Open the filing on EDGARArchrock Reports Third Quarter 2026 Results
HOUSTON, November 2, 2026 - Archrock, Inc. (NYSE: AROC) (“Archrock” or the “Company”) today reported results for the third quarter 2026.
Third Quarter 2026 Highlights
- Revenue for the third quarter of 2026 was $370.8 million compared to $382.4 million in the third quarter of 2025.
- Net income for the third quarter of 2026 was $84.5 million and EPS was $0.48 compared to $71.2 million and $0.40, respectively, in the third quarter of 2025.
- Adjusted net income (a non-GAAP measure defined below) for the third quarter of 2026 was $84.7 million and adjusted EPS (a non-GAAP measure defined below) was $0.49, compared to $73.2 million and $0.42, respectively, in the third quarter of 2025.
- Adjusted EBITDA (a non-GAAP measure defined below) for the third quarter of 2026 was $228.4 million compared to $220.9 million in the third quarter of 2025.
- Declared a quarterly dividend of $0.23 per common share for the third quarter of 2026, approximately 10% higher compared to the third quarter of 2025, resulting in dividend coverage of 3.8x.
- Leverage ratio of 2.5x as of September 30, 2026, down from 3.1x as of September 30, 2025.
- Reaffirmed full-year 2026 Adjusted EBITDA guidance of $865 million to $885 million.
Management Commentary and Outlook
“The continued strength and profitability of our business reflect consistent customer demand and a structurally tight compression market,” said Brad Childers, Archrock’s President and Chief Executive Officer. “We achieved our strongest bookings quarter since the second quarter of 2023, including strong bookings in the Permian Basin. Rising gas-to-oil ratios and additional takeaway capacity in the basin are supporting sustained compression requirements. While customer maintenance deferrals affected aftermarket activity and higher lube oil prices created near-term cost pressure, we are actively mitigating these headwinds through cost discipline and operating efficiencies. The underlying demand fundamentals remain strong, supporting our confidence in the long-term outlook.
“We remain focused on executing our disciplined growth program, deploying horsepower to meet customer demand and delivering the operational reliability our customers expect. With durable natural gas demand supported by long-term growth in LNG exports and power generation, a strong balance sheet and a disciplined, returns-based approach to capital deployment, Archrock is well positioned to invest alongside our customers at attractive returns, generate durable free cash flow and deliver consistent shareholder returns,” concluded Childers.
Third Quarter 2026 Financial Results
Archrock’s third quarter 2026 net income of $84.5 million included a non-cash long-lived and other asset impairment of $3.2 million. Archrock’s third quarter 2025 net income of $71.2 million included a non-cash long-lived and other asset impairment of $4.7 million, transaction-related costs totaling $1.8 million, and restructuring charges of $0.7 million.
Adjusted EBITDA for the third quarter of 2026 and 2025 included $2.1 million and $3.8 million, respectively, in net gains primarily related to the sale of compression and other assets. Also included in Adjusted EBITDA for the third quarter of 2025 was a net benefit to contract operations cost of sales of $9.9 million as a result of sales and use tax audit settlements.
Contract Operations
For the third quarter of 2026, contract operations segment revenue totaled $331.2 million, an increase of 1.5% compared to $326.3 million in the third quarter of 2025. Total operating horsepower at the end of the third quarter of 2026 was 4.5 million compared to 4.7 million at the end of the third quarter of 2025, reflecting period-end fleet utilization of 94.3% and the sale of approximately 112,000 non-strategic operating horsepower since the prior-year period.
Adjusted gross margin for the third quarter of 2026 was $238.7 million, compared to $239.6 million in the third quarter of 2025. Adjusted gross margin percentage for the third quarter of 2026 was 72%, compared to 73% in the third quarter of 2025. Excluding the aforementioned $9.9 million tax benefit for the third quarter of 2025, adjusted gross margin was $229.7 million and adjusted gross margin percentage was 70%.
Aftermarket Services
For the third quarter of 2026, aftermarket services segment revenue totaled $39.7 million, compared to $56.2 million in the third quarter of 2025, primarily reflecting reduced customer demand for major maintenance service activity and lower parts sales. Adjusted gross margin for the third quarter of 2026 was $9.1 million, compared to $13.0 million in the third quarter of 2025. Adjusted gross margin percentage for the third quarter of 2026 was 23%, compared to 23% for the third quarter of 2025.
