Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 26, 2023 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Commission File Number | 001-33666 | |
Entity Registrant Name | Archrock, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 74-3204509 | |
Entity Street Address | 9807 Katy Freeway | |
Entity Suite Number | Suite 100 | |
Entity City | Houston | |
Entity State | TX | |
Entity Postal Zip Code | 77024 | |
City Area Code | 281 | |
Local Phone Number | 836-8000 | |
Title of each class | Common stock, $0.01 par value per share | |
Trading Symbol | AROC | |
Name of exchange on which registered | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 156,695,322 | |
Entity Central Index Key | 0001389050 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 3,051 | $ 1,566 |
Accounts receivable, net of allowance of $1,318 and $1,674, respectively | 110,994 | 137,544 |
Inventory | 89,632 | 84,622 |
Other current assets | 6,946 | 8,228 |
Total current assets | 210,623 | 231,960 |
Property, plant and equipment, net | 2,246,245 | 2,199,253 |
Operating lease right-of-use assets | 16,111 | 16,706 |
Intangible assets, net | 35,196 | 37,077 |
Contract costs, net | 35,998 | 34,736 |
Deferred tax assets | 29,146 | 33,353 |
Other assets | 38,307 | 37,079 |
Non-current assets of discontinued operations | 8,280 | 8,586 |
Total assets | 2,619,906 | 2,598,750 |
Current liabilities: | ||
Accounts payable, trade | 78,999 | 64,324 |
Accrued liabilities | 92,213 | 76,915 |
Deferred revenue | 5,889 | 7,332 |
Total current liabilities | 177,101 | 148,571 |
Long-term debt | 1,547,274 | 1,548,334 |
Operating lease liabilities | 14,170 | 14,861 |
Deferred tax liabilities | 934 | 854 |
Other liabilities | 19,509 | 17,569 |
Non-current liabilities of discontinued operations | 7,868 | 7,868 |
Total liabilities | 1,766,856 | 1,738,057 |
Commitments and contingencies (Note 6) | ||
Equity: | ||
Preferred stock - $0.01 par value, 50,000,000 shares authorized, zero issued | ||
Common stock: $0.01 par value 250,000,000 shares authorized, 164,903,900 and 163,439,013 shares issued, respectively | 1,649 | 1,634 |
Additional paid-in capital | 3,460,259 | 3,456,777 |
Accumulated deficit | (2,516,500) | (2,509,133) |
Treasury stock: 8,207,390 and 7,810,548 common shares, at cost, respectively | (92,358) | (88,585) |
Total equity | 853,050 | 860,693 |
Total liabilities and equity | $ 2,619,906 | $ 2,598,750 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowance | $ 1,318 | $ 1,674 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 164,903,900 | 163,439,013 |
Treasury stock, common shares (in shares) | 8,207,390 | 7,810,548 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues | $ 229,834 | $ 197,201 |
Total cost of sales (excluding depreciation and amortization) | 113,390 | 93,139 |
Selling, general and administrative | 26,425 | 27,773 |
Depreciation and amortization | 40,181 | 43,039 |
Long-lived and other asset impairment | 2,569 | 7,416 |
Restructuring charges | 1,047 | |
Interest expense | 26,581 | 25,246 |
Gain on sale of assets, net | (3,605) | (2,112) |
Other expense (income), net | 603 | 36 |
Income before income taxes | 22,643 | 2,664 |
Provision for income taxes | 6,158 | 943 |
Net income | $ 16,485 | $ 1,721 |
Basic earnings per common share (in dollars per share) | $ 0.10 | $ 0.01 |
Diluted earnings per common share(in dollars per share) | $ 0.10 | $ 0.01 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 154,116 | 152,690 |
Diluted (in shares) | 154,281 | 152,810 |
Contract Operations | ||
Revenues | $ 187,745 | $ 163,656 |
Total cost of sales (excluding depreciation and amortization) | 79,482 | 64,501 |
Aftermarket Services | ||
Revenues | 42,089 | 33,545 |
Total cost of sales (excluding depreciation and amortization) | $ 33,908 | $ 28,638 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Condensed Consolidated Statements of Comprehensive Income | ||
Net income | $ 16,485 | $ 1,721 |
Other comprehensive income, net of tax: | ||
Interest rate swap gain, net of reclassifications to earnings | 574 | |
Amortization of dedesignated interest rate swap | 410 | |
Total other comprehensive income, net of tax | 984 | |
Comprehensive income | $ 16,485 | $ 2,705 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Treasury Stock, Common | Total |
Beginning balance at Dec. 31, 2021 | $ 1,615 | $ 3,440,059 | $ (2,463,114) | $ (984) | $ (86,138) | $ 891,438 |
Beginning balance (in shares) at Dec. 31, 2021 | 161,482,852 | |||||
Treasury stock, common shares, Beginning balance (in shares) at Dec. 31, 2021 | 7,417,401 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Treasury stock purchased | $ (2,363) | (2,363) | ||||
Treasury stock purchased (in shares) | 272,403 | |||||
Cash dividends | (22,673) | (22,673) | ||||
Shares issued in ESPP | 149 | 149 | ||||
Shares issued in ESPP (in shares) | 20,060 | |||||
Stock-based compensation, net of forfeitures | $ 14 | 3,053 | 3,067 | |||
Stock-based compensation, net of forfeitures (in shares) | 1,416,672 | 9,008 | ||||
Comprehensive income | ||||||
Net income | 1,721 | 1,721 | ||||
Other comprehensive income | $ 984 | 984 | ||||
Ending balance at Mar. 31, 2022 | $ 1,629 | 3,443,261 | (2,484,066) | $ (88,501) | 872,323 | |
Ending balance (in shares) at Mar. 31, 2022 | 162,919,584 | |||||
Treasury stock, common shares, Ending balance (in shares) at Mar. 31, 2022 | 7,698,812 | |||||
Beginning balance at Dec. 31, 2022 | $ 1,634 | 3,456,777 | (2,509,133) | $ (88,585) | $ 860,693 | |
Beginning balance (in shares) at Dec. 31, 2022 | 163,439,013 | |||||
Treasury stock, common shares, Beginning balance (in shares) at Dec. 31, 2022 | 7,810,548 | 7,810,548 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Treasury stock purchased | $ (3,773) | $ (3,773) | ||||
Treasury stock purchased (in shares) | 383,766 | |||||
Cash dividends | (23,852) | (23,852) | ||||
Shares issued in ESPP | $ 1 | 169 | 170 | |||
Shares issued in ESPP (in shares) | 20,251 | |||||
Stock-based compensation, net of forfeitures | $ 14 | 3,313 | 3,327 | |||
Stock-based compensation, net of forfeitures (in shares) | 1,444,636 | 13,076 | ||||
Comprehensive income | ||||||
Net income | 16,485 | 16,485 | ||||
Ending balance at Mar. 31, 2023 | $ 1,649 | $ 3,460,259 | $ (2,516,500) | $ (92,358) | $ 853,050 | |
Ending balance (in shares) at Mar. 31, 2023 | 164,903,900 | |||||
Treasury stock, common shares, Ending balance (in shares) at Mar. 31, 2023 | 8,207,390 | 8,207,390 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity (Parenthetical) - $ / shares | 3 Months Ended | ||||
Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Condensed Consolidated Statements of Equity | |||||
Dividend declared per common stock (in dollars per share) | $ 0.150 | $ 0.145 | $ 0.145 | $ 0.145 | $ 0.145 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||||
Net income | $ 16,485 | $ 1,721 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation and amortization | 40,181 | 43,039 | ||
Long-lived and other asset impairment | 2,569 | 7,416 | ||
Non-cash restructuring charges | 927 | |||
Unrealized change in fair value of investment in unconsolidated affiliate | 254 | |||
Inventory write-downs | 216 | 294 | ||
Amortization of operating lease right-of-use assets | 823 | 780 | ||
Amortization of deferred financing costs | 1,288 | 1,288 | ||
Amortization of debt premium | (501) | (502) | ||
Amortization of capitalized implementation costs | 597 | |||
Amortization of dedesignated interest rate swap | 410 | |||
Interest rate swaps | 631 | |||
