially, only about 35% of our bookings were in the Permian in the quarter. More were outside. They're spread, you know, fairly evenly between the Northeast, the Mid-Continent, the South, and that would be in East Texas, Haynesville, and the Rockies. It's been a nice spread, but it's also been good to see units moving into other markets and other basins accomplishing some growth, especially on natural gas. Yes. yes Great question. great question What we saw in the quarter was that, and really beneficially, only about 35% of our bookings were in the Permian in the quarter. what we saw in the quarter was that and really beneficially only about 35% of our bookings were in the permian in the quarter More were outside. more were outside They're spread, you know, fairly evenly between the Northeast, the Mid-Continent, the South, and that would be in East Texas, Haynesville, and the Rockies. they're spread you know fairly evenly between the northeast the mid-continent the south and that would be in east texas haynesville and the rockies It's been a nice spread, but it's also been good to see units moving into other markets and other basins accomplishing some growth, especially on natural gas. it's been a nice spread but it's also been good to see units moving into other markets and other basins accomplishing some growth especially on natural gas The unit sizes are more diverse in the plays outside the Permian, especially in the electric motor drives that we're deploying, where we see a spread of horsepower more, you know, all the way from 400, 800, and potentially moving up to 1,500. We do see more diversity, but it's primarily within the electric motor drives that we're seeing the smaller horsepower go out into the marketplace. The unit sizes are more diverse in the plays outside the Permian, especially in the electric motor drives that we're deploying, where we see a spread of horsepower more, you know, all the way from 400, 800, and potentially moving up to 1,500. the unit sizes are more diverse in the plays outside the permian especially in the electric motor drives that we're deploying where we see a spread of horsepower more you know all the way from 400 800 and potentially moving up to 1,500 We do see more diversity, but it's primarily within the electric motor drives that we're seeing the smaller horsepower go out into the marketplace. we do see more diversity but it's primarily within the electric motor drives that we're seeing the smaller horsepower go out into the marketplace

Speaker 8: Got it. I appreciate that. Then as my follow-up, with the longer timelines for large horsepower units that's been very topical so far, can you talk about if that delay changes your procurement strategy with packagers? Do you have to put down a deposit for the full unit so far in advance? Maybe can you help us understand the cash flow implications of such a long lead time for just the engines? Got it. got it I appreciate that. i appreciate that Then as my follow-up, with the longer timelines for large horsepower units that's been very topical so far, can you talk about if that delay changes your procurement strategy with packagers? then as my follow-up with the longer timelines for large horsepower units that's been very topical so far can you talk about if that delay changes your procurement strategy with packagers Do you have to put down a deposit for the full unit so far in advance? do you have to put down a deposit for the full unit so far in advance Maybe can you help us understand the cash flow implications of such a long lead time for just the engines? maybe can you help us understand the cash flow implications of such a long lead time for just the engines

Speaker 1: Well, without going into too much on our procurement strategy and the work we do with our packagers, I will say we're very aligned with our packagers in fulfillment and in making sure we can manage the need. It does not require a change in the overall kind of structure of the cash flows, where we still expect to have very effective deployment of capital so that the unit revenue is recognized, you know, within two-three months max of when the bulk of the capital goes out the door for a unit. Well, without going into too much on our procurement strategy and the work we do with our packagers, I will say we're very aligned with our packagers in fulfillment and in making sure we can manage the need. well without going into too much on our procurement strategy and the work we do with our packagers i will say we're very aligned with our packagers in fulfillment and in making sure we can manage the need It does not require a change in the overall kind of structure of the cash flows, where we still expect to have very effective deployment of capital so that the unit revenue is recognized, you know, within two-three months max of when the bulk of the capital goes out the door for a unit. it does not require a change in the overall kind of structure of the cash flows where we still expect to have very effective deployment of capital so that the unit revenue is recognized you know within two-three months max of when the bulk of the capital goes out the door for a unit