Balance Sheet
Long-term debt was $2.3 billion, and our available liquidity totaled $637 million at September 30, 2026. Our leverage ratio was 2.5x as of September 30, 2026, down from 3.1x as of September 30, 2025.
Shareholder Returns
Quarterly Dividend
Our Board of Directors recently declared a quarterly dividend of $0.23 per share of common stock, or $0.92 per share on an annualized basis, approximately 10% higher compared to the third quarter of 2025. Dividend coverage in the third quarter of 2026 was 3.8x. The third quarter 2026 dividend will be paid on November 10, 2026 to stockholders of record at the close of business on November 3, 2026.
Share Repurchase Program
No shares were repurchased during the third quarter of 2026. As of September 30, 2026, $113.2 million remained available under the share repurchase program.
Since the inception of the share repurchase program in April 2023 through September 30, 2026, we have repurchased 4,632,263 shares of common stock for an aggregate purchase price of $96.9 million, or an average price of $20.91 per share.
Summary Metrics
(in thousands, except percentages and ratios)
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Net income | $84,466 | $66,720 | $71,248 |
| Adjusted net income | $84,680 | $66,535 | $73,187 |
| Adjusted EBITDA | $228,425 | $212,626 | $220,944 |
| Contract operations revenue | $331,155 | $329,260 | $326,269 |
| Contract operations adjusted gross margin | $238,722 | $234,588 | $239,559 |
| Contract operations adjusted gross margin percentage | 72% | 71% | 73% |
| Aftermarket services revenue | $39,656 | $41,978 | $56,161 |
| Aftermarket services adjusted gross margin | $9,076 | $9,924 | $13,046 |
| Aftermarket services adjusted gross margin percentage | 23% | 24% | 23% |
| Selling, general, and administrative | $26,049 | $39,641 | $37,676 |
| Net cash provided by operating activities | $158,824 | $160,782 | $164,530 |
| Cash available for dividend | $153,009 | $127,184 | $135,737 |
| Cash available for dividend coverage | 3.8x | 3.1x | 3.7x |
| Adjusted free cash flow | $49,607 | $66,990 | $113,843 |
| Adjusted free cash flow after dividend | $9,044 | $28,366 | $76,922 |
| Total available horsepower (at period end) | 4,811 | 4,784 | 4,845 |
| Total operating horsepower (at period end) | 4,537 | 4,516 | 4,651 |
| Horsepower utilization spot (at period end) | 94.3% | 94.4% | 96.0% |
- Management believes adjusted net income, adjusted EBITDA, cash available for dividend, adjusted free cash flow and adjusted free cash flow after dividend provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons.
- Defined as cash available for dividend divided by dividends declared for the period.
- Defined as idle and operating horsepower and includes new compressor units completed by a third-party manufacturer that have been delivered to us.
- Defined as horsepower that is operating under contract and horsepower that is idle but under contract and generating revenue such as standby revenue.
- Defined as total operating horsepower divided by total available horsepower at period end.
Conference Call Details
Archrock will host a conference call on November 3, 2026, to discuss third quarter 2026 financial results. The call will begin at 8:30 a.m. Eastern Time.
Participants who wish to join the call by phone must pre-register using this link to receive a dial-in number and unique PIN: https://register-conf.media-server.com/register/BI3f49d51ace1144b3950b611b99cbcc17.
To listen to the call via live webcast, please register at this link: https://edge.media-server.com/mmc/p/9bqged8n. A replay of the webcast will be available on Archrock’s Investor Relations website shortly after the call.
The Company may from time to time publish additional materials for investors at the same website address.
Adjusted net income, a non-GAAP measure, is defined as net income excluding restructuring charges, transaction-related costs and debt extinguishment gain adjusted for income taxes. A reconciliation of net income, the most directly comparable GAAP measure, to adjusted net income, and a reconciliation of basic and diluted earnings per common share, the most directly comparable GAAP measure, to adjusted basic and diluted earnings per share, appear below.
