 HOUSTON, July 30, 2020 GLOBE NEWSWIRE -- Archrock, Inc. NYSE: AROC Archrock today reported results for the second quarter of 2020. Second Quarter 2020 Financial Results Revenue for the second quarter of 2020 was 220.3 million compared to 238.4 million in the second quarter of 2019. Net loss for the second quarter of 2020 was 30.4 million compared to net income of 11.4 million in the second quarter of 2019. Adjusted EBITDA a non-GAAP measure defined below for the second quarter of 2020 was 100.5 million compared to 100.7 million in the second quarter of 2019. Previously declared quarterly dividend of 0.145 per common share for the second quarter of 2020 was unchanged compared to the second quarter of 2019. Dividend coverage was 2.6x for the second quarter of 2020. Archrocks leverage ratio was 4.1x compared to 4.4x as of June 30, 2019.Archrocks second quarter 2020 net loss of 30.4 million included a non-cash long-lived asset impairment of 55.2 million, a debt extinguishment loss of 4.0 million and restructuring costs related to severance benefits totaling 2.4 million. In addition, the company recorded a non-cash income tax benefit of 8.1 million during the second quarter of 2020.Adjusted EBITDA for the second quarter of 2020 of 100.5 million included 2.2 million in net losses related to the sale of compression and other assets.Management Commentary and OutlookArchrocks impressive second quarter performance reaffirms the resilience of our compression business and keeps us on track to achieve our full-year 2020 EBITDA guidance, generate free cash flow and repay debt, said Brad Childers, Archrocks President and Chief Executive Officer. Despite one of the most difficult market and operating environments in the companys history, we improved our contract operations gross margin percentage through aggressive cost management and solid execution. With disciplined capital allocation, we protected our sound financial position while continuing to pay an attractive and well-covered dividend to our shareholders.The market deteriorated quickly and sharply during the second quarter as a result of the COVID-19 pandemic. While we will not try to predict the timing of the recovery, we began to see signs of stabilization in the overall market and in our compression operations entering the third quarter. As U.S. natural gas production has steadied in recent weeks, the pace of compression equipment returns from the field has moderated and weve seen customer requests to restart equipment that was temporarily put on standby status. These improvements are occurring across multiple customers and geographies.Looking ahead, we expect to continue to generate free cash flow as we have largely funded our 2020 capital needs and we are not planning large new equipment capital expenditures in 2021. This current and expanding free cash flow generation is a significant differentiator for Archrock and will facilitate further debt reduction and continuing return of cash to shareholders. We have substantial available liquidity and no near-term debt maturities. With the quality of our assets, strength of our balance sheet and dedication of our employees, I remain confident in our companys ability to successfully navigate the market challenges caused by constant volatility in U.S. natural gas production levels and continue to generate significant value for both our customers and shareholders, concluded Childers.Contract OperationsFor the second quarter of 2020, contract operations segment revenue totaled 187.9 million, flat compared to 186.3 million in the second quarter of 2019. Gross margin was 124.6 million, up 8.8 million or 8 from the second quarter of 2019, reflecting a gross margin percentage of 66 compared to 62 in the prior year quarter. Total operating horsepower at the end of the second quarter of 2020 was 3.6 million, unchanged compared to the end of the prior year quarter. Utilization at the end of the second quarter of 2020 was 86 compared to 88 at the end of the second quarter of 2019.Aftermarket ServicesFor the second quarter of 2020, aftermarket services segment revenue totaled 32.4 million, down from 52.1 million in the second quarter of 2019 due to a decrease in service activities and parts sales as customers continued the deferral of maintenance activities. Gross margin of 3.7 million was down from 9.9 million in the second quarter of 2019. Gross margin percentage of 11 was down compared to 19 in the prior year quarter.Balance