Speaker 8: Got it. Thanks. Those are my questions. Got it. got it Thanks. thanks Those are my questions. those are my questions

Speaker 1: Thank you. Thank you. thank you

Speaker 9: Your next question will come from Doug Irwin with Citi. Your next question will come from Doug Irwin with Citi. your next question will come from doug irwin with citi

Speaker 3: Hey, team. Thanks for the question. Brad, you made a comment in your prepared remarks about maintaining flexibility for both organic and inorganic growth. Just curious if inorganic growth becomes even more attractive here, just given where lead times are, as well as the fact that you have a much stronger equity currency compared to the last few acquisitions you did. Hey, team. hey team Thanks for the question. thanks for the question Brad, you made a comment in your prepared remarks about maintaining flexibility for both organic and inorganic growth. brad you made a comment in your prepared remarks about maintaining flexibility for both organic and inorganic growth Just curious if inorganic growth becomes even more attractive here, just given where lead times are, as well as the fact that you have a much stronger equity currency compared to the last few acquisitions you did. just curious if inorganic growth becomes even more attractive here just given where lead times are as well as the fact that you have a much stronger equity currency compared to the last few acquisitions you did

Speaker 1: We are, you know, extremely well-positioned, both from a balance sheet perspective, given our low leverage ratio now, and our equity position with our stock price. We're definitely, really well-positioned to finance any growth going forward, including inorganic growth. I would say that it doesn't make the targets look more attractive, and we're still gonna be very disciplined in how we evaluate the opportunity set going forward. We wanna make sure that if we, if we see an opportunity, that we know why we can use why we can add value to that opportunity or why that opportunity adds value to us. The discipline's gonna remain in outstanding the really strong financial position we're in. We are, you know, extremely well-positioned, both from a balance sheet perspective, given our low leverage ratio now, and our equity position with our stock price. we are you know extremely well-positioned both from a balance sheet perspective given our low leverage ratio now and our equity position with our stock price We're definitely, really well-positioned to finance any growth going forward, including inorganic growth. we're definitely really well-positioned to finance any growth going forward including inorganic growth I would say that it doesn't make the targets look more attractive, and we're still gonna be very disciplined in how we evaluate the opportunity set going forward. i would say that it doesn't make the targets look more attractive and we're still gonna be very disciplined in how we evaluate the opportunity set going forward We wanna make sure that if we, if we see an opportunity, that we know why we can use why we can add value to that opportunity or why that opportunity adds value to us. we wanna make sure that if we if we see an opportunity that we know why we can use why we can add value to that opportunity or why that opportunity adds value to us The discipline's gonna remain in outstanding the really strong financial position we're in. the discipline's gonna remain in outstanding the really strong financial position we're in We do see that there are a number of opportunities in the marketplace that could develop over the coming years, and we're optimistic that just like our track record of having grown through acquisition with TOPS, with NGCSi, that there will be opportunities for us to deploy capital into the market through both means. We do see that there are a number of opportunities in the marketplace that could develop over the coming years, and we're optimistic that just like our track record of having grown through acquisition with TOPS, with NGCSi, that there will be opportunities for us to deploy capital into the market through both means. we do see that there are a number of opportunities in the marketplace that could develop over the coming years and we're optimistic that just like our track record of having grown through acquisition with tops with ngcsi that there will be opportunities for us to deploy capital into the market through both means