Adjusted EBITDA, a non-GAAP measure, is defined as net income excluding interest expense, provision for income taxes, depreciation and amortization, long-lived and other asset impairment, restructuring charges, debt extinguishment gain, transaction-related costs, non-cash stock-based compensation expense, amortization of capitalized implementation costs and other items. A reconciliation of net income, the most directly comparable GAAP measure, to adjusted EBITDA, and a reconciliation of our full year 2026 net income to adjusted EBITDA guidance, appear below.
Adjusted gross margin, a non-GAAP measure, is defined as total revenue less cost of sales, excluding depreciation and amortization. Adjusted gross margin percentage, a non-GAAP measure, is defined as adjusted gross margin divided by revenue. A reconciliation of net income to adjusted gross margin, and a reconciliation of gross margin, the most directly comparable GAAP measure, to adjusted gross margin and adjusted gross margin percentage, appear below.
Cash available for dividend, a non-GAAP measure, is defined as net income excluding interest expense, provision for income taxes, depreciation and amortization, long-lived and other asset impairment, restructuring charges, debt extinguishment gain, transaction-related costs, non-cash stock-based compensation expense, amortization of capitalized implementation costs and other items, less maintenance capital expenditures, other capital expenditures, cash taxes and cash interest expense. Reconciliations of net income and net cash provided by operating activities, the most directly comparable GAAP measures, to cash available for dividend, and a reconciliation of our full year 2026 net income to adjusted EBITDA, appear below.
Adjusted free cash flow, a non-GAAP measure, is defined as net cash provided by operating activities plus net cash used in investing activities. A reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to adjusted free cash flow, appears below.
Adjusted free cash flow after dividend, a non-GAAP measure, is defined as net cash provided by operating activities plus net cash used in investing activities less dividends paid to stockholders. A reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to adjusted free cash flow after dividend, appears below.
About Archrock
Archrock is an energy infrastructure company with a primary focus on midstream natural gas compression and a commitment to helping its customers produce, compress and transport natural gas in a safe and environmentally responsible way. Headquartered in Houston, Texas, Archrock is a premier provider of natural gas compression services to customers in the energy industry throughout the U.S. and a leading supplier of aftermarket services to customers that own compression equipment. For more information on how Archrock embodies its purpose, WE POWER A CLEANER AMERICA®, visit www.archrock.com.
Forward-Looking Statements
Forward-looking statements notice
All statements in this release (and oral statements made regarding the subjects of this release) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside the control of Archrock. Forward-looking information includes, but is not limited to statements regarding: guidance or estimates related to Archrock’s results of operations or of financial condition; fundamentals of Archrock’s industry, including the attractiveness of returns and valuation, stability of cash flows, demand dynamics and overall outlook, and Archrock’s ability to realize the benefits thereof; Archrock’s expectations regarding future economic, geopolitical and market conditions and trends; Archrock’s operational and financial strategies, including planned growth, coverage and leverage reduction strategies, Archrock’s ability to successfully effect those strategies, and the expected results therefrom; Archrock’s financial and operational outlook; demand and growth opportunities for Archrock’s services; structural and process improvement initiatives, the expected timing thereof, Archrock’s ability to successfully effect those initiatives and the expected results therefrom; the operational and financial synergies provided by Archrock’s size; statements regarding Archrock’s dividend policy.
Forward-looking statements notice
While Archrock believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. The factors that could cause results to differ materially from those indicated by such forward-looking statements include, but are not limited to: risks related to macroeconomic conditions, including an increase in inflation and trade tensions; pandemics and other public health crises; ongoing international conflicts and tensions; risks related to our operations; competitive pressures; risks of acquisitions or mergers to reduce our ability to make distributions to our common stockholders; inability to make acquisitions on economically acceptable terms; inability to achieve the expected benefits of the acquisition of Natural Gas Compression Systems, Inc. and NGCSE, Inc. (collectively, “NGCS”) and difficulties integrating NGCS; risks related to our sustainability initiatives; uncertainty to pay dividends in the future; risks related to a substantial amount of debt and our debt agreements; inability to access the capital and credit markets or borrow on affordable terms to obtain additional capital; inability to fund purchases of additional compression equipment; vulnerability to interest rate increases and fluctuations; erosion of the financial condition of our customers; risks related to the loss of our most significant customers; uncertainty of the renewals for our contract operations service agreements; risks related to losing management or operational personnel; dependence on particular suppliers and vulnerability to product shortages and price increases; information technology and cybersecurity risks; tax-related risks; legal and regulatory risks, including climate-related and environmental, social and governance risks.