SheetLong-term debt was 1.8 billion at June 30, 2020, reflecting net debt repayment of 8.0 million. Our leverage ratio was 4.1x, flat compared to the end of the first quarter of 2020 and down from 4.4x at the end of the second quarter of 2019. Our available liquidity totaled 414.6 million as of June 30, 2020.Quarterly DividendOur Board of Directors recently declared a quarterly dividend of 0.145 per share of common stock, or 0.58 per share on an annualized basis, unchanged on a sequential and annual basis. Dividend coverage in the second quarter of 2020 was 2.6x. The dividend will be paid on August 14, 2020 to stockholders of record at the close of business on August 10, 2020.2020 Annual Guidance Archrock is providing updated 2020 annual guidance as listed below. All figures are in thousands, except percentages and ratios: Full Year 2020 Guidance Low High Net loss 1 77,000 37,000 Adjusted EBITDA 2 380,000 420,000 Cash available for dividend 3 4 221,000 251,000 Segment Contract operations revenue 735,000 745,000 Contract operations gross margin percentage 63.0 65.0 Aftermarket services revenue 135,000 145,000 Aftermarket services gross margin percentage 14.0 16.0 Selling, general and administrative 113,000 116,000 Capital expenditures Growth capital expenditures 70,000 85,000 Maintenance capital expenditures 37,000 43,000 Other capital expenditures 23,000 27,000 ___ 1 2020 annual guidance for net loss includes 99.8 million of goodwill impairment, 61.4 million of long-lived asset impairments, 4.1 million of restructuring charges and 4.0 million of debt extinguishment loss as of June 30, 2020, but does not include the impact of any such future costs, because due to their nature, they cannot be accurately forecasted. Such costs do not impact Adjusted EBITDA or cash available for dividend, however they are reconciling items between these measures and net loss. 2 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. 3 Management uses cash available for dividend as a supplemental performance measure to compute the coverage ratio of estimated cash flows to planned dividends. 4 A forward-looking estimate of cash provided by operating activities is not provided because certain items necessary to estimate cash provided by operating activities, including changes in assets and liabilities, are not estimable at this time. Changes in assets and liabilities were 10.4 million and 13.2 million for the years ended 2019 and 2018, respectively. Summary Metrics Three Months Ended in thousands, except percentages, per share amounts and ratios June 30, 2020 March 31, 2020 June 30, 2019 Net income loss 30,381 61,187 11,423 Adjusted EBITDA 100,509 112,915 100,664 Contract operations revenue 187,949 206,974 186,258 Contract operations gross margin 124,559 128,323 115,737 Contract operations gross margin percentage 66 62 62 Aftermarket services revenue 32,367 42,723 52,132 Aftermarket services gross margin 3,681 7,732 9,917 Aftermarket services gross margin percentage 11 18 19 Selling, general, and administrative 28,745 30,626 28,618 Cash available for dividend 58,036 62,114 55,354 Cash available for dividend coverage 2.6 x 2.8 x 2.5 x Total available horsepower at period end 4,203 4,386 4,096 Total operating horsepower at period end 3,613 3,883 3,611 Horsepower utilization spot at period end 86 89 88 Conference Call DetailsArchrock will host a conference call on Friday, July 31, 2020, to discuss second quarter 2020 financial results. The call will begin at 11:00 a.m. Eastern Time.To listen to the call via a live webcast, please visit Archrocks website at The call will also be available by dialing 1-877-407-0784 in the United States and Canada or 1-201-689-8560 for international calls. Please call approximately 15 minutes prior to the scheduled start time and reference Archrock.A replay of the conference call will be available on Archrocks website for approximately seven days. Also, a replay may be accessed by dialing 1-844-512-2921 in the United States and Canada, or 1-412-317-6671 for international calls. The access code is 13706627. Adjusted EBITDA, a non-GAAP measure, is defined as net income loss excluding interest expense, income taxes, depreciation and amortization, long-lived asset impairment, goodwill impairment, restatement and other charges, restructuring charges, debt extinguishment loss, transaction-related costs, non-cash stock-based compensation expense, indemnification income expense, net and other items. 