Speaker 3: Got it. Thanks for that. Maybe just a higher level one as a follow-up here. Sounds like you're working pretty closely with your own customers to make sure they have enough supply over the next year or so, but it's obviously a pretty dynamic market, so just curious to get your view on the balance of the broader market here going forward. I guess, is there a potential scenario where we could see compression become kind of a real near-term bottleneck if we see producers look to start accelerating activity into the back half of the year? Just curious kind of how much slack you see there being in broader compression market here? Got it. got it Thanks for that. thanks for that Maybe just a higher level one as a follow-up here. maybe just a higher level one as a follow-up here Sounds like you're working pretty closely with your own customers to make sure they have enough supply over the next year or so, but it's obviously a pretty dynamic market, so just curious to get your view on the balance of the broader market here going forward. sounds like you're working pretty closely with your own customers to make sure they have enough supply over the next year or so but it's obviously a pretty dynamic market so just curious to get your view on the balance of the broader market here going forward I guess, is there a potential scenario where we could see compression become kind of a real near-term bottleneck if we see producers look to start accelerating activity into the back half of the year? i guess is there a potential scenario where we could see compression become kind of a real near-term bottleneck if we see producers look to start accelerating activity into the back half of the year Just curious kind of how much slack you see there being in broader compression market here? just curious kind of how much slack you see there being in broader compression market here

Speaker 1: I don't know that I have enough visibility into the market to be able to answer the question accurately, but I would step back and pose the following, that for the United States to deliver all of the LNG we're targeting to export and all the power we expect to fuel through natural gas. I'm gonna stick to that. It's, it's in our lane. We have a lot of power capacity, power plants, power generation to build. We have a lot of lines to lay. We have a lot of pipelines to lay. We have a lot of gas plants to go in, and we have a lot of compression to go into the market. It is not all going to happen without some bottlenecks and delays along that entire supply chain. At Archrock, we're very invested to not being one of them. I don't know that I have enough visibility into the market to be able to answer the question accurately, but I would step back and pose the following, that for the United States to deliver all of the LNG we're targeting to export and all the power we expect to fuel through natural gas. i don't know that i have enough visibility into the market to be able to answer the question accurately but i would step back and pose the following that for the united states to deliver all of the lng we're targeting to export and all the power we expect to fuel through natural gas I'm gonna stick to that. i'm gonna stick to that It's, it's in our lane. it's it's in our lane We have a lot of power capacity, power plants, power generation to build. we have a lot of power capacity power plants power generation to build We have a lot of lines to lay. we have a lot of lines to lay We have a lot of pipelines to lay. we have a lot of pipelines to lay We have a lot of gas plants to go in, and we have a lot of compression to go into the market. we have a lot of gas plants to go in and we have a lot of compression to go into the market It is not all going to happen without some bottlenecks and delays along that entire supply chain. it is not all going to happen without some bottlenecks and delays along that entire supply chain At Archrock, we're very invested to not being one of them. at archrock we're very invested to not being one of them

Speaker 2: Yeah. Look, I think I'd just add, like with, you know, our utilization as high as it is, the industry at tight utilization. Brad pointed out, you know, there are a lot of macro factors. You know, we saw large E&P make a pretty aggressive announcement earlier in the week about their ability to grow even this year. I think we're gonna do everything we can to continue to make sure we have equipment for our customers and support this growth for compression. Yeah. yeah Look, I think I'd just add, like with, you know, our utilization as high as it is, the industry at tight utilization. look i think i'd just add like with you know our utilization as high as it is the industry at tight utilization Brad pointed out, you know, there are a lot of macro factors. brad pointed out you know there are a lot of macro factors You know, we saw large E&P make a pretty aggressive announcement earlier in the week about their ability to grow even this year. you know we saw large e&p make a pretty aggressive announcement earlier in the week about their ability to grow even this year I think we're gonna do everything we can to continue to make sure we have equipment for our customers and support this growth for compression. i think we're gonna do everything we can to continue to make sure we have equipment for our customers and support this growth for compression

Speaker 3: Understood. Thanks for your time. Understood. understood Thanks for your time. thanks for your time

Speaker 9: Your final question will come from Steve Ferazani with Sidoti. Your final question will come from Steve Ferazani with Sidoti. your final question will come from steve ferazani with sidoti