These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Archrock’s Annual Report on Form 10-K for the year ended December 31, 2025, Archrock’s Quarterly Reports on Form 10-Q and as set forth from time to time in Archrock’s filings with the Securities and Exchange Commission. These filings are available online at www.sec.gov and www.archrock.com. Except as required by law, Archrock expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.
SOURCE: Archrock, Inc.
For information, contact:
Megan Repine
VP of Investor Relations
281-836-8360 investor.relations@archrock.com
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Revenue: | | | |
| Contract operations | $331,155 | $329,260 | $326,269 |
| Aftermarket services | 39,656 | 41,978 | 56,161 |
| Total revenue | 370,811 | 371,238 | 382,430 |
| Cost of sales, exclusive of depreciation and amortization | | | |
| Contract operations | 92,433 | 94,672 | 86,710 |
| Aftermarket services | 30,580 | 32,054 | 43,115 |
| Total cost of sales, exclusive of depreciation and amortization | 123,013 | 126,726 | 129,825 |
| Selling, general and administrative | 26,049 | 39,641 | 37,676 |
| Depreciation and amortization | 71,948 | 71,478 | 67,130 |
| Long-lived and other asset impairment | 3,217 | 4,881 | 4,676 |
| Restructuring charges | - | 125 | 688 |
| Debt extinguishment gain | - | (687) | - |
| Interest expense | 37,017 | 37,016 | 43,661 |
| Transaction-related costs | 270 | 328 | 1,767 |
| Gain on sale of assets, net | (2,146) | (297) | (3,835) |
| Other (income) expense, net | (103) | (967) | 3,984 |
| Income before income taxes | 111,546 | 92,994 | 96,858 |
| Provision for income taxes | 26,660 | 25,821 | 25,425 |
| Income before equity in net loss of unconsolidated affiliate | 84,886 | 67,173 | 71,433 |
| Equity in net loss of unconsolidated affiliate | 420 | 453 | 185 |
| Net income | $84,466 | $66,720 | $71,248 |
| Basic and diluted earnings per common share | $0.48 | $0.38 | $0.40 |
| Weighted-average common shares outstanding: | | | |
| Basic | 174,526 | 174,410 | 174,619 |
| Diluted | 174,774 | 174,744 | 174,913 |
- Basic and diluted earnings per common share is computed using the two-class method to determine the net income per share for each class of common stock and participating security (restricted stock and stock-settled restricted stock units that have non-forfeitable rights to receive dividends or dividend equivalents) according to dividends declared and participation rights in undistributed earnings. Accordingly, we have excluded net income attributable to participating securities from our calculation of basic and diluted earnings per common share.