Stock-based compensation expense | 3,327 | 3,067 | ||
Provision for (benefit from) credit losses | (340) | 108 | ||
Gain on sale of assets, net | (3,605) | (2,112) | ||
Deferred income tax provision | 5,881 | 886 | ||
Amortization of contract costs | 5,090 | 4,476 | ||
Deferred revenue recognized in earnings | (4,476) | (3,115) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable, net | 7,632 | (15,084) | ||
Inventory | (4,131) | (1,021) | ||
Other assets | 609 | 444 | ||
Contract costs | (6,352) | (5,320) | ||
Accounts payable and other liabilities | 18,219 | 32,718 | ||
Deferred revenue | 3,179 | 6,351 | ||
Other | (16) | 97 | ||
Net cash provided by operating activities | 87,856 | 76,572 | ||
Cash flows from investing activities: | ||||
Capital expenditures | (84,392) | (44,858) | ||
Proceeds from sale of property, equipment and other assets | 28,726 | 5,437 | ||
Proceeds from insurance and other settlements | 2,763 | |||
Investments in unconsolidated entities | (2,000) | |||
Net cash used in investing activities | (57,666) | (36,658) | ||
Cash flows from financing activities: | ||||
Borrowings of long-term debt | 158,850 | 172,500 | ||
Repayments of long-term debt | (160,100) | (186,500) | ||
Payments for settlement of interest rate swaps that include financing elements | (1,334) | |||
Dividends paid to stockholders | (23,852) | $ (22,589) | $ (22,494) | (22,673) |
Proceeds from stock issued under ESPP | 170 | 149 | ||
Purchases of treasury stock | (3,773) | (2,363) | ||
Net cash used in financing activities | (28,705) | (40,221) | ||
Net increase (decrease) in cash and cash equivalents | 1,485 | (307) | ||
Cash and cash equivalents, beginning of period | 1,566 | $ 1,262 | 1,569 | |
Cash and cash equivalents, end of period | $ 3,051 | $ 1,566 | $ 1,262 |
Description of Business and Bas
Description of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2023 | |
Description of Business and Basis of Presentation | |
Description of Business and Basis of Presentation | 1. Description of Business and Basis of Presentation We are an energy infrastructure company with a pure play focus on midstream natural gas compression. We are the leading provider of natural gas compression services, in terms of total compression fleet horsepower, to customers in the energy industry throughout the U.S. and a leading supplier of aftermarket services to customers that own compression equipment in the U.S. We operate in two business segments: contract operations and aftermarket services. Our predominant segment, contract operations, primarily includes designing, sourcing, owning, installing, operating, servicing, repairing and maintaining our owned fleet of natural gas compression equipment to provide natural gas compression services to our customers. In our aftermarket services business, we sell parts and components and provide operations, maintenance, overhaul and reconfiguration services to customers who own compression equipment. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by GAAP. Therefore, this information should be read in conjunction with our consolidated financial statements and notes contained in our 2022 Form 10K. The information furnished herein reflects all adjustments that are, in the opinion of management, of a normal recurring nature and considered necessary for a fair statement of the results of the interim periods reported. All intercompany balances and transactions have been eliminated in consolidation. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2023 | |
Inventory | |
Inventory | 2. Inventory Inventory is comprised of the following: March 31, December 31, (in thousands) 2023 2022 Parts and supplies $ 73,573 $ 70,228 Work in progress 16,059 14,394 Inventory $ 89,632 $ 84,622 |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment | |
Property, Plant and Equipment | 3. Property, Plant and Equipment Property, plant and equipment is comprised of the following: March 31, December 31, (in thousands) 2023 2022 Compression equipment, facilities and other fleet assets $ 3,298,006 $ 3,234,239 Land and buildings 44,625 44,304 Transportation and shop equipment 93,490 93,189 Computer hardware and software 77,482 77,357 Other 6,263 5,754 Property, plant and equipment 3,519,866 3,454,843 Accumulated depreciation (1,273,621) (1,255,590) Property, plant and equipment, net $ 2,246,245 $ 2,199,253 |
Investment in Unconsolidated Af
Investment in Unconsolidated Affiliate | 3 Months Ended |
Mar. 31, 2023 | |
Investment in Unconsolidated Affiliate | |
Investment in Unconsolidated Affiliate | 4. Investment in Unconsolidated Affiliate Investments in which we are deemed to exert significant influence, but not control, are accounted for using the equity method of accounting, except in cases where the fair value option is elected. For such investments where we have elected the fair value option, the election is irrevocable and is applied on an investment–by–investment basis at initial recognition. In April 2022, we agreed to acquire, for cash, a 25% equity interest in ECOTEC, a company specializing in methane detection, monitoring and management. For greater transparency, we have elected the fair value option for this investment. As of March 31, 2023, our ownership interest in ECOTEC, was 25% and included in other assets in our unaudited condensed consolidated balance sheets. Changes in the fair value of this investment are recognized in other expense (income), net in our unaudited condensed consolidated statements of operations. See Note 13 (“Fair Value Measurements”) for further details on fair value accounting. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2023 | |
Long-Term Debt | |
Long-Term Debt | 5. Long-Term Debt Long–term debt is comprised of the following: March 31, December 31, (in thousands) 2023 2022 Credit Facility $ 250,000 $ 251,250 6.25% senior notes due April 2028: Principal outstanding 800,000 800,000 Unamortized debt premium 10,029 10,530 Unamortized debt issuance costs (8,329) (8,744) 801,700 801,786 6.875% senior notes due April 2027: Principal outstanding 500,000 500,000 Unamortized debt issuance costs (4,426) (4,702) 495,574 495,298 Long-term debt $ 1,547,274 $ 1,548,334 The Credit Facility matures in November 2024 unless renewed or amended prior to that date. As of March 31, 2023, there were $4.1 million letters of credit outstanding under the Credit Facility and the applicable margin on borrowings outstanding was 2.5%. The weighted average annual interest rate on the outstanding balance under the Credit Facility, excluding the effect of interest rate swaps, was 7.4% and 6.9% at March 31, 2023 and December 31, 2022, respectively. We incurred $0.5 million of commitment fees on the daily unused amount of the Credit Facility in each of the three months ended March 31, 2023 and 2022. As of March 31, 2023, we were in compliance with all covenants under our Credit Facility agreement. Additionally, all undrawn capacity on our Credit Facility was available for borrowings as of March 31, 2023. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 6. Commitments and Contingencies Insurance Matters Our business can be hazardous, involving unforeseen circumstances such as uncontrollable flows of natural gas or well fluids and fires or explosions. As is customary in our industry, we review our safety equipment and procedures and carry insurance against some, but not all, risks of our business. Our insurance coverage includes property damage, general liability and commercial automobile liability and other coverage we believe is appropriate. We believe that our insurance coverage is customary for the industry and adequate for our business, however, losses and liabilities not covered by insurance would increase our costs. Additionally, we are substantially self–insured for workers’ compensation and employee group health claims in view of the relatively high per–incident deductibles we absorb under our insurance arrangements for these risks. Losses up to the deductible amounts are estimated and accrued based upon known facts, historical trends and industry averages. We are also self–insured for property damage to our offshore assets. Tax Matters We are subject to a number of state and local taxes that are not income–based. As many of these taxes are subject to audit by the taxing authorities, it is possible that an audit could result in additional taxes due. We accrue for such additional taxes when we determine that it is probable that we have incurred a liability and we can reasonably estimate the amount of the liability. As of March 31, 2023 and December 31, 2022, we had $4.1 million and $3.9 million, respectively, accrued for the outcomes of non–income–based tax audits. We do not expect that the ultimate resolutions of these audits will result in a material variance from the amounts accrued. We do not accrue for unasserted claims for tax audits unless we believe the assertion of a claim is probable, it is probable that it will be determined that the claim is owed and we can reasonably estimate the claim or range of the claim. We believe the likelihood is remote that the impact of potential unasserted claims from non–income–based tax audits could be material to our consolidated financial position, but it is possible that the resolution of future audits could be material to our consolidated results of operations or cash flows. During the years ended December 31, 2022 and 2021, certain of our sales and use tax audits advanced from the audit review phase to the contested hearing phase. As of March 31, 2023 and December 31, 2022, we had $0.6 million accrued for these audits. Litigation and Claims In the ordinary course of business, we are involved in various pending or threatened legal actions. While we are unable to predict the ultimate outcome of these actions, we believe that any ultimate liability arising from any of these actions will not have a material adverse effect on our consolidated financial position, results of operations or cash flows, including our ability to pay dividends. However, because of the inherent uncertainty of litigation and arbitration proceedings, we cannot provide assurance that the resolution of any particular claim or proceeding to which we are a party will not have a material adverse effect on our consolidated financial position, results of operations or cash flows, including our ability to pay dividends. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | 7. Stockholders’ Equity Cash Dividends The following table summarizes our dividends declared and paid in each of the quarterly periods of 2023 and 2022: Dividends per Dividends Paid Common Share (in thousands) 2023 Q1 $ 0.150 $ 23,852 2022 Q4 $ 0.145 $ 22,589 Q3 0.145 22,559 Q2 0.145 22,494 Q1 0.145 22,673 On April 27, 2023, our Board of Directors declared a quarterly dividend of $0.15 per share of common stock to be paid on May 16, 2023 to stockholders of record at the close of business on May 9, 2023. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contracts with Customers | |
Revenue from Contracts with Customers | 8. Revenue from Contracts with Customers The following table presents our revenue from contracts with customers by segment and disaggregated by revenue source: Three Months Ended March 31, (in thousands) 2023 2022 Contract operations: 0 ― 1,000 horsepower per unit $ 39,954 $ 41,842 1,001 ― 1,500 horsepower per unit 81,807 67,001 Over 1,500 horsepower per unit 65,714 54,594 Other (1) 270 219 Total contract operations revenue (2) 187,745 163,656 Aftermarket services: Services 21,249 17,137 OTC parts and components sales 20,840 16,408 Total aftermarket services revenue (3) 42,089 33,545 Total revenue $ 229,834 $ 197,201 (1) Primarily relates to fees associated with owned non-compression equipment. (2) Includes $0.8 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively, related to billable maintenance on owned compressors that was recognized at a point in time. All other contract operations revenue is recognized over time. (3) Services revenue within aftermarket services is recognized over time. OTC parts and components sales revenue is recognized at a point in time. See Note 15 (“Segment Information”) for further information on segments. Performance Obligations As of March 31, 2023, we had $354.7 million of remaining performance obligations related to our contract operations segment, which will be recognized through 2028 as follows: (in thousands) 2023 2024 2025 2026 2027 2028 Total Remaining performance obligations $ 203,117 $ 88,750 $ 47,044 $ 11,658 $ 3,608 $ 504 $ 354,681 We do not disclose the aggregate transaction price for the remaining performance obligations for aftermarket services as there are no contracts with customers with an original contract term that is greater than one year. Contract Assets and Liabilities Contract Assets As of March 31, 2023 and December 31, 2022, our receivables from contracts with customers, net of allowance for credit losses, were $104.9 million and $111.9 million, respectively. Allowance for Credit Losses Our allowance for credit losses balance changed as follows during the three months ended March 31, 2023: (in thousands) Balance at beginning of period $ 1,674 Provision for (benefit from) credit losses (340) Write-offs charged against allowance (16) Balance at end of period $ 1,318 Contract Liabilities Freight billings to customers for the transport of compression assets, customer–specified modifications of compression assets and milestone billings on aftermarket services often result in a contract liability. As of March 31, 2023 and December 31, 2022, our contract liabilities were $6.8 million and $8.0 million, respectively. During the three months ended March 31, 2023, we deferred revenue of $3.2 million and recognized deferred revenue of $4.5 million. The revenue recognized during the period primarily related to freight billings and milestone billings on aftermarket services. |
Long-Lived and Other Asset Impa
Long-Lived and Other Asset Impairment | 3 Months Ended |
Mar. 31, 2023 | |
Long-Lived and Other Asset Impairment | |