Speaker 10: Morning, everyone. Thanks for taking my questions. Brad and Doug, when I think about your fleet, which you've obviously spent several years high grading, its larger horsepower units, it's a younger fleet. How do you think about changes in annual maintenance and other CapEx, particularly in a quarter where it looks like a lot of your guidance for the full year, other CapEx was taken in Q1? Morning, everyone. morning everyone Thanks for taking my questions. thanks for taking my questions Brad and Doug, when I think about your fleet, which you've obviously spent several years high grading, its larger horsepower units, it's a younger fleet. brad and doug when i think about your fleet which you've obviously spent several years high grading its larger horsepower units it's a younger fleet How do you think about changes in annual maintenance and other CapEx, particularly in a quarter where it looks like a lot of your guidance for the full year, other CapEx was taken in Q1? how do you think about changes in annual maintenance and other capex particularly in a quarter where it looks like a lot of your guidance for the full year other capex was taken in q1

Speaker 1: A few things you're seeing in our CapEx. Number one, our CapEx is typically dictated by what the units tell us they need from a time on location, time in operation, and hours perspective. We are seeing an incremental uptick in our maintenance CapEx right now because of the time at which we added the horsepower in prior years. We just have more large horsepower due for major maintenance this year than we have in the most recent couple of years. What you're going to see in major maintenance in particular is just going to be exactly that, the timing required for the units based upon, you know, hours of operation in the field, and that's what we're experiencing. A few things you're seeing in our CapEx. a few things you're seeing in our capex Number one, our CapEx is typically dictated by what the units tell us they need from a time on location, time in operation, and hours perspective. number one our capex is typically dictated by what the units tell us they need from a time on location time in operation and hours perspective We are seeing an incremental uptick in our maintenance CapEx right now because of the time at which we added the horsepower in prior years. we are seeing an incremental uptick in our maintenance capex right now because of the time at which we added the horsepower in prior years We just have more large horsepower due for major maintenance this year than we have in the most recent couple of years. we just have more large horsepower due for major maintenance this year than we have in the most recent couple of years What you're going to see in major maintenance in particular is just going to be exactly that, the timing required for the units based upon, you know, hours of operation in the field, and that's what we're experiencing. what you're going to see in major maintenance in particular is just going to be exactly that the timing required for the units based upon you know hours of operation in the field and that's what we're experiencing Even though we've de-aged the fleet nicely, we've standardized the mix of fleet really well, and we've increased the average size of horsepower and added in electric motor drives. The other aspect that you're seeing is that we grew through acquisition, some of what we're seeing for the year includes the NGCSi units coming into our fleet. Finally, we did go through a period of inflation that was pretty steep. Just the maintenance investment required for the same work has increased over time. That's what you're seeing in our maintenance activity overall. That said, we're very dedicated to ensuring we spend the maintenance capital required by the units to deliver superior customer service over time. Even though we've de-aged the fleet nicely, we've standardized the mix of fleet really well, and we've increased the average size of horsepower and added in electric motor drives. even though we've de-aged the fleet nicely we've standardized the mix of fleet really well and we've increased the average size of horsepower and added in electric motor drives The other aspect that you're seeing is that we grew through acquisition, some of what we're seeing for the year includes the NGCSi units coming into our fleet. the other aspect that you're seeing is that we grew through acquisition some of what we're seeing for the year includes the ngcsi units coming into our fleet Finally, we did go through a period of inflation that was pretty steep. finally we did go through a period of inflation that was pretty steep Just the maintenance investment required for the same work has increased over time. just the maintenance investment required for the same work has increased over time That's what you're seeing in our maintenance activity overall. that's what you're seeing in our maintenance activity overall That said, we're very dedicated to ensuring we spend the maintenance capital required by the units to deliver superior customer service over time. that said we're very dedicated to ensuring we spend the maintenance capital required by the units to deliver superior customer service over time

Speaker 10: When we think about your other CapEx guidance for the year, it looks like you spent about half of it in Q1. Was there anything particular, any reason to think that number could end up higher? When we think about your other CapEx guidance for the year, it looks like you spent about half of it in Q1. when we think about your other capex guidance for the year it looks like you spent about half of it in q1 Was there anything particular, any reason to think that number could end up higher? was there anything particular any reason to think that number could end up higher