Unaudited Supplemental Information
(in thousands, except percentages, per share amounts and ratios)
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Revenue: | | | |
| Contract operations | $331,155 | $329,260 | $326,269 |
| Aftermarket services | 39,656 | 41,978 | 56,161 |
| Total revenue | $370,811 | $371,238 | $382,430 |
| Adjusted gross margin: | | | |
| Contract operations | $238,722 | $234,588 | $239,559 |
| Aftermarket services | 9,076 | 9,924 | 13,046 |
| Total adjusted gross margin | $247,798 | $244,512 | $252,605 |
| Adjusted gross margin percentage: | | | |
| Contract operations | 72% | 71% | 73% |
| Aftermarket services | 23% | 24% | 23% |
| Total adjusted gross margin percentage | 67% | 66% | 66% |
| Selling, general and administrative | $26,049 | $39,641 | $37,676 |
| % of revenue | 7% | 11% | 10% |
| Adjusted EBITDA | $228,425 | $212,626 | $220,944 |
| % of revenue | 62% | 57% | 58% |
| Capital expenditures | $117,907 | $97,964 | $135,065 |
| Proceeds from sale of business | - | - | (71,000) |
| Proceeds from sale of property, equipment and other assets | (11,154) | (4,062) | (11,063) |
| Net capital expenditures | $106,753 | $93,902 | $53,002 |
| Total available horsepower (at period end) | 4,811 | 4,784 | 4,845 |
| Total operating horsepower (at period end) | 4,537 | 4,516 | 4,651 |
| Average operating horsepower | 4,528 | 4,514 | 4,647 |
| Horsepower utilization: | | | |
| Spot (at period end) | 94.3% | 94.4% | 96.0% |
| Average | 94.3% | 94.4% | 96.0% |
| Dividend declared for the period per share | $0.230 | $0.230 | $0.210 |
| Dividend declared for the period to all stockholders | $40,473 | $40,471 | $37,007 |
| Cash available for dividend coverage | 3.8x | 3.1x | 3.7x |
| Adjusted free cash flow | $49,607 | $66,990 | $113,843 |
| Adjusted free cash flow after dividend | $9,044 | $28,366 | $76,922 |
(1) Management believes adjusted gross margin, adjusted EBITDA, adjusted gross margin percentage, adjusted free cash flow and adjusted free cash flow after dividend provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons.
(2) Defined as idle and operating horsepower and includes new compressor units completed by a third-party manufacturer that have been delivered to us.
(3) Defined as horsepower that is operating under contract and horsepower that is idle but under contract and generating revenue such as standby revenue.
(4) Defined as total operating horsepower divided by total available horsepower at period end (spot) or over time (average).
(5) Defined as cash available for dividend divided by dividends declared for the period.
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Balance Sheet | | | |
| Long-term debt | $2,343,100 | $2,347,810 | $2,559,944 |
| Total equity | 1,597,867 | 1,552,105 | 1,422,279 |
- Carrying values are shown net of unamortized premium and deferred financing costs.
Unaudited Supplemental Information
Reconciliation of Net Income to Adjusted Net Income and Earnings Per Share to Adjusted Earnings Per Share
(in thousands, except per share amounts)
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Net income | $84,466 | $66,720 | $71,248 |
| Restructuring charges | - | 125 | 688 |
| Transaction-related costs | 270 | 328 | 1,767 |
| Debt extinguishment gain | - | (687) | - |
| Tax effect of adjustments | (57) | 49 | (516) |
| Adjusted net income | $84,680 | $66,535 | $73,187 |
| Weighted-average common shares outstanding: | | | |
| Basic | 174,526 | 174,410 | 174,619 |
| Diluted | 174,774 | 174,744 | 174,913 |
| Basic and diluted earnings per common share | $0.48 | $0.38 | $0.40 |
| Restructuring charges per share | $ - | $0.00 | $0.00 |
| Transaction-related costs per share | 0.01 | 0.01 | 0.02 |
| Debt extinguishment gain per share | - | (0.01) | - |
| Tax effect of adjustments per share | (0.00) | 0.00 | (0.00) |
| Adjusted basic and diluted earnings per common share | $0.49 | $0.38 | $0.42 |
(1) Represents an estimated tax effect of restructuring charges, transaction-related costs and debt extinguishment gain based on the federal statutory tax rate of 21%.
(2) Management believes adjusted net income and adjusted earnings per share provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review our current period operating performance, comparability measure and performance measure for period-to-period comparisons without burdened earnings and earnings per share for non-recurring transactional costs.
(3) Basic and diluted earnings per common share is computed using the two-class method to determine the net income per share for each class of common stock and participating security (restricted stock and stock-settled restricted stock units that have non-forfeitable rights to receive dividends or dividend equivalents) according to dividends declared and participation rights in undistributed earnings. Accordingly, we have excluded net income attributable to participating securities from our calculation of basic and diluted earnings per common share.