Long-Lived and Other Asset Impairment | 9. Long-Lived and Other Asset Impairment We review long–lived assets, including property, plant and equipment and identifiable intangibles that are being amortized, for impairment whenever events or changes in circumstances, including the removal of compressors from our active fleet, indicate that the carrying amount of an asset may not be recoverable. Compression Fleet We periodically review the future deployment of our idle compression assets for units that are not of the type, configuration, condition, make or model that are cost efficient to maintain and operate. Based on these reviews, we determine that certain idle compressors should be retired from the active fleet. The retirement of these units from the active fleet triggers a review of these assets for impairment and as a result of our review, we may record an asset impairment to reduce the book value of each unit to its estimated fair value. The fair value of each unit is estimated based on the expected net sale proceeds compared to other fleet units we recently sold, a review of other units recently offered for sale by third parties or the estimated component value of the equipment we plan to use. In connection with our review of our idle compression assets, we evaluate for impairment idle units that were culled from our fleet in prior years and are available for sale. Based on that review, we may reduce the expected proceeds from disposition and record additional impairment to reduce the book value of each unit to its estimated fair value. The following table presents the results of our compression fleet impairment review as recorded in our contract operations segment: Three Months Ended March 31, (dollars in thousands) 2023 2022 Idle compressors retired from the active fleet 30 45 Horsepower of idle compressors retired from the active fleet 14,000 31,000 Impairment recorded on idle compressors retired from the active fleet $ 2,569 $ 7,409 See Note 13 (“Fair Value Measurements”) for further details on fair value accounting. |
Restructuring Charges
Restructuring Charges | 3 Months Ended |
Mar. 31, 2023 | |
Restructuring Charges | |
Restructuring Charges | 10. Restructuring Charges During the first quarter of 2023, a plan to further streamline our organization and more fully align our teams to improve our customer service and profitability was approved by management. We expect to incur additional restructuring charges of $1.5 million related to these restructuring activities. The following table presents the changes to our accrued liability balance related to restructuring charges during the quarter ended March 31, 2023: (in thousands) Total Balance at December 31, 2022 $ — Charges incurred 1,047 Payments (120) Balance at March 31, 2023 $ 927 The following table presents restructuring charges incurred by segment: Contract Aftermarket (in thousands) Operations Services Other (1) Total Three months ended March 31, 2023 Organizational restructuring $ 203 $ — $ 844 $ 1,047 Total restructuring charges $ 203 $ — $ 844 $ 1,047 (1) Represents expense incurred within our corporate function and not directly attributable to our segments. The following table presents restructuring charges incurred by cost type: Three Months Ended (in thousands) March 31, 2023 Organizational restructuring Severance costs $ 789 Consulting costs 258 Total restructuring charges $ 1,047 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | 11. Income Taxes Valuation Allowance The amount of our deferred tax assets considered realizable could be adjusted if projections of future taxable income are reduced or objective negative evidence in the form of a three–year cumulative loss is present or both. Should we no longer have a level of sustained profitability, excluding nonrecurring charges, we will have to rely more on our future projections of taxable income to determine if we have an adequate source of taxable income for the realization of our deferred tax assets, namely net operating loss, interest limitation and tax credit carryforwards. This may result in the need to record a valuation allowance against all or a portion of our deferred tax assets. Effective Tax Rate The year-to-date effective tax rate for the three months ended March 31, 2023 differed significantly from our statutory rate primarily due to unrecognized tax benefits and the limitation on executive compensation. Unrecognized Tax Benefits As of March 31, 2023, we believe it is reasonably possible that $2.7 million of our unrecognized tax benefits, including penalties, interest and discontinued operations, will be reduced prior to March 31, 2024 due to the settlement of audits or the expiration of statutes of limitations or both. However, due to the uncertain and complex application of the tax regulations, it is possible that the ultimate resolution of these matters may result in liabilities that could materially differ from this estimate. |
Earnings Per Common Share
Earnings Per Common Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Common Share | |
Earnings Per Common Share | 12. Earnings Per Common Share Basic earnings per common share is computed using the two–class method, which is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Under the two–class method, basic earnings per common share is determined by dividing net income, after deducting amounts allocated to participating securities, by the weighted average number of common shares outstanding for the period. Participating securities include unvested restricted stock and stock–settled restricted stock units that have nonforfeitable rights to receive dividends or dividend equivalents, whether paid or unpaid. During periods of net loss, only distributed earnings (dividends) are allocated to participating securities, as participating securities do not have a contractual obligation to participate in our undistributed losses. Diluted earnings per common share is computed using the weighted average number of common shares outstanding adjusted for the incremental common stock equivalents attributed to outstanding performance–based restricted stock units and stock to be issued pursuant to our ESPP unless their effect would have been anti–dilutive. The following table shows the calculation of net income attributable to common stockholders, which is used in the calculation of basic and diluted earnings per common share, potential shares of common stock that were included in computing diluted earnings per common share and the potential shares of common stock issuable that were excluded from computing diluted earnings per common share as their inclusion would have been anti–dilutive: Three Months Ended March 31, (in thousands) 2023 2022 Net income $ 16,485 $ 1,721 Less: Allocation of earnings to participating securities (735) (515) Net income attributable to common stockholders $ 15,750 $ 1,206 Weighted average common shares outstanding used in basic earnings per common share 154,116 152,690 Effect of dilutive securities: Performance-based restricted stock units 162 117 ESPP shares 3 3 Weighted average common shares outstanding used in diluted earnings per common share 154,281 152,810 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | 13. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis As of March 31, 2023, we own a 25% equity interest in ECOTEC. The fair value is determined using an average of the income approach that includes the use of a discounted cash flow model, and the market approach that includes the financial metrics of comparable public companies under the guideline public company method. The determination of this investment primarily consisted on unobservable inputs, which creates uncertainty in the measurement of fair value as of the reporting date. Significant increases (decreases) in these inputs in isolation would result in a significantly higher (lower) fair value measurement. As of March 31, 2023, the fair value of our investment in ECOTEC was $14.5 million. This fair value measurement is classified as Level 3. The significant unobservable inputs used in the fair value measurement are the WACC and the revenue multiples. Additional quantitative information related to the significant unobservable inputs are as follows: Significant Unobservable Inputs Range Median Valuation technique: Discounted cash flow WACC 0% - 22.1% 11.3% Guideline public company Revenue multiple 1.7x - 8.0x 3.9x The reconciliation of changes in the fair value of our investment in ECOTEC is as follows: Three Months Ended March 31, (in thousands) 2023 2022 Balance at beginning of period $ 12,803 $ — Purchases of equity interests 2,000 — Unrealized loss (1) (254) — Balance at end of period $ 14,549 $ — (1) Included in other expense (income) in our unaudited condensed consolidated statement of operations. See Note 4 (“Investment in Unconsolidated Affiliate”) for further details. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis During the three months ended March 31, 2023, we recorded nonrecurring fair value measurements related to our idle compressors. Our estimate of the compressors’ fair value was primarily based on the expected net sale proceeds compared with other fleet units we recently sold and/or a review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use. We discounted the expected proceeds, net of selling and other carrying costs, using a weighted average disposal period of four years. The fair value of our compressors impaired in 2023 and 2022 was as follows: (in thousands) March 31, 2023 December 31, 2022 Impaired compressors $ 448 $ 1,961 These fair value measurements are classified as Level 3. The significant unobservable inputs used to develop the above fair value measurements were weighted by the relative fair value of the compressors being measured. Additional quantitative information related to our significant unobservable inputs follows: Range Weighted Average (1) Estimated net sale proceeds: As of March 31, 2023 $0 - $621 per horsepower $53 per horsepower As of December 31, 2022 $0 - $621 per horsepower $47 per horsepower (1) Calculated based on an estimated discount for market liquidity of 44% and 51% as of March 31, 2023 and December 31, 2022, respectively. See Note 9 (“Long-Lived and Other Asset Impairments”) for further details. Other Financial Instruments The carrying amounts of our cash, accounts receivable and accounts payable approximate fair value due to the short–term nature of these instruments. The carrying amount of borrowings outstanding under our Credit Facility approximates fair value due to the variable interest rate. The measurement of the fair value of these outstanding borrowings is a Level 3 measurement. The fair value of our fixed rate debt is estimated using yields observable in active markets, which are Level 2 inputs, and was as follows: (in thousands) March 31, 2023 December 31, 2022 Carrying amount of fixed rate debt (1) $ 1,297,274 $ 1,297,084 Fair value of fixed rate debt 1,259,000 1,214,000 (1) Carrying amounts are shown net of unamortized premium and deferred financing costs. See Note 5 (“Long-Term Debt”). |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions | |
Related Party Transactions | 14. Related Party Transactions Old Ocean Reserves, an affiliate of our customer Hilcorp, has the right to designate one director to serve on our board of directors as long as Old Ocean Reserves or its successors (together with its affiliates) owns at least 7.5% of our outstanding common stock. As of March 31, 2023, Old Ocean Reserves owned 9.4% of our outstanding common stock. Jason C. Rebrook, Chief Executive Officer and Director of Harvest Midstream Company, a Hilcorp affiliate, has served as Old Ocean Reserves’ representative director since July 2020. Revenue from Hilcorp was $9.1 million and $9.4 million during the three months ended March 31, 2023 and 2022, respectively. Accounts receivable, net due from Hilcorp was $3.1 million and $3.0 million as of March 31, 2023 and December 31, 2022, respectively. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2023 | |
Segment Information | |
Segment Information | 15. Segment Information We manage our business segments primarily based on the type of product or service provided. We have two segments: contract operations and aftermarket services. Our contract operations segment primarily provides natural gas compression services to meet specific customer requirements. Our aftermarket services segment provides a full range of services to support the compression needs of customers, from parts sales and normal maintenance services to full operation of a customer’s owned assets. All of our operations are located in the U.S. We evaluate the performance of our segments based on gross margin, defined as revenue less cost of sales (excluding depreciation and amortization) for each segment. Segment revenue includes only sales to external customers. Summarized financial information for our reporting segments is shown below: Contract Aftermarket (in thousands) Operations Services Total Three months ended March 31, 2023 Revenue $ 187,745 $ 42,089 $ 229,834 Gross margin 108,263 8,181 116,444 Three months ended March 31, 2022 Revenue $ 163,656 $ 33,545 $ 197,201 Gross margin 99,155 4,907 104,062 The following table reconciles total gross margin to income before income taxes: Three Months Ended March 31, (in thousands) 2023 2022 Total gross margin $ 116,444 $ 104,062 Less: Selling, general and administrative 26,425 27,773 Depreciation and amortization 40,181 43,039 Long-lived and other asset impairment 2,569 7,416 Restructuring charges 1,047 — Interest expense 26,581 25,246 Gain on sale of assets, net (3,605) (2,112) Other expense (income), net 603 36 Income before income taxes $ 22,643 $ 2,664 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 16. Subsequent Events On April 27, 2023, our Board of Directors authorized a share repurchase program that allows us to repurchase up to $50.0 million of outstanding common stock. Under the 2023 Share Repurchase Program, shares of our common stock may be repurchased periodically, including in the open market, privately negotiated transactions, or otherwise in accordance with applicable federal securities laws, at any time until April 27, 2024. The actual timing, manner, number, and value of shares repurchased under the program will be determined by us at our discretion. |
Description of Business and B_2
Description of Business and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Description of Business and Basis of Presentation | |
Basis of Presentation | The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by GAAP. Therefore, this information should be read in conjunction with our consolidated financial statements and notes contained in our 2022 Form 10K. The information furnished herein reflects all adjustments that are, in the opinion of management, of a normal recurring nature and considered necessary for a fair statement of the results of the interim periods reported. All intercompany balances and transactions have been eliminated in consolidation. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventory | |
Schedule of inventory, net of reserves | March 31, December 31, (in thousands) 2023 2022 Parts and supplies $ 73,573 $ 70,228 Work in progress 16,059 14,394 Inventory $ 89,632 $ 84,622 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment | |
Schedule of property, plant and equipment, net | March 31, December 31, (in thousands) 2023 2022 Compression equipment, facilities and other fleet assets $ 3,298,006 $ 3,234,239 Land and buildings 44,625 44,304 Transportation and shop equipment 93,490 93,189 Computer hardware and software 77,482 77,357 Other 6,263 5,754 Property, plant and equipment 3,519,866 3,454,843 Accumulated depreciation (1,273,621) (1,255,590) Property, plant and equipment, net $ 2,246,245 $ 2,199,253 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Long-Term Debt | |