Speaker 1: Likely just timing. The other CapEx is primarily trucks and computers. Likely just timing. likely just timing The other CapEx is primarily trucks and computers. the other capex is primarily trucks and computers

Speaker 10: Yeah. Yeah. yeah

Speaker 1: That would just mostly be the timing of delivery of our truck fleet to support the growth that we're seeing in the marketplace and making sure we have the right transportation for our mechanics. That would just mostly be the timing of delivery of our truck fleet to support the growth that we're seeing in the marketplace and making sure we have the right transportation for our mechanics. that would just mostly be the timing of delivery of our truck fleet to support the growth that we're seeing in the marketplace and making sure we have the right transportation for our mechanics

Speaker 10: Got it. That's helpful. I mean, you almost doubled your available liquidity sequentially with the, with the asset sales. When you think about returning capital to shareholders, does that mean you can get more aggressive, or do you have to carefully think about the multi-year likely expansion of your fleet given the expected demand growth? Got it. got it That's helpful. that's helpful I mean, you almost doubled your available liquidity sequentially with the, with the asset sales. i mean you almost doubled your available liquidity sequentially with the with the asset sales When you think about returning capital to shareholders, does that mean you can get more aggressive, or do you have to carefully think about the multi-year likely expansion of your fleet given the expected demand growth? when you think about returning capital to shareholders does that mean you can get more aggressive or do you have to carefully think about the multi-year likely expansion of your fleet given the expected demand growth

Speaker 1: Fortunately, we're in the position to be able to pay attention to both these key drivers for value creation for our investors. First and foremost, given the market we're in, as you just highlighted, growth. Poised for growth in maintaining some dry powder for growth is absolutely strategically something we wanna make sure we have done, but we do expect to continue to grow our cash returns to our investors over time as we grow our business. We certainly have the financial strength to do that comfortably. Fortunately, we're in the position to be able to pay attention to both these key drivers for value creation for our investors. fortunately we're in the position to be able to pay attention to both these key drivers for value creation for our investors First and foremost, given the market we're in, as you just highlighted, growth. first and foremost given the market we're in as you just highlighted growth Poised for growth in maintaining some dry powder for growth is absolutely strategically something we wanna make sure we have done, but we do expect to continue to grow our cash returns to our investors over time as we grow our business. poised for growth in maintaining some dry powder for growth is absolutely strategically something we wanna make sure we have done but we do expect to continue to grow our cash returns to our investors over time as we grow our business We certainly have the financial strength to do that comfortably. we certainly have the financial strength to do that comfortably

Speaker 10: Great. Thanks, everyone. Great. great Thanks, everyone. thanks everyone

Speaker 9: There are no more questions. Now, I'd like to turn the call back over to you, Mr. Childers, for final remarks. There are no more questions. there are no more questions Now, I'd like to turn the call back over to you, Mr. Childers, for final remarks. now i'd like to turn the call back over to you mr childers for final remarks

Speaker 1: Thank you for joining us today. We're pleased with our strong start to 2026 and remain focused on execution, profitable growth, and returning capital to shareholders. We appreciate your support and look forward to updating you on our progress next quarter. Thank you. Thank you for joining us today. thank you for joining us today We're pleased with our strong start to 2026 and remain focused on execution, profitable growth, and returning capital to shareholders. we're pleased with our strong start to 2026 and remain focused on execution profitable growth and returning capital to shareholders We appreciate your support and look forward to updating you on our progress next quarter. we appreciate your support and look forward to updating you on our progress next quarter Thank you. thank you

Speaker 9: Thank you for your participation. This does conclude today's conference. You may now disconnect. Thank you for your participation. thank you for your participation This does conclude today's conference. this does conclude today's conference You may now disconnect. you may now disconnect