Unaudited Supplemental Information
Reconciliation of Net Income to Adjusted EBITDA and Adjusted Gross Margin
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Net income | $84,466 | $66,720 | $71,248 |
| Depreciation and amortization | 71,948 | 71,478 | 67,130 |
| Long-lived and other asset impairment | 3,217 | 4,881 | 4,676 |
| Restructuring charges | - | 125 | 688 |
| Debt extinguishment gain | - | (687) | - |
| Interest expense | 37,017 | 37,016 | 43,661 |
| Transaction-related costs | 270 | 328 | 1,767 |
| Stock-based compensation expense | 3,421 | 5,507 | 4,488 |
| Amortization of capitalized implementation costs | 1,031 | 1,015 | 851 |
| Indemnification (income) expense, net | (25) | (31) | 825 |
| Provision for income taxes | 26,660 | 25,821 | 25,425 |
| Equity in net loss of unconsolidated affiliate | 420 | 453 | 185 |
| Adjusted EBITDA | 228,425 | 212,626 | 220,944 |
| Selling, general and administrative | 26,049 | 39,641 | 37,676 |
| Stock-based compensation expense | (3,421) | (5,507) | (4,488) |
| Amortization of capitalized implementation costs | (1,031) | (1,015) | (851) |
| Indemnification income (expense), net | 25 | 31 | (825) |
| Gain on sale of assets, net | (2,146) | (297) | (3,835) |
| Other (income) expense, net | (103) | (967) | 3,984 |
| Adjusted gross margin | $247,798 | $244,512 | $252,605 |
- Management believes adjusted EBITDA and adjusted gross margin provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons.
Unaudited Supplemental Information
Reconciliation of Gross Margin and Gross Margin Percentage to
Adjusted Gross Margin and Adjusted Gross Margin Percentage
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Total revenues | $370,811 | | $371,238 | | $382,430 | |
| Cost of sales, exclusive of depreciation and amortization | (123,013) | | (126,726) | | (129,825) | |
| Depreciation and amortization | (71,948) | | (71,478) | | (67,130) | |
| Gross margin and gross margin percentage | 175,850 | 47% | 173,034 | 47% | 185,475 | 48% |
| Depreciation and amortization | 71,948 | | 71,478 | | 67,130 | |
| Adjusted gross margin and adjusted gross margin percentage | $247,798 | 67% | $244,512 | 66% | $252,605 | 66% |
- Management believes adjusted gross margin and adjusted gross margin percentage provide useful information to investors because this non-GAAP measure, when viewed with our GAAP results and accompanying reconciliations, provides a more complete understanding of our performance than GAAP results alone. Management uses this non-GAAP measure as a supplemental measure to review current period operating performance, comparability measures and performance measures for period-to-period comparisons.
Unaudited Supplemental Information
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Dividend
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Net income | $84,466 | $66,720 | $71,248 |
| Depreciation and amortization | 71,948 | 71,478 | 67,130 |
| Long-lived and other asset impairment | 3,217 | 4,881 | 4,676 |
| Restructuring charges | - | 125 | 688 |
| Debt extinguishment gain | - | (687) | - |
| Interest expense | 37,017 | 37,016 | 43,661 |
| Transaction-related costs | 270 | 328 | 1,767 |
| Stock-based compensation expense | 3,421 | 5,507 | 4,488 |
| Amortization of capitalized implementation costs | 1,031 | 1,015 | 851 |
| Indemnification (income) expense, net | (25) | (31) | 825 |
| Provision for income taxes | 26,660 | 25,821 | 25,425 |
| Equity in net loss of unconsolidated affiliate | 420 | 453 | 185 |
| Adjusted EBITDA | 228,425 | 212,626 | 220,944 |
| Less: Maintenance capital expenditures | (33,281) | (39,413) | (29,629) |
| Less: Other capital expenditures | (6,213) | (7,612) | (13,117) |
| Less: Cash tax payment | (330) | (2,829) | - |
| Less: Cash interest expense | (35,592) | (35,588) | (42,461) |
| Cash available for dividend | $153,009 | $127,184 | $135,737 |
- Management believes adjusted EBITDA provides useful information to investors because this non-GAAP measure, when viewed with our GAAP results and accompanying reconciliations, provides a more complete understanding of our performance than GAAP results alone. Management uses this non-GAAP measure as a supplemental measure to review current period operating performance, comparability measure and performance measure for period-to-period comparisons.
- Management uses cash available for dividend as a supplemental performance measure to compute the coverage ratio of estimated cash flows to planned dividends.