Schedule of long-term debt | March 31, December 31, (in thousands) 2023 2022 Credit Facility $ 250,000 $ 251,250 6.25% senior notes due April 2028: Principal outstanding 800,000 800,000 Unamortized debt premium 10,029 10,530 Unamortized debt issuance costs (8,329) (8,744) 801,700 801,786 6.875% senior notes due April 2027: Principal outstanding 500,000 500,000 Unamortized debt issuance costs (4,426) (4,702) 495,574 495,298 Long-term debt $ 1,547,274 $ 1,548,334 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders' Equity | |
Summary of entity's dividends per common share | Dividends per Dividends Paid Common Share (in thousands) 2023 Q1 $ 0.150 $ 23,852 2022 Q4 $ 0.145 $ 22,589 Q3 0.145 22,559 Q2 0.145 22,494 Q1 0.145 22,673 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contracts with Customers | |
Schedule of disaggregation of revenue | Three Months Ended March 31, (in thousands) 2023 2022 Contract operations: 0 ― 1,000 horsepower per unit $ 39,954 $ 41,842 1,001 ― 1,500 horsepower per unit 81,807 67,001 Over 1,500 horsepower per unit 65,714 54,594 Other (1) 270 219 Total contract operations revenue (2) 187,745 163,656 Aftermarket services: Services 21,249 17,137 OTC parts and components sales 20,840 16,408 Total aftermarket services revenue (3) 42,089 33,545 Total revenue $ 229,834 $ 197,201 (1) Primarily relates to fees associated with owned non-compression equipment. (2) Includes $0.8 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively, related to billable maintenance on owned compressors that was recognized at a point in time. All other contract operations revenue is recognized over time. (3) Services revenue within aftermarket services is recognized over time. OTC parts and components sales revenue is recognized at a point in time. |
Schedule of remaining Performance Obligation | (in thousands) 2023 2024 2025 2026 2027 2028 Total Remaining performance obligations $ 203,117 $ 88,750 $ 47,044 $ 11,658 $ 3,608 $ 504 $ 354,681 |
Summary of changes in allowance for credit losses | (in thousands) Balance at beginning of period $ 1,674 Provision for (benefit from) credit losses (340) Write-offs charged against allowance (16) Balance at end of period $ 1,318 |
Long-Lived and Other Asset Im_2
Long-Lived and Other Asset Impairment (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Long-Lived and Other Asset Impairment | |
Schedule of impairment of long-lived assets | Three Months Ended March 31, (dollars in thousands) 2023 2022 Idle compressors retired from the active fleet 30 45 Horsepower of idle compressors retired from the active fleet 14,000 31,000 Impairment recorded on idle compressors retired from the active fleet $ 2,569 $ 7,409 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Restructuring Charges | |
Schedule of changes to accrued liability balance related to restructuring charges | (in thousands) Total Balance at December 31, 2022 $ — Charges incurred 1,047 Payments (120) Balance at March 31, 2023 $ 927 |
Schedule of restructuring charges by segment | Contract Aftermarket (in thousands) Operations Services Other (1) Total Three months ended March 31, 2023 Organizational restructuring $ 203 $ — $ 844 $ 1,047 Total restructuring charges $ 203 $ — $ 844 $ 1,047 (1) Represents expense incurred within our corporate function and not directly attributable to our segments. |
Schedule of restructuring charges by type | Three Months Ended (in thousands) March 31, 2023 Organizational restructuring Severance costs $ 789 Consulting costs 258 Total restructuring charges $ 1,047 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Common Share | |
Schedule calculation of basic and diluted net income (loss) per common share | Three Months Ended March 31, (in thousands) 2023 2022 Net income $ 16,485 $ 1,721 Less: Allocation of earnings to participating securities (735) (515) Net income attributable to common stockholders $ 15,750 $ 1,206 Weighted average common shares outstanding used in basic earnings per common share 154,116 152,690 Effect of dilutive securities: Performance-based restricted stock units 162 117 ESPP shares 3 3 Weighted average common shares outstanding used in diluted earnings per common share 154,281 152,810 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair value | |
Schedule of carrying value and estimated fair value of debt instruments | (in thousands) March 31, 2023 December 31, 2022 Carrying amount of fixed rate debt (1) $ 1,297,274 $ 1,297,084 Fair value of fixed rate debt 1,259,000 1,214,000 (1) Carrying amounts are shown net of unamortized premium and deferred financing costs. See Note 5 (“Long-Term Debt”). |
Compressors | |
Fair value | |
Schedule of significant unobservable inputs | Range Weighted Average (1) Estimated net sale proceeds: As of March 31, 2023 $0 - $621 per horsepower $53 per horsepower As of December 31, 2022 $0 - $621 per horsepower $47 per horsepower (1) Calculated based on an estimated discount for market liquidity of 44% and 51% as of March 31, 2023 and December 31, 2022, respectively. |
Schedule of non-recurring fair value assets | (in thousands) March 31, 2023 December 31, 2022 Impaired compressors $ 448 $ 1,961 |
Ecotec | Equity investment | |
Fair value | |
Schedule of significant unobservable inputs | Significant Unobservable Inputs Range Median Valuation technique: Discounted cash flow WACC 0% - 22.1% 11.3% Guideline public company Revenue multiple 1.7x - 8.0x 3.9x |
Schedule of changes in assets measured at fair value on a recurring basis | Three Months Ended March 31, (in thousands) 2023 2022 Balance at beginning of period $ 12,803 $ — Purchases of equity interests 2,000 — Unrealized loss (1) (254) — Balance at end of period $ 14,549 $ — (1) Included in other expense (income) in our unaudited condensed consolidated statement of operations. |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Information | |
Summary of revenue and other financial information by reportable segment | Contract Aftermarket (in thousands) Operations Services Total Three months ended March 31, 2023 Revenue $ 187,745 $ 42,089 $ 229,834 Gross margin 108,263 8,181 116,444 Three months ended March 31, 2022 Revenue $ 163,656 $ 33,545 $ 197,201 Gross margin 99,155 4,907 104,062 |
Reconciliation of total gross margin to income before taxes | Three Months Ended March 31, (in thousands) 2023 2022 Total gross margin $ 116,444 $ 104,062 Less: Selling, general and administrative 26,425 27,773 Depreciation and amortization 40,181 43,039 Long-lived and other asset impairment 2,569 7,416 Restructuring charges 1,047 — Interest expense 26,581 25,246 Gain on sale of assets, net (3,605) (2,112) Other expense (income), net 603 36 Income before income taxes $ 22,643 $ 2,664 |
Description of Business and B_3
Description of Business and Basis of Presentation (Details) | 3 Months Ended |
Mar. 31, 2023 segment | |
Description of Business and Basis of Presentation | |
Number of reportable segments | 2 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Composition of Inventory net of reserves | ||
Parts and supplies | $ 73,573 | $ 70,228 |
Work in progress | 16,059 | 14,394 |
Inventory | $ 89,632 | $ 84,622 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment | ||
Property, plant and equipment | $ 3,519,866 | $ 3,454,843 |
Accumulated depreciation | (1,273,621) | (1,255,590) |
Property, plant and equipment, net | 2,246,245 | 2,199,253 |
Compression equipment, facilities and other fleet assets | ||
Property, Plant and Equipment | ||
Property, plant and equipment | 3,298,006 | 3,234,239 |
Land and buildings | ||
Property, Plant and Equipment | ||
Property, plant and equipment | 44,625 | 44,304 |
Transportation and shop equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment | 93,490 | 93,189 |
Computer hardware and software | ||
Property, Plant and Equipment | ||
Property, plant and equipment | 77,482 | 77,357 |
Other | ||
Property, Plant and Equipment | ||
Property, plant and equipment | $ 6,263 | $ 5,754 |
Investment in Unconsolidated _2
Investment in Unconsolidated Affiliate (Details) - Ecotec | 1 Months Ended | |
Apr. 30, 2022 | Mar. 31, 2023 | |
Investments | ||
Equity interest agreed to acquire (as a percent) | 25% | |
Ownership interest (as a percent) | 25% |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Instruments | ||
Long-term debt | $ 1,547,274 | $ 1,548,334 |
Credit Facility | ||
Debt Instruments | ||
Long-term debt | 250,000 | 251,250 |
6.25% senior notes due April 2028 | ||
Debt Instruments | ||
Principal outstanding | 800,000 | 800,000 |
Unamortized debt premium | 10,029 | 10,530 |
Unamortized debt issuance costs | (8,329) | (8,744) |
Long-term debt | $ 801,700 | $ 801,786 |
Interest rate (as a percent) | 6.25% | 6.25% |
6.875% senior notes due April 2027 | ||
Debt Instruments | ||
Principal outstanding | $ 500,000 | $ 500,000 |
Unamortized debt issuance costs | (4,426) | (4,702) |
Long-term debt | $ 495,574 | $ 495,298 |
Interest rate (as a percent) | 6.875% | 6.875% |
Long-Term Debt - Credit Facilit
Long-Term Debt - Credit Facility (Details) - Credit Facility - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Line of Credit Facility | |||
Letter of credit outstanding | $ 4.1 | ||
Debt instrument, variable rate (percentage) | 2.50% | ||
Debt instrument weighted average interest rate (percent) | 7.40% | 6.90% | |
Commitment fee amount | $ 0.5 | $ 0.5 |
Commitments and Contingencies-
Commitments and Contingencies- Tax Matters - Loss contingencies (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Non-income based tax audits | ||
Loss Contingencies | ||
Accrued liability | $ 4.1 | $ 3.9 |
Non-income based tax audits in contested hearing phase | ||
Loss Contingencies | ||
Accrued liability | $ 0.6 | $ 0.6 |
Stockholders' Equity - Cash Div
Stockholders' Equity - Cash Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||||
Apr. 27, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Distributions | ||||||
Declared Dividends per Common Share (in dollars per share) | $ 0.150 | $ 0.145 | $ 0.145 | $ 0.145 | $ 0.145 | |
Dividends Paid (in dollars) | $ 23,852 | $ 22,589 | $ 22,559 | $ 22,494 | $ 22,673 | |
Subsequent Event. | ||||||
Distributions | ||||||
Declared Dividends per Common Share (in dollars per share) | $ 0.15 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregate Revenue (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) hp | Mar. 31, 2022 USD ($) hp | |
Disaggregation of Revenue | ||
Revenue | $ 229,834 | $ 197,201 |
Contract Operations | ||
Disaggregation of Revenue | ||
Revenue | 187,745 | 163,656 |
Contract Operations | Transferred at Point in Time | ||
Disaggregation of Revenue | ||
Revenue | 800 | 200 |
Contract Operations | 0 - 1,000 horsepower per unit | ||
Disaggregation of Revenue | ||
Revenue | $ 39,954 | $ 41,842 |
Contract Operations | 0 - 1,000 horsepower per unit | Minimum | ||
Disaggregation of Revenue | ||
Compressor unit horsepower (horsepower) | hp | 0 | 0 |
Contract Operations | 0 - 1,000 horsepower per unit | Maximum | ||
Disaggregation of Revenue | ||
Compressor unit horsepower (horsepower) | hp | 1,000 | 1,000 |
Contract Operations | 1,001 - 1,500 horsepower per unit | ||
Disaggregation of Revenue | ||
Revenue | $ 81,807 | $ 67,001 |
Contract Operations | 1,001 - 1,500 horsepower per unit | Minimum | ||
Disaggregation of Revenue | ||
Compressor unit horsepower (horsepower) | hp | 1,001 | 1,001 |
Contract Operations | 1,001 - 1,500 horsepower per unit | Maximum | ||
Disaggregation of Revenue | ||
Compressor unit horsepower (horsepower) | hp | 1,500 | 1,500 |
Contract Operations | Over 1,500 horsepower per unit | ||
Disaggregation of Revenue | ||
Revenue | $ 65,714 | $ 54,594 |
Contract Operations | Over 1,500 horsepower per unit | Minimum | ||
Disaggregation of Revenue | ||
Compressor unit horsepower (horsepower) | hp | 1,500 | 1,500 |
Contract Operations | Other | ||
Disaggregation of Revenue | ||
Revenue | $ 270 | $ 219 |
Aftermarket Services | ||
Disaggregation of Revenue | ||
Revenue | 42,089 | 33,545 |
Aftermarket Services | Services | ||
Disaggregation of Revenue | ||
Revenue | 21,249 | 17,137 |
Aftermarket Services | OTC parts and components sales | ||
Disaggregation of Revenue | ||
Revenue | $ 20,840 | $ 16,408 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Performance Obligations (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Remaining performance obligations | $ 354,681 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Remaining performance obligations | $ 203,117 |
Performance obligations expected to be satisfied, expected timing | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Remaining performance obligations | $ 88,750 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Remaining performance obligations | $ 47,044 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Remaining performance obligations | $ 11,658 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Remaining performance obligations | $ 3,608 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Remaining performance obligations | $ 504 |
Performance obligations expected to be satisfied, expected timing | 1 year |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Contract Assets (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Contract with Customers | ||
Receivables | ||
Accounts receivable, trade, net of allowance | $ 104.9 | $ 111.9 |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Credit Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Changes in the allowance for credit losses balance | ||
Balance at beginning of period | $ 1,674 | |
Provision for (benefit from) credit losses | (340) | $ 108 |
Write-offs charged against the allowance | (16) | |
Balance at end of period | $ 1,318 |
Revenue from Contracts with C_7
Revenue from Contracts with Customers - Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Revenue from Contracts with Customers | |||
Contract liability | $ 6,800 | $ 8,000 | |
Deferred revenue | 3,179 | $ 6,351 | |
Deferred revenue recognized in earnings | $ 4,476 | $ 3,115 |
Long-Lived and Other Asset Im_3
Long-Lived and Other Asset Impairment (Details) - Idle Compressor Units hp in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) CompressorUnit hp | Mar. 31, 2022 USD ($) CompressorUnit hp | |
Impaired Long-Lived Assets Held and Used | ||
Idle compressors retired from the active fleet | CompressorUnit | 30 | 45 |
Horsepower of idle compressors retired from the active fleet | hp | 14 | 31 |
Impairment recorded on idle compressors retired from the active fleet | $ | $ 2,569 | $ 7,409 |
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income | Long-lived and other asset impairment | Long-lived and other asset impairment |
Restructuring Charges - Changes
Restructuring Charges - Changes to accrued liability balance (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Restructuring Charges | |
Expected additional charges | $ 1,500 |
Changes to accrued liability balance related to restructuring | |
Restructuring charges | 1,047 |
Payments | (120) |