Unaudited Supplemental Information
Reconciliation of Net Cash Provided by Operating Activities to Cash Available for Dividend
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Net cash provided by operating activities | $158,824 | $160,782 | $164,530 |
| Inventory write-downs | (66) | (70) | (324) |
| Benefit from (provision for) credit losses | 280 | (109) | (297) |
| Gain on sale of assets, net | 2,146 | 297 | 3,835 |
| Current income tax (provision) benefit | 767 | 995 | (1,804) |
| Cash tax payment | (330) | (2,829) | - |
| Amortization of operating lease ROU assets | (1,170) | (1,225) | (1,185) |
| Amortization of contract costs | (4,806) | (4,864) | (5,549) |
| Deferred revenue recognized in earnings | 6,459 | 5,096 | 6,811 |
| Indemnification (income) expense, net | (25) | (31) | 825 |
| Cash restructuring charges | - | 125 | 437 |
| Cash transaction-related costs | 270 | 328 | 1,767 |
| Changes in assets and liabilities | 30,154 | 15,714 | 9,437 |
| Maintenance capital expenditures | (33,281) | (39,413) | (29,629) |
| Other capital expenditures | (6,213) | (7,612) | (13,117) |
| Cash available for dividend | $153,009 | $127,184 | $135,737 |
- Management uses cash available for dividend as a supplemental performance measure to compute the coverage ratio of estimated cash flows to planned dividends.
Unaudited Supplemental Information
Reconciliation of Net Cash Provided By Operating Activities to Adjusted Free Cash Flow
and Adjusted Free Cash Flow After Dividend
| Three Months Ended |
|---|
| September 30, | June 30, | September 30, |
|---|
| 2026 | 2026 | 2025 |
|---|
| Net cash provided by operating activities | $158,824 | $160,782 | $164,530 |
| Net cash used in investing activities | (109,217) | (93,792) | (50,687) |
| Adjusted free cash flow | 49,607 | 66,990 | 113,843 |
| Dividends paid to stockholders | (40,563) | (38,624) | (36,921) |
| Adjusted free cash flow after dividend | $9,044 | $28,366 | $76,922 |
- Management believes adjusted free cash flow and adjusted free cash flow after dividend provide useful information to investors because these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period-to-period comparisons.
Unaudited Supplemental Information
Reconciliation of Net Income to Adjusted EBITDA and Cash Available for Dividend Guidance
| Annual Guidance Range |
|---|
| 2026 |
|---|
| Low | High |
|---|
| Net income | $290,750 | $310,750 |
| Interest expense | 150,000 | 150,000 |
| Provision for income taxes | 103,000 | 103,000 |
| Depreciation and amortization | 283,000 | 283,000 |
| Restructuring charges | 250 | 250 |
| Stock-based compensation expense | 22,000 | 22,000 |
| Long-lived and other asset impairment | 10,100 | 10,100 |
| Amortization of capitalized implementation costs | 4,000 | 4,000 |
| Debt extinguishment gain | (700) | (700) |
| Transaction-related costs | 1,400 | 1,400 |
| Equity in net loss of unconsolidated affiliate | 1,000 | 1,000 |
| Indemnification expense, net | 200 | 200 |
| Adjusted EBITDA (2) (3) | 865,000 | 885,000 |
(1) 2026 annual guidance for net income includes $10.1 million of long-lived and other asset impairment as of June 30, 2026, but does not include the impact of any future long-lived and other asset impairment because due to its nature, it cannot be accurately forecasted. Long-lived and other asset impairment does not impact Adjusted EBITDA or cash available for dividend; however, it is a reconciling item between these measures and net income. Long-lived and other asset impairment for the years 2025 and 2024 was $18.3 million and $10.7 million, respectively.
(2) Reflects an estimate of expenses to be incurred related to the Total Operations and Production Services, LLC and NGCS acquisitions.
(3) Management believes adjusted EBITDA provides useful information to investors because this non-GAAP measure, when viewed with our GAAP results and accompanying reconciliations, provides a more complete understanding of our performance than GAAP results alone. Management uses this non-GAAP measure as a supplemental measure to review current period operating performance, comparability measure and performance measure for period-to-period comparisons.