Balance at end of period | $ 927 |
Restructuring Charges - By segm
Restructuring Charges - By segment (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Restructuring charges | |
Restructuring charges | $ 1,047 |
Expected additional charges | 1,500 |
Organizational Restructuring | |
Restructuring charges | |
Restructuring charges | 1,047 |
Corporate | |
Restructuring charges | |
Restructuring charges | 844 |
Corporate | Organizational Restructuring | |
Restructuring charges | |
Restructuring charges | 844 |
Contract Operations | Operating | |
Restructuring charges | |
Restructuring charges | 203 |
Contract Operations | Operating | Organizational Restructuring | |
Restructuring charges | |
Restructuring charges | $ 203 |
Restructuring Charges - By type
Restructuring Charges - By type (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Restructuring charges | |
Restructuring charges | $ 1,047 |
Organizational Restructuring | |
Restructuring charges | |
Restructuring charges | 1,047 |
Severance costs | Organizational Restructuring | |
Restructuring charges | |
Restructuring charges | 789 |
Consulting costs | Organizational Restructuring | |
Restructuring charges | |
Restructuring charges | $ 258 |
Income Taxes (Details)
Income Taxes (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Income Taxes | |
Potential decrease in unrecognized tax benefit in next twelve months | $ 2.7 |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Common Share | ||
Net income | $ 16,485 | $ 1,721 |
Less: Allocation of earnings to participating securities | (735) | (515) |
Net income (loss) attributable to common stockholders, basic | 15,750 | 1,206 |
Net income (loss) attributable to common stockholders, diluted | $ 15,750 | $ 1,206 |
Weighted average common shares outstanding including participating securities | 154,116 | 152,690 |
Effect of dilutive securities: | ||
Performance-based restricted stock units (in shares) | 162 | 117 |
ESPP shares (in shares) | 3 | 3 |
Weighted average common shares outstanding used in diluted income (loss) per common share (in shares) | 154,281 | 152,810 |
Fair Value Measurements - FV on
Fair Value Measurements - FV on Recurring Basis - Investment (Details) - Ecotec $ in Millions | Mar. 31, 2023 USD ($) |
Fair value measurement of assets and liabilities | |
Ownership interest (as a percent) | 25% |
Investment | $ 14.5 |
Fair Value Measurements - Inves
Fair Value Measurements - Investment unobservable inputs (Details) - Ecotec - Equity investment - Level 3 | Mar. 31, 2023 |
Discounted cash flow | WACC | Minimum | |
Fair value measurement of assets and liabilities | |
Equity Securities, FV-NI, Measurement Input | 0 |
Discounted cash flow | WACC | Maximum | |
Fair value measurement of assets and liabilities | |
Equity Securities, FV-NI, Measurement Input | 0.221 |
Discounted cash flow | WACC | Median | |
Fair value measurement of assets and liabilities | |
Equity Securities, FV-NI, Measurement Input | 0.113 |
Guideline public company | Revenue multiple | Minimum | |
Fair value measurement of assets and liabilities | |
Equity Securities, FV-NI, Measurement Input | 1.7 |
Guideline public company | Revenue multiple | Maximum | |
Fair value measurement of assets and liabilities | |
Equity Securities, FV-NI, Measurement Input | 8 |
Guideline public company | Revenue multiple | Median | |
Fair value measurement of assets and liabilities | |
Equity Securities, FV-NI, Measurement Input | 3.9 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation of changes in FV of investment (Details) - Ecotec - Equity investment $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Reconciliation of changes in fair value | |
Balance, beginning of period | $ 12,803 |
Purchases of equity interests | 2,000 |
Unrealized loss | (254) |
Balance, end of period | $ 14,549 |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on Nonrecurring Basis (Details) - Level 3 - Impaired Long-Lived Assets - Compressors | Mar. 31, 2023 USD ($) $ / hp Y | Dec. 31, 2022 USD ($) $ / hp |
Measurement Input, Weighted average disposal period | ||
Fair value | ||
Measurement input | Y | 4 | |
Measurement Input, Sale proceeds | Minimum | ||
Fair value | ||
Measurement input | 0 | 0 |
Measurement Input, Sale proceeds | Maximum | ||
Fair value | ||
Measurement input | 621 | 621 |
Measurement Input, Sale proceeds | Weighted average | ||
Fair value | ||
Measurement input | $ / hp | 53 | 47 |
Measurement Input, Discount for market liquidity | ||
Fair value | ||
Measurement input | 0.44 | 0.51 |
Nonrecurring Basis | ||
Fair value | ||
Impaired assets | $ | $ 448,000 | $ 1,961,000 |
Fair Value Measurements - Other
Fair Value Measurements - Other Financial Instruments (Details) - Fixed Rate Debt - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Carrying Amount | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | |||
Long-term debt, fair value | $ 1,297,274 | $ 1,297,084 | |
Fair Value | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | |||
Long-term debt, fair value | $ 1,259,000 | $ 1,214,000 | |
Long-Term Debt, Fair Value by Fair Value Hierarchy Level | us-gaap:FairValueInputsLevel2Member | us-gaap:FairValueInputsLevel2Member |
Related Party Transactions (Det
Related Party Transactions (Details) - Affiliated Entity $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 USD ($) director | Mar. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Old Ocean Reserves | Archrock, Inc. | |||
Related Party Transaction | |||
Ownership interest (percent) | 9.40% | ||
Old Ocean Reserves | |||
Related Party Transaction | |||
Number of directors shareholders have right to designate | director | 1 | ||
Minimum ownership interest of outstanding shares required to elect a board of director (percent) | 7.50% | ||
Hilcorp and affiliates | |||
Related Party Transaction | |||
Revenue from related party transactions | $ 9.1 | $ 9.4 | |
Due from related party | $ 3.1 | $ 3 |
Segment Information - Number (D
Segment Information - Number (Details) | 3 Months Ended |
Mar. 31, 2023 segment | |
Segment Information | |
Number of reportable segments | 2 |
Segment Information - Revenue a
Segment Information - Revenue and Gross Margin by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue and other financial information by reportable segment | ||
Revenue | $ 229,834 | $ 197,201 |
Gross margin | 116,444 | 104,062 |
Contract Operations | ||
Revenue and other financial information by reportable segment | ||
Revenue | 187,745 | 163,656 |
Gross margin | 108,263 | 99,155 |
Aftermarket Services | ||
Revenue and other financial information by reportable segment | ||
Revenue | 42,089 | 33,545 |
Gross margin | $ 8,181 | $ 4,907 |
Segment Information - Reconcili
Segment Information - Reconciliation of gross margin to income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Reconciliation of total gross margin to income | ||
Total gross margin | $ 116,444 | $ 104,062 |
Less: | ||
Selling, general and administrative | 26,425 | 27,773 |
Depreciation and amortization | 40,181 | 43,039 |
Long-lived and other asset impairment | 2,569 | 7,416 |
Restructuring charges | 1,047 | |
Interest expense | 26,581 | 25,246 |
Gain on sale of assets, net | (3,605) | (2,112) |
Other expense (income), net | 603 | 36 |
Income before income taxes | $ 22,643 | $ 2,664 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) $ in Millions | Apr. 27, 2023 USD ($) |
Subsequent Event. | |
Subsequent Event | |
Shares authorized to be repurchased under the program (in shares) | $ 50 |